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REGISTRATION NUMBER 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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<TABLE>
<C> <C>
K N ENERGY, INC. K N CAPITAL TRUST I
(Exact name of registrant (Exact name of registrant as specified
as specified in its charter) in its certificate of trust)
KANSAS DELAWARE
(State of other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
48-0290000 52-6850829
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
4932
(Primary Standard Industrial
Classification Code Number)
</TABLE>
MARTHA B. WYRSCH
VICE PRESIDENT, DEPUTY GENERAL
COUNSEL & SECRETARY
370 VAN GORDON STREET
P.O. BOX 281304
LAKEWOOD, COLORADO 80228-8304
(303) 989-1740
(Address, including zip code and telephone number, including area code, of
registrant's principal executive offices and agent for service)
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Copy to:
C. MICHAEL HARRINGTON
VINSON & ELKINS L.L.P.
3600 FIRST CITY TOWER
HOUSTON, TEXAS 77002-6760
(713) 758-2148
(713) 615-5306 (FAX)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED
MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
8.56% Series B Capital Trust
Pass-through Securities of K N
Capital Trust I...................... $100,000,000 100% $100,000,000 $30,304
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8.56% Junior Subordinated Deferrable
Interest Debentures due April 15,
2027 of K N Energy, Inc.(2).......... -- -- -- --
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Guarantee of K N Energy, Inc.(3)....... -- -- -- --
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Total......................... $100,000,000(4) 100% $100,000,000(4) $30,304
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</TABLE>
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457.
(2) The 8.56% Junior Subordinated Deferrable Interest Debentures (the
"Debentures") were originally purchased by K N Capital Trust I with the
proceeds of the sale of 8.56% Series A Capital Trust Pass-through Securities
(the "Old Capital Securities"). No separate consideration will be received
for the Debentures distributed upon any liquidation of K N Capital Trust I.
(3) No separate consideration will be received for the Guarantee of K N Energy,
Inc. with respect to the Old Capital Securities and the 8.56% Series B
Capital Trust Pass-through Securities (the "Exchange Capital Securities")
registered hereunder.
(4) Such amount represents the initial offering price of the Old Capital
Securities exchangeable hereunder and the principal amount of Debentures
that may be distributed to holders of Old or Exchange Capital Securities
upon any liquidation of K N Capital Trust I.
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THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
SUBJECT TO COMPLETION, DATED JULY 2, 1997
PROSPECTUS
K N CAPITAL TRUST I
OFFER TO EXCHANGE
8.56% SERIES B CAPITAL TRUST PASS-THROUGH SECURITIES(SM) (TRUPS(SM))*
FOR ANY AND ALL OUTSTANDING
8.56% SERIES A CAPITAL TRUST PASS-THROUGH SECURITIES(SM) (TRUPS(SM))*
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
K N ENERGY, INC.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED.
K N Capital Trust I, a statutory business trust created under the laws of
the State of Delaware (the "Trust"), and K N Energy, Inc., a Kansas corporation
("K N" or the "Company"), hereby offer, upon the terms and subject to the
conditions set forth in this Prospectus and in the accompanying Letter of
Transmittal (which together constitute the "Exchange Offer"), to exchange up to
$100,000,000 aggregate Liquidation Amount (as defined herein) of the 8.56%
Series B Capital Trust Pass-through Securities(SM) (the "Exchange Capital
Securities") which have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to a Registration Statement (as defined
herein) of which this Prospectus constitutes a part, for a like Liquidation
Amount of the outstanding 8.56% Series A Capital Trust Pass-through
Securities(SM) (the "Old Capital Securities"), of which $100,000,000 aggregate
Liquidation Amount is outstanding. Pursuant to the Exchange Offer, the Company
is also exchanging its guarantee of the payment of Distributions (as defined
herein) and payments on liquidation of the Trust or redemption of the Old
Capital Securities (the "Old Guarantee") for a like guarantee of the Old Capital
Securities and the Exchange Capital Securities (the "Exchange Guarantee"), and
the Company is also exchanging all of its 8.56% Series A Junior Subordinated
Deferrable Interest Debentures due April 15, 2027 (the "Old Subordinated Debt
Securities"), of which $103,100,000 aggregate principal amount is outstanding,
for a like aggregate principal amount of its 8.56% Series B Junior Subordinated
Deferrable Interest Debentures due April 15, 2027 (the "Exchange Subordinated
Debt Securities"), which Exchange Guarantee and Exchange Subordinated Debt
Securities also have been registered under the Securities Act. The Old Capital
Securities, the Old Guarantee and the Old Subordinated Debt Securities are
collectively referred to herein as the "Old Securities" and the Exchange Capital
Securities, the Exchange Guarantee and the Exchange Subordinated Debt Securities
are collectively referred to herein as the "Exchange Securities" and the
exchange of the Old Securities for the Exchange Securities is collectively
referred to herein as the "Exchange."
The terms of the Exchange Securities are identical in all material respects
to the respective terms of the Old Securities, except that (i) the Exchange
Securities have been registered under the Securities Act and therefore will not
be subject to certain restrictions on transfer applicable to the Old Securities,
(ii) the Exchange Capital Securities will not provide for any increase in the
Distribution rate thereon and (iii) the Exchange Subordinated Debt Securities
will not provide for any increase in the interest rate thereon. See "Description
of the Capital Securities" and "Description of the Old Securities."
Each broker-dealer that receives Exchange Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. The Letter
of Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Securities received in exchange for Old Securities
acquired by such broker-dealer as a result of market-making activities or other
trading activities. The Trust and the Company have agreed that they will make
this Prospectus available to any broker-dealer for use in connection with any
such resale until at least the close of business on the 90th day following the
Expiration Date (as defined herein). See "Plan of Distribution."
(Cover continued on next page.)
SEE "RISK FACTORS" BEGINNING ON PAGE 18 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PERSONS WHO TENDER OLD CAPITAL
SECURITIES IN THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL ACT.
The Exchange Capital Securities will be issued, and may be transferred, only
in blocks having a Liquidation Amount of not less than $100,000 (100 Exchange
Capital Securities). Any transfer of Exchange Capital Securities in a block
having a Liquidation Amount of less than $100,000 shall be deemed to be void and
of no legal effect whatsoever. Any such transferee shall be deemed not to be the
holder of such Exchange Capital Securities for any purpose, including but not
limited to the receipt of Distributions on such Exchange Capital Securities, and
such transferee shall be deemed to have no interest whatsoever in such Exchange
Capital Securities. See "Description of the Capital Securities -- Restrictions
on Transfer."
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* Salomon Brothers Inc has filed applications with the United States Patent and
Trademark Office for the registration of the "Capital Trust Pass-through
Securities" and the "TRUPS" service marks.
The date of this Prospectus is , 1997.
<PAGE> 3
(continued from cover page)
The Exchange Capital Securities, the Exchange Subordinated Debt Securities
and Exchange Guarantee are being offered for exchange in order to satisfy
certain obligations of the Company and the Trust under the Registration Rights
Agreement dated as of April 24, 1997 (the "Registration Agreement") among the
Company, the Trust and Salomon Brothers Inc and Merrill Lynch, Pierce, Fenner &
Smith Incorporated (the "Initial Purchasers"). In the event that the Exchange
Offer is consummated, any Old Capital Securities which remain outstanding after
consummation of the Exchange Offer and the Exchange Capital Securities issued in
the Exchange Offer will vote together as a single class for purposes of
determining whether holders of the requisite percentage in outstanding
Liquidation Amount thereof have taken certain actions or exercised certain
rights under the Declaration (as defined herein).
The Exchange Securities and the Old Capital Securities (together, the
"Capital Securities") represent undivided beneficial interests in the assets of
the Trust. The Company is the owner of all of the common securities of the Trust
(the "Common Securities" and, collectively with the Capital Securities, the
"Trust Securities") representing undivided beneficial interests in the assets of
the Trust. Wilmington Trust Company is the Property Trustee and the Delaware
Trustee of the Trust. The Trust exists for the sole purposes of (i) issuing and
selling the Trust Securities and effecting the Exchange Offer for the Exchange
Capital Securities, (ii) investing the proceeds from the sale of the Old Capital
Securities and the Common Securities in the Old Subordinated Debt Securities,
(iii) exchanging the Old Subordinated Debt Securities for the Exchange
Subordinated Debt Securities and (iv) engaging in other activities necessary,
advisable or incidental thereto.
The Subordinated Debt Securities (as defined herein) will mature on April
15, 2027 (the "Stated Maturity Date"). The Subordinated Debt Securities and the
Guarantee (as defined herein) are unsecured obligations of the Company, and are
subordinate and junior in right of payment to certain other existing and future
indebtedness of the Company. See "Description of the Guarantee -- General" and
"Description of the Subordinated Debt Securities -- Subordination." The Capital
Securities will have a preference over the Common Securities under certain
circumstances with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise. See "Description of the Capital
Securities -- Subordination of Common Securities."
Except as described herein, the Capital Securities will be represented by
global Capital Securities in fully registered form, deposited with a custodian
for and registered in the name of a nominee of The Depository Trust Company
("DTC"). Beneficial interests in such Capital Securities will be shown on, and
transfers thereof will be effected through, records maintained by DTC and its
participants. See "Description of the Capital Securities -- Form, Denomination,
Book-Entry Procedures and Transfers."
Holders of the Trust Securities will be entitled to receive cumulative cash
distributions ("Distributions") at the annual rate of 8.56% of the liquidation
amount of $1,000 per Trust Security (the "Liquidation Amount") accumulating from
the date of original issuance (April 24, 1997) and payable (subject to the
extensions of Distribution payment periods described below) semiannually in
arrears on April 15 and October 15 of each year, commencing October 15, 1997. So
long as no Debenture Event of Default (as defined herein) has occurred and is
continuing, the Company will have the right to defer payments of interest on the
Subordinated Debt Securities at any time and from time to time for a period not
exceeding ten consecutive semiannual periods with respect to each deferral
period (each, an "Extension Period"), provided that no Extension Period may
extend beyond the Stated Maturity Date. Upon the termination of any such
Extension Period and the payment of all amounts then due, the Company may elect
to begin a new Extension Period, subject to the requirements set forth herein.
There could be multiple Extension Periods of varying lengths, each up to ten
consecutive semiannual periods, throughout the term of the Subordinated Debt
Securities. If and for so long as interest payments on the Subordinated Debt
Securities are so deferred, Distributions on the Trust Securities will also be
deferred and the Company will not be permitted, subject to certain exceptions
described herein, to declare or pay any cash distributions with respect to the
Company's capital stock (which includes common and preferred stock) or to make
any payment with respect to debt securities or certain guarantees of the
2
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(continued from cover page)
Company that rank pari passu with or junior to the Subordinated Debt Securities.
During an Extension Period, interest on the Subordinated Debt Securities will
continue to accrue (and the amount of Distributions to which holders of the
Trust Securities are entitled will continue to accumulate) at the rate of 8.56%
per annum, compounded semiannually, and holders of Trust Securities will be
required to accrue interest income for United States federal income tax purposes
prior to receipt of cash payments attributable to such interest income. See
"Description of the Subordinated Debt Securities -- Option to Extend Interest
Payment Period" and "Certain Federal Income Tax Consequences -- Interest Income
and Original Issue Discount."
The payment of Distributions on the Capital Securities out of moneys held
by the Trust and payments on liquidation of the Trust or the redemption of
Capital Securities, as set forth below, are guaranteed by the Company as
described herein. The Guarantee, when taken together with the Company's
obligations under the Declaration, the Subordinated Debt Securities and the
Indenture (each as defined herein), including its obligation to pay costs,
expenses, debts and other liabilities of the Trust (other than with respect to
the Trust Securities), provides a full and unconditional guarantee, on a
subordinated basis, by the Company of amounts due on the Capital Securities. See
"Relationship Among the Capital Securities, the Subordinated Debt Securities and
the Guarantee -- Full and Unconditional Guarantee." The Guarantee and the Common
Guarantee (as defined herein) will guarantee payments of Distributions and
payments on liquidation or redemption of the Trust Securities, but in each case
only to the extent that the Trust holds funds on hand legally available therefor
and has failed to make such payments, as described herein. See "Description of
the Guarantee." If the Company fails to make a required payment on the
Subordinated Debt Securities, the Trust will not have sufficient funds to make
the related payments, including Distributions, on the Trust Securities. The
Guarantee and the Common Guarantee will not cover any such payment when the
Trust does not have sufficient funds on hand legally available therefor. In such
event, a holder of Capital Securities may institute a legal proceeding directly
against the Company to enforce payment to such holder of accrued but unpaid
interest on Subordinated Debt Securities with a principal amount equal to the
Liquidation Amount of the Capital Securities held by such holder. See
"Description of the Subordinated Debt Securities -- Enforcement of Certain
Rights by Holders of Capital Securities." The obligations of the Company under
the Guarantee, the Common Guarantee and the Subordinated Debt Securities are
unsecured and subordinated and rank junior in right of payment to all present
and future Senior Indebtedness of the Company to the extent and in the manner
set forth in the Indenture and the Guarantees, respectively (as described in
"Description of the Guarantee -- General" and "Description of the Subordinated
Debt Securities -- Subordination").
The Subordinated Debt Securities are redeemable, in whole or in part, by
the Company at the Call Price (as defined herein), plus accrued and unpaid
interest to the date of redemption, on or after April 15, 2007 (the "Optional
Redemption"). In certain limited circumstances described herein, upon the
occurrence and continuance of a Tax Event or the occurrence of an Investment
Company Event (each as defined herein), the Subordinated Debt Securities also
are redeemable by the Company, in whole or in part at any time, at (i) the
Make-Whole Amount (as defined herein) in the case of a redemption upon the
occurrence of a Tax Event or an Investment Company Event prior to April 15,
2007, or (ii) the Call Price in the case of a redemption upon the occurrence of
a Tax Event or an Investment Company Event on or after April 15, 2007, in each
case together with accrued and unpaid interest thereon to the date of the
redemption (the Call Price payable upon an Optional Redemption and the price
specified in clauses (i) and (ii) being referred to herein as the "Redemption
Price" in relation to the Subordinated Debt Securities). Upon redemption by the
Company or at maturity of the Subordinated Debt Securities, the Trust must
redeem on a pro rata basis its Trust Securities having an aggregate Liquidation
Amount equal to the aggregate principal amount of the Subordinated Debt
Securities so redeemed or matured at a redemption price equal to (i) $1,000 per
Trust Security, if redeemed upon the maturity of the Subordinated Debt
Securities, (ii) in the case of a redemption prior to April 15, 2007 following
the occurrence of a Tax Event or an Investment Company Event, an amount per
Trust Security equal to the Make-Whole Amount for a corresponding $1,000
principal amount of the Subordinated Debt Securities or
3
<PAGE> 5
(continued from cover page)
(iii) in the case of any Optional Redemption of Subordinated Debt Securities or
a redemption on or after April 15, 2007 following the occurrence of a Tax Event
or an Investment Company Event, an amount per Trust Security equal to the
product of $1,000 and the applicable percentage used to determine the Call Price
for the Subordinated Debt Securities being redeemed, plus, in all cases, accrued
and unpaid Distributions on such Trust Securities to the date of redemption (the
price specified in clauses (i), (ii) and (iii) being referred to herein as the
"Redemption Price" in relation to the Trust Securities). See "Description of the
Capital Securities -- Redemption," "Description of the Capital Securities -- Tax
Event and Investment Company Event Redemption" and "Description of the
Subordinated Debt Securities -- Optional Redemption."
The Company, as the holder of all of the outstanding Common Securities, has
the right at any time to dissolve the Trust (including, without limitation, upon
the occurrence of a Tax Event or an Investment Company Event) and, after
satisfaction of liabilities to creditors of the Trust (to the extent not
satisfied by the Company), cause the Subordinated Debt Securities to be
distributed to the holders of the Trust Securities, on a pro rata basis, in
accordance with the aggregate Liquidation Amount thereof, in liquidation of the
Trust.
In the event of the voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust, other than in connection with a
redemption or the maturity of Subordinated Debt Securities (as described above),
after satisfaction of liabilities to creditors of the Trust (to the extent not
satisfied by the Company), the holders of the Capital Securities generally will
be entitled to receive the stated Liquidation Amount thereof plus accrued and
unpaid Distributions thereon to the date of payment, unless, in connection with
such dissolution, the Subordinated Debt Securities held by the Trust are
distributed to the holders of the Trust Securities. The holders of the Common
Securities will be entitled to receive distributions upon any liquidation pro
rata with the holders of the Capital Securities, except that if a Debenture
Event of Default has occurred and is continuing, the Capital Securities shall
have a priority over the Common Securities. See "Description of the Capital
Securities -- Liquidation of the Trust and Distribution of Subordinated Debt
Securities."
Based on existing interpretations by the staff of the Securities and
Exchange Commission (the "Commission") set forth in several no-action letters to
third parties and subject to the two immediately following sentences, the
Company and the Trust believe that the Exchange Capital Securities, the Exchange
Guarantee and the Exchange Subordinated Debt Securities issued pursuant to the
Exchange Offer may be offered for resale, resold and otherwise transferred by a
holder thereof (other than a holder who is a broker-dealer) without further
compliance with the registration and prospectus delivery requirements of the
Securities Act; provided, that, such Exchange Capital Securities are acquired in
the ordinary course of such holder's business and such holder is not
participating, and has no arrangement or understanding with any person to
participate, in a distribution (within the meaning of the Securities Act) of the
Exchange Capital Securities. However, any holder of Old Capital Securities who
is an "affiliate" of the Trust or the Company or who intends to participate in
the Exchange Offer for the purpose of distributing Exchange Capital Securities,
or any broker-dealer who purchased Old Capital Securities from the Trust to
resell pursuant to Rule 144A under the Securities Act ("Rule 144A") or any other
available exemption under the Securities Act, (i) will not be able to rely on
the interpretations of the staff of the Commission set forth in the
above-mentioned no-action letters, (ii) will not be permitted or entitled to
tender such Old Capital Securities in the Exchange Offer and (iii) must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any sale or other transfer of such Old Capital Securities
unless such sale is made pursuant to an exemption from such requirements. In
addition, as described below, if any broker-dealer holds Old Capital Securities
acquired for its own account as a result of market-making or other trading
activities and exchanges such Old Capital Securities for Exchange Capital
Securities, then such broker-dealer must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of such
Exchange Capital Securities.
4
<PAGE> 6
(continued from cover page)
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for Exchange Capital Securities in the Exchange Offer will be
required to represent that (i) it is not an "affiliate" of the Trust or the
Company, (ii) any Exchange Capital Securities to be received by it are being
acquired in the ordinary course of its business and (iii) it has no arrangement
or understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such Exchange Capital Securities. Each
broker-dealer that receives Exchange Capital Securities for its own account
pursuant to the Exchange Offer must acknowledge that it acquired the Old Capital
Securities for its own account as the result of market-making activities or
other trading activities and must agree that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such Exchange Capital Securities. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
Based on the position taken by the staff of the Commission in the no-action
letters referred to above, the Company and the Trust believe that broker-dealers
who acquired Old Capital Securities for their own accounts as a result of
market-making activities or other trading activities may fulfill their
prospectus delivery requirements with respect to the Exchange Capital Securities
received upon exchange of such Old Capital Securities (other than Old Capital
Securities which represent an unsold allotment from the original sale of the Old
Capital Securities) with the prospectus prepared for the Exchange Offer so long
as it contains a description of the plan of distribution with respect to the
resale of such Exchange Capital Securities. Accordingly, subject to certain
provisions set forth in the Registration Agreement, the Company and the Trust
have agreed that this Prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with resales of such
Exchange Capital Securities for a period commencing on the Expiration Date and
ending 90 days after the Expiration Date (subject to extension in certain
limited circumstances set forth in the Registration Agreement) or, if earlier,
when all such Exchange Capital Securities have been disposed of by such
broker-dealer. See "Plan of Distribution." Any broker-dealer who is an
"affiliate" of the Trust or the Company may not rely on such no-action letters
and must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction. See "The Exchange
Offer -- Resales of Exchange Capital Securities."
Each broker-dealer who surrenders Old Capital Securities pursuant to the
Exchange Offer will be deemed to have agreed, by execution of the Letter of
Transmittal, that, upon receipt of notice from the Company or the Trust of the
occurrence of any event or the discovery of any fact which makes any statement
contained or incorporated by reference in this Prospectus untrue in any material
respect or which causes this Prospectus to omit to state a material fact
necessary in order to make the statements contained or incorporated by reference
herein, in light of the circumstances under which they were made, not misleading
or of the occurrence of certain other events specified in the Registration
Agreement, such broker-dealer will suspend the sale of Exchange Capital
Securities (or the Exchange Subordinated Debt Securities, as applicable)
pursuant to this Prospectus until the Company and the Trust have amended or
supplemented this Prospectus to correct such misstatement or omission and have
furnished copies of the amended or supplemented Prospectus to such broker-dealer
or the Company and the Trust have given notice that the sale of the Exchange
Capital Securities (or the Exchange Subordinated Debt Securities, as applicable)
may be resumed.
Neither the Company nor the Trust has sought its own interpretive letter
and there can be no assurance that the staff of the Commission would make a
similar determination with respect to the Exchange Offer as it has in such
no-action letters to third parties.
Prior to the Exchange Offer, there has been only a limited secondary market
and no public market for the Old Capital Securities. The Exchange Capital
Securities will be a new issue of securities for which there currently is no
market. Although each Initial Purchaser has informed the Company that it
currently intends to make a market in the Exchange Capital Securities, it is not
obligated to do so, and any such market-making may be discontinued at any time
without notice. Accordingly, there can be no assurance
5
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(continued from cover page)
as to the development or liquidity of any market for the Exchange Capital
Securities. The Company and the Trust do not currently intend to apply for
listing of the Exchange Capital Securities on the New York Stock Exchange.
Any Old Capital Securities not tendered and accepted in the Exchange Offer
will remain outstanding and will be entitled to all the same rights and will be
subject to the same limitations applicable to the Old Capital Securities under
the Declaration (except for those rights which terminate upon consummation of
the Exchange Offer). Following consummation of the Exchange Offer, the holders
of Old Capital Securities will continue to be subject to all of the existing
restrictions upon transfer thereof and neither the Company nor the Trust will
have any further obligation to such holders (other than under certain limited
circumstances) to provide for registration under the Securities Act of the Old
Capital Securities held by them. To the extent that Old Capital Securities are
tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered Old Capital Securities could be adversely affected. See "Risk
Factors -- Consequences of a Failure to Exchange Old Capital Securities."
THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE URGED TO READ THIS PROSPECTUS
AND THE LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR
OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.
Old Capital Securities may be tendered for exchange prior to 5:00 p.m., New
York City time, on , 1997 (such time and date being hereinafter
called the "Expiration Date"), unless the Exchange Offer is extended by the
Company and the Trust (in which case the term "Expiration Date" shall mean the
latest date and time to which the Exchange Offer is extended). Tenders of Old
Capital Securities may be withdrawn at any time prior to 5:00 p.m., New York
City time, on the Expiration Date. The Exchange Offer is not conditioned upon
any minimum Liquidation Amount of Old Capital Securities being tendered for
exchange. However, the Exchange Offer is subject to certain events and
conditions which may be waived by the Company or the Trust and to the terms and
provisions of the Registration Agreement. Old Capital Securities may be tendered
in whole or in part having a Liquidation Amount of not less than $100,000 (100
Old Capital Securities) or any integral multiple of $1,000 Liquidation Amount
(one Old Capital Security) in excess thereof. The Company has agreed to pay all
expenses of the Exchange Offer. See "The Exchange Offer -- Fees and Expenses."
Each Exchange Capital Security will pay cumulative Distributions from the most
recent Distribution Date (as defined herein) on the Old Capital Securities
surrendered in exchange for such Exchange Capital Securities or, if no
Distribution Date has occurred, from April 24, 1997. Holders of the Old Capital
Securities whose Old Capital Securities are accepted for exchange will not
receive accumulated Distributions on such Old Capital Securities for any period,
and will be deemed to have waived the right to receive such Distributions. See
"Risk Factors--Consequences of a Failure to Exchange Old Capital Securities."
This Prospectus, together with the Letter of Transmittal, is being sent to all
registered holders of Old Capital Securities as of the date of this Prospectus.
Neither the Company nor the Trust will receive any cash proceeds from the
issuance of the Exchange Capital Securities offered hereby. No dealer-manager is
being used in connection with this Exchange Offer. See "Use of Proceeds from
Sale of Old Capital Securities" and "Plan of Distribution."
As used herein, (i) the "Indenture" means the Indenture, dated as of April
24, 1997, as amended and supplemented from time to time, between the Company and
Wilmington Trust Company, as trustee (the "Debenture Trustee"), relating to the
Subordinated Debt Securities, (ii) the "Declaration" means the Amended and
Restated Declaration of Trust relating to the Trust among the Company, as
Sponsor, Wilmington Trust Company, as Property Trustee (the "Property Trustee"),
Wilmington Trust Company, as Delaware Trustee (the "Delaware Trustee"), the
Administrative Trustees named therein (collectively, with the Property Trustee
and Delaware Trustee, the "Issuer Trustees"), (iii) the "Old Guarantee" means
the Guarantee dated as of April 24, 1997 relating to the Old Capital Securities
between the
6
<PAGE> 8
(continued from cover page)
Company and Wilmington Trust Company, as trustee (the "Guarantee Trustee"), (iv)
the "Common Guarantee" means the Guarantee relating to the Common Securities by
the Company, and (v) "Exchange Guarantee" means the Guarantee to be entered into
between the Company and the Guarantee Trustee in respect of the Capital
Securities. In addition, as the context may require, unless expressly indicated
otherwise, (i) "Capital Securities" includes the Old Capital Securities and the
Exchange Capital Securities, (ii) "Subordinated Debt Securities" includes the
Old Subordinated Debt Securities and the Exchange Subordinated Debt Securities,
(iii) "Guarantee" includes the Old Guarantee and the Exchange Guarantee and (iv)
"Guarantees" includes the Guarantee and the Common Guarantee.
7
<PAGE> 9
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE TRUST. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY
SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY
PERSON IN ANY JURISDICTION WHERE SUCH OFFER WOULD BE UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
AFFAIRS OF THE COMPANY OR THE TRUST SINCE THE DATE HEREOF.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information....................................... 9
Incorporation of Certain Documents by Reference............. 9
Summary..................................................... 10
Risk Factors................................................ 18
Use of Proceeds from Sale of Old Capital Securities......... 23
Ratios of Earnings to Fixed Charges......................... 23
Capitalization.............................................. 24
The Company................................................. 25
The Trust................................................... 25
The Exchange Offer.......................................... 26
Description of the Capital Securities....................... 35
Description of the Guarantee................................ 51
Description of the Subordinated Debt Securities............. 54
Description of the Old Securities........................... 62
Relationship Among the Capital Securities, the Subordinated
Debt Securities and the Guarantee......................... 63
Certain Federal Income Tax Consequences..................... 65
ERISA Considerations........................................ 68
Plan of Distribution........................................ 70
Legal Matters............................................... 70
Experts..................................................... 71
</TABLE>
8
<PAGE> 10
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Commission. Such reports
and other information concerning the Company can be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and at the Commission's Regional
Offices at Seven World Trade Center, 13th Floor, New York, New York 10048, and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can be obtained from the Public Reference Room of the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at
prescribed rates. The Commission maintains a Web site that contains reports,
proxy and information statements and other materials that are filed through the
Commission's Electronic Data Gathering Analysis and Retrieval System. The Web
site can be accessed at http://www.sec.gov. In addition, similar information
concerning the Company can be inspected at the New York Stock Exchange, 20 Broad
Street, New York, New York 10005.
No separate financial statements of the Trust have been included herein.
The Company does not consider that such financial statements would be material
to holders of the Capital Securities because (i) all of the voting securities of
the Trust are owned, directly or indirectly, by the Company, a reporting company
under the Exchange Act and (ii) the Trust is a newly formed special purpose
entity that has no independent operations and exists for the sole purpose of
issuing securities representing undivided beneficial interests in the assets of
the Trust and holding as trust assets the Subordinated Debt Securities issued by
the Company. See "Description of the Subordinated Debt Securities." In addition,
the Company does not expect that the Trust will file reports, proxy statements
or other information under the Exchange Act with the Commission.
This Prospectus constitutes a part of a registration statement on Form S-4
(the "Registration Statement") filed by the Company and the Trust with the
Commission under the Securities Act. This Prospectus does not contain all the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission, and
reference is hereby made to the Registration Statement and to the exhibits
relating thereto for further information with respect to the Company, the Trust
and the Exchange Securities. Any statements contained herein concerning the
provisions of any document are not necessarily complete, and, in each instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996, as amended by Amendment No. 1 thereto, filed by the Company with the
Commission (File No. 1-6446) on March 12, 1997, its Quarterly Report on Form
10-Q for the quarter ended March 31, 1997 and its Current Reports on Form 8-K
filed with the Commission on January 23 and 28, 1997, are incorporated herein by
reference.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering made hereby shall be incorporated by reference into
this Prospectus and shall be deemed to be a part of this Prospectus from the
date of filing of such documents. See "Available Information." Any statement
contained in a document incorporated by reference herein shall be deemed to be
modified or superseded to the extent that a statement contained in this
Prospectus or any supplement hereto or in any other subsequently filed
incorporated document, modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus. As used herein, the terms "Prospectus"
and "herein" mean this Prospectus, including the documents incorporated or
deemed to be incorporated herein by reference, as the same may be amended,
supplemented or otherwise modified from time to time. The Company will provide,
upon written or oral request, without charge, to each person to whom a copy of
this Prospectus has been delivered, a copy of any or all of the documents which
have been or may be incorporated in this Prospectus by reference, other than
certain exhibits to such documents. Requests for such copies should be directed
to: K N Energy, Inc., 370 Van Gordon Street, P.O. Box 281304, Lakewood, CO
80228-8304, Attention: Treasurer. In order to ensure timely delivery of
documents, any such request should be made by , 1997.
9
<PAGE> 11
SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere or incorporated by reference in this
Prospectus.
K N CAPITAL TRUST I
The Trust is a statutory business trust created under Delaware law pursuant
to (i) the Declaration executed by the Company, as Sponsor, Wilmington Trust
Company, as Property Trustee and as Delaware Trustee, and the individual
Administrative Trustees named therein, and (ii) the filing of a certificate of
trust with the Delaware Secretary of State on April 4, 1997. The Trust's
business and affairs are conducted by the Issuer Trustees, the Property Trustee,
the Delaware Trustee and the three individual Administrative Trustees who are
employees and officers of the Company. The Trust exists for the exclusive
purposes of (i) issuing and selling the Trust Securities and effecting the
Exchange Offer for the Exchange Capital Securities, (ii) using the proceeds from
the sale of the Trust Securities to acquire the Old Subordinated Debt Securities
issued by the Company, (iii) exchanging the Old Subordinated Debt Securities for
the Exchange Subordinated Debt Securities and (iv) engaging in only those other
activities necessary, advisable or incidental thereto. Accordingly, the
Subordinated Debt Securities will be the sole assets of the Trust, and payments
under the Subordinated Debt Securities will be the sole revenues of the Trust.
All of the Common Securities will be owned by the Company. The principal place
of business of the Trust is c/o K N Energy, Inc., 370 Van Gordon Street,
Lakewood, Colorado 80228, and its telephone number is (303) 989-1740.
THE COMPANY
The Company is an integrated energy services company with operations that
include natural gas gathering, processing, marketing, field services, storage,
transportation and energy commodity sales of natural gas and natural gas liquids
("NGLs") and power marketing. The Company also sells innovative products and
services, such as its Simple Choice(SM) menu of products and call center
services designed for consumers, utilities and commercial entities. The Company
has operations in nine states in the Rocky Mountain and Mid-Continent regions.
K N is a Kansas corporation which commenced operations in 1936. Executive
offices of K N are located at 370 Van Gordon Street, Lakewood, Colorado 80228,
and its telephone number is (303) 989-1740. As used herein, and unless the
context otherwise requires, "K N" and the "Company" refer to K N Energy, Inc.
and its subsidiaries.
THE EXCHANGE OFFER
The Exchange Offer......... Up to $100,000,000 aggregate Liquidation Amount of
Exchange Capital Securities are being offered in
exchange for a like aggregate Liquidation Amount of
Old Capital Securities. Old Capital Securities may
be tendered for exchange in whole or in part in a
Liquidation Amount of $100,000 (100 Old Capital
Securities) or any integral multiple of $1,000 in
excess thereof. The Company and the Trust are
making the Exchange Offer in order to satisfy their
obligations under the Registration Agreement
relating to the Old Securities. For a description
of the procedures for tendering Old Capital
Securities, see "The Exchange Offer -- Procedures
for Tendering Old Capital Securities."
Expiration Date............ 5:00 p.m., New York City time, on ,1997
unless the Exchange Offer is extended by the
Company and the Trust, in which case the term
"Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended. See
"The Exchange Offer -- Expiration Date; Extensions;
Amendments."
10
<PAGE> 12
Conditions to the Exchange
Offer.................... The Exchange Offer is subject to certain
conditions, which may be waived by the Company and
the Trust in their sole discretion. The Exchange
Offer is not conditioned upon any minimum
Liquidation Amount of Old Capital Securities being
tendered. See "The Exchange Offer -- Conditions to
the Exchange Offer."
The Company and the Trust reserve the right in
their sole and absolute discretion, subject to
applicable law, at any time and from time to time,
(i) to delay the acceptance of the Old Capital
Securities for exchange, (ii) to terminate the
Exchange Offer if certain specified conditions have
not been satisfied, (iii) to extend the Expiration
Date of the Exchange Offer and to retain all Old
Capital Securities tendered pursuant to the
Exchange Offer, subject, however, to the right of
holders of Old Capital Securities to withdraw their
tendered Old Capital Securities, or (iv) to waive
any condition or otherwise amend the terms of the
Exchange Offer in any respect. See "The Exchange
Offer -- Expiration Date; Extensions; Amendments."
Withdrawal Rights.......... Tenders of Old Capital Securities may be withdrawn
at any time prior to 5:00 p.m., New York City time,
on the Expiration Date by delivering a written
notice of such withdrawal to the Exchange Agent in
conformity with certain procedures set forth below
under "The Exchange Offer -- Procedures for
Tendering Old Capital Securities -- Withdrawal of
Tenders."
Procedures for Tendering Old
Capital Securities....... Tendering holders of Old Capital Securities must
complete and sign a Letter of Transmittal in
accordance with the instructions contained therein
and forward the same by mail, facsimile or hand
delivery, together with any other required
documents, to the Exchange Agent, either with the
Old Capital Securities to be tendered or in
compliance with the specified procedures for
guaranteed delivery of such Old Capital Securities.
Certain brokers, dealers, commercial banks, trust
companies and other nominees may also effect
tenders by book-entry transfer. Holders of Old
Capital Securities registered in the name of a
broker, dealer, commercial bank, trust company or
other nominee are urged to contact such person
promptly if they wish to tender Old Capital
Securities pursuant to the Exchange Offer. See "The
Exchange Offer -- Procedures for Tendering Old
Capital Securities."
Letters of Transmittal and certificates
representing Old Capital Securities should not be
sent to the Company or the Trust. Such documents
should only be sent to the Exchange Agent.
Questions regarding how to tender and requests for
information should be directed to the Exchange
Agent. See "The Exchange Offer -- Exchange Agent."
Resales of Exchange
Securities................. Based on existing interpretations by the staff of
the Commission and subject to the two immediately
following sentences, the Company and the Trust
believe that the Exchange Capital Securities, the
Exchange Guarantee and, after the distribution
thereof to the holders of the Capital Securities,
the Exchange Subordinated Debt Securities issued
pursuant to the Exchange Offer may be offered for
resale,
11
<PAGE> 13
resold and transferred by a holder thereof (other
than a holder who is a broker-dealer) without
further compliance with the registration and
prospectus requirements of the Securities Act,
provided that such Exchange Capital Securities are
acquired in the ordinary course of such holder's
business and such holder is not participating, and
has no arrangement or understanding with any person
to participate, in a distribution (within the
meaning of the Securities Act) of the Exchange
Capital Securities. However, any holder of Old
Capital Securities who is an "affiliate" of the
Trust or the Company or who intends to participate
in the Exchange Offer for the purpose of
distributing the Exchange Capital Securities, or
any broker-dealer who purchased the Old Capital
Securities from the Trust to resell pursuant to
Rule 144A or any other available exemption under
the Securities Act, (i) will not be able to rely on
the interpretations of the staff of the Commission
set forth in the above-mentioned no-action letters,
(ii) will not be permitted or entitled to tender
such Old Capital Securities in the Exchange Offer
and (iii) must comply with the registration and
prospectus delivery requirements of the Securities
Act in connection with any sale or other transfer
of such Old Capital Securities unless such sale is
made pursuant to an exemption from such
requirements. In addition, as described below, if
any broker-dealer holds Old Capital Securities
acquired for its own account as a result of
market-making or other trading activities and
exchanges such Old Capital Securities for Exchange
Capital Securities, then such broker-dealer must
deliver a prospectus meeting the requirements of
the Securities Act in connection with any resales
of such Exchange Capital Securities.
Each holder of Old Capital Securities who wishes to
exchange Old Capital Securities for Exchange
Capital Securities in the Exchange Offer will be
required to represent that (i) it is not an
"affiliate" of the Trust or the Company, (ii) any
Exchange Capital Securities to be received by it
are being acquired in the ordinary course of its
business and (iii) it has no arrangement or
understanding with any person to participate in a
distribution (within the meaning of the Securities
Act) of such Exchange Capital Securities. Each
broker-dealer that receives Exchange Capital
Securities for its own account pursuant to the
Exchange Offer must acknowledge that it acquired
the Old Capital Securities for its own account as
the result of market-making activities or other
trading activities and must agree that it will
deliver a prospectus meeting the requirements of
the Securities Act in connection with any resale of
such Exchange Capital Securities. The Letter of
Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not
be deemed to admit that it is an "underwriter"
within the meaning of the Securities Act. Based on
the position taken by the staff of the Commission
in the no- action letters referred to above, the
Company and the Trust believe that broker-dealers
who acquired Old Capital Securities for their own
accounts as a result of market-making activities or
other trading activities may fulfill their
prospectus delivery requirements with respect to
the Exchange Capital Securities received upon
exchange of such Old Capital Securities (other than
Old Capital Securities which represent an unsold
allotment from the original sale of the Old Capital
Securities) with the prospectus prepared for the
Exchange Offer so
12
<PAGE> 14
long as it contains a description of the plan of
distribution with respect to the resale of such
Exchange Capital Securities. Accordingly, subject
to certain provisions set forth in the Registration
Agreement and to the limitations described below
under "The Exchange Offer -- Resales of Exchange
Capital Securities," the Company and the Trust have
agreed that this Prospectus, as it may be amended
or supplemented from time to time, may be used by a
broker-dealer in connection with the resales of
such Exchange Capital Securities for a period
commencing on the Expiration Date and ending 90
days after the Expiration Date (subject to
extension as described in the Registration
Agreement) or if earlier, when all such Exchange
Capital Securities have been disposed of by such
broker-dealer. See "Plan of Distribution." Any
broker-dealer who is an "affiliate" of the Company
or the Trust may not rely on such no-action letters
and must comply with the registration and
prospectus delivery requirements of the Securities
Act in connection with any resale transaction. See
"The Exchange Offer -- Resales of Exchange Capital
Securities."
Neither the Company nor the Trust has sought its
own interpretive letter and there can be no
assurance that the staff of the Commission would
make a similar determination with respect to the
Exchange Offer as it has in such no-action letters
to third parties.
Exchange Agent............. The exchange agent with respect to the Exchange
Offer is Wilmington Trust Company (the "Exchange
Agent"). The addresses, and telephone and facsimile
numbers, of the Exchange Agent are set forth in
"The Exchange Offer -- Exchange Agent" and in the
Letter of Transmittal.
Use of Proceeds............ Neither the Company nor the Trust will receive any
cash proceeds from the issuance of the Exchange
Capital Securities offered hereby. See "Use of
Proceeds from Sale of Old Capital Securities."
Certain Federal Income Tax
Consequences............. Holders of Old Capital Securities should review the
information set forth under "Certain Federal Income
Tax Consequences" prior to tendering Old Capital
Securities in the Exchange Offer.
THE EXCHANGE SECURITIES
Securities Offered......... Up to $100,000,000 aggregate Liquidation Amount of
the Trust's 8.56% Series B Capital Trust
Pass-through Securities(SM) which have been
registered under the Securities Act (Liquidation
Amount $1,000 per Capital Security). The Exchange
Capital Securities will be issued, and the Old
Capital Securities were issued, under the
Declaration. The Exchange Capital Securities and
any Old Capital Securities which remain outstanding
after consummation of the Exchange Offer will
constitute a single class of Capital Securities
under the Declaration and, accordingly, will vote
together for purposes of determining whether
holders of the requisite percentage in outstanding
Liquidation Amount thereof have taken certain
actions or exercised certain rights under the
Declaration. See "Description of the Capital
Securities -- General." The terms of the Exchange
Capital Securities are identical in all material
respects to the terms of the Old Capital
13
<PAGE> 15
Securities, except that the Exchange Capital
Securities have been registered under the
Securities Act and therefore are not subject to
certain restrictions on transfer applicable to the
Old Capital Securities and will not provide for any
increase in the Distribution rate thereon. See "The
Exchange Offer -- Purpose and Effect of the
Exchange Offer," "Description of the Capital
Securities" and "Description of the Old
Securities."
General.................... The Exchange Capital Securities will represent
undivided beneficial interests in the Trust's
assets, which consist solely of Subordinated Debt
Securities. The Subordinated Debt Securities mature
on April 15, 2027, unless the Subordinated Debt
Securities are redeemed by the Company prior to
such maturity as described under "Description of
the Capital Securities -- Redemption" and
"Description of the Capital Securities -- Tax Event
and Investment Company Event Redemption."
Distributions.............. The Distributions payable on the Exchange Capital
Securities will be fixed at a rate per annum of
8.56% of the Liquidation Amount of $1,000 per
Capital Security and will accumulate from the date
of original issuance of the Old Capital Securities,
April 24, 1997, and (subject to the extensions of
Distribution payment periods described below) will
be payable semiannually, in arrears, on April 15
and October 15 of each year, commencing October 15,
1997. See "Description of the Capital
Securities -- Distributions."
Option to Extend Interest
Payment Period........... So long as no Debenture Event of Default has
occurred and is continuing, Distributions on the
Trust Securities may be deferred for the duration
of any Extension Period elected by the Company with
respect to the payment of interest on the
Subordinated Debt Securities. No Extension Period
may exceed ten consecutive semiannual periods or
extend beyond the Stated Maturity Date. See
"Description of the Subordinated Debt
Securities -- Option to Extend Interest Payment
Period" and "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue
Discount."
Liquidation................ The Company, as holder of the Common Securities,
will have the right at any time to dissolve the
Trust (including, without limitation, upon the
occurrence of a Tax Event or an Investment Company
Event), and cause the Subordinated Debt Securities
to be distributed to the holders of the Trust
Securities on a pro rata basis in liquidation of
the Trust. In addition, the Trust will be
automatically dissolved under certain other
circumstances. See "Description of the Capital
Securities -- Liquidation of the Trust and
Distribution of Subordinated Debt Securities."
Liquidation Amount......... In the event of the voluntary or involuntary
dissolution of the Trust, the Trust shall be
liquidated by the Administrative Trustees as
expeditiously as possible by distributing, after
satisfaction of liabilities to creditors of the
Trust as provided by applicable law (to the extent
not satisfied by the Company), to the holders of
the Trust Securities a Like Amount (as defined
herein) of the Subordinated Debt Securities. In the
event such holders do not receive a Like Amount of
Subordinated Debt Securities, such holders will be
entitled to receive
14
<PAGE> 16
out of the assets of the Trust legally available
for distribution, after satisfaction of liabilities
to creditors of the Trust (to the extent not
satisfied by the Company), an amount equal to the
aggregate of the Liquidation Amount plus
accumulated and unpaid Distributions thereon to the
date of payment (such amount being the "Liquidation
Distribution"). If the Liquidation Distribution can
be paid only in part because the Trust has
insufficient assets on hand legally available to
pay in full the aggregate Liquidation Distribution,
then the amounts payable directly by the Trust on
the Capital Securities and the Common Securities
shall be paid on a pro rata basis, except that if a
Debenture Event of Default has occurred and is
continuing, the Capital Securities shall have a
priority over the Common Securities. See
"Description of the Capital
Securities -- Subordination of Common Securities."
Redemption of Trust
Securities................. Upon the repayment of the Subordinated Debt
Securities, whether at maturity or upon early
redemption as provided in the Indenture, the
proceeds from such repayment will be applied by the
Property Trustee to redeem a Like Amount of Trust
Securities, upon the terms and conditions described
herein. See "Description of the Capital
Securities -- Redemption."
Optional Redemption of
Subordinated Debt
Securities............... K N has the right to redeem the Subordinated Debt
Securities on or after April 15, 2007, in whole at
any time or in part from time to time, subject to
the conditions described in "Description of the
Subordinated Debt Securities -- Optional
Redemption," at the Call Prices described herein,
together with accrued and unpaid interest to the
date of redemption. Upon the redemption of the
Subordinated Debt Securities, the proceeds of such
redemption will be applied by the Property Trustee
to redeem a Like Amount of the Trust Securities pro
rata at the applicable Redemption Price and upon
the terms and conditions described herein. See
"Description of the Capital
Securities -- Redemption."
Tax Event and Investment
Company Event
Redemption............... If at any time a Tax Event occurs and is
continuing, the Company may, within 90 days of the
occurrence of such Tax Event, redeem the
Subordinated Debt Securities in whole or in part at
the Make-Whole Amount, if such event occurs prior
to April 15, 2007, or at the Call Price (as
described herein) if such event occurs on or after
April 15, 2007, in each case together with accrued
and unpaid interest thereon to the date of
redemption. If an Investment Company Event occurs,
the Company may, within 90 days of the occurrence
of such Investment Company Event, redeem the
Subordinated Debt Securities in whole or in part at
the Make-Whole Amount, if such event occurs prior
to April 15, 2007, or at the Call Price, if such
event occurs on or after April 15, 2007, in each
case together with accrued and unpaid interest
thereon to the date of redemption. See "Description
of the Capital Securities -- Tax Event and
Investment Company Event Redemption." Upon the
redemption of the Subordinated Debt Securi-
15
<PAGE> 17
ties, the proceeds of such redemption will be
applied by the Property Trustee to redeem a Like
Amount of the Trust Securities pro rata at the
applicable Redemption Price, upon the terms and
conditions described herein. See "Description of
the Capital Securities -- Redemption."
The Guarantee.............. The payment of Distributions out of moneys held by
the Trust, payments upon liquidation of the Trust
and payments upon the redemption of the Capital
Securities are guaranteed by the Company as
described under "Description of the Guarantee." The
Guarantee covers payments of Distributions and
other payments on the Capital Securities only if
and to the extent that the Trust has funds
available therefor, which funds will not be
available except to the extent that the Company has
made payments of interest (or premium, if any) or
principal or other payments on the Subordinated
Debt Securities. The Guarantee, when taken together
with the Company's obligations under the
Subordinated Debt Securities, the Declaration and
the Indenture, including its obligation to pay
costs, expenses, debts and other liabilities of the
Trust (other than with respect to the Trust
Securities), provides a full and unconditional
guarantee, on a subordinated basis, by the Company
of amounts due on the Capital Securities.
Ranking.................... The Exchange Capital Securities will rank pari
passu, and payments thereon will be made pro rata,
with the Old Capital Securities and the Common
Securities except as described under "Description
of the Capital Securities -- Subordination of
Common Securities." The Exchange Subordinated Debt
Securities will be unsecured and subordinate and
rank junior in right of payment to all Senior
Indebtedness to the extent and in the manner set
forth in the Indenture. See "Description of the
Subordinated Debt Securities -- General." The
Exchange Guarantee will constitute an unsecured
obligation of the Company and will be subordinate
and rank junior in right of payment to all Senior
Indebtedness to the extent and in the manner set
forth in the Exchange Guarantee. See "Description
of the Guarantee."
Voting Rights.............. Holders of Exchange Capital Securities will have
limited voting rights and, so long as no Debenture
Event of Default has occurred and is continuing,
will not be entitled to vote to appoint, remove or
replace, or to increase or decrease the number of,
Issuer Trustees, which voting rights are vested
exclusively in the holder of the Common Securities.
Holders of the Exchange Capital Securities will not
be entitled to appoint, remove or replace the
Administrative Trustees. See "Description of the
Capital Securities -- Voting Rights; Amendment of
the Declaration" and "-- Removal of Issuer
Trustees; Appointment of Successors."
Ratings.................... The Exchange Capital Securities are expected to
retain the "baa1" issued by Moody's Investors
Service, Inc., the "BBB" issued by Standard and
Poor's Rating Services and the "A-" issued by Fitch
Investors Service, Inc. in respect of the Old
Capital Securities. A security rating is not a
recommendation to buy, sell or hold securities and
may be subject to revision or withdrawal at any
time by the assigning rating organization.
16
<PAGE> 18
Absence of Market for the
Exchange Capital
Securities............... The Exchange Capital Securities will be a new issue
of securities for which there currently is no
market. Although each of the Initial Purchasers of
the Old Capital Securities has informed KN that it
currently intends to make a market in the Exchange
Capital Securities, it is not obligated to do so,
and any such market making may be discontinued at
any time without notice. Accordingly, there can be
no assurance as to the development or liquidity of
any market for the Exchange Capital Securities. The
Trust and the Company do not currently intend to
apply for listing of the Exchange Capital
Securities on the New York Stock Exchange.
For additional information with respect to the Exchange Securities, see
"Description of the Capital Securities," "Description of the Subordinated Debt
Securities," "Description of the Guarantee" and "Certain Federal Income Tax
Consequences."
RISK FACTORS
Holders tendering Old Capital Securities in the Exchange Offer should
carefully consider the matters set forth under "Risk Factors."
17
<PAGE> 19
RISK FACTORS
Holders of Old Capital Securities should carefully review the information
contained elsewhere in this Prospectus and should particularly consider the
following matters in evaluating the Exchange Offer.
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE GUARANTEE AND SUBORDINATED DEBT
SECURITIES
The obligations of the Company under the Guarantee and under the
Subordinated Debt Securities are unsecured and subordinate and rank junior in
right of payment to all present and future Senior Indebtedness of the Company to
the extent and in the manner set forth in the Indenture and the Guarantee,
respectively. No payment may be made of the principal of, or premium, if any, or
interest on the Subordinated Debt Securities, or in respect of any redemption,
retirement, purchase or other acquisition of any of the Subordinated Debt
Securities, at any time when (i) there shall have occurred and be continuing a
default in any payment in respect of any Senior Indebtedness, or there has been
an acceleration of the maturity thereof because of a default or (ii) in the
event of the acceleration of the maturity of the Subordinated Debt Securities,
until payment has been made on all Senior Indebtedness. As of December 31, 1996,
Senior Indebtedness of the Company aggregated approximately $580 million. There
are no terms in the Capital Securities, the Subordinated Debt Securities or the
Guarantee that limit the Company's ability to incur additional indebtedness,
including indebtedness which ranks senior to the Subordinated Debt Securities
and the Guarantee. See "Description of the Guarantee -- Status of the Guarantee"
and "Description of the Subordinated Debt Securities -- Subordination."
CONSEQUENCES OF HIGHLY LEVERAGED TRANSACTION
The Indenture does not contain provisions that afford holders of the
Subordinated Debt Securities protection in the event of a highly leveraged
transaction, including a change of control or other similar transactions
involving the Company that may adversely affect such holders. See "Description
of the Subordinated Debt Securities -- General."
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSIDERATIONS
So long as no Debenture Event of Default shall have occurred and be
continuing, the Company shall have the right under the Indenture to defer
payments of interest on the Subordinated Debt Securities at any time or from
time to time for a period not exceeding ten consecutive semiannual periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity Date. Upon any such deferral, semiannual
Distributions on the Trust Securities by the Trust will be deferred (and the
amount of Distributions to which holders of the Trust Securities are entitled
will accumulate Distributions thereon at the rate of 8.56% per annum, compounded
semiannually, to the extent permitted by applicable law, from the relevant
payment date for such Distributions) during any such Extension Period.
The Company may extend any existing Extension Period, provided that such
extension does not cause such Extension Period to exceed ten consecutive
semiannual periods or to extend beyond the Stated Maturity Date. Upon the
expiration of any Extension Period and the payment of all interest then accrued
and unpaid on the Subordinated Debt Securities (together with interest thereon
at the annual rate of 8.56%, compounded semiannually, to the extent permitted by
applicable law), the Company may elect to begin a new Extension Period, subject
to the above requirements. There is no limitation on the number of times that
the Company may elect to begin an Extension Period. See "Description of the
Capital Securities -- Distributions" and "Description of the Subordinated Debt
Securities -- Option to Extend Interest Payment Period."
Should the Company exercise its right to defer payments of interest by
extending the interest payment period, each holder of Capital Securities will be
required to accrue income (as original issue discount ("OID")) in respect of the
deferred stated interest allocable to its Capital Securities for United States
federal income tax purposes, which will be allocated but not distributed to
holders of record of Capital Securities. As a result, each such holder of
Capital Securities will recognize income for United
18
<PAGE> 20
States federal income tax purposes in advance of the receipt of cash and will
not receive the cash from the Trust related to such income if such holder
disposes of its Capital Securities prior to the record date for the date on
which distributions of such amounts are made. The Company has no current
intention of exercising its right to defer payments of interest by extending the
interest payment period on the Subordinated Debt Securities. However, should the
Company determine to exercise such right in the future, the market price of the
Capital Securities is likely to be affected. A holder that disposes of its
Capital Securities during an Extension Period, therefore, might not receive the
same return on its investment as a holder that continues to hold its Capital
Securities. In addition, as a result of the existence of the Company's right to
defer interest payments, the market price of the Capital Securities (which
represent an undivided beneficial interest in the Subordinated Debt Securities)
may be more volatile than other securities on which OID accrues that do not have
such rights. See "Certain Federal Income Tax Consequences -- Sales of Capital
Securities."
PROPOSED TAX LEGISLATION
On February 6, 1997 the Clinton Administration released an explanation of
its Fiscal 1998 Budget Proposal, which would, among other things, generally deny
corporate issuers a deduction for interest in respect of certain types of debt
obligations (the "Administration's Proposal"). The Administration's Proposal
would apply to debt obligations, such as the Subordinated Debt Securities,
issued on or after the date of "first committee action" with respect to the
Administration's Proposal if such debt obligations have a maximum term in excess
of 15 years and are not shown as indebtedness on the issuer's balance sheet or
if such debt obligations have a maximum weighted average maturity of more than
40 years. Under current law, the Company will be able to deduct interest on the
Subordinated Debt Securities, and as currently proposed the Administration's
Proposal would not apply to the Subordinated Debt Securities, because they were
issued prior to the date of "first committee action." Legislative proposals
recently approved by the House Ways and Means Committee and the Senate Finance
Committee did not include the Administration's Proposal. There can be no
assurance, however, that current or future legislative proposals or final
legislation will not adversely affect the ability of the Company to deduct
interest on the Subordinated Debt Securities. Accordingly, there can be no
assurance that a Tax Event will not occur. The occurrence of a Tax Event may
result in the redemption of the Subordinated Debt Securities for cash, in which
event the holders of Capital Securities would receive cash in redemption of
their Capital Securities. See "Description of the Capital Securities -- Tax
Event and Investment Company Event Redemption" and "Description of the
Subordinated Debt Securities -- Optional Redemption."
TAX EVENT OR INVESTMENT COMPANY EVENT REDEMPTION
Upon the occurrence of a Tax Event or an Investment Company Event, the
Company will have the right to redeem the Subordinated Debt Securities, in whole
or in part, subject to the conditions described in "Description of the Capital
Securities -- Tax Event and Investment Company Event Redemption," at the
Redemption Prices described herein, and therefore to cause a mandatory
redemption of a Like Amount of Trust Securities at corresponding Redemption
Prices. See "Description of the Capital Securities -- Redemption" and "-- Tax
Event and Investment Company Event Redemption" and "Description of the
Subordinated Debt Securities -- Optional Redemption."
DISTRIBUTION OF SUBORDINATED DEBT SECURITIES
The Company, as the holder of the Common Securities, will have the right at
any time to dissolve the Trust (including, without limitation, upon the
occurrence of a Tax Event or an Investment Company Event) and, after
satisfaction of liabilities to creditors of the Trust (to the extent not
satisfied by the Company), cause the Subordinated Debt Securities to be
distributed to the holders of the Trust Securities in liquidation of the Trust.
Such right is subject to the Company having received an opinion of counsel to
the effect that such distribution will not be a taxable event to holders of
Capital Securities. Under current United States federal income tax law, a
distribution of Subordinated Debt Securities upon the dissolution of the Trust
would not be a taxable event to holders of the Capital Securities. Moreover,
19
<PAGE> 21
upon the occurrence of a Tax Event or an Investment Company Event, a dissolution
of the Trust in which holders of the Capital Securities receive cash would be a
taxable event to such holders. See "Certain Federal Income Tax
Consequences -- Receipt of Subordinated Debt Securities or Cash Upon Liquidation
of the Trust."
POSSIBLE ADVERSE EFFECT ON MARKET PRICES
There can be no assurance as to the market prices for the Capital
Securities or the Subordinated Debt Securities that may be distributed in
exchange for Capital Securities if a dissolution or liquidation of the Trust
were to occur. Accordingly, the Capital Securities or the Subordinated Debt
Securities may trade at a discount to the price that the investor paid to
purchase the Capital Securities offered hereby. Because holders of Capital
Securities may receive Subordinated Debt Securities, such holders should
carefully review all the information regarding the Subordinated Debt Securities
contained herein. See "Description of the Capital Securities -- Redemption" and
"-- Liquidation of the Trust and Distribution of the Subordinated Debt
Securities" and "Description of the Subordinated Debt Securities."
RIGHTS UNDER THE GUARANTEE
Wilmington Trust Company will act as Guarantee Trustee and will hold the
Guarantee for the benefit of the holders of Capital Securities. Wilmington Trust
Company also acts as both Property Trustee and Delaware Trustee under the
Declaration and as Debenture Trustee under the Indenture. The Guarantee will
guarantee to the holders of the Capital Securities the following payments, to
the extent not paid by the Trust: (i) any accumulated and unpaid Distributions
that are required to be paid on the Capital Securities, to the extent the Trust
has funds on hand legally available therefor, (ii) the Redemption Price,
including all accumulated and unpaid Distributions, with respect to Capital
Securities called for redemption by the Trust, to the extent the Trust has funds
on hand legally available therefor, and (iii) upon a voluntary or involuntary
dissolution and liquidation of the Trust (other than in connection with the
distribution of Subordinated Debt Securities to the holders of Capital
Securities), the lesser of (a) the aggregate of the Liquidation Amount and all
accumulated and unpaid Distributions on the Capital Securities to the date of
the payment, to the extent the Trust has funds on hand legally available
therefor, and (b) the amount of assets of the Trust remaining available for
distribution to holders of the Capital Securities in liquidation of the Trust.
Subject to certain limited exceptions, the holders of a majority in Liquidation
Amount of the Capital Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under the Guarantee. Notwithstanding the foregoing, if the
Guarantee Trustee fails to enforce the Guarantee after the holders of a majority
in Liquidation Amount of the Capital Securities have so requested, any holder of
Capital Securities may institute a legal proceeding directly against the Company
to enforce the Guarantee Trustee's rights and the Company's obligations under
the Guarantee without first instituting a legal proceeding against the Trust,
the Guarantee Trustee or any other person or entity. If the Company were to
default on its obligation to pay amounts payable on the Subordinated Debt
Securities or otherwise, the Trust would lack available funds for the payment of
Distributions or amounts payable on redemption of the Capital Securities or
otherwise, and, in such event, holders of the Capital Securities would not be
able to rely upon the Guarantee for payment of such amounts. Instead, holders of
the Capital Securities would rely on the enforcement (1) by the Property Trustee
of its rights as registered holder of the Subordinated Debt Securities against
the Company pursuant to the terms of the Subordinated Debt Securities or (2) by
such holders of their right against the Company to enforce payments on the
Subordinated Debt Securities. See "Description of the Guarantee" and
"Description of the Subordinated Debt Securities." The Guarantee will constitute
an unsecured obligation of the Company and will rank subordinate and junior in
right of payment to all Senior Indebtedness in the same manner as the
Subordinated Debt Securities. The Declaration provides that each holder of
Capital Securities, by acceptance thereof, agrees to the provisions of the
Guarantee, including the subordination provisions thereof, and the Indenture.
20
<PAGE> 22
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If a Debenture Event of Default occurs and is continuing, then the holders
of Capital Securities would rely on the enforcement by the Property Trustee of
its rights as a holder of the Subordinated Debt Securities against the Company.
In addition, the holders of a majority in Liquidation Amount of the Capital
Securities will have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Property Trustee or to
direct the exercise of any trust or power conferred upon the Property Trustee
under the Declaration, including the right to direct the Property Trustee to
exercise the remedies available to it as a holder of the Subordinated Debt
Securities. If the Property Trustee fails to enforce its rights under the
Subordinated Debt Securities after the holders of a majority in Liquidation
Amount of the Capital Securities have so requested, a holder of Capital
Securities may, to the fullest extent permitted by applicable law, institute a
legal proceeding directly against the Company to enforce the Property Trustee's
rights under the Subordinated Debt Securities without first instituting any
legal proceeding against the Property Trustee or any other person or entity.
Notwithstanding the foregoing, if a Debenture Event of Default has occurred and
is continuing, and such event is attributable to the failure of the Company to
pay interest or principal on the Subordinated Debt Securities on the date such
interest or principal is otherwise payable (or in the case of redemption, on the
redemption date), then a holder of Capital Securities may directly institute a
proceeding for enforcement of payment to such holder of the principal of or
interest on the Subordinated Debt Securities having a principal amount equal to
the aggregate Liquidation Amount of the Capital Securities of such holder (a
"Direct Action") on or after the respective due date specified in the
Subordinated Debt Securities. In connection with such Direct Action, the rights
of the Company, as holder of the Common Securities, will be subrogated to the
rights of such holder of Capital Securities under the Declaration to the extent
of any payment made by the Company to such holder of Capital Securities in such
Direct Action. The holders of Capital Securities will not be able to exercise
directly any other remedy available to the holders of the Subordinated Debt
Securities. See "Description of the Capital Securities -- Events of Default;
Notice."
LIMITED VOTING RIGHTS
Holders of Capital Securities will have limited voting rights and, so long
as no Debenture Event of Default has occurred and is continuing, will not be
entitled to vote to appoint, remove or replace, or to increase or decrease the
number of, Issuer Trustees, which voting rights are vested exclusively in the
holder of the Common Securities. See "Description of the Capital
Securities -- Voting Rights; Amendment of the Declaration."
TRADING PRICE
The Capital Securities may trade at a price that does not fully reflect the
value of accrued but unpaid interest with respect to the underlying Subordinated
Debt Securities. For United States federal income tax purposes, a holder who
uses the accrual method of accounting for tax purposes (and a cash method
holder, if the Subordinated Debt Securities are treated as issued with OID) and
who disposes of its Capital Securities between record dates for payments of
Distributions thereon will be required to include accrued but unpaid interest on
the Subordinated Debt Securities through the date of disposition in income as
ordinary income (i.e., interest or, possibly, OID), and to add such amount to
its adjusted tax basis in its pro rata share of the underlying Subordinated Debt
Securities deemed disposed of. To the extent the selling price is less than the
holder's adjusted tax basis (which will include all accrued but unpaid
interest), a holder will recognize a capital loss. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes. See "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue Discount" and "-- Sales of
Capital Securities."
CONSEQUENCES OF A FAILURE TO EXCHANGE OLD CAPITAL SECURITIES
The Old Capital Securities have not been registered under the Securities
Act or any state securities laws and therefore may not be offered, sold or
otherwise transferred except in compliance with the
21
<PAGE> 23
registration requirements of the Securities Act and any other applicable
securities laws, or pursuant to an exemption therefrom or in a transaction not
subject thereto, and in each case in compliance with certain other conditions
and restrictions. Old Capital Securities which remain outstanding after
consummation of the Exchange Offer will continue to bear a legend reflecting
such restrictions on transfer. In addition, upon consummation of the Exchange
Offer, holders of Old Capital Securities which remain outstanding will not be
entitled to any rights to have such Old Capital Securities registered under the
Securities Act or to any similar rights under the Registration Agreement
(subject to certain limited exceptions). The Company and the Trust do not intend
to register under the Securities Act any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer (subject to such limited
exceptions, if applicable).
The Registration Agreement provides, under certain circumstances, for
additional interest to become payable in respect of the Old Subordinated Debt
Securities as liquidated damages, and for corresponding additional Distributions
to become payable in respect of the Old Capital Securities. Following
consummation of the Exchange Offer, any outstanding Old Capital Securities will
not be entitled to any increase in the Distribution rate thereon.
To the extent that Old Capital Securities are tendered and accepted in the
Exchange Offer, a holder's ability to sell untendered Old Capital Securities
could be adversely affected. In addition, any trading market for Old Capital
Securities which remain outstanding after the Exchange Offer could be adversely
affected.
The Exchange Capital Securities and any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer will constitute a single
class of Capital Securities under the Declaration and, accordingly, will vote
together for purposes of determining whether holders of the requisite percentage
in outstanding Liquidation Amount thereof have taken certain actions or
exercised certain rights under the Declaration. See "Description of the Capital
Securities -- General."
ABSENCE OF PUBLIC MARKET
The Old Capital Securities were issued to, and the Company believes are
currently owned by, a relatively small number of beneficial owners. The Old
Capital Securities have not been registered under the Securities Act and will
remain subject to restrictions on transferability to the extent that they are
not exchanged for the Exchange Capital Securities. Although the Exchange Capital
Securities will generally be permitted to be resold or otherwise transferred by
the holders thereof without compliance with the registration requirements under
the Securities Act, they will constitute a new issue of securities with no
established trading market. Capital Securities may be transferred by the holders
thereof only in blocks having a Liquidation Amount of not less than $100,000
(100 Capital Securities). The Company has been advised by each Initial Purchaser
that it currently intends to make a market in the Exchange Capital Securities
and the Old Capital Securities. However, neither Initial Purchaser is obligated
to do so and any market-making activity with respect to the Exchange Capital
Securities or the Old Capital Securities may be discontinued at any time without
notice. In addition, such market-making activity will be subject to the limits
imposed by the Securities Act and the Exchange Act. Accordingly, no assurance
can be given that an active public or other market will develop for the Exchange
Capital Securities or the Old Capital Securities or as to the liquidity of or
the trading market for the Exchange Capital Securities or the Old Capital
Securities. If an active public market does not exist for the Exchange Capital
Securities or the Old Capital Securities, as the case may be, the market price
and liquidity of such Capital Securities may be adversely affected.
Future trading prices of the Capital Securities will depend on many
factors, including, among other things, prevailing interest rates, results of
operations of the Company and the market for similar securities. Under certain
circumstances, the Capital Securities may trade at a discount.
Notwithstanding the registration of the Exchange Capital Securities in the
Exchange Offer, holders who are "affiliates" (as defined under Rule 405 of the
Securities Act) of the Company or the Trust may
22
<PAGE> 24
publicly offer for sale or resell the Exchange Securities only in compliance
with the provisions of Rule 144 under the Securities Act.
Each broker-dealer that receives Exchange Capital Securities for its own
account in exchange for Old Capital Securities, where such Old Capital
Securities were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Capital Securities.
See "Plan of Distribution."
EXCHANGE OFFER PROCEDURES
Issuance of Exchange Capital Securities in exchange for Old Capital
Securities pursuant to the Exchange Offer will be made only after timely receipt
by the Trust of such Old Capital Securities, a properly completed and duly
executed Letter of Transmittal and all other required documents. Therefore,
holders of Old Capital Securities desiring to tender such Old Capital Securities
in exchange for Exchange Capital Securities should allow sufficient time to
ensure timely delivery. The Trust is under no duty to give notification of
defects or irregularities with respect to the tenders of Old Capital Securities
for exchange.
USE OF PROCEEDS FROM SALE OF OLD CAPITAL SECURITIES
Neither the Company nor the Trust will receive any cash proceeds from the
issuance of the Exchange Capital Securities offered hereby. In consideration for
issuing the Exchange Capital Securities in exchange for Old Capital Securities
as described in this Prospectus, the Trust will receive Old Capital Securities
in like Liquidation Amount. The Old Capital Securities surrendered in exchange
for the Exchange Capital Securities will be retired and canceled.
The net proceeds to the Trust from the offering of the Old Capital
Securities was $100,000,000 (exclusive of the Initial Purchasers' discount and
other expenses associated with the offering paid by K.N.). All of the proceeds
from the sale of the Common Securities and the Old Capital Securities were
invested by the Trust in the Old Subordinated Debt Securities. The Company
applied the net proceeds from the sale of the Old Subordinated Debt Securities
to reduce short-term indebtedness incurred (i) to provide working capital and
(ii) to fund capital expenditures and acquisitions. The indebtedness repaid had
an approximate weighted average annual interest rate of 5.7%.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's consolidated ratios of
earnings to fixed charges for the periods shown.
<TABLE>
<CAPTION>
THREE MONTHS YEARS ENDED DECEMBER 31,
ENDED --------------------------------
MARCH 31, 1997 1996 1995 1994 1993 1992
- -------------- ---- ---- ---- ---- ----
<C> <C> <C> <C> <C> <C>
3.05 3.21 3.07 1.69 2.41 2.61
</TABLE>
The ratios of earnings to fixed charges were computed by dividing earnings
by fixed charges. For this purpose, earnings are the sum of net income, taxes
and fixed charges. Fixed charges are interest, amortization of debt discount,
premium and expense, preferred stock dividends of a subsidiary, and the
estimated interest portion of rental charges. The allowance for borrowed funds
used during construction recognized for gas utility operations has been added to
fixed charges and is included in earnings. A schedule setting forth the
computation of the ratios of earnings to fixed charges is filed as an exhibit to
the Registration Statement of which this Prospectus is a part.
23
<PAGE> 25
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at December 31, 1996 on an historical basis and as adjusted to reflect
the issuance of the Capital Securities. This table should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements of the Company and the
notes thereto contained in K N's Annual Report on Form 10-K for the year ended
December 31, 1996, as amended, which report is incorporated by reference herein.
See "Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996
-------------------------
ACTUAL AS ADJUSTED
(AUDITED) (UNAUDITED)
--------- ------------
(IN MILLIONS)
<S> <C> <C>
Short-Term Debt(1).......................................... $156.3 $ 156.3
====== =======
Long-Term Debt, Excluding Current Maturities................ $423.7 $ 423.7
Company-Obligated Mandatorily Redeemable Capital Trust
Pass-through Securities of Subsidiary Trust(2)............ -- 100.0
------ -------
Preferred Stock............................................. 7.0 7.0
------ -------
Common Stockholders' Equity:
Common Stock, $5 par value, authorized 50,000,000 shares,
30,295,792 outstanding shares.......................... 151.5 151.5
Additional Paid-in Capital................................ 228.9 228.9
Retained Earnings......................................... 142.6 142.6
Deferred Compensation..................................... (2.9) (2.9)
Treasury Stock, at Cost (7,216 shares).................... (.3) (.3)
------ -------
Total Common Stockholders' Equity................. 519.8 519.8
------ -------
Total Capitalization.............................. $950.5 $1,050.5
====== =======
</TABLE>
- ---------------
(1) Includes $27.0 million of current maturities of long-term debt and $129.3
million of notes payable.
(2) As described herein, the sole assets of the Trust are the Subordinated Debt
Securities with a principal amount of $103.1 million. The Subordinated Debt
Securities bear interest at the rate of 8.56% per annum and will mature on
April 15, 2027. The Company owns all of the Common Securities of the Trust.
Upon redemption of the Subordinated Debt Securities, the Capital Securities
will be mandatorily redeemable.
24
<PAGE> 26
THE COMPANY
The Company is a Kansas corporation which commenced operations in 1936. K N
is an integrated energy services company with operations that include natural
gas gathering, processing, marketing, field services, storage, transportation
and energy commodity sales of natural gas and NGLs and power marketing. The
Company also sells innovative products and services, such as its Simple
Choice(SM) menu of products and call center services designed for consumers,
utilities and commercial entities. The Company has operations in nine states in
the Rocky Mountain and Mid-Continent regions.
The executive offices of K N are located at 370 Van Gordon Street,
Lakewood, Colorado 80228, and its telephone number is (303) 989-1740.
Additional information concerning the Company is included in the Company
reports and other documents incorporated by reference in this Prospectus. See
"Available Information" and "Incorporation of Certain Documents by Reference."
THE TRUST
The Trust is a statutory business trust created under Delaware law pursuant
to (i) a declaration of trust, dated as of March 31, 1997, executed by the
Company, as sponsor (the "Sponsor"), the Delaware Trustee and the Administrative
Trustee named therein (the "Initial Declaration"), and (ii) the filing of a
certificate of trust with the Secretary of State of the State of Delaware on
April 4, 1997. The Initial Declaration was replaced by an amended and restated
declaration of trust executed as of the Issue Date by the Company, as Sponsor,
and the Issuer Trustees (as defined herein) (the "Declaration"). The Trust
exists for the exclusive purposes of (i) issuing and selling the Trust
Securities, which represent undivided beneficial interests in the assets of the
Trust, and effecting the Exchange Offer for the Exchange Capital Securities,
(ii) investing the gross proceeds from the sale of the Old Capital Securities
and Common Securities in the Old Subordinated Debt Securities, (iii) exchanging
the Old Subordinated Debt Securities for the Exchange Subordinated Debt
Securities and (iv) engaging in only those other activities necessary, advisable
or incidental thereto. Accordingly, the Subordinated Debt Securities are the
sole assets of the Trust and payments under the Subordinated Debt Securities are
the sole revenues of the Trust. All of the Common Securities are owned directly
by the Company. The Common Securities rank pari passu, and any payments will be
made thereon pro rata, with the Capital Securities except that upon the
occurrence and during the continuance of a Debenture Event of Default, the
rights of the Company as holder of the Common Securities to payments from the
Trust in respect of Distributions and payments upon liquidation, redemption and
otherwise will be subordinated and rank junior to the rights of the holders of
the Capital Securities. See "Description of the Capital
Securities--Subordination of Common Securities." On the Issue Date, the Company
acquired Common Securities in an aggregate Liquidation Amount equal to 3% of the
total capital of the Trust. The Trust has a term of 31 years, but may dissolve
earlier as provided in the Declaration. The Company, as holder of all of the
outstanding Common Securities, has the right at any time to dissolve the Trust
(including, without limitation, upon the occurrence of a Tax Event or an
Investment Company Event) and, after satisfaction of liabilities to creditors of
the Trust (to the extent not satisfied by the Company), cause the Subordinated
Debt Securities to be distributed to holders of the Trust Securities on a pro
rata basis in accordance with the respective liquidation amounts thereof, in
liquidation of the Trust.
The Trust's business and affairs are conducted by trustees (the "Issuer
Trustees") appointed by the Company as the direct holder of the Common
Securities. The Issuer Trustees are Wilmington Trust Company, as the property
trustee (the "Property Trustee"), Wilmington Trust Company, as the Delaware
trustee (the "Delaware Trustee"), and three individual trustees (the
"Administrative Trustees"), each of whom is an employee and officer of K N.
Pursuant to the Declaration, the Delaware Trustee is an entity that maintains
its principal place of business in the State of Delaware. Wilmington Trust
Company, as Property Trustee, acts as sole indenture trustee under the
Declaration. The Property Trustee holds title to the Subordinated Debt
Securities for the benefit of the holders of the Trust Securities and has the
power to exercise all rights, powers and privileges under the Indenture as the
25
<PAGE> 27
holder of the Subordinated Debt Securities. In addition, the Property Trustee
maintains exclusive control of a separate, segregated, non-interest bearing
trust account (the "Property Account") to hold all payments made in respect of
the Subordinated Debt Securities for the benefit of the holders of the Trust
Securities. The Property Trustee will make payments of Distributions and
payments on liquidation, redemption and otherwise to the holders of record of
the Trust Securities out of funds from the Property Account. Wilmington Trust
Company also acts as indenture trustee under the Guarantee and the Indenture.
See "Description of the Guarantee" and "Description of the Subordinated Debt
Securities." The holder of the Common Securities or, if an Event of Default
under the Declaration has occurred and is continuing, the holders of a majority
in Liquidation Amount of the Capital Securities, will be entitled to appoint,
remove or replace the Property Trustee and/or the Delaware Trustee. In no event
will the holders of the Capital Securities have the right to vote to appoint,
remove or replace the Administrative Trustees; such voting rights will be vested
exclusively in the holder of the Common Securities. The duties and obligations
of each Issuer Trustee are governed by the Declaration. Pursuant to the expense
provisions under the Indenture, the Company will pay all fees, expenses, debts
and obligations related to the Trust and the offering of the Capital Securities,
including all fees and expenses in connection with the Exchange Offer and all
ongoing costs and expenses of the Trust (other than with respect to the Trust
Securities).
The principal place of business of the Trust is c/o K N Energy, Inc., 370
Van Gordon Street, P.O. Box 281304, Lakewood, Colorado 80228-8304, Attention:
Chief Financial Officer.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of the Old Capital Securities, the Company and
the Trust entered into the Registration Agreement with the Initial Purchasers,
pursuant to which the Company and the Trust agreed, among other things, to use
their best efforts to file and to cause to become effective with the Commission
a registration statement with respect to the exchange of the Old Capital
Securities for capital securities with terms identical in all material respects
to the terms of the Old Capital Securities. A copy of the Registration Agreement
has been filed as an Exhibit to the Registration Statement of which this
Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual obligations of
the Company and the Trust under the Registration Agreement. The form and terms
of the Exchange Capital Securities are the same as the form and terms of the Old
Capital Securities except that the Exchange Capital Securities have been
registered under the Securities Act and therefore will not be subject to certain
restrictions on transfer applicable to the Old Capital Securities and will not
provide for any increase in the Distribution rate thereon. In that regard, the
Old Capital Securities provide, among other things, that, if the Exchange Offer
is not consummated within a specified period after the date the Old Capital
Securities were issued, then both the Distribution rate borne by the Old Capital
Securities and the interest rate borne by the Old Subordinated Debt Securities
will increase by 0.25% per annum until the Exchange Offer is consummated. Upon
consummation of the Exchange Offer, holders of Old Capital Securities will not
be entitled to any increase in the Distribution rate thereon or any further
registration rights under the Registration Agreement, except under limited
circumstances. See "Risk Factors -- Consequences of a Failure to Exchange Old
Capital Securities" and "Description of the Old Securities."
The Exchange Offer is not being made to, nor will the Company or the Trust
accept tenders for exchange from, holders of Old Capital Securities in any
jurisdiction in which the Exchange Offer or the acceptance thereof would not be
in compliance with the securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to
the Exchange Offer means any person in whose name the Old Capital Securities are
registered on the books of the Trust or any other person who has obtained a
properly completed bond power from the registered holder, or any person
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whose Old Capital Securities are held of record by the nominee of DTC who
desires to deliver such Old Capital Securities by book-entry transfer at DTC.
Pursuant to the Exchange Offer, the Company will exchange, as soon as
practicable after the draft hereof, the Old Guarantee for the Exchange Guarantee
and all of the Old Subordinated Debt Securities, of which $103,100,000 aggregate
principal amount is outstanding, for a like aggregate principal amount of the
Exchange Subordinated Debt Securities. The Exchange Subordinated Debt Securities
and the Exchange Guarantee have been registered under the Securities Act.
TERMS OF THE EXCHANGE
The Company and the Trust hereby offer, upon the terms and subject to the
conditions set forth in this Prospectus and in the accompanying Letter of
Transmittal, to exchange up to $100,000,000 aggregate Liquidation Amount of
Exchange Capital Securities for a like aggregate Liquidation Amount of Old
Capital Securities properly tendered prior to 5:00 p.m., New York City time, on
the Expiration Date and not properly withdrawn, in accordance with the
procedures described below. The Trust will issue, promptly after the Expiration
Date, an aggregate Liquidation Amount of up to $100,000,000 of Exchange Capital
Securities in exchange for a like Liquidation Amount of outstanding Old Capital
Securities tendered and accepted in connection with the Exchange Offer. Holders
may tender their Old Capital Securities in whole or in part in a Liquidation
Amount of not less than $100,000 (100 Capital Securities) or any integral
multiple of $1,000 in excess thereof, provided that if any Old Capital
Securities are tendered for exchange in part, the untendered Liquidation Amount
thereof must be $100,000 (100 Capital Securities) or any integral multiple of
$1,000 in excess thereof.
The Exchange Offer is not conditioned upon any minimum Liquidation Amount
of Old Capital Securities being tendered. As of the date of this Prospectus,
$100,000,000 aggregate Liquidation Amount of the Old Capital Securities is
outstanding.
Holders of Old Capital Securities do not have any appraisal or dissenters'
rights in connection with the Exchange Offer. Old Capital Securities which are
not tendered or are tendered but not accepted in connection with the Exchange
Offer will remain outstanding and be entitled to the benefits of the
Declaration, but will not be entitled to any increase in the Distribution rate
thereon or any further registration rights under the Registration Agreement,
except under limited circumstances. See "Risk Factors -- Consequences of a
Failure to Exchange Old Capital Securities" and "Description of the Old
Securities."
If any tendered Old Capital Securities are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Old Capital Securities
will be returned, without expense, to the tendering holder thereof promptly
after the Expiration Date.
Holders who tender Old Capital Securities in connection with the Exchange
Offer will not be required to pay brokerage commissions or fees or, subject to
the instructions in the Letter of Transmittal, transfer taxes with respect to
the exchange of Old Capital Securities in connection with the Exchange Offer.
The Company will pay all charges and expenses, other than certain applicable
taxes described below, in connection with the Exchange Offer. See "-- Fees and
Expenses."
NEITHER THE BOARD OF DIRECTORS OF THE COMPANY NOR THE ISSUER TRUSTEES MAKE
ANY RECOMMENDATION TO HOLDERS OF OLD CAPITAL SECURITIES AS TO WHETHER TO TENDER
OR REFRAIN FROM TENDERING ALL OR ANY PORTION OF THEIR OLD CAPITAL SECURITIES
PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE
ANY SUCH RECOMMENDATION. HOLDERS OF OLD CAPITAL SECURITIES MUST MAKE THEIR OWN
DECISION BASED ON THEIR OWN FINANCIAL POSITION AND REQUIREMENTS WHETHER TO
TENDER PURSUANT TO THE EXCHANGE OFFER AND, IF SO, THE AGGREGATE LIQUIDATION
AMOUNT OF OLD CAPITAL SECURITIES TO TENDER AFTER READING THIS PROSPECTUS AND THE
LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR ADVISORS, IF ANY.
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EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on
, 1997 unless the Exchange Offer is extended by the Company and the
Trust (in which case the term "Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended).
The Company and the Trust expressly reserve the right in their sole and
absolute discretion, subject to applicable law, at any time and from time to
time, (i) to delay the acceptance of the Old Capital Securities for exchange,
(ii) to terminate the Exchange Offer (whether or not any Old Capital Securities
have theretofore been accepted for exchange) if the Company and the Trust
determine, in their sole and absolute discretion, that any of the events or
conditions referred to under "-- Conditions to the Exchange Offer" has occurred
or exists or has not been satisfied, (iii) to extend the Expiration Date of the
Exchange Offer and retain all Old Capital Securities tendered pursuant to the
Exchange Offer, subject, however, to the right of holders of Old Capital
Securities to withdraw their tendered Old Capital Securities as described under
"-- Procedures for Tendering Old Capital Securities -- Withdrawal of Tenders,"
and (iv) to waive any condition or otherwise amend the terms of the Exchange
Offer in any respect. If the Exchange Offer is amended in a manner determined by
the Company and the Trust to constitute a material change, or if the Company and
the Trust waive a material condition of the Exchange Offer, the Company or the
Trust will promptly disclose such amendment or waiver by means of a prospectus
supplement that will be distributed to the registered holders of the Old Capital
Securities, and the Company and the Trust will extend the Exchange Offer to the
extent required by applicable law.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Company or the Trust may choose to make any public
announcement and subject to applicable law, neither the Company nor the Trust
shall have any obligation to publish, advertise or otherwise communicate any
such public announcement other than by issuing a release to an appropriate news
agency.
PROCEDURES FOR TENDERING OLD CAPITAL SECURITIES
Valid Tender. Except as set forth below, in order for Old Capital
Securities to be validly tendered pursuant to the Exchange Offer, a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees and any other required documents, must be
received by the Exchange Agent at one of its addresses set forth under
"-- Exchange Agent". In addition, either (i) certificates for such Old Capital
Securities must be received by the Exchange Agent or (ii) a timely confirmation
of a book-entry transfer ("Book-Entry Confirmation") of such Old Capital
Securities, if that procedure is available, into the Exchange Agent's account at
DTC pursuant to the procedure for book-entry transfer described below, must be
received by the Exchange Agent, in each case prior to 5:00 p.m., New York City
time, on the Expiration Date or (iii) the holder must comply with the guaranteed
delivery procedures set forth below.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER,
AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT REQUESTED,
PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
The tender by a holder of Old Capital Securities that is not withdrawn
before 5:00 p.m., New York City time, on the Expiration Date will constitute an
agreement between such holder and the Company and the Trust in accordance with
the terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
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Any beneficial owner whose Old Capital Securities are registered in the
name of a broker, dealer, commercial bank, trust company, or other nominee and
who wishes to tender should contact the registered holder promptly and instruct
such registered holder to tender on the beneficial owner's behalf. If the
beneficial owner wishes to tender on its own behalf, the owner must, prior to
completing and executing the Letter of Transmittal and delivering Old Capital
Securities certificates, either make appropriate arrangements to register
ownership of the Old Capital Securities in such beneficial owner's name or
obtain a properly completed bond power from the registered holder. The transfer
of registered ownership may take considerable time.
If fewer than all of the Old Capital Securities held by a holder are
tendered, such tendering holder should fill in the amount of Old Capital
Securities being tendered in the appropriate box on the Letter of Transmittal.
The entire amount of Old Capital Securities delivered to the Exchange Agent will
be deemed to have been tendered unless otherwise indicated.
Signatures. Certificates for the Old Capital Securities need not be
endorsed and signature guarantees on the Letter of Transmittal, or a notice of
withdrawal, as the case may be, are unnecessary unless (i) a certificate for the
Old Capital Securities is registered in a name other than that of the person
surrendering the certificate or (ii) such registered holder completes the box
entitled "Special Issuance Instructions" or "Special Delivery Instructions" in
the Letter of Transmittal. In the case of (i) or (ii) above, such certificates
for Old Capital Securities must be duly endorsed or accompanied by a properly
executed bond power, with the endorsement or signature on the bond power and on
the Letter of Transmittal guaranteed by a firm or other entity identified in
Rule 17Ad-15 under the Exchange Act as an "eligible guarantor institution,"
including (as such terms are defined therein): (i) a bank; (ii) a broker,
dealer, municipal securities broker or dealer or government securities broker or
dealer; (iii) a credit union; (iv) a national securities exchange, registered
securities association or clearing agency; or (v) a savings association that is
a participant in a Securities Transfer Association (each, an "Eligible
Institution"), unless surrendered on behalf of such Eligible Institution. See
Instruction 1 to the Letter of Transmittal.
If any Letter of Transmittal, endorsement, bond power, power of attorney,
or any other document required by the Letter of Transmittal is signed by a
trustee, attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, such person should so indicate when
signing, and unless waived by the Company or the Trust, proper evidence
satisfactory to the Company or the Trust, in its sole discretion, of such
person's authority to so act must be submitted.
Determination of Validity. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Old Capital Securities will be determined by the Company and the
Trust, in their sole discretion, whose determination shall be final and binding
on all parties. The Company and the Trust reserve the absolute right, in their
sole and absolute discretion, to reject any and all tenders determined by them
not to be in proper form or the acceptance of which, or exchange for, may, in
the view of counsel to the Company and the Trust, be unlawful. The Company and
the Trust also reserve the absolute right, subject to applicable law, to waive
any of the conditions of the Exchange Offer as set forth under "-- Conditions to
the Exchange Offer" or any condition or irregularity in any tender of Old
Capital Securities of any particular holder, whether or not similar conditions
or irregularities are waived in the case of other holders.
The Company's and the Trust's interpretation of the terms and conditions of
the Exchange Offer (including the Letter of Transmittal and the instructions
thereto) will be final and binding. No tender of Old Capital Securities will be
deemed to have been validly made until all irregularities with respect to such
tender have been cured or waived. Neither the Company, the Trust, any affiliates
or assigns of the Company, the Exchange Agent nor any other person shall be
under any duty to give any notification of any irregularities in tenders or
incur any liability for failure to give any such notification.
Acceptance of Old Capital Securities for Exchange; Delivery of Exchange
Capital Securities. Upon the terms and subject to the conditions of the Exchange
Offer, the Company and the Trust will exchange, and will issue to the Exchange
Agent, Exchange Capital Securities for Old Capital Securities validly
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tendered and not withdrawn (pursuant to the withdrawal rights described under
"-- Withdrawal of Tenders") promptly after the Expiration Date.
In all cases, delivery of Exchange Capital Securities in exchange for Old
Capital Securities tendered and accepted for exchange pursuant to the Exchange
Offer will be made only after timely receipt by the Exchange Agent of (i) Old
Capital Securities or a Book-Entry Confirmation (as defined below), (ii) the
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, and (iii) any other documents
required by the Letter of Transmittal.
Subject to the terms and conditions of the Exchange Offer, the Company and
the Trust will be deemed to have accepted for exchange, and thereby exchanged,
Old Capital Securities validly tendered and not withdrawn as, if and when the
Company or the Trust gives oral or written notice to the Exchange Agent of the
Company's and the Trust's acceptance of such Old Capital Securities for exchange
pursuant to the Exchange Offer. The Exchange Agent will act as agent for the
Company and the Trust for the purpose of receiving tenders of Old Capital
Securities, Letters of Transmittal and related documents, and as agent for
tendering holders for the purpose of receiving Old Capital Securities, Letters
of Transmittal and related documents and transmitting Exchange Capital
Securities to validly tendering holders. Such exchange will be made promptly
after the Expiration Date. If, for any reason whatsoever, acceptance for
exchange or the exchange of any Old Capital Securities tendered pursuant to the
Exchange Offer is delayed (whether before or after the Company's and the Trust's
acceptance for exchange of Old Capital Securities) or the Company or the Trust
extends the Exchange Offer or is unable to accept for exchange or exchange Old
Capital Securities tendered pursuant to the Exchange Offer, then, without
prejudice to the Company's or the Trust's rights set forth herein, the Exchange
Agent may, nevertheless, on behalf of the Company and the Trust (and subject to
applicable law), retain tendered Old Capital Securities and such Old Capital
Securities may not be withdrawn except to the extent tendering holders are
entitled to withdrawal rights as described under "-- Withdrawal of Tenders."
Pursuant to the Letter of Transmittal, a holder of Old Capital Securities
will warrant and agree in the Letter of Transmittal that it has full power and
authority to tender, exchange, sell, assign and transfer Old Capital Securities,
that the Trust will acquire good, marketable and unencumbered title to the
tendered Old Capital Securities, free and clear of all liens, restrictions,
charges and encumbrances, and that the Old Capital Securities tendered for
exchange are not subject to any adverse claims or proxies. The holder also will
warrant and agree that it will, upon request, execute and deliver any additional
documents deemed by the Company, the Trust or the Exchange Agent to be necessary
or desirable to complete the exchange, sale, assignment and transfer of the Old
Capital Securities tendered pursuant to the Exchange Offer.
Notwithstanding any other provision hereof, the delivery of Exchange
Capital Securities in exchange for Old Capital Securities tendered and accepted
for exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of Old Capital Securities and a properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
together with any required signature guarantees and any other documents required
by the Letter of Transmittal, or of a Book-Entry Confirmation with respect to
such Old Capital Securities. Accordingly, the delivery of Exchange Capital
Securities might not be made to all tendering holders at the same time, and will
depend upon when Old Capital Securities, Book-Entry Confirmations with respect
to Old Capital Securities and other required documents are received by the
Exchange Agent.
Book-Entry Transfer. The Exchange Agent will make a request to establish an
account with respect to the Old Capital Securities at DTC for purposes of the
Exchange Offer within two business days after the date of this Prospectus. Any
financial institution that is a participant in DTC's book-entry transfer
facility system may make a book-entry delivery of the Old Capital Securities by
causing DTC to transfer such Old Capital Securities into the Exchange Agent's
account at DTC in accordance with DTC's procedures for transfers. However,
although delivery of Old Capital Securities may be effected through book-entry
transfer into the Exchange Agent's account at DTC, the Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees and any other
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required documents, must, in any case other than as set forth in the following
paragraph, be transmitted to and received by the Exchange Agent at its address
set forth under "-- Exchange Agent" prior to 5:00 p.m., New York City time, on
the Expiration Date, or the guaranteed delivery procedure set forth below must
be complied with in order for such Old Capital Securities to be properly
tendered.
DTC's Automated Tender Offer Program ("ATOP") is the only method of
processing exchange offers through DTC. To accept the Exchange Offer through
ATOP, participants in DTC must send electronic instructions to DTC through DTC's
communication system in place for sending a signed, hard copy of the Letter of
Transmittal. DTC is obligated to communicate those electronic instructions to
the Exchange Agent. To tender Old Capital Securities through ATOP, the
electronic instructions sent to DTC and transmitted by DTC to the Exchange Agent
must contain the character by which the participant acknowledges its receipt of
and agrees to be bound by the Letter of Transmittal.
Guaranteed Delivery. If a holder desires to tender Old Capital Securities
pursuant to the Exchange Offer and the certificates for such Old Capital
Securities are not immediately available or time will not permit all required
documents to reach the Exchange Agent before 5:00 p.m., New York City time, on
the Expiration Date, or the procedures for book-entry transfer cannot be
completed on a timely basis, such Old Capital Securities may nevertheless be
tendered, provided that all of the following guaranteed delivery procedures are
complied with:
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of Transmittal,
is received by the Exchange Agent prior to 5:00 p.m., New York City time,
on the Expiration Date; and
(iii) the certificates (or a book-entry confirmation) representing all
tendered Old Capital Securities, in proper form for transfer, together with
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees and any other documents
required by the Letter of Transmittal, are received by the Exchange Agent
within five New York Stock Exchange trading days after the date of
execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by facsimile or mail, to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
Withdrawal of Tenders. Tenders of Old Capital Securities may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
For withdrawal to be effective, a written electronic ATOP transmission
notice of withdrawal (for DTC participants) must be received by the Exchange
Agent at one of its addresses set forth herein prior to 5:00 p.m., New York City
time, on the Expiration Date. Any such notice of withdrawal must (i) specify the
name of the person having tendered the Old Capital Securities to be withdrawn,
(ii) identify the Old Capital Securities to be withdrawn (including the
certificate number or numbers and Liquidation Amount of such Old Capital
Securities) and (iii) where physical certificates for Old Capital Securities
have been transmitted, specify the name in which any such Old Capital Securities
are registered, if different from that of the withdrawing holder. If physical
certificates for Old Capital Securities have been delivered or otherwise
identified to the Exchange Agent, then, prior to the release of such
certificates, the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and a signed notice of withdrawal with
signatures guaranteed, as necessary. If Old Capital Securities have been
tendered pursuant to the procedure for book-entry transfer described above, any
notice of withdrawal must specify the name and number of the account at DTC to
be credited with the withdrawn Old Capital Securities and otherwise comply with
DTC's procedures. All questions as to validity, form, and eligibility (including
time of receipt) of such notices will be determined by the Company or the Trust,
whose determination shall be final and binding on all parties. Any Old Capital
Securities so withdrawn will be deemed not to have been validly tendered for
exchange for purposes of the Exchange Offer. Any Old
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Capital Securities which have been tendered for exchange but which are not
exchanged for any reason will be returned to the holder thereof without cost to
such holder (or, in the case of Old Capital Securities tendered by book-entry
transfer into the Exchange Agent's account at DTC pursuant to the book-entry
transfer procedures described above, such Old Capital Securities will be
credited to an account maintained with DTC for the Old Capital Securities) as
soon as practicable after withdrawal, rejection of tender, or termination of the
Exchange Offer. Properly withdrawn Old Capital Securities may be retendered by
following one of the procedures described above at an time prior to 5:00 p.m.,
New York City time, on the Expiration Date.
RESALES OF EXCHANGE CAPITAL SECURITIES
Based on existing interpretations by the staff of the Commission and
subject to the two immediately following sentences, the Company and the Trust
believe that the Exchange Capital Securities, the Exchange Guarantee and, after
distribution thereof to the holders of Capital Securities, the Exchange
Subordinated Debt Securities issued pursuant to this Exchange Offer may be
offered for resale, resold and otherwise transferred by a holder thereof (other
than a holder who is a broker-dealer) without further compliance with the
registration and prospectus delivery requirements of the Securities Act;
provided, that, such Exchange Capital Securities are acquired in the ordinary
course of such holder's business and such holder is not participating, and has
no arrangement or understanding with any person to participate, in a
distribution (within the meaning of the Securities Act) of the Exchange Capital
Securities. However, any holder of Old Capital Securities who is an "affiliate"
of the Trust or the Company (within the meaning of Rule 405 under the Securities
Act) or who intends to participate in the Exchange Offer for the purpose of
distributing the Exchange Capital Securities, or any broker-dealer who purchased
the Old Capital Securities from the Trust to resell pursuant to Rule 144A or any
other available exemption under the Securities Act, (i) will not be able to rely
on the interpretations of the staff of the Commission set forth in the
above-mentioned no-action letters, (ii) will not be permitted or entitled to
tender such Old Capital Securities in the Exchange Offer and (iii) must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any sale or other transfer of such Old Capital Securities
unless such sale is made pursuant to an exemption from such requirements. In
addition, as described below, if any broker-dealer holds Old Capital Securities
acquired for its own account as a result of market-making or other trading
activities and exchanges such Old Capital Securities for Exchange Capital
Securities, then such broker-dealer must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of such
Exchange Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for Exchange Capital Securities in the Exchange Offer will be
required to represent that (i) it is not an "affiliate" of the Trust or the
Company, (ii) any Exchange Capital Securities to be received by it are being
acquired in the ordinary course of its business and (iii) it has no arrangement
or understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such Exchange Capital Securities. Each
broker-dealer that receives Exchange Capital Securities for its own account
pursuant to the Exchange Offer must acknowledge that it acquired the Old Capital
Securities for its own account as the result of market-making activities or
other trading activities and must agree that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such Exchange Capital Securities. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
Based on the position taken by the staff of the Commission in the no-action
letters referred to above, the Company and the Trust believe that broker-dealers
who acquired Old Capital Securities for their own accounts as a result of
market-making activities or other trading activities may fulfill their
prospectus delivery requirements with respect to the Exchange Capital Securities
received upon exchange of such Old Capital Securities (other than Old Capital
Securities which represent an unsold allotment from the original sale of the Old
Capital Securities) with the prospectus prepared for the Exchange Offer so long
as it contains a description of the plan of distribution with respect to the
resale of such Exchange Capital Securities. Accordingly, subject to certain
provisions set forth in the Registration Agreement and to the limitations set
out herein, the Company and the Trust have agreed that this
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Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of such Exchange Capital
Securities for a period commencing on the Expiration Date and ending 90 days
after the Expiration Date (subject to extension in certain limited circumstances
set forth in the Registration Agreement) or, if earlier, when all such Exchange
Capital Securities have been disposed of by such broker-dealer. See "Plan of
Distribution." Any broker-dealer who is an "affiliate" of the Trust or the
Company may not rely on such no-action letters and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction.
In that regard, each broker-dealer who surrenders Old Capital Securities
pursuant to the Exchange Offer will be deemed to have agreed, by execution of
the Letter of Transmittal, that, upon receipt of notice from the Company or the
Trust of the occurrence of any event or the discovery of any fact which makes
any statement contained or incorporated by reference in this Prospectus untrue
in any material respect or which causes this Prospectus to omit to state a
material fact necessary in order to make the statements contained or
incorporated by reference herein, in light of the circumstances under which they
were made, not misleading or of the occurrence of certain other events specified
in the Registration Agreement, such broker-dealer will suspend the sale of
Exchange Capital Securities (or the Exchange Subordinated Debt Securities, as
applicable) pursuant to this Prospectus until the Company and the Trust have
amended or supplemented this Prospectus to correct such misstatement or omission
and have furnished copies of the amended or supplemented Prospectus to such
broker-dealer or the Company and the Trust have given notice that the sale of
the Exchange Capital Securities (or the Exchange Subordinated Debt Securities,
as applicable) may be resumed. If the Company or the Trust gives such notice to
suspend the sale of the Exchange Capital Securities (or the Exchange
Subordinated Debt Securities, as applicable) it shall extend the 90 day period
referred to in the immediately preceding paragraph during which such broker-
dealers are entitled to use this Prospectus in connection with the resale of
Exchange Capital Securities (or the Exchange Subordinated Debt Securities, as
applicable) by the number of days during the period from and including the date
of the giving of such notice to and including the date when such broker-dealers
shall have received copies of the supplemented or amended Prospectus necessary
to permit such resales or to and including the date on which the Company and the
Trust give notice that the sale of Exchange Capital Securities (or the Exchange
Subordinated Debt Securities, as applicable) may be resumed.
Neither the Company nor the Trust has sought its own interpretive letter
and there can be no assurance that the staff of the Commission would make a
similar determination with respect to the Exchange Offer as it has in such
no-action letters to third parties.
DISTRIBUTIONS ON THE EXCHANGE CAPITAL SECURITIES
Holders of Old Capital Securities whose Old Capital Securities are accepted
for exchange will not receive accumulated Distributions on such Old Capital
Securities for any period from the Distribution Date with respect to such Old
Capital Securities immediately preceding the original issue date of the Exchange
Capital Securities or, if no such Distribution Date has occurred, from the
original issue date of such Old Capital Securities (April 24, 1997), and such
tendering holders will be deemed to have waived the right to receive any such
Distributions. However, because Distributions on the Exchange Capital Securities
will accumulate from the later of the Distribution Date of the Old Capital
Securities immediately preceding the original issue date of the Exchange Capital
Securities and the original issue date of the Old Capital Securities, the amount
of the Distributions received by holders whose Old Capital Securities are
accepted for exchange will not be affected by the exchange.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Trust will not be required to accept for
exchange, or to exchange, any Old Capital Securities for any Exchange Capital
Securities, and, as described below, may terminate the Exchange Offer (whether
or not any Old Capital Securities have theretofore been accepted for exchange)
or may waive any
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conditions to or amend the Exchange Offer, if any of the following conditions
has occurred or exists or has not been satisfied:
(a) there shall occur a change in the current interpretation by the
staff of the Commission which permits the Exchange Capital Securities
issued pursuant to the Exchange Offer in exchange for Old Capital
Securities to be offered for resale, resold and otherwise transferred by
holders thereof (other than broker-dealers and any such holder which is an
"affiliate" of the Trust or the Company within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such
Exchange Capital Securities are acquired in the ordinary course of such
holder's business and such holders have no arrangement or understanding
with any person to participate in the distribution of such Exchange Capital
Securities; or
(b) any action or proceeding shall have been instituted or threatened
in any court or by or before any governmental agency or body with respect
to the Exchange Offer which, in the Company's and the Trust's judgment,
would reasonably be expected to impair the ability of the Company or the
Trust to proceed with the Exchange Offer; or
(c) any law, statute, rule or regulation shall have been adopted or
enacted which, in the Company's and the Trust's judgment, would reasonably
be expected to impair the ability of the Company or the Trust to proceed
with the Exchange Offer; or
(d) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration
Statement or proceedings shall have been initiated or, to the knowledge of
the Company or the Trust, threatened for that purpose; or
(e) there is a reasonable likelihood in the Company's judgment that,
or a material uncertainty exists in the Company's judgment as to whether,
consummation of the Exchange Offer would result in an adverse tax
consequence to the Company.
If the Company and the Trust determine in their sole and absolute
discretion that any of the foregoing events or conditions has occurred or exists
or has not been satisfied, the Company and the Trust may, subject to applicable
law, terminate the Exchange Offer (whether or not any Old Capital Securities
have theretofore been accepted for exchange) or may waive any such condition or
otherwise amend the terms of the Exchange Offer in any respect. If such waiver
or amendment constitutes a material change to the Exchange Offer, the Company
and the Trust will promptly disclose such waiver or amendment by means of a
prospectus supplement that will be distributed to the registered holders of the
Old Capital Securities, and the Company and the Trust will extend the Exchange
Offer to the extent required by applicable law.
EXCHANGE AGENT
Wilmington Trust Company has been appointed as Exchange Agent for the
Exchange Offer. Delivery of the Letters of Transmittal and any other required
documents, questions, requests for assistance, and requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed to
the Exchange Agent as follows:
Inquiries by Telephone: (302) 651-8869
By Facsimile: (302) 651-1079
<TABLE>
<C> <C>
By mail/overnight delivery: By hand:
Wilmington Trust Company Wilmington Trust Company
1100 North Market Street 1105 North Market Street, 1st Floor
Wilmington, Delaware 19890-0001 Wilmington, Delaware 19890
Attn: Jill Rylee Attn: Corporate Trust Operations
</TABLE>
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<PAGE> 36
Delivery to other than the above addresses in the manner prescribed for
such address or facsimile number will not constitute a valid delivery.
FEES AND EXPENSES
The Company has agreed to pay the Exchange Agent reasonable and customary
fees for its services and will reimburse it for its reasonable out-of-pocket
expenses in connection therewith. The Company will also pay brokerage houses and
other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Prospectus and related documents
to the beneficial owners of Old Capital Securities, and in tendering for their
customers.
Holders who tender their Old Capital Securities for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however,
Exchange Capital Securities are to be delivered to, or are to be issued in the
name of, any person other than the registered holder of the Old Capital
Securities tendered, or if a transfer tax is imposed for any reason other than
the exchange of Old Capital Securities in connection with the Exchange Offer,
then the amount of any such transfer taxes (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
Neither the Company nor the Trust will make any payment to brokers, dealers
or others soliciting acceptances of the Exchange Offer.
DESCRIPTION OF THE CAPITAL SECURITIES
Pursuant to the terms of the Declaration, the Issuer Trustees have issued
the Old Capital Securities and the Common Securities and will issue the Exchange
Capital Securities. The Exchange Capital Securities will represent undivided
beneficial interests in the assets of the Trust and the holders thereof will be
entitled to a preference over the Common Securities in certain circumstances
with respect to Distributions and amounts payable on redemption of the Trust
Securities or liquidation of the Trust. See "-- Subordination of Common
Securities" below. The Declaration has been qualified under the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"). The following description
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, the Declaration, a copy of which is filed as an
exhibit to the Registration Statement of which this Prospectus is a part, the
Delaware Business Trust Act and the Trust Indenture Act. Certain capitalized
terms used herein are defined in the Declaration.
GENERAL
The Capital Securities (including the Old Capital Securities and the
Exchange Capital Securities) will be limited to $100 million aggregate
Liquidation Amount at any time outstanding. The Capital Securities will have
equivalent terms to and will rank pari passu, and payments will be made thereon
pro rata, with the Common Securities except as described under "-- Subordination
of Common Securities" below. Legal title to the Old Subordinated Debt Securities
is, and legal title to the Exchange Subordinated Debt Securities will be, held
by the Property Trustee in trust for the benefit of the Trust and the holders of
the Capital Securities and the Common Securities. The payment of Distributions
out of money held by the Trust, and payments upon redemption of the Capital
Securities upon liquidation of the Trust, are guaranteed by the Company as
described under "Description of the Guarantee." The Guarantee will not guarantee
payment of Distributions or amounts payable on redemption of the Capital
Securities or liquidation of the Trust when the Trust does not have funds on
hand legally available for such payments. In such event, the remedy of holders
of the Capital Securities would be, through the vote of holders of a majority in
Liquidation Amount of the Capital Securities, to direct the Property Trustee to
enforce the Property Trustee's rights under the Subordinated Debt Securities
except in the circumstances in which a holder of such Capital Securities may
take Direct Action or otherwise enforce the Property Trustee's rights. See
"-- Events of Default; Notice."
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<PAGE> 37
The Exchange Capital Securities and any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer will constitute a single
class of Capital Securities under the Declaration and, accordingly, will vote
together for purposes of determining whether holders of the requisite percentage
in outstanding Liquidation Amount thereof have taken certain actions or
exercised certain rights under the Declaration. The terms of the Exchange
Capital Securities are identical in all material respects to the terms of the
Old Capital Securities, except that the Exchange Capital Securities have been
registered under the Securities Act and therefore are not subject to certain
restrictions on transfer applicable to the Old Capital Securities and will not
provide for any increase in the Distribution rate thereon. See "Description of
the Old Securities."
DISTRIBUTIONS
Distributions on the Capital Securities will be payable semiannually in
arrears on April 15 and October 15 of each year, commencing October 15, 1997, at
the annual rate of 8.56% of the Liquidation Amount to the holders of the Capital
Securities on the relevant record dates. The record dates will be the first day
of the month in which the relevant Distribution Date (as defined herein) falls.
Distributions on the Old Capital Securities accumulate from the date of original
issuance, April 24, 1997, and the first Distribution Date thereon is October 15,
1997. Holders of Old Capital Securities whose Old Capital Securities are
accepted for exchange will not receive accumulated Distributions on such Old
Capital Securities for any period from the Distribution Date with respect to
such Old Capital Securities immediately preceding the original issue date of the
Exchange Capital Securities or, if no such Distribution Date has occurred, from
the original issue date of such Old Capital Securities, and such tendering
holders will be deemed to have waived the right to receive any such
Distributions. However, because Distributions on the Exchange Capital Securities
will accumulate from the later of the Distribution Date of the Old Capital
Securities immediately preceding the original issue date of the Exchange Capital
Securities and the original issue date of the Old Capital Securities, the amount
of the Distributions received by holders whose Old Capital Securities are
accepted for exchange will not be affected by the exchange. The amount of
Distributions payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months. In the event that any date on which Distributions
are payable on the Capital Securities is not a Business Day (as defined herein),
payment of the Distributions payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay), with the same force and effect as if made on the
date such payment was originally payable (each date on which Distributions are
payable in accordance with the foregoing, a "Distribution Date"). A "Business
Day" shall mean any day other than a Saturday or a Sunday, or a day on which
banking institutions in New York, New York or Wilmington, Delaware are
authorized or required by law or executive order to close.
So long as no Debenture Event of Default shall have occurred and be
continuing, the Company will have the right under the Indenture to elect to
defer the payment of interest on the Subordinated Debt Securities at any time
and from time to time for a period not exceeding ten consecutive semiannual
periods with respect to each Extension Period; provided that no Extension Period
may end on a day other than an Interest Payment Date (as defined herein) or may
extend beyond the Stated Maturity Date and no Extension Period may be initiated
while accrued interest from a prior, completed Extension Period is unpaid. Upon
any such election, semiannual Distributions on the Capital Securities will be
also deferred by the Trust during such Extension Period. Distributions to which
holders of the Capital Securities are entitled during any such Extension Period
will continue to accumulate additional Distributions thereon at the rate of
8.56% per annum, compounded semiannually, to the extent permitted by applicable
law, from the relevant Distribution Date. The term "Distributions," as used
herein, shall include any such additional Distributions.
During any Extension Period, pursuant to the Indenture, the Company may not
(i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of the Company's
capital stock (which includes common and preferred stock), (ii) make any payment
of principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of
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<PAGE> 38
the Company (including any Other Debentures (as defined in the Indenture)) that
rank pari passu with or junior in right of payment to the Subordinated Debt
Securities or (iii) make any guarantee payments with respect to any guarantee by
the Company of any securities of any subsidiary of the Company (including Other
Guarantees (as defined in the Indenture)) if such guarantee ranks pari passu
with or junior in right of payment to the Subordinated Debt Securities (other
than (a) dividends or distributions in shares of, or options, warrants or rights
to subscribe for or purchase shares of, capital stock of the Company, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
payments under the Guarantee, (d) as a direct result of a reclassification of
the Company's capital stock or the exchange or conversion of one class or series
of the Company's capital stock for another class or series of the Company's
capital stock, (e) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged or pursuant to
an acquisition in which fractional shares of the Company's capital stock would
otherwise be issued and (f) purchases of common stock related to the issuance of
common stock or rights under any benefit plan for directors, officers, agents or
employees of the Company or its subsidiaries or any of the Company's dividend
reinvestment or director, officer, agent or employee stock purchase plans).
Prior to the termination of any such Extension Period, the Company may
further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed ten consecutive semiannual periods or to
extend beyond the Stated Maturity Date. Upon the termination of any such
Extension Period and the payment of all amounts then due on any Interest Payment
Date, the Company may elect to begin a new Extension Period, subject to the
above requirements. No interest shall be due and payable during an Extension
Period, except at the end thereof. The Company must give the Property Trustee,
the Administrative Trustees and the Debenture Trustee notice of its election to
begin or extend any Extension Period at least five Business Days prior to the
earlier of (i) the date the Distributions on the Trust Securities would have
been payable except for the election to begin or extend such Extension Period or
(ii) the date the Administrative Trustees are required to give to any securities
exchange or to holders of Capital Securities notice of the record date or the
date such Distributions are payable, but in any event not less than five
Business Days prior to such record date. The Company shall give notice of its
election to begin or extend a new Extension Period to the holders of the Capital
Securities. There is no limitation on the number of times that the Company may
elect to begin an Extension Period.
Although the Company may in the future exercise its option to defer
payments of interest on the Subordinated Debt Securities, the Company has no
such current intention.
The revenue of the Trust available for distribution to holders of the
Capital Securities will be limited to payments received from the Company under
the Subordinated Debt Securities. See "Description of the Subordinated Debt
Securities -- General." If the Company does not make interest payments on the
Subordinated Debt Securities, the Property Trustee will not have funds available
to pay Distributions on the Capital Securities. The payment of Distributions (if
and to the extent the Trust has funds on hand legally available for the payment
of such Distributions) will be guaranteed by the Company on a limited basis as
set forth herein under "Description of the Guarantee."
REDEMPTION
The Subordinated Debt Securities will mature on April 15, 2027. As
described in more detail below, the Subordinated Debt Securities may be redeemed
by K N in whole or in part, at any time and from time to time, at a Redemption
Price equal to (i) the Make-Whole Amount in the case of a redemption upon the
occurrence of a Tax Event or an Investment Company Event prior to April 15,
2007, or (ii) the Call Price in the case of a redemption upon the occurrence of
a Tax Event or an Investment Company Event on or after April 15, 2007, in each
case together with accrued and unpaid interest thereon to the date of the
redemption.
37
<PAGE> 39
In addition, the Subordinated Debt Securities may be redeemed by the
Company, in whole or in part, at any time and from time to time on or after
April 15, 2007, at the Redemption Prices (expressed as a percentage of the
principal amount) specified below for the indicated Stated Maturity Date:
<TABLE>
<CAPTION>
IF REDEEMED DURING THE
12-MONTH PERIOD BEGINNING
APRIL 15, CALL PRICE
- ------------------------- ----------
<S> <C> <C>
2007.......................................................... 104.280%
2008.......................................................... 103.852
2009.......................................................... 103.424
2010.......................................................... 102.996
2011.......................................................... 102.568
2012.......................................................... 102.140
2013.......................................................... 101.712
2014.......................................................... 101.284
2015.......................................................... 100.856
2016.......................................................... 100.428
</TABLE>
and thereafter at 100% of the principal amount (each a "Call Price"), in each
case together with accrued and unpaid interest thereon to the date of
redemption.
Upon the repayment in full at maturity or redemption in whole or in part of
the Subordinated Debt Securities (other than following the distribution of the
Subordinated Debt Securities to the holders of the Trust Securities), the
proceeds from such repayment or redemption shall concurrently be applied to
redeem on a pro rata basis (i) at $1,000 per Trust Security, plus accumulated
and unpaid Distributions to the date of redemption (in the case of repayment at
maturity) or (ii) at the applicable Redemption Price (in the case of payment on
redemption), plus accumulated and unpaid Distributions to the date of
redemption, Trust Securities having an aggregate Liquidation Amount equal to the
aggregate principal amount of the Subordinated Debt Securities so repaid or
redeemed; provided, however, that holders of such Trust Securities shall be
given not less than 30 nor more than 60 days' notice of such redemption (other
than at the scheduled maturity of the Subordinated Debt Securities). See
"Description of the Subordinated Debt Securities -- Optional Redemption." In the
event that fewer than all of the outstanding Capital Securities are to be
redeemed, Capital Securities held in book-entry form will be redeemed in
accordance with the procedures of DTC as described under "-- Form, Denomination,
Book-Entry Procedures and Transfer."
TAX EVENT AND INVESTMENT COMPANY EVENT REDEMPTION
As described in more detail below, upon the occurrence of a Tax Event or an
Investment Company Event, the Company will be entitled, under certain
circumstances, to redeem the Subordinated Debt Securities and cause the
redemption of the Trust Securities. For purposes of a Tax Event or an Investment
Company Event and the redemption procedures applicable thereto, reference to
Subordinated Debt Securities shall include any Exchange Securities issued in
exchange therefor.
Upon the occurrence and continuance of a Tax Event or the occurrence of an
Investment Company Event, the Company will have the right, within 90 days
following the occurrence of such event, upon (a) not less than 30 days' notice
to the Debenture Trustee, which notice shall be accompanied by an Officers'
Certificate certifying that such event has occurred and (b) not less than 30 nor
more than 60 days' notice, to redeem the Subordinated Debt Securities in whole
or in part, for cash, at (i) the Make-Whole Amount, in the case of a redemption
upon the occurrence of a Tax Event or an Investment Company Event prior to April
15, 2007 or (ii) the Call Price, in the case of a redemption upon the occurrence
of a Tax Event or an Investment Company Event on or after April 15, 2007, in
each case together with accrued and unpaid interest thereon to the date of
redemption. Following such redemption, Trust Securities with an aggregate
Liquidation Amount equal to the aggregate principal amount of the Subordinated
Debt Securities so redeemed shall be redeemed by the Trust at the corresponding
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<PAGE> 40
Redemption Price, together with accumulated and unpaid Distributions thereon to
the date of redemption.
"Tax Event" means the receipt by the Administrative Trustees of an opinion
of a nationally recognized independent tax counsel experienced in such matters
to the effect that, as a result of (a) any amendment to, clarification of or
change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, (b) any judicial decision or official
administrative pronouncement, ruling, regulatory procedure, notice or
announcement, including any notice or announcement or intent to adopt such
procedures or regulations (an "Administrative Action") or (c) any amendment to,
clarification of or change in the administrative position or interpretation of
any Administrative Action or judicial decision that differs from the theretofore
generally accepted position, in each case, by any legislative body, court,
governmental agency or regulatory body, irrespective of the manner in which such
amendment, clarification or change is made known, which amendment, clarification
or change is effective or such Administrative Action or decision is announced,
in each case, on or after the date of this Offering Memorandum, there is more
than an insubstantial risk that (i) the Trust is, or will be within 90 days of
the date thereof, subject to United States federal income tax with respect to
interest accrued or received on the Subordinated Debt Securities or subject to
more than a de minimis amount of other taxes, duties or other governmental
charges, (ii) any portion of interest payable by the Company on the Subordinated
Debt Securities is not, or within 90 days of the date thereof will not be,
deductible by the Company for United States federal income tax purposes, or
(iii) the Company could become liable to pay, on the next date on which any
amount would be payable with respect to the Subordinated Debt Securities, any
Additional Amounts (as defined herein).
"Investment Company Event" means the receipt by the Administrative Trustees
of an opinion of counsel rendered by a law firm having a nationally recognized
securities practice, to the effect that, as a result of the occurrence of a
change in law or regulation or a change in interpretation or application of law
or regulation by any legislative body, court, governmental agency or regulatory
authority ("Change in Investment Company Law"), there is more than an
insubstantial risk that the Trust is or will be considered an "investment
company" which is required to be registered under the Investment Company Act of
1940, as amended (the "1940 Act"), which Change in Investment Company Law
becomes effective or is announced, enacted or promulgated on or after the date
of this Offering Memorandum.
The "Make-Whole Amount" will be equal to the greater of (i) 100% of the
principal amount of the Subordinated Debt Securities to be redeemed or (ii) as
determined by the Quotation Agent (as defined herein), (a) the sum of the
present values of the principal amount and premium payable as part of the Call
Price with respect to a redemption of such Subordinated Debt Securities on April
15, 2007, together with the present values of all scheduled payments of interest
on such Subordinated Debt Securities from the redemption date to April 15, 2007
(the "Remaining Life"), in each case discounted to the redemption date on a
semiannual basis (assuming a 360-day year consisting of 30-day months) at the
Adjusted Treasury Rate (as defined herein) less (b) accrued and unpaid interest
on such Subordinated Debt Securities to the redemption date.
"Adjusted Treasury Rate" means, with respect to any redemption date, the
rate per annum equal to (i) the yield, under the heading which represents the
average for the immediately prior week, appearing in the most recently published
statistical release designated "H.15 (519)" or any successor publication which
is published weekly by the Federal Reserve Board and which establishes yields on
actively traded United States Treasury securities adjusted to constant maturity
under the caption "Treasury Constant Maturities," for the maturity date
corresponding to the Remaining Life (if no maturity date is within three months
before or after the Remaining Life, yields for the two published maturity dates
most closely corresponding to the Remaining Life shall be interpolated and the
Adjusted Treasury Rate shall be interpolated or extrapolated from such yields on
a straight-line basis, rounding to the nearest month) or (ii) if such release
(or any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semiannual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue
39
<PAGE> 41
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date, in each case calculated on the third
Business Day preceding the redemption date, plus in each case (a) 1.25% if such
redemption date occurs on or prior to April 24, 1998 and (b) 0.50% in all other
cases.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity date comparable to the
Remaining Life 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 Life. If no United
States Treasury security has a maturity date which is within a period from three
months before to three months after the Remaining Life, the two most closely
corresponding United States Treasury securities shall be used as the Comparable
Treasury Issue, and the Adjusted Treasury Rate shall be interpolated or
extrapolated on a straight-line basis, rounding to the nearest month using such
securities.
"Quotation Agent" means Salomon Brothers Inc and its successors; provided,
however, that if the foregoing shall cease to be a primary U.S. Government
securities dealer in New York City (a "Primary Treasury Dealer"), the Company
shall substitute therefor another Primary Treasury Dealer. "Reference Treasury
Dealer" means: (i) the Quotation Agent and (ii) any other Primary Treasury
Dealer selected by the Debenture Trustee after consultation with the Company.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of five Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest of such Reference Treasury Dealer
Quotations, or (ii) if the Debenture Trustee obtains fewer than five such
Reference Treasury Dealer Quotations, the average of all such quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Debenture Trustee, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) quoted in
writing to the Debenture Trustee by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such redemption date.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption due to each holder of Subordinated Debentures to
be prepaid at its registered address. Unless the Company defaults in payment of
the applicable Redemption Price, on and after the redemption date interest will
cease to accrue on such Subordinated Debt Securities called for redemption.
The rights of the Company described above if a Tax Event or an Investment
Company Event occurs are in addition to the right of the Company, as the holder
of the Common Securities, to dissolve the Trust at any time and, after
satisfaction of liabilities to creditors of the Trust (to the extent not
satisfied by the Company), cause the Subordinated Debt Securities to be
distributed to holders of the Trust Securities. See "-- Liquidation of the Trust
and Distribution of Subordinated Debt Securities."
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding Capital
Securities unless all accumulated and unpaid Distributions have been paid on all
such Capital Securities for all semiannual distribution periods terminating on
or prior to the date of redemption.
If the Trust gives a notice of redemption in respect of the Capital
Securities, then, by 12:00 noon, New York City time, on the redemption date, to
the extent funds are legally available, with respect to the Capital Securities
held by DTC or its nominees, the Property Trustee will pay or cause the Paying
Agent (as defined herein) to pay the Redemption Price to DTC. See "-- Form,
Denomination, Book-Entry Procedures and Transfer" below. With respect to the
Capital Securities held in certificated form, the Property Trustee, to the
extent funds are legally available, will give irrevocable instructions and
authority to the Paying Agent and will irrevocably deposit with the Paying Agent
for the Capital Securities funds sufficient to pay or cause the Paying Agent to
pay the applicable Redemption Price to the holders thereof
40
<PAGE> 42
upon surrender of their certificates evidencing the Capital Securities. See
"-- Payment and Paying Agent" below. Distributions payable on or prior to the
redemption date shall be payable to the holders of such Capital Securities on
the relevant record dates for the related Distribution Dates occurring on or
prior to such redemption date. If notice of redemption shall have been given and
funds deposited with the Property Trustee to pay the Redemption Price for the
Capital Securities called for redemption, then all rights of the holders of such
Capital Securities will cease, except the right of the holders of such Capital
Securities to receive the applicable Redemption Price, but without interest on
such Redemption Price, and such Capital Securities will cease to be outstanding.
In the event that any redemption date is not a Business Day, then the applicable
Redemption Price payable on such date will be paid on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay) except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date fixed for
redemption. In the event that payment of the applicable Redemption Price is
improperly withheld or refused and not paid either by the Trust or by the
Company pursuant to the Guarantee as described under "Description of the
Guarantee," (i) Distributions on Capital Securities called for redemption will
accumulate on the Redemption Price at the then applicable rate, from the
redemption date originally established by the Trust to the date such applicable
Redemption Price is actually paid, and (ii) the actual payment date will be the
redemption date for purposes of calculating the applicable Redemption Price.
In the event that fewer than all of the outstanding Capital Securities are
to be redeemed, Capital Securities will be redeemed on a pro rata basis as
described under "-- Form, Denomination, Book-Entry Procedures and Transfer."
The Trust shall not be required to (i) issue, register the transfer of or
exchange any Capital Security in registered certificated form during a period
beginning at the opening of business 15 days before the mailing of any notice of
redemption of Capital Securities and ending at the close of business on the date
of such mailing or (ii) register the transfer of or exchange any Capital
Security in registered certificated form so selected for redemption, in whole or
in part, except for the unredeemed portion of any Certificated Securities being
redeemed in part.
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws) the Company or its subsidiaries may at
any time and from time to time purchase outstanding Capital Securities by
tender, in the open market or by private agreement.
Notice of any redemption will be mailed at least 30 days but not more than
60 days prior to the redemption date to each holder of Trust Securities at its
registered address. Unless the Company defaults in payment of the applicable
Redemption Price, on and after the redemption date Distributions will cease to
accrue on the Trust Securities called for redemption.
LIQUIDATION OF THE TRUST AND DISTRIBUTION OF SUBORDINATED DEBT SECURITIES
The Liquidation Amount payable on the Capital Securities in the event of
any liquidation of the Trust is $1,000 per Capital Security plus accumulated and
unpaid Distributions, which may be in the form of a distribution of such amount
in Subordinated Debt Securities, subject to certain exceptions.
The Company will have the right at any time to dissolve the Trust
(including, without limitation, upon the occurrence of a Tax Event or an
Investment Company Event) and cause the Subordinated Debt Securities to be
distributed to the holders of the Trust Securities on a pro rata basis in
liquidation of the Trust. Such right is subject to the Company having received
an opinion of counsel to the effect that such distribution will not be a taxable
event to holders of Capital Securities.
The Trust shall automatically dissolve upon the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of the Company; (ii)
the distribution of a Like Amount of the Subordinated Debt Securities to the
holders of the Trust Securities, if the Company, as Sponsor, has given written
direction to the Property Trustee to dissolve the Trust (which direction is
optional and, except as described above,
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<PAGE> 43
wholly within the discretion of the Company, as holder of the Common
Securities); (iii) redemption of all of the Trust Securities as described under
"-- Redemption" and "-- Tax Event and Investment Company Event Redemption above;
(iv) April 15, 2028, the expiration of the term of the Trust; (v) upon repayment
of the Subordinated Debt Securities or at such time as no Subordinated Debt
Securities are outstanding; or (vi) the entry of an order for the dissolution of
the Trust by a court of competent jurisdiction.
If a dissolution occurs as described in clause (i), (ii), (iv) or (vi) of
the preceding paragraph, the Trust shall be liquidated by the Administrative
Trustees as expeditiously as the Administrative Trustees determine to be
possible by distributing, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law (to the extent not satisfied by the
Company), to the holders of the Trust Securities a Like Amount of the
Subordinated Debt Securities, unless such distribution is determined by the
Property Trustee not to be practicable, in which event such holders will be
entitled to receive out of the assets of the Trust legally available for
distribution to holders, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law (to the extent not satisfied by the
Company), an amount equal to the aggregate of the Liquidation Amount plus
accumulated and unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution"). If the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets on hand legally
available to pay in full the aggregate Liquidation Distribution, then the
amounts payable directly by the Trust on the Capital Securities and the Common
Securities shall be paid on a pro rata basis, except that if a Debenture Event
of Default has occurred and is continuing, the Capital Securities shall have a
priority over the Common Securities. See "-- Subordination of Common Securities"
below.
"Like Amount" means (i) with respect to a redemption of the Trust
Securities, Trust Securities having a Liquidation Amount equal to the principal
amount of Subordinated Debt Securities to be paid in accordance with their terms
and (ii) with respect to a distribution of Subordinated Debt Securities upon the
liquidation of the Trust, Subordinated Debt Securities having a principal amount
equal to the Liquidation Amount of the Trust Securities of the holder to whom
such Subordinated Debt Securities are distributed.
After the liquidation date is fixed for any distribution of Subordinated
Debt Securities to holders of the Trust Securities, (i) the Trust Securities
will no longer be deemed to be outstanding, (ii) DTC or its nominee, as the
record holder of Trust Securities issued in book-entry form, will receive a
registered global certificate or certificates representing the Subordinated Debt
Securities to be delivered upon such distribution and (iii) any certificates
representing Trust Securities not held by DTC or its nominee will be deemed to
represent undivided beneficial interests in the Subordinated Debt Securities
having a principal amount equal to the Liquidation Amount of such Trust
Securities, and bearing accrued and unpaid interest in an amount equal to the
accumulated and unpaid Distributions on such Trust Securities, until such
certificates are presented to the Administrative Trustees or their agent for
cancellation, whereupon the Company will issue to such holder, and the Debenture
Trustee will authenticate, a certificate representing such Subordinated Debt
Securities.
There can be no assurance as to the market prices for the Capital
Securities or the Subordinated Debt Securities that may be distributed in
exchange for the Trust Securities if a dissolution and liquidation of the Trust
were to occur. Accordingly, the Capital Securities that an investor may
purchase, or the Subordinated Debt Securities that the investor may receive on
dissolution and liquidation of the Trust, may trade at a discount to the price
that the investor paid to purchase the Capital Securities.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, the Capital
Securities and the Common Securities, as applicable, shall be made pro rata
based on the Liquidation Amount of the Capital Securities and Common Securities;
provided, however, that if any Debenture Event of Default shall have occurred
and be continuing, no payments in respect of any Distribution on, or payments
upon liquidation, redemption, repurchase or otherwise with respect to, the
Common Securities, shall be made until the
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holders of the Capital Securities shall be paid in full in cash the
Distributions, Redemption Price, Liquidation Distribution and other payments to
which they are entitled at such time.
EVENTS OF DEFAULT; NOTICE
The occurrence of a Debenture Event of Default in respect of the
Subordinated Debt Securities (see "Description of the Subordinated Debt
Securities -- Debenture Events of Default, Waiver and Notice") constitutes an
"Event of Default" under the Declaration. In the case of any Event of Default,
the Company as holder of the Common Securities will be deemed to have waived any
right to act with respect to such Event of Default until the effect of such
Event of Default with respect to the Trust Securities shall have been cured,
waived or otherwise eliminated. Until any such Event of Default has been so
cured, waived or otherwise eliminated, the Property Trustee shall act solely on
behalf of the holders of the Capital Securities and not on behalf of the Company
as holder of the Common Securities, and only the holders of the Capital
Securities will have the right to direct the Property Trustee to act on their
behalf, including the right to direct the Property Trustee to exercise the
remedies available to it as holder of the Subordinated Debt Securities. If the
Property Trustee fails to enforce its rights under the Subordinated Debt
Securities after the holders of a majority in Liquidation Amount of such Capital
Securities have so directed the Property Trustee, a holder of record of such
Capital Securities may, to the fullest extent permitted by law, institute a
legal proceeding against the Company to enforce the Property Trustee's rights
under the Subordinated Debt Securities without first instituting any legal
proceeding against the Property Trustee or any other person or entity.
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company to pay
interest or principal (or premium, if any) on the Subordinated Debt Securities
on the respective dates such interest or principal (or premium, if any) is
payable (or in the case of redemption, the redemption date), then a holder of
record of such Capital Securities may institute a Direct Action against the
Company for payment, on or after the respective due dates specified in the
Subordinated Debt Securities, to such holder directly of the principal of (or
premium, if any) or interest on Subordinated Debt Securities having an aggregate
principal amount equal to the aggregate Liquidation Amount of the Capital
Securities of such holder. In connection with such Direct Action, the Company
will be subrogated to the rights of such holder of Capital Securities under the
Declaration to the extent of any payment made by the Company to such holder of
Capital Securities in such Direct Action. The holders of Capital Securities will
not be able to exercise directly any other remedy available to the holders of
the Subordinated Debt Securities.
Subject to certain limitations, within 30 Business Days after the
occurrence of any Event of Default which is actually known to the Property
Trustee, the Property Trustee shall transmit notice of such Event of Default to
the holders of the Capital Securities, the Administrative Trustees and the
Company, as Sponsor, unless such Event of Default shall have been cured or
waived. The Company, as Sponsor, and the Administrative Trustees are required to
file annually with the Property Trustee a certificate as to whether or not they
are in compliance with all the conditions and covenants applicable to them under
the Declaration.
Upon the occurrence of an Event of Default, the Property Trustee, so long
as it is the sole holder of the Subordinated Debt Securities, will have the
right under the Indenture to declare the principal of (or premium, if any) and
interest on the Subordinated Debt Securities to be immediately due and payable.
If a Debenture Event of Default has occurred and is continuing, the Capital
Securities shall have a preference over the Common Securities as described under
"-- Liquidation of the Trust and Distribution of Subordinated Debt Securities"
and "-- Subordination of Common Securities" above.
VOTING RIGHTS; AMENDMENT OF THE DECLARATION
Except as provided under "-- Mergers, Conversions, Consolidations,
Amalgamations or Replacements of the Trust" below and "Description of the
Guarantee -- Modification of the Guarantee; Assignment" and as otherwise
required by law and the Declaration, the holders of the Capital Securities will
have no voting rights.
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The Declaration may be amended from time to time by the Company and the
Issuer Trustees, without the consent of the holders of the Trust Securities (i)
to cure any ambiguity, correct or supplement any provisions in the Declaration
that may be inconsistent with any other provision, to make any other provisions
with respect to matters or questions arising under the Declaration, which shall
not be inconsistent with the other provisions of the Declaration, or to add to
the covenants, restrictions or obligations of the Company or (ii) to modify,
eliminate or add to any provisions of the Declaration to such extent as shall be
necessary to ensure that the Trust will be classified for United States federal
income tax purposes as a grantor trust at all times that any Trust Securities
are outstanding or to ensure that the Trust will not be required to register as
an "investment company" under the Investment Company Act; provided, however,
that in the case of clauses (i) and (ii), such action shall not materially
adversely affect the interests of the holders of the Trust Securities. Any
amendment of the Declaration pursuant to the foregoing shall become effective
when notice thereof is given to the holders of the Trust Securities. The
Declaration may be amended by the Issuer Trustees and the Company (i) with the
consent of holders representing a majority (based upon Liquidation Amount) of
the outstanding Trust Securities and (ii) upon receipt by the Issuer Trustees of
an opinion of counsel to the effect that such amendment or the exercise of any
power granted to the Issuer Trustees in accordance with such amendment will not
affect the Trust's status as a grantor trust for United States federal income
tax purposes or the Trust's exemption from status as an "investment company"
under the Investment Company Act; provided that, (A) without the consent of each
holder of Trust Securities, the Declaration may not be amended to (i) change the
amount or timing of any Distribution or other payment on the Trust Securities or
otherwise adversely affect the amount of any Distribution required to be made in
respect of the Trust Securities as of a specified date or (ii) restrict the
right of a holder of Trust Securities to institute suit for the enforcement of
any such payment on or after such date and (B) without the consent of each
holder of Capital Securities, the Declaration may not be amended to restrict the
right of a holder of Capital Securities to bring a Direct Action.
If the Property Trustee fails to enforce its rights under the Subordinated
Debt Securities after the holders of a majority in Liquidation Amount of the
Capital Securities have so directed the Property Trustee, a holder of record of
the Capital Securities may, to the fullest extent permitted by law, institute a
legal proceeding directly against the Company to enforce the Property Trustee's
rights under the Subordinated Debt Securities without first instituting any
legal proceeding against the Property Trustee or any other person or entity.
Notwithstanding the foregoing, if a Debenture Event of Default has occurred and
is continuing and such event is attributable to the failure of the Company to
pay interest or principal (or premium, if any) on the Subordinated Debt
Securities on the respective dates such interest or principal (or premium, if
any) is payable (or in the case of redemption, the redemption date), then a
holder of record of Capital Securities may institute a Direct Action against the
Company for payment, on or after the respective due dates specified in the
Subordinated Debt Securities, to such holder directly of the principal of (or
premium, if any) or interest on the Subordinated Debt Securities having an
aggregate principal amount equal to the aggregate Liquidation Amount of the
Capital Securities of such holder. The Property Trustee shall notify all holders
of the Capital Securities of any default actually known to the Property Trustee
with respect to the Subordinated Debt Securities unless (x) such default has
been cured prior to the giving of such notice or (y) the Property Trustee
determines in good faith that the withholding of such notice is in the interest
of the holders of such Capital Securities, except where the default relates to
the payment of interest or principal of (or premium, if any) on any of the
Subordinated Debt Securities.
So long as any Subordinated Debt Securities are held by the Property
Trustee, the Issuer Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on the Debenture Trustee with respect to
the Subordinated Debt Securities, (ii) waive certain past defaults under the
Indenture, (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Subordinated Debt
Securities or (iv) consent to any amendment, modification or termination of the
Indenture or the Subordinated Debt Securities, where such consent shall be
required to be made by the holders of a majority in aggregate principal amount
of the Subordinated Debt Securities then outstanding,
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without, in each case, obtaining the prior approval of the holders of a majority
in Liquidation Amount of all outstanding Trust Securities; provided, however,
that where a consent under the Indenture would require the consent of each
holder of Subordinated Debt Securities affected thereby, no such consent shall
be given by the Property Trustee without the prior approval of each holder of
Trust Securities. The Issuer Trustees shall not revoke any action previously
authorized or approved by a vote of the holders of the Trust Securities except
by subsequent vote of such holders. In addition to obtaining the foregoing
approvals of such holders of the Trust Securities, prior to taking any of the
foregoing actions, the Issuer Trustees shall obtain an opinion of counsel
experienced in such matters to the effect that the Trust will not be classified
as an association taxable as a corporation for United States federal income tax
purposes on account of such action.
A waiver of a Debenture Event of Default will constitute a waiver of the
corresponding Event of Default under the Declaration.
Any required approval of holders of Capital Securities may be given at a
meeting of such holders convened for such purpose or pursuant to written
consent. The Administrative Trustees will cause a notice of any meeting at which
holders of Capital Securities are entitled to vote, or of any matter upon which
action by written consent of such holders is to be taken, to be given to each
holder of record of Capital Securities in the manner set forth in the
Declaration.
No vote or consent of the holders of Capital Securities will be required
for the Trust to redeem and cancel the Capital Securities in accordance with the
Declaration.
Notwithstanding that holders of the Capital Securities are entitled to vote
or consent under any of the circumstances described above, any of the Capital
Securities that are owned by the Company or any affiliate of the Company shall,
for purposes of such vote or consent, be treated as if they were not
outstanding.
REMOVAL OF ISSUER TRUSTEES; APPOINTMENT OF SUCCESSORS
Unless an Event of Default under the Declaration shall have occurred and be
continuing, any Issuer Trustee may be removed at any time by the holder of a
majority in Liquidation Amount of the Common Securities. If an Event of Default
under the Declaration has occurred and is continuing, the Property Trustee and
the Delaware Trustee may be removed at such time by the holders of a majority in
Liquidation Amount of the outstanding Capital Securities. In no event will the
holders of the Capital Securities have the right to vote to appoint, remove or
replace the Administrative Trustees, which voting rights are vested exclusively
in the Company as the holder of the Common Securities. No resignation or removal
of an Issuer Trustee and no appointment of a successor trustee shall be
effective until the acceptance of appointment by the successor Issuer Trustee in
accordance with the provisions of the Declaration.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default under the Declaration shall have occurred and be
continuing, at any time or times, for the purpose of meeting the legal
requirements of the Trust Indenture Act or of any jurisdiction in which any part
of the Trust's property may at the time be located, the Company, as the holder
of a majority in Liquidation Amount of the Common Securities, and the
Administrative Trustees shall have power to appoint one or more persons either
to act as a co-trustee, jointly with the Property Trustee, of all or any part of
such Trust's property, or to act as a separate trustee of any such property, in
either case with such powers as may be provided in the instrument of
appointment, and to vest in such person or persons in such capacity any
property, title, right or power deemed necessary or desirable, subject to the
provisions of the Declaration. In case such an Event of Default has occurred and
is continuing, the Property Trustee alone shall have power to make such
appointment.
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MERGERS, CONVERSIONS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The Trust may not merge or convert with or into, consolidate, amalgamate,
or be replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any corporation or other Person,
except as described below or as otherwise described above under "-- Liquidation
of the Trust and Distribution of Subordinated Debt Securities." The Trust may,
at the request of the Company, as Sponsor, with the consent of the
Administrative Trustees but without the consent of the holders of the Capital
Securities, the Property Trustee or the Delaware Trustee, merge or convert with
or into, consolidate, amalgamate, or be replaced by or convey, transfer or lease
its properties and assets as an entirety or substantially as an entirety to a
trust organized as such under the laws of any State; provided that (i) if the
Trust is not the survivor, such successor entity either (a) expressly assumes
all of the obligations of the Trust with respect to the Trust Securities or (b)
substitutes for the Trust Securities other securities having substantially the
same terms as the Trust Securities (the "Successor Securities") so long as the
Successor Securities rank the same as the Trust Securities rank in priority with
respect to Distributions and payments upon liquidation, redemption and
otherwise, (ii) the Company expressly appoints a trustee of such successor
entity possessing the same powers and duties as the Property Trustee with
respect to the Subordinated Debt Securities, (iii) the Capital Securities or any
Successor Securities issued in place of the Capital Securities are listed, or
any such Successor Securities will be listed upon notification of issuance, on
any national securities exchange or other organization on which the Capital
Securities are then listed or quoted, if any, (iv) such merger, conversion,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
cause the Capital Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization, (v)
such merger, conversion, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not adversely affect the rights, preferences and
privileges of the holders of the Trust Securities (including any Successor
Securities) in any material respect (other than any dilution of such holders'
interests in the new entity), (vi) such successor entity has a purpose
substantially identical to that of the Trust, (vii) prior to such merger,
conversion, consolidation, amalgamation, replacement, conveyance transfer or
lease, the Company has received an opinion from independent counsel to the Trust
experienced in such matters to the effect that (A) such merger, conversion,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders of the
Trust Securities (including any Successor Securities) in any material respect
(other than any dilution of such holders' interests in the new entity), (B)
following such merger, conversion, consolidation, amalgamation, replacement,
conveyance, transfer or lease, neither the Trust nor such successor entity will
be required to register as an investment company under the 1940 Act and (C)
following such merger, conversion, consolidation, amalgamation, replacement,
conveyance, transfer or lease, neither the Trust nor such successor entity will
be classified as other than a grantor trust for U.S. federal income tax
purposes, and (viii) the Company or any permitted successor or assignee owns all
of the common securities of such successor entity and guarantees the obligations
of such successor entity under the Successor Securities at least to the extent
provided by the Guarantee and the Common Guarantee. Notwithstanding the
foregoing, the Trust shall not, except with the consent of holders of 100% in
Liquidation Amount of the Trust Securities, consolidate, amalgamate, merge or
convert with or into, or be replaced by or convey, transfer or lease its
properties and assets as an entirety or substantially as an entirety to any
other entity or permit any other entity to consolidate, amalgamate, merge or
convert with or into, or replace it if such consolidation, amalgamation, merger,
conversion, replacement, conveyance, transfer or lease would cause the Trust or
the successor entity not to be classified as a grantor trust for the United
States federal income tax purposes.
FORM, DENOMINATION, BOOK-ENTRY PROCEDURES AND TRANSFER
In the event that Exchange Capital Securities are issued in certificated
(i.e., non-global form), such Exchange Capital Securities will be in blocks
having a Liquidation Amount of not less than $100,000 (100 Exchange Capital
Securities) and may be transferred or exchanged only in such blocks and in the
manner and at the offices described below.
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The Exchange Capital Securities will be initially represented by one or
more Capital Securities in registered, global form (collectively, the "Global
Exchange Capital Securities"). The Global Exchange Capital Securities will be
deposited upon issuance with the Property Trustee as custodian for DTC and
registered in the name of DTC or its nominee, in each case for credit to an
account of a direct or indirect participant in DTC as described below.
Except as set forth below, the Global Exchange Capital Securities may be
transferred, in whole or in part, only to another nominee of DTC or to a
successor of DTC or its nominee and only in amounts that would not cause a
holder to own fewer than 100 Exchange Capitals Securities. Beneficial interests
in the Global Exchange Capital Securities may not be exchanged for Exchange
Capital Securities in certificated forms except in the limited circumstances
described under "-- Exchange of Book-Entry Exchange Capital Securities for
Certificated Exchange Capital Securities" below. In addition, transfer of
beneficial interests in the Global Exchange Capital Securities will be subject
to the applicable rules and procedures of DTC and its direct or indirect
participants, which may change from time to time.
Depositary Procedures
DTC has advised the Trust and the Company that DTC is a limited-purpose
trust company created to hold securities for its participating organizations
(collectively, the "Participants") and to facilitate the clearance and
settlement of transactions in those securities between Participants through
electronic book-entry changes in accounts of the Participants. The Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. Indirect access to DTC's system is
also available to other entities such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own securities
held by or on behalf of DTC only through the Participants or the Indirect
Participants. The ownership interest and transfer of ownership interest of each
actual purchase of each security held by or on behalf of DTC are recorded on the
records of the Participants and Indirect Participants.
DTC has also advised the Trust and the Company that, pursuant to procedures
established by it, (i) upon deposit of the Global Exchange Capital Securities,
DTC will credit the accounts of Participants designated by the Exchange Agent
with portions of the Liquidation Amount of the Global Exchange Capital
Securities and (ii) ownership of such interests in the Global Exchange Capital
Securities will be shown on, and the transfer of ownership thereof will be
effected only through, records maintained by DTC (with respect to the
Participants) or by the Participants and the Indirect Participants (with respect
to other owners of beneficial interests in the Global Exchange Capital
Securities).
Investors in the Global Exchange Capital Securities may hold their
interests therein directly through DTC if they are Participants in such system,
or indirectly through organizations which are Participants in such system. All
interests in a Global Exchange Capital Security will be subject to the
procedures and requirements of DTC. The laws of some states require that certain
persons take physical delivery in certificated form of securities that they own.
Consequently, the ability to transfer beneficial interests in a Global Exchange
Capital Security to such persons will be limited to that extent. Because DTC can
act only on behalf of Participants, which in turn act on behalf of Indirect
Participants and certain banks, the ability of a person having beneficial
interests in a Global Exchange Capital Security to pledge such interest to
persons that do not participate in the DTC system, or otherwise take actions in
respect of such interest, may be affected by the lack of a physical certificate
evidencing such interests. For certain other restrictions on the transferability
of the Capital Securities, see "-- Exchange of Book-Entry Exchange Capital
Securities for Certificated Exchange Capital Securities" below.
Except as described below, owners of interests in the Global Exchange
Capital Securities will not have Exchange Capital Securities registered in their
names, will not receive physical delivery of Exchange Capital Securities in
certificated form and will not be considered the registered owners or holders
thereof under the Declaration for any purpose.
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Payments in respect of each Global Exchange Capital Security registered in
the name of DTC or its nominee will be payable by the Property Trustee to DTC in
its capacity as the registered holder under the Declaration. Under the terms of
the Declaration, the Property Trustee will treat the persons in whose names the
Exchange Capital Securities, including the Global Exchange Capital Securities,
are registered as the owners thereof for the purpose of receiving such payments
and for any and all purposes whatsoever. Consequently, neither the Property
Trustee nor any agent thereof has or will have any responsibility or liability
for (i) any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of beneficial
ownership interests in the Global Exchange Capital Securities, or for
maintaining, supervising or reviewing any of DTC's records or any Participant's
or Indirect Participant's records relating to the beneficial ownership interests
in the Global Exchange Capital Securities or (ii) any other matter relating to
the actions and practices of DTC or any of its Participants or Indirect
Participants. DTC has advised the Trust and the Company that its current
practice, upon receipt of any payment in respect of securities such as the
Exchange Capital Securities, is to credit the accounts of the relevant
Participants with the payment on the payment date, in amounts proportionate to
their respective holdings in Liquidation Amount of beneficial interests in the
relevant security as shown on the records of DTC unless DTC has reason to
believe it will not receive payment on such payment date. Payments by the
Participants and the Indirect Participants to the beneficial owners of Exchange
Capital Securities represented by Global Exchange Capital Securities will be
governed by standing instructions and customary practices and will be the
responsibility of the Participants or the Indirect Participants and will not be
the responsibility of DTC, the Property Trustee, the Trust or the Company.
Neither the Trust nor the Company or the Property Trustee will be liable for any
delay by DTC or any of its Participants in identifying the beneficial owners of
the Exchange Capital Securities, and the Trust, the Company and the Property
Trustee may conclusively rely on and will be protected in relying on
instructions from DTC or its nominee for all purposes.
Interests in the Global Exchange Capital Securities will trade in DTC's
Same-Day Funds Settlement System and secondary market trading activity in such
interests will therefore settle in immediately available funds, subject in all
cases to the rules and procedures of DTC and its Participants. Transfers between
Participants in DTC will be effected in accordance with DTC's procedures, and
will be settled in same-day funds.
DTC has advised the Trust and the Company that it will take any action
permitted to be taken by a holder of Exchange Capital Securities only at the
direction of one or more Participants to whose account with DTC interests in the
Global Exchange Capital Securities are credited and only in respect of such
portion of the Liquidation Amount of the Exchange Capital Securities as to which
such Participant or Participants has or have given such direction. However, if
there is an Event of Default under the Declaration, DTC reserves the right to
exchange the Global Exchange Capital Securities for Exchange Capital Securities
in certificated form and to distribute such Exchange Capital Securities to its
Participants.
The information in this section concerning DTC and its book-entry system
has been obtained from sources that the Trust and the Company believe to be
reliable, but neither the Trust nor the Company takes responsibility for the
accuracy thereof. Neither the Trust nor the Company or the Property Trustee will
have any responsibility for the performance by DTC or its Participants of their
respective obligations under the rules and procedures governing their
operations.
Exchange of Book-Entry Exchange Capital Securities for Certificated Exchange
Capital Securities
A Global Exchange Capital Security is exchangeable for Exchange Capital
Securities in certificated form if (i) DTC notifies the Trust that it is
unwilling or unable to continue as clearing agency for the Global Capital
Security or has ceased to be a clearing agency registered under the Exchange Act
and the Company thereupon falls to appoint a successor clearing agency within 90
days, (ii) the Trust in its sole discretion elects to cause the issuance of
definitive certificated Capital Securities or (iii) there has occurred and is
continuing an Event of Default or any event which after notice or lapse of time
or both would be an Event of Default under the Declaration. In addition,
beneficial interests in a Global Exchange
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Capital Security may be exchanged for certificated Exchange Capital Securities
upon request but only upon at least 20 days' prior written notice given to the
Property Trustee by or on behalf of DTC in accordance with customary procedures.
In all cases certificated Exchange Capital Securities delivered in exchange for
any Global Exchange Capital Security or beneficial interests therein will be
registered in the names, and issued in any approved denominations, in blocks of
at least $100,000, requested by or on behalf of the clearing agency (in
accordance with its customary procedures).
RESTRICTIONS ON TRANSFER
The Exchange Capital Securities will be issued, and may be transferred,
whether before or after registration under the Securities Act, only in blocks
having a Liquidation Amount of not less than $100,000 (100 Exchange Capital
Securities). Any such transfer of Exchange Capital Securities in a block having
a Liquidation Amount of less than $100,000 shall be deemed to be void and of no
legal effect whatsoever. Any such transferee shall be deemed not to be the
holder of such Exchange Capital Securities for any purpose, including but not
limited to the receipt of Distributions on such Exchange Capital Securities, and
such transferee shall be deemed to have no interest whatsoever in such Exchange
Capital Securities.
PAYMENT AND PAYING AGENT
Payments in respect of the Exchange Capital Securities held in global form
shall be made to the Depositary, which shall credit the relevant accounts at the
Depositary on the applicable Distribution Dates. Payments in respect of the
Exchange Capital Securities that are not held by the Depositary shall be made by
check mailed to the address of the holder entitled thereto as such address shall
appear on the register. The paying agent for the Trust Securities (the "Paying
Agent") shall initially be the Property Trustee. The Trust may appoint one or
more additional paying agents acceptable to the Administrative Trustees and the
Company. The Paying Agent shall be permitted to resign as Paying Agent upon 30
days' written notice to the Administrative Trustees. In the event that the
Property Trustee shall no longer be the Paying Agent, the Trust shall appoint a
successor (which shall be a bank or trust company acceptable to the
Administrative Trustees and the Company) to act as Paying Agent.
REGISTRAR AND TRANSFER AGENT
The Property Trustee will initially serve as Registrar for the Exchange
Capital Securities. Registration of transfers of Exchange Capital Securities
will be effected without charge by the Registrar, but upon payment (with the
giving of such indemnity as the Administrative Trustees may require) in respect
of any tax or other government charges which may be imposed in relation to it.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, prior to the occurrence of a default with respect to
the Trust Securities and after the curing of any defaults that may have
occurred, undertakes to perform only such duties as are specifically set forth
in the Declaration and, after an Event of Default thereunder, shall exercise
such rights and powers vested in it by the Declaration and use the same degree
of care and skill as a prudent person would exercise under the circumstances in
the conduct of his or her own affairs. Subject to such provisions, the Property
Trustee is under no obligation to exercise any of the powers vested in it by the
Declaration at the request of any holder of Capital Securities, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The holders of Capital Securities will not be
required to offer such indemnity in the event such holders, by exercising their
voting rights, direct the Property Trustee to take any action it is empowered to
take under the Declaration following an Event of Default thereunder. The
Property Trustee also serves as trustee under the Guarantee and the Indenture.
Whenever in the exercise of its rights or powers or the performance of its
duties under the Declaration the Property Trustee shall deem it desirable to
receive instructions with respect to enforcing
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any remedy or right or taking any other action thereunder, the Property Trustee
(i) may request instructions from the holders of the Capital Securities, which
instructions may only be given by the holders of a majority, or such other
proportion, in Liquidation Amount of the Capital Securities as would be entitled
to direct the Property Trustee under the terms of such Capital Securities in
respect of such remedy, right or action, (ii) may refrain from enforcing such
remedy or right or taking such other action until such instructions are
received, and (iii) shall be protected in conclusively relying on or acting on
or in accordance with such instructions.
The Company and certain of its subsidiaries may, from time to time, conduct
certain banking transactions with the Property Trustee in the ordinary course of
their business.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Issuer Trustee shall be a party, or
any Person succeeding to all or substantially all the corporate trust business
of such Issuer Trustee, shall be the successor of such Issuer Trustee under the
Declaration, provided such Person shall be otherwise qualified and eligible.
GOVERNING LAW
The Declaration and the Capital Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to operate the
Trust in such a way so that the Trust will not be required to register as an
"investment company" under the 1940 Act or characterized as other than a grantor
trust for United States federal income tax purposes. In this connection, the
Company and the Administrative Trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust of the Trust, the
Declaration or the articles of incorporation of the Company, that each of the
Company and the Administrative Trustees determine in their discretion to be
necessary or desirable to achieve such end.
Holders of the Trust Securities have no preemptive or similar rights.
The Trust may not borrow money, issue debt, execute mortgages or pledge any
of its assets.
The Exchange Capital Securities are expected to retain the "BBB" rating
issued by Standard & Poor's Rating Services, the "baa1" rating issued by Moody's
Investors Service, Inc. and the "A-" issued by Fitch Investors Service, Inc. in
respect of the Old Capital Securities. A security rating is not a recommendation
to buy, sell or hold securities and may be subject to revision or withdrawal at
any time by the assigning rating agency.
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DESCRIPTION OF THE GUARANTEE
The Old Guarantee was executed and delivered by the Company concurrently
with the issuance by the Trust of the Old Capital Securities for the benefit of
the holders from time to time of the Old Capital Securities. Wilmington Trust
Company acts as trustee ("Guarantee Trustee") under the Old Guarantee, and it
will also act as trustee under the Exchange Guarantee. As soon as practicable
after the date hereof, the Old Guarantee will be exchanged by the Company for
the Exchange Guarantee. The Old Guarantee shall be of no further force or effect
after such exchange. Unless otherwise expressly indicated, references in this
section of the Prospectus to the "Guarantee" refer only to the Exchange
Guarantee.
The Guarantee has been qualified under the Trust Indenture Act. This
summary of certain provisions of the Guarantee does not purport to be complete
and is subject to, and qualified in its entirety by reference to, all of the
provisions of the Guarantee, including the definitions therein of certain terms,
and those provisions made a part of the Guarantee by the Trust Indenture Act.
Copies of both the Old Guarantee and the Exchange Guarantee are filed as
exhibits to the Registration Statement of which this Prospectus is a part. The
Guarantee Trustee will hold the Guarantee for the benefit of the holders of the
Capital Securities.
GENERAL
The Company will irrevocably agree to pay in full, on a subordinated basis,
to the extent set forth herein, the Guarantee Payments (as defined below) to the
holders of the Capital Securities, as and when due, regardless of any defense,
right of set-off or counterclaim that the Trust may have or assert other than
the defense of payment. The following payments with respect to the Capital
Securities, to the extent not paid by or on behalf of the Trust (the "Guarantee
Payments"), will be subject to the Guarantee: (i) any accumulated and unpaid
Distributions required to be paid on Capital Securities, to the extent the Trust
has funds on hand legally available therefor, (ii) the Redemption Price with
respect to any Capital Securities called for redemption, and any accumulated and
unpaid Distributions to the date of redemption, to the extent that the Trust has
funds on hand legally available therefor, or (iii) upon a voluntary or
involuntary dissolution and liquidation of the Trust (unless the Subordinated
Debt Securities are distributed to holders of the Capital Securities), the
lesser of (a) the Liquidation Distribution, to the extent that the Trust has
funds on hand legally available therefor, and (b) the amount of assets of the
Trust remaining available for distribution to holders of Capital Securities. The
Company's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Company to the holders of the Capital
Securities or by causing the Trust to pay such amounts to such holders.
The Guarantee will rank subordinate and junior in right of payment to all
Senior Indebtedness to the extent provided therein. See "-- Status of the
Guarantee" below. The Company's obligations under the Guarantee will be
effectively subordinated to all existing and future liabilities of the Company's
subsidiaries, and claimants should look only to the assets of the Company for
payments thereunder. See "Description of the Subordinated Debt
Securities -- General." The Guarantee does not limit the incurrence or issuance
of other secured or unsecured debt of the Company, including Senior
Indebtedness, whether under the Indenture, any other indenture that the Company
may enter into in the future or otherwise.
The Company will, through the Guarantee, the Declaration, the Subordinated
Debt Securities and the Indenture, taken together, fully, irrevocably and
unconditionally guarantee all of the Trust's obligations under the Capital
Securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee. It is only the
combined operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the Trust's obligations under the
Capital Securities. See "Relationship Among the Capital Securities, the
Subordinated Debt Securities and the Guarantee."
The Company has also agreed separately to irrevocably and unconditionally
guarantee the obligations of the Trust with respect to Common Securities (the
"Common Securities Guarantee" or the
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"Common Guarantee") to the same extent as the Guarantee, except that upon the
occurrence and continuance of a Debenture Event of Default, holders of Capital
Securities shall have priority over holders of Common Securities with respect to
any payments made by the Company on or in respect of the Trust Securities under
the Guarantee and the Common Securities Guarantee. A copy of the Common
Securities Guarantee is filed as an exhibit to the Registration Statement of
which this Prospectus is a part.
CERTAIN COVENANTS OF THE COMPANY UNDER THE GUARANTEE
In the Guarantee, the Company will covenant that, so long as any Capital
Securities remain outstanding, if (1) a Debenture Event of Default shall have
occurred and be continuing or would occur upon the taking of any action
specified in clauses (i)-(iii) below, (2) there shall have occurred any event of
which the Company has actual knowledge that (A) is, or with the giving of notice
or the lapse of time, or both, would be, a Debenture Event of Default and (B) in
respect of which the Company shall not have taken reasonable steps to cure, (3)
the Company shall be in default under the Guarantee or (4) the Company shall
have elected to exercise its right to extend the interest payment period under
the Indenture and such extension shall be continuing, then the Company shall not
(i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of the Company's
capital stock (which includes common and preferred stock), (ii) make any payment
of principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Company (including any Other Debentures) that rank pari
passu with or junior in right of payment to the Subordinated Debt Securities or
(iii) make any guarantee payments with respect to any guarantee by the Company
of any securities of any subsidiary of the Company (including Other Guarantees)
if such guarantee ranks pari passu with or junior in right of payment to the
Subordinated Debt Securities (other than (a) dividends or distributions in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, capital stock of the Company, (b) any declaration of a dividend in
connection with the implementation of a stockholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the
Guarantee, (d) as a direct result of a reclassification of the Company's capital
stock or the exchange or conversion of one class or series of the Company's
capital stock for another class or series of the Company's capital stock, (e)
the purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged or pursuant to an acquisition in which
fractional shares of the Company's capital stock would otherwise be issued, and
(f) purchases of common stock related to the issuance of common stock or rights
under any benefit plan for directors, officers, agents or employees of the
Company or its subsidiaries or any of the Company's dividend reinvestment or
director, officer, agent or employee stock purchase plans).
MODIFICATION OF THE GUARANTEE; ASSIGNMENT
Except with respect to any changes that do not materially adversely affect
the rights of holders of the Capital Securities (in which case no consent will
be required), the Guarantee may not be amended without the prior approval of the
holders of a majority of the Liquidation Amount of the outstanding Capital
Securities. The manner of obtaining any such approval will be as set forth under
"Description of the Capital Securities -- Voting Rights; Amendment of the
Declaration." All guarantees and agreements contained in the Guarantee shall
bind the successors, assigns, receivers, trustees and representatives of the
Company and shall inure to the benefit of the holders of the Capital Securities
then outstanding.
TERMINATION
The Guarantee will terminate (a) upon full payment of the applicable
Redemption Price of the Capital Securities or (b) upon liquidation of the Trust,
the full payment of amounts payable in accordance with the Declaration or
distribution of the Subordinated Debt Securities to the holders of the Capital
Securities. Notwithstanding the foregoing, the Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any holder
of Capital Securities must restore payment of any sums paid under the Capital
Securities or the Guarantee.
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EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. Subject
to certain limited exceptions, the holders of a majority in Liquidation Amount
of the Capital Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under the Guarantee.
If the Guarantee Trustee fails to enforce the Guarantee after the holders
of a majority in Liquidation Amount of the Capital Securities have so requested,
any holder of Capital Securities may institute a legal proceeding directly
against the Company to enforce the Guarantee Trustee's rights and the
obligations of the Company under the Guarantee, without first instituting a
legal proceeding against the Trust, the Guarantee Trustee or any other person or
entity.
The Company, as guarantor, will be required to file annually with the
Guarantee Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior Indebtedness
of the Company in the same manner as the Subordinated Debt Securities. The
Guarantee will be effectively subordinated to all existing and future
liabilities of the Company's subsidiaries, and claimants should look only to the
assets of the Company for payments thereunder.
The Guarantee will rank pari passu with the Subordinated Debt Securities
and with all other guarantees (if any) issued by the Company after the Issue
Date with respect to capital securities (if any) similar to the Capital
Securities issued by other trusts that the Company may establish similar to the
Trust. The Guarantee will constitute a guarantee of payment and not of
collection. Therefore, the guaranteed party may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee without
first instituting a legal proceeding against any other person or entity. The
Guarantee does not place a limitation on the amount of additional Senior
Indebtedness that may be incurred by the Company. The Company expects from time
to time to incur additional indebtedness constituting Senior Indebtedness.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default and after the
curing or waiving of all defaults that may have occurred with respect to the
Guarantee, undertakes to perform only such duties as are specifically set forth
in the Guarantee and, after default, shall exercise the same degree of care as a
prudent individual would exercise in the conduct of his or her own affairs.
Subject to such provisions, the Guarantee Trustee is under no obligation to
exercise any of the powers vested in it by the Guarantee at the request of any
holder of Capital Securities, unless offered reasonable indemnity against the
costs, expenses and liabilities which might be incurred thereby.
The Company and certain of its subsidiaries may, from time to time, conduct
certain banking transactions with the Guarantee Trustee in the ordinary course
of business.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the
internal laws of the State of New York.
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DESCRIPTION OF THE SUBORDINATED DEBT SECURITIES
The Old Subordinated Debt Securities were issued, and the Exchange
Subordinated Debt Securities will be issued, under an Indenture dated as of
April 24, 1997 (the "Indenture"), between the Company and Wilmington Trust
Company, as trustee (the "Debenture Trustee"). The Indenture has been qualified
under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
This summary of certain terms and provisions of the Subordinated Debt Securities
and the Indenture does not purport to be complete and, where reference is made
to particular provisions of the Indenture, such provisions, including the
definitions of certain terms, some of which are not otherwise defined herein,
are qualified in their entirety by reference to all of the provisions of the
Indenture and those terms made a part of the Indenture by the Trust Indenture
Act. A copy of the Indenture is filed as an exhibit to the Registration
Statement of which this Prospectus is a part.
In certain circumstances, Subordinated Debt Securities may be distributed
to the holders of the Trust Securities in liquidation of the Trust. See
"Description of the Capital Securities -- Liquidation of the Trust and
Distribution of Subordinated Debt Securities." Until the liquidation of the
Trust, each Subordinated Debt Security will be registered in the name of the
Property Trustee and held by it in trust for the benefit of the holders of the
Trust Securities. Notwithstanding the registration of the Exchange Subordinated
Debt Securities under the Securities Act, the Exchange Subordinated Debt
Securities may not be offered for resale, resold or otherwise transferred on
behalf of the Trust without further compliance with the registration and
prospectus delivery requirements of the Securities Act. If the Exchange
Subordinated Debt Securities are distributed to the holders of Capital
Securities, however, the Trust and the Company believe (based on existing
interpretations by the staff of the Commission) such holders would be permitted,
subject to certain limitations, to offer for resale, resell or transfer the
Exchange Subordinated Debt Securities without further compliance with the
registration and prospectus delivery requirements of the Securities Act. See
"The Exchange Offer--Resales of Exchange Capital Securities."
GENERAL
Concurrently with the issuance of the Old Capital Securities, the Trust
invested the proceeds thereof, together with the consideration paid by the
Company for the Common Securities, in the Old Subordinated Debt Securities
issued by the Company. Pursuant to the Exchange Offer, the Company will exchange
the Old Subordinated Debt Securities for the Exchange Subordinated Debt
Securities as soon as practicable after the date hereof. No Old Subordinated
Debt Securities will remain outstanding after such exchange.
The Subordinated Debt Securities will be issued in denominations of $1,000
and integral multiples thereof. The Subordinated Debt Securities will mature on
April 15, 2027 (the "Stated Maturity Date").
The Subordinated Debt Securities are not subject to a sinking fund
provision. The entire principal amount of the Subordinated Debt Securities will
mature and become due and payable, together with any accrued and unpaid interest
thereon, including additional interest on the amount thereof (to the extent
permitted by law), compounded semiannually, and Additional Amounts (as defined
herein), if any, on the Stated Maturity Date.
The Subordinated Debt Securities will rank pari passu with all Other
Debentures and will be unsecured and subordinate and rank junior in right of
payment to the extent and in the manner set forth in the Indenture to all Senior
Indebtedness of the Company. See "-- Subordination" below. The Subordinated Debt
Securities will be effectively subordinated to all existing and future
liabilities of the Company's subsidiaries, and holders of Subordinated Debt
Securities should look only to the assets of the Company for payments on the
Subordinated Debt Securities. The Indenture does not limit the incurrence or
issuance of other secured or unsecured debt of the Company, including Senior
Indebtedness. See "-- Subordination" below and "Risk Factors -- Ranking of
Subordinate Obligations Under the Guarantee and Subordinated Debt Securities."
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The Indenture does not contain provisions that afford holders of the
Subordinated Debt Securities protection in the event of a highly leveraged
transaction, including a change of control or other similar transactions
involving the Company that may adversely affect such holders.
SUBORDINATION
In the Indenture, the Company has covenanted and agreed that any
Subordinated Debt Securities issued thereunder will be subordinate and junior in
right of payment to all Senior Indebtedness to the extent provided in the
Indenture. Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshalling of assets or any bankruptcy, insolvency, or similar
proceedings, the holders of Senior Indebtedness will first be entitled to
receive payment in full in cash or other satisfactory consideration of all
amounts due or to become due on or in respect of such Senior Indebtedness before
the holders of Subordinated Debt Securities will be entitled to receive or
retain any payment in respect thereof.
In the event of the acceleration of the maturity of Subordinated Debt
Securities, the holders of all Senior Indebtedness outstanding at the time of
such acceleration will first be entitled to receive payment in full in cash or
other satisfactory consideration of all such Senior Indebtedness before the
holders of Subordinated Debt Securities will be entitled to receive or retain
any payment in respect of the Subordinated Debt Securities.
No payments on account of principal or premium, if any, or interest, if
any, in respect of the Subordinated Debt Securities may be made if there shall
have occurred and be continuing a default in any payment with respect to Senior
Indebtedness, or in the event the acceleration of the maturity thereof has been
or would be permitted with notice or the passage of time, or if any judicial
proceeding shall be pending with respect to any such default, until all amounts
due or to become due on the Senior Indebtedness are paid in full in cash or
other satisfactory consideration.
"Indebtedness" shall mean (i) any obligation of, or any obligation
guaranteed by, the Company for which the Company is responsible or liable as
obligor or otherwise including principal, premium, and interest (whether
accruing before or after filing of any petition in bankruptcy or any similar
proceedings by or against the Company and whether or not allowed as a claim in
bankruptcy or similar proceedings) for (A) indebtedness of the Company for money
borrowed, (B) indebtedness evidenced by securities, bonds, debentures, notes or
other similar written instruments, (C) any deferred obligation for the payment
of the purchase price or conditional sale obligation of property or assets
acquired other than in the ordinary course of business, but excluding trade
account payables arising in the ordinary course of business, (D) all obligations
of the Company for the reimbursement of any letter of credit, banker's
acceptance, security purchase facility or similar credit transaction or (E) any
obligation referred to in (A) through (D) above of other persons secured by any
lien on any property or asset of the Company and (ii) all indebtedness of the
Company for obligations of the Company to make payments in respect of derivative
products such as interest and foreign exchange rate contracts, commodity
contracts (including future or options contracts), swap agreements, cap
agreements, repurchase and reverse repurchase agreements and similar
arrangements, whether outstanding on the date of execution of the Indenture or
thereafter created, assumed or incurred.
"Indebtedness Ranking on a Parity with the Subordinated Debt Securities"
shall mean Indebtedness, whether outstanding on the date of execution of the
Indenture or thereafter created, assumed or incurred, which specifically by its
terms ranks equally with and not prior to the Subordinated Debt Securities in
the right of payment upon the happening of the dissolution or winding-up or
liquidation or reorganization of the Company. The securing of any Indebtedness,
otherwise constituting Indebtedness Ranking on a Parity with the Subordinated
Debt Securities, shall not be deemed to prevent such Indebtedness from
constituting Indebtedness Ranking on a Parity with the Subordinated Debt
Securities.
"Indebtedness Ranking Junior to the Subordinated Debt Securities" shall
mean any Indebtedness, whether outstanding on the date of execution of the
Indenture or thereafter created, assumed or incurred, which specifically by its
terms ranks junior to and not equally with or prior to the Subordinated Debt
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Securities (and any other Indebtedness Ranking on a Parity with the Subordinated
Debt Securities) in right of payment upon the happening of the dissolution or
winding-up or liquidation or reorganization of the Company. The securing of any
Indebtedness, otherwise constituting Indebtedness Ranking Junior to the
Subordinated Debt Securities, shall not be deemed to prevent such Indebtedness
from constituting Indebtedness Ranking Junior to the Subordinated Debt
Securities.
"Senior Indebtedness" shall mean all Indebtedness, whether outstanding on
the date of execution of the Indenture or thereafter created, assumed, incurred
or guaranteed, except Indebtedness Ranking on a Parity with the Subordinated
Debt Securities or Indebtedness Ranking Junior to the Subordinated Debt
Securities, and any deferrals, renewals or extensions of such Senior
Indebtedness.
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued or entered into by the Company. As of December 31, 1996,
Senior Indebtedness of the Company aggregated approximately $580 million.
OPTIONAL REDEMPTION
The Company may redeem the Subordinated Debt Securities, in whole or in
part, at any time and from time to time, on or after April 15, 2007, upon not
less than 30 nor more than 60 days' notice, at the Call Price described under
"Description of the Capital Securities -- Redemption," plus accrued and unpaid
interest to the redemption date. In certain limited circumstances described
herein, the Subordinated Debt Securities also are redeemable by the Company, in
whole or in part at any time at (i) the Make-Whole Amount in the case of a
redemption upon the occurrence of a Tax Event or an Investment Company Event
prior to April 15, 2007, or (ii) the Call Price in the case of a redemption upon
the occurrence of a Tax Event or an Investment Company Event on or after April
15, 2007, in each case together with accrued and unpaid interest thereon to the
date of the redemption. See "Description of the Capital Securities -- Tax Event
and Investment Company Event Redemption."
INTEREST
The Subordinated Debt Securities will bear interest at the rate of 8.56%
per annum of the principal amount thereof, payable semiannually in arrears on
April 15 and October 15 of each year (each, an "Interest Payment Date"),
commencing October 15, 1997, to the Person in whose name each Subordinated Debt
Security is registered, subject to certain exceptions, at the close of business
on the first day of the month in which the relevant payment date falls. It is
anticipated that, until the liquidation, if any, of the Trust, each Subordinated
Debt Security will be held in the name of the Property Trustee in trust for the
benefit of the holders of the Trust Securities.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. In the event that any Interest
Payment Date is not a Business Day, then payment of the interest payable on such
date will be made on the next succeeding day that is a Business Day or, in the
case of a redemption payment, on the immediately preceding Business Day if such
succeeding Business Day would otherwise fall in the next calendar year (and
without any interest or other payment in respect of any such delay), with the
same force and effect as if made on the date such payment was originally
payable. Accrued interest that is not paid on the applicable Interest Payment
Date will bear additional interest on the amount thereof (to the extent
permitted by law) at the rate of 8.56% per annum, compounded semiannually. The
term "interest," as used herein, includes any semiannual interest payments,
interest on semiannual interest payments not paid on the applicable Interest
Payment Date and Additional Amounts (as defined herein), as applicable.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no Debenture Event of Default has occurred and is continuing,
the Company will have the right under the Indenture at any time or from time to
time during the term of the Subordinated Debt Securities to defer the payment of
interest for a period not exceeding ten consecutive semiannual periods with
respect to each Extension Period; provided that no Extension Period may end on a
day other than an
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Interest Payment Date or may extend beyond the Stated Maturity Date. At the end
of an Extension Period, the Company must pay all interest then accrued and
unpaid (together with interest thereon accrued at the annual rate of 8.56%,
compounded semiannually, to the extent permitted by applicable law). During an
Extension Period, interest will continue to accrue and, if the Subordinated Debt
Securities have been distributed to holders of the Trust Securities, holders of
Subordinated Debt Securities (or holders of the Trust Securities while Trust
Securities are outstanding) will be required to accrue interest income for
United States federal income tax purposes prior to the receipt of cash
attributable to such income. See "Certain Federal Income Tax
Considerations -- Interest Income and Original Issue Discount."
During any such Extension Period, pursuant to the Indenture, the Company
may not (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire. or make a liquidation payment with respect to, any of the
Company's capital stock (which includes common and preferred stock), (ii) make
any payment of principal, interest or premium, if any, on or repay, repurchase
or redeem any debt securities of the Company (including any Other Debentures)
that rank pari passu with or junior in right of payment to the Subordinated Debt
Securities or (iii) make any guarantee payments with respect to any guarantee by
the Company of any securities of any subsidiary of the Company (including Other
Guarantees) if such guarantee ranks pari passu with or junior in right of
payment to the Subordinated Debt Securities (other than (a) dividends or
distributions in shares of, or options, warrants or rights to subscribe for or
purchase shares of, capital stock of the Company, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the
Guarantee, (d) as a direct result of a reclassification of the Company's capital
stock or the exchange or conversion of one class or series of the Company's
capital stock for another class or series of the Company's capital stock, (e)
the purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged or pursuant to an acquisition in which
fractional shares of the Company's capital stock would otherwise be issued, and
(f) purchases of common stock related to the issuance of common stock or rights
under any benefit plan for directors, officers, agents or employees of the
Company or its subsidiaries or any of the Company's dividend reinvestment or
director, officer, agent or employee stock purchase plans).
Prior to the termination of any such Extension Period, the Company may
further extend such Extension Period, provided that such extension does not
cause the Extension Period to exceed ten consecutive semiannual periods or to
extend beyond the Stated Maturity Date. Upon the termination of any such
Extension Period and the payment of all amounts then due on any Interest Payment
Date, the Company may elect to begin a new Extension Period, subject to the
above requirements. No interest shall be due and payable during an Extension
Period, except at the end thereof. The Company must give the Property Trustee,
the Administrative Trustees and the Debenture Trustee notice of its election of
any Extension Period (or an extension thereof) at least five Business Days prior
to the earlier of (i) the date the Distributions on the Trust Securities would
have been payable except for the election to begin or extend such Extension
Period or (ii) the date the Administrative Trustees are required to give notice
to any securities exchange or to holders of Capital Securities of the record
date or the date such Distributions are payable, but in any event not less than
five Business Days prior to such record date. The Property Trustee shall give
notice of the Company's election to begin or extend an Extension Period to the
holders of the Capital Securities. There is no limitation on the number of times
that the Company may elect to begin an Extension Period.
ADDITIONAL AMOUNTS
If at any time the Trust shall be required to pay any taxes, duties and
other governmental charges of whatever nature (other than withholding taxes)
imposed by the United States, or any other taxing authority, then, in any such
case, the Company will pay as additional interest ("Additional Amounts") on the
Subordinated Debt Securities such additional amounts as shall be required in
order that the net amounts received and retained by the Trust after paying any
such taxes, duties and other governmental
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charges will equal the amounts the Trust and the Property Trustee would have
received had no such taxes, duties and other governmental charges been imposed.
CERTAIN COVENANTS OF THE COMPANY
The Company covenants in the Indenture that it will not (i) declare or pay
any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock (which
includes common and preferred stock), (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company (including any Other Debentures) that rank pari passu
with or junior in right of payment to the Subordinated Debt Securities or (iii)
make any guarantee payments with respect to any guarantee by the Company of any
securities of any subsidiary of the Company (including Other Guarantees) if such
guarantee ranks pari passu with or junior in right of payment to the
Subordinated Debt Securities (other than (a) dividends or distributions in
shares of or options, warrants or rights to subscribe for or purchase shares of,
capital stock of the Company, (b) any declaration of a dividend in connection
with the implementation of a stockholders' rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (c) payments under the Guarantee or the Exchange
Guarantee, (d) as a direct result of a reclassification of the Company's capital
stock or the exchange or conversion of one class or series of the Company's
capital stock for another class or series of the Company's capital stock, (e)
the purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged or pursuant to an acquisition in which
fractional shares of the Company's capital stock would otherwise be issued, and
(f) purchases of common stock related to the issuance of common stock or rights
under any benefit plan for directors, officers, agents or employees of the
Company or its subsidiaries or any of the Company's dividend reinvestment or
director, officer, agent or employee stock purchase plans) if at such time (1) a
Debenture Event of Default shall have occurred and be continuing, or would occur
upon the taking of any action specified in clauses (i) through (iii) above, (2)
there shall have occurred any event of which the Company has actual knowledge
that (a) with the giving of notice or the lapse of time, or both, would
constitute a Debenture Event of Default and (b) in respect of which the Company
shall not have taken reasonable steps to cure, (3) the Company shall be in
default with respect to its payment of any obligations under the Guarantee or
(4) the Company shall have given notice of its election of an Extension Period
or any extension thereof, as provided in the Indenture, or an extension period
with respect to any Other Debentures, and shall not have rescinded such notice,
or such Extension Period, or any extension thereof, or extension period with
respect to Other Debentures, shall be continuing.
The Company also covenants (i) to directly or indirectly maintain 100%
ownership of the Common Securities of the Trust; provided, however, that any
permitted successor of the Company under the Indenture may succeed to the
Company's ownership of the Common Securities, (ii) to use its reasonable efforts
to cause the Trust (a) to remain a statutory business trust, except in
connection with the distribution of Subordinated Debt Securities to the holders
of Trust Securities in liquidation of the Trust, the redemption of all of the
Trust Securities of the Trust, or certain mergers, consolidations or
amalgamations, each as permitted by the Declaration, and (b) to otherwise
continue not to be treated as an association taxable as a corporation or a
partnership for United States federal income tax purposes and (iii) to use its
reasonable efforts to cause each holder of Trust Securities to be treated as
owning an undivided beneficial interest in the Subordinated Debt Securities.
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Company shall not consolidate with or merge
with or into any other Person or sell, convey, assign, transfer, lease or
otherwise dispose of all or substantially all of its properties and assets as an
entirety to any Person, unless: (i) the Person formed by such consolidation or
into which the Company is merged or the Person which acquires such properties
and assets by sale, conveyance, assignment, transfer, lease or disposition is a
corporation, trust or partnership organized
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under the laws of the United States or any State or the District of Columbia,
and such successor expressly assumes the Company's obligations on the
Subordinated Debt Securities; (ii) immediately before and immediately after
giving effect thereto, no Debenture Event of Default, and no event which, after
notice or lapse of time or both, would become a Debenture Event of Default,
shall have occurred and be continuing; and (iii) certain other conditions as
prescribed in the Indenture are met. This provision shall only apply to a merger
or consolidation in which the Company is not the surviving corporation and to
dispositions by the Company of all or substantially all of the consolidated
properties and assets of the Company to any Person.
Upon any consolidation by the Company with or merger by the Company into
any other Person or any sale, conveyance, assignment, transfer, lease or other
disposition of all or substantially all of the properties and assets of the
Company as an entirety to any Person in accordance with the conditions listed in
the immediately preceding paragraph, the successor Person formed by such
consolidation or into which the Company is merged or to which such disposition
is made shall succeed to, and be substituted for, and may exercise every right
and power of, the Company under the Indenture, and in the event of any such
disposition, the Company, except in the case of a lease, shall be discharged of
all obligations and covenants under the Indenture and the Subordinated Debt
Securities and may be dissolved and liquidated.
The general provisions of the Indenture do not afford holders of the
Subordinated Debt Securities protection in the event of a highly leveraged or
similar transaction involving the Company that may adversely affect holders of
the Subordinated Debt Securities.
DEBENTURE EVENTS OF DEFAULT, WAIVER AND NOTICE
The Indenture provides that any one or more of the following described
events with respect to the Subordinated Debt Securities constitutes a "Debenture
Event of Default":
(a) default for 30 days in payment of any interest on the Subordinated
Debt Securities, including any interest on accrued and unpaid interest (to
the extent permitted by applicable law) or any Additional Amounts, when
due, provided, however, that a valid extension of an interest payment
period by the Company in accordance with the terms of the Indenture shall
not constitute a default in the payment of interest for this purpose;
(b) default in payment of principal and premium, if any, on the
Subordinated Debt Securities when due either at maturity, upon redemption,
by declaration or otherwise;
(c) default by the Company in the performance of any other of the
covenants or agreements in the Indenture which shall not have been remedied
for a period of 90 days after written notice to the Company by the
Debenture Trustee or to the Company and the Debenture Trustee by the
holders of 25% in aggregate principal amount of the Subordinated Debt
Securities then outstanding;
(d) certain events of bankruptcy, insolvency or reorganization of the
Company; or
(e) the liquidation of the Trust, except in connection with the
distribution of the Subordinated Debt Securities to the holders of Trust
Securities in liquidation of the Trust, the redemption of all of the Trust
Securities, or certain mergers, consolidations or amalgamation, each as
permitted by the Declaration.
The Indenture provides that the Debenture Trustee may, under certain
circumstances, withhold from the notice of default with respect to the
Subordinated Debt Securities (except for any default in payment of principal of
or interest or premium, if any, on the Subordinated Debt Securities) if the
Debenture Trustee considers it in the interest of such holders to do so.
The Debenture Trustee or the holders of not less than 25% in aggregate
outstanding principal amount of the Subordinated Debt Securities may declare the
principal due and payable immediately upon a Debenture Event of Default. The
holders of a majority in aggregate outstanding principal amount of the
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Subordinated Debt Securities may annul such declaration and waive the default if
the default (other than the nonpayment of the principal of the Subordinated Debt
Securities which has become due solely by such acceleration) has been cured and
a sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee.
Prior to any declaration accelerating the maturity of the Subordinated Debt
Securities, the holders of a majority in aggregate principal amount of the
outstanding Subordinated Debt Securities may, on behalf of the holders of all
the Subordinated Debt Securities, waive any past default except a default in the
payment of principal of or premium, if any, on or interest or a default in
respect of a covenant or provision which under the Indenture cannot be modified
or amended without the consent of the holder of each outstanding Subordinated
Debt Security.
No holder of any Subordinated Debt Security shall have any right to
institute any suit, action or proceeding for any remedy under the Indenture,
unless such holder previously shall have given to the Debenture Trustee written
notice of a continuing Debenture Event of Default and unless the holders of not
less than 25% in aggregate principal amount of the Subordinated Debt Securities
then outstanding shall have given the Debenture Trustee a written request to
institute such action, suit or proceeding and shall have offered to the
Debenture Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred thereby, and the Debenture Trustee for
60 days after its receipt of such notice, request and offer of indemnity shall
have failed to institute any such action, suit or proceeding; provided, however,
that no holder of Subordinated Debt Securities shall have any right to prejudice
the rights of any other holder of Subordinated Debt Securities, obtain priority
or preference over any other such holder or enforce any right under the
Indenture except as provided in the Indenture and for the equal, ratable and
common benefit of all holders of Subordinated Debt Securities. Notwithstanding
the foregoing, the right of any holder of any Subordinated Debt Security to
receive payment of the principal of, premium, if any, and interest, on such
Subordinated Debt Security when due, or to institute suit for the enforcement of
any such payment, shall not be impaired or affected without the consent of such
holder.
The Indenture provides that the holders of a majority in aggregate
outstanding principal amount of the Subordinated Debt Securities have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Debenture Trustee; provided, however, that, except under
certain circumstances, the Debenture Trustee may decline to follow any such
direction if the Debenture Trustee determines that the action so directed would
be unjustly prejudicial to holders not taking part in such direction or would be
unlawful or would involve the Debenture Trustee in personal liability.
The Indenture requires the annual filing by the Company with the Debenture
Trustee of a certificate as to the absence of certain defaults under the
Indenture.
MODIFICATION OF THE INDENTURE
From time to time the Company and the Debenture Trustee may, without the
consent of the holders of Subordinated Debt Securities, amend or supplement the
Indenture for specified purposes, including, among other things, curing
ambiguities, defects or inconsistencies (provided that any such action does not
materially adversely affect the interest of the holders of Subordinated Debt
Securities). The Indenture contains provisions permitting the Company and the
Debenture Trustee, with the consent of the holders of a majority in aggregate
principal amount of the Subordinated Debt Securities then outstanding, to modify
the Indenture in a manner affecting the rights of the holders of Subordinated
Debt Securities; provided that no such modification may, without the consent of
the holders of each outstanding Subordinated Debt Security so affected, (i)
change the Stated Maturity Date or reduce the principal amount of the
Subordinated Debt Securities or reduce the rate or extend the time of payment of
interest thereon or (ii) reduce the percentage of principal amount of
Subordinated Debt Securities the holders of which are required to consent to any
such modification of the Indenture.
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SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Subordinated Debt
Securities not previously delivered to the Debenture Trustee for cancellation
(i) have become due and payable or (ii) will become due and payable at maturity
or upon redemption within one year, and the Company deposits with the Debenture
Trustee funds, in trust, for the purpose and in amount sufficient to pay and
discharge the entire indebtedness on the Subordinated Debt Securities not
previously delivered to the Debenture Trustee for cancellation, for the
principal and premium, if any, and interest to the Stated Maturity Date or the
date of redemption, as the case may be, then the Indenture will cease to be of
further effect (except as to the Company's obligations to pay all other sums due
pursuant to the Indenture and to provide the officers' certificates and opinions
of counsel described therein), and the Company will be deemed to have satisfied
and discharged the Indenture.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee is subject to all the duties and responsibilities
specified with respect to an indenture trustee under the Trust Indenture Act.
Subject to such provisions, the Debenture Trustee is under no obligation to
exercise any of the powers vested in it by the Indenture at the request of any
holder of Subordinated Debt Securities, unless offered reasonable indemnity by
such holder against the costs, expenses and liabilities which might be incurred
thereby. The Debenture Trustee is not required to expend or risk its own funds
or otherwise incur personal financial liability in the performance of its duties
if the Debenture Trustee reasonably believes that repayment or adequate
indemnity is not reasonably assured to it.
The Company and certain of its subsidiaries may, from time to time, conduct
certain banking transactions with the Debenture Trustee in the ordinary course
of business.
FORM, REGISTRATION AND TRANSFER
If the Subordinated Debt Securities are distributed to the holders of the
Trust Securities, the Subordinated Debt Securities may be represented by one or
more global certificates registered in the name of Cede & Co. as the nominee of
DTC. The depositary arrangements for such Subordinated Debt Securities are
expected to be substantially similar to those in effect for the Capital
Securities. For a description of DTC and the terms of the depositary
arrangements relating to payments, transfers, voting rights, redemptions and
other notices and other matters, see "Description of the Capital Securities --
Form, Denomination, Book-Entry Procedures and Transfer."
RESTRICTIONS ON TRANSFER
The Subordinated Debt Securities will be issued, and, if distributed to the
holders of the Trust Securities in liquidation of the Trust, may be transferred,
only in blocks having an aggregate principal amount of not less than $100,000.
Any such transfer of Subordinated Debt Securities in a block having an aggregate
principal amount of less than $100,000 shall be deemed to be void and of no
legal effect whatsoever. Any such transferee shall be deemed not to be holder of
such Subordinated Debt Securities for any purpose, including but not limited to
the receipt of payments on such Subordinated Debt Securities, and such
transferee shall be deemed to have no interest whatsoever in such Subordinated
Debt Securities.
GOVERNING LAW
The Indenture and the Subordinated Debt Securities will be governed by, and
construed in accordance with, the internal laws of the State of New York.
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PAYMENT AND PAYING AGENTS
Payment of principal of and premium, if any, and any interest on
Subordinated Debt Securities will be made at the office of the Debenture Trustee
in Wilmington, Delaware, or at the office of such Paying Agent or Paying Agents
as the Company may designate from time to time, except that at the option of the
Company payment of any interest may be made (i) by check mailed to the address
of the Person entitled thereto as such address shall appear in the register for
Subordinated Debt Securities or (ii) by transfer to an account maintained by the
Person entitled thereto as specified in such register, provided that proper
transfer instructions have been received by the relevant record date. Payment of
any interest on any Subordinated Debt Security will be made to the Person in
whose name such Subordinated Debt Security is registered at the close of
business on the record date for such interest, except in the case of defaulted
interest. The Company may at any time designate additional Paying Agents or
rescind the designation of any Paying Agent; however, the Company will at all
times be required to maintain a Paying Agent in each place of payment for the
Subordinated Debt Securities.
Any moneys deposited with the Debenture Trustee or any Paying Agent, or
then held by the Company in trust, for the payment of the principal of and
premium, if any or interest on any Subordinated Debt Security and remaining
unclaimed for two years after such principal and premium, if any, or interest
has become due and payable shall, at the request of the Company, be repaid to
the Company and the holder of such Subordinated Debt Security shall thereafter
look, as a general unsecured creditor, only to the Company for payment thereof.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
Pursuant to the Declaration and the Indenture, if a Debenture Event of
Default shall have occurred and be continuing and shall be attributable to the
failure of the Company to pay interest or premium, if any, on or principal of
the Subordinated Debt Securities on the due date, a holder of Capital Securities
may institute a Direct Action. The Company may not amend the Indenture to remove
the foregoing right to bring a Direct Action without the prior written consent
of the holders of all of the Capital Securities. Notwithstanding any payments
made to a holder of Capital Securities by the Company in connection with a
Direct Action, the Company shall remain obligated to pay the principal of or
premium, if any, or interest on the Subordinated Debt Securities, and the
Company shall be subrogated to the rights of the holder of such Capital
Securities with respect to payments on the Capital Securities to the extent of
any payments made by the Company to such holder in any Direct Action.
The holders of the Capital Securities will not be able to exercise directly
any remedies, other than those set forth in the preceding paragraph or as
otherwise described under "Description of the Capital Securities -- Events of
Default; Notice," available to the holders of the Subordinated Debt Securities.
DESCRIPTION OF THE OLD SECURITIES
The terms of the Old Securities are identical in all material respects to
the Exchange Securities, except that (i) the Old Securities have not been
registered under the Securities Act, are subject to certain restrictions on
transfer and are entitled to certain rights under the Registration Agreement
(which rights will terminate upon consummation of the Exchange Offer, except
under limited circumstances), (ii) the Exchange Capital Securities will not
provide for any increase in the Distribution rate thereon and (iii) the Exchange
Subordinated Debt Securities will not provide for any increase in the interest
rate thereon. The Registration Agreement provides that, under certain
circumstances specified therein, interest on the principal amount of the Old
Subordinated Debt Securities and Distributions on the Liquidation Amount of the
Old Capital Securities will accrue or accumulate at an increased rate. The
Exchange Securities are not, and upon consummation of the Exchange Offer any Old
Capital Securities that remain outstanding will not be, entitled to any such
additional interest or Distributions.
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RELATIONSHIP AMONG THE CAPITAL SECURITIES, THE
SUBORDINATED DEBT SECURITIES AND THE GUARANTEE
LIMITED PURPOSE OF THE TRUST
The Capital Securities represent undivided beneficial interests in the
assets of the Trust, and the Trust exists for the sole purposes of (i) issuing
and selling the Trust Securities and effecting the Exchange Offer for the
Exchange Capital Securities, (ii) investing the gross proceeds from the sale of
the Old Capital Securities and Common Securities in the Old Subordinated Debt
Securities, (iii) exchanging the Old Subordinated Debt Securities for the
Exchange Subordinated Debt Securities and (iv) engaging in only those other
activities necessary, advisable or incidental thereto.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
Subordinated Debt Securities, such payments will be sufficient to cover
Distributions and other payments due on the Trust Securities, primarily because:
(i) the aggregate principal amount or Redemption Price of the Subordinated Debt
Securities is equal to the sum of the Liquidation Amount or Redemption Price, as
applicable, of the Trust Securities; (ii) the interest rate and interest and
other payment dates on the Subordinated Debt Securities will match the
Distribution rate and Distribution and other payment dates for the Trust
Securities; (iii) the Company shall pay for all and any costs, expenses and
liabilities of the Trust except the Trust's obligations to holders of Trust
Securities under such Trust Securities; and (iv) the Declaration will provide
that the Trust is not authorized to engage in any activity that is not
consistent with the limited purposes thereof.
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Capital Securities
(to the extent the Trust has funds on hand legally available for the payment of
such Distributions) are irrevocably guaranteed by the Company as and to the
extent set forth under "Description of the Guarantee." Taken together, the
Company's obligations under the Subordinated Debt Securities, the Indenture, the
Declaration and the Guarantee provide, in the aggregate, a full, irrevocable and
unconditional guarantee of payment of Distributions and other amounts due on the
Capital Securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
Trust's obligations under the Capital Securities. If and to the extent that the
Company does not make the required payments on the Subordinated Debt Securities,
the Trust will not have sufficient funds to make the related payments, including
Distributions, on the Capital Securities. The Guarantee will not cover any such
payment when the Trust does not have sufficient funds on hand legally available
therefor. In such event, the remedy of a holder of Capital Securities is to
institute a Direct Action. The obligations of the Company under the Guarantee
are subordinate and junior in right of payment to all Senior Indebtedness.
ENFORCEMENT OF RIGHTS OF HOLDERS OF CAPITAL SECURITIES
If the Guarantee Trustee fails to enforce the Guarantee after the holders
of a majority in Liquidation Amount of the Capital Securities have so requested,
a holder of any Capital Security may institute a legal proceeding against the
Company to enforce its rights under the Guarantee without first instituting a
legal proceeding against the Guarantee Trustee, the Trust or any other person or
entity.
A default or event of default under any Senior Indebtedness would not
constitute a default or Event of Default under the Declaration. However, in the
event of payment defaults under, or acceleration of, Senior Indebtedness, the
subordination provisions of the Indenture will provide that no payments may be
made in respect of the Subordinated Debt Securities until such Senior
Indebtedness has been paid in full
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or any payment default thereunder has been cured or waived. Failure to make
required payments on Subordinated Debt Securities would constitute an Event of
Default under the Declaration.
RIGHTS UPON DISSOLUTION
Unless the Subordinated Debt Securities are distributed to holders of the
Trust Securities, upon any voluntary or involuntary dissolution and liquidation
of the Trust after satisfaction of liabilities to creditors of the Trust (to the
extent not satisfied by the Company), the holders of the Trust Securities will
be entitled to receive, out of assets held by the Trust, the Liquidation
Distribution in cash. See "Description of Capital Securities -- Liquidation of
the Trust and Distribution of Subordinated Debt Securities." Upon any voluntary
or involuntary liquidation or bankruptcy of the Company, the Property Trustee,
as holder of the Subordinated Debt Securities, would be a subordinated creditor
of the Company, subordinated in right of payment to all Senior Indebtedness, as
set forth in the Indenture, but entitled to receive payment in full of principal
(and premium, if any) and interest, before any stockholders of the Company
receive payments or distributions. Since the Company will be the guarantor under
the Guarantee and will agree to pay for all costs, expenses and liabilities of
the Trust (other than the Trust's obligations to the holders of its Trust
Securities), the positions of a holder of Capital Securities and a holder of
Subordinated Debt Securities relative to other creditors and to stockholders of
the Company in the event of liquidation or bankruptcy of the Company are
expected to be substantially the same.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
In the opinion of Vinson & Elkins L.L.P., special United States federal
income tax counsel to the Company and the Trust ("Tax Counsel"), the following
summary accurately describes the material United States federal income tax
consequences of the exchange of Old Capital Securities for Exchange Capital
Securities pursuant to the Exchange Offer and the ownership and disposition of
Capital Securities. Except as otherwise noted, this summary only addresses the
tax consequences to a person that acquired Old Capital Securities on their
original issue at their original offering price and that is, for United States
federal income tax purposes, (i) a citizen or individual resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any state thereof or the District of Columbia or (iii) an
estate or trust which is not treated as a foreign estate or foreign trust for
United States federal tax purposes (a "United States Person"). This summary does
not address all tax consequences that may be applicable to a United States
Person that is a beneficial owner of Capital Securities, nor does it address the
tax consequences to (i) persons that are subject to special treatment under
United States federal income tax law, such as banks, insurance companies, thrift
institutions, regulated investment companies, real estate investment trusts,
tax-exempt organizations and dealers in securities or currencies, (ii) persons
that hold Capital Securities as part of a position in a "straddle" or as part of
a "hedging," "conversion" or other integrated investment transaction for federal
income tax purposes, (iii) United States Persons whose functional currency is
not the United States dollar or (iv) persons that do not hold Capital Securities
as capital assets.
This summary is based upon the Internal Revenue Code of 1986, as amended
(the "Code"), Treasury regulations, Internal Revenue Service rulings and
pronouncements and judicial decisions, all as of the date hereof and all of
which are subject to change at any time. Such changes may be retroactive and
could result in tax consequences that vary substantially from the consequences
described below, possibly adversely affecting a beneficial owner of Capital
Securities. An opinion of counsel is not binding on the Internal Revenue Service
("IRS") or the courts, and the authorities on which this summary is based are
subject to various interpretations. It is therefore possible that the federal
income tax treatment of the purchase, ownership and disposition of Capital
Securities may differ from the treatment described below.
HOLDERS ARE ADVISED TO CONSULT WITH THEIR OWN TAX ADVISORS IN LIGHT OF
THEIR OWN PARTICULAR CIRCUMSTANCES AS TO THE FEDERAL TAX CONSEQUENCES OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF CAPITAL SECURITIES, AS WELL AS THE EFFECT
OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
EXCHANGE OF CAPITAL SECURITIES
The Exchange will not be a taxable event for United States federal income
tax purposes. Consequently, no taxable gain or loss will be recognized by a
holder upon the receipt of Exchange Capital Securities in exchange for its Old
Capital Securities, and such holder will have the same adjusted tax basis and
holding period in the Exchange Capital Securities as the holder had in its Old
Capital Securities immediately before such exchange.
CLASSIFICATION OF THE SUBORDINATED DEBT SECURITIES
Tax Counsel is of the opinion that under then current law and assuming full
compliance with the terms of the Indenture (and certain other documents), and
based on certain facts and assumptions contained in such opinion, the
Subordinated Debt Securities will be classified for United States federal income
tax purposes as indebtedness of the Company.
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CLASSIFICATION OF THE TRUST
Tax Counsel is of the opinion that, under then current law and assuming
full compliance with the terms of the Declaration and the Indenture (and certain
other documents), and based on certain facts and assumptions contained in such
opinion, the Trust will be classified for United States federal income tax
purposes as a grantor trust and not as a partnership or an association taxable
as a corporation. Accordingly, for United States federal income tax purposes,
each holder of Capital Securities will be considered the owner of an undivided
interest in the Subordinated Debt Securities, and each holder will be required
to include in its gross income any interest and original issue discount ("OID")
accrued with respect to its allocable share of those Subordinated Debt
Securities.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under Treasury regulations (the "Regulations"), a "remote" contingency that
stated interest will not be timely paid on the Subordinated Debt Securities will
be ignored in determining whether the Subordinated Debt Securities are issued
with OID. The Company believes that the likelihood of its exercising its option
to defer payments of interest on the Subordinated Debt Securities is "remote"
since, among other things, exercising that option would prevent the Company from
declaring dividends on any class of its equity securities. Accordingly, the
Company intends to take the position, based on the advice of Tax Counsel, that
the Subordinated Debt Securities will not be considered to be issued with OID
and, accordingly, stated interest on the Subordinated Debt Securities generally
will be taxable to a holder of Capital Securities as ordinary income at the time
it is paid or accrued in accordance with such holder's method of accounting.
If the Company were to exercise its option to defer payments of interest on
the Subordinated Debt Securities, the Subordinated Debt Securities would at that
time be treated for purposes of the OID rules as having been retired and
reissued with OID equal to the sum of all future payments of stated interest on
the Subordinated Debt Securities. If the Subordinated Debt Securities are
treated as having been reissued with OID (either because the Company exercises
its right to defer interest payments or because the likelihood of such exercise
was not remote at the time of issuance), holders must include that OID in income
on an economic accrual basis regardless of their method of tax accounting and
regardless of the amount of interest received. Thus, the amount of income
required to be recognized by a holder of Capital Securities with respect to a
taxable period may exceed the Distributions received by such holder in such
period. The amount of OID that accrues in any semiannual period will
approximately equal the amount of interest that accrues in that semiannual
period at the stated interest rate (including compounding). Accordingly, if the
interest payment period is extended, holders will accrue OID approximately equal
to the amount of the interest payment due at the end of the Extension Period on
an economic accrual basis over the length of the Extension Period. A holder of
Capital Securities that disposes of the Capital Securities during an Extension
Period may suffer a loss because the market value of the Capital Securities
likely will fall if the Company exercises its option to defer payments of
interest on the Subordinated Debt Securities. To the extent the selling price is
less than the holder's adjusted tax basis (which effectively will include all
accrued but unpaid interest and OID), the holder will recognize a capital loss,
which generally may not be used to offset ordinary income (including interest
income or OID on the Subordinated Debt Securities).
The Regulations have not yet been addressed in any rulings or other
interpretations by the IRS, and it is possible that the IRS could take a
position contrary to Tax Counsel's interpretation herein.
Because income on the Capital Securities will constitute interest or OID,
corporate holders of the Capital Securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the Capital Securities.
RECEIPT OF SUBORDINATED DEBT SECURITIES OR CASH UPON LIQUIDATION OF THE TRUST
The Company will have the right at any time to liquidate the Trust and
cause the Subordinated Debt Securities to be distributed to the holders of the
Trust Securities. Under current law, such a distribution
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would, for United States federal income tax purposes, be treated as a nontaxable
event to each holder, and each holder would receive an aggregate tax basis in
the Subordinated Debt Securities equal to such holder's aggregate tax basis in
its Capital Securities. A holder's holding period in the Subordinated Debt
Securities so received in liquidation of the Trust would include the period
during which the Capital Securities were held by such holder.
Under certain circumstances described herein (see "Description of the
Capital Securities"), the Subordinated Debt Securities may be redeemed for cash
and the proceeds of such redemption distributed to holders in redemption of
their Capital Securities. Under current law, such a redemption would, for United
States federal income tax purposes, constitute a taxable disposition of the
redeemed Capital Securities, and a holder could recognize gain or loss as if it
sold such redeemed Capital Securities for cash. See "-- Sales of Capital
Securities" below.
SALES OF CAPITAL SECURITIES
A holder that sells Capital Securities (including upon a redemption) will
recognize gain or loss equal to the difference between its adjusted tax basis in
the Capital Securities and the amount realized on the sale of such Capital
Securities (for this purpose, the amount realized on the sale of a Capital
Security does not include any amount attributable to accrued and unpaid interest
not previously included in income, which will be taxable as ordinary income). A
holder's adjusted tax basis in the Capital Securities generally will be the
initial purchase price therefor increased by any OID accrued to the date of
disposition and decreased by payments (other than stated interest that
constitutes ordinary income at the time it is paid or accrued) received on the
Capital Securities. Such gain or loss generally will be a capital gain or loss
and generally will be a long-term capital gain or loss if the Capital Securities
have been held for more than one year. Subject to certain limited exceptions,
capital losses cannot be applied to offset ordinary income for United States
federal income tax purposes.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is a
beneficial owner of a Capital Security that is not a United States Person and is
not engaged in the conduct of a trade or business within the United States.
Under present United States federal income tax law: (i) payments by the
Trust or any of its paying agents to a United States Alien Holder will not be
subject to United States federal withholding tax; provided that, (a) such United
States Alien Holder does not actually or constructively own 10 percent or more
of the total combined voting power of all classes of stock of the Company
entitled to vote, (b) such United States Alien Holder is not a controlled
foreign corporation that is related to the Company through stock ownership,
within the meaning of the Code, and (c) either (A) such United States Alien
Holder certifies to the Trust or its agent, under penalties of perjury, that it
is not a United States holder and provides its name and address or (B) a
securities clearing organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business (a
"Financial Institution"), and holds the Capital Security in such capacity,
certifies to the Trust or its agent, under penalties of perjury, that such
statement has been received from such United States Alien Holder by it or by a
Financial Institution between it and such United States Alien Holder and
furnishes the Trust or its agent with a copy thereof; and (ii) a United States
Alien Holder of a Capital Security generally will not be subject to United
States federal withholding tax on any gain realized upon the sale or other
disposition of a Capital Security.
PROPOSED TAX LEGISLATION
On February 6, 1997, the Clinton Administration released an explanation of
its Fiscal 1998 Budget Proposal, which would, among other things, generally deny
corporate issuers a deduction for interest in respect of certain types of debt
obligations (the "Administration's Proposal"). The Administration's Proposal
would apply to debt obligations, such as the Subordinated Debt Securities,
issued on or after
67
<PAGE> 69
the date of "first committee action" with respect to the Administration's
Proposal if such debt obligations have a maximum term in excess of 15 years and
are not shown as indebtedness on the issuer's balance sheet or if such debt
obligations have a maximum weighted average maturity of more than 40 years.
Under current law, the Company will be able to deduct interest on the
Subordinated Debt Securities, and as currently proposed the Administration's
Proposal would not apply to the Subordinated Debt Securities, because they were
issued prior to the date of "first committee action." Legislative proposals
recently approved by the House Ways and Means Committee and the Senate Finance
Committee did not include the Administration's Proposal. There can be no
assurance, however, that current or future legislative proposals or final
legislation will not adversely affect the ability of the Company to deduct
interest on the Subordinated Debt Securities. Accordingly, there can be no
assurance that a Tax Event will not occur. The occurrence of a Tax Event may
result in the redemption of the Subordinated Debt Securities for cash, in which
event the holders of Capital Securities would receive cash in redemption of
their Capital Securities. See "Description of the Capital Securities -- Tax
Event and Investment Company Event Redemption" and "Description of the
Subordinated Debt Securities -- Optional Redemption."
INFORMATION REPORTING TO HOLDERS
Generally, income on the Capital Securities will be reported to holders on
Forms 1099-INT, which forms should be mailed to holders of Capital Securities by
January 31 following each calendar year.
ADDITIONAL INTEREST
The Company does not anticipate that Additional Interest, Additional
Amounts or Additional Distributions will be paid. However, if Additional
Interest, Additional Amounts or Additional Distributions are paid, they will be
taxable to the holder as ordinary income (possibly as interest income) in
accordance with the holder's method of accounting for tax purposes.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
"Backup" withholding at a rate of 31% will apply to payments of interest to
a nonexempt holder unless the holder furnishes its taxpayer identification
number in the manner prescribed in applicable Treasury regulations, certifies
that such number is correct, certifies as to no loss of exemption from backup
withholding and meets certain other conditions or otherwise establishes an
exemption. Any amounts withheld from a holder of Capital Securities under the
backup withholding rules will be allowed as a refund or a credit against such
holder's United States federal income tax liability, provided the required
information is furnished to the Internal Revenue Service.
The amount of interest paid or OID accrued on the Capital Securities by
United States Persons (other than corporations and other exempt holders) will be
reported to the IRS. In addition, payment of the proceeds from the disposition
of Capital Securities to or through the United States office of a broker is
subject to information reporting and backup withholding unless the holder or
beneficial owner establishes an exemption from information reporting and backup
withholding.
ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (a "Plan"), should consider the fiduciary standards of ERISA in the
context of the Plan's particular circumstances before authorizing an investment
in the Exchange Capital Securities, whether pursuant to the Exchange Offer or
otherwise. Accordingly, among other factors, the fiduciary should consider
whether the investment would satisfy the prudence and diversification
requirements of ERISA, whether the investment would constitute an improper
delegation of fiduciary authority, and whether the investment would be
consistent with the documents and instruments governing the Plan.
68
<PAGE> 70
Section 406 of ERISA and Section 4975 of the Code prohibit Plans, as well
as individual retirement accounts and Keogh plans subject to Section 4975 of the
Code (also "Plans"), from engaging in certain transactions involving "plan
assets" with persons who are "parties in interest" under ERISA or "disqualified
persons" under the Code ("Parties in Interest") with respect to such Plan.
Unless exemptive relief is available, a violation of these "prohibited
transaction" rules may result in an excise tax or other liabilities for such
Parties in Interest. Employee benefit plans that are governmental plans (as
defined in Section 3(32) of ERISA), certain church plans (as defined in Section
3(33) of ERISA) and foreign plans (as described in Section 4(b)(4) of ERISA) are
not subject to the requirements of ERISA or Section 4975 of the Code.
Under a regulation (the "Plan Assets Regulation") issued by the U.S.
Department of Labor (the "DOL"), the assets of the Trust may be deemed to be
"plan assets" of a Plan for purposes of ERISA and Section 4975 of the Code if
"plan assets" of the Plan were used to acquire Exchange Capital Securities.
If the Exchange Capital Securities were acquired and held by a Plan (or
with the "plan assets" of such Plan) and the assets of the Trust were deemed to
be "plan assets" of such Plan under the Plan Assets Regulation, certain
transactions involving the Trust could be deemed to constitute direct or
indirect prohibited transactions under Section 406 of ERISA and Section 4975 of
the Code with respect to such Plan. For example, if the Company is a Party in
Interest with respect to an investing Plan, extensions of credit between the
Company and the Trust (as represented by the Subordinated Debt Securities and
the Guarantees) would likely be prohibited by Section 406(a)(1)(B) of ERISA and
Section 4975(c)(1)(B) of the Code, unless exemptive relief were available (see
below). Because the assets of the Trust may be considered "plan assets" for
ERISA purposes as a result of a Plan's acquisition and holding of Exchange
Capital Securities, a Plan fiduciary should consider (a) whether powers which
potentially may be exercised by any person or entity with respect to the Trust
or its assets would result in such person or entity being potentially deemed to
be a fiduciary and, therefore, a Party in Interest with respect to a Plan
acquiring or holding Exchange Capital Securities and (b) if so, whether such
acquisition and holding could result in a delegation of fiduciary authority
which is impermissible under the Plan's governing instruments or any investment
management agreement with the Plan. In making such determinations, a Plan
fiduciary should note that prior to a Debenture Event of Default, the Issuer
Trustees will have only limited custodial and ministerial authority with respect
to the assets of the Trust.
The DOL has issued five prohibited transaction class exemptions ("PTCEs")
that may provide exemptive relief for direct or indirect prohibited transactions
resulting from the purchase or holding of the Exchange Capital Securities,
assuming that assets of the Trust were deemed to be "plan assets" of Plans
investing in the Trust. Those class exemptions are PTCE 96-23 (for certain
transactions determined by in-house asset managers), PTCE 95-60 (for certain
transactions involving insurance company general accounts), PTCE 91-38 (for
certain transactions involving bank collective investment funds), PTCE 90-1 (for
certain transactions involving insurance company pooled separate accounts) and
PTCE 84-14 (for certain transactions determined by independent qualified asset
managers).
Because of the prohibited transaction exposures described above, the
Exchange Capital Securities may not be purchased or held by any Plan, any entity
whose underlying assets include "plan assets" by reason of any Plan's investment
in the entity (a "Plan Asset Entity") or any person investing "plan assets" of
any Plan, unless such purchaser or holder is eligible for the exemptive relief
available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14. Any purchaser or holder
of the Exchange Capital Securities will be deemed to have represented by its
purchase and holding thereof that it either (a) is not a Plan or a Plan Asset
Entity and is not purchasing such securities on behalf of or with "plan assets"
of any Plan or (b) is eligible for the exemptive relief available under PTCE
96-23, 95-60, 91-38, 90-1 or 84-14, with respect to such purchase or holding.
See "Notice to Investors" herein. Further, the fiduciaries of any Plan or Plan
Asset Entity which may purchase or hold any Exchange Capital Securities will be
deemed as a result of such acquisition or holding to have (a) directed the Trust
to invest in the Exchange Subordinated Debt Securities and (b) authorized and
directed any of the actions taken or which may be taken with respect to the
Trust, the Exchange Capital Securities by any of the Company, the Issuer
69
<PAGE> 71
Trustees, the Debenture Trustee or the Guarantee Trustee as contemplated by the
Indenture, the Declaration, the Guarantee or the Common Guarantee.
Due to the complexity of these rules and the penalties that may be imposed
upon persons involved in non-exempt prohibited transactions, it is particularly
important that fiduciaries or other persons considering purchasing Exchange
Capital Securities on behalf of a Plan or with "plan assets" of any Plan consult
with their counsel regarding the potential consequences if the assets of the
Trust were deemed to be "plan assets" and the availability of exemptive relief
under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Securities received in
exchange for Old Capital Securities where such Old Capital Securities were
acquired by such broker-dealer as a result of market-making activities or other
trading activities. The Trust and the Company have agreed that, starting on the
Expiration Date and ending on the close of business on the 90th day following
the Expiration Date (subject to extension in the circumstances described in the
Registration Agreement), they will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale. In addition, until , 1997, all dealers effecting
transactions in the Exchange Securities may be required to deliver a prospectus.
The Company and the Trust will not receive any proceeds from any sale of
Exchange Securities by broker-dealers. Exchange Securities received by
broker-dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange
Securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or the
purchasers of any such Exchange Securities. Any broker-dealer that resells
Exchange Securities that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such Exchange Securities may be deemed to be an "underwriter" within the meaning
of the Securities Act and any profit of any such resale of Exchange Securities
and any commissions or concessions received by any such persons may be deemed to
be underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Exchange
Capital Securities and the formation of the Trust will be passed upon on behalf
of the Trust and the Company by Richards, Layton & Finger, P.A., special
Delaware counsel to the Trust and the Company. The validity of the Exchange
Subordinated Debt Securities and the Exchange Guarantee will be passed upon on
behalf of the Company by Vinson & Elkins L.L.P. Certain United States federal
income taxation matters will be passed upon for the Company and the Trust by
Vinson & Elkins L.L.P.
70
<PAGE> 72
EXPERTS
The consolidated financial statements of the Company as of December 31,
1996 and 1995 and for each of the three years in the period ended December 31,
1996, incorporated herein by reference to its Annual Report on Form 10-K for the
year ended December 31, 1996, as amended, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are incorporated herein in reliance upon the authority of said firm
as experts in accounting and auditing in giving said report.
71
<PAGE> 73
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is a Kansas corporation. Section 17-6305 of the Kansas General
Corporation Law provides that a Kansas corporation shall have power to indemnify
any person who was or is a party, or is threatened to be made a party, to any
threatened, pending or completed action or suit (including an action by or in
the right of the corporation to procure a judgment in its favor) or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses actually and reasonably
incurred by such person in connection with the defense or settlement of such
action or suit by or in the right of the corporation, including attorney fees,
and against expenses, judgments, fines and amounts paid in settlement actually
and reasonably incurred by such person in connection with such action, suit or
proceeding, including attorney fees, if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation; and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such person's conduct was
unlawful. Article Ninth of the articles of incorporation of the Company requires
the Company to provide substantially the same indemnification of its directors
and officers as that authorized by Kansas General Corporation Law.
The Amended and Restated Declaration of Trust provides, to the full extent
permitted by applicable law, for indemnity of the Administrative Trustees, any
Affiliate of any Administrative Trustee, any officer, director, shareholder,
member, partner, employee, representative or agent of any Administrative
Trustee, or any officer, employee or agent of the Trust or its Affiliates (each
a "Company Indemnified Person"), from and against losses and expenses incurred
by such Company Indemnified Person in connection with any action, suite or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, except that if such
action, suit or proceeding is by or in the right of the Trust, the indemnity
shall be limited to expenses of such Company Indemnified Person.
The Company has insurance policies which, among other things, include
liability insurance coverage for directors and officers (including officers
acting as Administrative Trustees), with a $200,000 corporate reimbursement
deductible clause, under which directors and officers are covered against "loss"
arising from any claim or claims which may be made against a director or officer
by reason of any "wrongful act" in their respective capacities as directors and
officers. "Loss" is defined so as to exclude, among other things, fines or
penalties, as well as matters deemed uninsurable under the law pursuant to which
the policy is to be construed. "Wrongful act" is defined to include any actual
or alleged breach of duty, neglect, error, misstatement, misleading statement or
omission done or wrongfully attempted. The policy also contains other specific
definitions and exclusions and provides an aggregate of more than $20,000,000 of
insurance coverage.
ITEM 21. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
4.1 -- Restated Articles of Incorporation of the Company.
Incorporated herein by reference to Exhibit 3(a) to the
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1994.
4.2 -- By-laws of the Company, as amended. Incorporated herein
by reference to Exhibit 3(b) to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994.
</TABLE>
4.3 -- Indenture between the Company and Wilmington Trust
Company, as Debenture Trustee, dated as of April 24,
1997.
II-1
<PAGE> 74
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
4.4 -- Amended and Restated Declaration of Trust among the
Company, Wilmington Trust Company, as Property Trustee
and Delaware Trustee, and the Administrative Trustees
named therein, dated as of April 24, 1997.
4.5 -- Form of Capital Security certificate originally issued by
K N Capital Trust I on April 24, 1997 (included as
Exhibit A-1 of Exhibit 4.4).
4.6 -- Form of Capital Security certificate to be issued by K N
Capital Trust I and registered under the Securities Act
of 1933 (included as Exhibit A-1 of Exhibit 4.4).
4.7 -- Form of certificate for 8.56% Series A Junior
Subordinated Deferrable Interest Debenture due April 15,
2027 originally issued by the Company on April 24, 1997
(included as Exhibit A of Exhibit 4.3).
4.8 -- Form of certificate for 8.56% Series B Junior
Subordinated Deferred Interest Debenture due April 15,
2027 to be issued by the Company and registered under the
Securities Act of 1933 (included as Exhibit A to Exhibit
4.3).
4.9 -- Series A Capital Securities Guarantee executed by the
Company and Wilmington Trust Company, as Guarantee
Trustee, as of April 24, 1997.
4.10 -- Form of Capital Securities Guarantee to be entered into
by the Company and Wilmington Trust Company, as Guarantee
Trustee, and registered under the Securities Act of 1933.
4.11 -- Common Securities Guarantee of the Company dated as of
April 24, 1997.
4.12 -- Registration Rights Agreement, dated as of April 24, 1997
among the Company, K N Capital Trust I, Salomon Brothers
Inc and Merrill Lynch & Co.
5.1 -- Opinion and consent of Vinson & Elkins L.L.P. as to
legality of the Exchange Subordinated Debt Securities and
the Exchange Guarantee to be issued by the Company.
5.2 -- Opinion of special Delaware counsel as to legality of the
Exchange Capital Securities to be issued by K N Capital
Trust I.
8.1 -- Opinion of Vinson & Elkins L.L.P. as to certain federal
income tax matters (included in Exhibit 5.1).
12.1 -- Computation of ratio of earnings to fixed charges.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Vinson & Elkins L.L.P. (included in Exhibit
5.1).
23.3 -- Consent of special Delaware counsel (included in Exhibit
5.2).
24.1 -- Powers of Attorney.
25.1 -- Form T-1 Statement of Eligibility of Wilmington Trust
Company to act as trustee under the Indenture.
25.2 -- Form T-1 Statement of Eligibility of Wilmington Trust
Company to act as trustee under the Amended and Restated
Declaration of Trust.
25.3 -- Form T-1 Statement of Eligibility of Wilmington Trust
Company to act as trustee under the Guarantee for the
benefit of the holders of the Capital Securities.
99.1 -- Form of Letter of Transmittal.
99.2 -- Form of Notice of Guaranteed Delivery.
99.3 -- Form of Exchange Agency Agreement.
</TABLE>
II-2
<PAGE> 75
ITEM 22. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
either registrant pursuant to any charter provision, bylaw, contract,
arrangement, statute, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by such registrant of expenses incurred or paid by a director,
officer or controlling person of such registrant in the successful defense of
any action, suit or proceeding) is asserted against such registrant by such
director, officer or controlling person in connection with the securities being
registered, such registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(b) Each registrant hereby undertakes:
(1) To respond to requests for information that is incorporated by
reference into the Prospectus, pursuant to Item 4, 10(b), 11 or 13 of this
Form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the Registration Statement through the date of responding
to the request.
(2) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired or involved
therein, that was not the subject of and included in the Registration
Statement when it became effective.
(c) Each registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of such registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-3
<PAGE> 76
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, K N Capital
Trust I has duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Lakewood, State of
Colorado, on the 2nd day of July, 1997.
K N CAPITAL TRUST I
By: /s/ CLYDE E. MCKENZIE
----------------------------------
Clyde E. McKenzie
Administrative Trustee
By: /s/ E. WAYNE LUNDHAGEN
----------------------------------
E. Wayne Lundhagen
Administrative Trustee
Pursuant to the requirements of the Securities Act of 1933, K N Energy,
Inc. has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Lakewood, State of
Colorado on the 2nd day of July, 1997.
K N ENERGY, INC.
By: /s/ CLYDE E. MCKENZIE
----------------------------------
Clyde E. McKenzie
Vice President and Chief Financial
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on July 2, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <C>
(i) Principal executive officer:
/s/ LARRY D. HALL* Chairman of the Board, President
- ----------------------------------------------------- and Chief Executive Officer
(Larry D. Hall)
(ii) Principal financial and accounting officer:
/s/ CLYDE E. MCKENZIE Vice President and Chief
- ----------------------------------------------------- Financial Officer
(Clyde E. McKenzie)
</TABLE>
(iii) Directors:
/s/ EDWARD H. AUSTIN, JR.*
- -----------------------------------------------------
(Edward H. Austin, Jr.)
II-4
<PAGE> 77
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <C>
/s/ CHARLES W. BATTEY*
- -----------------------------------------------------
(Charles W. Battey)
/s/ STEWART A. BLISS*
- -----------------------------------------------------
(Stewart A. Bliss)
/s/ DAVID W. BURKHOLDER*
- -----------------------------------------------------
(David W. Burkholder)
/s/ DAVID M. CARMICHAEL*
- -----------------------------------------------------
(David M. Carmichael)
/s/ ROBERT H. CHITWOOD*
- -----------------------------------------------------
(Robert H. Chitwood)
/s/ HOWARD P. COGHLAN*
- -----------------------------------------------------
(Howard P. Coghlan)
/s/ JORDAN L. HAINES*
- -----------------------------------------------------
(Jordan L. Haines)
/s/ LARRY D. HALL*
- -----------------------------------------------------
(Larry D. Hall)
/s/ WILLIAM J. HYBL*
- -----------------------------------------------------
(William J. Hybl)
/s/ EDWARD RANDALL, III*
- -----------------------------------------------------
(Edward Randall, III)
/s/ R. GORDON SHEARER*
- -----------------------------------------------------
(R. Gordon Shearer)
/s/ JAMES C. TAYLOR*
- -----------------------------------------------------
(James C. Taylor)
/s/ H. S. TRUE, III*
- -----------------------------------------------------
(H. S. True, III)
*By: /s/ CLYDE E. MCKENZIE
------------------------------------------------
(Clyde E. McKenzie, Attorney-in-Fact)
</TABLE>
II-5
<PAGE> 78
EXHIBIT LIST
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
4.1 -- Restated Articles of Incorporation of the Company.
Incorporated herein by reference to Exhibit 3(a) to the
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1994.
4.2 -- By-laws of the Company, as amended. Incorporated herein
by reference to Exhibit 3(b) to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994.
4.3 -- Indenture between the Company and Wilmington Trust
Company, as Debenture Trustee, dated as of April 24,
1997.
4.4 -- Amended and Restated Declaration of Trust among the
Company, Wilmington Trust Company, as Property Trustee
and Delaware Trustee, and the Administrative Trustees
named therein, dated as of April 24, 1997.
4.5 -- Form of Capital Security certificate originally issued by
K N Capital Trust I on April 24, 1997 (included as
Exhibit A-1 of Exhibit 4.4).
4.6 -- Form of Capital Security certificate to be issued by K N
Capital Trust I and registered under the Securities Act
of 1933 (included as Exhibit A-1 of Exhibit 4.4).
4.7 -- Form of certificate for 8.56% Series A Junior
Subordinated Deferrable Interest Debenture due April 15,
2027 originally issued by the Company on April 24, 1997
(included as Exhibit A of Exhibit 4.3).
4.8 -- Form of certificate for 8.56% Series B Junior
Subordinated Deferred Interest Debenture due April 15,
2027 to be issued by the Company and registered under the
Securities Act of 1933 (included as Exhibit A to Exhibit
4.3).
4.9 -- Series A Capital Securities Guarantee executed by the
Company and Wilmington Trust Company, as Guarantee
Trustee, as of April 24, 1997.
4.10 -- Form of Capital Securities Guarantee to be entered into
by the Company and Wilmington Trust Company, as Guarantee
Trustee, and registered under the Securities Act of 1933.
4.11 -- Common Securities Guarantee of the Company dated as of
April 24, 1997.
4.12 -- Registration Rights Agreement, dated as of April 24, 1997
among the Company, K N Capital Trust I, Salomon Brothers
Inc and Merrill Lynch & Co.
5.1 -- Opinion and consent of Vinson & Elkins L.L.P. as to
legality of the Exchange Subordinated Debt Securities and
the Exchange Guarantee to be issued by the Company.
5.2 -- Opinion of special Delaware counsel as to legality of the
Exchange Capital Securities to be issued by K N Capital
Trust I.
8.1 -- Opinion of Vinson & Elkins L.L.P. as to certain federal
income tax matters (included in Exhibit 5.1).
12.1 -- Computation of ratio of earnings to fixed charges.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Vinson & Elkins L.L.P. (included in Exhibit
5.1).
23.3 -- Consent of special Delaware counsel (included in Exhibit
5.2).
24.1 -- Powers of Attorney.
25.1 -- Form T-1 Statement of Eligibility of Wilmington Trust
Company to act as trustee under the Indenture.
</TABLE>
<PAGE> 79
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
25.2 -- Form T-1 Statement of Eligibility of Wilmington Trust
Company to act as trustee under the Amended and Restated
Declaration of Trust.
25.3 -- Form T-1 Statement of Eligibility of Wilmington Trust
Company to act as trustee under the Guarantee for the
benefit of the holders of the Capital Securities.
99.1 -- Form of Letter of Transmittal.
99.2 -- Form of Notice of Guaranteed Delivery.
99.3 -- Form of Exchange Agency Agreement.
</TABLE>
<PAGE> 1
EXHIBIT 4.3
K N ENERGY, INC.
INDENTURE
DATED AS OF APRIL 24, 1997
WILMINGTON TRUST COMPANY,
TRUSTEE
8.56% JUNIOR SUBORDINATED DEFERRABLE INTEREST
DEBENTURES DUE APRIL 15, 2027
<PAGE> 2
TIE-SHEET
of provisions of Trust Indenture Act of 1939 with Indenture dated as of April
24, 1997 between K N Energy, Inc. and Wilmington Trust Company, Trustee:
<TABLE>
<CAPTION>
ACT SECTION INDENTURE SECTION
<S> <C>
310(a)(1) 6.09
(a)(2) 6.09
310(a)(3) N/A
(a)(4) N/A
310(a)(5) 6.10, 6.11
310(b) N/A
310(c) 6.13
311(a) and (b) N/A
311(c) 4.01, 4.02(a)
312(a) 4.02
312(b) and (c) 4.04
313(a) 4.04
313(b)(1) 4.04
313(b)(2) 4.04
313(c) 4.04
313(d) 4.04
314(a) 4.03
314(b) N/A
314(c)(1) and (2) 6.07
314(c)(3) N/A
314(d) N/A
314(e) 6.07
314(f) N/A
315(a)(c) and (d) 6.01
315(b) 5.08
315(e) 5.09
316(a)(1) 5.07
316(a)(2) N/A
316(a) last sentence 2.09
316(b) 9.02
317(a) 5.05
317(b) 6.05
318(a) 13.08
</TABLE>
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THIS TIE-SHEET IS NOT PART OF THE INDENTURE AS EXECUTED.
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TABLE OF CONTENTS(1)
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ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . 1
Additional . . . . . . . . . . . . . . . . . . . . . . . 1
Adjusted Treasury Rate . . . . . . . . . . . . . . . . . . 1
Administrative Action . . . . . . . . . . . . . . . . . . 2
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . . . . . . . . . 2
Board of Directors . . . . . . . . . . . . . . . . . . . . 2
Board Resolution . . . . . . . . . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . . . . . . . . . 2
Capital Securities . . . . . . . . . . . . . . . . . . . . 2
Capital Securities Guarantee . . . . . . . . . . . . . . . 3
Commission . . . . . . . . . . . . . . . . . . . . . . . . 3
Common Securities . . . . . . . . . . . . . . . . . . . . 3
Common Securities Guarantee . . . . . . . . . . . . . . . 3
Common Stock . . . . . . . . . . . . . . . . . . . . . . . 3
Company . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Request . . . . . . . . . . . . . . . . . . . . . 3
Company Order . . . . . . . . . . . . . . . . . . . . . . 3
Comparable Treasury Issue . . . . . . . . . . . . . . . . 4
Comparable Treasury Price . . . . . . . . . . . . . . . . 4
Compounded Interest . . . . . . . . . . . . . . . . . . . 4
Declaration . . . . . . . . . . . . . . . . . . . . . . . 4
Default . . . . . . . . . . . . . . . . . . . . . . . . . 4
Deferred Interest . . . . . . . . . . . . . . . . . . . . 4
Definitive Securities . . . . . . . . . . . . . . . . . . 4
Depositary . . . . . . . . . . . . . . . . . . . . . . . . 4
Direct Action . . . . . . . . . . . . . . . . . . . . . . 4
Dissolution Event . . . . . . . . . . . . . . . . . . . . 5
Event of Default . . . . . . . . . . . . . . . . . . . . . 5
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . 5
Exchange Offer . . . . . . . . . . . . . . . . . . . . . . 5
Extended Interest Payment Period . . . . . . . . . . . . . 5
</TABLE>
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(1) THIS TABLE OF CONTENTS SHALL NOT, FOR ANY PURPOSE, BE DEEMED TO BE A
PART OF THE INDENTURE.
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Global Security . . . . . . . . . . . . . . . . . . . . . 5
Indebtedness for Money Borrowed . . . . . . . . . . . . . 5
Indebtedness Ranking Junior to the Securities . . . . . . 5
Indebtedness Ranking on a Parity with the Securities . . . 6
Indenture . . . . . . . . . . . . . . . . . . . . . . . . 6
Interest Payment Date . . . . . . . . . . . . . . . . . . 6
Investment Company Event . . . . . . . . . . . . . . . . . 6
Issue Date . . . . . . . . . . . . . . . . . . . . . . . . 6
Junior Subordinated Payment . . . . . . . . . . . . . . . 6
K N Capital Trust . . . . . . . . . . . . . . . . . . . . 6
Liquidated Damages . . . . . . . . . . . . . . . . . . . . 6
Non Book-Entry Capital Securities . . . . . . . . . . . . 7
Officers . . . . . . . . . . . . . . . . . . . . . . . . . 7
Officers' Certificate . . . . . . . . . . . . . . . . . . 7
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . 7
Optional Redemption Price . . . . . . . . . . . . . . . . 7
Other Debentures . . . . . . . . . . . . . . . . . . . . . 7
Other Guarantees . . . . . . . . . . . . . . . . . . . . . 7
outstanding . . . . . . . . . . . . . . . . . . . . . . . 7
Person . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Predecessor Security . . . . . . . . . . . . . . . . . . . 8
Principal Office of the Trustee . . . . . . . . . . . . . 8
Property Trustee . . . . . . . . . . . . . . . . . . . . . 8
Purchase Agreement . . . . . . . . . . . . . . . . . . . . 8
Quotation Agent . . . . . . . . . . . . . . . . . . . . . 8
Record Date . . . . . . . . . . . . . . . . . . . . . . . 8
Redemption Price . . . . . . . . . . . . . . . . . . . . . 9
Redemption Tax Opinion . . . . . . . . . . . . . . . . . . 9
Reference Treasury Dealer . . . . . . . . . . . . . . . . 9
Reference Treasury Dealer Quotations . . . . . . . . . . . 9
Registration Rights Agreement . . . . . . . . . . . . . . 9
Responsible Officer . . . . . . . . . . . . . . . . . . . 9
Restricted Security . . . . . . . . . . . . . . . . . . . 10
Rule 144A . . . . . . . . . . . . . . . . . . . . . . . . 10
Securities . . . . . . . . . . . . . . . . . . . . . . . . 10
Securities Act . . . . . . . . . . . . . . . . . . . . . . 10
Securityholder . . . . . . . . . . . . . . . . . . . . . . 10
Security Register . . . . . . . . . . . . . . . . . . . . 10
Senior Indebtedness . . . . . . . . . . . . . . . . . . . 10
Series A Securities . . . . . . . . . . . . . . . . . . . 10
Series B Securities . . . . . . . . . . . . . . . . . . . 10
Special Event . . . . . . . . . . . . . . . . . . . . . . 10
Special Event Redemption Price . . . . . . . . . . . . . . 10
Stated Maturity Date . . . . . . . . . . . . . . . . . . . 11
</TABLE>
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Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . 11
Tax Event . . . . . . . . . . . . . . . . . . . . . . . . 11
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 11
Trust Indenture Act of 1939 . . . . . . . . . . . . . . . 11
Trust Securities . . . . . . . . . . . . . . . . . . . . . 11
U.S. Government Obligations . . . . . . . . . . . . . . . 11
ARTICLE II
SECURITIES
SECTION 2.01. Forms Generally; Single Class . . . . . . . . . . . 12
SECTION 2.02. Execution and Authentication . . . . . . . . . . . 12
SECTION 2.03. Form and Payment . . . . . . . . . . . . . . . . . 12
SECTION 2.04. Legends . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.05. Global Security . . . . . . . . . . . . . . . . . . 13
SECTION 2.06. Interest . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.07. Transfer and Exchange . . . . . . . . . . . . . . . 16
SECTION 2.08. Replacement Securities . . . . . . . . . . . . . . 18
SECTION 2.09. [Reserved] . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.10. Temporary Securities. . . . . . . . . . . . . . . . 18
SECTION 2.11. Cancellation . . . . . . . . . . . . . . . . . . . 19
SECTION 2.12. Defaulted Interest . . . . . . . . . . . . . . . . 19
SECTION 2.13. CUSIP Numbers . . . . . . . . . . . . . . . . . . . 20
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.01. Payment of Principal, Premium and Interest . . . . 20
SECTION 3.02. Offices for Notices and Payments, Etc. . . . . . . 20
SECTION 3.03. Appointments to Fill Vacancies in Trustee's
Office . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.04. Provision as to Paying Agent . . . . . . . . . . . 21
SECTION 3.05. Certificate to Trustee . . . . . . . . . . . . . . 22
SECTION 3.06. [Reserved] . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.07. Limitation on Dividends . . . . . . . . . . . . . . 22
SECTION 3.08. Covenants as to K N Capital Trust . . . . . . . . . 23
SECTION 3.09. Payment of Expenses . . . . . . . . . . . . . . . . 24
SECTION 3.10. Payment Upon Resignation or Removal . . . . . . . . 24
</TABLE>
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ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE
SECTION 4.01. Securityholders' Lists . . . . . . . . . . . . . . 25
SECTION 4.02. Preservation and Disclosure of Lists . . . . . . . 25
SECTION 4.03. Reports by the Company . . . . . . . . . . . . . . 26
SECTION 4.04. Reports by the Trustee . . . . . . . . . . . . . . 27
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.01. Events of Default . . . . . . . . . . . . . . . . . 28
SECTION 5.02. Payment of Securities on Default; Suit Therefor . . 30
SECTION 5.03. Application of Moneys Collected by Trustee . . . . 32
SECTION 5.04. Proceedings by Securityholders . . . . . . . . . . 32
SECTION 5.05. Proceedings by Trustee . . . . . . . . . . . . . . 33
SECTION 5.06. Remedies Cumulative and Continuing . . . . . . . . 33
SECTION 5.07. Direction of Proceedings and Waiver of Defaults
by Majority of Securityholders . . . . . . . . . 34
SECTION 5.08. Notice of Defaults . . . . . . . . . . . . . . . . 34
SECTION 5.09. Undertaking to Pay Costs . . . . . . . . . . . . . 35
ARTICLE VI
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Trustee . . . . . . 35
SECTION 6.02. Reliance on Documents, Opinions, Etc. . . . . . . . 36
SECTION 6.03. No Responsibility for Recitals, Etc. . . . . . . . 38
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents,
Transfer Agents or Registrar May Own Securities . 38
SECTION 6.05. Moneys to Be Held in Trust . . . . . . . . . . . . 38
SECTION 6.06. Compensation and Expenses of Trustee . . . . . . . 39
SECTION 6.07. Officers' Certificate as Evidence . . . . . . . . . 39
SECTION 6.08. Conflicting Interest of Trustee . . . . . . . . . . 40
SECTION 6.09. Eligibility of Trustee . . . . . . . . . . . . . . 40
SECTION 6.10. Resignation or Removal of Trustee . . . . . . . . . 40
SECTION 6.11. Acceptance by Successor Trustee . . . . . . . . . . 41
SECTION 6.12. Succession by Merger, Etc. . . . . . . . . . . . . 42
SECTION 6.13. Limitation on Rights of Trustee as a Creditor . . . 43
</TABLE>
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SECTION 6.14. Authenticating Agents . . . . . . . . . . . . . . . 43
ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Action by Securityholders . . . . . . . . . . . . . 44
SECTION 7.02. Proof of Execution by Securityholders . . . . . . . 45
SECTION 7.03. Who Are Deemed Absolute Owners . . . . . . . . . . 45
SECTION 7.04. Securities Owned by Company Deemed Not
Outstanding . . . . . . . . . . . . . . . . . . . 45
SECTION 7.05. Revocation of Consents; Future Holders Bound . . . 46
ARTICLE VIII
SECURITYHOLDERS' MEETINGS
SECTION 8.01. Purposes of Meetings . . . . . . . . . . . . . . . 46
SECTION 8.02. Call of Meetings by Trustee . . . . . . . . . . . . 47
SECTION 8.03. Call of Meetings by Company or Securityholders . . 47
SECTION 8.04. Qualifications for Voting . . . . . . . . . . . . . 47
SECTION 8.05. Regulations . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.06. Voting . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE IX
AMENDMENTS
SECTION 9.01. Without Consent of Securityholders . . . . . . . . 49
SECTION 9.02. With Consent of Securityholders . . . . . . . . . . 51
SECTION 9.03. Compliance with Trust Indenture Act; Effect of
Supplemental Indentures . . . . . . . . . . . . . 52
SECTION 9.04. Notation on Securities . . . . . . . . . . . . . . 52
SECTION 9.05. Evidence of Compliance of Supplemental
Indenture to Be Furnished Trustee . . . . . . . 52
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 10.01. Company May Consolidate, Etc., Only on Certain
Terms . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10.02. Successor Person Substituted . . . . . . . . . . . 53
</TABLE>
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ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.01. Discharge of Indenture . . . . . . . . . . . . . . 54
SECTION 11.02. Deposited Moneys and U.S. Government
Obligations to Be Held in Trust by Trustee . . . 55
SECTION 11.03. Paying Agent to Repay Moneys Held . . . . . . . . 55
SECTION 11.04. Return of Unclaimed Moneys . . . . . . . . . . . . 55
SECTION 11.05. Defeasance Upon Deposit of Moneys or U.S.
Government Obligations . . . . . . . . . . . . . 55
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
SECTION 12.01. Indenture and Securities Solely Corporate
Obligations . . . . . . . . . . . . . . . . . . . 57
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. Successors . . . . . . . . . . . . . . . . . . . . 57
SECTION 13.02. Official Acts by Successor Corporation . . . . . . 57
SECTION 13.03. Surrender of Company Powers . . . . . . . . . . . 58
SECTION 13.04. Addresses for Notices, Etc. . . . . . . . . . . . 58
SECTION 13.05. Governing Law . . . . . . . . . . . . . . . . . . 58
SECTION 13.06. Evidence of Compliance with Conditions
Precedent . . . . . . . . . . . . . . . . . . . . 58
SECTION 13.07. Business Days . . . . . . . . . . . . . . . . . . 59
SECTION 13.08. Trust Indenture Act to Control . . . . . . . . . . 59
SECTION 13.09. Table of Contents, Headings, Etc. . . . . . . . . 59
SECTION 13.10. Execution in Counterparts . . . . . . . . . . . . 59
SECTION 13.11. Separability . . . . . . . . . . . . . . . . . . . 60
SECTION 13.12. Assignment . . . . . . . . . . . . . . . . . . . . 60
SECTION 13.13. Acknowledgment of Rights . . . . . . . . . . . . . 60
ARTICLE XIV
REDEMPTION OF SECURITIES
SECTION 14.01. Special Event Redemption . . . . . . . . . . . . . 60
SECTION 14.02. Optional Redemption . . . . . . . . . . . . . . . 61
SECTION 14.03. No Sinking Fund . . . . . . . . . . . . . . . . . 61
SECTION 14.04. Notice of Redemption; Selection of Securities . . 61
SECTION 14.05. Payment of Securities Called for Redemption . . . 62
</TABLE>
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ARTICLE XV
SUBORDINATION OF SECURITIES
SECTION 15.01. Agreement to Subordinate . . . . . . . . . . . . . 63
SECTION 15.02. Default on Senior Indebtedness . . . . . . . . . . 63
SECTION 15.03. Prior Payment to Senior Indebtedness Upon
Acceleration of Securities . . . . . . . . . . . 64
SECTION 15.04. Liquidation; Dissolution; Bankruptcy . . . . . . . 64
SECTION 15.05. Subrogation . . . . . . . . . . . . . . . . . . . 65
SECTION 15.06. Trustee to Effectuate Subordination . . . . . . . 66
SECTION 15.07. Notice by the Company . . . . . . . . . . . . . . 67
SECTION 15.08. Rights of the Trustee; Holders of Senior
Indebtedness . . . . . . . . . . . . . . . . . . 68
SECTION 15.09. Subordination May Not Be Impaired . . . . . . . . 68
SECTION 15.10. Article Applicable to Paying Agents . . . . . . . 69
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 16.01. Extension of Interest Payment Period . . . . . . . 69
SECTION 16.02. Notice of Extension . . . . . . . . . . . . . . . 70
</TABLE>
Testimonium
Signatures
EXHIBIT A-1
<PAGE> 10
THIS INDENTURE, dated as of April 24, 1997, between K N
ENERGY, INC., a Kansas corporation (hereinafter sometimes called the
"Company"), and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as
trustee (hereinafter sometimes called the "Trustee"),
W I T N E S S E T H :
In consideration of the premises, and the purchase of the
Securities by the holders thereof, the Company covenants and agrees with the
Trustee for the equal and proportionate benefit of the respective holders from
time to time of the Securities, without preference to the holders of one series
of the Securities over the other series, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.
The terms defined in this Section 1.01 (except as herein
otherwise expressly provided or unless the context otherwise requires) for all
purposes of this Indenture shall have the respective meanings specified in this
Section 1.01. All other terms used in this Indenture which are defined in the
Trust Indenture Act, or which are by reference therein defined in the
Securities Act, shall (except as herein otherwise expressly provided or unless
the context otherwise requires) have the meanings assigned to such terms in
said Trust Indenture Act and in said Securities Act as in force at the date of
this Indenture as originally executed. The following terms have the meanings
given to them in the Declaration: (i) Clearing Agency; (ii) Delaware Trustee;
(iii) Property Trustee; (iv) Administrative Trustees; (v) Distributions; (vi)
Series A Capital Securities; and (vii) Series B Capital Securities. All
accounting terms used herein and not expressly defined shall have the meanings
assigned to such terms in accordance with generally accepted accounting
principles and the term "generally accepted accounting principles" means such
accounting principles as are generally accepted at the time of any computation.
The words "herein", "hereof" and "hereunder" and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section
or other subdivision. Headings are used for convenience of reference only and
do not affect interpretation. The singular includes the plural and vice versa.
"Additional Amounts" shall have the meaning set forth in
Section 2.06(c).
"Additional Interest" shall mean Additional Amounts and
Liquidated Damages.
"Adjusted Treasury Rate" shall mean, with respect to any
redemption date, the rate per annum equal to (i) the yield, under the heading
which represents the average for the immediately prior week, appearing in the
most recently published statistical release designated
<PAGE> 11
2
"H.15 (519)" or any successor publication which is published weekly by the
Federal Reserve Board and which establishes yields on actively traded United
States Treasury securities adjusted to constant maturity under the caption
"Treasury Constant Maturities," for the maturity date corresponding to the
Remaining Life (if no maturity date is within three months before or after the
Remaining Life, yields for the two published maturity date most closely
corresponding to the Remaining Life shall be interpolated, and the Adjusted
Treasury Rate shall be interpolated or extrapolated from such yields on a
straight-line basis, rounding to the nearest month) or (ii) if such release (or
any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semiannual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using 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, in each case calculated on the third Business Day
preceding the redemption date, plus, in each case, (a) 1.25% if such redemption
date occurs on or prior to April 24, 1998, and (b) .5% in all other cases.
"Administrative Action" shall mean any official administrative
pronouncement, ruling, regulatory procedure, notice or announcement, including
any notice or announcement or intent to adopt such procedures or regulations.
"Affiliate" shall mean, with respect to a specified Person,
any Person directly or indirectly controlling, controlled by, or under common
control with the specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" shall mean any agent or agents of the
Trustee which at the time shall be appointed and acting pursuant to Section
6.14.
"Board of Directors" shall mean either the Board of Directors
of the Company or any duly authorized committee of that board.
"Board Resolution" shall mean a copy of a resolution certified
by the Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on the
date of such certification, and delivered to the Trustee.
"Business Day" shall mean, with respect to any series of
Securities, any day other than a Saturday or a Sunday or a day on which banking
institutions in New York, New York or Wilmington, Delaware are authorized or
required by law or executive order to close.
"Capital Securities" shall mean, collectively, the Series A
Capital Securities and the Series B Capital Securities, which represent
undivided beneficial interests in the assets of K N Capital Trust and which
rank pari passu with the Common Securities issued by K N Capital Trust;
provided, however, that upon the occurrence and during the continuance of an
Event of
<PAGE> 12
3
Default, no payments in respect of Distributions on, or payments upon
liquidation, redemption or otherwise with respect to, the Common Securities
shall be made until the holders of the Capital Securities shall be paid in full
the Distributions and the liquidation, redemption and other payments to which
they are entitled.
"Capital Securities Guarantee" shall mean any guarantee that
the Company may enter into with Wilmington Trust Company, as guarantee trustee,
or other Persons that operates directly or indirectly for the benefit of
holders of Capital Securities of K N Capital Trust and shall include a Series A
Capital Securities Guarantee and a Series B Capital Securities Guarantee with
respect to the Series A Capital Securities and the Series B Capital Securities,
respectively.
"Commission" shall mean 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 Indenture 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 Securities" shall mean undivided beneficial interests
in the assets of K N Capital Trust which rank pari passu with the Capital
Securities; provided, however, that upon the occurrence and during the
continuance of an Event of Default, no payments in respect of Distributions on,
or payments upon liquidation, redemption or otherwise with respect to, the
Common Securities shall be made until the holders of the Capital Securities
shall be paid in full the Distributions and the liquidation, redemption and
other payments to which they are entitled.
"Common Securities Guarantee" shall mean any guarantee that
the Company may enter into with any Person or Persons that operates directly or
indirectly for the benefit of holders of Common Securities of K N Capital
Trust.
"Common Stock" shall mean the Common Stock, par value $5.00
per share, of the Company or any other class of stock resulting from changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
"Company" shall mean K N Energy, Inc., a Kansas corporation,
and, subject to the provisions of Article X, shall include its successors and
assigns.
"Company Request" or "Company Order" shall mean a written
request or order signed in the name of the Company by the Chairman, the Chief
Executive Officer, the President, a Vice Chairman, a Vice President, the
Secretary or an Assistant Secretary of the Company, and delivered to the
Trustee.
"Comparable Treasury Issue" shall mean the United States
Treasury security selected by the Quotation Agent as having a maturity date
comparable to the Remaining Life 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
Life. If
<PAGE> 13
4
no United States Treasury security has a maturity date which is within a period
from three months before to three months after the Remaining Life, the two most
closely corresponding United States Treasury securities shall be used as the
Comparable Treasury Issue, and the Adjusted Treasury Rate shall be interpolated
or extrapolated on a straight-line basis, rounding to the nearest month using
such securities.
"Comparable Treasury Price" shall mean, with respect to any
redemption date pursuant to Section 14.01, (i) the average of five Reference
Treasury Dealer Quotations for such redemption date, after excluding the
highest and lowest of such Reference Treasury Dealer Quotations, or (ii) if the
Trustee obtains fewer than five such Reference Treasury Dealer Quotations, the
average of all such Quotations.
"Compounded Interest" shall have the meaning set forth in
Section 16.01.
"Declaration" shall mean the Amended and Restated Declaration
of Trust of K N Capital Trust, dated as of the Issue Date.
"Default" means any event, act or condition that with notice
or lapse of time, or both, would constitute an Event of Default.
"Defaulted Interest" shall have the meaning set forth in
Section 2.12.
"Deferred Interest" shall have the meaning set forth in
Section 16.01.
"Definitive Securities" shall mean those Securities issued in
fully registered certificated form not otherwise in global form.
"Depositary" shall mean, with respect to Securities of any
series, for which the Company shall determine that such Securities will be
issued as a Global Security, The Depository Trust Company, New York, New York,
another clearing agency, or any successor registered as a clearing agency under
the Exchange Act or other applicable statute or regulation, which, in each
case, shall be designated by the Company pursuant to Section 2.05(d).
"Direct Action" shall have the meaning set forth in Section
13.13.
"Dissolution Event" means the liquidation of the Trust
pursuant to the Declaration, and the distribution of the Securities held by the
Property Trustee to the holders of the Trust Securities issued by the Trust pro
rata in accordance with the Declaration.
"Event of Default" shall mean any event specified in Section
5.01, continued for the period of time, if any, and after the giving of the
notice, if any, therein designated.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
<PAGE> 14
5
"Exchange Offer" shall mean the offer that may be made
pursuant to the Registration Rights Agreement (i) by the Company to exchange
Series B Securities for Series A Securities and to exchange a Series B Capital
Securities Guarantee for a Series A Capital Securities Guarantee and (ii) by K
N Capital Trust to exchange Series B Capital Securities for Series A Capital
Securities.
"Extended Interest Payment Period" shall have the meaning set
forth in Section 16.01.
"Global Security" shall mean, with respect to the Securities,
a Security executed by the Company and delivered by the Trustee to the
Depositary or pursuant to the Depositary's instruction, all in accordance with
this Indenture, which shall be registered in the name of the Depositary or its
nominee.
"Indebtedness for Money Borrowed" shall mean (i) any
obligation of, or any obligation guaranteed by, the Company or which the
Company is responsible or liable as obligor or otherwise including principal,
premium, and interest (whether accruing before or after filing of any petition
in bankruptcy or any similar proceedings by or against the Company and whether
or not allowed as a claim in bankruptcy or similar proceedings) for (A)
indebtedness of the Company for money borrowed, (B) indebtedness evidenced by
securities, bonds, debentures, notes or other similar written instruments, (C)
any deferred obligation for the payment of the purchase price or conditional
sale obligation of property or assets acquired other than in the ordinary
course of business, but excluding any trade account payables arising in the
ordinary course of business, (D) all obligations of the Company for the
reimbursement of any letter of credit, banker's acceptance, security purchase
facility or similar credit transaction or (E) any obligation referred to in (A)
through (D) above of other Persons secured by any lien on any property or asset
of the Company and (ii) all indebtedness of the Company for obligations of the
Company to make payments in respect of derivative products such as interest and
foreign exchange rate contracts, commodity contracts (including future or
options contracts), swap agreements, cap agreements, repurchase and reverse
repurchase agreements and similar arrangements, whether outstanding on the date
hereof or hereafter created, assumed or incurred.
"Indebtedness Ranking Junior to the Securities" shall mean any
Indebtedness for Money Borrowed, whether outstanding on the date hereof or
hereafter created, assumed or incurred, which specifically by its terms ranks
junior to and not equally with or prior to the Securities (and any other
Indebtedness Ranking on a Parity with the Securities) in right of payment upon
the happening of the dissolution or winding up or liquidation or reorganization
or similar events of the Company. The securing of any Indebtedness for Money
Borrowed of the Company, otherwise constituting Indebtedness Ranking Junior to
the Securities, shall not be deemed to prevent such Indebtedness for Money
Borrowed from constituting Indebtedness Ranking Junior to the Securities.
"Indebtedness Ranking on a Parity with the Securities" shall
mean Indebtedness for Money Borrowed, whether outstanding on the date hereof or
hereafter created, assumed or
<PAGE> 15
6
incurred, which specifically by its terms ranks equally with and not prior to
the Securities in the right of payment upon the happening of the dissolution or
winding up or liquidation or reorganization or similar events of the Company.
The securing of any Indebtedness for Money Borrowed of the Company, otherwise
constituting Indebtedness Ranking on a Parity with the Securities, shall not be
deemed to prevent such Indebtedness for Money Borrowed from constituting
Indebtedness Ranking on a Parity with the Securities.
"Indenture" shall mean this instrument as originally executed
or, if amended as herein provided, as so amended.
"Interest Payment Date" shall have the meaning set forth in
Section 2.06.
"Investment Company Act" shall mean the Investment Company Act
of 1940, as amended.
"Investment Company Event" shall mean that the Administrative
Trustees shall have received an opinion from counsel rendered by a law firm
having a nationally recognized securities law practice to the effect that, as a
result of the occurrence of change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, there is more than an
insubstantial risk that K N Capital Trust is or will be considered an
"investment company" which is required to be registered under the Investment
Company Act, which change becomes effective or is announced, enacted or
promulgated on or after April 17, 1997.
"Issue Date" means April 24, 1997.
"Junior Subordinated Payment" shall have the meaning set forth
in Section 15.04.
"K N Capital Trust" or the "Trust" shall mean K N Capital
Trust I, a Delaware business trust, created for the purpose of issuing its
undivided beneficial interests in connection with the issuance of Securities
under this Indenture.
"Liquidated Damages" shall have the meaning set forth in the
Registration Rights Agreement.
"Make-Whole Amount" shall mean, with respect to any Security
to be redeemed, an amount equal to the greater of (i) 100% of the principal
amount of such Security or (ii) as determined by the Quotation Agent, (A) the
sum of the present values of the principal amount and premium, if any, payable
as part of the Optional Redemption Price with respect to a redemption of such
Securities on April 15, 2007, together with the present values of all scheduled
payments of interest on such Securities from the redemption date to April 15,
2007 (the "Remaining Life"), in each case discounted to the redemption date on
a semiannual basis (assuming a 360-day year consisting of 30-day months) at the
Adjusted Treasury Rate, less (B) accrued and unpaid interest on such Securities
to the redemption date.
<PAGE> 16
7
"Non Book-Entry Capital Securities" shall have the meaning set
forth in Section 2.05.
"Officers" shall mean any of the Chairman, a Vice Chairman,
the Chief Executive Officer, the President, a Vice President, the Comptroller,
the Secretary or an Assistant Secretary of the Company.
"Officers' Certificate" shall mean a certificate signed by two
Officers and delivered to the Trustee.
"Opinion of Counsel" shall mean a written opinion, acceptable
to the Trustee, of counsel, who may be an employee of the Company, and who
shall be acceptable to the Trustee.
"Optional Redemption Price" shall have the meaning set forth
in Exhibit A hereto.
"Other Debentures" means all junior subordinated debentures
(if any) issued by the Company from time to time and sold to trusts to be
established by the Company (if any), in each case similar to the Trust.
"Other Guarantees" means all guarantees issued by the Company
with respect to capital securities (if any) and issued to other trusts
established by the Company (if any), in each case similar to the Trust.
The term "outstanding", when used with reference to Securities
and subject to the provisions of Section 7.04, shall mean, as of any particular
time, all Securities authenticated and delivered by the Trustee or the
Authenticating Agent under this Indenture, except
(a) Securities theretofore canceled by the Trustee or the
Authenticating Agent or delivered to the Trustee for
cancellation;
(b) Securities, or portions thereof, for the payment or
redemption of which moneys in the necessary amount
shall have been deposited in trust with the Trustee
or with any paying agent (other than the Company) or
shall have been set aside and segregated in trust by
the Company (if the Company shall act as its own
paying agent); provided that, if such Securities, or
portions thereof, are to be redeemed prior to
maturity thereof, notice of such redemption shall
have been given as in Article XIV provided or
provision satisfactory to the Trustee shall have been
made for giving such notice; and
(c) Securities in lieu of or in substitution for which
other Securities shall have been authenticated and
delivered pursuant to the terms of Section 2.08
unless proof satisfactory to the Company and the
Trustee is presented that any such Securities are
held by bona fide holders in due course.
<PAGE> 17
8
"Person" shall mean any individual, corporation, estate,
partnership, joint venture, association, joint-stock company, limited liability
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt and as that
evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 2.08 in lieu
of a lost, destroyed or stolen Security shall be deemed to evidence the same
debt as the lost, destroyed or stolen Security.
"Principal Office of the Trustee", or other similar term,
shall mean the office of the Trustee, at which at any particular time its
corporate trust business shall be principally administered, which office on the
date hereof is located at 1100 N. Market Street, Rodney Square North,
Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration.
"Property Trustee" shall have the same meaning as set forth in
the Declaration.
"Purchase Agreement" shall mean the Purchase Agreement dated
April 17, 1997, among the Company, K N Capital Trust and the initial purchasers
named therein.
"Quotation Agent" shall mean Salomon Brothers Inc and its
successors; provided, however, that if the foregoing shall cease to be a
primary U.S. Government securities dealer in The City of New York (a "Primary
Treasury Dealer"), the Company shall substitute therefor another Primary
Treasury Dealer.
"Record Date" shall have the meaning set forth in Section
2.06(a).
"Redemption Price" shall mean the Special Event Redemption
Price or the Optional Redemption Price, as the context requires.
"Redemption Tax Opinion" shall mean an opinion of a nationally
recognized independent tax counsel experienced in such matters to the effect
that, as a result of (a) any amendment to, clarification of or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein, (b) any judicial decision or Administrative
Action or (c) any amendment to, clarification of or change in the
administrative position or interpretation of any Administrative Action or
judicial decision that differs from the theretofore generally accepted
position, in each case, by any legislative body, court, governmental agency or
regulatory body, irrespective of the manner in which such amendment,
clarification or change is made known, which amendment, clarification or change
is effective or such Administrative Action or decision is announced, in each
case, on or after April 17, 1997, there is more than an insubstantial risk that
(i) K N Capital Trust is, or will be within 90 days of the date thereof,
subject to United States federal income tax with respect to interest accrued or
received on the Securities or subject to more than a de minimis amount of other
taxes, duties or other governmental charges, (ii) any
<PAGE> 18
9
portion of interest payable by the Company on the Securities is not, or within
90 days of the date thereof will not be, deductible by the Company for United
States federal income tax purposes, or (iii) the Company could become liable to
pay, on the next date on which any amount would be payable with respect to the
Securities, any Additional Amounts.
"Reference Treasury Dealer" shall mean (i) the Quotation Agent
and (ii) any other Primary Treasury Dealer selected by the Trustee after
consultation with the Company.
"Reference Treasury Dealer Quotations" shall mean, with
respect to each Reference Treasury Dealer and any redemption date pursuant to
Section 14.01, the average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue (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. New York City time, on the third
Business Day preceding such redemption date.
"Registration Rights Agreement" shall mean the Registration
Rights Agreement, dated as of the Issue Date, by and among the Company, the
Trust and the Initial Purchasers named therein as such agreement may be
amended, modified or supplemented from time to time.
"Responsible Officer", when used with respect to the Trustee,
shall mean any officer within the Principal Office of the Trustee, including
any vice president, any assistant vice president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer or senior trust officer, any
trust officer or assistant trust officer, or any other officer or assistant
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter
is referred because of his knowledge of and familiarity with the particular
subject.
"Restricted Security" shall mean Securities that bear or are
required to bear the Securities Act legends set forth in Exhibit A hereto.
"Rule 144A" means Rule 144A under the Securities Act, as such
rule may be amended from time to time, or under any similar rule or regulation
hereafter adopted by the Commission.
"Securities" means, collectively, the Series A Securities and
the Series B Securities.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Securityholder", "holder of Securities", or other similar
terms, shall mean any Person in whose name at the time a particular Security is
registered on the register kept by the Company or the Trustee for that purpose
in accordance with the terms hereof.
<PAGE> 19
10
"Security Register" shall mean (i) prior to a Dissolution
Event, the list of holders provided to the Trustee pursuant to Section 4.01,
and (ii) following a Dissolution Event, any security register maintained by a
security registrar for the Securities appointed by the Company following the
execution of a supplemental indenture providing for transfer procedures as
provided for in Section 2.07(a).
"Senior Indebtedness" shall mean all Indebtedness for Money
Borrowed, whether outstanding on the date hereof or hereafter created, assumed,
incurred or guaranteed, except Indebtedness Ranking on a Parity with the
Securities or Indebtedness Ranking Junior to the Securities, and any deferrals,
modifications, renewals, refinancings or extensions of such Senior
Indebtedness.
"Series A Securities" shall mean the Company's 8.56% Series A
Junior Subordinated Deferrable Interest Debentures due April 15, 2027, as
authenticated and issued under this Indenture.
"Series B Securities" shall mean the Company's 8.56% Series B
Junior Subordinated Deferrable Interest Debentures due April 15, 2027, as
authenticated and issued under this Indenture.
"Special Event" shall mean a Tax Event or an Investment
Company Event, as the case may be.
"Special Event Redemption Price" shall mean with respect to
any redemption of the Securities upon the occurrence of a Tax Event pursuant to
Section 14.01(a) hereof or with respect to any redemption of the Securities
upon the occurrence of an Investment Company Event pursuant to Section 14.01(b)
hereof, an amount in cash equal to (i) the Make-Whole Amount, in the case of a
redemption upon the occurrence of such Special Event prior to April 15, 2007 or
(ii) the Optional Redemption Price, in the case of a redemption upon the
occurrence of such Special Event on or after April 15, 2007, in each case
together with accrued and unpaid interest, if any, thereon to the date of
redemption.
"Stated Maturity Date" shall mean April 15, 2027.
"Subsidiary" shall mean, with respect to any Person, (i) any
corporation at least a majority of whose outstanding voting stock is owned,
directly or indirectly, by such Person or by one or more of its Subsidiaries,
or by such Person and one or more of its Subsidiaries, (ii) any general
partnership, joint venture or similar entity, at least a majority of whose
outstanding partnership or similar interests shall at the time be owned by such
Person, or by one or more of its Subsidiaries, or by such Person and one or
more of its Subsidiaries and (iii) any limited partnership of which such Person
or any of its Subsidiaries is a general partner. For the purposes of this
definition, "voting stock" means shares, interests, participations or other
equivalents in the equity interests (however designated) in such Person having
ordinary voting power for the election of a majority of the directors (or the
equivalent) of such Person, other than shares,
<PAGE> 20
11
interests, participations or other equivalents having such power only by reason
of the occurrence of a contingency.
"Tax Event" shall mean the receipt by the Administrative
Trustees of a Redemption Tax Opinion.
"Trustee" shall mean the Person identified as "Trustee" in the
first paragraph hereof, and, subject to the provisions of Article VI hereof,
shall also include its successors and assigns as Trustee hereunder. The term
"Trustee" as used with respect to a particular series of the Securities shall
mean the trustee with respect to that series.
"Trust Indenture Act of 1939" shall mean the Trust Indenture
Act of 1939 as in force at the date of execution of this Indenture, except as
provided in Section 9.03.
"Trust Securities" shall mean the Capital Securities and the
Common Securities, collectively.
"U.S. Government Obligations" shall mean 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 a Person controlled
or supervised by and acting as 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, which, in either
case under clauses (i) or (ii) are not callable or redeemable at the option of
the issuer thereof, 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 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.
ARTICLE II
SECURITIES
SECTION 2.01. Forms Generally; Single Class.
The Securities and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A, the terms of which are
incorporated in and made a part of this Indenture. The Securities may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject or usage. Each Security shall be
<PAGE> 21
12
dated the date of its authentication. The Securities shall be issued in
denominations of $1,000 and integral multiples thereof.
Except as otherwise required by this Indenture, the Series A
Securities and the Series B Securities shall be treated as a single class for
all purposes, including without limitation, Section 2.06(a).
SECTION 2.02. Execution and Authentication.
One Officer shall sign the Securities for the Company by
manual or facsimile signature in the manner set forth in Exhibit A. 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.
A Security shall not be valid until authenticated by the
manual signature of an authorized officer of the Trustee. The signature of the
Trustee shall be conclusive evidence that the Security has been authenticated
under this Indenture. The form of Trustee's certificate of authentication to
be borne by the Securities shall be substantially as set forth in Exhibit A
hereto.
The Trustee shall, upon a Company Order, authenticate for
original issue up to, and the aggregate principal amount of Securities
outstanding at any time may not exceed, the sum of $103,100,000, except as
provided in Sections 2.07, 2.08, 2.10 and 14.05. The series of Securities to
be initially issued hereunder shall be the Series A Securities.
SECTION 2.03. Form and Payment.
Except as provided in Section 2.05, the Securities shall be
issued in fully registered certificated form without interest coupons.
Principal of, premium, if any, and interest on the Securities issued in
certificated form will be payable, the transfer of such Securities will be
registrable and such Securities will be exchangeable for Securities bearing
identical terms and provisions at the office or agency of the Company
maintained for such purpose under Section 3.02; provided, however, that payment
of interest with respect to the Securities may be made at the option of the
Company (i) by check mailed to the holder at such address as shall appear in
the Security Register or (ii) by transfer to an account maintained by the
Person entitled thereto, provided that proper transfer instructions have been
received in writing by the relevant record date. Notwithstanding the
foregoing, so long as the holder of any Securities is the Property Trustee, the
payment of the principal of, premium, if any, and interest (including
Compounded Interest and Additional Interest, if any) on such Securities held by
the Property Trustee will be made at such place and to such account as may be
designated by the Property Trustee.
SECTION 2.04. Legends.
(a) Except as permitted by subsection (b) of this Section
2.04 or as otherwise determined by the Company in accordance with applicable
law, each Security shall bear the
<PAGE> 22
13
applicable legends relating to restrictions on transfer pursuant to the
securities laws in substantially the form set forth on Exhibit A hereto.
(b) The Company shall issue and the Trustee shall
authenticate Series B Securities in exchange for Series A Securities accepted
for exchange in the Exchange Offer, which Series B Securities shall not bear
the legends required by subsection (a) above, in each case unless the holder of
such Series A Securities is either (1) a broker-dealer who purchased such
Series A Securities directly from the Company for resale pursuant to Rule 144A
or any other available exemption under the Securities Act, (2) a Person
participating in the distribution of the Series A Securities or (3) a Person
who is an affiliate (as defined in Rule 144 under the Securities Act) of the
Company.
SECTION 2.05. Global Security.
(a) In connection with a Dissolution Event,
(i) if any Capital Securities are held in book-entry
form, the related Definitive Securities shall be presented to the
Trustee (if an arrangement with the Depositary has been maintained) by
the Property Trustee in exchange for one or more Global Securities (as
may be required pursuant to Section 2.07) in an aggregate principal
amount equal to the aggregate principal amount of all outstanding
Securities, to be registered in the name of the Depositary, or its
nominee, and delivered by the Trustee to the Depositary for crediting
to the accounts of its participants pursuant to the instructions of
the Administrative Trustees; the Company upon any such presentation
shall execute one or more Global Securities in such aggregate
principal amount and deliver the same to the Trustee for
authentication and delivery in accordance with this Indenture; and
payments on the Securities issued as a Global Security will be made to
the Depositary or its nominee; and
(ii) if any Capital Securities are held in certificated
form, the related Definitive Securities may be presented to the
Trustee by the Property Trustee and any Capital Security certificate
which represents Capital Securities other than Capital Securities in
book- entry form ("Non Book-Entry Capital Securities") will be deemed
to represent beneficial interests in Securities presented to the
Trustee by the Property Trustee having an aggregate principal amount
equal to the aggregate liquidation amount of the Non Book-Entry
Capital Securities until such Capital Security certificates are
presented to the Security Registrar for transfer or reissuance, at
which time such Capital Security certificates will be canceled and a
Security, registered in the name of the holder of the Capital Security
certificate or the transferee of the holder of such Capital Security
certificate, as the case may be, with an aggregate principal amount
equal to the aggregate liquidation amount of the Capital Security
certificate canceled, will be executed by the Company and delivered to
the Trustee for authentication and delivery in accordance with the
Indenture. Upon the issuance of such Securities, Securities with an
equivalent
<PAGE> 23
14
aggregate principal amount that were presented by the Property Trustee
to the Trustee will be deemed to have been canceled.
(b) The Global Securities shall represent the aggregate
amount of outstanding Securities from time to time endorsed thereon; provided
that the aggregate amount of outstanding Securities represented thereby may be
from time to time reduced or increased, as appropriate, to reflect exchanges
and redemptions. Any endorsement of a Global Security to reflect the amount of
any increase or decrease in the amount of outstanding Securities represented
thereby shall be made by the Trustee, in accordance with instructions given by
the Company as required by this Section 2.05.
(c) The Global Securities may be transferred, in whole
but not in part, only to the Depositary, another nominee of the Depositary, or
to a successor Depositary selected or approved by the Company or to a nominee
of such successor Depositary.
(d) If at any time the Depositary notifies the Company
that it is unwilling or unable to continue as Depositary or the Depositary has
ceased to be a clearing agency registered under the Exchange Act, and a
successor Depositary is not appointed by the Company within 90 days after the
Company receives such notice or becomes aware of such condition, as the case
may be, the Company will execute, and the Trustee, upon written notice from the
Company, will authenticate and make available for delivery the Definitive
Securities, in authorized denominations, and in an aggregate principal amount
equal to the principal amount of the Global Security in exchange for such
Global Security. If there is an Event of Default, the Depositary shall have
the right to exchange the Global Securities for Definitive Securities. In
addition, the Company may at any time determine that the Securities shall no
longer be represented by a Global Security. In the event of such an Event of
Default or such a determination, the Company shall execute, and subject to
Section 2.07, the Trustee, upon receipt of an Officers' Certificate evidencing
such determination by the Company, will authenticate and make available for
delivery the Definitive Securities, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the Global Security
in exchange for such Global Security. Upon the exchange of the Global Security
for such Definitive Securities, in authorized denominations, the Global
Security shall be canceled by the Trustee. Such Definitive Securities issued in
exchange for the Global Security shall be registered in such names and in such
authorized denominations as the Depositary, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the Trustee. The
Trustee shall deliver such Definitive Securities to the Depositary for delivery
to the Persons in whose names such Definitive Securities are so registered.
(e) In the event the Securities are issued as Global
Securities with the Depositary: (i) the Trustee may deal with the Depositary
as the authorized representative of the Securityholders; (ii) the rights of the
Securityholders shall be exercised only through the Depositary and shall be
limited to those established by law and agreement between the Securityholders
and the Depositary and/or direct participants of the Depositary; (iii) the
Depositary will make book-entry transfers among the direct participants of the
Depositary and
<PAGE> 24
15
will receive and transmit distributions of principal and interest on the
Securities to such direct participants; and (iv) the direct participants of the
Depositary shall have no rights under this Indenture under or with respect to
any of the Securities held on their behalf by the Depositary, and the
Depositary may be treated by the Trustee and its agents, employees, officers
and directors as the absolute owner of the Securities for all purposes
whatsoever.
SECTION 2.06. Interest.
(a) Each Security shall bear interest at the annual rate
of 8.56% (the "Coupon Rate") of the principal amount thereof from the most
recent date to which interest has been paid or duly provided for or, if no
interest has been paid or duly provided for, from the Issue Date, until the
principal thereof becomes due and payable, and at the Coupon Rate on any
overdue principal (and premium, if any) and (to the extent that payment of such
interest is enforceable under applicable law) on any overdue installment of
interest, compounded semiannually, payable (subject to the provisions of
Article XVI) semiannually in arrears on April 15 and October 15 of each year
(each, an "Interest Payment Date") commencing on October 15, 1997, to the
Person in whose name such Security or any predecessor Security is registered,
at the close of business on the regular record date for such interest
installment (each, a "Record Date"), which shall be the first day of the month
in which the relevant Interest Payment Date falls.
(b) The amount of interest payable for any period will be
computed on the basis of a 360-day year consisting of twelve 30-day months and,
for any period of less than a full calendar month, the actual number of days
elapsed in such month. In the event that any Interest Payment Date falls on a
day that is not a Business Day, then payment of interest payable on such date
will be made on the next succeeding day which is a Business Day (and without
any interest or other payment in respect of any such delay), with the same
force and effect as if made on the date such payment was originally payable.
(c) If at any time K N Capital Trust shall be required to
pay any taxes, duties and other governmental charges of whatever nature (other
than withholding taxes) imposed by the United States, or any other taxing
authority, then, in any such case, the Company will pay as additional interest
("Additional Amounts") on the Securities such additional amounts as shall be
required in order that the net amounts received and retained by K N Capital
Trust after paying any such taxes, duties and other governmental charges will
equal the amounts K N Capital Trust and the Property Trustee, as the holder of
the Securities, would have received had no such taxes, duties and other
governmental charges been imposed. The Company will also pay as additional
interest on the Securities any Liquidated Damages payable under the
Registration Rights Agreement.
SECTION 2.07. Transfer and Exchange.
(a) Transfer Restrictions. The Series A Securities, and
those Series B Securities with respect to which any Person described in Section
2.04(b)(1), (2) or (3) is the beneficial owner, may not be transferred except
in compliance with the legend contained in
<PAGE> 25
16
Exhibit A unless otherwise determined by the Company in accordance with
applicable law. At all times after the Issue Date, the Securities will be in
blocks having a principal amount of not less than $100,000 and may be
transferred or exchanged only in such blocks. Upon any distribution of the
Securities following a Dissolution Event, the Company and the Trustee shall
enter into a supplemental indenture pursuant to Section 9.01 to provide for the
transfer restrictions and procedures with respect to the Securities
substantially similar to those contained in the Declaration to the extent
applicable in the circumstances existing at such time.
(b) General Provisions Relating to Transfers and
Exchanges. Upon surrender for registration of transfer of any Security at the
office or agency of the Company maintained for the purpose pursuant to Section
3.02, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of the same series, of any authorized denominations and of a
like aggregate principal amount.
At the option of the holder, Securities of either series may
be exchanged for other Securities of the same series, of any authorized
denominations and of a like aggregate principal amount, upon surrender of the
Securities to be exchanged at such office or agency. 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.
Every Security presented or surrendered for registration of
transfer or exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security registrar duly executed, by the
holder thereof or his attorney duly authorized in writing.
All Definitive Securities and Global Securities issued upon
any registration of transfer or exchange of Definitive Securities or Global
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Definitive
Securities or Global Securities surrendered upon such registration of transfer
or exchange.
No service charge shall be made to a holder for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith.
The Company shall not be required to (i) issue, register the
transfer or exchange of the Securities during a period beginning at the opening
of business 15 days before the day of mailing of a notice of redemption under
Article XIV hereof and ending at the close of business on the day of such
mailing or (ii) register the transfer or exchange of any Security so selected
for redemption in whole or in part, except the unredeemed portion of any
Security being redeemed in part.
<PAGE> 26
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(c) Exchange of Series A Securities for Series B
Securities. The Series A Securities may be exchanged for Series B Securities
pursuant to the terms of the Exchange Offer. The Trustee shall make the
exchange as follows:
The Company shall present the Trustee with an Officers'
Certificate certifying the following:
(A) upon issuance of the Series B Securities, the
transactions contemplated by the Exchange Offer have been consummated;
and
(B) the principal amount of Series A Securities properly
tendered in the Exchange Offer that are represented by a Global
Security and the principal amount of Series A Securities properly
tendered in the Exchange Offer that are represented by Definitive
Securities, the name of each holder of such Definitive Securities, the
principal amount properly tendered in the Exchange Offer by each such
holder and the name and address to which Definitive Securities for
Series B Securities shall be registered and sent for each such holder.
The Trustee, upon receipt of (i) such Officers' Certificate,
(ii) an Opinion of Counsel (x) to the effect that the issuance of Series B
Securities has been registered under the Securities Act and the Indenture has
been qualified under the Trust Indenture Act and (y) with respect to the
matters set forth in Section 3(p) of the Registration Rights Agreement and
(iii) a Company Order, shall authenticate (A) a Global Security for Series B
Securities in aggregate principal amount equal to the aggregate principal
amount of Series A Securities represented by a Global Security indicated in
such Officers' Certificate as having been properly tendered and (B) Definitive
Securities representing Series B Securities registered in the names of, and in
the principal amounts indicated in, such Officers' Certificate.
If the principal amount of the Global Security for the Series
B Securities is less than the principal amount of the Global Security for the
Series A Securities, the Trustee shall make an endorsement on such Global
Security for Series A Securities indicating a reduction in the principal amount
represented thereby.
The Trustee shall deliver such Definitive Securities for
Series B Securities to the holders thereof as indicated in such Officers'
Certificate.
SECTION 2.08. Replacement Securities.
If any mutilated Security is surrendered to the Trustee, or
the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, the Company shall issue and the
Trustee shall authenticate a replacement Security if the Trustee's requirements
for replacements of Securities are met. An indemnity bond must be supplied by
the holder that is sufficient in the judgment of the Trustee and the Company to
protect the Company,
<PAGE> 27
18
the Trustee, any agent thereof or any authenticating agent from any loss that
any of them may suffer if a Security is replaced. The Company or the Trustee
may charge for its expenses in replacing a Security.
Every replacement Security is an obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement of mutilated, destroyed, lost or stolen Securities.
SECTION 2.09. [Reserved]
SECTION 2.10. Temporary Securities.
Pending the preparation of definitive Securities, the Company
may execute, and upon Company Order the Trustee shall authenticate and make
available for delivery, temporary Securities that are printed, lithographed,
typewritten, mimeographed or otherwise reproduced, in any authorized
denomination, substantially of the tenor of the definitive Securities in lieu
of which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities
may determine, as conclusively evidenced by their execution of such Securities.
If temporary Securities are issued, the Company shall cause
definitive Securities to be prepared without unreasonable delay. The
definitive Securities shall be printed, lithographed or engraved, or provided
by any combination thereof, or in any other manner permitted by the rules and
regulations of any applicable securities exchange, all as determined by the
officers executing such definitive Securities. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities of the same series upon surrender of the temporary
Securities at the office or agency maintained by the Company for such purpose
pursuant to Section 3.02 hereof, without charge to the Holder. Upon surrender
for cancellation of any one or more temporary Securities, the Company shall
execute, and the Trustee shall authenticate and make available for delivery, in
exchange therefor the same aggregate principal amount of definitive Securities
of the same series of authorized denominations. Until so exchanged, the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of the same series.
SECTION 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Trustee and no one else shall cancel all Securities
surrendered for registration of transfer, exchange, payment, replacement or
cancellation and shall retain or dispose of canceled Securities in accordance
with its normal practices (subject to the record retention requirement of the
<PAGE> 28
19
Exchange Act) unless the Company directs them to be returned to it. The
Company may not issue new Securities to replace Securities that have been
redeemed or paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. Defaulted Interest.
Any interest on any Security that is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the holder
on the relevant regular record date; and such Defaulted Interest shall be paid
by the Company, at its election, as provided in clause (a) or clause (b) below:
(a) The Company may make payment of any Defaulted
Interest on Securities to the Persons in whose names such Securities
(or their respective Predecessor Securities) are registered at the
close of business on a special record date for the payment of such
Defaulted Interest, which shall be fixed in the following manner: the
Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each such Security and the date of the
proposed payment, and at the same time the Company shall deposit with
the Trustee an amount of money equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the
date of the proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such Defaulted
Interest as in this clause provided. Thereupon the Trustee shall fix
a special record date for the payment of such Defaulted Interest which
shall not be more than fifteen nor less than ten days prior to the
date of the proposed payment and not less than ten days after the
receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such special record date
and, in the name and at the expense of the Company, shall cause notice
of the proposed payment of such Defaulted Interest and the special
record date therefor to be mailed, first class postage prepaid, to
each Securityholder at his or her address as it appears in the
Security Register, not less than ten days prior to such special record
date. Notice of the proposed payment of such Defaulted Interest and
the special record date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the Persons in whose names such
Securities (or their respective Predecessor Securities) are
registered on such special record date and shall be no longer payable
pursuant to the following clause (b).
(b) The Company may make payment of any Defaulted
Interest on any Securities in any other lawful manner not inconsistent
with the requirements of any securities exchange on which such
Securities may be listed, and upon such notice as may be required by
such exchange, if, after notice given by the Company to the Trustee of
the proposed payment pursuant to this clause, such manner of payment
shall be deemed practicable by the Trustee.
<PAGE> 29
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SECTION 2.13. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers
(if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers
in notices of redemption as a convenience to Securityholders; provided that any
such notice may state that no representation is made as to the correctness of
such numbers either as printed on the Securities or as contained in any notice
of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the CUSIP numbers.
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.01. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of the
holders of the Securities that it will duly and punctually pay or cause to be
paid the principal of and premium, if any, and interest on the Securities at
the place, at the respective times and in the manner provided herein. Except
as provided in Section 2.03, each installment of interest on the Securities may
be paid by mailing checks for such interest payable to the order of the holder
of the Security entitled thereto as they appear in the Security Register. The
Company further covenants to pay any and all amounts including, without
limitation, Liquidated Damages, if any, on the dates and in the manner required
under the Registration Rights Agreement.
SECTION 3.02. Offices for Notices and Payments, Etc.
So long as any of the Securities remain outstanding, the
Company will maintain in the Borough of Manhattan, The City of New York, or
Wilmington, Delaware an office or agency where the Securities may be presented
for payment, an office or agency where the Securities may be presented for
registration of transfer and for exchange as in this Indenture provided and an
office or agency where notices and demands to or upon the Company in respect
of the Securities or of this Indenture may be served. The Company will give to
the Trustee written notice of the location of any such office or agency and of
any change of location thereof. Until otherwise designated from time to time
by the Company in a notice to the Trustee, any such office or agency for all of
the above purposes shall be the Principal Office of the Trustee. In case the
Company shall fail to maintain any such office or agency in the Borough of
Manhattan, The City of New York, or Wilmington, Delaware or shall fail to give
such notice of the location or of any change in the location thereof,
presentations and demands may be made and notices may be served at the
Principal Office of the Trustee.
<PAGE> 30
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In addition to any such office or agency, the Company may from
time to time designate one or more offices or agencies outside the Borough of
Manhattan, The City of New York, or Wilmington, Delaware where the Securities
may be presented for payment, registration of transfer and for exchange in the
manner provided in this Indenture, and the Company may from time to time
rescind such designation, as the Company may deem desirable or expedient;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain any such office or agency in
the Borough of Manhattan, The City of New York, or Wilmington, Delaware for the
purposes above mentioned. The Company will give to the Trustee prompt written
notice of any such designation or rescission thereof.
SECTION 3.03. Appointments to Fill Vacancies in Trustee's
Office.
The Company, whenever necessary to avoid or fill a vacancy in
the office of Trustee, will appoint, in the manner provided in Section 6.10, a
Trustee, so that there shall at all times be a Trustee hereunder.
SECTION 3.04. Provision as to Paying Agent.
(a) If the Company shall appoint a paying agent other
than the Trustee with respect to the Securities, it will cause such paying
agent to execute and deliver to the Trustee an instrument in which such agent
shall agree with the Trustee, subject to the provision of this Section 3.04,
(1) that it will hold all sums held by it as such agent
for the payment of the principal of and premium, if any, or interest
on the Securities (whether such sums have been paid to it by the
Company or by any other obligor on the Securities of such series) in
trust for the benefit of the holders of the Securities;
(2) that it will give the Trustee notice of any failure
by the Company (or by any other obligor on the Securities) to make any
payment of the principal of and premium or interest on the Securities
when the same shall be due and payable; and
(3) that it will at any time during the continuance of
any such failure, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held in trust by it as such paying
agent.
(b) If the Company shall act as its own paying agent, it
will, on or before each due date of the principal of and premium, if any, or
interest on the Securities, set aside, segregate and hold in trust for the
benefit of the holders of the Securities a sum sufficient to pay such
principal, premium or interest so becoming due and will notify the Trustee of
any failure to take such action and of any failure by the Company (or by any
other obligor under the Securities) to make any payment of the principal of and
premium, if any, or interest on the Securities when the same shall become due
and payable.
<PAGE> 31
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(c) Anything in this Section 3.04 to the contrary
notwithstanding, the Company may, at any time, for the purpose of obtaining a
satisfaction and discharge with respect to the Securities hereunder, or for any
other reason, pay or cause to be paid to the Trustee all sums held in trust for
any such series by the Trustee or any paying agent hereunder, as required by
this Section 3.04, such sums to be held by the Trustee upon the trusts herein
contained.
(d) Anything in this Section 3.04 to the contrary
notwithstanding, the agreement to hold sums in trust as provided in this
Section 3.04 is subject to Sections 11.03 and 11.04 and Article XV.
SECTION 3.05. Certificate to Trustee.
The Company will deliver to the Trustee on or before 120 days
after the end of each fiscal year in each year, commencing with the first
fiscal year ending after the date hereof, so long as Securities are outstanding
hereunder, an Officers' Certificate, one of the signers of which shall be the
principal executive, principal financial or principal accounting officer of the
Company stating that in the course of the performance by the signers of their
duties as officers of the Company they would normally have knowledge of any
default by the Company in the performance of any covenants contained herein,
stating whether or not they have knowledge of any such default and, if so,
specifying each such default of which the signers have knowledge and the nature
thereof.
SECTION 3.06. [Reserved]
SECTION 3.07. Limitation on Dividends.
The Company will not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock (which includes common and
preferred stock), or (ii) make any payment of principal, interest or premium,
if any, on or repay or repurchase or redeem any debt securities of the Company
(including any Other Debentures) that rank pari passu with or junior in right
of payment to the Securities or (iii) make any guarantee payments with respect
to any guarantee by the Company of any securities of any Subsidiary of the
Company (including Other Guarantees) if such guarantee ranks pari passu with,
or junior in right of payment to, the Securities (other than (a) dividends or
distributions in shares of, or options, warrants or rights to subscribe for or
purchase shares of, capital stock of the Company; (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption
or repurchase of any such rights pursuant thereto; (c) payments under a Capital
Securities Guarantee; (d) as a direct result of a reclassification of the
Company's capital stock or the exchange or the conversion of one class or
series of the Company's capital stock for another class or series of the
Company's capital stock; (e) the purchase of fractional interests in shares of
the Company's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged or pursuant
to an acquisition in which fractional shares of the Company's capital stock
<PAGE> 32
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would otherwise be issued; and (f) purchases of Common Stock related to the
issuance of Common Stock or rights under any benefit plan for directors,
officers, agents or employees of the Company or its Subsidiaries or any of the
Company's dividend reinvestment or director, officer, agent or employee stock
purchase plans), if at such time (1) an Event of Default shall have occurred
and be continuing, or would occur upon the taking of any action described in
clauses (i) through (iii) above, (2) there shall have occurred any event of
which the Company has actual knowledge that (a) with the giving of notice or
the lapse of time, or both, would constitute an Event of Default and (b) in
respect of which the Company shall not have taken reasonable steps to cure, (3)
the Company shall be in default with respect to its payment obligations under a
Capital Securities Guarantee or (4) the Company shall have given notice of its
election of the exercise of its right to extend the interest payment period
pursuant to Section 16.01 (or notice of a valid extension of an interest
payment period in accordance with the terms of any Other Debentures) and any
such notice shall not have been rescinded or such Extended Interest Payment
Period, or any extension thereof, or extension period with respect to Other
Debentures, shall be continuing.
SECTION 3.08. Covenants as to K N Capital Trust.
In the event Securities are issued to K N Capital Trust or a
trustee of such trust in connection with the issuance of Trust Securities by K
N Capital Trust, for so long as such Trust Securities remain outstanding, the
Company will (i) maintain 100% direct or indirect ownership of the Common
Securities of K N Capital Trust; provided, however, that any successor of the
Company, permitted pursuant to Article X hereof, may succeed to the Company's
ownership of such Common Securities, (ii) use its reasonable efforts,
consistent with the terms and provisions of the Declaration, to cause K N
Capital Trust (a) to remain a statutory business trust, except in connection
with a distribution of Securities to holders of Trust Securities in liquidation
of K N Capital Trust, the redemption of all of the Trust Securities of K N
Capital Trust or certain mergers, consolidations or amalgamations, each as
permitted by the Declaration, and (b) to otherwise continue to be treated as a
grantor trust and not as an association taxable as a corporation or a
partnership for United States federal income tax purposes and (iii) to use its
reasonable efforts to cause each holder of Trust Securities to be treated as
owning an undivided beneficial interest in the Securities.
SECTION 3.09. Payment of Expenses.
In connection with the offering, sale and issuance of the
Securities to the K N Capital Trust and in connection with the sale of the
Trust Securities by the K N Capital Trust, the Company, in its capacity as
borrower with respect to the Securities, shall:
(a) pay all costs and expenses relating to the offering,
sale and issuance of the Securities, including commissions to the
initial purchasers payable pursuant to the Purchase Agreement, fees
and expenses in connection with any exchange offer or other action to
be taken pursuant to the Registration Rights Agreement and
compensation of the Trustee in accordance with the provisions of
Section 6.06;
<PAGE> 33
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(b) pay all costs and expenses of the K N Capital Trust
(including, but not limited to, costs and expenses relating to the
organization of the K N Capital Trust, the offering, sale and issuance
of the Trust Securities (including commissions to the initial
purchasers in connection therewith), the fees and expenses of the
Property Trustee and the Delaware Trustee, the costs and expenses
relating to the operation of the K N Capital Trust, including without
limitation, costs and expenses of accountants, attorneys, statistical
or bookkeeping services, expenses for printing and engraving and
computing or accounting equipment, paying agent(s), registrar(s),
transfer agent(s), duplicating, travel and telephone and other
telecommunications expenses and costs and expenses incurred in
connection with the acquisition, financing, and disposition of assets
of the K N Capital Trust);
(c) be primarily and fully liable for any indemnification
obligations arising with respect to the Declaration;
(d) pay any and all taxes (other than United States
withholding taxes attributable to the K N Capital Trust or its assets)
and all liabilities, costs and expenses with respect to such taxes of
the K N Capital Trust; and
(e) pay all other fees, expenses, debts and obligations
(other than payments of principal of, premium, if any, or interest on
the Trust Securities) related to K N Capital Trust.
SECTION 3.10. Payment Upon Resignation or Removal.
Upon termination of this Indenture or the removal or
resignation of the Trustee, unless otherwise stated, the Company shall pay to
the Trustee all amounts accrued and owing to the date of such termination,
removal or resignation. Upon termination of the Declaration or the removal or
resignation of the Delaware Trustee or the Property Trustee, as the case may
be, pursuant to Section 5.07 of the Declaration, the Company shall pay to the
Delaware Trustee or the Property Trustee, as the case may be, all amounts
accrued and owing to the date of such termination, removal or resignation.
<PAGE> 34
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ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE
SECTION 4.01. Securityholders' Lists.
The Company covenants and agrees that it will furnish or cause
to be furnished to the Trustee:
(a) on a semiannual basis on each regular record date for
the Securities, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Securityholders as of such
record date; and
(b) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the Company, of any such
request, a list of similar form and content as of a date not more than
15 days prior to the time such list is furnished,
except that, no such lists need be furnished so long as the Trustee is in
possession thereof by reason of its acting as Security registrar.
SECTION 4.02. Preservation and Disclosure of Lists.
(a) The Trustee shall preserve, in as current a form as
is reasonably practicable, all information as to the names and addresses of the
holders of the Securities (1) contained in the most recent list furnished to it
as provided in Section 4.01 or (2) received by it in the capacity of Securities
registrar (if so acting) hereunder. The Trustee may destroy any list furnished
to it as provided in Section 4.01 upon receipt of a new list so furnished.
(b) In case three or more holders of Securities
(hereinafter referred to as "applicants") apply in writing to the Trustee and
furnish to the Trustee reasonable proof that each such applicant has owned a
Security for a period of at least six months preceding the date of such
application, and such application states that the applicants desire to
communicate with other holders of Securities or with holders of all Securities
with respect to their rights under this Indenture and is accompanied by a copy
of the form of proxy or other communication which such applicants propose to
transmit, then the Trustee shall within 5 Business Days after the receipt of
such application, at its election, either:
(1) afford such applicants access to the information
preserved at the time by the Trustee in accordance with the provisions
of subsection (a) of this Section 4.02, or
(2) inform such applicants as to the approximate number
of holders of all Securities, whose names and addresses appear in the
information preserved at the time by the Trustee in accordance with
the provisions of subsection (a) of this Section 4.02, and
<PAGE> 35
26
as to the approximate cost of mailing to such Securityholders the form
of proxy or other communication, if any, specified in such
application.
If the Trustee shall elect not to afford such applicants
access to such information, the Trustee shall, upon the written request of such
applicants, mail to each Securityholder whose name and address appear in the
information preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 4.02 a copy of the form of proxy
or other communication which is specified in such request with reasonable
promptness after a tender to the Trustee of the material to be mailed and of
payment, or provision for the payment, of the reasonable expenses of mailing,
unless within five days after such tender, the Trustee shall mail to such
applicants and file with the Commission, together with a copy of the material
to be mailed, a written statement to the effect that, in the opinion of the
Trustee, such mailing would be contrary to the best interests of the holders of
Securities of such series or all Securities, as the case may be, or would be in
violation of applicable law. Such written statement shall specify the basis of
such opinion. If the Commission, after opportunity for a hearing upon the
objections specified in the written statement so filed, shall enter an order
refusing to sustain any of such objections or if, after the entry of an order
sustaining one or more of such objections, the Commission shall find, after
notice and opportunity for hearing, that all the objections so sustained have
been met and shall enter an order so declaring, the Trustee shall mail copies
of such material to all such Securityholders with reasonable promptness after
the entry of such order and the renewal of such tender; otherwise the Trustee
shall be relieved of any obligation or duty to such applicants respecting their
application.
(c) Each and every holder of Securities, by receiving and
holding the same, agrees with the Company and the Trustee that neither the
Company nor the Trustee nor any paying agent shall be held accountable by
reason of the disclosure of any such information as to the names and addresses
of the holders of Securities in accordance with the provisions of subsection
(b) of this Section 4.02, regardless of the source from which such information
was derived, and that the Trustee shall not be held accountable by reason of
mailing any material pursuant to a request made under said subsection (b).
SECTION 4.03. Reports by the Company.
(a) The Company covenants and agrees to file with the
Trustee, within 15 days after the date on which the Company is required to file
the same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as said Commission may from time to time by rules and regulations
prescribe) which the Company may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company
is not required to file information, documents or reports pursuant to either of
such sections, then to file with the Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the Commission, such
of the supplementary and periodic information, documents and reports which may
be required pursuant to Section 13 of the Exchange Act in respect of a
<PAGE> 36
27
security listed and registered on a national securities exchange as may be
prescribed from time to time in such rules and regulations.
(b) The Company covenants and agrees to file with the
Trustee and the Commission, in accordance with the rules and regulations
prescribed from time to time by said Commission, such additional information,
documents and reports with respect to compliance by the Company with the
conditions and covenants provided for in this Indenture as may be required from
time to time by such rules and regulations.
(c) The Company covenants and agrees to transmit by mail
to all holders of Securities, as the names and addresses of such holders appear
upon the Security Register, within 30 days after the filing thereof with the
Trustee, such summaries of any information, documents and reports required to
be filed by the Company pursuant to subsections (a) and (b) of this Section
4.03 as may be required by rules and regulations prescribed from time to time
by the Commission.
(d) Delivery of such reports, information and documents
to the Trustee is for informational purposes only and the Trustee's receipt of
such shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
(e) So long as is required for an offer or sale of the
Securities to qualify for an exemption under Rule 144A under the Securities
Act, the Company shall, upon request, provide the information required by
clause (d)(4) thereunder to each Holder and to each beneficial owner and
prospective purchaser of Securities identified by any holder of Restricted
Securities, unless such information is furnished to the Commission pursuant to
Section 13 or 15(d) of the Exchange Act.
SECTION 4.04. Reports by the Trustee.
(a) The Trustee shall transmit to Securityholders such
reports concerning the Trustee and its actions under this Indenture as may be
required pursuant to the Trust Indenture Act at the times and in the manner
provided pursuant thereto. If required by Section 313(a) of the Trust
Indenture Act, the Trustee shall, within 90 days after each December 31
following the date of this Indenture, commencing December 31, 1997, deliver to
Securityholders a brief report, dated as of such December 31, which complies
with the provisions of such Section 313(a).
(b) A copy of each such report shall, at the time of such
transmission to Securityholders, be filed by the Trustee with each stock
exchange, if any, upon which the Securities are listed, with the Commission and
with the Company. The Company will promptly notify the Trustee when the
Securities are listed on any stock exchange.
<PAGE> 37
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ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.01. Events of Default.
One or more of the following events of default shall
constitute an Event of Default hereunder (whatever the reason for such Event of
Default and whether it shall be voluntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) default for a period of 30 days in the payment of any
interest on any Security, including any interest on accrued and unpaid
interest (to the extent permitted by applicable law) or any Additional
Interest in respect thereof, when due and payable; provided, however,
that a valid extension of an interest payment period by the Company in
accordance with the terms hereof shall not constitute a default in the
payment of interest for this purpose;
(b) default in the payment of all or any part of the
principal of, or premium, if any, on, any Security when the same shall
become due and payable either at maturity, upon redemption, by
declaration of acceleration of maturity or otherwise;
(c) default by the Company in the performance, or breach,
of any other of the covenants or agreements of the Company in this
Indenture (other than a covenant or agreement a default in whose
performance or whose breach is elsewhere in this Section specifically
dealt with), and continuance of such default or breach for a period of
90 days after there has 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 aggregate principal amount of the
Securities then outstanding a written notice specifying such default
or breach and requiring it to be remedied and stating that such notice
is a "Notice of Default" hereunder;
(d) a court having jurisdiction in the premises shall
enter a decree or order for relief in respect of the Company in an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of the Company or for any substantial part of its property,
or ordering the winding-up or liquidation of its affairs and such
decree or order shall remain unstayed and in effect for a period of 90
consecutive days;
(e) the Company shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, shall consent to the entry of an order for relief
in an involuntary case under any such law, or shall consent to the
appointment of or taking possession by a receiver, liquidator,
assignee, trustee,
<PAGE> 38
29
custodian, sequestrator (or other similar official) of the Company or
of any substantial part of its property, or shall make any general
assignment for the benefit of creditors, or admission by it in writing
of its inability to pay its debts as they become due; or
(f) the liquidation of the Trust, except in connection
with the occurrence of a Dissolution Event, the redemption of all of
the Trust Securities, or certain mergers, consolidations or
amalgamations, each as permitted by Section 3.15 of the Declaration.
If an Event of Default with respect to Securities then
outstanding occurs and is continuing, then and in every such case, the Trustee
or the holders of not less than 25% in aggregate principal amount of the
Securities then outstanding may declare the principal amount of all Securities
to be due and payable immediately, by a notice in writing to the Company (and
to the Trustee if given by the holders of the outstanding Securities), and upon
any such declaration the same shall become immediately due and payable.
The foregoing provisions, however, are subject to the
condition that if, at any time after the principal of the Securities 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, (i) the Company shall pay or shall deposit with the Trustee a sum
sufficient to pay (A) all matured installments of interest upon all the
Securities and the principal of and premium, if any, on any and all Securities
which shall have become due otherwise than by acceleration (with interest upon
such principal and premium, if any, 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 specified in the Securities
to the date of such payment or deposit) and (B) such amount as shall be
sufficient to cover reasonable compensation to the Trustee and each predecessor
Trustee, their respective agents, attorneys and counsel, and all other expenses
and liabilities incurred, and all advances made, by the Trustee and each
predecessor Trustee except as a result of negligence or bad faith, and (ii) any
and all Events of Default under the Indenture, other than the non-payment of
the principal of the Securities which shall have become due solely by such
declaration of 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 the Securities then outstanding, by
written notice to the Company and to the Trustee, may 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.
In case the Trustee shall have proceeded to enforce any right
under this Indenture and such proceedings shall have been discontinued or
abandoned because of such rescission or annulment or for any other reason or
shall have been determined adversely to the Trustee, then and in every such
case, the Company, the Trustee and the holders of the Securities shall be
restored respectively to their several positions and rights hereunder, and all
rights, remedies and powers of the Company, the Trustee and the holders of the
Securities shall continue as though no such proceeding had been taken.
<PAGE> 39
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SECTION 5.02. Payment of Securities on Default; Suit
Therefor.
The Company covenants that (a) in case default shall be made
in the payment of any installment of interest upon any of the Securities as and
when the same shall become due and payable, and such default shall have
continued for a period of 30 days (provided, however, the valid extension of an
interest payment period in accordance with Section 16.01 hereof shall not
constitute a default in the payment of interest for this purpose), or (b) in
case default shall be made in the payment of the principal of or premium, if
any, on any of the Securities as and when the same shall have become due and
payable, whether at maturity of the Securities or upon redemption or by
declaration or otherwise, then, upon demand of the Trustee, the Company will
pay to the Trustee, for the benefit of the holders of the Securities, the whole
amount that then shall have become due and payable on all such Securities for
principal and premium, if any, or interest, or both, as the case may be, with
interest upon the overdue principal and premium, if any, and (to the extent
that payment of such interest is enforceable under applicable law and, if the
Securities are held by K N Capital Trust or a trustee of such trust, without
duplication of any other amounts paid by K N Capital Trust or a trustee in
respect thereof) upon the overdue installments of interest at the rate borne by
the Securities; and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including a
reasonable compensation to the Trustee, its agents, attorneys and counsel, and
any expenses or liabilities incurred by the Trustee hereunder other than
through its negligence or bad faith.
In case the Company shall fail forthwith to pay such amounts
upon such demand, the Trustee, in its own name and as trustee of an express
trust, shall be entitled and empowered to institute any actions or proceedings
at law or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceeding to judgment or final decree, and may
enforce any such judgment or final decree against the Company or any other
obligor on the Securities and collect in the manner provided by law out of the
property of the Company or any other obligor on the Securities wherever
situated the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy
or for the reorganization of the Company or any other obligor on the Securities
under Title 11, United States Code, or any other applicable law, or in case a
receiver or trustee shall have been appointed for the property of the Company
or such other obligor, or in the case of any other similar judicial proceedings
relative to the Company or other obligor upon the Securities, or to the
creditors or property of the Company or such other obligor, the Trustee,
irrespective of whether the principal of the Securities shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand pursuant to the provisions of
this Section 5.02, shall be entitled and empowered, by intervention in such
proceedings or otherwise, to file and prove a claim or claims for the whole
amount of principal and interest owing and unpaid in respect of the Securities
and, in case of any judicial proceedings, to 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 reasonable compensation to the
Trustee and each predecessor Trustee, and their respective agents, attorneys
and counsel, and for reimbursement of all expenses and liabilities incurred,
and all advances made, by the Trustee and each predecessor Trustee, except as a
result of negligence or bad faith) and of the Securityholders allowed in such
judicial proceedings relative to the Company or any
<PAGE> 40
31
other obligor on the Securities, or to the creditors or property of the Company
or such other obligor, unless prohibited by applicable law and regulations, to
vote on behalf of the holders of the Securities in any election of a trustee or
a standby trustee in arrangement, reorganization, liquidation or other
bankruptcy or insolvency proceedings or person performing similar functions in
comparable proceedings, and to collect and receive any moneys or other property
payable or deliverable on any such claims, and to distribute the same after the
deduction of its charges and expenses; and any receiver, assignee or trustee in
bankruptcy or reorganization is hereby authorized by each of the
Securityholders to make such payments to the Trustee, and, in the event that
the Trustee shall consent to the making of such payments directly to the
Securityholders, to pay to the Trustee such amounts as shall be sufficient to
cover reasonable compensation to the Trustee, each predecessor Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Trustee and each
predecessor Trustee except as a result of negligence or bad faith.
Nothing herein contained shall be construed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Securityholder 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 Securityholder in
any such proceeding.
All rights of action and of asserting claims under this
Indenture, or under any of the Securities, may be enforced by the Trustee
without the possession of any of the Securities, or the production thereof on
any trial or other proceeding relative thereto, and any such suit or proceeding
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall be for the ratable benefit of
the holders of the Securities.
In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Trustee shall be a party) the Trustee shall be held to represent all
the holders of the Securities, and it shall not be necessary to make any
holders of the Securities parties to any such proceedings.
SECTION 5.03. Application of Moneys Collected by Trustee.
Any moneys collected by the Trustee shall be applied in the
order following, at the date or dates fixed by the Trustee for the distribution
of such moneys, upon presentation of the Securities in respect of which moneys
have been collected, and stamping thereon the payment, if only partially paid,
and upon surrender thereof if fully paid:
First: To the payment of costs and expenses of collection
applicable to the Securities and reasonable compensation to the Trustee, its
agents, attorneys and counsel, and of all other expenses and liabilities
incurred, and all advances made, by the Trustee except as a result of its
negligence or bad faith;
<PAGE> 41
32
Second: To the payment of all Senior Indebtedness of the
Company if and to the extent required by Article XV;
Third: To the payment of the amounts then due and unpaid upon
Securities for principal of (and premium, if any) and interest on the
Securities, in respect of which or for the benefit of which money has been
collected, ratably, without preference of priority of any kind, according to
the amounts due on such Securities for principal (and premium, if any) and
interest, respectively; and
Fourth: To the Company.
SECTION 5.04. Proceedings by Securityholders.
No holder of any Security shall have any right by virtue of or
by availing of any provision of this Indenture to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Indenture
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless such holder previously shall have given to the Trustee
written notice of an Event of Default and of the continuance thereof with
respect to the Securities specifying such Event of Default, as hereinbefore
provided, and unless also the holders of not less than 25% in aggregate
principal amount of the Securities then outstanding shall have made written
request upon the Trustee to institute such action, suit or proceeding in its
own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for 60 days
after its receipt of such notice, request and offer of indemnity shall have
failed to institute any such action, suit or proceeding, it being understood
and intended, and being expressly covenanted by the taker and holder of every
Security with every other taker and holder and the Trustee, that no one or more
holders of Securities shall have any right in any manner whatever by virtue of
or by availing of any provision of this Indenture to affect, disturb or
prejudice the rights of any other holder of Securities, or to obtain or seek to
obtain priority over or preference to any other such holder, or to enforce any
right under this Indenture, except in the manner herein provided and for the
equal, ratable and common benefit of all holders of Securities.
Notwithstanding any other provisions in this Indenture,
however, the right of any holder of any Security to receive payment of the
principal of, premium, if any, and interest on such Security, on or after the
same shall have become due and payable, or to institute suit for the
enforcement of any such payment, shall not be impaired or affected without the
consent of such holder and by accepting a Security hereunder it is expressly
understood, intended and covenanted by the taker and holder of every Security
with every other such taker and holder and the Trustee, that no one or more
holders of Securities shall have any right in any manner whatsoever by virtue
or by availing of any provision of this Indenture to affect, disturb or
prejudice the rights of the holders of any other Securities, or to obtain or
seek to obtain priority over or preference to any other such holder, or to
enforce any right under this Indenture, except in the manner herein provided
and for the equal, ratable and common benefit of all holders of Securities.
For the
<PAGE> 42
33
protection and enforcement of the provisions of this Section, each and every
Securityholder and the Trustee shall be entitled to such relief as can be given
either at law or in equity.
The Company and the Trustee acknowledge that pursuant to the
Declaration, the holders of Capital Securities are entitled, in the
circumstances and subject to the limitations set forth therein, to commence a
Direct Action with respect to any Event of Default under this Indenture and the
Securities.
SECTION 5.05. Proceedings by Trustee.
In case an Event of Default occurs with respect to Securities
and is continuing, the Trustee may, in its discretion, proceed to protect and
enforce the rights vested in it by this Indenture by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
of such rights, either by suit in equity or by action at law or by proceeding
in bankruptcy or otherwise, whether for the specific enforcement of any
covenant or agreement contained in this Indenture or in aid of the exercise of
any power granted in this Indenture, or to enforce any other legal or equitable
right vested in the Trustee by this Indenture or by law.
SECTION 5.06. Remedies Cumulative and Continuing.
Except as provided in the last paragraph of Section 2.08, all
powers and remedies given by this Article V to the Trustee or to the
Securityholders shall, to the extent permitted by law, be deemed cumulative and
not exclusive of any other powers and remedies available to the Trustee or the
holders of the Securities, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants and agreements contained in this
Indenture or otherwise established with respect to the Securities, and no delay
or omission of the Trustee or of any holder of any of the Securities to
exercise any right or power accruing upon any Event of Default occurring and
continuing as aforesaid shall impair any such right or power, or shall be
construed to be a waiver of any such default or an acquiescence therein; and,
subject to the provisions of Section 5.04, every power and remedy given by this
Article V or by law to the Trustee or to the Securityholders may be exercised
from time to time, and as often as shall be deemed expedient, by the Trustee or
by the Securityholders.
SECTION 5.07. Direction of Proceedings and Waiver of Defaults
by Majority of Securityholders.
The holders of a majority in aggregate principal amount of the
Securities at the time outstanding shall have the right to 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; provided,
however, that (subject to the provisions of Section 6.01) the Trustee shall
have the right to decline to follow any such direction if the Trustee shall
determine that the action so directed would be unjustly prejudicial to the
holders not taking part in such direction or if the Trustee being advised by
counsel determines that the action or proceeding so directed may not
<PAGE> 43
34
lawfully be taken or if the Trustee in good faith by its board of directors or
trustees, executive committee, or a trust committee of directors or trustees
and/or Responsible Officers shall determine that the action or proceedings so
directed would involve the Trustee in personal liability. Prior to any
declaration accelerating the maturity of the Securities, the holders of a
majority in aggregate principal amount of the Securities at the time
outstanding may on behalf of the holders of all of the Securities waive any
past default or Event of Default and its consequences except a default (a) in
the payment of principal of or premium, if any, or interest on any of the
Securities or (b) in respect of covenants or provisions hereof which cannot be
modified or amended without the consent of the holder of each Security
affected; provided, however, that if the Securities are held by the Property
Trustee, such waiver or modification to such waiver shall not be effective
until the holders of a majority in aggregate liquidation amount of Trust
Securities shall have consented to such waiver or modification to such waiver;
provided further that if the consent of the holder of each outstanding Security
is required, such waiver shall not be effective until each holder of the Trust
Securities shall have consented to such waiver. Upon any such waiver, the
default covered thereby shall be deemed to be cured for all purposes of this
Indenture and the Company, the Trustee and the holders of the Securities shall
be restored to their former positions and rights hereunder, respectively; but
no such waiver shall extend to any subsequent or other default or impair any
right consequent thereon. Whenever any default or Event of Default hereunder
shall have been waived as permitted by this Section 5.07, said default or Event
of Default shall for all purposes of the Securities and this Indenture be
deemed to have been cured and to be not continuing.
SECTION 5.08. Notice of Defaults.
The Trustee shall, within 30 Business Days after actual
knowledge by a Responsible Officer of the Trustee of the occurrence of a
default with respect to the Securities mail to all Securityholders, as the
names and addresses of such holders appear upon the Security register, notice
of all defaults known to the Trustee, unless such defaults shall have been
cured before the giving of such notice (the term "defaults" for the purpose of
this Section 5.08 being hereby defined to be the events specified in clauses
(a), (b), (c), (d) and (e) of Section 5.01, not including periods of grace, if
any, provided for therein, and irrespective of the giving of written notice
specified in clause (c) of Section 5.01); and provided that, except in the case
of default in the payment of the principal of or premium, if any, or interest
on any of the Securities, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee, or a
trust committee of directors and/or Responsible Officers of the Trustee in good
faith determines that the withholding of such notice is in the interests of the
Securityholders; and provided further that in the case of any default of the
character specified in Section 5.01(c) no such notice to Securityholders shall
be given until at least 60 days after the occurrence thereof but shall be given
within 90 days after such occurrence.
SECTION 5.09. Undertaking to Pay Costs.
All parties to this Indenture agree, and each holder of any
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in
<PAGE> 44
35
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,
the filing by any party litigant in such suit of an undertaking to pay the
costs of such suit, and that such court may in its discretion assess reasonable
costs, including reasonable attorneys' fees and expenses, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section 5.09 shall not apply to any suit instituted by the Trustee, to any suit
instituted by any Securityholder, or group of Securityholders, holding in the
aggregate more than 10% in aggregate principal amount of the Securities
outstanding, or to any suit instituted by any Securityholder for the
enforcement of the payment of the principal of (or premium, if any) or interest
on any Security against the Company on or after the same shall have become due
and payable.
ARTICLE VI
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Trustee.
With respect to the holders of the Securities issued
hereunder, the Trustee, prior to the occurrence of an Event of Default and
after the curing or waiving of all Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Indenture. In case an Event of Default has occurred (which has
not been cured or waived) the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of care and
skill in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default and
after the curing or waiving of all Events of Default which may have
occurred:
(1) the duties and obligations of the Trustee
shall be determined solely by the express provisions of this
Indenture, and the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished
to the Trustee and conforming to the requirements of this
Indenture; but, in the case of
<PAGE> 45
36
any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements
of this Indenture;
(b) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or Officers of
the Trustee, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts; and
(c) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith, in accordance
with the direction of the Securityholders pursuant to Section 5.07,
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.
None of the provisions contained in this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if there is reasonable ground for believing
that the repayment of such funds or liability is not reasonably assured to it
under the terms of this Indenture or indemnity against such risk reasonably
satisfactory to it is not assured to it.
SECTION 6.02. Reliance on Documents, Opinions, Etc.
Except as otherwise provided in Section 6.01:
(a) the Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond, note, debenture or other paper or document
believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) any request, direction, order or demand of the
Company mentioned herein may be sufficiently evidenced by an Officers'
Certificate (unless other evidence in respect thereof be herein
specifically prescribed); and any Board Resolution may be evidenced to
the Trustee by a copy thereof certified by the Secretary or an
Assistant Secretary of the Company;
(c) the Trustee may consult with counsel of its selection
and any advice or Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or
suffered omitted by it hereunder in good faith and in accordance with
such advice or Opinion of Counsel;
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(d) 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 Securityholders, pursuant to
the provisions of this Indenture, unless such Securityholders shall
have offered to the Trustee security or indemnity reasonably
satisfactory to it against the costs, expenses and liabilities which
may be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken
or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture; nothing contained herein shall, however, relieve the
Trustee of the obligation, upon the occurrence of an Event of Default
(that has not been cured or waived), to exercise such of the rights
and powers vested in it by this Indenture, and to use the same degree
of care and skill in their exercise, as a prudent man would exercise
or use under the circumstances in the conduct of his own affairs;
(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond, debenture, coupon or other paper or
document, unless requested in writing to do so by the holders of a
majority in aggregate principal amount of the outstanding Securities;
provided, however, 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 expense or liability as a condition
to so proceeding;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents (including any Authenticating Agent) or attorneys, and
the Trustee shall not be responsible for any misconduct or negligence
on the part of or for the supervision of any such agent or attorney
appointed by it with due care;
(h) the Trustee shall not be under any obligation to take
any action that is discretionary under the provisions of this
Indenture;
(i) no permissive power or authority available to the
Trustee shall be construed as a duty; and
(j) in the event that the Trustee is also acting as
Paying Agent or Securities registrar hereunder, the rights and
protections afforded to the Trustee pursuant to this Article VI shall
also be afforded to such Paying Agent and Securities registrar.
<PAGE> 47
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SECTION 6.03. No Responsibility for Recitals, Etc.
The recitals contained herein and in the Securities (except in
the certificate of authentication of the Trustee or the Authenticating Agent)
shall be taken as the statements of the Company and the Trustee and the
Authenticating Agent assume no responsibility for the correctness of the same.
The Trustee and the Authenticating Agent make no representations as to the
validity or sufficiency of this Indenture or of the Securities. The Trustee
and the Authenticating Agent shall not be accountable for the use or
application by the Company of any Securities or the proceeds of any Securities
authenticated and delivered by the Trustee or the Authenticating Agent in
conformity with the provisions of this Indenture. The Trustee shall not be
charged with knowledge of any default or Event of Default unless (i) a
Responsible Officer of the Trustee assigned to its Principal Office shall have
actual knowledge thereof or (ii) the Company, any Securityholder or the holder
of any Other Debenture shall have given the Trustee written notice thereof in
accordance with Section 13.04.
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents,
Transfer Agents or Registrar May Own Securities.
The Trustee or any Authenticating Agent or any paying agent or
any transfer agent or any Security registrar, in its individual or any other
capacity, may become the owner or pledgee of Securities with the same rights it
would have if it were not Trustee, Authenticating Agent, paying agent, transfer
agent or Security registrar.
SECTION 6.05. Moneys to Be Held in Trust.
Subject to the provisions of Section 11.04, all moneys
received by the Trustee or any paying agent shall, until used or applied as
herein provided, be held in trust for the purpose for which they were received,
but need not be segregated from other funds except to the extent required by
law. The Trustee and any paying agent shall be under no liability for interest
on any money received by it hereunder except as otherwise agreed in writing
with the Company. So long as no Event of Default shall have occurred and be
continuing, all interest allowed on any such moneys shall be paid from time to
time upon the written order of the Company, signed by the Chairman of the Board
of Directors, the President or a Vice President or the Treasurer or an
Assistant Treasurer of the Company.
SECTION 6.06. Compensation and Expenses of Trustee.
The Company, as borrower, covenants and agrees to pay to the
Trustee from time to time, and the Trustee shall be entitled to, such
compensation as shall be agreed to in writing between the Company and the
Trustee (which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust), and the Company will pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Indenture (including the reasonable compensation
and the expenses and disbursements of its counsel and of
<PAGE> 48
39
all persons not regularly in its employ) except any such expense, disbursement
or advance as may arise from its negligence or bad faith. The Company also
covenants to indemnify each of the Trustee or any predecessor Trustee (and its
officers, agents, directors and employees) for, and to hold it harmless
against, any and all loss, damage, claim, liability or expense including taxes
(other than taxes based on the income of the Trustee) incurred without
negligence or bad faith on the part of the Trustee and arising out of or in
connection with the acceptance or administration of this trust, including the
costs and expenses of defending itself against any claim of liability in the
premises. The obligations of the Company under this Section 6.06 to compensate
and indemnify the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder.
Such additional indebtedness shall be secured by a lien prior 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.
Without prejudice to any other rights available to the Trustee
under applicable law, when the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 5.01(d) or Section
5.01(e), the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the termination
of this Indenture or the earlier resignation or removal of the Trustee.
SECTION 6.07. Officers' Certificate as Evidence.
Except as otherwise provided in Sections 6.01 and 6.02,
whenever in the administration of the provisions of this Indenture the Trustee
shall deem it necessary or desirable that a matter be proved or established
prior to taking or omitting any action hereunder, the Trustee shall be entitled
to receive, and such matter (unless other evidence in respect thereof is 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 or omitted by it under the
provisions of this Indenture in reliance thereon.
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SECTION 6.08. Conflicting Interest of Trustee.
If the Trustee has or shall acquire any "conflicting interest"
within the meaning of Section 310(b) of the Trust Indenture Act, the Trustee
and the Company shall in all respects comply with the provisions of Section
310(b) of the Trust Indenture Act, subject to the penultimate paragraph
thereof.
SECTION 6.09. Eligibility of Trustee.
The Trustee hereunder shall at all times be a corporation
organized and doing business under the laws of the United States of America or
any state or territory thereof or of the District of Columbia or a corporation
or other Person permitted to act as trustee by the Commission authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least 50 million U.S. dollars ($50,000,000) and subject to
supervision or examination by federal, state, territorial, or District of
Columbia authority. If such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising
or examining authority, then for the purposes of this Section 6.09 the combined
capital and surplus of such Person shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published.
The Company may not, nor may any Person directly or indirectly
controlling, controlled by, or under common control with the Company, serve as
Trustee.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 6.09, the Trustee shall resign
immediately in the manner and with the effect specified in Section 6.10.
SECTION 6.10. Resignation or Removal of Trustee.
(a) The Trustee, or any trustee or trustees hereafter
appointed, may at any time resign by giving written notice of such resignation
to the Company and by mailing notice thereof to the holders of the Securities
at their addresses as they shall appear on the Security register. Upon
receiving such notice of resignation, the Company shall promptly appoint a
successor trustee or trustees by written instrument, in duplicate, one copy of
which instrument shall be delivered to the resigning Trustee and one copy to
the successor trustee. If no successor trustee shall have been so appointed
and have accepted appointment within 60 days after the mailing of such notice
of resignation to the Securityholders, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee, or
any Securityholder who has been a bona fide holder of a Security for at least
six months may, subject to the provisions of Section 5.09, on behalf of himself
and all others similarly situated, petition any such court for the appointment
of a successor trustee. Such court may thereupon, after such notice, if any,
as it may deem proper and prescribe, appoint a successor trustee.
<PAGE> 50
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(b) In case at any time any of the following shall occur
- -
(1) the Trustee shall fail to comply with the provisions
of Section 6.08 after written request therefor by the Company or by
any Securityholder who has been a bona fide holder of a Security or
Securities for at least six months, or
(2) the Trustee shall cease to be eligible in accordance
with the provisions of Section 6.09 and shall fail to resign after
written request therefor by the Company or by any such Securityholder,
or
(3) the Trustee shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer
shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or
liquidation, then and in any such case, the Company may remove the
Trustee and appoint a successor trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee, or, subject
to the provisions of Section 5.09, any Securityholder who has been a
bona fide holder of a Security for at least six months may, on behalf
of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the
appointment of a successor trustee. Such court may thereupon, after
such notice, if any, as it may deem proper and prescribe, remove the
Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate principal
amount of the Securities at the time outstanding may at any time remove the
Trustee and nominate a successor trustee, which shall be deemed appointed as
successor trustee unless within 10 days after such nomination the Company
objects thereto or if no successor trustee shall have been so appointed and
shall have accepted appointment within 30 days after such removal, in which
case the Trustee so removed or any Securityholder, upon the terms and
conditions and otherwise as provided in subsection (a) of this Section 6.10,
may petition any court of competent jurisdiction for an appointment of a
successor trustee.
(d) Any resignation or removal of the Trustee and
appointment of a successor trustee pursuant to any of the provisions of this
Section 6.10 shall become effective upon acceptance of appointment by the
successor trustee as provided in Section 6.11.
SECTION 6.11. Acceptance by Successor Trustee.
Any successor trustee appointed as provided in Section 6.10
shall execute, acknowledge and deliver to the Company and to its predecessor
trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the retiring trustee shall become effective and such
successor trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, duties and obligations of its predecessor
<PAGE> 51
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hereunder, with like effect as if originally named as trustee herein; but,
nevertheless, on the written request of the Company or of the successor
trustee, the trustee ceasing to act shall, upon payment of any amounts then due
it pursuant to the provisions of Section 6.06, execute and deliver an
instrument transferring to such successor trustee all the rights and powers of
the trustee so ceasing to act and shall duly assign, transfer and deliver to
such successor trustee all property and money held by such retiring trustee
thereunder. Upon request of any such successor trustee, the Company shall
execute any and all instruments in writing for more fully and certainly vesting
in and confirming to such successor trustee all such rights and powers. Any
trustee ceasing to act shall, nevertheless, retain a lien upon all property or
funds held or collected by such trustee to secure any amounts then due it
pursuant to the provisions of Section 6.06.
No successor trustee shall accept appointment as provided in
this Section 6.11 unless at the time of such acceptance such successor trustee
shall be qualified under the provisions of Section 6.08 and eligible under the
provisions of Section 6.09.
Upon acceptance of appointment by a successor trustee as
provided in this Section 6.11, the Company shall mail notice of the succession
of such trustee hereunder to the holders of Securities at their addresses as
they shall appear on the Security register. If the Company fails to mail such
notice within 10 days after the acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Company.
SECTION 6.12. Succession by Merger, Etc.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder without the execution or filing of any paper or any further act on
the part of any of the parties hereto; provided, however, the Trustee shall
promptly notify the Company of any succession pursuant to this Section 6.12.
In case at the time such successor to the Trustee shall
succeed to the trusts created by this Indenture any Securities shall have been
authenticated but not delivered, any such successor to the Trustee may adopt
the certificate of authentication of any predecessor trustee, and deliver such
Securities so authenticated; and in case at that time any of the Securities
shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor hereunder or
in the name of the successor trustee; and in all such cases such certificates
shall have the full force which the Securities or this Indenture elsewhere
provides that the certificate of the Trustee shall have; provided, however,
that the right to adopt the certificate of authentication of any predecessor
Trustee or authenticate Securities in the name of any predecessor Trustee shall
apply only to its successor or successors by merger, conversion or
consolidation.
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SECTION 6.13. Limitation on Rights of Trustee as a Creditor.
The Trustee shall comply with Section 311(a) of the Trust
Indenture Act, excluding any creditor relationship described in Section 311(b)
of the Trust Indenture Act. A Trustee who has resigned or been removed shall
be subject to Section 311(a) of the Trust Indenture Act to the extent included
therein.
SECTION 6.14. Authenticating Agents.
There may be one or more Authenticating Agents appointed by
the Trustee upon the request of the Company with power to act on its behalf and
subject to its direction in the authentication and delivery of Securities
issued upon exchange or transfer thereof as fully to all intents and purposes
as though any such Authenticating Agent had been expressly authorized to
authenticate and deliver Securities; provided that the Trustee shall have no
liability to the Company for any acts or omissions of the Authenticating Agent
with respect to the authentication and delivery of Securities. Any such
Authenticating Agent shall at all times be a corporation organized and doing
business under the laws of the United States or of any state or territory
thereof or of the District of Columbia authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of at least
$5,000,000 and being subject to supervision or examination by federal, state,
territorial or District of Columbia authority. If such corporation publishes
reports of condition at least annually pursuant to law or the requirements of
such authority, then for the purposes of this Section 6.14 the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If
at any time an Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect herein specified in this Section.
Any corporation into which any Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, consolidation or conversion to which any
Authenticating Agent shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of any Authenticating Agent,
shall be the successor of such Authenticating Agent hereunder, if such
successor corporation is otherwise eligible under this Section 6.14 without the
execution or filing of any paper or any further act on the part of the parties
hereto or such Authenticating Agent.
Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Trustee and to the Company. The Trustee
may at any time terminate the agency of any Authenticating Agent by giving
written notice of termination to such Authenticating Agent and to the Company.
Upon receiving such a notice of resignation or upon such a termination, or in
case at any time any Authenticating Agent shall cease to be eligible under this
Section 6.14, the Trustee may, and upon the request of the Company shall,
promptly appoint a successor Authenticating Agent eligible under this Section
6.14, shall give written notice of such appointment to the Company and shall
mail notice of such appointment to all Securityholders as the names and
addresses of such holders appear on the Security Register. Any
<PAGE> 53
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successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all rights, powers, duties and responsibilities of its
predecessor hereunder, with like effect as if originally named as
Authenticating Agent herein.
The Company, as borrower, agrees to pay to any Authenticating
Agent from time to time reasonable compensation for its services. Any
Authenticating Agent shall have no responsibility or liability for any action
taken by it as such in accordance with the directions of the Trustee.
ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Action by Securityholders.
Whenever in this Indenture it is provided that the holders of
a specified percentage in aggregate principal amount of the Securities may take
any action (including the making of any demand or request, the giving of any
notice, consent or waiver or the taking of any other action) the fact that at
the time of taking any such action the holders of such specified percentage
have joined therein may be evidenced (a) by any instrument or any number of
instruments of similar tenor executed by such Securityholders in person or by
agent or proxy appointed in writing, or (b) by the record of such holders of
Securities voting in favor thereof at any meeting of such Securityholders duly
called and held in accordance with the provisions of Article VIII, or (c) by a
combination of such instrument or instruments and any such record of such a
meeting of such Securityholders.
If the Company shall solicit from the Securityholders any
request, demand, authorization, direction, notice, consent, waiver or other
action, the Company may, at its option, as evidenced by an Officers'
Certificate, fix in advance a record date for the determination of
Securityholders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other action or to revoke any such
action, but the Company shall have no obligation to do so. If such a record
date is fixed, such request, demand, authorization, direction, notice, consent,
waiver or other action or revocation may be given before or after the record
date, but only the Securityholders of record at the close of business on the
record date shall be deemed to be Securityholders for the purposes of
determining whether Securityholders of the requisite proportion of outstanding
Securities have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other action, and for that
purpose the outstanding Securities shall be computed as of the record date;
provided, however, that no such authorization, agreement or consent by such
Securityholders on the record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later than
six months after the record date.
<PAGE> 54
45
SECTION 7.02. Proof of Execution by Securityholders.
Subject to the provisions of Sections 6.01, 6.02 and 8.05,
proof of the execution of any instrument by a Securityholder or its agent or
proxy shall be sufficient if made in accordance with such reasonable rules and
regulations as may be prescribed by the Trustee or in such manner as shall be
satisfactory to the Trustee. The ownership of Securities shall be proved by
the Security Register or by a certificate of the Security registrar. The
Trustee may require such additional proof of any matter referred to in this
Section as it shall deem necessary.
The record of any Securityholders' meeting shall be proved in
the manner provided in Section 8.06.
SECTION 7.03. Who Are Deemed Absolute Owners.
Prior to due presentment for registration of transfer of any
Security, the Company, the Trustee, any Authenticating Agent, any paying agent,
any transfer agent and any Security registrar may deem the person in whose name
such Security shall be registered upon the Security Register to be, and may
treat it as, the absolute owner of such Security (whether or not such Security
shall be overdue) for the purpose of receiving payment of or on account of the
principal of and premium, if any, and (subject to Section 2.06) interest on
such Security and for all other purposes; and neither the Company nor the
Trustee nor any Authenticating Agent nor any paying agent nor any transfer
agent nor any Security registrar shall be affected by any notice to the
contrary. All such payments so made to any holder for the time being or upon
its order shall be valid, and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for moneys payable upon any
such Security.
SECTION 7.04. Securities Owned by Company Deemed Not
Outstanding.
In determining whether the holders of the requisite aggregate
principal amount of Securities have concurred in any direction, consent or
waiver under this Indenture, Securities which are owned by the Company or any
other obligor on the Securities or by any person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Company or any other obligor on the Securities shall be disregarded and
deemed not to be outstanding for the purpose of any such determination;
provided that for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, consent or waiver, only Securities
which a Responsible Officer of the Trustee assigned to its Principal Office
actually knows are so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as outstanding for the purposes
of this Section 7.04 if the pledgee shall establish to the satisfaction of the
Trustee the pledgee's right to vote such Securities and that the pledgee is not
the Company or any such other obligor or person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Company or any such other obligor. In the case of a dispute as to such
right, any decision by the Trustee taken upon the advice of counsel shall be
full protection to the Trustee.
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SECTION 7.05. Revocation of Consents; Future Holders Bound.
At any time prior to (but not after) the evidencing to the
Trustee, as provided in Section 7.01, of the taking of any action by the
holders of the percentage in aggregate principal amount of the Securities
specified in this Indenture in connection with such action, any holder of a
Security (or any Security issued in whole or in part in exchange or
substitution therefor), subject to Section 7.01, the serial number of which is
shown by the evidence to be included in the Securities the holders of which
have consented to such action may, by filing written notice with the Trustee
at its Principal Office and upon proof of holding as provided in Section 7.02,
revoke such action so far as concerns such Security (or so far as concerns the
principal amount represented by any exchanged or substituted Security). Except
as aforesaid, any such action taken by the holder of any Security shall be
conclusive and binding upon such holder and upon all future holders and owners
of such Security, and of any Security issued in exchange or substitution
therefor, irrespective of whether or not any notation in regard thereto is made
upon such Security or any Security issued in exchange or substitution therefor.
ARTICLE VIII
SECURITYHOLDERS' MEETINGS
SECTION 8.01. Purposes of Meetings.
A meeting of Securityholders may be called at any time and
from time to time pursuant to the provisions of this Article VIII for any of
the following purposes:
(a) to give any notice to the Company or to the Trustee,
or to give any directions to the Trustee, or to consent to the waiving
of any default hereunder and its consequences, or to take any other
action authorized to be taken by Securityholders pursuant to any of
the provisions of Article V;
(b) to remove the Trustee and nominate a successor
trustee pursuant to the provisions of Article VI;
(c) to consent to the execution of an indenture or
indentures supplemental hereto pursuant to the provisions of Section
9.02; or
(d) to take any other action authorized to be taken by or
on behalf of the holders of any specified aggregate principal amount
of such Securities under any other provision of this Indenture or
under applicable law.
<PAGE> 56
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SECTION 8.02. Call of Meetings by Trustee.
The Trustee may at any time call a meeting of Securityholders
to take any action specified in Section 8.01, to be held at such time and at
such place in the Borough of Manhattan, The City of New York, or Wilmington,
Delaware, as the Trustee shall determine. Notice of every meeting of the
Securityholders, setting forth the time and the place of such meeting and in
general terms the action proposed to be taken at such meeting, shall be mailed
to holders of Securities at their addresses as they shall appear on the
Securities Register. Such notice shall be mailed not less than 20 nor more
than 180 days prior to the date fixed for the meeting.
SECTION 8.03. Call of Meetings by Company or Securityholders.
In case at any time the Company pursuant to a resolution of
the Board of Directors, or the holders of at least 10% in aggregate principal
amount of the Securities then outstanding, shall have requested the Trustee to
call a meeting of Securityholders, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have mailed the notice of such meeting within 20 days after
receipt of such request, then the Company or such Securityholders may determine
the time and the place in said Borough of Manhattan for such meeting and may
call such meeting to take any action authorized in Section 8.01, by mailing
notice thereof as provided in Section 8.02.
SECTION 8.04. Qualifications for Voting.
To be entitled to vote at any meeting of Securityholders a
person shall be (a) a holder of one or more Securities or (b) a person
appointed by an instrument in writing as proxy by a holder of one or more
Securities. The only persons who shall be entitled to be present or to speak
at any meeting of Securityholders shall be the persons entitled to vote at such
meeting and their counsel and any representatives of the Trustee and its
counsel and any representatives of the Company and its counsel.
SECTION 8.05. Regulations.
Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Securityholders, in regard to proof of the holding of Securities and
of the appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates
and other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Securityholders as provided in Section 8.03, in which case
the Company or the Securityholders calling the meeting, as the case may be,
shall in like manner appoint a temporary chairman. A permanent chairman and a
permanent secretary of the meeting shall be elected by majority vote of the
meeting.
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Subject to the provisions of Section 8.04, at any meeting each
holder of Securities or proxy therefor shall be entitled to one vote for each
$1,000 principal amount of Securities held or represented by him; provided,
however, that no vote shall be cast or counted at any meeting in respect of any
Security challenged as not outstanding and ruled by the chairman of the meeting
to be not outstanding. The chairman of the meeting shall have no right to vote
other than by virtue of Securities held by him or instruments in writing as
aforesaid duly designating him as the person to vote on behalf of other
Securityholders. Any meeting of Securityholders duly called pursuant to the
provisions of Section 8.02 or 8.03 may be adjourned from time to time by a
majority of those present, whether or not constituting a quorum, and the
meeting may be held as so adjourned without further notice.
The Persons entitled to vote a majority in principal amount of
the outstanding Securities shall constitute a quorum for a meeting of Holders
of Securities; provided, however, that if any action is to be taken at such
meeting with respect to a consent, waiver, request, demand, notice,
authorization, direction or other action which may be given by the holders of
not less than a specified percentage in principal amount of the outstanding
Securities, the Persons holding or representing such specified percentage in
principal amount of the outstanding Securities will constitute a quorum. In
the absence of a quorum within 30 minutes of the time appointed for any such
meeting, the meeting shall, if convened at the request of holders of
Securities, be dissolved. In any other case the meeting may be adjourned for a
period of not less than 10 days as determined by the chairman of the meeting
prior to the adjournment of such meeting. In the absence of a quorum at any
such adjourned meeting, such adjourned meeting may be further adjourned for a
period of not less than 10 days as determined by the chairman of the meeting
prior to the adjournment of such adjourned meeting. Notice of the reconvening
of any adjourned meeting shall be given as provided in Section 8.02, except
that such notice need be given only once not less than five days prior to the
date on which the meeting is scheduled to be reconvened. Notice of the
reconvening of an adjourned meeting shall state expressly the percentage, as
provided above, of the principal amount of the outstanding Securities which
shall constitute a quorum.
Except as limited by the first proviso to the first paragraph
of Section 9.02, any resolution presented to a meeting or adjourned meeting
duly reconvened at which a quorum is present as aforesaid may be adopted by the
affirmative vote of the holders of a majority in principal amount of the
outstanding Securities; provided, however, that, except as limited by the first
proviso to the first paragraph of Section 9.02, any resolution with respect to
any consent, waiver, request, demand, notice, authorization, direction or other
action which this Indenture expressly provides may be given by the holders of
not less than a specified percentage in principal amount of the outstanding
Securities may be adopted at a meeting or an adjourned meeting duly reconvened
and at which a quorum is present as aforesaid only by the affirmative vote of
the holders of not less than such specified percentage in principal amount of
the outstanding Securities.
<PAGE> 58
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Any resolution passed or decision taken at any meeting of
Holders of Securities duly held in accordance with this Section shall be
binding on all the Holders of Securities whether or not present or represented
at the meeting.
SECTION 8.06. Voting.
The vote upon any resolution submitted to any meeting of
holders of Securities shall be by written ballots on which shall be subscribed
the signatures of such holders or of their representatives by proxy and the
serial number or numbers of the Securities held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in triplicate of all votes cast at the meeting. A record in duplicate
of the proceedings of each meeting of Securityholders shall be prepared by the
secretary of the meeting and there shall be attached to said record the
original reports of the inspectors of votes on any vote by ballot taken thereat
and affidavits by one or more persons having knowledge of the facts setting
forth a copy of the notice of the meeting and showing that said notice was
mailed as provided in Section 8.02. The record shall show the serial numbers of
the Securities voting in favor of or against any resolution. The record shall
be signed and verified by the affidavits of the permanent chairman and
secretary of the meeting and one of the duplicates shall be delivered to the
Company and the other to the Trustee to be preserved by the Trustee, the latter
to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
ARTICLE IX
AMENDMENTS
SECTION 9.01. Without Consent of Securityholders.
The Company and the Trustee may from time to time and at any
time amend the Indenture, without the consent of the Securityholders, for one
or more of the following purposes:
(a) to evidence the succession of another Person to the
Company, or successive successions, and the assumption by the
successor Person of the covenants, agreements and obligations of the
Company pursuant to Article X hereof;
(b) to convey, transfer, assign, mortgage or pledge any
property to or with the Trustee or to surrender any right or power
herein conferred upon the Company;
(c) to add to the covenants of the Company such further
covenants, restrictions or conditions for the protection of the
Securityholders as the Board of
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Directors and the Trustee shall consider to be for the protection of
the Securityholders, and to make the occurrence, or the occurrence and
continuance, of a default in any of such additional covenants,
restrictions or conditions a default or an Event of Default permitting
the enforcement of all or any of the remedies provided in this
Indenture as herein set forth; provided, however, that in respect of
any such additional covenant, restriction or condition such amendment
may provide for a particular period of grace after default (which
period may be shorter or longer than that allowed in the case of other
defaults) or may provide for an immediate enforcement upon such
default or may limit the remedies available to the Trustee upon such
default;
(d) to provide for the issuance under this Indenture of
Securities in coupon form (including Securities registrable as to
principal only) and to provide for exchangeability of such Securities
with the Securities issued hereunder in fully registered form and to
make all appropriate changes for such purpose;
(e) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may
be defective or inconsistent with any other provision contained herein
or in any supplemental indenture, or to make such other provisions in
regard to matters or questions arising under this Indenture; provided
that any such action shall not materially adversely affect the
interests of the holders of the Securities;
(f) to evidence and provide for the acceptance of
appointment hereunder by a successor trustee with respect to the
Securities;
(g) to make provision for transfer procedures,
certification, book-entry provisions, the form of restricted
securities legends, if any, to be placed on Securities, minimum
denominations and all other matters required pursuant to Section 2.07
or otherwise necessary, desirable or appropriate in connection with
the issuance of Securities to holders of Capital Securities in the
event of a distribution of Securities by K N Capital Trust following a
Dissolution Event;
(h) to qualify or maintain qualification of this
Indenture under the Trust Indenture Act; or
(i) to make any other change that does not materially
adversely affect the rights of any Securityholder.
The Trustee is hereby authorized to join with the Company in
the execution of any supplemental indenture to effect such amendment, to make
any further appropriate agreements and stipulations which may be therein
contained and to accept the conveyance, transfer and assignment of any
property thereunder, but the Trustee shall not be obligated to, but may in its
discretion, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
<PAGE> 60
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Any amendment to the Indenture authorized by the provisions of
this Section 9.01 may be executed by the Company and the Trustee without the
consent of the holders of any of the Securities at the time outstanding,
notwithstanding any of the provisions of Section 9.02.
SECTION 9.02. With Consent of Securityholders.
With the consent (evidenced as provided in Section 7.01) of
the holders of a majority in aggregate principal amount of the Securities at
the time outstanding, the Company, when authorized by a Board Resolution, and
the Trustee may from time to time and at any time amend the Indenture for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of modifying in any manner the
rights of the holders of the Securities; provided, however, that no such
amendment shall without the consent of the holders of each Security then
outstanding and affected thereby (i) change the Stated Maturity Date of any
Security, or reduce the rate or extend the time of payment of interest thereon
(except as contemplated by Article XVI), or reduce the principal amount
thereof, or reduce any amount payable on redemption thereof, or make the
principal thereof or any interest or premium thereon payable in any coin or
currency other than that provided in the Securities, or impair or affect the
right of any Securityholder to institute suit for payment thereof, or (ii)
reduce the aforesaid percentage of Securities the holders of which are required
to consent to any such amendment to the Indenture; provided, however, that if
the Securities are held by K N Capital Trust, such amendment shall not be
effective until the holders of a majority in liquidation amount of Trust
Securities shall have consented to such amendment; provided further that if the
consent of the holder of each outstanding Security is required, such amendment
shall not be effective until each holder of the Trust Securities shall have
consented to such amendment; and provided further that such amendment shall not
impair or affect the right of any holder of Capital Securities to commence a
Direct Action, in the circumstances and subject to the limitations set forth in
Section 13.13, until each holder of Capital Securities shall have consented to
such amendment.
Upon the request of the Company accompanied by a copy of a
resolution of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any supplemental indenture affecting
such amendment, and upon the filing with the Trustee of evidence of the consent
of Securityholders as aforesaid, the Trustee shall join with the Company in the
execution of such supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture.
Promptly after the execution by the Company and the Trustee of
any supplemental indenture pursuant to the provisions of this Section, the
Trustee shall transmit by mail, first class postage prepaid, a notice, prepared
by the Company, setting forth in general terms the substance of such
supplemental indenture, to the Securityholders as their names and addresses
appear upon the Security Register. Any failure of the Trustee to mail such
notice, or
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any defect therein, shall not, however, in any way impair or affect the
validity of any such supplemental indenture.
It shall not be necessary for the consent of the
Securityholders under this Section 9.02 to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof.
SECTION 9.03. Compliance with Trust Indenture Act; Effect of
Supplemental Indentures.
Any supplemental indenture executed pursuant to the provisions
of this Article IX shall comply with the Trust Indenture Act of 1939 as it may
be in effect from time to time. Upon the execution of any supplemental
indenture pursuant to the provisions of this Article IX, this Indenture shall
be and be deemed to be modified and amended in accordance therewith and the
respective rights, limitations of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Company and the holders of Securities
shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
SECTION 9.04. Notation on Securities.
Securities authenticated and delivered after the execution of
any supplemental indenture affecting such series pursuant to the provisions of
this Article IX may bear a notation in form approved by the Trustee as to any
matter provided for in such supplemental indenture. If the Company or the
Trustee shall so determine, new Securities so modified as to conform, in the
opinion of the Trustee and the Board of Directors, to any modification of this
Indenture contained in any such supplemental indenture may be prepared and
executed by the Company, authenticated by the Trustee or the Authenticating
Agent and delivered in exchange for the Securities then outstanding.
SECTION 9.05. Evidence of Compliance of Supplemental
Indenture to Be Furnished Trustee.
The Trustee, subject to the provisions of Sections 6.01 and
6.02, may receive an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article IX.
The Trustee may receive an Opinion of Counsel as conclusive
evidence that any supplemental indenture executed pursuant to this Article is
authorized or permitted by, and conforms to, the terms of this Article and
that it is proper for the Trustee under the provisions of this Article to join
in the execution thereof.
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ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 10.01. Company May Consolidate, Etc., Only on Certain
Terms.
The Company shall not consolidate with or merge with or into
any other Person or sell, convey, assign, transfer, lease or otherwise dispose
of all or substantially all of its properties and assets as an entirety to any
Person, unless:
(1) the Person formed by such consolidation or into which
the Company is merged or the Person which acquires, by sale,
conveyance, assignment, transfer, lease or disposition of all or
substantially all of the properties and assets of the Company as an
entirety (A) shall be a corporation, partnership or trust organized
and validly existing under the laws of the United States of America,
any State thereof or the District of Columbia and (B) shall expressly
assume, by an indenture supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, the Company's
obligation for the due and punctual payment of the principal of (and
premium, if any, on) and interest on all the Securities and the
performance and observance of every covenant and agreement of this
Indenture on the part of the Company to be performed or observed;
(2) immediately before and immediately after giving pro
forma effect to such transaction (and treating any Indebtedness not
previously an obligation of the Company or a Subsidiary which became
the obligation of the Company or any of its Subsidiaries in connection
with or as a result of such transaction as having been incurred at the
time of such transaction), no Default or Event of Default shall have
occurred and be continuing; and
(3) the Company or such Person shall have delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger or disposition and such
supplemental indenture comply with this Article and that all
conditions precedent herein provided for relating to such transaction
have been complied with.
This Section and Section 10.02 shall only apply to a merger or
consolidation in which the Company is not the surviving corporation and to
dispositions by the Company of all or substantially all of the properties and
assets of the Company and its Subsidiaries on a consolidated basis to any
Person.
SECTION 10.02. Successor Person Substituted.
Upon any consolidation by the Company with or merger by the
Company into any other Person or any sale, assignment, conveyance, transfer,
lease or other disposition of all or substantially all of the properties and
assets of the Company as an entirety to any Person in
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accordance with Section 10.01, the successor Person formed by such
consolidation or into which the Company is merged or to which such 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 as if such
successor Person had been named as the Company herein, and in the event of any
such disposition, the Company (which term shall for this purpose mean the
Person named as the "Company" in the first paragraph of this Indenture or any
successor Person which shall theretofore become such in the manner described in
Section 10.01), except in the case of a lease, shall be discharged of all
obligations and covenants under this Indenture and the Securities and may be
dissolved and liquidated.
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.01. Discharge of Indenture.
When (a) the Company shall deliver to the Trustee for
cancellation all Securities theretofore authenticated (other than any
Securities which shall have been destroyed, lost or stolen and which shall have
been replaced or paid as provided in Section 2.08) and not theretofore
canceled, or (b) all the Securities not theretofore canceled or delivered to
the Trustee for cancellation shall have become due and payable, or are by their
terms to become due and payable within one year or are to be called for
redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption, and the Company shall deposit with the
Trustee, in trust, funds sufficient to pay on the Stated Maturity Date or upon
redemption all of the Securities (other than any Securities which shall have
been destroyed, lost or stolen and which shall have been replaced as provided
in Section 2.08) not theretofore canceled or delivered to the Trustee for
cancellation, including principal and premium, if any, and interest due or to
become due to the Stated Maturity Date or the date of redemption, as the case
may be, but excluding, however, the amount of any moneys for the payment of
principal of or premium, if any, or interest on the Securities (1) theretofore
repaid to the Company in accordance with the provisions of Section 11.04, or
(2) paid to any State or to the District of Columbia pursuant to its unclaimed
property or similar laws, and if in either case the Company shall also pay or
cause to be paid all other sums payable hereunder by the Company, then this
Indenture shall cease to be of further effect except for the provisions of
Sections 2.02, 2.07, 2.08, 3.01, 3.02, 3.04, 6.06, 6.10 and 11.04 hereof, which
shall survive until such Securities shall mature and be paid. Thereafter,
Sections 6.06, 6.10 and 11.04 shall survive, and the Trustee, on demand of the
Company accompanied by any Officers' Certificate and an Opinion of Counsel and
at the cost and expense of the Company, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture, the Company,
however, hereby agreeing to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred by the Trustee in connection with
this Indenture or the Securities.
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SECTION 11.02. Deposited Moneys and U.S. Government
Obligations to Be Held in Trust by Trustee.
Subject to the provisions of Section 11.04, all moneys and
U.S. Government Obligations deposited with the Trustee pursuant to Section
11.01 or 11.05 shall be held in trust and applied by it to the payment, either
directly or through any paying agent (including the Company if acting as its
own paying agent), to the holders of the particular Securities for the payment
of which such moneys or U.S. Government Obligations have been deposited with
the Trustee, of all sums due and to become due thereon for principal, premium,
if any, and interest.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 11.05 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the holders of outstanding Securities.
SECTION 11.03. Paying Agent to Repay Moneys Held.
Upon the satisfaction and discharge of this Indenture all
moneys then held by any paying agent of the Securities (other than the Trustee)
shall, upon written demand of the Company, be repaid to it or paid to the
Trustee, and thereupon such paying agent shall be released from all further
liability with respect to such moneys.
SECTION 11.04. Return of Unclaimed Moneys.
Any moneys deposited with or paid to the Trustee or any paying
agent, or then held by the Company in trust, for payment of the principal of or
premium, if any, or interest on Securities and not applied but remaining
unclaimed by the holders of Securities for two years after the date upon which
the principal of or premium, if any, or interest on such Securities, as the
case may be, shall have become due and payable, shall be repaid to the Company
by the Trustee or such paying agent on Company Request; and the holder of any
of the Securities shall thereafter look only to the Company, as a general
unsecured creditor, for any payment which such holder may be entitled to
collect and all liability of the Trustee or such paying agent with respect to
such moneys shall thereupon cease.
SECTION 11.05. Defeasance Upon Deposit of Moneys or U.S.
Government Obligations.
The Company shall be deemed to have been Discharged (as
defined below) from its obligations with respect to the Securities on the 91st
day after the conditions set forth below have been satisfied:
(1) The Company shall have deposited or caused to be
deposited irrevocably with the Trustee or the Defeasance Agent (as
defined below) as trust funds in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the holders of
<PAGE> 65
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the Securities (i) money in an amount, or (ii) U.S. Government
Obligations which through the payment of interest and principal in
respect thereof in accordance with their terms will provide, not later
than one day before the due date of any payment, money in an amount,
or (iii) a combination of (i) and (ii), sufficient, in the opinion
(with respect to (ii) and (iii)) of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee and the Defeasance Agent, if any, to
pay and discharge each installment of principal of and interest and
premium, if any, on the outstanding Securities on the dates such
installments of principal, interest or premium are due;
(2) if the Securities are then listed on any national
securities exchange, the Company shall have delivered to the Trustee
and the Defeasance Agent, if any, an Opinion of Counsel to the effect
that the exercise of the option under this Section 11.05 would not
cause such Securities to be delisted from such exchange until the
Securities have been discharged;
(3) no Default or Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such
deposit; and
(4) the Company shall have delivered to the Trustee and
the Defeasance Agent, if any, an Opinion of Counsel to the effect that
holders of the Securities will not recognize income, gain or loss for
United States federal income tax purposes as a result of the exercise
of the option under this Section 11.05 and will be subject to United
States federal income tax on the same amount and in the same manner
and at the same times as would have been the case if such option had
not been exercised, and such opinion shall be based on a statute so
providing or be accompanied by a private letter ruling to that effect
received from the United States Internal Revenue Service or a revenue
ruling pertaining to a comparable form of transaction to that effect
published by the United States Internal Revenue Service.
"Discharged" means that the Company shall be deemed to have
paid and discharged the entire indebtedness represented by, and obligations
under, the Securities and to have satisfied all the obligations under this
Indenture relating to the Securities (and the Trustee, at the expense of the
Company, shall execute proper instruments provided to it acknowledging the
same), except (A) the rights of holders of Securities to receive, from the
trust fund described in clause (1) above, payment of the principal of and the
interest and premium, if any, on the Securities when such payments are due; (B)
the Company's obligations with respect to the Securities under Sections 2.02,
2.07, 2.08, 3.02, 3.04, 6.10 and 11.04; and (C) the rights, powers, trusts,
duties and immunities of the Trustee hereunder.
"Defeasance Agent" means another financial institution which
is eligible to act as Trustee hereunder and which assumes all of the
obligations of the Trustee necessary to enable the Trustee to act under this
Article. In the event such a Defeasance Agent is appointed pursuant to this
Section, the following conditions shall apply:
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(1) The Trustee shall have approval rights over the
document appointing such Defeasance Agent and the document setting
forth such Defeasance Agent's rights and responsibilities;
(2) The Defeasance Agent shall provide verification to
the Trustee acknowledging receipt of sufficient money and/or U. S.
Government Obligations to meet the applicable conditions set forth in
this Section 11.05.
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
SECTION 12.01. Indenture and Securities Solely Corporate
Obligations.
No recourse for the payment of the principal of or premium, if
any, or interest on any Security, or for any claim based thereon or otherwise
in respect thereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in this Indenture, or in any Security, or because of
the creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, officer or director, as such, past, present or
future, of the Company or of any successor Person to the Company, either
directly or through the Company or any successor Person to the Company, whether
by virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise; it being expressly understood that all
such liability is hereby expressly waived and released as a condition of, and
as a consideration for, the execution of this Indenture and the issue of the
Securities.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. Successors.
All the covenants, stipulations, promises and agreements in
this Indenture contained by the Company shall bind its successors and assigns
whether so expressed or not.
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SECTION 13.02. Official Acts by Successor Corporation.
Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, committee or
officer of the Company shall and may be done and performed with like force and
effect by the like board, committee or officer of any corporation that shall at
the time be the lawful sole successor of the Company.
SECTION 13.03. Surrender of Company Powers.
The Company by instrument in writing executed by authority of
2/3 (two-thirds) of its Board of Directors and delivered to the Trustee may
surrender any of the powers reserved to the Company, and thereupon such power
so surrendered shall terminate both as to the Company and as to any successor
Person, as the case may be.
SECTION 13.04. Addresses for Notices, Etc.
Any notice or demand which by any provision of this Indenture
is required or permitted to be given or served by the Trustee or by the holders
of Securities on the Company may be given or served by being deposited postage
prepaid by registered or certified mail in a post office letter box addressed
(until another address is filed by the Company with the Trustee for the
purpose) to the Company, 370 Van Gordon Street, P.O. Box 281304, Lakewood,
Colorado 80228-8304, Attention: Chief Financial Officer. Any notice,
direction, request or demand by any Securityholder or by the Company to or upon
the Trustee shall be deemed to have been sufficiently given or made, for all
purposes, if given or made in writing at the office of the Trustee, 1100 N.
Market Street, Rodney Square North, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration (unless another address is provided by the
Trustee to the Company for the purpose).
Any notice or communication to a Holder by any party hereto
shall be mailed by first class mail to its address shown on the register kept
by the Securities registrar. 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.
SECTION 13.05. Governing Law.
THIS INDENTURE AND EACH SECURITY ISSUED HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE
OF NEW YORK.
SECTION 13.06. Evidence of Compliance with Conditions
Precedent.
Upon any application or demand by the Company to the Trustee
to take any action under any of the provisions of this Indenture, the Company
shall furnish to the Trustee an Officers' Certificate stating that in the
opinion of the signers all conditions precedent, if any,
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provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or
covenant provided for in this Indenture (except pursuant to Section 3.05) shall
include (1) a statement that the person making such certificate or opinion has
read such covenant or condition; (2) a brief statement as to the nature and
scope of the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; (3) a statement that, in
the opinion of such person, he has made such examination or investigation as is
necessary to enable him to express an in formed opinion as to whether or not
such covenant or condition has been complied with; and (4) a statement as to
whether or not, in the opinion of such person, such condition or covenant has
been complied with.
SECTION 13.07. Business Days.
In any case where the date of payment of principal of or
premium, if any, or interest on the Securities will not be a Business Day, the
payment of such principal of or premium, if any, or interest on the Securities
need not be made on such date but may be made on the next succeeding Business
Day or, in the case of a redemption payment, on the immediately preceding
Business Day if such succeeding Business Day would otherwise fall in the next
calendar year, with the same force and effect as if made on the date of payment
and no interest shall accrue for the period from and after such date.
SECTION 13.08. Trust Indenture Act to Control.
If and to the extent that any provision of this Indenture
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act of 1939, such imposed duties shall
control.
SECTION 13.09. Table of Contents, Headings, Etc.
The table of contents and the titles and headings of the
articles and sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 13.10. Execution in Counterparts.
This Indenture may be executed in any number of counterparts,
each of which shall be an original, but such counterparts shall together
constitute but one and the same instrument.
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SECTION 13.11. Separability.
In case any one or more of the provisions contained in this
Indenture or in the Securities shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Indenture or of
the Securities, but this Indenture and the Securities shall be construed as if
such invalid or illegal or unenforceable provision had never been contained
herein or therein.
SECTION 13.12. Assignment.
The Company will have the right at all times to assign any of
its respective rights or obligations under this Indenture to a direct or
indirect wholly owned Subsidiary of the Company; provided that, in the event of
any such assignment, the Company will remain primarily liable for all its
obligations. Subject to the foregoing, the Indenture is binding upon and
inures to the benefit of the parties thereto and their respective successors
and assigns. This Indenture may not otherwise be assigned by the parties
thereto.
SECTION 13.13. Acknowledgment of Rights.
The Company acknowledges that, with respect to any Securities
held by K N Capital Trust or a trustee of such trust, if the Property Trustee
of such Trust fails to enforce its rights under this Indenture as the holder of
the Securities held as the assets of K N Capital Trust after the holders of a
majority in liquidation amount of the Capital Securities have so directed the
Property Trustee, any holder of Capital Securities may institute legal
proceedings directly against the Company to enforce such Property Trustee's
rights under this Indenture without first instituting any legal proceedings
against such Property Trustee or any other Person. Notwithstanding the
foregoing, if an Event of Default has occurred and is continuing and such event
is attributable to the failure of the Company to pay principal of or premium,
if any, or interest on the Securities when due, the Company acknowledges that a
holder of Capital Securities may directly institute a proceeding for
enforcement of payment to such holder of the principal of or premium, if any,
or interest on the Securities having a principal amount equal to the aggregate
liquidation amount of the Capital Securities of such holder (a "Direct Action")
on or after the respective due date specified in the Securities.
ARTICLE XIV
REDEMPTION OF SECURITIES
SECTION 14.01. Special Event Redemption.
(a) If, at any time, a Tax Event should occur and be
continuing, then the Company shall have the right, upon (i) not less than 30
days' notice to the Trustee, which notice shall be accompanied by an Officers'
Certificate certifying that a Tax Event entitling the
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Company to redeem the Securities pursuant to this Section has occurred and (ii)
not less than 30 days nor more than 60 days' notice to the Securityholders, to
redeem the Securities, in whole or in part, at any time within 90 days
following the occurrence of such Tax Event, for cash, at the Special Event
Redemption Price.
(b) Upon the occurrence of an Investment Company Event,
the Company will have the right within 90 days following the occurrence of such
Investment Company Event, upon (i) not less than 30 days' notice to the
Trustee, which notice shall be accompanied by an Officers' Certificate
certifying that an Investment Company Event entitling the Company to redeem the
Securities pursuant to this Section has occurred and (ii) not less than 30 nor
more than 60 days' notice to the Securityholders, to redeem the Securities, in
whole or in part, for cash, at the Special Event Redemption Price.
Following the occurrence of any Special Event, the Company
shall take such action as is necessary to promptly determine the Special Event
Redemption Price, including, without limitation, the appointment by the Company
of a Quotation Agent. The Company shall provide the Trustee with written
notice of the Special Event Redemption Price promptly after the calculation
thereof, which notice shall include the calculation, if any, made by a
Quotation Agent in connection with the determination of the Special Event
Redemption Price.
SECTION 14.02. Optional Redemption.
The Securities are subject to redemption, at the option of the
Company, in whole or in part, at any time and from time to time on or after
April 15, 2007 upon not less than 30 days nor more than 60 days' notice to the
Securityholders, at the Optional Redemption Price fixed for such redemption on
the date of redemption pursuant to the terms of this Indenture and the
Securities, in each case together with accrued and unpaid interest, if any,
thereon to the date of redemption.
SECTION 14.03. No Sinking Fund.
The Securities are not entitled to the benefit of any sinking
fund.
SECTION 14.04. Notice of Redemption; Selection of Securities.
In case the Company shall desire to exercise the right to
redeem all, or, as the case may be, any part of the Securities in accordance
with their terms, it shall fix a date for redemption and shall mail a notice of
such redemption at least 30 and not more than 60 days prior to the date fixed
for redemption to the holders of Securities so to be redeemed as a whole or in
part at their last addresses as the same appear on the Security Register. Such
mailing shall be by first class mail. The notice if mailed in the manner
herein provided shall be conclusively presumed to have been duly given, whether
or not the holder receives such notice. In any case, failure to give such
notice by mail or any defect in the notice to the holder of any Security
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designated for redemption as a whole or in part shall not affect the validity
of the proceedings for the redemption of any other Security.
Each such notice of redemption shall specify the CUSIP number,
if any, of the Securities to be redeemed, the date fixed for redemption, the
redemption price at which the Securities are to be redeemed (or the method by
which such redemption price is to be calculated), the place or places of
payment, that payment will be made upon presentation and surrender of the
Securities, that interest accrued to the date fixed for redemption will be paid
as specified in said notice, and that on and after said date interest thereon
or on the portions thereof to be redeemed will cease to accrue. If less than
all the Securities are to be redeemed the notice of redemption shall specify
the numbers of the Securities to be redeemed. In case any Security is to be
redeemed in part only, the notice of redemption 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 in principal amount equal to the unredeemed portion thereof will be
issued.
By 11:00 a.m. New York time on the date of redemption
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 an
amount of money sufficient to redeem on the redemption date all the Securities
so called for redemption at the appropriate Redemption Price, together with
accrued interest to the date fixed for redemption.
The Company will give the Trustee notice not less than 45 days
prior to the redemption date (or such lesser notice as shall be acceptable to
the Trustee) as to the aggregate principal amount of Securities to be redeemed
and the Trustee shall select, in such manner as in its sole discretion it shall
deem appropriate and fair, the Securities or portions thereof (in integral
multiples of $1,000, except as otherwise set forth in the applicable form of
Security) to be redeemed.
SECTION 14.05. Payment of Securities Called for Redemption.
If notice of redemption has been given as provided in Section
14.04, the Securities or portions of Securities with respect to which such
notice has been given shall become due and payable on the date and at the place
or places stated in such notice at the applicable Redemption Price, together
with interest accrued to the date fixed for redemption (subject to the rights
of holders of Securities on the close of business on a regular record date in
respect of an Interest Payment Date occurring on or prior to the redemption
date), and on and after said date (unless the Company shall default in the
payment of such Securities at the Redemption Price, together with interest
accrued to said date) interest on the Securities or portions of Securities so
called for redemption shall cease to accrue. On presentation and surrender of
such Securities at a place of payment specified in said notice, the 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 (subject to the rights of holders of
Securities on
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the close of business on a regular record date in respect of an Interest
Payment Date occurring on or prior to the redemption date).
Upon presentation of any Security redeemed in part only, the
Company shall execute and the Trustee shall authenticate and make available for
delivery to the holder thereof, at the expense of the Company, a new Security
or Securities of authorized denominations, in principal amount equal to the
unredeemed portion of the Security so presented.
ARTICLE XV
SUBORDINATION OF SECURITIES
SECTION 15.01. Agreement to Subordinate.
The Company covenants and agrees, and each holder of
Securities issued hereunder likewise covenants and agrees, that the Securities
shall be issued subject to the provisions of this Article XV; and each holder
of a Security, whether upon original issue or upon transfer or assignment
thereof, accepts and agrees to be bound by such provisions.
The payment by the Company of the principal of, premium, if
any, and interest on all Securities issued hereunder shall, to the extent and
in the manner hereinafter set forth, be subordinated and junior in right of
payment to the prior payment in full of all Senior Indebtedness, whether
outstanding at the date of this Indenture or thereafter incurred.
No provision of this Article XV shall prevent the occurrence
of any Default or Event of Default hereunder.
SECTION 15.02. Default on Senior Indebtedness.
Unless Section 15.03 shall be applicable, in the event and
during the continuation of any default by the Company in the payment of
principal, premium, interest or any other payment due on any Senior
Indebtedness, or in the event that the maturity of any Senior Indebtedness has
been or would be permitted upon notice or the passage of time to be accelerated
because of a default, or if any judicial proceeding shall be pending with
respect to any such default, then, unless and until such event of default shall
have been cured or waived or shall have ceased to exist and such acceleration
shall have been rescinded or annulled, then no payment or distribution of any
kind or character, whether in cash, properties or securities shall be made by
the Company with respect to the principal (including redemption payments) of or
premium, if any, or interest on the Securities or on account of the purchase or
other acquisition of Securities by the Company or any Subsidiary, in each case
unless and until all amounts due or to become due on such Senior Indebtedness
are paid in full in cash or other consideration satisfactory to the holders of
such Senior Indebtedness.
<PAGE> 73
64
In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or a holder of any Security when such payment
is prohibited by the preceding paragraph of this Section 15.02, such payment
shall be held in trust for the benefit of, and shall be paid over or delivered
to, the holders of Senior Indebtedness or their respective representatives, or
to the trustee or trustees under any indenture pursuant to which any of such
Senior Indebtedness may have been issued, as their respective interests may
appear, but only to the extent that the holders of the Senior Indebtedness (or
their representative or representatives or a trustee) notify the Trustee in
writing, within 90 days of such payment.
SECTION 15.03. Prior Payment to Senior Indebtedness Upon
Acceleration of Securities.
In the event that any Securities are declared due and payable
before their Stated Maturity Date, then no payment or distribution of any kind
or character, whether in cash, properties or securities shall be made by the
Company on account of the principal (including redemption payments) of, or
premium, if any, or interest (including any Additional Interest) on the
Securities or on account of the purchase or other acquisition of Securities by
the Company or any Subsidiary, until all amounts due on or in respect of Senior
Indebtedness outstanding at the time of such acceleration shall have been paid
in full to the holders of such Senior Indebtedness in cash or other
consideration satisfactory to the holders of such Senior Indebtedness, or
provision shall have been made for such payment.
In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or the Holder of any Security prohibited by
the foregoing provisions of this Section 15.03, such payment shall be held in
trust for the benefit of, and shall be paid over or delivered to, the holders
of Senior Indebtedness or their respective representatives, or to the trustee
or trustees under any indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests may appear,
but only to the extent that the holders of the Senior Indebtedness (or their
representative or representatives or a trustee) notify the Trustee in writing,
within 90 days of such payment.
The provisions of this Section shall not apply to any payment
with respect to which Section 15.04 would be applicable.
SECTION 15.04. Liquidation; Dissolution; Bankruptcy.
In the case of the pendency of any receivership, bankruptcy,
insolvency, dissolution, winding-up, liquidation, reorganization, assignment
for the benefit of creditors or any other marshaling of assets or liabilities
of the Company or other similar judicial proceeding relative to the Company,
whether voluntary or involuntary or in bankruptcy, insolvency, receivership or
other proceedings (each such event, if any herein sometimes referred to as a
"Proceeding"), then the holders of Senior Indebtedness shall be entitled to
receive payment in full of all amounts due or to become due on such Senior
Indebtedness, or provision shall be made for such payment in cash or cash
equivalents or otherwise in a manner satisfactory to the holders
<PAGE> 74
65
of Senior Indebtedness, before the Holders of the Securities are entitled to
receive or retain any payment or distribution of any kind or character, whether
in cash, property or securities (including any payment or distribution which
may be payable or deliverable by reason of the payment of any other debt of the
Company subordinated to the payment of the Securities, such payment or
distribution being hereinafter referred to as a "Junior Subordinated Payment"),
on account of principal of (or premium, if any) or interest (including
Additional Interest) on the Securities or on account of the purchase or other
acquisition of Securities by the Company or any Subsidiary, and to that end the
holders of Senior Indebtedness shall be entitled to receive, for application to
the payment thereof, any payment or distribution of any kind or character,
whether in cash, property or securities, including any Junior Subordinated
Payment, which may be payable or deliverable in respect of the Securities in
any such Proceeding.
In the event that, notwithstanding the foregoing provisions of
this Section, the Trustee or the Holders of any Security shall have received
any payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any Junior Subordinated
Payment, before all amounts due or to become due on all Senior Indebtedness are
paid in full or payment thereof is provided for in cash or cash equivalents or
otherwise in a manner satisfactory to the holders of Senior Indebtedness, and
if such fact shall, at or prior to the time of such payment or distribution,
have been made actually known to a Responsible Officer of the Trustee or, as
the case may be, such Holder, then in such event such payment or distribution
shall be paid over or delivered forthwith to the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee, agent or other Person
making payment or distribution of assets of the Company for application to the
payment of all amounts due or to become due on all Senior Indebtedness
remaining unpaid, to the extent necessary to pay all amounts due or to become
due on all Senior Indebtedness in full, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness.
For purposes of this Article XV, the words "cash, property or
securities" shall not be deemed (so long as the effect of any exclusion
employing this definition is not to cause the Securities to be treated in any
Proceeding as a part of the same class of claims as the Senior Indebtedness or
any class of claims pari passu with, or senior to the Senior Indebtedness) to
include shares of stock of the Company as reorganized or readjusted, or
securities of the Company or any other corporation provided for by a plan of
reorganization or readjustment, the payment of which is subordinated at least
to the extent provided in this Article XV with respect to the Securities to the
payment of Senior Indebtedness that may at the time be outstanding, provided
that (i) such Senior Indebtedness is assumed by the new corporation, if any,
resulting from any such reorganization or readjustment, and (ii) the rights of
the holders of such Senior Indebtedness are not, without the consent of such
holders, altered by such reorganization or readjustment. The consolidation of
the Company with, or the merger of the Company into, another Person or the
liquidation or dissolution of the Company following the sale, assignment,
conveyance, transfer, lease or other disposition of its property as an
entirety, or substantially as an entirety, to another Person upon the terms and
conditions provided for in Article X of this Indenture shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 15.03 if such other Person shall, as a part of such consolidation,
merger,
<PAGE> 75
66
sale, conveyance, transfer or lease, comply with the conditions stated in
Article X of this Indenture.
SECTION 15.05. Subrogation.
Subject to the payment in full of all amounts due or to become
due on all Senior Indebtedness to the extent provided herein or the provision
for such payment in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of Senior Indebtedness, the rights of the
Securityholders shall be subrogated to the rights of the holders of such Senior
Indebtedness to receive payments or distributions made to the holders of such
Senior Indebtedness pursuant to the provisions of this Article (equally and
ratably with the holders of all Indebtedness for Money Borrowed of the Company
which by its express terms is subordinated to Senior Indebtedness of the
Company to substantially the same extent as the Securities are subordinated to
the Senior Indebtedness and is entitled to like rights of subrogation by reason
of payments or distributions made to holders of such Senior Indebtedness) to
the rights of the holders of such Senior Indebtedness to receive payments and
distributions of cash, property or securities of the Company, as the case may
be, applicable to such Senior Indebtedness until the principal of (and premium,
if any) and interest (including Additional Interest) on the Securities shall be
paid in full; and, for the purposes of such subrogation, no payments or
distributions to the holders of such Senior Indebtedness of any cash, property
or securities to which the Securityholders or the Trustee would be entitled
except for the provisions of this Article XV, and no payment over pursuant to
the provisions of this Article XV to or for the benefit of the holders of such
Senior Indebtedness by Securityholders or the Trustee, shall, as between the
Company, its creditors other than holders of Senior Indebtedness of the
Company, and the holders of the Securities, be deemed to be a payment by the
Company to or on account of such Senior Indebtedness. It is understood that
the provisions of this Article XV are and are intended solely for the purposes
of defining the relative rights of the holders of the Securities, on the one
hand, and the holders of such Senior Indebtedness on the other hand.
Nothing contained in this Article XV or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as between the
Company, its creditors other than the holders of Senior Indebtedness of the
Company, and the holders of the Securities, the obligation of the Company,
which is absolute and unconditional, to pay to the holders of the Securities
the principal of (and premium, if any) and interest on the Securities as and
when the same shall become due and payable in accordance with their terms, or
is intended to or shall affect the relative rights of the holders of the
Securities and creditors of the Company, as the case may be, other than the
holders of Senior Indebtedness of the Company, as the case may be, nor shall
anything herein or therein prevent the Trustee or the holder of any Security
from exercising all remedies otherwise permitted by applicable law upon default
under the Indenture, subject to the rights, if any, under this Article XV of
the holders of such Senior Indebtedness in respect of cash, property or
securities of the Company, as the case may be, received upon the exercise of
any such remedy.
<PAGE> 76
67
SECTION 15.06. Trustee to Effectuate Subordination.
Each Securityholder by such Securityholder's acceptance
thereof authorizes and directs the Trustee on such Securityholder's behalf to
take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article XV and appoints the Trustee such
Securityholder's attorney-in-fact for any and all such purposes.
SECTION 15.07. Notice by the Company.
The Company shall give prompt written notice to a Responsible
Officer of the Trustee assigned to its Principal Office of any fact known to
the Company that would prohibit the making of any payment of monies to or by
the Trustee in respect of the Securities pursuant to the provisions of this
Article XV. Notwithstanding the provisions of this Article XV or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment of
monies to or by the Trustee in respect of the Securities pursuant to the
provisions of this Article XV, unless and until a Responsible Officer of the
Trustee assigned to its Principal Office shall have received written notice
thereof from the Company or a holder or holders of Senior Indebtedness or from
any trustee therefor; and before the receipt of any such written notice, the
Trustee, subject to the provisions of Article VI of this Indenture, shall be
entitled in all respects to assume that no such facts exist; provided, however,
that if the Trustee shall not have received the notice provided for in this
Section 15.06 at least two Business Days prior to the date (i) upon which by
the terms hereof any money may become payable for any purpose (including,
without limitation, the payment of the principal of (or premium, if any) or
interest on any Security), or (ii) moneys and/or U.S. Government Obligations
are deposited in trust pursuant to Article XI then, anything herein contained
to the contrary notwithstanding, the Trustee shall have full power and
authority to receive such moneys and U.S. Government Obligations and to apply
the same to the purposes for which they were received, and shall not be
affected by any notice to the contrary that may be received by it within two
Business Days prior to such date.
The Trustee, subject to the provisions of Article VI of this
Indenture, shall be entitled to conclusively rely on the delivery to it of a
written notice by a Person representing himself to be a holder of Senior
Indebtedness of the Company (or a trustee or representative on behalf of such
holder) to establish that such notice has been given by a holder of such Senior
Indebtedness or a trustee or representative on behalf of any such holder or
holders. In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
such Senior Indebtedness to participate in any payment or distribution pursuant
to this Article XV, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of such Senior
Indebtedness held by such Person, the extent to which such Person is entitled
to participate in such payment or distribution and any other facts pertinent to
the rights of such Person under this Article XV, and, if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
<PAGE> 77
68
Upon any payment or distribution of assets of the Company
referred to in this Article XV, the Trustee and the Securityholders shall be
entitled to rely upon any order or decree entered by any court of competent
jurisdiction in which such insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or proceeding is
pending, or a certificate of the trustee in bankruptcy, liquidating trustee,
custodian, receiver, assignee for the benefit of creditors, agent or other
person making such payment or distribution, delivered to the Trustee or to the
Securityholders, for the purpose of ascertaining the persons entitled to
participate in such payment or distribution, the holders of Senior Indebtedness
and other indebtedness of the Company, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article XV.
SECTION 15.08. Rights of the Trustee; Holders of Senior
Indebtedness.
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article XV in respect of any Senior
Indebtedness at any time held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of
any of its rights as such holder.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article XV, and no implied
covenants or obligations with respect to the holders of Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not
be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and,
subject to the provisions of Article VI of this Indenture, the Trustee shall
not be liable to any holder of Senior Indebtedness if it shall pay over or
deliver to Securityholders, the Company or any other Person money or assets to
which any holder of Senior Indebtedness shall be entitled by virtue of this
Article XV or otherwise.
Nothing in this Article XV shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 6.06.
SECTION 15.09. Subordination May Not Be Impaired.
No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof that any such holder may
have or otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Securityholders,
without incurring responsibility to the Securityholders and without impairing
or releasing the subordination provided in this Article XV or the obligations
<PAGE> 78
69
hereunder of the holders of the Securities to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the manner,
place or terms of payment or extend the time of payment of, or renew or alter,
such Senior Indebtedness, or otherwise amend or supplement in any manner such
Senior Indebtedness or any instrument evidencing the same or any agreement
under which such Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or other wise
securing such Senior Indebtedness; (iii) release any Person liable in any
manner for the collection of such Senior Indebtedness; and (iv) exercise or
refrain from exercising any rights against the Company and any other Person.
SECTION 15.10. Article Applicable to Paying Agents.
In case at any time any paying agent other than the Trustee
shall have been appointed by the Company and then be acting hereunder, the term
"Trustee" as used in this Article shall in such case (unless the context
otherwise requires) be construed as extending to and including such paying
agent within its meanings as fully and for all intents and purposes as if such
paying agent were named in this article in addition to or in place of the
Trustee.
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 16.01. Extension of Interest Payment Period.
So long as no Event of Default has occurred and is continuing,
the Company shall have the right, at any time and from time to time during the
term of the Securities, to defer payments of interest by extending the interest
payment period of such Securities for a period not exceeding ten consecutive
semiannual periods, including the first such semiannual period during such
extension period (the "Extended Interest Payment Period"), during which
Extended Interest Payment Period no interest shall be due and payable; provided
that no Extended Interest Payment Period shall end on a date other than an
Interest Payment Date or extend beyond the Stated Maturity Date. To the extent
permitted by applicable law, interest, the payment of which has been deferred
because of the extension of the interest payment period pursuant to this
Section 16.01, will bear interest thereon at the Coupon Rate compounded
semiannually for each semiannual period of the Extended Interest Payment Period
("Compounded Interest"). At the end of the Extended Interest Payment Period,
the Company shall pay all interest accrued and unpaid on the Securities,
including any Additional Interest and Compounded Interest (together, "Deferred
Interest") that shall be payable to the holders of the Securities in whose
names the Securities are registered in the Security Register on the first
Record Date preceding the end of the Extended Interest Payment Period. Before
the termination of any Extended Interest Payment Period, the Company may
further defer payments of interest by further extending such period; provided
that such period, together with all such previous and further extensions within
such Extended Interest Payment Period, shall not exceed ten consecutive
semiannual periods, including the first such semiannual period during such
Extended Interest Payment Period, or
<PAGE> 79
70
extend beyond the Stated Maturity Date. Upon the termination of any Extended
Interest Payment Period and the payment of all Deferred Interest then due, the
Company may commence a new Extended Interest Payment Period, subject to the
foregoing requirements. No interest shall be due and payable during an
Extended Interest Payment Period, except at the end thereof, but the Company
may prepay at any time all or any portion of the interest accrued during an
Extended Interest Payment Period.
SECTION 16.02. Notice of Extension.
(a) If the Property Trustee is the only registered holder
of the Securities at the time the Company selects an Extended Interest Payment
Period, the Company shall give written notice to the Administrative Trustees,
the Property Trustee and the Trustee of its selection of such Extended Interest
Payment Period five Business Days before the earlier of (i) the next succeeding
date on which Distributions on the Trust Securities issued by K N Capital Trust
are payable, or (ii) the date K N Capital Trust is required to give notice of
the record date, or the date such Distributions are payable, to any national
securities exchange or to holders of the Capital Securities issued by K N
Capital Trust, but in any event at least five Business Days before such record
date.
(b) If the Property Trustee is not the only holder of the
Securities at the time the Company selects an Extended Interest Payment Period,
the Company shall give the holders of the Securities and the Trustee written
notice of its selection of such Extended Interest Payment Period at least ten
Business Days before the earlier of (i) the next succeeding Interest Payment
Date, or (ii) the date the Administrative Trustees are required to give notice
of the record or payment date of such interest payment to any national
securities exchange.
(c) The semiannual period in which any notice is given
pursuant to paragraphs (a) or (b) of this Section 16.02 shall be counted as one
of the ten semiannual periods permitted in the maximum Extended Interest
Payment Period permitted under Section 16.01.
Wilmington Trust Company hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions hereinabove set
forth.
<PAGE> 80
71
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed by their respective officers thereunto duly
authorized, as of the day and year first above written.
K N ENERGY, INC.
By /s/ E. Wayne Lundhagen
---------------------------------
Name: E. Wayne Lundhagen
Title: Vice President and Treasurer
WILMINGTON TRUST COMPANY,
Trustee
By /s/ James P. Lawler
---------------------------------
Name: James P. Lawler
Title: Vice President
<PAGE> 81
EXHIBIT A
(FORM OF FACE OF SECURITY)
[IF THE SECURITY IS A GLOBAL SECURITY, INSERT: THIS SECURITY
IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED
TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY.
THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON
OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A
TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON 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.]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
"AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR
OF THIS SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO
LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
<PAGE> 82
A-2
UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D)
PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1),
(2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE
COMPANY PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D),
(E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS
AND/OR OTHER INFORMATION SATISFACTORY TO THE COMPANY, AND (ii) PURSUANT TO
CLAUSE (E), TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON
THE REVERSE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEREE TO
THE COMPANY. SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES, REPRESENTS
AND WARRANTS THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYMENT RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
(ii) THE ACQUISITION AND HOLDING OF THIS SECURITY BY IT IS NOT PROHIBITED BY
EITHER SECTION 406 OF ERISA OR SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE
OF 1986, AS AMENDED, OR IS EXEMPT FROM ANY SUCH PROHIBITION.
[IF THE SECURITY IS A REGULATION S SECURITY INSERT: THIS SECURITY HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT AND MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS UNLESS
REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT IS AVAILABLE.]
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES TO BE BOUND BY
THE PROVISIONS OF A REGISTRATION RIGHTS AGREEMENT DATED AS OF APRIL 24, 1997
AMONG K N CAPITAL TRUST I, K N ENERGY, INC. AND CERTAIN OTHER PARTIES NAMED
THEREIN.
<PAGE> 83
A-3
No. CUSIP No. ______________
K N ENERGY, INC.
8.56% SERIES A JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE DUE
APRIL 15, 2027
K N Energy, Inc., a Kansas corporation (the "Company", which
term includes any successor Person under the Indenture hereinafter referred
to), for value received, hereby promises to pay to ____________ or registered
assigns, the principal sum of _____________ Dollars on April 15, 2027 (the
"Stated Maturity Date"), unless previously redeemed, and to pay interest on the
outstanding principal amount hereof from April 24, 1997, or from the most
recent interest payment date (each such date, an "Interest Payment Date") to
which interest has been paid or duly provided for, semiannually (subject to
deferral as set forth herein) in arrears on April 15 and October 15 of each
year, commencing October 15, 1997 at the rate of 8.56% per annum until the
principal hereof shall have become due and payable, and at the same rate per
annum on any overdue principal and premium, if any, and (without duplication
and to the extent that payment of such interest is enforceable under applicable
law) on any overdue installment of interest at the same rate per annum
compounded semiannually. The amount of interest payable on any Interest
Payment Date shall be computed on the basis of a 360-day year of twelve 30-day
months and, for any period less than a full calendar month, the actual number
of days elapsed in such month. In the event that any date on which the
principal of (or premium, if any) or interest on this Security is payable is
not a Business Day, then the payment payable on such date will be made on the
next succeeding day that is a Business Day or, in the case of a redemption
payment, on the immediately preceding Business Day if such succeeding Business
Day would otherwise fall in the next calendar year (and without any interest or
other payment in respect of any such delay), with the same force and effect as
if made on such date. Pursuant to Section 2.06(c) of the Indenture hereinafter
referred to, in certain limited circumstances the Company will be required to
pay Additional Amounts with respect to this Security. Pursuant to the
Registration Rights Agreement, in certain limited circumstances the Company
will be required to pay Liquidated Damages (as defined in the Registration
Rights Agreement) with respect to this Security.
The interest installment so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities, as defined in said Indenture) is registered at the
close of business on the regular record date for such interest installment,
which shall be the first day of the month in which the relevant interest
payment date falls. Any such interest installment not punctually paid or duly
provided for shall forthwith cease to be payable to the holders on such regular
record date and may be paid to the Person in whose name this Security (or one
or more Predecessor Securities) is registered at the close of business on a
special record date to be fixed by the Trustee for the payment of such
Defaulted Interest, notice whereof shall be given to the holders of Securities
not less than ten days prior to such special record date, or may be paid at any
time in any other lawful manner not inconsistent with the requirements of
<PAGE> 84
A-4
any securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in the
Indenture.
The principal of (and premium, if any) and interest on this
Security shall be payable at the office or agency of the Trustee maintained for
that purpose in any coin or currency of the United States of America that at
the time of payment is legal tender for payment of public and private debts;
provided, however, that, payment of interest may be made at the option of the
Company by (i) check mailed to the holder at such address as shall appear in
the Security Register or (ii) by transfer to an account maintained by the
Person entitled thereto, provided that proper written transfer instructions
have been received by the relevant record date. Notwithstanding the foregoing,
so long as the Holder of this Security is the Property Trustee, the payment of
the principal of (and premium, if any) and interest on this Security will be
made at such place and to such account as may be designated by the Property
Trustee.
The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of Senior Indebtedness, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each holder
of this Security, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Trustee on its behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee its attorney-in-fact for
any and all such purposes. Each holder hereof, by its acceptance hereof,
hereby waives all notice of the acceptance of the subordination provisions
contained herein and in the Indenture by each holder of Senior Indebtedness,
whether now out standing or hereafter incurred, and waives reliance by each
such holder upon said provisions.
This Security shall not be entitled to any benefit under the
Indenture hereinafter referred to, or be valid or become obligatory for any
purpose until the Certificate of Authentication hereon shall have been signed
by or on behalf of the Trustee.
<PAGE> 85
A-5
The provisions of this Security are continued on the reverse
side hereof and such provisions shall for all purposes have the same effect as
though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to
be executed.
K N ENERGY, INC.
By:
---------------------------------
Name:
Title
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the
within-mentioned Indenture.
Dated
---------------
WILMINGTON TRUST COMPANY,
Trustee
By:
--------------------
Authorized Officer
<PAGE> 86
A-6
(FORM OF REVERSE OF SECURITY)
This Security is one of the Securities of the Company (herein
sometimes referred to as the "Securities"), specified in the Indenture, all
issued or to be issued under and pursuant to an Indenture, dated as of April
24, 1997 (the "Indenture"), duly executed and delivered between the Company and
Wilmington Trust Company, as Trustee (the "Trustee"), to which Indenture
reference is hereby made for a description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the Trustee, the
Company and the holders of the Securities.
This Security is subject to redemption, at the option of the
Company, in whole or in part, at any time and from time to time on or after
April 15, 2007 upon not less than 30 days nor more than 60 days' written notice
to the holder hereof, at the Optional Redemption Prices (expressed as
percentages of the principal amount) indicated below:
<TABLE>
<S> <C>
IF REDEEMED DURING THE
12-MONTH PERIOD BEGINNING OPTIONAL REDEMPTION
-------------------
APRIL 15, PRICE
-------------------------------- -----
2007 . . . . . . . . . . . . . . . . . . . . . 104.280%
2008 . . . . . . . . . . . . . . . . . . . . . 103.852
2009 . . . . . . . . . . . . . . . . . . . . . 103.424
2010 . . . . . . . . . . . . . . . . . . . . . 102.996
2011 . . . . . . . . . . . . . . . . . . . . . 102.568
2012 . . . . . . . . . . . . . . . . . . . . . 102.140
2013 . . . . . . . . . . . . . . . . . . . . . 101.712
2014 . . . . . . . . . . . . . . . . . . . . . 101.284
2015 . . . . . . . . . . . . . . . . . . . . . 100.856
2016 . . . . . . . . . . . . . . . . . . . . . 100.428
</TABLE>
and thereafter at 100% of the principal amount (the "Optional Redemption
Price"), in each case together with accrued and unpaid interest, if any, hereon
to the date of redemption.
Upon the occurrence and continuance of a Tax Event or the
occurrence of an Investment Company Event, the Company shall have the right at
any time, within 90 days following the occurrence of such Special Event, to
redeem this Security in whole or in part at the Special Event Redemption Price.
Special Event Redemption Price shall mean with respect to any redemption of
this Security upon the occurrence of a Tax Event or an Investment Company
Event, an amount in cash equal to (i) the Make-Whole Amount, in the case of
redemption upon the occurrence of such Special Event prior to April 15, 2007,
or (ii) the Optional Redemption Price, in the case of redemption upon the
occurrence of such Special Event on or after April 15, 2007, together in each
case with accrued and unpaid interest, if any, hereon to the date of
redemption. The Make-Whole Amount with respect to this Security shall mean an
amount equal to the greater of (i) 100% of the principal amount hereof or (ii)
as determined by the Quotation
<PAGE> 87
A-7
Agent, (A) the sum of the present values of the principal amount and premium,
if any, payable as part of the Optional Redemption Price with respect to a
redemption hereof on April 15, 2007, together with the present values of all
scheduled payments of interest hereon during the Remaining Life hereof, in each
case discounted to the date of redemption on a semiannual basis (assuming a
360-day year consisting of 30-day months) at the Adjusted Treasury Rate, less
(B) accrued and unpaid interest, if any, hereon to the date of redemption.
In case an Event of Default, as defined in the Indenture,
shall have occurred and be continuing, the principal of all of the Securities
may be declared, and upon such declaration shall become, due and payable, in
the manner, with the effect and subject to the conditions provided in the
Indenture.
The Indenture contains provisions permitting the Company and
the Trustee, with the consent of the holders of a majority in aggregate
principal amount of the Securities at the time outstanding, as defined in the
Indenture, to execute supplemental indentures for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Indenture or of modifying in any manner the rights of the holders of the
Securities; provided, however, that no such supplemental indenture shall,
without the consent of each holder of Securities then outstanding and affected
thereby, (i) change the Stated Maturity Date of any Securities, or reduce the
principal amount thereof, or reduce any amount payable on redemption thereof,
or reduce the rate or extend the time of payment of interest thereon (subject
to Article XVI of the Indenture), or make the principal of, or interest or
premium on, the Securities payable in any coin or currency other than U.S.
dollars, or impair or affect the right of any holder of Securities to institute
suit for the payment thereof, or (ii) reduce the aforesaid percentage of
Securities, the holders of which are required to consent to any such
supplemental indenture. The Indenture also contains provisions permitting the
holders of a majority in aggregate principal amount of the Securities at the
time outstanding, on behalf of all of the holders of the Securities, to waive
any past default in the performance of any of the covenants contained in the
Indenture, or established pursuant to the Indenture, and its consequences,
except a default in the payment of the principal of or premium, if any, or
interest on any of the Securities or a default in respect of any covenant or
provision under which the Indenture cannot be modified or amended without the
consent of each holder of Securities then outstanding. Any such consent or
waiver by the holder of this Security (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such Holder and upon all future
holders and owners of this Security and of any Security issued in exchange
herefor or in place hereof (whether by registration of transfer or otherwise),
irrespective of whether or not any notation of such consent or waiver is made
upon this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest on this Security at the time and place and at the
rate and in the money herein prescribed.
The Company shall have the right, at any time and from time to
time during the term of the Securities, to defer payments of interest by
extending the interest payment period of
<PAGE> 88
A-8
such Securities for a period not exceeding ten consecutive semiannual periods,
including the first such semiannual period during such extension period, and
not to extend beyond the Stated Maturity Date of the Securities (an "Extended
Interest Payment Period"), at the end of which period the Company shall pay all
interest then accrued and unpaid (together with interest thereon at the rate
specified for the Securities to the extent that payment of such interest is
enforceable under applicable law). Before the termination of any such Extended
Interest Payment Period, the Company may further defer payments of interest by
further extending such Extended Interest Payment Period; provided that such
Extended Interest Payment Period, together with all such previous and further
extensions within such Extended Interest Payment Period, shall not exceed ten
consecutive semiannual periods, including the first semiannual period during
such Extended Interest Payment Period, shall not end on any date other than an
Interest Payment Date or extend beyond the Stated Maturity Date of the
Securities. Upon the termination of any such Extended Interest Payment Period
and the payment of all accrued and unpaid interest and any additional amounts
then due, the Company may commence a new Extended Interest Payment Period,
subject to the foregoing requirements.
The Company has agreed that it will not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock (which
includes common and preferred stock) or (ii) make any payment of principal,
interest or premium, if any, on or repay or repurchase or redeem any debt
securities of the Company that rank pari passu with or junior in right of
payment to the Securities or (iii) make any guarantee payments with respect to
any guarantee by the Company of any securities of any Subsidiary of the Company
(including Other Guarantees) if such guarantee ranks pari passu with or junior
in right of payment to the Securities (other than (a) dividends or
distributions in shares of, or options, warrants or rights to subscribe for or
purchase shares of, capital stock of the Company; (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption
or repurchase of any such rights pursuant thereto; (c) payments under a Capital
Securities Guarantee; (d) as a direct result of a reclassification of the
Company's capital stock or the exchange or the conversion of one class or
series of the Company's capital stock for another class or series of the
Company's capital stock; (e) the purchase of fractional interests in shares of
the Company's capital stock pursuant to the exchange or conversion of such
capital stock or the security being exchanged or converted or pursuant to an
acquisition in which the fractional shares of the Company's capital stock would
otherwise be issued and (f) purchases of Common Stock related to the issuance
of Common Stock or rights under any benefit plan for directors, officers,
agents or employees of the Company or its Subsidiaries or any of the Company's
dividend reinvestment or director, officer, agent or employee stock purchase
plans) if at such time (1) an Event of Default shall have occurred and be
continuing, or would occur upon the taking of any action specified in clauses
(i) through (iii) above, (2) there shall have occurred any event of which the
Company has actual knowledge that (a) with the giving of notice or the lapse of
time, or both, would be an Event of Default and (b) in respect of which the
Company shall not have taken reasonable steps to cure, (3) the Company shall be
in default with respect to its payment obligations under a Capital Securities
Guarantee or (4) the Company shall have given notice of its election of the
exercise of its right to extend the interest payment period under
<PAGE> 89
A-9
the Indenture (or notice of a valid extension of an interest payment period in
accordance with the terms of any Other Debentures) and any such notice shall
not have been rescinded or such Extended Interest Payment Period, or any
extension thereof, or extension period with respect to Other Debentures, shall
be continuing.
The Securities are issuable only in registered form without
coupons in denominations of $1,000.00 and any integral multiple thereof. As
provided in the Indenture and subject to the transfer restrictions limitations
as may be contained herein and therein from time to time, this Security is
transferable by the holder hereof on the Security Register of the Company, in
blocks having a principal amount of not less than $100,000, upon surrender of
this Security for registration of transfer at the office or agency of the
Company in the City and State of New York, or in Wilmington, Delaware
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company and the Security registrar duly executed by the
holder hereof or its attorney duly authorized in writing, and thereupon one or
more new Securities of authorized denominations and for the same aggregate
principal amount and series will be issued to the designated transferee or
transferees. No service charge will be made for any such transfer, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this
Security, the Company, the Trustee, any authenticating agent, any paying agent,
any transfer agent and the registrar may deem and treat the holder hereof as
the absolute owner hereof (whether or not this Security shall be overdue and
notwithstanding any notice of ownership or writing hereon made by anyone other
than the Security Registrar) for the purpose of receiving payment of or on
account of the principal hereof and premium, if any, and (subject to the
Indenture) interest due hereon and for all other purposes, and neither the
Company nor the Trustee nor any authenticating agent nor any paying agent nor
any transfer agent nor any registrar shall be affected by any notice to the
contrary.
No recourse shall be had for the payment of the principal of
or premium, if any, or interest on this Security, or for any claim based
hereon, or otherwise in respect hereof, or based on or in respect of the
Indenture, against any incorporator, stockholder, officer or director, past,
present or future, as such, of the Company or of any predecessor or successor
Person, whether by virtue of any constitution, statute or rule of law, or by
the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the
issuance hereof, expressly waived and released.
All terms used in this Security that are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
<PAGE> 90
A-10
[FORM OF TRANSFER CERTIFICATION]
FOR VALUE RECEIVED, the undersigned registered holder hereby
sell(s), assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Please print or typewrite name and address, including zip code of assignee)
- -------------------------------------------------------------------------------
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing
- -------------------------------------------------------------------------------
attorney to transfer such Security on the books of the Company with full power
of substitution in the premises.
In connection with any transfer of this Security occurring
prior to the date which is the earlier of the date of an effective Registration
Statement, or April 24, 2000, the undersigned confirms that without utilizing
any general solicitation or general advertising that:
[Check One]
[ ] (a) This Security is being transferred in compliance with the
exemption from registration under the Securities Act of 1933,
as amended, provided by Rule 144A thereunder.
or
[ ] (b) This Security is being transferred other than in accordance
with (a) above and documents are being furnished which comply
with the conditions of transfer set forth in this Security and
the Indenture.
If none of the foregoing boxes is checked, the Trustee shall not be obligated
to register this Security in the name of any Person other than the Holder
hereof unless and until the
<PAGE> 91
A-11
conditions to any such transfer of registration set forth herein and in Section
2.07 of the Indenture shall have been satisfied.
Date:
NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of the
within-mentioned instrument in every
particular, without alteration or any
change whatsoever.
Signature Guarantee:
-------------------------------------------
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED:
The undersigned represents and warrants that it is purchasing
this Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, as amended, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has requested pursuant to
Rule 144A or has determined not to request such information and that it is
aware that the transferor is relying upon the undersigned's foregoing
representation in order to claim the exemption from registration provided by
Rule 144A.
Date:
NOTICE: To be executed by an executive
officer
<PAGE> 1
EXHIBIT 4.4
AMENDED AND RESTATED DECLARATION
OF TRUST
K N CAPITAL TRUST I
Dated as of April 24, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I - INTERPRETATION AND DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II - TRUST INDENTURE ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.01. Trust Indenture Act; Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.02. Lists of Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.03. Reports by the Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.04. Periodic Reports to Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.05. Evidence of Compliance with Conditions Precedent . . . . . . . . . . . . . . . . . . . . . 10
Section 2.06. Events of Default; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.07. Event of Default; Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE III - ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.01. Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.02. Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.03. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.04. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.05. Title to Property of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.06. Powers and Duties of the Administrative Trustees . . . . . . . . . . . . . . . . . . . . . 14
Section 3.07. Prohibition of Actions by the Trust and the Trustees . . . . . . . . . . . . . . . . . . . 18
Section 3.08. Powers and Duties of the Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.09. Certain Duties and Responsibilities of the Property Trustee . . . . . . . . . . . . . . . . 21
Section 3.10. Certain Rights of Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.11. Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.12. Execution of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.13. Not Responsible for Recitals or Issuance of Securities. . . . . . . . . . . . . . . . . . . 25
Section 3.14. Duration of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.15. Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE IV - SPONSOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.01. Sponsor's Purchase of Common Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.02. Responsibilities of the Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.03. Right to Proceed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V - TRUSTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.01. Number of Trustees; Appointment of Co-Trustee . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.02. Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.03. Property Trustee; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.04. Certain Qualifications of Administrative Trustees and Delaware
Trustee Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.05. Administrative Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.06. Delaware Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.07. Appointment, Removal and Resignation of Trustees . . . . . . . . . . . . . . . . . . . . . 31
Section 5.08. Vacancies Among Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.09. Effect of Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.10. Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.11. Delegation of Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.12. Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . . 34
ARTICLE VI - DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 6.01. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VII - ISSUANCE OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.01. General Provisions Regarding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.02. Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 7.03. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 7.04. Registrar, Paying Agent and Exchange Agent. . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 7.05. Paying Agent to Hold Money in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 7.06. Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 7.07. Outstanding Capital Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 7.08. Capital Securities in Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 7.09. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 7.10. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 7.11. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE VIII - DISSOLUTION OF TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.01. Dissolution of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE IX -TRANSFER OF INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.01. Transfer of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.02. Transfer Procedures and Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.03. Book Entry Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
Section 9.04. Notices to Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 9.05. Appointment of Successor Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE X - LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS . . . . . . . . . . . . . . . . . . 53
Section 10.01. Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 10.02. Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 10.03. Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 10.04. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 10.05. Outside Businesses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 10.06. Compensation; Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE XI - ACCOUNTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 11.01. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 11.02. Certain Accounting Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 11.03. Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 11.04. Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE XII - AMENDMENTS AND MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 12.01. Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 12.02. Meetings of the Holders; Action by Written Consent. . . . . . . . . . . . . . . . . . . . . 62
ARTICLE XIII - REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . 64
Section 13.01. Representations and Warranties of Property Trustee. . . . . . . . . . . . . . . . . . . . . 64
Section 13.02. Representations and Warranties of Delaware Trustee. . . . . . . . . . . . . . . . . . . . . 64
ARTICLE XIV - REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 14.01. Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE XV - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 15.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 15.02. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 15.03. Intention of the Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 15.04. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 15.05. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 15.06. Partial Enforceability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 15.07. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
</TABLE>
iii
<PAGE> 5
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
K N CAPITAL TRUST I
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration")
dated and effective as of April 24, 1997, by the Trustees (as defined herein),
the Sponsor (as defined herein) and by the holders, from time to time, of
undivided beneficial interests in the assets of the Trust to be issued pursuant
to this Declaration;
WHEREAS, the Trustees named therein and the Sponsor
established K N Capital Trust I (the "Trust"), a statutory business trust
created under the Delaware Business Trust Act pursuant to a Declaration of
Trust dated as of March 31, 1997 (the "Original Declaration"), and a
Certificate of Trust filed with the Secretary of State of the State of Delaware
on April 4, 1997, for the sole purpose of issuing and selling certain
securities representing undivided beneficial interests in the assets of the
Trust and investing the proceeds thereof in certain Debentures of the Debenture
Issuer (each as hereinafter defined);
WHEREAS, all of the Trustees and the Sponsor, by this
Declaration, amend and restate each and every term and provision of the
Original Declaration; and
NOW, THEREFORE, it being the intention of the parties hereto
to continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitutes the governing instrument of such business trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the Trust and the Holders from time to time of the
securities representing undivided beneficial interests in the assets of the
Trust issued hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
Section 1.01 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not
defined in the preamble above have the respective meanings assigned to them in
this Section 1.01;
(b) a term defined anywhere in this Declaration has the
same meaning throughout;
<PAGE> 6
(c) all references to "the Declaration" or "this
Declaration" are to this Declaration as modified, supplemented or amended from
time to time;
(d) all references in this Declaration to Articles,
Sections, Annexes and Exhibits are to Articles and Sections of, and Annexes and
Exhibits to, this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the
same meaning when used in this Declaration unless otherwise defined in this
Declaration or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and
vice versa.
"Administrative Trustee" has the meaning set forth in
Section 5.01.
"Affiliate" has the same meaning as given to that term in Rule
405 under the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent, Registrar or Exchange Agent.
"Authorized Officer" of a Person means any other Person that
is authorized to legally bind such former Person.
"Book Entry Interest" means a beneficial interest in a Global
Capital Security registered in the name of a Clearing Agency or its nominee,
ownership and transfer of which shall be maintained and made through book
entries by a Clearing Agency as described in Section 9.02.
"Business Day" means any day other than a Saturday or a Sunday
or a day on which banking institutions in New York, New York or Wilmington,
Delaware are authorized or required by law or executive order to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801, et seq., as it may be amended from
time to time, or any successor legislation.
"Capital Security Beneficial Owner" means, with respect to a
Book Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of
a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Capital Securities" means, collectively, the Series A Capital
Securities and the Series B Capital Securities.
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<PAGE> 7
"Capital Securities Guarantee" means, collectively, the Series
A Capital Securities Guarantee and the Series B Capital Securities Guarantee.
"Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act that is acting as
depositary for the Capital Securities and in whose name or in the name of a
nominee of that organization shall be registered a Global Capital Security and
which shall undertake to effect book entry transfers and pledges of the Capital
Securities.
"Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other Person for whom from time to time the
Clearing Agency effects book entry transfers and pledges of securities
deposited with the Clearing Agency.
"Closing Time" means the "Closing Time" under the Purchase
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor legislation.
"Commission" means the United States Securities and Exchange
Commission.
"Common Securities" has the meaning specified in Section
7.01(a).
"Common Securities Guarantee" means the guarantee dated as of
April 24, 1997 of the Sponsor in respect of the Common Securities.
"Company Indemnified Person" means (a) any Administrative
Trustee; (b) any Affiliate of any Administrative Trustee; (c) any officers,
directors, shareholders, members, partners, employees, representatives or
agents of any Administrative Trustee; or (d) any officer, employee or agent of
the Trust or its Affiliates.
"Company" means the Debenture Issuer.
"Corporate Trust Office" means the office of the Property
Trustee at which the corporate trust business of the Property Trustee shall, at
any particular time, be principally administered, which office at the date of
execution of this Agreement is located at 1100 N. Market Street, Rodney Square
North, Wilmington, Delaware 19890-0001.
"Covered Person" means: (a) any officer, director,
shareholder, partner, member, representative, employee or agent of (i) the
Trust or (ii) the Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means K N Energy, Inc., a Kansas
corporation, or any successor entity permitted under the Indenture including a
successor entity resulting from any consolidation, amalgamation, merger, sale
of assets as an entirety or substantially as an entirety,
3
<PAGE> 8
transfer, lease, or other business combination, in its capacity as issuer of
the Debentures under the Indenture.
"Debenture Trustee" means Wilmington Trust Company, a Delaware
banking corporation, as trustee under the Indenture until a successor is
appointed thereunder, and thereafter means such successor trustee.
"Debentures" means, collectively, the Series A Debentures and
the Series B Debentures.
"Default" means an event, act or condition that with notice of
lapse of time, or both, would constitute an Event of Default.
"Definitive Capital Securities" has the meaning set forth in
Section 7.03(c).
"Delaware Trustee" has the meaning set forth in Section 5.02.
"Direct Action" has the meaning set forth in Section 3.08(e).
"Distribution" means a distribution payable to Holders in
accordance with Section 6.01 and Annex I.
"DTC" means The Depository Trust Company, the initial Clearing
Agency.
"Event of Default" in respect of the Securities means an Event
of Default (as defined in the Indenture) that has occurred and is continuing
in respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
"Exchange Agent" has the meaning set forth in Section 7.04.
"Exchange Offer" means the offer that may be made pursuant to
the Registration Rights Agreement (i) by the Trust to exchange Series B Capital
Securities for Series A Capital Securities and (ii) by the Debenture Issuer to
exchange Series B Debentures for Series A Debentures and the Series B Capital
Securities Guarantee for the Series A Capital Securities Guarantee.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 10.04(b).
"Global Capital Securities" has the meaning set forth in
Section 7.03(a).
4
<PAGE> 9
"Holder" means a Person in whose name a Security is registered
on the register for the Securities, such Person being a beneficial owner within
the meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of April 24, 1997,
between the Debenture Issuer and Wilmington Trust Company, as amended from time
to time.
"Investment Company" means an investment company as defined in
the Investment Company Act.
"Investment Company Act" means the Investment Company Act of
1940, as amended.
"Legal Action" has the meaning set forth in Section 3.06(g).
"liquidation amount" means, with respect to the Trust
Securities, except as provided in the terms of the Capital Securities or by the
Trust Indenture Act, the stated liquidation amount of $1,000 per security, plus
accrued and unpaid Distributions to the date upon which the voting percentages
or amounts are determined.
"Majority in liquidation amount" means, with respect to the
Trust Securities, except as provided in the terms of the Capital Securities or
by the Trust Indenture Act, Holder(s) of outstanding Trust Securities voting
together as a single class or, as the context may require, Holders of
outstanding Capital Securities or Holders of outstanding Common Securities
voting separately as a class, who are the record owners of more than 50% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all outstanding
Securities of the relevant class.
"Offering Memorandum" has the meaning set forth in Section
3.06(b).
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman, a Vice Chairman, the Chief Executive
Officer, the President, a Vice President, the Comptroller, the Secretary or an
Assistant Secretary of such Person. Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for in this
Declaration shall include:
(a) a statement that the officer signing the Certificate
has read the covenant or condition and the definitions relating
thereto;
5
<PAGE> 10
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by the officer in rendering
the Certificate;
(c) a statement that such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of such
officer, such condition or covenant has been complied with.
"Opinion of Counsel" shall mean a written opinion of counsel,
who may be an employee of the Sponsor, and who shall be, and which opinion
shall be, acceptable to the Property Trustee.
"Paying Agent" has the meaning specified in Section 7.04.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Property Trustee" has the meaning set forth in Section
5.03(a).
"Property Trustee Account" has the meaning set forth in
Section 3.08(c).
"Purchase Agreement" means the Purchase Agreement for the
initial offering and sale of Capital Securities dated April 17, 1996, between
the Company, the Trust and Salomon Brothers Inc, on behalf of the several
Initial Purchasers.
"QIBs" means qualified institutional buyers as defined in Rule
144A.
"Quorum" means a majority of the Administrative Trustees or,
if there are only two Administrative Trustees, both of them.
"Registrable Securities" has the meaning set forth in Section
14.01.
"Registrar" has the meaning set forth in Section 7.04.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of April 24, 1997, by and among the Trust, the Debenture
Issuer and the Initial Purchasers named therein, as amended from time to time.
"Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
6
<PAGE> 11
"Regulation S" means Regulation S under the Securities Act, as
such regulation may be amended from time to time.
"Regulation S Global Capital Security" has the meaning set
forth in Section 7.03(a).
"Responsible Officer" means, with respect to the Property
Trustee, any officer within the Corporate Trust Office of the Property Trustee,
including any vice-president, any assistant vice-president, any secretary, any
assistant secretary, the treasurer, any assistant treasurer, or other officer
of the Corporate Trust Office of the Property Trustee customarily performing
functions similar to those performed by any of the above designated officers
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.
"Restricted Definitive Capital Securities" has the meaning set
forth in Section 7.03(c).
"Restricted Capital Security" means a Capital Security
required by Section 9.02 to contain a Restricted Securities Legend.
"Restricted Securities Legend" has the meaning set forth in
Section 9.02(h).
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act,
or any successor rule or regulation.
"Rule 144" means Rule 144 under the Securities Act, as such
rule may be amended from time to time.
"Rule 144A" means Rule 144A under the Securities Act, as such
rule may be amended from time to time.
"Rule 144A Global Capital Security" has the meaning set forth
in Section 7.03(a).
"Securities" or "Trust Securities" means the Common Securities
and the Capital Securities.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Guarantees" means the Common Securities Guarantee
and the Capital Securities Guarantee.
"Series A Capital Securities" has the meaning specified in
Section 7.01(a).
"Series B Capital Securities" has the meaning specified in
Section 7.01(a).
7
<PAGE> 12
"Series A Capital Securities Guarantee" means the guarantee
dated as of April 24, 1997 of the Sponsor in respect of the Series A Capital
Securities.
"Series B Capital Securities Guarantee" means the guarantee to
be entered in connection with the Exchange Offer by the Sponsor in respect of
the Series B Capital Securities.
"Series A Debentures" means the 8.56% Series A Junior
Subordinated Deferrable Interest Debentures due April 15, 2027 of the Debenture
Issuer issued pursuant to the Indenture.
"Series B Debentures" means the 8.56% Series B Junior
Subordinated Deferrable Interest Debentures due April 15, 2027 of the Debenture
Issuer issued pursuant to the Indenture.
"Special Event" has the meaning set forth in Annex I hereto.
"Sponsor" means K N Energy, Inc., a Kansas corporation, or any
successor entity permitted under the Indenture, including a successor entity
resulting from any merger, consolidation, amalgamation sale of assets as an
entirety or substantially as an entirety, transfer, lease or other business
combination, in its capacity as sponsor of the Trust.
"Successor Property Trustee" has the meaning specified in
Section 3.08(f).
"Super Majority" has the meaning set forth in Section
2.06(a)(ii).
"10% in liquidation amount" means, with respect to the Trust
Securities, except as provided in the terms of the Capital Securities or by the
Trust Indenture Act, Holder(s) of outstanding Trust Securities voting together
as a single class or, as the context may require, Holders of outstanding
Capital Securities or Holders of outstanding Common Securities voting
separately as a class, who are the record owners of 10% or more of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all outstanding
Securities of the relevant class.
"Treasury Regulations" means the income tax regulations,
including temporary and proposed regulations, promulgated under the Code by the
United States Treasury, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with
the provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
8
<PAGE> 13
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended from time to time.
"Unrestricted Global Capital Security" has the meaning set
forth in Section 9.02(b).
ARTICLE II
TRUST INDENTURE ACT
Section 2.01. Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the
Trust Indenture Act that are required to be part of this Declaration and shall,
to the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which
is a Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this
Declaration limits, qualifies or conflicts with the duties imposed by Sections
310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
(d) The application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
Section 2.02. Lists of Holders of Securities.
(a) Each of the Sponsor and the Administrative Trustees
on behalf of the Trust shall provide the Property Trustee, unless the Property
Trustee is Registrar for the Securities, (i) within 14 days after each record
date for payment of Distributions, a list, in such form as the Property Trustee
may reasonably require, of the names and addresses of the Holders (a "List of
Holders") as of such record date; provided that neither the Sponsor nor the
Administrative Trustees on behalf of the Trust shall be obligated to provide
such List of Holders at any time if the List of Holders does not differ from
the most recent List of Holders so provided, and (ii) at any other time, within
30 days of receipt by the Trust of a written request for a List of Holders as
of a date no more than 14 days before such List of Holders is given to the
Property Trustee. The Property Trustee shall preserve, in as current a form as
is reasonably practicable, all information contained in Lists of Holders given
to it or which it receives in its capacity as Registrar (if acting in such
capacity); provided that the Property Trustee may destroy any List of Holders
previously given to it upon receipt of a new List of Holders.
9
<PAGE> 14
(b) The Property Trustee shall comply with its
obligations under Sections 311(a), 311(b) and 312(b) of the Trust Indenture
Act.
Section 2.03. Reports by the Property Trustee.
Within 90 days after December 31 of each year, commencing
December 31, 1997, the Property Trustee shall provide to the Holders of the
Capital Securities such reports as are required by Section 313(a) of the Trust
Indenture Act, if any, in the form and in the manner provided by Section 313 of
the Trust Indenture Act. The Property Trustee shall also comply with the other
requirements of Section 313 of the Trust Indenture Act. The Sponsor shall
promptly notify the Property Trustee when the Capital Securities are listed on
any stock exchange.
Section 2.04. Periodic Reports to Property Trustee.
Each of the Sponsor and the Administrative Trustees on behalf
of the Trust shall provide to the Property Trustee such documents, reports and
information as are required by Section 314 (if any) and the compliance
certificate required by Section 314 of the Trust Indenture Act in the form, in
the manner and at the times required by Section 314(a)(4) of the Trust
Indenture Act, such compliance certificate to be delivered annually on or
before 120 days after the end of each fiscal year of the Sponsor.
Section 2.05. Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Administrative Trustees on behalf
of the Trust shall provide to the Property Trustee such evidence of compliance
with any conditions precedent provided for in this Declaration that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c) (1) of the Trust Indenture Act may be given in the form of an Officers'
Certificate.
Section 2.06. Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of
Capital Securities may, by vote on behalf of the Holders of all of the Capital
Securities, waive any past Event of Default in respect of the Capital
Securities and its consequences; provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, the Event of
Default under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a
majority in aggregate principal amount of the holders of the
Debentures (a "Super Majority") to be waived under the Indenture, the
Event of Default under the Declaration may only be waived by the vote
of the Holders of at least the proportion in aggregate liquidation
amount of the
10
<PAGE> 15
Capital Securities that the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding.
The foregoing provisions of this Section 2.06(a) shall be in
lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section
316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this
Declaration and the Securities, as permitted by the Trust Indenture Act. Upon
such waiver, any such default shall cease to exist, and any Event of Default
with respect to the Capital Securities arising therefrom shall be deemed to
have been cured, for every purpose of this Declaration, but no such waiver
shall extend to any subsequent or other default or an Event of Default with
respect to the Capital Securities or impair any right consequent thereon. Any
waiver by the Holders of the Capital Securities of an Event of Default with
respect to the Capital Securities shall also be deemed to constitute a waiver
by the Holders of the Common Securities of any such Event of Default with
respect to the Common Securities for all purposes of this Declaration without
any further act, vote, or consent of the Holders of the Common Securities.
The Holders of a Majority in liquidation amount of the Capital
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee or
to direct the exercise of any trust or power conferred upon the Property
Trustee, including the right to direct the Property Trustee to exercise the
remedies available to it as holder of the Debentures; provided, however, that
(subject to the provisions of Section 3.09) the Property Trustee shall have the
right to decline to follow any such direction if the Property Trustee shall
determine that the action so directed would be unjustly prejudicial to the
Holders not taking part in such direction or if the Property Trustee, being
advised by counsel, determines that the action or proceeding so directed may
not lawfully be taken or if the Property Trustee, in good faith, by its
Responsible Officers, shall determine that the action or proceedings so
directed would involve the Property Trustee in personal liability.
(b) The Holders of a Majority in liquidation amount of
the Common Securities may, by vote, on behalf of the Holders of all of the
Common Securities, waive any past Event of Default with respect to the Common
Securities and its consequences; provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where
the Holders of the Common Securities are deemed to have waived such
Event of Default under the Declaration as provided below in this
Section 2.06(b), the Event of Default under the Declaration shall also
not be waivable; or
(ii) requires the consent or vote of a Super Majority to
be waived, except where the Holders of the Common Securities are
deemed to have waived such Event of Default under the Declaration as
provided below in this Section 2.06(b), the Event of Default under the
Declaration may only be waived by the vote of the Holders of at least
the proportion in aggregate liquidation amount of the Common
Securities that the
11
<PAGE> 16
relevant Super Majority represents of the aggregate principal amount
of the Debentures outstanding;
provided further that each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Securities and their consequences if all Events of Default with respect
to the Capital Securities have been cured, waived or otherwise eliminated, and
until such Events of Default have been so cured, waived or otherwise
eliminated, the Property Trustee will be deemed to be acting solely on behalf
of the Holders of the Capital Securities and only the Holders of the Capital
Securities will have the right to direct the Property Trustee in accordance
with the terms of the Securities. The foregoing provisions of this Section
2.06(b) shall be in lieu of Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust
Indenture Act and such Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust
Indenture Act are hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Subject to the foregoing
provisions of this Section 2.06(b), upon such waiver, any such default shall
cease to exist and any Event of Default with respect to the Common Securities
arising therefrom shall be deemed to have been cured for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or other default
or Event of Default with respect to the Common Securities or impair any right
consequent thereon.
(c) A waiver of an Event of Default under the Indenture
by the Property Trustee, at the direction of the Holders of the Capital
Securities, constitutes a waiver of the corresponding Event of Default under
this Declaration. The foregoing provisions of this Section 2.06(c) shall be in
lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section
316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this
Declaration and the Securities, as permitted by the Trust Indenture Act.
Section 2.07. Event of Default; Notice.
(a) The Property Trustee shall, within 30 Business Days
after the occurrence of an Event of Default is actually known to a Responsible
Officer of the Property Trustee, transmit by mail, first class postage prepaid,
to the Holders of the Securities, the Sponsor and the Administrative Trustees,
notice of all defaults with respect to the Securities actually known to a
Responsible Officer of the Property Trustee, unless such defaults have been
cured before the giving of such notice (the term "defaults" for the purposes of
this Section 2.07(a) being hereby defined to be an Event of Default as defined
in the Indenture, not including any periods of grace provided for therein and
irrespective of the giving of any notice provided therein); provided that,
except for a default in the payment of principal of (or premium, if any) or
interest on any of the Debentures, the Property Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the Property
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders.
(b) The Property Trustee shall not be deemed to have
knowledge of any default except:
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(i) a default under Sections 5.01(a) and 5.01(b) of the
Indenture relating to the Debentures; or
(ii) any default as to which the Property Trustee shall
have received written notice or of which a Responsible Officer of the
Property Trustee charged with the administration of the Declaration
shall have actual knowledge.
(c) Unless the notice under Section 2.07(a) shall have
been transmitted, within 30 Business Days after the occurrence of any Event of
Default actually known to the Sponsor, the Sponsor shall transmit notice of
such Event of Default to the Holders of the Capital Securities, the
Administrative Trustees and the Property Trustee, unless such Event of Default
shall have been cured or waived. The Sponsor and the Administrative Trustees
shall file annually with the Property Trustee in accordance with Section 2.04 a
certification as to whether or not they are in compliance with all the
conditions and covenants applicable to them under this Declaration.
ARTICLE III
ORGANIZATION
Section 3.01. Name.
The Trust is named "K N Capital Trust I" as such name may be
modified from time to time by the Administrative Trustees following written
notice to the Holders of Securities and the other Trustees. The Trust's
activities may be conducted under the name of the Trust or any other name
deemed advisable by the Administrative Trustees.
Section 3.02. Office.
The address of the principal office of the Trust is c/o K N
Energy, Inc., 370 Van Gordon Street, P.O. Box 281304, Lakewood, Colorado
80288-8304. On ten Business Days' written notice to the Holders of Securities
and the other Trustees, the Administrative Trustees may designate another
principal office.
Section 3.03. Purpose.
The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities, (b) use the proceeds from the sale of the Securities
to acquire the Debentures, and (c) except as otherwise limited herein, to
engage in only those other activities necessary, advisable or incidental
thereto, including effecting the Exchange Offer. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, mortgage or
pledge any of its assets, or otherwise undertake (or permit to be undertaken)
any activity that would cause the Trust not to be classified for United States
federal income tax purposes as a grantor trust.
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Section 3.04. Authority.
Subject to the limitations provided in this Declaration and to
the specific duties of the Property Trustee, the Administrative Trustees shall
have exclusive and complete authority to carry out the purposes of the Trust.
An action taken by the Administrative Trustees in accordance with their powers
shall constitute the act of and serve to bind the Trust and an action taken by
the Property Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the
Trustees acting on behalf of the Trust, no Person shall be required to inquire
into the authority of the Trustees to bind the Trust. Persons dealing with the
Trust are entitled to rely conclusively on the power and authority of the
Trustees as set forth in this Declaration.
Section 3.05. Title to Property of the Trust.
Except as provided in Section 3.08 with respect to the
Debentures and the Property Trustee Account or as otherwise provided in this
Declaration, legal title to all assets of the Trust shall be vested in the
Trust. The Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial interest in the assets of the
Trust.
Section 3.06. Powers and Duties of the Administrative Trustees.
The Administrative Trustees shall have the exclusive power,
duty and authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Securities in accordance with
this Declaration; provided, however, that except as contemplated in Section
7.01(a), (i) the Trust may issue no more than one series of Capital Securities
and no more than one series of Common Securities, (ii) there shall be no
interests in the Trust other than the Securities, and (iii) the issuance of
Series A Capital Securities Common Securities shall be limited to a
simultaneous issuance of both Series A Capital Securities and Common Securities
at the Closing Time;
(b) in connection with the issue and sale of the Capital
Securities and the consummation of the Exchange Offer to:
(i) execute, if necessary, an offering memorandum (the
"Offering Memorandum") in preliminary and final form prepared by the
Sponsor, in relation to the offering and sale of Series A Capital
Securities to qualified institutional buyers in reliance on Rule 144A
under the Securities Act and to institutional "accredited investors"
(as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act) and outside the United States to non-U.S. persons in offshore
transactions in reliance on Regulation S under the Securities Act, and
to execute and file with the Commission, at such time as determined by
the Sponsor, any Registration Statement, including any amendments
thereto, as contemplated by the Registration Rights Agreement;
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(ii) execute and file any documents prepared by the
Sponsor, or take any acts as determined by the Sponsor to be necessary
in order to qualify or register all or part of the Capital Securities
in any State in which the Sponsor has determined to qualify or
register such Capital Securities for sale;
(iii) at the direction of the Sponsor, execute and file an
application, prepared by the Sponsor, to the New York Stock Exchange
or any other national stock exchange or the Nasdaq Stock Market's
National Market for listing or quotation of the Capital Securities;
(iv) to execute and deliver letters, documents, or
instruments with DTC and other Clearing Agencies relating to the
Capital Securities;
(v) if required, execute and file with the Commission a
registration statement on Form 8-A, including any amendments thereto,
prepared by the Sponsor, relating to the registration of the Capital
Securities under Section 12 of the Exchange Act and the preparation
and filing of all periodic and other reports and other documents
pursuant to the foregoing; and
(vi) execute and enter into the Registration Rights
Agreement;
(c) to acquire the Series A Debentures with the proceeds
of the sale of the Series A Capital Securities and the Common Securities and to
exchange the Series A Debentures for a like principal amount of Series B
Debentures, pursuant to the Exchange Offer; provided, however, that the
Administrative Trustees shall cause legal title to the Debentures to be held of
record in the name of the Property Trustee for the benefit of the Trust and the
Holders;
(d) to give the Sponsor and the Property Trustee prompt
written notice of the occurrence of a Special Event;
(e) to establish a record date with respect to all
actions to be taken hereunder that require a record date be established,
including and with respect to, for the purposes of Section 316(c) of the Trust
Indenture Act, Distributions, voting rights, redemptions and exchanges, and to
issue relevant notices, which are not or have not been issued by the Property
Trustee as provided herein, to the Holders of Capital Securities and Holders of
Common Securities as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be
required of the Administrative Trustees pursuant to the terms of the Securities
set forth in Annex I hereto;
(g) to bring or defend, pay, collect, compromise,
arbitrate, resort to legal action, or otherwise adjust claims or demands of or
against the Trust ("Legal Action"), unless pursuant to Section 3.08(e) the
Property Trustee has the exclusive power to bring such Legal Action;
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(h) to employ or otherwise engage employees and agents
(who may be designated as officers with titles) and managers, contractors,
advisors, and consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's
obligations under the Trust Indenture Act;
(j) to give the certificate required by Section 314(a)(4)
of the Trust Indenture Act to the Property Trustee, which certificate may be
executed by any Administrative Trustee;
(k) to incur expenses that are necessary or incidental to
carry out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as,
Registrar and Exchange Agent for the Securities or to appoint a Paying Agent
for the Securities as provided in Section 7.04 except for such time as such
power to appoint a Paying Agent is vested in the Property Trustee;
(m) to give prompt written notice to the Property Trustee
and to Holders of any notice received from the Debenture Issuer of its election
to defer payments of interest on the Debentures by extending the interest
payment period under the Indenture;
(n) to execute all documents or instruments, perform all
duties and powers, and do all things for and on behalf of the Trust in all
matters necessary or incidental to the foregoing;
(o) to take all action that may be necessary or
appropriate for the preservation and the continuation of the Trust's valid
existence, rights, franchises and privileges as a statutory business trust
under the laws of the State of Delaware and of each other jurisdiction in which
such existence is necessary to protect the limited liability of the Holders of
the Capital Securities or to enable the Trust to effect the purposes for which
the Trust was created;
(p) to take any action, not inconsistent with this
Declaration or with applicable law, that the Administrative Trustees determine
in their discretion to be necessary or desirable in carrying out the activities
of the Trust as set out in this Section 3.06, including, but not limited to:
(i) causing the Trust not to be deemed to be an
Investment Company required to be registered under the Investment
Company Act;
(ii) causing the Trust to be classified for United States
federal income tax purposes as a grantor trust; and
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(iii) cooperating with the Debenture Issuer to ensure that
the Debentures will be treated as indebtedness of the Debenture Issuer
for United States federal income tax purposes;
(q) to take all action necessary to consummate the
Exchange Offer or otherwise cause the Capital Securities to be registered
pursuant to an effective Registration Statement in accordance with the
provisions of the Registration Rights Agreement; and
(r) to take all action necessary to cause all applicable
tax returns and tax information reports that are required to be filed with
respect to the Trust to be duly prepared and filed by the Administrative
Trustees, on behalf of the Trust.
The Administrative Trustees must exercise the powers set forth
in this Section 3.06 in a manner that is consistent with the purposes and
functions of the Trust set out in Section 3.03, and the Administrative Trustees
shall not take any action that is inconsistent with the purposes and functions
of the Trust set forth in Section 3.03.
Subject to this Section 3.06, the Administrative Trustees
shall have none of the powers or the authority of the Property Trustee set
forth in Section 3.08.
Any expenses incurred by the Administrative Trustees pursuant
to this Section 3.06 shall be reimbursed by the Sponsor. The Administrative
Trustees shall take all actions on behalf of the Trust that are not
specifically required by this Declaration to be taken by any other Trustee.
Section 3.07. Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including the
Property Trustee) shall not, engage in any activity other than as required or
authorized by this Declaration. The Trust shall not:
(i) invest any proceeds received by the Trust from
holding the Debentures, but shall distribute all such proceeds to
Holders pursuant to the terms of this Declaration and of the
Securities;
(ii) acquire any assets other than as expressly provided
herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than
loans represented by the Debentures or pledge any assets or enter into
any mortgages;
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(v) possess any power or otherwise act in such a way as
to vary the Trust assets or the terms of the Securities in any way
whatsoever except as otherwise expressly provided herein;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities; or
(vii) other than as provided in this Declaration or Annex
I, (A) direct the time, method and place of conducting any proceeding
with respect to any remedy available to the Debenture Trustee, or
exercise any trust or power conferred upon the Debenture Trustee with
respect to the Debentures, (B) waive any past default that is waivable
under the Indenture, (C) exercise any right to rescind or annul any
declaration that the principal of all the Debentures shall be due and
payable, or (D) consent to any amendment, modification or termination
of the Indenture or the Debentures where such consent shall be
required unless the Trust shall have received an opinion of a
nationally recognized tax counsel experienced in such matters to the
effect that such modification will not cause more than an
insubstantial risk that for United States federal income tax purposes
the Trust will not be classified as a grantor trust.
Section 3.08. Powers and Duties of the Property Trustee.
(a) The legal title to the Debentures shall be owned by
and held of record in the name of the Property Trustee in trust for the benefit
of the Trust and the Holders. The right, title and interest of the Property
Trustee to the Debentures shall vest automatically in each Person who may
hereafter be appointed as Property Trustee in accordance with Section 5.07.
Such vesting and cessation of title shall be effective whether or not
conveyancing documents with regard to the Debentures have been executed and
delivered.
(b) The Property Trustee shall not transfer its right,
title and interest in the Debentures to the Administrative Trustees or to the
Delaware Trustee (if the Property Trustee does not also act as Delaware
Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest
bearing trust account (the "Property Trustee Account") in the name of
and under the exclusive control of the Property Trustee on behalf of
the Holders and, upon the receipt of payments of funds made in respect
of the Debentures held by the Property Trustee, deposit such funds
into the Property Trustee Account and make payments to the Holders of
the Capital Securities and Holders of the Common Securities from the
Property Trustee Account in accordance with Section 6.01. Funds in
the Property Trustee Account shall be held uninvested until disbursed
in accordance with this Declaration. The Property Trustee Account
shall be an account that is maintained with a banking institution the
rating on whose long-term unsecured indebtedness is at least equal to
the rating assigned to the Capital Securities by
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a "nationally recognized statistical rating organization", as that
term is defined for purposes of Rule 436(g)(2) under the Securities
Act;
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect the redemption of the Securities to
the extent the Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by the
Administrative Trustees in accordance with the terms of the
Securities, engage in such ministerial activities as shall be
necessary or appropriate to effect the distribution of the Debentures
to Holders of Securities upon the occurrence of certain events.
(d) The Property Trustee shall take all actions and
perform such duties as may be specifically required of the Property Trustee
pursuant to the terms of the Securities set forth in Annex I hereto.
(e) Subject to Section 3.09(a), the Property Trustee may
take any Legal Action which arises out of or in connection with an Event of
Default of which a Responsible Officer of the Property Trustee has actual
knowledge or the Property Trustee's duties and obligations under this
Declaration or the Trust Indenture Act. If such Property Trustee shall have
failed to take such Legal Action, to the fullest extent permitted by law, the
Holders of the Capital Securities may take such Legal Action after the Holders
of a Majority in liquidation amount of the Capital Securities have so directed
the Property Trustee, to the same extent as if such Holders of Capital
Securities held an aggregate principal amount of Debentures equal to the
aggregate liquidation amount of such Capital Securities, without first
proceeding against the Property Trustee, the Trust or any other Person;
provided, however, that if an Event of Default has occurred and is continuing
and such event is attributable to the failure of the Debenture Issuer to pay
the principal of or premium, if any, or interest on the Debentures on the date
such principal, premium, if any, or interest is otherwise payable (or in the
case of redemption, on the redemption date), then a Holder of Capital
Securities may pursuant to Section 13.13 of the Indenture directly institute a
proceeding for enforcement of payment to such Holder of the principal of or
premium, if any, or interest on the Debentures having a principal amount equal
to the aggregate liquidation amount of the Capital Securities of such Holder (a
"Direct Action") on or after the respective due date specified in the
Debentures. In connection with such Direct Action, the rights of the Holders
of the Common Securities will be subrogated to the rights of such Holder of
Capital Securities to the extent of any payment made by the Debenture Issuer to
such Holder of Capital Securities in such Direct Action. Except as provided in
the preceding sentences, the Holders of Capital Securities will not be able to
exercise directly any other remedy available to the holders of the Debentures.
(f) Subject to Section 5.07 hereof, the Property Trustee
shall not resign as a Trustee unless either:
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(i) the Trust has been completely liquidated and the
proceeds of the liquidation distributed to the Holders of the
Securities pursuant to the terms of the Securities set forth in Annex
I hereto; or
(ii) a successor Property Trustee has been appointed and
has accepted that appointment in accordance with Section 5.07 (a
"Successor Property Trustee").
(g) The Property Trustee shall have the legal power to
exercise all of the rights, powers and privileges of a holder of Debentures
under the Indenture and, if an Event of Default actually known to a Responsible
Officer of the Property Trustee occurs and is continuing, the Property Trustee
may, for the benefit of Holders, enforce its rights as holder of the Debentures
subject to the rights of the Holders pursuant to the terms of such Securities.
(h) The Property Trustee shall be authorized to undertake
any actions set forth in Section 317(a) of the Trust Indenture Act.
(i) For such time as the Property Trustee is the Paying
Agent, the Property Trustee may authorize one or more Persons to act as
additional Paying Agents and to pay Distributions, redemption payments or
liquidation payments on behalf of the Trust with respect to all Securities and
any such Paying Agent shall comply with Section 317(b) of the Trust Indenture
Act. Any such additional Paying Agent may be removed by the Property Trustee
at any time the Property Trustee remains as Paying Agent and a successor Paying
Agent or additional Paying Agents may be (but are not required to be) appointed
at any time by the Property Trustee while the Property Trustee is so acting as
Paying Agent.
(j) Subject to this Section 3.08, the Property Trustee
shall have none of the duties, liabilities, powers or the authority of the
Administrative Trustees set forth in Section 3.06.
The Property Trustee must exercise the powers set forth in
this Section 3.08 in a manner that is consistent with the purposes and
functions of the Trust set out in Section 3.03, and the Property Trustee shall
not take any action that is inconsistent with the purposes and functions of the
Trust set out in Section 3.03.
Section 3.09. Certain Duties and Responsibilities of the Property Trustee.
(a) The Property Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Declaration and in the Securities and no implied covenants shall
be read into this Declaration against the Property Trustee. In case an Event
of Default has occurred (that has not been cured or waived pursuant to Section
2.06) of which a Responsible Officer of the Property Trustee has actual
knowledge, the Property Trustee shall exercise such of the rights and powers
vested in it by this Declaration, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
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(b) No provision of this Declaration shall be construed
to relieve the Property Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and
after the curing or waiving of all such Events of Default that may
have occurred:
(A) the duties and obligations of the Property
Trustee shall be determined solely by the express provisions
of this Declaration and in the Securities and the Property
Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Declaration and in the Securities, and no implied covenants or
obligations shall be read into this Declaration or the
Securities against the Property Trustee; and
(B) in the absence of bad faith on the part of
the Property Trustee, the Property Trustee may conclusively
rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or
opinions furnished to the Property Trustee and conforming to
the requirements of this Declaration; provided, however, that
in the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to
the Property Trustee, the Property Trustee shall be under a
duty to examine the same to determine whether or not they
conform to the requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Property Trustee, unless it shall be proved that the Property Trustee
was negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Capital Securities relating to
the time, method and place of conducting any proceeding for any remedy
available to the Property Trustee, or exercising any trust or power
conferred upon the Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the
Property Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Declaration or indemnity satisfactory to the Property Trustee against
such risk or liability is not assured to it;
(v) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and
the Property Trustee Account shall be to
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deal with such property in a similar manner as the Property Trustee
deals with similar property for its own account, subject to the
protections and limitations on liability afforded to the Property
Trustee under this Declaration and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability
for or with respect to the value, genuineness, existence or
sufficiency of the Debentures or the payment of any taxes or
assessments levied thereon or in connection therewith;
(vii) the Property Trustee shall not be liable for any
interest on any money received by it except as it may otherwise agree
in writing with the Sponsor. Money held by the Property Trustee need
not be segregated from other funds held by it except in relation to
the Property Trustee Account maintained by the Property Trustee
pursuant to Section 3.08(c)(i) and except to the extent otherwise
required by law; and
(viii) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or the
Sponsor with their respective duties under this Declaration, nor shall
the Property Trustee be liable for any default or misconduct of the
Administrative Trustees or the Sponsor.
Section 3.10. Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.09:
(i) the Property Trustee may conclusively rely and shall
be fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties;
(ii) any direction or act of the Sponsor or the
Administrative Trustees contemplated by this Declaration may be
sufficiently evidenced by an Officers' Certificate;
(iii) whenever in the administration of this Declaration,
the Property Trustee shall deem it desirable that a matter be proved
or established before taking, suffering or omitting any action
hereunder, the Property Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and be entitled to receive and conclusively rely upon an
Officers' Certificate which, upon receipt of such request, shall be
promptly delivered by the Sponsor or the Administrative Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or
securities laws) or any rerecording, refiling or registration thereof;
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(v) the Property Trustee may consult with counsel or
other experts of its selection and the advice or opinion of such
counsel and experts with respect to legal matters or advice within the
scope of such experts' area of expertise shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance with such
advice or opinion, such counsel may be counsel to the Sponsor or any
of its Affiliates, and may include any of its employees. The Property
Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of
competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration
at the request or direction of any Holder, unless such Holder shall
have provided to the Property Trustee security and indemnity,
satisfactory to the Property Trustee, against the costs, expenses
(including reasonable attorneys' fees and expenses and the expenses of
the Property Trustee's agents, nominees or custodians) and liabilities
that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by
the Property Trustee provided, that, nothing contained in this Section
3.10(a)(vi) shall be taken to relieve the Property Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the
rights and powers vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Property Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents, custodians, nominees or attorneys and the Property
Trustee shall not be responsible for any misconduct or negligence on
the part of or for the supervision of any agent or attorney appointed
with due care by it hereunder;
(ix) any action taken by the Property Trustee or its
agents hereunder shall bind the Trust and the Holders of the
Securities, and the signature of the Property Trustee or its agents
alone shall be sufficient and effective to perform any such action and
no third party shall be required to inquire as to the authority of the
Property Trustee to so act or as to its compliance with any of the
terms and provisions of this Declaration, both of which shall be
conclusively evidenced by the Property Trustee's or its agent's taking
such action;
(x) whenever in the administration of this Declaration
the Property Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other
action hereunder, the Property Trustee (i) may request instructions
from the Holders of the Securities which instructions may only be
given by
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the Holders of the same proportion in liquidation amount of the
Securities as would be entitled to direct the Property Trustee under
the terms of the Securities in respect of such remedy, right or
action, (ii) may refrain from enforcing such remedy or right or taking
such other action until such instructions are received, and (iii)
shall be protected in conclusively relying on or acting in accordance
with such instructions;
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be under any obligation to
take any action that is discretionary under the provisions of this
Declaration; and
(xii) the Property Trustee shall not be liable for any
action taken, suffered, or omitted to be taken by it in good faith,
without negligence, and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Declaration.
(b) No provision of this Declaration shall be deemed to
impose any duty or obligation on the Property Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on
it, in any jurisdiction in which it shall be illegal, or in which the Property
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts, or to exercise any such right, power, duty or
obligation or which would expose the Property Trustee to liability, financial
or otherwise. No permissive power or authority available to the Property
Trustee shall be construed to be a duty.
Section 3.11. Delaware Trustee.
Notwithstanding any other provision of this Declaration other
than Section 5.02 (and subject to Section 5.02), the Delaware Trustee shall not
be entitled to exercise any powers, nor shall the Delaware Trustee have any of
the duties and responsibilities of the Administrative Trustees or the Property
Trustee described in this Declaration. Except as set forth in Section 5.02,
the Delaware Trustee shall be a Trustee for the sole and limited purpose of
fulfilling the requirements of Section 3807 of the Business Trust Act.
Section 3.12. Execution of Documents.
Except as otherwise required by the Business Trust Act, any
Administrative Trustee is authorized to execute on behalf of the Trust any
documents that the Administrative Trustees have the power and authority to
cause the Trust to execute pursuant to Section 3.06, except that the
Registration Statement must be signed by a majority of the Administrative
Trustees.
Section 3.13. Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities
shall be taken as the statements of the Sponsor, and the Trustees do not assume
any responsibility for their correctness. The Trustees make no
representations as to the value or condition of the property of
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the Trust or any part thereof. The Trustees make no representations as to the
validity or sufficiency of this Declaration, the Debentures or the Securities.
Section 3.14. Duration of Trust.
The Trust, unless dissolved and terminated pursuant to the
provisions of Article VIII hereof, shall have existence up to April 15, 2028.
Section 3.15. Mergers.
(a) The Trust may not merge with or convert into,
consolidate, amalgamate, or be replaced by, or convey, transfer or lease its
properties and assets as an entirety or substantially as an entirety to any
Person, except as described in Section 3.15(b) and (c) or Section 3 of Annex I.
(b) The Trust may, at the request of the Sponsor, with
the consent of the Administrative Trustees or, if there are more than two, a
majority of the Administrative Trustees and without the consent of the Holders
of Securities, the Delaware Trustee or the Property Trustee, merge with or
convert into, consolidate, amalgamate, or be replaced by, or convey, transfer
or lease its properties and assets as an entirety or substantially as an
entirety to, a trust organized as such under the laws of any State; provided
that:
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of
the Trust under the Securities; or
(B) substitutes for the Securities other
securities having substantially the same terms as the
Securities (the "Successor Securities") so long as the
Successor Securities rank the same as the Securities rank with
respect to Distributions and payments upon liquidation,
redemption and otherwise;
(ii) the Sponsor expressly appoints a trustee of the
Successor Entity that possesses the same powers and duties as the
Property Trustee as the holder of the Debentures;
(iii) the Successor Securities that are issued in place of
the Capital Securities are listed, or any such Successor Securities
will be listed upon notification of issuance, on any national
securities exchange or with another organization on which the Capital
Securities are then listed or quoted, if any;
(iv) such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not cause the Capital
Securities (including any
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Successor Securities) to be downgraded by any nationally recognized
statistical rating organization;
(v) such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect
the rights, preferences and privileges of the Holders of Securities
(including any Successor Securities) in any material respect (other
than with respect to any dilution of such Holders' interests in the
new entity);
(vi) such Successor Entity has a purpose substantially
identical to that of the Trust;
(vii) prior to such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Sponsor
has received an opinion of an independent counsel to the Trust
experienced in such matters to the effect that:
(A) such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer or lease does
not adversely affect the rights, preferences and privileges of
the Holders of Securities (including any Successor Securities)
in any material respect (other than with respect to any
dilution of the Holders' interest in the new entity); and
(B) following such merger, conversion,
consolidation, amalgamation, replacement, conveyance, transfer
or lease, neither the Trust nor the Successor Entity will be
required to register as an Investment Company; and
(C) following such merger, conversion,
consolidation, amalgamation, replacement, conveyance, transfer
or lease, neither the Trust nor the Successor Entity will be
classified as other than a grantor trust for U.S. federal
income tax purposes; and
(viii) the Sponsor or any permitted successor or assignee
owns all of the common securities of such Successor Entity and
guarantees the obligations of such Successor Entity under the
Successor Securities at least to the extent provided by the Capital
Securities Guarantee and the Common Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not,
except with the consent of Holders of 100% in liquidation amount of the
Securities, consolidate, amalgamate, merge with or convert into, or be replaced
by, or convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to, any other entity or permit any other entity to
consolidate, amalgamate, merge with or convert into, or replace it if such
consolidation, amalgamation, merger, conversion, replacement, conveyance,
transfer or lease would cause the Trust or the Successor Entity not to be
classified as a grantor trust for United States federal income tax purposes.
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ARTICLE IV
SPONSOR
Section 4.01. Sponsor's Purchase of Common Securities.
At the Closing Time, the Sponsor will purchase an aggregate of
3,100 Common Securities, which will constitute all of the Common Securities
then issued by the Trust, having a liquidation amount at least equal to 3% of
the capital of the Trust, at the same time as the Series A Capital Securities
are issued and sold.
Section 4.02. Responsibilities of the Sponsor.
In connection with the issue and sale of the Capital
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) to prepare the Offering Memorandum and to prepare for
filing by the Trust with the Commission any Registration Statement, including
any amendments thereto as contemplated by the Registration Rights Agreement;
(b) to determine the States in which to take appropriate
action to qualify or register for sale all or part of the Capital Securities
and to do any and all such acts, other than actions which must be taken by the
Trust, and advise the Trust of actions it must take, and prepare for execution
and filing any documents to be executed and filed by the Trust, as the Sponsor
deems necessary or advisable in order to comply with the applicable laws of any
such States;
(c) if deemed necessary or advisable by the Sponsor, to
prepare for filing by the Trust an application to the New York Stock Exchange
or any other national stock exchange or the Nasdaq National Market for listing
or quotation of the Capital Securities;
(d) if deemed necessary or advisable by the Sponsor, to
prepare for filing by the Trust with the Commission a registration statement on
Form 8-A relating to the registration of the Capital Securities under Section
12 of the Exchange Act, including any amendments thereto; and
(e) to negotiate the terms of, and execute and deliver on
behalf of the Trust, the Purchase Agreement and to negotiate the terms of the
Registration Rights Agreement.
Section 4.03. Right to Proceed.
The Sponsor acknowledges the rights of the Holders of Capital
Securities to institute a Direct Action pursuant to Section 3.08(e).
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ARTICLE V
TRUSTEES
Section 5.01. Number of Trustees; Appointment of Co-Trustee.
The number of Trustees initially shall be five (5), and:
(a) at any time before the issuance of any Securities,
the Sponsor may, by written instrument, increase or decrease the number of
Trustees; and
(b) after the issuance of any Securities, the number of
Trustees may be increased or decreased by vote of the Holders of a Majority in
liquidation amount of the Common Securities voting as a class at a meeting of
the Holders of the Common Securities; provided, however, that, the number of
Trustees shall in no event be less than two (2); provided further that (1) if
required by the Business Trust Act, there shall at all times be a Delaware
Trustee meeting the requirements of Section 5.02; (2) there shall be at least
one Trustee who is an employee or officer of, or is affiliated with the Sponsor
(an "Administrative Trustee"); and (3) one Trustee shall be the Property
Trustee, which Trustee may also serve as Delaware Trustee if it meets the
applicable requirements. Notwithstanding the above, unless an Event of Default
shall have occurred and be continuing, at any time or times, for the purpose of
meeting the legal requirements of the Trust Indenture Act or of any
jurisdiction in which any part of the Trust's property may at the time be
located, the Holders of a Majority in liquidation amount of the Common
Securities acting as a class at a meeting of the Holders of the Common
Securities, and the Administrative Trustees shall have power to appoint one or
more Persons either to act as a co-trustee, jointly with the Property Trustee,
of all or any part of the Trust's property, or to act as separate trustee of
any such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such Person or persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of this Declaration. In case an Event of Default has
occurred and is continuing, the Property Trustee alone shall have power to make
any such appointment of a co-trustee.
Section 5.02. Delaware Trustee.
If required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of
Delaware; or
(b) if not a natural person, an entity which has its
principal place of business in the State of Delaware, and otherwise meets the
requirements of applicable law; provided that, if the Property Trustee has its
principal place of business in the State of Delaware and otherwise meets the
requirements of applicable law, then the Property Trustee shall also be the
Delaware Trustee and Section 3.11 shall have no application.
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Section 5.03. Property Trustee; Eligibility.
(a) There shall at all times be one Trustee (the
"Property Trustee") which shall act as Property Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State or Territory
thereof or of the District of Columbia, or a corporation or other
Person permitted by the Commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at
least 50 million U.S. dollars ($50,000,000), and subject to
supervision or examination by Federal, State, Territorial or District
of Columbia authority. If such Person publishes reports of condition
at least annually, pursuant to law or to the requirements of the
supervising or examining authority referred to above, then for the
purposes of this Section 5.3(a)(ii), the combined capital and surplus
of such Person shall be deemed to be its combined capital and surplus
as set forth in its most recent report of condition so published.
(b) If at any time the Property Trustee shall cease to be
eligible to so act under Section 5.03(a), the Property Trustee shall
immediately resign in the manner and with the effect set forth in Section
5.07(c).
(c) If the Property Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Property Trustee and the Holder of the Common Securities (as
if it were the obligor referred to in Section 310(b) of the Trust Indenture
Act) shall in all respects comply with the provisions of Section 310(b) of the
Trust Indenture Act.
(d) The Capital Securities Guarantee and the Indenture
shall be deemed to be specifically described in this Declaration for purposes
of clause (i) of the first proviso contained in Section 310(b) of the Trust
Indenture Act.
(e) The initial Property Trustee shall be:
Wilmington Trust Company
1100 N. Market Street
Rodney Square North
Wilmington, Delaware 19890-0001
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Section 5.04. Certain Qualifications of Administrative Trustees and Delaware
Trustee Generally.
Each Administrative Trustee and the Delaware Trustee (unless
the Property Trustee also acts as Delaware Trustee) shall be either a natural
person who is at least 21 years of age or a legal entity that shall act through
one or more Authorized Officers.
Section 5.05. Administrative Trustees.
The initial Administrative Trustees shall be:
Larry D. Hall
Clyde E. McKenzie
E. Wayne Lundhagen
(a) Except as expressly set forth in this Declaration and
except if a meeting of the Administrative Trustees is called with respect to
any matter over which the Administrative Trustees have power to act, any power
of the Administrative Trustees may be exercised by, or with the consent of, any
one such Administrative Trustee.
(b) Except as otherwise required by the Business Trust
Act or applicable law, any Administrative Trustee is authorized to execute on
behalf of the Trust any documents which the Administrative Trustees have the
power and authority to cause the Trust to execute pursuant to Section 3.06,
provided that the registration statement referred to in Section 3.06, including
any amendments thereto, shall be signed by a majority of the Administrative
Trustees.
Section 5.06. Delaware Trustee.
The initial Delaware Trustee shall be:
Wilmington Trust Company
1100 N. Market Street
Rodney Square North
Wilmington, Delaware 19890-0001
Section 5.07. Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.07(b) of this Declaration and to
Section 6(b) of Annex I hereto, Trustees may be appointed or removed without
cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor;
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(ii) unless an Event of Default shall have occurred and be
continuing after the issuance of any Securities, by vote of the
Holders of a Majority in liquidation amount of the Common Securities
voting as a class at a meeting of the Holders of the Common
Securities; and
(iii) if an Event of Default shall have occurred and be
continuing after the issuance of the Securities, with respect to the
Property Trustee or the Delaware Trustee, by vote of Holders of a
Majority in liquidation amount of the Capital Securities voting as a
class at a meeting of Holders of the Capital Securities.
(b) (i) The Trustee that acts as Property Trustee shall
not be removed in accordance with Section 5.07(a) until a Successor Property
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Property Trustee and delivered to the
Administrative Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not
be removed in accordance with Section 5.07(a) until a successor
Trustee possessing the qualifications to act as Delaware Trustee under
Sections 5.02 and 5.04 (a "Successor Delaware Trustee") has been
appointed and has accepted such appointment by written instrument
executed by such Successor Delaware Trustee and delivered to the
Administrative Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until
his successor shall have been appointed or until his death, removal or
resignation. Any Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing signed by such Trustee and
delivered to the Sponsor and the Trust, which resignation shall take effect
upon such delivery or upon such later date as is specified therein; provided,
however, that:
(i) No such resignation of the Trustee that acts as the
Property Trustee shall be effective:
(A) until a Successor Property Trustee
has been appointed and has accepted such appointment
by instrument executed by such Successor Property
Trustee and delivered to the Trust, the Sponsor and
the resigning Property Trustee; or
(B) until the assets of the Trust have
been completely liquidated and the proceeds thereof
distributed to the Holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee
has been appointed and has accepted such appointment by instrument
executed by such Successor Delaware Trustee and delivered to the
Trust, the Sponsor and the resigning Delaware Trustee.
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(d) The Holders of the Common Securities shall use their
best efforts to promptly appoint a Successor Delaware Trustee or Successor
Property Trustee, as the case may be, if the Property Trustee or the Delaware
Trustee delivers an instrument of resignation in accordance with this Section
5.07.
(e) If no Successor Property Trustee or Successor
Delaware Trustee shall have been appointed and accepted appointment as provided
in this Section 5.07 within 60 days after delivery of an instrument of
resignation or removal, the Property Trustee or Delaware Trustee resigning or
being removed, as applicable, may petition any court of competent jurisdiction
for appointment of a Successor Property Trustee or Successor Delaware Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may deem
proper and prescribe, appoint a Successor Property Trustee or Successor
Delaware Trustee, as the case may be.
(f) No Property Trustee or Delaware Trustee shall be
liable for the acts or omissions to act of any Successor Property Trustee or
Successor Delaware Trustee, as the case may be.
Section 5.08. Vacancies Among Trustees.
If a Trustee ceases to hold office for any reason and the
number of Trustees is not reduced pursuant to Section 5.01, or if the number of
Trustees is increased pursuant to Section 5.01, a vacancy shall occur. A
resolution certifying the existence of such vacancy by the Administrative
Trustees or, if there are more than two, a majority of the Administrative
Trustees shall be conclusive evidence of the existence of such vacancy. The
vacancy shall be filled with a Trustee appointed in accordance with Section
5.07.
Section 5.09. Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to dissolve, terminate or annul the Trust. Whenever
a vacancy in the number of Administrative Trustees shall occur, until such
vacancy is filled by the appointment of an Administrative Trustee in accordance
with Section 5.07, the Administrative Trustees in office, regardless of their
number, shall have all the powers granted to the Administrative Trustees and
shall discharge all the duties imposed upon the Administrative Trustees by this
Declaration.
Section 5.10. Meetings.
If there is more than one Administrative Trustee, meetings of
the Administrative Trustees shall be held from time to time upon the call of
any Administrative Trustee. Regular meetings of the Administrative Trustees
may be held at a time and place fixed by resolution of the Administrative
Trustees. Notice of any in-person meetings of the Administrative Trustees
shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours before
such meeting. Notice of any telephonic
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meetings of the Administrative Trustees or any committee thereof shall be hand
delivered or otherwise delivered in writing (including by facsimile, with a
hard copy by overnight courier) not less than 24 hours before a meeting.
Notices shall contain a brief statement of the time, place and anticipated
purposes of the meeting. The presence (whether in person or by telephone) of
an Administrative Trustee at a meeting shall constitute a waiver of notice of
such meeting except where an Administrative Trustee attends a meeting for the
express purpose of objecting to the transaction of any activity on the ground
that the meeting has not been lawfully called or convened. Unless provided
otherwise in this Declaration, any action of the Administrative Trustees may be
taken at a meeting by vote of a majority of the Administrative Trustees present
(whether in person or by telephone) and eligible to vote with respect to such
matter, provided that a Quorum is present, or without a meeting by the
unanimous written consent of the Administrative Trustees. In the event there
is only one Administrative Trustee, any and all action of such Administrative
Trustee shall be evidenced by a written consent of such Administrative Trustee.
Section 5.11. Delegation of Power.
(a) Any Administrative Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purpose of executing any documents
contemplated in Section 3.06, including any registration statement or amendment
thereto filed with the Commission, or making any other governmental filing; and
(b) the Administrative Trustees shall have power to
delegate from time to time to such of their number or to officers of the Trust
the doing of such things and the execution of such instruments either in the
name of the Trust or the names of the Administrative Trustees or otherwise as
the Administrative Trustees may deem expedient, to the extent such delegation
is not prohibited by applicable law or contrary to the provisions of the Trust,
as set forth herein.
Section 5.12. Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Property Trustee or the Delaware
Trustee or any Administrative Trustee that is not a natural person, as the case
may be, may be merged or converted or with which it may be consolidated, or any
Person resulting from any merger, conversion or consolidation to which the
Property Trustee or the Delaware Trustee or any Administrative Trustee that is
not a natural person, as the case may be, shall be a party, or any Person
succeeding to all or substantially all the corporate trust business of the
Property Trustee or the Delaware Trustee or any Administrative Trustee that is
not a natural person, as the case may be, shall be the successor of the
Property Trustee or the Delaware Trustee or any Administrative Trustee that is
not a natural person, as the case may be, hereunder, provided such corporation
shall be otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto.
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ARTICLE VI
DISTRIBUTIONS
Section 6.01. Distributions.
Holders shall receive Distributions in accordance with the
applicable terms of Annex I and the relevant Holder's Securities. If and to
the extent that the Debenture Issuer makes a payment of interest (including
Compounded Interest (as defined in the Indenture) and Additional Interest (as
defined in the Indenture), if any), premium and/or principal on the Debentures
held by the Property Trustee or any other payments pursuant to the Registration
Rights Agreement with respect to the Debentures held by the Property Trustee
(the amount of any such payment being a "Payment Amount"), the Property Trustee
shall and is directed, to the extent funds are available for that purpose, to
make a distribution (a "Distribution") of the Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
Section 7.01. General Provisions Regarding Securities.
(a) The Administrative Trustees shall on behalf of the
Trust issue one class of capital securities representing undivided beneficial
interests in the assets of the Trust having such terms as are set forth in
Annex I (the "Series A Capital Securities") and one class of common securities
representing undivided beneficial interests in the assets of the Trust having
such terms as are set forth in Annex I (the "Common Securities"). The
Administrative Trustees shall on behalf of the Trust issue one class of capital
securities representing undivided beneficial interests in the Trust having such
terms as set forth in Annex I (the "Series B Capital Securities") in exchange
for Series A Capital Securities accepted for exchange in the Exchange Offer,
which Series B Capital Securities shall not bear the legends required by
Section 9.02(h) unless the Holder of such Series A Capital Securities is either
(A) a broker-dealer who purchased such Series A Capital Securities directly
from the Trust for resale pursuant to Rule 144A or any other available
exemption under the Securities Act, (B) a Person participating in the
distribution of the Series A Capital Securities or (C) a Person who is an
affiliate (as defined in Rule 144A) of the Trust. The Trust shall issue no
securities or other interests in the assets of the Trust other than the
Securities.
(b) The consideration received by the Trust for the
issuance of the Securities shall constitute a contribution to the capital of
the Trust and shall not constitute a loan to the Trust.
(c) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and non-assessable undivided beneficial interests in the assets of
the Trust.
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(d) Every Person, by virtue of having become a Holder or
a Capital Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the terms
of, and shall be bound by, this Declaration.
Section 7.02. Execution and Authentication.
(a) The Securities shall be signed on behalf of the Trust
by an Administrative Trustee. In case any Administrative Trustee of the Trust
who shall have signed any of the Securities shall cease to be such
Administrative Trustee before the Securities so signed shall be delivered by
the Trust, such Securities nevertheless may be delivered as though the person
who signed such Securities had not ceased to be such Administrative Trustee;
and any Securities may be signed on behalf of the Trust by such persons who, at
the actual date of execution of such Security, shall be the Administrative
Trustees of the Trust, although at the date of the execution and delivery of
the Declaration any such person was not such an Administrative Trustee.
(b) One Administrative Trustee shall sign the Capital
Securities for the Trust by manual or facsimile signature. Unless otherwise
determined by the Trust, such signature shall, in the case of Common
Securities, be a manual signature.
A Capital Security shall not be valid until authenticated by
the manual signature of an authorized officer of the Property Trustee. The
signature shall be conclusive evidence that the Capital Security has been
authenticated under this Declaration.
Upon a written order of the Trust signed by one Administrative
Trustee, the Property Trustee shall authenticate the Capital Securities for
original issue. The aggregate number of Capital Securities outstanding at any
time shall not exceed the number set forth in the Terms in Annex I hereto
except as provided in Section 7.06.
The Property Trustee may appoint an authenticating agent
acceptable to the Trust to authenticate Capital Securities. An authenticating
agent may authenticate Capital Securities whenever the Property Trustee may do
so. Each reference in this Declaration to authentication by the Property
Trustee includes authentication by such agent. An authenticating agent has the
same rights as the Property Trustee to deal with the Sponsor or an Affiliate.
Section 7.03. Form and Dating.
The Capital Securities and the Property Trustee's certificate
of authentication shall be substantially in the form of Exhibit A-1 and the
Common Securities shall be substantially in the form of Exhibit A-2, each of
which is hereby incorporated in and expressly made a part of this Declaration.
Certificates representing the Securities may be printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Administrative Trustees, as evidenced by their execution thereof. The
Securities may have letters, CUSIP or other numbers, notations or other marks
of identification or designation and such legends or endorsements required by
law, stock exchange rule, agreements to which the
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Trust is subject, if any, or usage (provided that any such notation, legend or
endorsement is in a form acceptable to the Trust). The Trust at the direction
of the Sponsor shall furnish any such legend not contained in Exhibit A-1 to
the Property Trustee in writing. Each Capital Security shall be dated the date
of its authentication. The terms and provisions of the Securities set forth in
Annex I and the forms of Securities set forth in Exhibits A-1 and A-2 are part
of the terms of this Declaration and to the extent applicable, the Property
Trustee and the Sponsor, by their execution and delivery of this Declaration,
expressly agree to such terms and provisions and to be bound thereby.
(a) Global Securities. Securities offered and sold to
QIBs in reliance on Rule 144A or offered and sold outside the United States to
non-U.S. persons in offshore transactions in reliance on Regulation S, as
provided in the Purchase Agreement, shall be issued in the form of one or more,
permanent global Securities in definitive, fully registered form without
distribution coupons with the global legend and applicable Restricted
Securities Legend set forth in Exhibit A-1 hereto (respectively, a "Rule 144A
Global Capital Security" or "Regulation S Global Capital Security", each a
"Global Capital Security" and collectively, the "Global Capital Securities"),
which shall be deposited on behalf of the purchasers of the Capital Securities
represented thereby with the Clearing Agency or with the Property Trustee, as
custodian for the Clearing Agency, and registered in the name of the Clearing
Agency or a nominee of the Clearing Agency, duly executed by the Trust and
authenticated by the Property Trustee as hereinafter provided. The number of
Capital Securities represented by the Rule 144A Global Capital Security and the
Regulation S Global Capital Security may from time to time be increased or
decreased by adjustments made on the records of the Property Trustee and the
Clearing Agency or its nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 7.03(b) shall
apply only to the Rule 144A Global Capital Security, the Regulation S Global
Capital Securities and such other Capital Securities in global form as may be
authorized by the Trust to be deposited with or on behalf of the Clearing
Agency.
The Trust shall execute and the Property Trustee shall, in
accordance with this Section 7.03, authenticate and make available for delivery
initially one or more Rule 144A Global Capital Securities and one or more
Regulation S Global Capital Securities that (i) shall be registered in the name
of Cede & Co. or other nominee of such Clearing Agency and (ii) shall be
delivered by the Property Trustee to such Clearing Agency or pursuant to such
Clearing Agency's written instructions or held by the Property Trustee as
custodian for the Clearing Agency.
Members of, or participants in, the Clearing Agency
("Participants") shall have no rights under this Declaration with respect to
any Rule 144A Global Capital Security or any Regulation S Global Capital
Security held on their behalf by the Clearing Agency or by the Property Trustee
as the custodian of the Clearing Agency or under such Rule 144A Global Capital
Security or such Regulation S Global Capital Security, and the Clearing Agency
may be treated by the Trust, the Property Trustee and any agent of the Trust or
the Property Trustee as the absolute owner of such Rule 144A Global Capital
Security or such Regulation S Global
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Capital Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Trust, the Property Trustee or any agent or
employee of the Trust or the Property Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Clearing Agency or
impair, as between the Clearing Agency and its Participants, the operation of
customary practices of such Clearing Agency governing the exercise of the
rights of a holder of a beneficial interest in any Rule 144A Global Capital
Security or any Regulation S Global Capital Security.
(c) Definitive Capital Securities. Except as provided in
Sections 7.09 or 9.01(f), owners of beneficial interests in a Rule 144A Global
Capital Security or a Regulation S Global Capital Security will not be entitled
to receive physical delivery of certificated Capital Securities ("Definitive
Capital Securities"). Purchasers of Securities who are "accredited investors"
(as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and
did not purchase Capital Securities in reliance on Regulation S will receive
Capital Securities in the form of individual certificates in definitive, fully
registered form without distribution coupons and with the applicable Restricted
Securities Legend set forth in Exhibit A-1 hereto ("Restricted Definitive
Capital Securities"); provided, however, that upon transfer of such Restricted
Definitive Capital Securities to a QIB, such Restricted Definitive Capital
Securities will, unless the Rule 144A Global Capital Security has previously
been exchanged, be exchanged for an interest in a Rule 144A Global Capital
Security pursuant to the provisions of Section 9.02. Restricted Definitive
Capital Securities will bear the applicable Restricted Securities Legend set
forth on Exhibit A-1 unless removed in accordance with Section 9.02.
(d) Authorized Denominations. The Capital Securities are
issuable only in denominations of $1,000 and any integral multiple thereof.
Section 7.04. Registrar, Paying Agent and Exchange Agent.
The Trust shall maintain in the Borough of Manhattan, The City
of New York, or in Wilmington, Delaware, (i) an office or agency where Capital
Securities may be presented for registration of transfer ("Registrar"), (ii) an
office or agency where Capital Securities may be presented for payment ("Paying
Agent") and (iii) an office or agency where Securities may be presented for
exchange ("Exchange Agent"). The Paying Agent shall initially be the Property
Trustee. The Registrar shall keep a register of the Capital Securities and of
their transfer. The Trust may appoint the Registrar, the Paying Agent and the
Exchange Agent and may appoint one or more co-registrars, one or more
additional paying agents and one or more additional exchange agents in such
other locations as it shall determine which paying agent and/or exchange agent
must be acceptable to the Administrative Trustees and the Company. The term
"Registrar" includes any additional registrar, "Paying Agent" includes any
additional paying agent and the term "Exchange Agent" includes any additional
exchange agent. The Trust may change any Paying Agent, Registrar, or Exchange
Agent without prior notice to any Holder. The Paying Agent shall be permitted
to resign as Paying Agent upon 30 days' written notice to the Administrative
Trustees. The Trust shall notify the Property Trustee of the name and address
of any Agent not a party to this Declaration. If the Trust fails to appoint or
maintain another entity
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as Registrar, Paying Agent or Exchange Agent, the Property Trustee shall act as
such. The Trust or any of its Affiliates may act as Paying Agent, Registrar,
or Exchange Agent. The Trust shall act as Paying Agent, Registrar and Exchange
Agent for the Common Securities.
The Trust initially appoints the Property Trustee as
Registrar, Paying Agent, and Exchange Agent for the Capital Securities. In the
event that the Property Trustee shall no longer be the Registrar, Paying Agent,
or Exchange Agent the Trust shall appoint a successor which successor shall be
acceptable to the Administrative Trustees and the Company.
Section 7.05. Paying Agent to Hold Money in Trust.
The Trust shall require each Paying Agent other than the
Property Trustee to agree in writing that the Paying Agent will hold in trust
for the benefit of Holders or the Property Trustee all money held by the Paying
Agent for the payment of liquidation amounts or Distributions on the
Securities, and will notify the Property Trustee if there are insufficient
funds for such purpose. While any such insufficiency continues, the Property
Trustee may require a Paying Agent to pay all money held by it to the Property
Trustee. The Trust at any time may require a Paying Agent to pay all money
held by it to the Property Trustee and to account for any money disbursed by
it. Upon payment over to the Property Trustee, the Paying Agent (if other than
the Trust or an Affiliate of the Trust) shall have no further liability for the
money. If the Trust or the Sponsor or an Affiliate of the Trust or the Sponsor
acts as Paying Agent, it shall segregate and hold in a separate trust fund for
the benefit of the Holders all money held by it as Paying Agent.
Section 7.06. Replacement Securities.
If a Holder claims that a Security owned by it has been lost,
destroyed or wrongfully taken or if such Security is mutilated and is
surrendered to the Trust or in the case of the Capital Securities to the
Property Trustee, the Trust shall issue and the Property Trustee shall
authenticate a replacement Security if the Property Trustee's and the Trust's
requirements, as the case may be, are met. An indemnity bond must be provided
by the Holder which, in the judgment of the Property Trustee, is sufficient to
protect the Trustees, the Sponsor or any authenticating agent from any loss
which any of them may suffer if a Security is replaced. The Trust may charge
such Holder for its expenses in replacing a Security.
Section 7.07. Outstanding Capital Securities.
The Capital Securities outstanding at any time are all the
Capital Securities authenticated by the Property Trustee except for those
cancelled by it, those delivered to it for cancellation, and those described in
this Section as not outstanding.
If a Capital Security is replaced, pursuant to Section 7.06
hereof, it ceases to be outstanding unless the Property Trustee receives proof
satisfactory to it that the replaced Capital Security is held by a bona fide
purchaser.
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If Capital Securities are considered paid in accordance with
the terms of this Declaration, they cease to be outstanding and Distributions
on them shall cease to accumulate.
A Capital Security does not cease to be outstanding because
one of the Trust, the Sponsor or an Affiliate of the Sponsor holds the
Security.
Section 7.08. Capital Securities in Treasury.
In determining whether the Holders of the required amount of
Securities have concurred in any direction, waiver or consent, Capital
Securities owned by the Trust, the Sponsor or an Affiliate of the Sponsor, as
the case may be, shall be disregarded and deemed not to be outstanding, except
that for the purposes of determining whether the Property Trustee shall be
fully protected in relying on any such direction, waiver or consent, only
Securities which a Responsible Officer of the Property Trustee actually knows
are so owned shall be so disregarded.
Section 7.09. Temporary Securities.
(a) Until definitive Securities are ready for delivery,
the Trust may prepare and, in the case of the Capital Securities, the Property
Trustee shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations that
the Trust considers appropriate for temporary Securities. Without unreasonable
delay, the Trust shall prepare and, in the case of the Capital Securities, the
Property Trustee shall authenticate definitive Securities in exchange for
temporary Securities of the same series.
(b) A Global Capital Security deposited with the Clearing
Agency or with the Property Trustee as custodian for the Clearing Agency
pursuant to Section 7.03 shall be transferred to the beneficial owners thereof
in the form of Definitive Capital Securities only if such transfer complies
with Section 9.02 and (i) the Clearing Agency notifies the Company that it is
unwilling or unable to continue as Clearing Agency for such Global Capital
Security or if at any time such Clearing Agency ceases to be a "clearing
agency" registered under the Exchange Act and a clearing agency is not
appointed by the Sponsor within 90 days of such notice, (ii) a Default or an
Event of Default has occurred and is continuing or (iii) the Trust at its sole
discretion elects to cause the issuance of Definitive Capital Securities.
(c) Any Global Capital Security that is transferable to
the beneficial owners thereof in the form of Definitive Capital Securities
pursuant to this Section 7.09 shall be surrendered by the Clearing Agency to
the Property Trustee located in the Borough of Manhattan, The City of New York
or Wilmington, Delaware, to be so transferred, in whole or from time to time in
part, without charge, and the Property Trustee shall authenticate and make
available for delivery, upon such transfer of each portion of such Global
Capital Security, an equal aggregate liquidation amount of Securities of
authorized denominations in the form of certificated Capital Securities. Any
portion of a Global Capital Security transferred pursuant to this Section shall
be registered in such names as the Clearing Agency shall direct. Any Capital
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Security in the form of Definitive Capital Securities delivered in exchange for
an interest in the Restricted Capital Security in global form shall, except as
otherwise provided by Sections 7.03 and 9.02, bear the applicable Restricted
Securities Legend set forth in Exhibit A-1 hereto.
(d) Subject to the provisions of Section 7.09(c), the
Holder of a Global Capital Security may grant proxies and otherwise authorize
any Person, including Participants and Persons that may hold interests through
Participants, to take any action which such Holder is entitled to take under
this Declaration or the Securities.
(e) In the event of the occurrence of any of the events
specified in Section 7.09(b), the Trust will promptly make available to the
Property Trustee a reasonable supply of certificated Capital Securities in
fully registered form without Distribution coupons.
Section 7.10. Cancellation.
The Trust at any time may deliver Capital Securities to the
Property Trustee for cancellation. The Registrar, Paying Agent and Exchange
Agent shall forward to the Property Trustee any Capital Securities surrendered
to them for registration of transfer, redemption, exchange or payment. The
Property Trustee shall promptly cancel all Capital Securities, surrendered for
registration of transfer, redemption, exchange, payment, replacement or
cancellation and shall dispose of cancelled Capital Securities as the Trust
directs, provided that the Property Trustee shall not be obligated to destroy
Capital Securities. The Trust may not issue new Capital Securities to replace
Capital Securities that it has paid or that have been delivered to the Property
Trustee for cancellation or that any Holder has exchanged.
Section 7.11. CUSIP Numbers.
The Trust in issuing the Capital Securities may use "CUSIP"
numbers (if then generally in use), and, if so, the Property Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders of Capital
Securities; provided that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Capital
Securities or as contained in any notice of a redemption and that reliance may
be placed only on the other identification numbers printed on the Capital
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Sponsor will promptly notify the Property
Trustee of any change in the CUSIP numbers.
ARTICLE VIII
DISSOLUTION OF TRUST
Section 8.01. Dissolution of Trust.
(a) The Trust shall automatically dissolve:
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(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of dissolution or
liquidation or its equivalent with respect to the Sponsor; or the
revocation of the Sponsor's charter and the expiration of 90 days
after the date of revocation without a reinstatement thereof;
(iii) following the distribution of a Like Amount of the
Debentures to the Holders, provided that the Property Trustee has
received written notice from the Holder of Common Securities directing
the Property Trustee to dissolve the Trust (which direction is
optional, and except as otherwise expressly provided below, within the
discretion of the Holder of Common Securities) and provided, further,
that such direction and such distribution is conditioned on the
Administrative Trustees' receipt of an opinion of an independent tax
counsel experienced in such matters (a "No Recognition Opinion"),
which opinion may rely on published rulings of the Internal Revenue
Service, to the effect that the Holders will not recognize any gain or
loss for United States federal income tax purposes as a result of the
dissolution of the Trust and the distribution of Debentures;
(iv) upon the entry of a decree of judicial dissolution of
the Trust by a court of competent jurisdiction;
(v) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the
Securities;
(vi) upon the repayment of the Debentures or at such time
as no Debentures are outstanding; or
(vii) the expiration of the term of the Trust provided in
Section 3.14.
(b) As soon as is practicable after the occurrence of an
event referred to in Section 8.01(a), the Trust shall be liquidated in the
manner set forth in Annex I hereto, and after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, the Administrative
Trustees shall file a certificate of cancellation with the Secretary of State
of the State of Delaware.
(c) The provisions of Section 3.09 and Article X shall
survive the termination of the Trust.
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ARTICLE IX
TRANSFER OF INTERESTS
Section 9.01. Transfer of Securities.
(a) Securities may only be transferred, in whole or in
part, in accordance with the terms and conditions set forth in this Declaration
and in the terms of the Securities. Any transfer or purported transfer of any
Security not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article IX, Capital Securities may
only be transferred, in whole or in part, in accordance with the terms and
conditions set forth in this Declaration. Any transfer or purported transfer of
any security not made in accordance with this Declaration shall be null and
void.
(c) The Sponsor may not transfer the Common Securities
other than (i) to a directly or indirectly, wholly-owned subsidiary thereof or
(ii) pursuant to a consolidation, merger or disposition in accordance with
Article X of the Indenture.
(d) The Administrative Trustees shall provide for the
registration of Capital Securities and of the transfer of Capital Securities,
which will be effected without charge but only upon payment (with such
indemnity as the Administrative Trustees may require) in respect of any tax or
other governmental charges that may be imposed in relation to it. Upon
surrender for registration of transfer of any Capital Securities, the
Administrative Trustees shall cause one or more new Capital Securities to be
issued in the name of the designated transferee or transferees. Every Capital
Security surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Administrative
Trustees and the Registrar duly executed by the Holder or such Holder's
attorney duly authorized in writing. Each Capital Security surrendered for
registration of transfer shall be canceled by the Property Trustee. A
transferee of a Capital Security shall be entitled to the rights and subject to
the obligations of a Holder hereunder upon the receipt by such transferee of a
Capital Security. By acceptance of a Capital Security, each transferee shall
be deemed to have agreed to be bound by this Declaration.
Section 9.02. Transfer Procedures and Restrictions
(a) General. Except as otherwise provided in Section
9.02(b), if Capital Securities are issued upon the transfer, exchange or
replacement of Capital Securities bearing the Restricted Securities Legend set
forth in Exhibit A-1 hereto, or if a request is made to remove such Restricted
Securities Legend on Capital Securities, the Capital Securities so issued shall
bear the Restricted Securities Legend, or the Restricted Securities Legend
shall not be removed, as the case may be, unless there is delivered to the
Trust and the Property Trustee such evidence satisfactory to the Sponsor, which
shall include an Opinion of Counsel, as may be reasonably required by the
Sponsor, that neither the legend nor the restrictions on transfer set forth
therein are required to ensure that transfers thereof are made pursuant to an
exception from the
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registration requirements of the Securities Act or, with respect to Restricted
Definitive Capital Securities, that such Securities are not "restricted" within
the meaning of Rule 144. Upon provision of such satisfactory evidence, the
Property Trustee, at the written direction of an Administrative Trustee on
behalf of the Trust, shall authenticate and deliver Capital Securities that do
not bear the legend.
(b) Transfers After Effectiveness of a Registration
Statement. After the effectiveness of a Registration Statement with respect to
any Capital Securities, all requirements pertaining to legends on such Capital
Securities will cease to apply, and beneficial interests in a Capital Security
in global form without legends will be available to transferees of such Capital
Securities, upon exchange of the transferring Holder's Restricted Definitive
Capital Security or directions to transfer such Holder's beneficial interest in
the Rule 144A Global Capital Security or the Regulation S Global Capital
Security, as the case may be. No such transfer or exchange of a Restricted
Definitive Capital Security or of an interest in the Rule 144A Global Capital
Security or the Regulation S Global Capital Security shall be effective unless
the transferor delivers to the Trust a certificate in a form substantially
similar to that attached hereto as the "Form of Assignment" in Exhibit A-1.
Except as otherwise provided in Section 9.02(l), after the effectiveness of a
Registration Statement, the Trust shall issue and the Property Trustee, upon a
written order of the Trust signed by one Administrative Trustee, shall
authenticate a Capital Security in global form without the Restricted
Securities Legend (the "Unrestricted Global Capital Security") for deposit with
the Clearing Agency or its custodian to evidence transfers of beneficial
interests from the (i) Rule 144A Global Capital Security or the Regulation S
Global Capital Security and (ii) Restricted Definitive Capital Securities.
(c) Transfer and Exchange of Definitive Capital
Securities. When Definitive Capital Securities are presented to the Registrar
(x) to register the transfer of such Definitive Capital
Securities; or
(y) to exchange such Definitive Capital Securities for an
equal number of Definitive Capital Securities, the Registrar or
co-registrar shall register the transfer or make the exchange as
requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Capital Securities surrendered
for transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the
Administrative Trustees and the Registrar or co-registrar, duly
executed by the Holder thereof or his attorney duly authorized in
writing; and
(ii) in the case of Definitive Capital Securities that are
Restricted Definitive Capital Securities:
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(A) if such Restricted Capital Securities are
being delivered to the Registrar by a Holder for registration
in the name of such Holder, without transfer, a certification
from such Holder to that effect; or
(B) if such Restricted Capital Securities are
being transferred: (i) a certification from the transferor in
a form substantially similar to that attached hereto as the
"Form of Assignment" in Exhibit A-1, and (ii) if the Trust so
requests, evidence reasonably satisfactory to it as to the
compliance with the restrictions set forth in the Restricted
Securities Legend.
(d) Restrictions on Transfer of a Definitive Capital
Security for a Beneficial Interest in a Global Capital Security. A Definitive
Capital Security may not be exchanged for a beneficial interest in a Global
Capital Security except upon satisfaction of the requirements set forth below.
Upon receipt by the Property Trustee of a Definitive Capital Security, duly
endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Property Trustee and Administrative Trustees, together
with:
(i) if such Definitive Capital Security is a Restricted
Capital Security, certification (in a form substantially similar to
that attached hereto as the "Form of Assignment" in Exhibit A-1);
provided, however, that such Definitive Capital Security may only be
exchanged for an interest in a Regulation S Global Security where such
Definitive Capital Security is being transferred pursuant to
Regulation S or Rule 144 (if available); and
(ii) whether or not such Definitive Capital Security is a
Restricted Capital Security, written instructions directing the
Property Trustee to make, or to direct the Clearing Agency to make, an
adjustment on its books and records with respect to the appropriate
Global Capital Security to reflect an increase in the number of the
Capital Securities represented by such Global Capital Security, then
the Property Trustee shall cancel such Definitive Capital Security and
cause, or direct the Clearing Agency to cause, the aggregate number of
Capital Securities represented by the appropriate Global Capital
Security to be increased accordingly. If no Global Capital Securities
are then outstanding, the Trust shall issue and the Property Trustee
shall authenticate, upon written order of any Administrative Trustee,
an appropriate number of Capital Securities in global form.
(e) Transfer and Exchange of Global Capital Securities.
Subject to Section 9.02(f), the transfer and exchange of Global Capital
Securities or beneficial interests therein shall be effected through the
Clearing Agency, in accordance with this Declaration (including applicable
restrictions on transfer set forth herein, if any) and the procedures of the
Clearing Agency therefor.
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(f) Transfer of a Beneficial Interest in a Global Capital
Security for a Definitive Capital Security.
(i) Any Person having a beneficial interest in a Global
Capital Security may upon request, but only upon 20 days' prior notice
to the Property Trustee, and if accompanied by the information
specified below, exchange such beneficial interest for a Definitive
Capital Security representing the same number of Capital Securities.
Upon receipt by the Property Trustee from the Clearing Agency or its
nominee on behalf of any Person having a beneficial interest in a
Global Capital Security of written instructions or such other form of
instructions as is customary for the Clearing Agency or the Person
designated by the Clearing Agency as having such a beneficial interest
in a Restricted Capital Security and a certification from the
transferor (in a form substantially similar to that attached hereto as
the "Form of Assignment" in Exhibit A-1), which may be submitted by
facsimile, then the Property Trustee will cause the aggregate number
of Capital Securities represented by Global Capital Securities to be
reduced on its books and records and, following such reduction, the
Trust will execute and the Property Trustee will authenticate and
make available for delivery to the transferee a Definitive Capital
Security.
(ii) Definitive Capital Securities issued in exchange for
a beneficial interest in a Global Capital Security pursuant to this
Section 9.02(f) shall be registered in such names and in such
authorized denominations as the Clearing Agency, pursuant to
instructions from its Participants or indirect participants or
otherwise, shall instruct the Property Trustee in writing. The
Property Trustee shall deliver such Capital Securities to the Persons
in whose names such Capital Securities are so registered in accordance
with such instructions of the Clearing Agency.
(g) Restrictions on Transfer and Exchange of Global
Capital Securities. Notwithstanding any other provisions of this Declaration
(other than the provisions set forth in subsection (b) of Section 7.09), a
Global Capital Security may not be transferred as a whole except by the
Clearing Agency to a nominee of the Clearing Agency or another nominee of the
Clearing Agency or by the Clearing Agency or any such nominee to a successor
Clearing Agency or a nominee of such successor Clearing Agency.
Prior to the expiration of the restricted period, as
contemplated by Regulation S, beneficial interests in the Regulation S Global
Capital Security may be exchanged for beneficial interests in the Rule 144A
Global Capital Security only if such exchange occurs in connection with a
transfer of the Capital Securities pursuant to Rule 144A and the transferor
first delivers to the Property Trustee a written certificate (in a form
substantially similar to that attached hereto as the "Form of Assignment" in
Exhibit A-1) to the effect that the Capital Securities are being transferred
pursuant to and in compliance with Rule 144A under the Securities Act of 1933.
Beneficial interests in the Rule 144A Global Capital Security
may be transferred to a Person who takes delivery in the form of an interest in
the Regulation S Global Capital
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Security, whether before or after the expiration of such restricted period, as
contemplated by Regulation S, only if the transferor first delivers to the
Property Trustee a written certificate (in a form substantially similar to that
attached hereto as the "Form of Assignment" in Exhibit A-1) to the effect that
such transfer is pursuant to and in compliance with Regulation S under the
Securities Act.
(h) Legend.
(i) Except as permitted by the following paragraph (ii),
each Capital Security certificate evidencing the Global Capital
Securities and the Definitive Capital Securities (and all Capital
Securities issued in exchange therefor or substitution thereof) shall
bear a legend (the "Restricted Securities Legend") in substantially
the following form, as applicable:
THIS CAPITAL SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES
LAW. NEITHER THIS CAPITAL SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL
SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH K N
ENERGY, INC. (THE "CORPORATION") OR ANY AFFILIATE OF THE
CORPORATION WAS THE OWNER OF THIS CAPITAL SECURITY (OR ANY
PREDECESSOR OF THIS CAPITAL SECURITY) ONLY (A) TO THE
CORPORATION, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO
LONG AS THIS CAPITAL SECURITY IS ELIGIBLE FOR RESALE PURSUANT
TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE
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ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS
THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT
THAT IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR
FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR,
FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER
OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
SECURITIES ACT, SUBJECT TO THE RIGHT OF THE K N CAPITAL TRUST I
AND THE CORPORATION PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
(i) PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY
OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) PURSUANT TO
CLAUSE (E), TO REQUIRE THAT THE TRANSFEROR DELIVER TO THE K N
CAPITAL TRUST I A LETTER FROM THE TRANSFEREE SUBSTANTIALLY IN
THE FORM OF ANNEX A TO THE OFFERING MEMORANDUM DATED APRIL 17,
1997. SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS CAPITAL SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF
ALSO AGREES, REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT
AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYMENT RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR (ii) THE
ACQUISITION AND HOLDING OF THIS CAPITAL SECURITY BY IT IS NOT
PROHIBITED BY EITHER SECTION 406 OF ERISA OR SECTION 4975 OF
THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR IS
EXEMPT FROM ANY SUCH PROHIBITION.
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THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE OF THIS
CAPITAL SECURITY ALSO AGREES TO BE BOUND BY THE PROVISIONS OF
A REGISTRATION RIGHTS AGREEMENT DATED AS OF APRIL 24, 1997,
AMONG K N CAPITAL TRUST I, THE CORPORATION AND CERTAIN OTHER
PARTIES
and in addition, in the case of the Regulation S Global Capital Security:
THIS CAPITAL SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT AND MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS UNLESS REGISTERED UNDER THE SECURITIES ACT OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT IS AVAILABLE.
(ii) Upon any sale or transfer of a Restricted Capital
Security (including any Restricted Capital Security represented by a
Global Capital Security) pursuant to an effective registration
statement under the Securities Act or pursuant to Rule 144 under the
Securities Act after such registration statement ceases to be
effective:
(A) in the case of any Restricted Capital
Security that is a Definitive Capital Security, the Registrar
shall permit the Holder thereof to exchange such Restricted
Capital Security for a Definitive Capital Security that does
not bear the Restricted Securities Legend and rescind any
restriction on the transfer of such Restricted Capital
Security; and
(B) in the case of any Restricted Capital
Security that is represented by a Global Capital Security,
the Registrar shall permit the Holder of such Global Capital
Security to exchange such Global Capital Security for another
Global Capital Security that does not bear the Restricted
Securities Legend.
(i) Cancellation or Adjustment of Global Capital
Security. At such time as all beneficial interests in a Global Capital
Security have either been exchanged for Definitive Capital Securities to the
extent permitted by this Declaration or redeemed, repurchased or canceled in
accordance with the terms of this Declaration, such Global Capital Security
shall be returned to the Property Trustee for cancellation or retained and
canceled by the Property Trustee. At any time prior to such cancellation, if
any beneficial interest in a Global Capital Security is exchanged for
Definitive Capital Securities, Capital Securities represented by such Global
Capital Security shall be reduced and an adjustment shall be made on the books
and records of the Property Trustee (if it is then the custodian for such
Global Capital Security) with respect to such Global Capital Security, by the
Property Trustee or any securities custodian, to reflect such reduction.
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(j) Obligations with Respect to Transfers and Exchanges
of Capital Securities.
(i) To permit registrations of transfers and exchanges,
the Trust shall execute and the Property Trustee shall authenticate
Definitive Capital Securities and Global Capital Securities at the
Registrar's request in accordance with the terms of this Declaration.
(ii) Registrations of transfers or exchanges will be
effected without charge, but only upon payment (with such indemnity as
the Trust, the Property Trustee or the Sponsor may require) in respect
of any tax or other governmental charge that may be imposed in
relation to it.
(iii) The Registrar shall not be required to register the
transfer of or exchange of (a) Capital Securities during a period
beginning at the opening of business 15 days before the day of mailing
of a notice of redemption and ending at the close of business on the
day of such mailing; or (b) any Capital Security so selected for
redemption, except the unredeemed portion of any Capital Security
being redeemed in part.
(iv) Prior to the due presentation for registrations of
transfer of any Capital Security, the Trust, the Property Trustee, the
Paying Agent or the Registrar may deem and treat the Person in whose
name a Capital Security is registered as the absolute owner of such
Capital Security for the purpose of receiving Distributions on such
Capital Security (subject to Section 2(c) of Annex I) and for all
other purposes whatsoever, and none of the Trust, the Property
Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
(v) All Capital Securities issued upon any transfer or
exchange pursuant to the terms of this Declaration shall evidence the
same security and shall be entitled to the same benefits under this
Declaration as the Capital Securities surrendered upon such transfer
or exchange.
(k) No Obligation of the Property Trustee.
(i) The Property Trustee shall have no responsibility or
obligation to any beneficial owner of a Global Capital Security, a
Participant in the Clearing Agency or other Person with respect to the
accuracy of the records of the Clearing Agency or its nominee or of
any Participant thereof, with respect to any ownership interest in the
Capital Securities or with respect to the delivery to any Participant,
beneficial owner or other Person (other than the Clearing Agency) of
any notice (including any notice of redemption) or the payment of any
amount, under or with respect to such Capital Securities. All notices
and communications to be given to the Holders and all payments to be
made to Holders under the Capital Securities shall be given or made
only to or upon the order of the registered Holders (which shall be
the Clearing Agency or its nominee in
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the case of a Global Capital Security). The rights of beneficial
owners in any Global Capital Security shall be exercised only through
the Clearing Agency subject to the applicable rules and procedures of
the Clearing Agency. The Property Trustee may conclusively rely and
shall be fully protected in relying upon information furnished by the
Clearing Agency or any agent thereof with respect to its Participants
and any beneficial owners.
(ii) The Property Trustee and Registrar shall have no
obligation or duty to monitor, determine or inquire as to compliance
with any restrictions on transfer imposed under this Declaration or
under applicable law with respect to any transfer of any interest in
any Capital Security (including any transfers between or among
Clearing Agency Participants or beneficial owners in any Global
Capital Security) other than to require delivery of such certificates
and other documentation or evidence as are expressly required by, and
to do so if and when expressly required by, the terms of this
Declaration, and to examine the same to determine substantial
compliance as to form with the express requirements hereof.
(l) Exchange of Series A Capital Securities for Series B
Capital Securities. The Series A Capital Securities may, at the option of the
Company, be exchanged for Series B Securities pursuant to the terms of the
Exchange Offer. The Property Trustee shall make the exchange as follows:
The Sponsor shall present the Property Trustee with an
Officers' Certificate certifying the following:
(A) upon issuance of the Series B Capital
Securities, the transactions contemplated by the Exchange
Offer have been consummated; and
(B) the aggregate liquidation amount of Series A
Capital Securities properly tendered in the Exchange Offer
that are represented by a Global Capital Security and the
aggregate liquidation amount of Series A Capital Securities
properly tendered in the Exchange Offer that are represented
by Definitive Capital Securities.
The Property Trustee, upon receipt of (i) such Officers'
Certificate, (ii) an Opinion of Counsel (x) to the effect that the issuance of
the Series B Capital Securities has been registered under the Securities Act
and the Indenture has been qualified under the Trust Indenture Act and (y) with
respect to the matters set forth in Section 3(p) of the Registration Rights
Agreement and (iii) an order of the Trust as set forth in Section 7.02, shall
authenticate a Global Capital Security for Series B Capital Securities in
aggregate liquidation amount equal to the aggregate liquidation amount of all
Series A Capital Securities indicated in such Officers' Certificate as having
been properly tendered.
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If, upon consummation of the Exchange Offer, less than all the
outstanding Series A Capital Securities represented by a Global Capital
Security shall have been properly tendered and not withdrawn, the Property
Trustee shall make an endorsement on such Global Capital Security indicating
the reduction in the number and aggregate liquidation amount represented
thereby as a result of the Exchange Offer.
(m) Minimum Transfers. Capital Securities may only be
transferred in minimum blocks of $100,000 aggregate liquidation amount.
Section 9.03. Book Entry Interests.
Global Capital Securities shall initially be registered on the
books and records of the Trust in the name of Cede & Co., the nominee of the
Clearing Agency, and no Capital Security Beneficial Owner will receive a
Definitive Capital Security representing such Capital Security Beneficial
Owner's interests in such Global Capital Securities, except as provided in
Section 9.02 and Section 7.09. Unless and until Definitive Capital Securities
have been issued to the Capital Security Beneficial Owners pursuant to Section
9.02 or Section 7.09:
(a) the provisions of this Section 9.03 shall be in full
force and effect;
(b) the Trust and the Trustees shall be entitled to deal
with the Clearing Agency for all purposes of this Declaration (including the
payment of Distributions on the Global Capital Securities and receiving
approvals, votes or consents hereunder) as the Holder of the Capital Securities
and the sole holder of the Global Certificates and shall have no obligation to
the Capital Security Beneficial Owners;
(c) to the extent that the provisions of this Section
9.03 conflict with any other provisions of this Declaration, the provisions of
this Section 9.03 shall control; and
(d) the rights of the Capital Security Beneficial Owners
shall be exercised only through the Clearing Agency and shall be limited to
those established by law and agreements between such Capital Security
Beneficial Owners and the Clearing Agency and/or the Clearing Agency
Participants and the Clearing Agency shall receive and transmit payments of
Distributions on the Global Certificates to such Clearing Agency Participants.
The Clearing Agency will make book entry transfers among the Clearing Agency
Participants.
Section 9.04. Notices to Clearing Agency.
Whenever a notice or other communication to the Capital
Security Holders is required under this Declaration, the Trustees shall give
all such notices and communications specified herein to be given to the Holders
of Global Capital Securities to the Clearing Agency, and shall have no notice
obligations to the Capital Security Beneficial Owners.
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Section 9.05. Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Capital Securities, the
Administrative Trustees may, in their sole discretion, appoint a successor
Clearing Agency with respect to such Capital Securities.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
Section 10.01. Liability.
(a) Except as expressly set forth in this Declaration,
the Securities Guarantees and the terms of the Securities, the Sponsor shall
not be:
(i) personally liable for the return of any portion of
the capital contributions (or any return thereon) of the Holders of
the Securities, which shall be made solely from assets of the Trust;
or
(ii) required to pay to the Trust or to any Holder of
Securities any deficit upon dissolution of the Trust or otherwise.
(b) The Sponsor shall be liable for all of the debts and
obligations of the Trust (other than with respect to the Securities) to the
extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust
Act, the Holders of the Capital Securities shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the
State of Delaware.
Section 10.02. Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in
a manner such Indemnified Person reasonably believed to be within the scope of
the authority conferred on such Indemnified Person by this Declaration or by
law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's gross
negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Trust and upon such information,
opinions, reports or statements
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presented to the Trust by any Person as to matters the Indemnified Person
reasonably believes are within such other Person's professional or expert
competence and, if selected by such Indemnified Person, has been selected by
such Indemnified Person with reasonable care on behalf of the Trust, including
information, opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts pertinent to the
existence and amount of assets from which Distributions to Holders of
Securities might properly be paid.
Section 10.03. Fiduciary Duty.
(a) To the extent that, at law or in equity, an
Indemnified Person has duties (including fiduciary duties) and liabilities
relating thereto to the Trust or to any other Covered Person, an Indemnified
Person acting under this Declaration shall not be liable to the Trust or to any
other Covered Person for its good faith reliance on the provisions of this
Declaration. The provisions of this Declaration, to the extent that they
restrict the duties and liabilities of an Indemnified Person otherwise existing
at law or in equity (other than the duties imposed on the Property Trustee
under the Trust Indenture Act), are agreed by the parties hereto to replace
such other duties and liabilities of such Indemnified Person.
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(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between any Covered Person and any Indemnified Person; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and
reasonable to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative interest of
each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made, taken
or provided by the Indemnified Person shall not constitute a breach of this
Declaration or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to consider such
interests and factors as it desires, including its own interests, and
shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express standard
and shall not be subject to any other or different standard imposed by
this Declaration or by applicable law.
Section 10.04. Indemnification.
(a) (i) The Sponsor shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Trust) by reason of the fact
that he is or was a Company Indemnified Person against expenses (including
attorneys' fees and expenses), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the Company
Indemnified Person did not act in good faith and in a manner
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which he reasonably believed to be in or not opposed to the best interests of
the Trust, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(ii) The Sponsor shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Trust to procure a
judgment in its favor by reason of the fact that he is or was a
Company Indemnified Person against expenses (including attorneys' fees
and expenses) actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Trust and except that no such
indemnification shall be made in respect of any claim, issue or matter
as to which such Company Indemnified Person shall have been adjudged
to be liable to the Trust unless and only to the extent that the Court
of Chancery of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for
such expenses which such Court of Chancery or such other court shall
deem proper.
(iii) To the extent that a Company Indemnified Person shall
be successful on the merits or otherwise (including dismissal of an
action without prejudice or the settlement of an action without
admission of liability) in defense of any action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 10.04(a), or in
defense of any claim, issue or matter therein, he shall be
indemnified, to the full extent permitted by law, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of
this Section 10.04(a) (unless ordered by a court) shall be made by
the Sponsor only as authorized in the specific case upon a
determination that indemnification of the Company Indemnified Person
is proper in the circumstances because he has met the applicable
standard of conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Administrative Trustees by a
majority vote of a Quorum consisting of such Administrative Trustees
who were not parties to such action, suit or proceeding, (2) if such a
Quorum is not obtainable, or, even if obtainable, if a Quorum of
disinterested Administrative Trustees so directs, by independent legal
counsel in a written opinion, or (3) by the Common Security Holder.
(v) Expenses (including attorneys' fees and expenses)
incurred by a Company Indemnified Person in defending a civil,
criminal, administrative or investigative action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 10.04(a) shall
be paid by the Sponsor in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on
behalf of such Company Indemnified Person to
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repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the Sponsor as authorized in this Section 10.04(a).
Notwithstanding the foregoing, no advance shall be made by the Sponsor if a
determination is reasonably and promptly made (i) by the Administrative
Trustees by a majority vote of a Quorum of disinterested Administrative
Trustees, (ii) if such a Quorum is not obtainable, or, even if obtainable, if a
Quorum of disinterested Administrative Trustees so directs, by independent
legal counsel in a written opinion or (iii) the Common Security Holder, that,
based upon the facts known to the Administrative Trustees, counsel or the
Common Security Holder at the time such determination is made, such Company
Indemnified Person acted in bad faith or in a manner that such Person did not
believe to be in or not opposed to the best interests of the Trust, or, with
respect to any criminal proceeding, that such Company Indemnified Person
believed or had reasonable cause to believe his conduct was unlawful. In no
event shall any advance be made in instances where the Administrative Trustees,
independent legal counsel or Common Security Holder reasonably determine that
such Person deliberately breached his duty to the Trust or its Common or
Capital Security Holders.
(vi) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this
Section 10.04(a) shall not be deemed exclusive of any other rights to
which those seeking indemnification and advancement of expenses may be
entitled under any agreement, vote of stockholders or disinterested
directors of the Sponsor or Capital Security Holders of the Trust or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office. All rights to
indemnification under this Section 10.04(a) shall be deemed to be
provided by a contract between the Sponsor and each Company
Indemnified Person who serves in such capacity at any time while this
Section 10.04(a) is in effect. Any repeal or modification of this
Section 10.04(a) shall not affect any rights or obligations then
existing.
(vii) The Sponsor or the Trust may purchase and maintain
insurance on behalf of any person who is or was a Company Indemnified
Person against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or
not the Sponsor would have the power to indemnify him against such
liability under the provisions of this Section 10.04(a).
(viii) For purposes of this Section 10.04(a), references to
"the Trust" shall include, in addition to the resulting or surviving
entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any person
who is or was a director, trustee, officer or employee of such
constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent
of another entity, shall stand in the same position under the
provisions of this Section 10.04(a) with respect to the resulting or
surviving entity as he would have with respect to such constituent
entity if its separate existence had continued.
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(ix) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 10.04(a) shall,
unless otherwise provided when authorized or ratified, continue as to
a person who has ceased to be a Company Indemnified Person and shall
inure to the benefit of the heirs, executors and administrators of
such a person.
(b) To the fullest extent permitted by law, the Sponsor
agrees to indemnify the (i) Property Trustee, (ii) the Delaware Trustee, (iii)
any Affiliate of the Property Trustee and the Delaware Trustee, and (iv) any
officers, directors, shareholders, members, partners, employees,
representatives, custodians, nominees or agents of the Property Trustee and the
Delaware Trustee (each of the Persons in (i) through (iv) being referred to as
a "Fiduciary Indemnified Person") for, and to hold each Fiduciary Indemnified
Person harmless against, any and all loss, liability, damage, claim or expense
including taxes (other than taxes based on the income of such Fiduciary
Indemnified Person) incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or
investigating any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 10.04(b) shall survive the termination
of this Declaration and the Trust or the earlier resignation or removal of the
Property Trustee or the Delaware Trustee.
Section 10.05. Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Property Trustee (subject to Section 5.03(c)) may engage in or possess an
interest in other business ventures of any nature or description, independently
or with others, similar or dissimilar to the business of the Trust, and the
Trust and the Holders shall have no rights by virtue of this Declaration in and
to such independent ventures or the income or profits derived therefrom, and
the pursuit of any such venture, even if competitive with the business of the
Trust, shall not be deemed wrongful or improper. No Covered Person, the
Sponsor, the Delaware Trustee, or the Property Trustee shall be obligated to
present any particular investment or other opportunity to the Trust even if
such opportunity is of a character that, if presented to the Trust, could be
taken by the Trust, and any Covered Person, the Sponsor, the Delaware Trustee
and the Property Trustee shall have the right to take for its own account
(individually or as a partner or fiduciary) or to recommend to others any such
particular investment or other opportunity. Any Covered Person, the Delaware
Trustee and the Property Trustee may engage or be interested in any financial
or other transaction with the Sponsor or any Affiliate of the Sponsor, or may
act as depositary for, trustee or agent for, or act on any committee or body of
holders of, securities or other obligations of the Sponsor or its Affiliates.
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Section 10.06. Compensation; Fees.
The Sponsor agrees:
(a) to pay to the Trustees from time to time reasonable
compensation for all services rendered by them hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust); and
(b) except as otherwise expressly provided herein, to
reimburse the Trustees upon request for all reasonable expenses, disbursements
and advances incurred or made by the Trustees in accordance with any provision
of this Declaration and the offering of the Capital Securities (including the
reasonable compensation and the expenses and disbursements of their respective
agents and counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith.
The provisions of this Section 10.06 shall survive the
termination of the Trust and the termination of this Declaration and the
removal or resignation of any Trustee.
No Trustee may claim any lien or charge on any property of the
Trust as a result of any amount due pursuant to this Section 10.06.
ARTICLE XI
ACCOUNTING
Section 11.01. Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the
calendar year, or such other year as is required by the Code.
Section 11.02. Certain Accounting Matters.
(a) At all times during the existence of the Trust, the
Administrative Trustees shall keep, or cause to be kept, full books of account,
records and supporting documents, which shall reflect in reasonable detail,
each transaction of the Trust. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted accounting
principles, consistently applied. The Trust shall use the accrual method of
accounting for United States federal income tax purposes. The books of account
and the records of the Trust shall be examined by and reported upon as of the
end of each Fiscal Year of the Trust by a firm of independent certified public
accountants selected by the Administrative Trustees.
(b) The Administrative Trustees shall cause to be duly
prepared and delivered to each of the Holders, any annual United States federal
income tax information statement, required by the Code, containing such
information with regard to the Securities held by each
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Holder as is required by the Code and the Treasury Regulations.
Notwithstanding any right under the Code to deliver any such statement at a
later date, the Administrative Trustees shall endeavor to deliver all such
information statements within 30 days after the end of each Fiscal Year of the
Trust.
(c) The Administrative Trustees shall cause to be duly
prepared and filed with the appropriate taxing authority, an annual United
States federal income tax return, on a Form 1041 or such other form required by
United States federal income tax law, and any other annual income tax returns
required to be filed by the Administrative Trustees on behalf of the Trust with
any state or local taxing authority.
Section 11.03. Banking.
The Trust shall maintain one or more bank accounts in the name
and for the sole benefit of the Trust; provided, however, that all payments of
funds in respect of the Debentures held by the Property Trustee shall be made
directly to the Property Trustee Account and no other funds of the Trust shall
be deposited in the Property Trustee Account. The sole signatories for such
accounts shall be designated by the Administrative Trustees; provided, however,
that the Property Trustee shall designate the signatories for the Property
Trustee Account.
Section 11.04. Withholding.
The Trust and the Administrative Trustees shall comply with
all withholding requirements under United States federal, state and local law.
The Trust shall request, and the Holders shall provide to the Trust, such forms
or certificates as are necessary to establish an exemption from withholding
with respect to each Holder, and any representations and forms as shall
reasonably be requested by the Trust to assist it in determining the extent of,
and in fulfilling, its withholding obligations. The Administrative Trustees
shall file required forms with applicable jurisdictions and, unless an
exemption from withholding is properly established by a Holder, shall remit
amounts withheld with respect to the Holder to applicable jurisdictions. To
the extent that the Trust is required to withhold and pay over any amounts to
any authority with respect to Distributions or allocations to any Holder, the
amount withheld shall be deemed to be a Distribution in the amount of the
withholding to the Holder. In the event of any claim over withholding, Holders
shall be limited to an action against the applicable jurisdiction. If the
amount required to be withheld was not withheld from actual Distributions made,
the Trust may reduce subsequent Distributions by the amount of such
withholding.
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ARTICLE XII
AMENDMENTS AND MEETINGS
Section 12.01. Amendments.
(a) Except as otherwise provided in this Declaration or
by any applicable terms of the Securities, this Declaration may only be amended
by a written instrument approved and executed by:
(i) the Administrative Trustees (or if there are more
than two Administrative Trustees a majority of the Administrative
Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the Property
Trustee; and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware
Trustee.
(b) No amendment shall be made, and any such purported
amendment shall be void and ineffective:
(i) unless, the Property Trustee shall have first
received;
(A) an Officers' Certificate from each of the
Trust and the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the
terms of the Securities); and
(B) an opinion of counsel (who may be counsel to
the Sponsor or the Trust) that such amendment is permitted by,
and conforms to, the terms of this Declaration (including the
terms of the Securities),
provided, however, that the Property Trustee and the Delaware Trustee shall not
be required to sign any such amendment which affects the rights, powers,
duties, obligations or immunities of the Property Trustee or the Delaware
Trustee, and
(ii) to the extent the result of such amendment would be
to:
(A) cause the Trust to fail to continue to be
classified for purposes of United States federal income
taxation as a grantor trust;
(B) reduce or otherwise adversely affect the
powers of the Property Trustee in contravention of the Trust
Indenture Act; or
(C) cause the Trust to be deemed to be an
Investment Company required to be registered under the
Investment Company Act;
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(c) at such time after the Trust has issued any
Securities that remain outstanding, any amendment that would materially
adversely affect the rights, privileges or preferences of any Holder of
Securities may be effected only with such additional requirements as may be set
forth in the terms of such Securities;
(d) Section 9.01(c) and this Section 12.01 shall not be
amended without the consent of all of the Holders of the Securities;
(e) Article Four shall not be amended without the consent
of the Holders of a Majority in liquidation amount of the Common Securities;
(f) The rights of the Holders of the Common Securities
under Article Five to increase or decrease the number of, and appoint and
remove Trustees shall not be amended without the consent of the Holders of a
Majority in liquidation amount of the Common Securities; and
(g) Notwithstanding Section 12.01(c), this Declaration
may be amended without the consent of the Holders of the Securities to:
(i) cure any ambiguity, correct or supplement any
provision in this Declaration that may be inconsistent with any other
provision of this Declaration or to make any other provisions with
respect to matters or questions arising under this Declaration which
shall not be inconsistent with the other provisions of the Declaration
or to add to the covenants, restrictions or obligations of the
Sponsor; and
(ii) to modify, eliminate or add to any provisions of the
Declaration to such extent as shall be necessary to ensure that the
Trust will be classified for United States federal income tax purposes
as a grantor trust at all times that any Securities are outstanding or
to ensure that the Trust will not be required to register as an
Investment Company under the Investment Company Act;
provided, however, that in the case of clause (i) and (ii), such action shall
not adversely affect in any material respect the interests of the Holders of
the Securities, and any amendments of this Declaration pursuant to (i) or (ii)
shall become effective when notice thereof is given to the Holders of the
Securities.
Section 12.02. Meetings of the Holders; Action by Written Consent.
(a) Meetings of the Holders of any class of Securities
may be called at any time by the Administrative Trustees (or as provided in the
terms of the Securities) to consider and act on any matter on which Holders of
such class of Securities are entitled to act under the terms of this
Declaration, the terms of the Securities or the rules of any stock exchange on
which the Capital Securities are listed or admitted for trading. The
Administrative Trustees shall call a
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meeting of the Holders of such class if directed to do so by the Holders of at
least 10% in liquidation amount of such class of Securities. Such direction
shall be given by delivering to the Administrative Trustees one or more notices
in a writing stating that the signing Holders of Securities wish to call a
meeting and indicating the general or specific purpose for which the meeting is
to be called. Any Holders calling a meeting shall specify in writing the
certificates evidencing the Securities held by the Holders exercising the right
to call a meeting and only those Securities specified shall be counted for
purposes of determining whether the required percentage set forth in the second
sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms
of the Securities, the following provisions shall apply to meetings of Holders
of Securities:
(i) notice of any such meeting shall be given to all the
Holders of Securities having a right to vote thereat at least seven
days and not more than 60 days before the date of such meeting.
Whenever a vote, consent or approval of the Holders is permitted or
required under this Declaration or the rules of any stock exchange on
which the Capital Securities are listed or admitted for trading, such
vote, consent or approval may be given at a meeting of the Holders.
Any action that may be taken at a meeting of the Holders of Securities
may be taken without a meeting if a consent in writing setting forth
the action so taken is signed by the Holders of Securities owning not
less than the minimum amount of Securities in liquidation amount that
would be necessary to authorize or take such action at a meeting at
which all Holders having a right to vote thereon were present and
voting. Prompt notice of the taking of action without a meeting shall
be given to the Holders entitled to vote who have not consented in
writing. The Administrative Trustees may specify that any written
ballot submitted to the Holder for the purpose of taking any action
without a meeting shall be returned to the Trust within the time
specified by the Administrative Trustees;
(ii) each Holder may authorize any Person to act for it by
proxy on all matters in which a Holder is entitled to participate,
including waiving notice of any meeting, or voting or participating at
a meeting. No proxy shall be valid after the expiration of 11 months
from the date thereof unless otherwise provided in the proxy. Every
proxy shall be revocable prior to the vote by the Holder of Securities
executing it. Except as otherwise provided herein, all matters
relating to the giving, voting or validity of proxies shall be
governed by the General Corporation Law of the State of Delaware
relating to proxies, and judicial interpretations thereunder, as if
the Trust were a Delaware corporation and the Holders were
stockholders of a Delaware corporation;
(iii) each meeting of the Holders shall be conducted by the
Administrative Trustees or by such other Person that the
Administrative Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the
terms of the Securities, the Trust Indenture Act or the listing rules
of any stock exchange on which the Capital Securities are then listed
or trading, otherwise provides, the Administrative Trustees, in
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their sole discretion, shall establish all other provisions relating
to meetings of Holders, including notice of the time, place or purpose
of any meeting at which any matter is to be voted on by any Holders of
Securities, waiver of any such notice, action by consent without a
meeting, the establishment of a record date, quorum requirements,
voting in person or by proxy or any other matter with respect to the
exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
Section 13.01. Representations and Warranties of Property Trustee.
The Trustee that acts as initial Property Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Property Trustee represents and warrants to the Trust and
the Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) The Property Trustee is a Delaware banking
corporation with trust powers and authority under the laws of the State of
Delaware to execute and deliver, and to carry out and perform its obligations
under the terms of, this Declaration;
(b) The execution, delivery and performance by the
Property Trustee of the Declaration has been duly authorized by all necessary
corporate action on the part of the Property Trustee. The Declaration has been
duly executed and delivered by the Property Trustee and constitutes a legal,
valid and binding obligation of the Property Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law);
(c) The execution, delivery and performance of this
Declaration by the Property Trustee does not conflict with or constitute a
breach of the charter or by-laws of the Property Trustee; and
(d) No consent, approval or authorization of, or
registration with or notice to, any Delaware State or federal banking authority
is required for the execution, delivery or performance by the Property Trustee
of this Declaration.
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Section 13.02. Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Delaware Trustee represents and warrants to the Trust and
the Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is a duly organized Delaware
banking corporation, validly existing and in good standing under the laws of
the State of Delaware, with trust power and authority to execute and deliver,
and to carry out and perform its obligations under the terms of, this
Declaration;
(b) The execution, delivery and performance by the
Delaware Trustee of this Declaration has been duly authorized by all necessary
corporate action on the part of the Delaware Trustee. This Declaration has
been duly executed and delivered by the Delaware Trustee and constitutes a
legal, valid and binding obligation of the Delaware Trustee, enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws affecting
creditors' rights generally and to general principles of equity and the
discretion of the court (regardless of whether the enforcement of such remedies
is considered in a proceeding in equity or at law);
(c) No consent, approval or authorization of, or
registration with or notice to, any federal banking authority is required for
the execution, delivery or performance by the Delaware Trustee of this
Declaration; and
(d) The Delaware Trustee is a natural person who is a
resident of the State of Delaware or, if not a natural person, an entity which
has its principal place of business in the State of Delaware.
ARTICLE XIV
REGISTRATION RIGHTS
Section 14.01. Registration Rights Agreement.
The Holders of the Capital Securities, the Debentures and the
Capital Securities Guarantee are entitled to the benefits of the Registration
Rights Agreement.
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ARTICLE XV
MISCELLANEOUS
Section 15.01. Notices.
All notices provided for in this Declaration shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Administrative
Trustees at the Trust's mailing address set forth below (or such other address
as the Trust may give notice of to the Holders and the Property Trustee):
K N Capital Trust I
c/o K N Energy, Inc.
370 Van Gordon Street
P.O. Box 281304
Lakewood, Colorado 80228-8304
Attention: Administrative Trustees
(b) if given to the Delaware Trustee, at the mailing
address set forth below (or such other address as Delaware Trustee may give
notice of to the Holders):
Wilmington Trust Company
1100 N. Market Street
Rodney Square North
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
(c) if given to the Property Trustee, at the Property
Trustee's mailing address set forth below (or such other address as the
Property Trustee may give notice of to the Holders):
Wilmington Trust Company
1100 N. Market Street
Rodney Square North
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
(d) if given to the Holder of the Common Securities, at
the mailing address of the Sponsor set forth below (or such other address as
the Holder of the Common Securities may give notice to the Trust and the
Property Trustee):
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<PAGE> 70
K N Energy, Inc.
370 Van Gordon Street
P.O. Box 281304
Lakewood, Colorado 80228-8304
Attention: Chief Financial Officer
(e) if given to any other Holder, at the address set
forth on the books and records of the Trust.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no
notice was given, such notice or other document shall be deemed to have been
delivered on the date of such refusal or inability to deliver.
Section 15.02. Governing Law.
This Declaration and the rights of the parties hereunder shall
be governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by the internal laws of
the State of Delaware. The provisions of Sections 3540 and 3561 of Title 12 of
the Delaware Code shall not apply to the Trust.
Section 15.03. Intention of the Parties.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust.
The provisions of this Declaration shall be interpreted to further this
intention of the parties.
Section 15.04. Headings.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
Section 15.05. Successors and Assigns.
Whenever in this Declaration any of the parties hereto is
named or referred to, the successors and assigns of such party shall be deemed
to be included, and all covenants and agreements in this Declaration by the
Sponsor and the Trustees shall bind and inure to the benefit of their
respective successors and assigns, whether so expressed.
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Section 15.06. Partial Enforceability.
If any provision of this Declaration, or the application of
such provision to any Person or circumstance, shall be held invalid, the
remainder of this Declaration, or the application of such provision to persons
or circumstances other than those to which it is held invalid, shall not be
affected thereby.
Section 15.07. Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees and the Sponsor to one of such counterpart
signature pages. All of such counterpart signature pages shall be read as
though one, and they shall have the same force and effect as though all of the
signers had signed a single signature page.
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<PAGE> 72
IN WITNESS WHEREOF, the undersigned has caused these presents
to be executed as of the day and year first above written.
/s/ Larry G. Hall
---------------------------------------------
Larry D. Hall, as Administrative Trustee
/s/ Clyde E. McKenzie
---------------------------------------------
Clyde E. McKenzie, as Administrative Trustee
/s/ E. Wayne Lundhagen
---------------------------------------------
E. Wayne Lundhagen, as Administrative Trustee
WILMINGTON TRUST COMPANY,
as Delaware Trustee
By: /s/ James P. Lawler
----------------------------------------
Name: James P. Lawler
Title: Vice President
WILMINGTON TRUST COMPANY,
as Property Trustee
By: /s/ James P. Lawler
----------------------------------------
Name: James P. Lawler
Title: Vice President
K N ENERGY, INC.,
as Sponsor
By: /s/ E. Wayne Lundhagen
----------------------------------------
Name: E. Wayne Lundhagen
Title: Vice President and Treasurer
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ANNEX I
TERMS OF
8.56% SERIES A/SERIES B CAPITAL SECURITIES
8.56% COMMON SECURITIES
Pursuant to Section 7.01 of the Amended and Restated
Declaration of Trust, dated as of April 24, 1997 (as amended from time to time,
the "Declaration"), the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Securities are set out below
(each capitalized term used but not defined herein has the meaning set forth in
the Declaration or, if not defined in such Declaration, as defined in the
Offering Memorandum referred to below in Section 2(c) of this Annex I):
1. Designation and Number.
(a) Capital Securities. 100,000 Series A Capital
Securities of the Trust and 100,000 Series B Capital Securities of the Trust,
with an aggregate liquidation amount at any time outstanding with respect to
the assets of the Trust of one hundred million dollars ($100,000,000), and each
Capital Security with a liquidation amount with respect to the assets of the
Trust of $1,000 per Security, are hereby designated for the purposes of
identification only as "8.56% Series A Capital Trust Pass-through
Securities(SM)" and "8.56% Series B Capital Trust Pass-through Securities(SM)",
respectively. The certificates evidencing the Capital Securities shall be
substantially in the form of Exhibit A-1 to the Declaration, with such changes
and additions thereto or deletions therefrom as may be required by ordinary
usage, custom or practice or to conform to the rules of any stock exchange on
which the Capital Securities are listed.
(b) Common Securities. 3,100 Common Securities of the
Trust with an aggregate liquidation amount with respect to the assets of the
Trust of three million one hundred thousand dollars ($3,100,000) and each
Common Security with a liquidation amount with respect to the assets of the
Trust of $1,000 per Security, are hereby designated for the purposes of
identification only as "Common Securities". The certificates evidencing the
Common Securities shall be substantially in the form of Exhibit A-2 to the
Declaration, with such changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will be fixed
at a rate per annum of 8.56% (the "Coupon Rate") of the liquidation amount of
$1,000 per Security (the "Liquidation Amount"), such rate being the rate of
interest payable on the Debentures to be held by the Property Trustee. Except
for Distributions which are deferred as provided in Section 2(b), Distributions
in arrears for more than one semiannual period will bear additional
distributions
<PAGE> 74
thereon compounded semiannually at the Coupon Rate (to the extent permitted by
applicable law). Pursuant to the Registration Rights Agreement, in certain
limited circumstances the Debenture Issuer will be required to pay Liquidated
Damages (as defined in the Registration Rights Agreement) with respect to the
Debentures. The term "Distributions", as used herein, includes distributions
of any such interest and Liquidated Damages payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Property Trustee and to the extent the Property
Trustee has funds on hand legally available therefor.
(b) Distributions on the Securities will be cumulative,
will accumulate from the most recent date to which Distributions have been paid
or duly provided for or, if no Distributions have been paid or duly provided
for, from April 24, 1997, and will be payable semiannually in arrears on April
15 and October 15 of each year, commencing on October 15, 1997 (each, a
"Distribution Date"), except as otherwise described below. Distributions will
be computed on the basis of a 360-day year consisting of twelve 30-day months
and for any period less than a full calendar month on the basis of the actual
number of days elapsed in such month. As long as no Event of Default has
occurred and is continuing under the Indenture, the Debenture Issuer has the
right under the Indenture to defer payments of interest by extending the
interest payment period at any time and from time to time on the Debentures for
a period not exceeding 10 consecutive semiannual periods, including the first
such semiannual period during such period (each an "Extension Period"), during
which Extension Period no interest shall be due and payable on the Debentures;
provided that no Extension Period shall end on a day other than an Interest
Payment Date (as defined in the Indenture) for the Debentures or shall extend
beyond the Maturity Date of the Debentures. As a consequence of such deferral,
Distributions shall not be due and payable and will also be deferred. Despite
such deferral, Distributions will continue to accumulate with additional
Distributions thereon (to the extent permitted by applicable law but not at a
rate greater than the rate at which interest is then accruing on the
Debentures) at the Coupon Rate compounded semiannually during any such
Extension Period. Prior to the termination of any such Extension Period, the
Debenture Issuer may further defer payments of interest by further extending
such Extension Period; provided that such Extension Period, together with all
such previous and further extensions within such Extension Period, may not
exceed 10 consecutive semiannual periods, including the first semiannual period
during such Extension Period, or extend beyond the Maturity Date of the
Debentures. Upon the termination of any Extension Period and the payment of
all amounts then due, the Debenture Issuer may commence a new Extension Period,
subject to the above requirements. The Property Trustee will give notice to
the Holders of the Capital Securities of the Company's election to begin or
extend an Extension Period.
(c) Except as provided above, Distributions on the
Securities will be payable to the Holders thereof as they appear on the books
and records of the Trust on the first day of the month in which the relevant
Distribution Date occurs, which Distribution Dates correspond to the interest
payment dates on the Debentures. Subject to any applicable laws and
regulations and the provisions of the Declaration, each such payment in respect
of the Global Capital Securities will be made as described under the heading
"Description of the Capital Securities -- Form,
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<PAGE> 75
Denomination, Book-Entry Procedures and Transfer" in the Offering Memorandum
dated April 17, 1997, of the Debenture Issuer and the Trust relating to the
Securities and the Debentures. Payments in respect of Capital Securities held
in certificated form will be made by check mailed to the Holder entitled
thereto. The relevant record dates for the Common Securities shall be the same
as the record dates for the Capital Securities. Distributions payable on any
Securities that are not punctually paid on any Distribution Date, as a result
of the Debenture Issuer having failed to make a payment under the Debentures,
will cease to be payable to the Holder on the relevant record date, and such
defaulted Distribution will instead be payable to the Person in whose name such
Securities are registered on the special record date or other specified date
determined in accordance with the Indenture. If any date on which
Distributions are payable on the Securities is not a Business Day, then payment
of the Distribution payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in
respect of any such delay), except that if such Business Day falls in the next
calendar year, such payment will be made on the immediately preceding Business
Day, in each case, with the same force and effect as if made on such date.
(d) In the event that there is any money or other
property held by or for the Trust that is not accounted for hereunder, such
property shall be distributed Pro Rata (as defined herein) among the Holders of
the Securities.
3. Liquidation Distribution Upon Dissolution.
In the event of any dissolution of the Trust pursuant to
Section 8.1(a)(i), (ii), (iii), (iv) or (vi) of the Declaration, the Trust
shall be liquidated by the Administrative Trustees as expeditiously as the
Administrative Trustees determine to be possible by distributing, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, to the Holders of the Securities a Like Amount (as defined below) of the
Debentures unless such distibution is determined by the Property Trustee not to
be practicable, in which event such Holders will be entitled to receive out of
the assets of the Trust legally available for distribution to Holders, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, an amount equal to the aggregate of the liquidation amount of $1,000 per
Security plus accumulated and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution").
"Like Amount" means (i) with respect to a redemption of the
Securities, Securities having a Liquidation Amount equal to the principal
amount of Debentures to be paid in accordance with their terms and (ii) with
respect to a distribution of Debentures upon the liquidation of the Trust,
Debentures having a principal amount equal to the liquidation amount of the
Securities of the Holder to whom such Debentures are distributed.
If, upon any such liquidation, the Liquidation Distribution
can be paid only in part because the Trust has insufficient assets on hand
legally available to pay in full the aggregate Liquidation Distribution, then
the amounts payable directly by the Trust on the Securities shall be paid Pro
Rata (as defined below).
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<PAGE> 76
4. Redemption and Distribution.
(a) Upon the repayment or redemption of the Debentures in
whole or in part, at maturity or upon early redemption (pursuant to a Special
Event or at the option of the Company, as described below), the proceeds from
such repayment or redemption shall be simultaneously applied by the Property
Trustee to redeem on a Pro Rata basis a Like Amount of Securities at a
redemption price per Security equal to (i) in the case of the repayment of the
Debentures at maturity, the Maturity Redemption Price (as defined below), (ii)
in the case of a redemption of the Debentures upon the occurrence and
continuation of a Special Event prior to April 15 , 2007, the Special Event
Redemption Price (as defined below) or (iii) in the case of an optional
redemption of the Debentures or a redemption as a result of a Special Event on
or after April 15, 2007, the Call Price (as specified below), plus, in any such
case, accumulated and unpaid Distributions to the date of redemption. The
Maturity Redemption Price, the Special Event Redemption Price and the Call
Price are referred to collectively as the "Redemption Price". Holders will be
given not less than 30 nor more than 60 days notice of such redemption.
The Debenture Issuer shall have the right (subject to
conditions in the Indenture) to elect to redeem the Debentures in whole or in
part at any time on or after April 15, 2007 at the optional redemption prices
specified in the Indenture. In the event of such redemption, the Call Prices
at which the Securities shall be redeemed shall be equal to the percentage of
the liquidation amount of the Securities being redeemed as set forth below:
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<PAGE> 77
<TABLE>
<CAPTION>
IF REDEEMED DURING THE
12-MONTH PERIOD BEGINNING
APRIL 15, CALL PRICE
---------------------------- ----------
<S> <C>
2007 . . . . . . . . . . . 104.280%
2008 . . . . . . . . . . . 103.852
2009 . . . . . . . . . . . 103.424
2010 . . . . . . . . . . . 102.996
2011 . . . . . . . . . . . 102.568
2012 . . . . . . . . . . . 102.140
2013 . . . . . . . . . . . 101.712
2014 . . . . . . . . . . . 101.284
2015 . . . . . . . . . . . 100.856
2016 . . . . . . . . . . . 100.428
</TABLE>
and thereafter at 100% of the liquidation amount of the Securities being
redeemed.
(b) The "Maturity Redemption Price" means the liquidation
amount of $1,000 per security.
(c) If at any time a Tax Event occurs and is continuing
or an Investment Company Event (each as defined below, and each a "Special
Event") occurs, the Debenture Issuer shall have the right (subject to the
conditions set forth in the Indenture), upon not less than 30 nor more than 60
days notice, to redeem the Debentures in whole or in part, within the 90 days
following the occurrence of such Special Event, and, simultaneously with such
redemption, to cause a Like Amount of the Securities to be redeemed by the
Trust at the Special Event Redemption Price on a Pro Rata basis.
"Tax Event" means the receipt by the Administrative Trustees
of an opinion (a "Tax Event Opinion") of a nationally recognized independent
tax counsel experienced in such matters to the effect that, as a result of (a)
any amendment to, clarification of, or change (including any announced
prospective change) in, the laws or any regulations thereunder of the United
States or any political subdivision or taxing authority thereof or therein, or
(b) any judicial decision or Administrative Action (as defined in the
Indenture) or (c) any amendment to, clarification of or change in the
administrative position or interpretation of any Administrative Action or
judicial decision that differs from the theretofore generally accepted
position, in each case, by any legislative body, court, governmental agency or
regulatory body, irrespective of the manner in which such amendment,
clarification or change is made known, which amendment, clarification or change
is effective or such Administrative Action or decision is announced, in each
case, on or after April 17, 1997, there is more than an insubstantial risk that
(i) the Trust is, or will be within 90 days of the date thereof, subject to
United States federal income tax with respect to interest accrued or received
on the Debentures or subject to more than a de minimis amount of other taxes,
duties or other governmental charges, (ii) any portion of interest payable by
the Company on the Debentures is not, or within 90 days of the date thereof
will not be,
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<PAGE> 78
deductible by the Company for United States federal income tax purposes, or
(iii) the Company could become liable to pay, on the next date on which any
amount would be payable with respect to the Securities, any Additional Amounts
(as defined in the Indenture).
"Investment Company Event" means the receipt by the
Administrative Trustees of an opinion of counsel rendered by a law firm having
a nationally recognized securities practice, to the effect that, as a result of
the occurrence of a change in law or regulation or a change in interpretation
or application of law or regulation by any legislative body, court,
governmental agency or regulatory authority, there is more than an
insubstantial risk that the Trust is or will be considered an "investment
company" that is required to be registered under the Investment Company Act of
1940, as amended (the "Investment Company Act"), which change or prospective
change becomes effective or is announced, enacted or promulgated, on or after
April 17, 1997.
"Special Event Redemption Price" shall mean, with respect to a
redemption of a Security, a price equal to (i) the Make-Whole Amount (as
defined in the Indenture) applicable to a corresponding $1,000 principal amount
of Debentures pursuant to the terms of the Indenture in the case of a
redemption upon the occurrence of a Special Event prior to April 15, 2007, or
(ii) the Call Price in the case of a redemption upon the occurrence of a
Special Event on or after April 17, 1997.
(d) On and from the date fixed by the Administrative
Trustees for any distribution of Debentures and liquidation of the Trust: (i)
the Securities will no longer be deemed to be outstanding, (ii) the Clearing
Agency or its nominee (or any successor Clearing Agency or its nominee), as the
Holder of the Capital Securities, will receive a registered global certificate
or certificates representing the Debentures to be delivered upon such
distribution and (iii) any certificates representing Securities not held by the
Clearing Agency or its nominee (or any successor Clearing Agency or its
nominee) will be deemed to represent beneficial interests in the Debentures
until such certificates are presented to the Debenture Issuer or its agent for
cancellation.
(e) The Trust may not redeem fewer than all the
outstanding Securities unless all accumulated and unpaid Distributions have
been paid on all Securities for all semi-annual Distribution periods
terminating on or before the date of redemption.
(f) The procedure with respect to redemptions or
distributions of Debentures shall be as follows:
(i) Notice of any redemption of, or notice of
distribution of Debentures in exchange for, the Securities (a
"Redemption/Distribution Notice") will be given by the Trust by mail
to each Holder to be redeemed or exchanged not fewer than 30 nor more
than 60 days before the date fixed for redemption or exchange thereof
which, in the case of a redemption, will be the date fixed for
redemption of the Debentures. For purposes of the calculation of the
date of redemption or exchange and the dates on which
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notices are given pursuant to this Section 4(f)(i), a Redemption/
Distribution Notice shall be deemed to be given on the day such notice
is first mailed by first-class mail, postage prepaid, to Holders.
Each Redemption/Distribution Notice shall be addressed to the Holders
of Securities at the address of each such Holder appearing in the
books and records of the Trust. No defect in the Redemption/
Distribution Notice or in the mailing of either thereof with respect to
any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding
Securities are to be redeemed, the Securities to be redeemed shall be
redeemed Pro Rata from each Holder of Capital Securities, it being
understood that, in respect of Capital Securities registered in the
name of and held of record by the Clearing Agency or its nominee (or
any successor Clearing Agency or its nominee) or any nominee, the
distribution of the proceeds of such redemption will be made to the
Clearing Agency and disbursed by such Clearing Agency in accordance
with the procedures applied by such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives
a Redemption/Distribution Notice (which notice will be irrevocable),
then (A) with respect to Capital Securities issued in book-entry form,
by 12:00 noon, New York City time, on the redemption date, provided
that the Debenture Issuer has paid the Property Trustee a sufficient
amount of cash in connection with the related redemption or maturity
of the Debentures by 11:00 a.m., New York City time, on the maturity
date or the date of redemption, as the case requires, the Property
Trustee will deposit irrevocably with the Clearing Agency or its
nominee (or successor Clearing Agency or its nominee) funds sufficient
to pay the applicable Redemption Price with respect to such Capital
Securities and will give the Clearing Agency irrevocable instructions
and authority to pay the Redemption Price to the relevant Clearing
Agency Participants, and (B) with respect to Capital Securities issued
in certificated form and Common Securities, provided that the
Debenture Issuer has paid the Property Trustee a sufficient amount of
cash in connection with the related redemption or maturity of the
Debentures, the Property Trustee will pay the relevant Redemption
Price to the Holders by check mailed to the address of the relevant
Holder appearing on the books and records of the Trust on the
redemption date. If a Redemption/Distribution Notice shall have been
given and funds deposited as required, if applicable, then immediately
prior to the close of business on the date of such deposit, or on the
redemption date, as applicable, Distributions will cease to accumulate
on the Securities so called for redemption and all rights of Holders
so called for redemption will cease, except the right of the Holders
of such Securities to receive the Redemption Price, but without
interest on such Redemption Price, and such Securities shall cease to
be outstanding.
(iv) Payment of accumulated and unpaid Distributions on
the redemption date of the Securities will be subject to the rights of
Holders of Securities on the close of business on a regular record
date in respect of a Distribution Date occurring on or prior to such
redemption date.
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<PAGE> 80
(v) Neither the Administrative Trustees nor the Trust
shall be required to register or cause to be registered the transfer
of (i) any Securities beginning on the opening of business 15 days
before the day of mailing of a notice of redemption and ending at the
close of business on the day of such mailing or (ii) any Securities
selected for redemption except the unredeemed portion of any Security
being redeemed. If any date fixed for redemption of Securities is not
a Business Day, then payment of the Redemption Price payable on such
date will be made on the next succeeding day that is a Business Day
(and without any interest or other payment in respect of any such
delay), except that if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such
date fixed for redemption. If payment of the Redemption Price in
respect of any Securities is improperly withheld or refused and not
paid either by the Property Trustee or by the Sponsor as guarantor
pursuant to the relevant Securities Guarantee, Distributions on such
Securities will continue to accumulate from the original redemption
date to the actual date of payment, in which case the actual payment
date will be considered the date fixed for redemption for purposes of
calculating the Redemption Price.
(vi) Redemption/Distribution Notices shall be sent by the
Property Trustee on behalf of the Trust to (A) in respect of the
Capital Securities, the Clearing Agency or its nominee (or any
successor Clearing Agency or its nominee) if certificates evidencing
Global Capital Securities have been issued or, if certificates
evidencing Definitive Capital Securities have been issued, to the
Holders thereof, and (B) in respect of the Common Securities to the
Holders thereof.
(vii) Subject to the foregoing and applicable law
(including, without limitation, United States federal securities
laws), the Sponsor or any of its subsidiaries may at any time and from
time to time purchase outstanding Capital Securities by tender, in the
open market or by private agreement.
5. Voting Rights - Capital Securities.
(a) Except as provided under Sections 5(b) and 7 and as
otherwise required by law and the Declaration, the Holders of the Capital
Securities will have no voting rights.
(b) So long as any Debentures are held by the Property
Trustee, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on such Debenture Trustee with respect
to the Debentures, (ii) waive any past default that is waivable under Section
5.07 of the Indenture, (iii) exercise any right to rescind or annul a
declaration of acceleration of the maturity of the principal of the Debentures
or (iv) consent to any amendment, modification or termination of the Indenture
or the Debentures, where such consent shall be required to be made by the
holders of a majority in aggregate principal amount of the Debentures then
outstanding, without, in each case, obtaining the prior approval of the Holders
of a Majority in liquidation
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<PAGE> 81
amount of all outstanding Capital Securities; provided, however, that where a
consent under the Indenture would require the consent of each holder of
Debentures affected thereby, no such consent shall be given by the Property
Trustee without the prior approval of each Holder of the Capital Securities.
The Trustees shall not revoke any action previously authorized or approved by a
vote of the Holders of the Capital Securities except by subsequent vote of such
Holders. Subject to and except as provided in Section 2.07 of the Declaration,
the Property Trustee shall notify each Holder of Capital Securities of any
notice of default with respect to the Debentures. In addition to obtaining the
foregoing approvals of such Holders of the Capital Securities, prior to taking
any of the foregoing actions, the Trustees shall obtain an opinion of counsel
experienced in such matters to the effect that the Trust will not be classified
as an association taxable as a corporation for United States federal income tax
purposes on account of such action.
If an Event of Default under the Declaration has occurred and
is continuing and such event is attributable to the failure of the Debenture
Issuer to pay principal of or premium, if any, or interest on the Debentures on
the due date (or in the case of redemption, on the redemption date), then a
Holder of Capital Securities may pursuant to Section 13.13 of the Indenture
institute a proceeding for enforcement of payment to such Holder of the
principal of or premium, if any, or interest on a Like Amount of Debentures (a
"Direct Action") on or after the respective due date specified in the
Debentures. In connection with such Direct Action, the rights of the Common
Securities Holder will be subrogated to the rights of such Holder of Capital
Securities to the extent of any payment made by the Debenture Issuer to such
Holder of Capital Securities in such Direct Action. Except as provided in the
second preceding sentence and in Section 3.08(e) of the Declaration, the
Holders of Capital Securities will not be able to exercise directly any other
remedy available to the holders of the Debentures.
Any approval or direction of Holders of Capital Securities may
be given at a separate meeting of Holders of Capital Securities convened for
such purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent in the manner set forth in the Declaration. The
Administrative Trustees will cause a notice of any meeting at which Holders of
Capital Securities are entitled to vote, or of any matter upon which action by
written consent of such Holders is to be taken, to be mailed to each Holder of
record of Capital Securities. Each such notice will include a statement
setting forth (i) the date of such meeting or the date by which such action is
to be taken, (ii) a description of any resolution proposed for adoption at such
meeting on which such Holders are entitled to vote or of such matter upon which
written consent is sought and (iii) instructions for the delivery of proxies or
consents.
No vote or consent of the Holders of the Capital Securities
will be required for the Trust to redeem and cancel Capital Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
Notwithstanding that Holders of Capital Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Capital Securities that are owned by the Sponsor or any Affiliate of the
Sponsor shall not be entitled to vote or consent and shall, for purposes of
such vote or consent, be treated as if they were not outstanding.
9
<PAGE> 82
6. Voting Rights - Common Securities.
(a) Except as provided under Sections 6(b), 6(c), and 7
as otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) Unless an Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by the holder of the Common
Securities. If an Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed at such time by the
Holders of a Majority in liquidation amount of the outstanding Capital
Securities. In no event will the Holders of the Capital Securities have the
right to vote to appoint, remove or replace the Administrative Trustees, which
voting rights are vested exclusively in the Company as the holder of the Common
Securities. No resignation or removal of a Trustee and no appointment of a
successor trustee shall be effective until the acceptance of appointment by the
successor trustee in accordance with the provisions of the Declaration.
(c) So long as any Debentures are held by the Property
Trustee, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on such Debenture Trustee with respect
to the Debentures, (ii) waive any past default that is waivable under Section
5.07 of the Indenture, (iii) exercise any right to rescind or annul a
declaration of acceleration of the maturity of the principal of the Debentures
or (iv) consent to any amendment, modification or termination of the Indenture
or the Debentures, where such consent shall be required to be made by the
holders of a majority in aggregate principal amount of the Debentures then
outstanding, without, in each case, obtaining the prior approval of the Holders
of a Majority in liquidation amount of all outstanding Common Securities;
provided, however, that where a consent under the Indenture would require the
consent of each holder of Debentures affected thereby, no such consent shall be
given by the Property Trustee without the prior approval of each Holder of the
Common Securities. The Trustees shall not revoke any action previously
authorized or approved by a vote of the Holders of the Common Securities except
by subsequent vote of such Holders. Subject to Section 2.07 of the Declaration,
the Property Trustee shall notify each Holder of Common Securities of any
notice of default with respect to the Debentures. In addition to obtaining the
foregoing approvals of such Holders of the Common Securities, prior to taking
any of the foregoing actions, the Trustees shall obtain an opinion of counsel
experienced in such matters to the effect that the Trust will not be classified
as an association taxable as a corporation for United States federal income tax
purposes on account of such action.
If an Event of Default under the Declaration has occurred and
is continuing and such event is attributable to the failure of the Debenture
Issuer to pay principal of or premium, if any, or interest on the Debentures on
the due date (or in the case of redemption, on the redemption date), then a
Holder of Common Securities may institute a Direct Action for enforcement of
payment to such Holder of the principal of or premium, if any, or interest on a
Like Amount of Debentures on or after the respective due date specified in the
Debentures. In connection with such Direct Action, the rights of such Common
Securities Holder will be subordinated to the rights of the Holders of Capital
Securities to the extent of any payment made
10
<PAGE> 83
by the Debenture Issuer to such Holder of Common Securities in such Direct
Action. Except as provided in the second preceding sentence, the Holders of
Common Securities will not be able to exercise directly any other remedy
available to the holders of the Debentures.
Any approval or direction of Holders of Common Securities may
be given at a separate meeting of Holders of Common Securities convened for
such purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent in accordance with the Declaration. The
Administrative Trustees will cause a notice of any meeting at which Holders of
Common Securities are entitled to vote, or of any matter upon which action by
written consent of such Holders is to be taken, to be mailed to each Holder of
record of Common Securities. Each such notice will include a statement setting
forth (i) the date of such meeting or the date by which such action is to be
taken, (ii) a description of any resolution proposed for adoption at such
meeting on which such Holders are entitled to vote or of such matter upon which
written consent is sought and (iii) instructions for the delivery of proxies or
consents.
No vote or consent of the Holders of the Common Securities
will be required for the Trust to redeem and cancel Common Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
7. Amendments to Declaration.
In addition to the requirements set out in Section 12.01 of
the Declaration, under the circumstances referred to in Section 12.01(c) of the
Declaration, the Declaration may be amended by the Trustees and the Sponsor
with (i) the consent of Holders representing a Majority in liquidation amount
of all outstanding Securities, and (ii) receipt by the Trustees of an opinion
of counsel to the effect that such amendment or the exercise of any power
granted to the Trustees in accordance with such amendment will not affect the
Trust's status as a grantor trust for United States federal income tax purposes
or the Trust's exemption from status as an Investment Company under the
Investment Company Act; provided that (A) without the consent of each Holder of
Trust Securities, the Declaration may not be amended to (i) change the amount
or timing of any Distribution on the Trust Securities or otherwise adversely
affect the amount of any Distribution required to be made in respect of the
Trust Securities as of a specified date, or (ii) restrict the right of a Holder
of Trust Securities to institute suit for the enforcement of any such payment
on or after such date and (B) without the consent of each Holder of Capital
Securities, the Declaration may not be amended to restrict the right of a
Holder of Capital Securities to bring a Direct Action.
8. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each
Holder according to the aggregate liquidation amount of the Securities held by
the relevant Holder in relation to the aggregate liquidation amount of all
Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration has occurred and is continuing, in which case any funds
available
11
<PAGE> 84
to make such payment shall be paid first to each Holder of the Capital
Securities pro rata according to the aggregate liquidation amount of Capital
Securities held by the relevant Holder relative to the aggregate liquidation
amount of all Capital Securities outstanding, and only after satisfaction of
all amounts owed to the Holders of the Capital Securities, to each Holder of
Common Securities pro rata according to the aggregate liquidation amount of
Common Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Common Securities outstanding. In any such proration
the Trust may make such adjustments as may be appropriate in order that only
Securities in authorized denominations shall be redeemed (subject to the
minimum block requirement of Section 9.02(m) of the Declaration).
9. Ranking.
The Capital Securities rank pari passu with the Common
Securities and payment thereon shall be made Pro Rata with the Common
Securities, except that, if an Event of Default under the Declaration occurs
and is continuing, no payments in respect of Distributions on, or payments upon
liquidation, redemption, repurchase or otherwise with respect to, the Common
Securities shall be made until the Holders of the Capital Securities shall be
paid in full in cash the Distributions, Redemption Price, Liquidation
Distribution and other payments to which they are entitled at such time.
10. Acceptance of Declaration, Securities Guarantee and
Indenture.
Each Holder of Capital Securities and Common Securities, by
the acceptance thereof, agrees to the provisions of the Declaration, Capital
Securities Guarantee and the Common Securities Guarantee, respectively,
including the subordination provisions therein and to the provisions of the
Indenture.
11. No Preemptive Rights.
The Holders of the Securities shall have no preemptive or
similar rights to subscribe for any additional securities.
12. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the
Capital Securities Guarantee or the Common Securities Guarantee (as may be
appropriate) and the Indenture (including any supplemental indenture) to a
Holder without charge on written request to the Sponsor at its principal place
of business.
12
<PAGE> 85
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
[IF THIS CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY,
INSERT: THIS CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY WITHIN THE MEANING
OF THE DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "CLEARING AGENCY") OR A NOMINEE OF THE CLEARING
AGENCY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE CLEARING AGENCY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO
TRANSFER OF THIS CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL
SECURITY AS A WHOLE BY THE CLEARING AGENCY TO A NOMINEE OF THE CLEARING AGENCY
OR BY A NOMINEE OF THE CLEARING AGENCY TO THE CLEARING AGENCY OR ANOTHER
NOMINEE OF THE CLEARING AGENCY) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
[IF THIS CAPITAL SECURITY IS A RESTRICTED CAPITAL SECURITY,
INSERT: THIS CAPITAL SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW. NEITHER THIS CAPITAL SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY, PRIOR TO THE
DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE
LATER OF THE ORIGINAL ISSUANCE
<PAGE> 86
DATE HEREOF AND THE LAST DATE ON WHICH K N ENERGY, INC. (THE "CORPORATION") OR
ANY "AFFILIATE" OF THE CORPORATION WAS THE OWNER OF THIS CAPITAL SECURITY (OR
ANY PREDECESSOR OF THIS CAPITAL SECURITY) ONLY (A) TO THE CORPORATION, (B)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (C) SO LONG AS THIS CAPITAL SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS
THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER
THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR
FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES
ACT, SUBJECT TO THE RIGHT OF K N CAPITAL TRUST I AND THE CORPORATION PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D), (E) OR (F) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) PURSUANT TO CLAUSE (E), TO
REQUIRE THAT THE TRANSFEROR DELIVER TO K N CAPITAL TRUST I A LETTER FROM THE
TRANSFEREE SUBSTANTIALLY IN THE FORM OF ANNEX A TO THE OFFERING MEMORANDUM
DATED APRIL 17, 1997. SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS CAPITAL SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND.]
[IF THIS CAPITAL SECURITY IS A REGULATION S GLOBAL SECURITY,
INSERT: THIS CAPITAL SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS UNLESS REGISTERED UNDER THE SECURITIES ACT
OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS
AVAILABLE.]
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF
ALSO AGREES, REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT AN EMPLOYEE
BENEFIT PLAN SUBJECT TO THE EMPLOYMENT RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED ("ERISA") OR (ii) THE ACQUISITION AND HOLDING OF THIS CAPITAL
SECURITY BY IT IS NOT PROHIBITED BY EITHER
2
<PAGE> 87
SECTION 406 OF ERISA OR SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986,
AS AMENDED, OR EXEMPT FROM ANY SUCH PROHIBITION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE OF THIS
CAPITAL SECURITY ALSO AGREES TO BE BOUND BY THE PROVISIONS OF A REGISTRATION
RIGHTS AGREEMENT DATED AS OF APRIL 24, 1997 AMONG K N CAPITAL TRUST I, THE
CORPORATION AND CERTAIN OTHER PARTIES NAMED THEREIN.
3
<PAGE> 88
Certificate Number
Aggregate Liquidation Amount
of Capital Securities: $100,000,000
CUSIP NO. __________
Certificate Evidencing Capital Securities
of
K N Capital Trust I
8.56% Series __ Capital Trust Pass-through Securities(SM)
(liquidation amount $1,000 per Capital Security)
K N Capital Trust I, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of [$__________ in
aggregate liquidation amount of Capital Securities of the Trust(1) [the
aggregate liquidation amount of Capital Securities of the Trust specified in
Schedule A hereto.](2) representing undivided beneficial interests in the assets
of the Trust designated the 8.56% Series __ Capital Trust Pass-through
Securities(SM) (liquidation amount $1,000 per Capital Security) (the "Capital
Securities"). Subject to the Declaration (as defined below), the Capital
Securities are transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Capital
Securities represented hereby are issued and shall in all respects be subject
to the provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of April 24, 1997, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Capital
Securities as set forth in Annex I to the Declaration. Capitalized terms used
but not defined herein shall have the meaning given them in the Declaration.
The Sponsor will provide a copy of the Declaration, the Capital Securities
Guarantee and the Indenture to a Holder without charge upon written request to
the Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Capital Securities Guarantee to the extent provided therein.
- ------------------------
(1) Insert in Definitive Capital Securities only.
(2) Insert in Global Capital Securities only.
<PAGE> 89
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Capital
Securities as evidence of indirect beneficial ownership in the Debentures.
2
<PAGE> 90
IN WITNESS WHEREOF, the Trust has executed this certificate
this ____ day of __________, ____.
K N CAPITAL TRUST I
By:
Name:
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the
within-mentioned Declaration.
Dated: ,
WILMINGTON TRUST COMPANY,
as Property Trustee
By:
Authorized Officer
3
<PAGE> 91
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed
at a rate per annum of 8.56% (the "Coupon Rate") of the liquidation amount of
$1,000 per Capital Security, such rate being the rate of interest payable on
the Debentures to be held by the Property Trustee. Except for Distributions
which are deferred as provided below, Distributions in arrears for more than
one semiannual period will bear interest thereon compounded semiannually at the
Coupon Rate (to the extent permitted by applicable law). Pursuant to the
Indenture, in certain limited circumstances the Debenture Issuer will be
required to pay Additional Interest (as defined in the Indenture) with respect
to the Debentures. The term "Distributions", as used herein, includes such
cash distributions and any such interest and such Additional Interest payable
unless otherwise stated. A Distribution is payable only to the extent that
payments are made in respect of the Debentures held by the Property Trustee and
to the extent the Property Trustee has funds on hand legally available
therefor.
Distributions on the Capital Securities will be cumulative,
will accumulate from the most recent date to which Distributions have been paid
or duly provided for or, if no Distributions have been paid or duly provided
for, from April 24, 1997 and will be payable semiannually in arrears, on April
15 and October 15 of each year, commencing on October 15, 1997, except as
otherwise described below. Distributions will be computed on the basis of a
360-day year consisting of twelve 30-day months and, for any period less than a
full calendar month, the number of days elapsed in such month. As long as no
Event of Default has occurred and is continuing under the Indenture, the
Debenture Issuer has the right under the Indenture to defer payments of
interest by extending the interest payment period at any time and from time to
time on the Debentures for a period not exceeding ten consecutive calendar
semiannual periods, including the first such semiannual period during such
extension period (each an "Extension Period"); provided that no Extension
Period shall end on a day other than an Interest Payment Date for the
Debentures or shall extend beyond the Maturity Date of the Debentures. As a
consequence of such deferral of payments of interest on the Debentures,
Distributions will also be deferred. Despite such deferral, semiannual
Distributions will continue to accumulate with interest thereon (to the extent
permitted by applicable law, but not at a rate exceeding the rate of interest
then accruing on the Debentures) at the Coupon Rate compounded semiannually
during any such Extension Period. Prior to the termination of any such
Extension Period, the Debenture Issuer may further defer payments of interest
by further extending such Extension Period; provided that such Extension
Period, together with all such previous and further extensions within such
Extension Period, may not exceed ten consecutive semiannual periods, including
the first semiannual period during such Extension Period, or extend beyond the
Maturity Date of the Debentures. Payments of accumulated Distributions will be
payable to Holders as they appear on the books and records of the Trust on the
first record date preceding the end of the Extension Period. Upon the
termination of any Extension Period and the payment of all amounts then due,
the Debenture Issuer may commence a new Extension Period, subject to the above
requirements.
Subject to certain conditions set forth in the Declaration and
the Indenture, the Property Trustee may, at the direction of the holder of the
Common Securities, at any time
<PAGE> 92
liquidate the Trust and, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law, cause the Debentures to be distributed to
the holders of the Securities in liquidation of the Trust or, simultaneous with
any redemption of the Debentures, cause a Like Amount of the Securities to be
redeemed by the Trust.
The Capital Securities shall be redeemable as provided in the
Declaration.
2
<PAGE> 93
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital Security
certificate to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer this Capital Security certificate on the books of the Trust.
The agent may substitute another to act for him or her.
[Include the following if the Capital Security bears a Restricted Capital
Securities Legend]
In connection with any transfer of any of the Capital Securities evidenced by
this certificate, the undersigned confirms that such Capital Securities are
being:
CHECK ONE BOX BELOW
(1) [ ] exchanged for the undersigned's own account without
transfer; or
(2) [ ] transferred pursuant to and in compliance with Rule
144A under the Securities Act of 1933; or
(3) [ ] transferred pursuant to and in compliance with
Regulation S under the Securities Act of 1933; or
(4) [ ] transferred to an institutional "accredited investor"
within the meaning of subparagraph (a) (1), (2), (3)
or (7) of Rule 501 of Regulation D under the
Securities Act of 1933 that is acquiring the Capital
Securities for its own
<PAGE> 94
account, or for the account of such an institutional
"accredited investor," for investment purposes and
not with a view to, or for offer or sale in
connection with, any distribution in violation of the
Securities Act of 1933; or
(5) [ ] transferred pursuant to another available exemption
from the registration requirements of the Securities
Act of 1933; or
(6) [ ] transferred pursuant to an effective registration
statement.
Unless one of the boxes is checked, the Registrar will refuse to register any
of the Capital Securities evidenced by this certificate in the name of any
Person other than the registered Holder thereof; provided, however, that if box
(3), (4) or (5) is checked, the Registrar may require, prior to registering any
such transfer of the Capital Securities such legal opinions, certifications and
other information as the Trust has reasonably requested to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act of 1933, such
as the exemption provided by Rule 144 under such Act; provided, further, that
(i) if box (2) is checked, the transferee must also certify that it is a
qualified institutional buyer as defined in
2
<PAGE> 95
Rule 144A or (ii) if box (4) is checked, the transferee must also provide to
the Registrar a Transferee Letter of Representation in the form attached to the
Offering Memorandum of the Trust dated April 17, 1997; provided further, that
after the date that a Registration Statement has been filed and so long as such
a Registration Statement continues to be effective, the Registrar may only
permit transfers for which box (6) has been checked.
:
Signature (Sign exactly as your name
appears on the other side of this
Capital Security Certificate)
Name:
Signature Guarantee(3):
-----------------------------------
- ------------------------
(3) Signature must be guaranteed by an "eligible guarantor institution"
that is a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Registrar, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities and Exchange Act of
1934, as amended.
3
<PAGE> 96
SCHEDULE A(4)
The initial aggregate liquidation amount of Capital Securities
evidenced by the Certificate to which this Schedule is attached is $__________
(equivalent to ________ Capital Securities). The notations on the following
table evidence decreases and increases in the number of Capital Securities
evidenced by such Certificate.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Liquidation Amount of
Decrease in Liquidation Increase in Liquidation Capital Securities Notation by
Amount of Capital Amount of Capital Remaining After Such Registration
Securities Securities Decrease or Increase
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------------------------
(4) Append to Global Capital Securities only.
<PAGE> 97
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW.
Certificate Number
Number of Common Securities: _____
Certificate Evidencing Common Securities
of
K N Capital Trust I
8.56% Common Securities
(liquidation amount $1,000 per Common Security)
K N Capital Trust I, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), hereby certifies that K N
Energy, Inc. (the "Holder") is the registered owner of 3,100 common securities
of the Trust representing undivided beneficial interests in the assets of the
Trust designated the 8.56% Common Securities (liquidation amount $1,000 per
Common Security) (the "Common Securities"). Subject to the limitations in
Section 9.01(c) of the Declaration (as defined below), the Common Securities
are transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities represented
hereby are issued and shall in all respects be subject to the provisions of the
Amended and Restated Declaration of Trust of the Trust dated as of April 24,
1997, as the same may be amended from time to time (the "Declaration"),
including the designation of the terms of the Common Securities as set forth in
Annex I to the Declaration. Capitalized terms used but not defined herein
shall have the meaning given them in the Declaration. The Sponsor will provide
a copy of the Declaration, the Common Securities Guarantee and the Indenture
(including any supplemental indenture) to a Holder without charge upon written
request to the Sponsor at its principal place of business.
<PAGE> 98
Upon receipt of this certificate, the Holder is bound
by the Declaration and is entitled to the benefits thereunder and to
the benefits of the Common Securities Guarantee to the extent
provided therein.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Debentures.
2
<PAGE> 99
IN WITNESS WHEREOF, the Trust has executed this certificate
this ___ day of ____________, ____.
K N CAPITAL TRUST I
By:
--------------------------------
Name:
Administrative Trustee
3
<PAGE> 100
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at
a rate per annum of 8.56% (the "Coupon Rate") of the liquidation amount of
$1,000 per Common Security, such rate being the rate of interest payable on the
Debentures to be held by the Property Trustee. Except for Distributions which
are deferred as provided below, Distributions in arrears for more than one
semiannual period will bear interest thereon compounded semiannually at the
Coupon Rate (to the extent permitted by applicable law). Pursuant to the
Indenture, in certain limited circumstances the Debenture Issuer will be
required to pay Additional Interest (as defined in the Indenture) with respect
to the Debentures. The term "Distributions", as used herein, includes such
cash distributions and Additional Interest unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Property Trustee and to the extent the Property
Trustee has funds legally available therefor.
Distributions on the Common Securities will be cumulative,
will accumulate from the most recent date to which Distributions have been paid
or duly provided for or, if no Distributions have been paid or duly provided
for, from April 24, 1997 and will be payable semiannually in arrears, on April
15 and October 15 of each year, commencing on October 15, 1997, except as
otherwise described below. Distributions will be computed on the basis of a
360-day year consisting of twelve 30-day months and, for any period less than a
full calendar month, the number of days elapsed in such month. As long as no
Event of Default has occurred and is continuing under the Indenture, the
Debenture Issuer has the right under the Indenture to defer payments of
interest by extending the interest payment period at any time and from time to
time on the Debentures for a period not exceeding ten consecutive calendar
semiannual periods, including the first such semiannual period during such
extension period (each an "Extension Period"), provided that no Extension
Period shall end on a day other than an Interest Payment Date for the
Debentures or extend beyond the Maturity Date of the Debentures. As a
consequence of such deferral of payments of interest on the Debentures,
Distributions will also be deferred. Despite such deferral, Distributions will
continue to accumulate with interest thereon (to the extent permitted by
applicable law, but not at a rate exceeding the rate of interest then accruing
on the Debentures) at the Coupon Rate compounded semiannually during any such
Extension Period. Prior to the termination of any such Extension Period, the
Debenture Issuer may further defer payments of interest by further extending
such Extension Period; provided that such Extension Period, together with all
such previous and further extensions within such Extension Period, may not
exceed ten consecutive semiannual periods, including the first semiannual
period during such Extension Period, or extend beyond the Maturity Date of the
Debentures. Payments of accumulated Distributions will be payable to Holders
as they appear on the books and records of the Trust on the first record date
preceding the end of the Extension Period. Upon the termination of any
Extension Period and the payment of all amounts then due, the Debenture Issuer
may commence a new Extension Period, subject to the above requirements.
Subject to certain conditions set forth in the Declaration and
the Indenture, the Property Trustee may, at the direction of the holder of the
Common Securities, at any time
<PAGE> 101
liquidate the Trust and, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law, cause the Debentures to be distributed to
the holders of the Securities in liquidation of the Trust or, simultaneous with
any redemption of the Debentures, cause a Like Amount of the Securities to be
redeemed by the Trust.
The Common Securities shall be redeemable as provided in the
Declaration.
2
<PAGE> 1
EXHIBIT 4.9
SERIES A CAPITAL SECURITIES GUARANTEE
K N ENERGY, INC.
Dated as of April 24, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS AND INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.01 Definitions and Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II TRUST INDENTURE ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.01 Trust Indenture Act; Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.02 Lists of Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.03 Reports by the Capital Securities Guarantee Trustee . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.04 Periodic Reports to Capital Securities Guarantee Trustee . . . . . . . . . . . . . . . . . 6
SECTION 2.05 Evidence of Compliance with Conditions Precedent . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.06 Events of Default; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.07 Event of Default; Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.08 Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III POWERS, DUTIES AND RIGHTS OF CAPITAL SECURITIES GUARANTEE TRUSTEE . . . . . . . . . . . . . . . . . 8
SECTION 3.01 Powers and Duties of the Capital Securities Guarantee Trustee . . . . . . . . . . . . . . . 8
SECTION 3.02 Certain Rights of Capital Securities Guarantee Trustee . . . . . . . . . . . . . . . . . . 10
SECTION 3.03 Not Responsible for Recitals or Issuance of Series A Capital Securities Guarantee . . . . . 12
ARTICLE IV CAPITAL SECURITIES GUARANTEE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.01 Capital Securities Guarantee Trustee; Eligibility . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.02 Appointment, Removal and Resignation of Capital Securities Guarantee Trustee . . . . . . . 13
ARTICLE V GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.01 Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.02 Waiver of Notice and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.03 Obligations Not Affected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.04 Rights of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.05 Guarantee of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
SECTION 5.06 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.07 Independent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.01 Limitation of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.02 Ranking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VII TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.01 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VII COMPENSATION AND EXPENSES OF CAPITAL SECURITIES GUARANTEE TRUSTEE . . . . . . . . . . . . . . . . . 18
ARTICLE IX INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 9.01 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 9.02 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 10.01 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 10.02 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 10.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 10.04 Exchange Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 10.05 Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 10.06 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
ii
<PAGE> 4
SERIES A CAPITAL SECURITIES GUARANTEE
This GUARANTEE (the "Series A Capital Securities Guarantee"), dated as
of April 24, 1997, is executed and delivered by K N ENERGY, INC., a Kansas
corporation (the "Guarantor"), and WILMINGTON TRUST COMPANY, a Delaware banking
corporation, as trustee (the "Capital Securities Guarantee Trustee"), for the
benefit of the Holders (as defined herein) from time to time of the Series A
Capital Securities (as defined herein) of K N Capital Trust I, a Delaware
statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of April 24, 1997, among the trustees of the Issuer,
the Guarantor, as sponsor, and the holders from time to time of undivided
beneficial interests in the assets of the Issuer, the Issuer is issuing on the
date hereof 100,000 capital securities, having an aggregate liquidation amount
of $100,000,000, such capital securities being designated the 8.56% Series A
Capital Trust Pass-through Securities(SM))(1) (collectively the "Series A
Capital Securities") and, in connection with an Exchange Offer (as defined in
the Declaration) has agreed to execute and deliver the Series B Capital
Securities Guarantee (as defined in the Declaration) for the benefit of holders
of the Series B Capital Securities (as defined in the Declaration).
WHEREAS, as incentive for the Holders to purchase the Series A Capital
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Series A Capital Securities Guarantee, to pay to
the Holders the Guarantee Payments (as defined below). The Guarantor agrees to
make certain other payments on the terms and conditions set forth herein.
WHEREAS, the Guarantor is executing and delivering a guarantee (the
"Common Securities Guarantee"), with substantially identical terms to this
Series A Capital Securities Guarantee, for the benefit of the holders of the
Common Securities (as defined herein), except that if an Event of Default (as
defined in the Declaration) has occurred and is continuing, the rights of
holders of the Common Securities to receive Guarantee Payments under the Common
Securities Guarantee are subordinated, to the extent and in the manner set
forth in the Common Securities Guarantee, to the rights of holders of Series A
Capital Securities and the Series B Capital Securities to receive Guarantee
Payments under this Series A Capital Securities Guarantee and the Series B
Capital Securities Guarantee, as the case may be.
NOW, THEREFORE, in consideration of the purchase by each Holder, which
purchase the Guarantor hereby acknowledges shall benefit the Guarantor, the
Guarantor executes and delivers this Series A Capital Securities Guarantee for
the benefit of the Holders.
- -------------
(1) Salomon Brothers Inc has filed an application with the United States
Patent and Trademark Office for the registration of the "Capital Trust
Pass-through Securities" service mark.
1
<PAGE> 5
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.01 Definitions and Interpretation
In this Series A Capital Securities Guarantee, unless the context
otherwise requires:
(a) capitalized terms used in this Series A Capital Securities
Guarantee but not defined in the preamble above have the respective meanings
assigned to them in this Section 1.01;
(b) terms defined in the Declaration as at the date of execution
of this Series A Capital Securities Guarantee have the same meaning when used
in this Series A Capital Securities Guarantee unless otherwise defined in this
Series A Capital Securities Guarantee;
(c) a term defined anywhere in this Series A Capital Securities
Guarantee has the same meaning throughout;
(d) all references to "the Series A Capital Securities Guarantee"
or "this Series A Capital Securities Guarantee" are to this Series A Capital
Securities Guarantee as modified, supplemented or amended from time to time;
(e) all references in this Series A Capital Securities Guarantee
to Articles and Sections are to Articles and Sections of this Series A Capital
Securities Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same meaning
when used in this Series A Capital Securities Guarantee, unless otherwise
defined in this Series A Capital Securities Guarantee or unless the context
otherwise requires; and
(g) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" means any day other than a Saturday or a Sunday, or a
day on which banking institutions in Wilmington, Delaware or New York, New York
are authorized or required by law or executive order to close.
"Capital Securities Guarantee Trustee" means Wilmington Trust Company,
a Delaware banking corporation, until a Successor Capital Securities Guarantee
Trustee has been appointed and has accepted such appointment pursuant to the
terms of this Series A Capital Securities Guarantee and thereafter means each
such Successor Capital Securities Guarantee Trustee.
2
<PAGE> 6
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the Capital Securities
Guarantee Trustee at which the corporate trust business of the Capital
Securities Guarantee Trustee shall, at any particular time, be principally
administered, which office at the date of execution of this Series A Capital
Securities Guarantee is located at 1100 N. Market Street, Rodney Square,
Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration.
"Covered Person" means any Holder or beneficial owner of Series A
Capital Securities.
"Debentures" means the series of subordinated debt securities of the
Guarantor designated the 8.56 % Series A Junior Subordinated Deferrable
Interest Debentures due April 15, 2027 held by the Institutional Trustee (as
defined in the Declaration) of the Issuer.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Series A Capital Securities Guarantee.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Series A Capital Securities, to the
extent not paid or made by the Issuer: (i) any accumulated and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Series A Capital Securities to the extent the Issuer has funds on hand
legally available therefor at such time, (ii) the redemption price, including
all accumulated and unpaid Distributions to the date of redemption (the
"Redemption Price") to the extent the Issuer has funds on hand legally
available therefor at such time, with respect to any Series A Capital
Securities called for redemption by the Issuer, and (iii) upon a voluntary or
involuntary dissolution and liquidation of the Issuer (other than in connection
with the distribution of Debentures to the Holders in exchange for Series A
Capital Securities as provided in the Declaration), the lesser of (a) the
aggregate of the liquidation amount and all accumulated and unpaid
Distributions on the Series A Capital Securities to the date of payment, to the
extent the Issuer has funds on hand legally available therefor, and (b) the
amount of assets of the Issuer remaining available for distribution to Holders
in liquidation of the Issuer.
"Holder" shall mean any holder, as registered on the books and records
of the Issuer, of any Series A Capital Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Series A Capital
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Capital Securities Guarantee Trustee,
any Affiliate of the Capital Securities Guarantee Trustee, or any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Capital Securities Guarantee Trustee.
3
<PAGE> 7
"Indenture" means the Indenture dated as of April 24, 1997, between
the Guarantor (the "Debenture Issuer") and Wilmington Trust Company, as
trustee, pursuant to which the Debentures are to be issued to the Property
Trustee of the Issuer.
"Majority in liquidation amount of the Series A Capital Securities"
means, except as provided by the Trust Indenture Act, a vote by Holder(s) of
more than 50% of the aggregate liquidation amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus accumulated
and unpaid Distributions to the date upon which the voting percentages are
determined) of all Series A Capital Securities outstanding at the time of such
vote.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman, a Vice Chairman, the Chief Executive
Officer, the President, a Vice President, the Comptroller, the Secretary or an
Assistant Secretary of such Person. Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for in this Series
A Capital Securities Guarantee (other than pursuant to Section 314(a)(4) of the
Trust Indenture Act) shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions relating
thereto;
(b) a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(c) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Other Common Securities Guarantees" shall have the same meaning as
"Other Guarantees" in the Common Securities Guarantee.
"Other Debentures" means all subordinated debentures issued by the
Guarantor from time to time and sold to trusts to be established by the
Guarantor (if any), in each case similar to the Issuer.
"Other Guarantees" means all guarantees to be issued by the Guarantor
with respect to capital securities (if any) similar to the Series A Capital
Securities issued by other trusts to be established by the Guarantor (if any),
in each case similar to the Issuer.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever
nature.
4
<PAGE> 8
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of April 24, 1997, by and among the Guarantor, the Issuer
and the Initial Purchasers named therein as such agreement may be amended,
modified or supplemented from time to time.
"Responsible Officer" means, with respect to the Capital Securities
Guarantee Trustee, any officer within the Corporate Trust Office of the Capital
Securities Guarantee Trustee, including any vice president, any assistant vice
president, any secretary, any assistant secretary, the treasurer, any assistant
treasurer, any trust officer, any senior trust officer or other officer in the
Corporate Trust Office of the Capital Securities Guarantee Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Successor Capital Securities Guarantee Trustee" means a successor
Capital Securities Guarantee Trustee possessing the qualifications to act as
Capital Securities Guarantee Trustee under Section 4.01.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Trust Securities" means the Common Securities and the Series A
Capital Securities and Series B Capital Securities, collectively.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.01 Trust Indenture Act; Application
(a) This Series A Capital Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Series A Capital Securities Guarantee and shall, to the extent applicable, be
governed by such provisions; and
(b) if and to the extent that any provision of this Series A
Capital Securities Guarantee limits, qualifies or conflicts with the duties
imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such
imposed duties shall control.
SECTION 2.02 Lists of Holders of Securities
(a) The Guarantor shall provide the Capital Securities Guarantee
Trustee (unless the Capital Securities Guarantee Trustee is otherwise the
registrar of the Capital Securities) with a list, in such form as the Capital
Securities Guarantee Trustee may reasonably require, of the names and addresses
of the Holders ("List of Holders") as of such date, (i) within one Business Day
after each Record Date (as defined in the Indenture), and (ii) at any other
time within 30
5
<PAGE> 9
days of receipt by the Guarantor of a written request for a List of Holders as
of a date no more than 14 days before such List of Holders is given to the
Capital Securities Guarantee Trustee; provided that the Guarantor shall not be
obligated to provide such List of Holders at any time the List of Holders does
not differ from the most recent List of Holders given to the Capital Securities
Guarantee Trustee by the Guarantor. The Capital Securities Guarantee Trustee
may destroy any List of Holders previously given to it on receipt of a new List
of Holders.
(b) The Capital Securities Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.03 Reports by the Capital Securities Guarantee Trustee
Within 90 days after December 31 of each year, commencing December 31,
1997, the Capital Securities Guarantee Trustee shall provide to the Holders
such reports as are required by Section 313(a) of the Trust Indenture Act, if
any, in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Capital Securities Guarantee Trustee shall also comply with
the other requirements of Section 313 of the Trust Indenture Act.
SECTION 2.04 Periodic Reports to Capital Securities Guarantee Trustee
The Guarantor shall provide to the Capital Securities Guarantee
Trustee such documents, reports and information as required by Section 314 (if
any) and the compliance certificate required by Section 314 of the Trust
Indenture Act in the form, in the manner and at the times required by Section
314 of the Trust Indenture Act, provided that such compliance certificate shall
be delivered on or before 120 days after the end of each fiscal year of the
Guarantor. Delivery of such reports, information and documents to the Capital
Securities Guarantee Trustee is for informational purposes only, and the
Capital Securities Guarantee Trustee's receipt of such reports, information and
documents shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Guarantor's compliance with any of its covenants hereunder (as to which the
Capital Securities Guarantee Trustee is entitled to rely exclusively on
Officers' Certificates).
SECTION 2.05 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Capital Securities Guarantee
Trustee such evidence of compliance with any conditions precedent, if any,
provided for in this Series A Capital Securities Guarantee that relate to any
of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
6
<PAGE> 10
SECTION 2.06 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Series A Capital
Securities may, on behalf of all the Holders, waive by vote any past Event of
Default and its consequences. Upon such waiver, any such Event of Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Series A Capital Securities
Guarantee, but no such waiver shall extend to any subsequent or other default
or Event of Default or impair any right consequent thereon.
SECTION 2.07 Event of Default; Notice
(a) The Capital Securities Guarantee Trustee shall, within 30
Business Days after the occurrence of an Event of Default becomes actually
known to a Responsible Officer of the Capital Securities Guarantee Trustee,
mail by first class postage prepaid to all Holders notices of all defaults
actually known to such Responsible Officer of the Capital Securities Guarantee
Trustee, unless such defaults have been cured before the giving of such notice;
provided, however, that, except in the case of default in the payment of any
Guarantee Payment, the Capital Securities Guarantee Trustee shall be protected
in withholding notice of such Event of Default if and so long as the board of
directors, the executive committee, or a trust committee of directors and/or
Responsible Officers of the Capital Securities Guarantee Trustee, acting in
good faith, determines that the withholding of such notice is in the interests
of the holders of the Series A Capital Securities.
(b) The Capital Securities Guarantee Trustee shall not be deemed
to have knowledge of any Event of Default unless (i) the Capital Securities
Guarantee Trustee shall have received written notice from the Guarantor or a
Holder of such Event of Default or (ii) a Responsible Officer of the Capital
Securities Guarantee Trustee charged with the administration of the Series A
Capital Securities Guarantee shall have obtained actual knowledge of such Event
of Default.
SECTION 2.08 Conflicting Interests
The Declaration shall be deemed to be specifically described in this
Series A Capital Securities Guarantee for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.
7
<PAGE> 11
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.01 Powers and Duties of the Capital Securities Guarantee Trustee
(a) This Series A Capital Securities Guarantee shall be held by
the Capital Securities Guarantee Trustee for the benefit of the Holders, and
the Capital Securities Guarantee Trustee shall not transfer this Series A
Capital Securities Guarantee to any Person except a Holder exercising its
rights pursuant to Section 5.04(b) or to a Successor Capital Securities
Guarantee Trustee on acceptance by such Successor Capital Securities Guarantee
Trustee of its appointment to act as Successor Capital Securities Guarantee
Trustee. The right, title and interest of the Capital Securities Guarantee
Trustee shall automatically vest in any Successor Capital Securities Guarantee
Trustee, and such vesting and succession of title shall be effective whether or
not conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Capital Securities Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer
of the Capital Securities Guarantee Trustee has occurred and is continuing, the
Capital Securities Guarantee Trustee shall enforce this Series A Capital
Securities Guarantee for the benefit of the Holders.
(c) Before the occurrence of any Event of Default and after the
curing or waiving of all Events of Default that may have occurred, the Capital
Securities Guarantee Trustee shall undertake to perform only such duties as are
specifically set forth in this Series A Capital Securities Guarantee, and no
implied covenants shall be read into this Series A Capital Securities Guarantee
against the Capital Securities Guarantee Trustee. If an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.06) and is
actually known to a Responsible Officer of the Capital Securities Guarantee
Trustee, the Capital Securities Guarantee Trustee shall exercise such of the
rights and powers vested in it by this Series A Capital Securities Guarantee,
and use the same degree of care and skill in its exercise thereof, as a prudent
person would exercise or use under the same or similar circumstances in the
conduct of his or her own affairs.
(d) No provision of this Series A Capital Securities Guarantee
shall be construed to relieve the Capital Securities Guarantee Trustee from
liability for its own negligent action, its own negligent failure to act, or
its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and
after the curing or waiving of all such Events of Default that may
have occurred:
(A) the duties and obligations of the Capital
Securities Guarantee Trustee shall be determined solely by the
express provisions of this Series A Capital Securities
Guarantee, and the Capital Securities Guarantee Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Series A
Capital Securities Guarantee, and no implied covenants or
obligations shall be read into this Series A Capital
Securities Guarantee against the Capital Securities Guarantee
Trustee; and
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(B) in the absence of bad faith on the part of
the Capital Securities Guarantee Trustee, the Capital
Securities Guarantee Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished
to the Capital Securities Guarantee Trustee and conforming to
the requirements of this Series A Capital Securities
Guarantee; provided that, in the case of any such certificates
or opinions that are specifically required to be furnished to
the Capital Securities Guarantee Trustee by any provision
hereof, the Capital Securities Guarantee Trustee shall be
under a duty to examine such certificates or opinions to
determine whether or not they conform to the requirements of
this Series A Capital Securities Guarantee;
(ii) the Capital Securities Guarantee Trustee shall not be
liable for any error in judgment made in good faith by a Responsible
Officer of the Capital Securities Guarantee Trustee, unless it shall
be proved that the Capital Securities Guarantee Trustee was negligent
in ascertaining the pertinent facts upon which such judgment was made;
(iii) the Capital Securities Guarantee Trustee shall not be
liable with respect to any action taken or omitted to be taken by it
in good faith in accordance with the direction of the Holders of a
Majority in liquidation amount of the Series A Capital Securities
relating to the time, method and place of conducting any proceeding
for any remedy available to the Capital Securities Guarantee Trustee,
or exercising any trust or power conferred upon the Capital Securities
Guarantee Trustee under this Series A Capital Securities Guarantee;
and
(iv) no provision of this Series A Capital Securities
Guarantee shall require the Capital Securities Guarantee Trustee to
expend or risk or its own funds or otherwise incur personal financial
liability in the performance of its duties or in the exercise of its
rights or powers, if the Capital Securities Guarantee Trustee shall
have reasonable grounds for believing that the repaying of such funds
or liability is not reasonably assured to it under the terms of this
Series A Capital Securities Guarantee or indemnity, reasonably
satisfactory to the Capital Securities Guarantee Trustee, against such
risk or liability is not reasonably assured to it.
SECTION 3.02 Certain Rights of Capital Securities Guarantee Trustee
(a) Subject to the provisions of Section 3.01:
(i) The Capital Securities Guarantee Trustee may
conclusively rely, and shall be fully protected in acting or
refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other
paper or document believe by it to be genuine and to have been signed,
sent or presented by the proper party or parties.
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(ii) Any direction or act of the Guarantor contemplated by
this Series A Capital Securities Guarantee may be sufficiently
evidenced by an Officers' Certificate.
(iii) Whenever, in the administration of this Series A
Capital Securities Guarantee, the Capital Securities Guarantee Trustee
shall deem it desirable that a matter be proved or established before
taking, suffering or omitting any action hereunder, and in the absence
of bad faith on its part, the Capital Securities Guarantee Trustee may
request, shall be entitled to receive and may conclusively rely upon
an Officers' Certificate (unless other evidence is herein specifically
prescribed) which shall be promptly delivered by the Guarantor upon
receipt of such request.
(iv) The Capital Securities Guarantee Trustee shall have
no duty to see to any recording, filing or registration of any
instrument (or any rerecording, refiling or registration thereof).
(v) The Capital Securities Guarantee Trustee may consult
with counsel of its own selection, and the advice or opinion of such
counsel with respect to legal matters shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance with such
advice or opinion. Such counsel may be counsel to the Guarantor or
any of its Affiliates and may include any of its employees. The
Capital Securities Guarantee Trustee shall have the right at any time
to seek instructions concerning the administration of this Series A
Capital Securities Guarantee from any court of competent jurisdiction.
(vi) The Capital Securities Guarantee Trustee shall be
under no obligation to exercise any of the rights or powers vested in
it by this Series A Capital Securities Guarantee at the request or
direction of any Holder, unless such Holder shall have provided to the
Capital Securities Guarantee Trustee security and indemnity reasonably
satisfactory to the Capital Securities Guarantee Trustee against the
costs, expenses (including attorneys' fees and expenses and the
expenses of the Capital Securities Guarantee Trustee's agents,
nominees or custodians) and liabilities that might be incurred by it
in complying with such request or direction, including such reasonable
advances as may be requested by the Capital Securities Guarantee
Trustee; provided that nothing contained in this Section 3.02(a)(vi)
shall be taken to relieve the Capital Securities Guarantee Trustee of
its obligation to exercise the rights and powers vested in it by this
Series A Capital Securities Guarantee upon the occurrence of an Event
of Default.
(vii) The Capital Securities Guarantee Trustee shall not be
bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document, but the
Capital Securities Guarantee Trustee, in its own discretion, may make
such further inquiry or investigation into such facts or matters as it
sees fit.
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(viii) The Capital Securities Guarantee Trustee may execute
any of the trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents, nominees, custodians or
attorneys, and the Capital Securities Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any agent
or attorney appointed with due care by it hereunder.
(ix) Any action taken by the Capital Securities Guarantee
Trustee or its agents hereunder shall bind the Holders, and the
signature of the Capital Securities Guarantee Trustee or its agents
alone shall be sufficient and effective to perform any such action. No
third party shall be required to inquire as to the authority of the
Capital Securities Guarantee Trustee to so act or as to its compliance
with any of the terms and provisions of this Series A Capital
Securities Guarantee, both of which shall be conclusively evidenced by
the Capital Securities Guarantee Trustee's or its agent's taking such
action.
(x) Whenever in the administration of this Series A
Capital Securities Guarantee, the Capital Securities Guarantee Trustee
shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder,
the Capital Securities Guarantee Trustee (i) may request instructions
from the Holders of a Majority in liquidation amount of the Series A
Capital Securities, (ii) may refrain from enforcing such remedy or
right or taking such other action until such instructions are received
and (iii) shall be protected in conclusively relying on or acting in
accordance with such instructions.
(xi) The Capital Securities Guarantee Trustee shall not be
liable for any action taken, suffered, or omitted to be taken by it in
good faith, without negligence, and reasonably believed by it to be
authorized or within the discretion, rights or powers conferred upon
it by this Series A Capital Securities Guarantee.
(xii) Except as otherwise expressly provided by this Series
A Capital Securities Guarantee, the Capital Securities Guarantee
Trustee shall not be under any obligation to take any action that is
discretionary hereunder.
(b) No provision of this Series A Capital Securities Guarantee
shall be deemed to impose any duty or obligation on the Capital Securities
Guarantee Trustee to perform any act or acts or exercise any right, power, duty
or obligation conferred or imposed on it in any jurisdiction in which it shall
be illegal, or in which the Capital Securities Guarantee Trustee shall be
unqualified or incompetent in accordance with applicable law to perform any
such act or acts or to exercise any such right, power, duty or obligation, or
which would expose the Capital Securities Guarantee Trustee to liability,
financial or otherwise. No permissive power or authority available to the
Capital Securities Guarantee Trustee shall be construed to be a duty.
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SECTION 3.03 Not Responsible for Recitals or Issuance of Series A Capital
Securities Guarantee
The recitals contained in this Series A Capital Securities Guarantee
shall be taken as the statements of the Guarantor, and the Capital Securities
Guarantee Trustee does not assume any responsibility for their correctness.
The Capital Securities Guarantee Trustee makes no representation as to the
validity or sufficiency of this Series A Capital Securities Guarantee.
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.01 Capital Securities Guarantee Trustee; Eligibility
(a) There shall at all times be a Capital Securities Guarantee
Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or other Person
permitted by the Securities and Exchange Commission to act as an
institutional trustee under the Trust Indenture Act, authorized under
such laws to exercise corporate trust powers, having a combined
capital and surplus of at least fifty million U.S. dollars
($50,000,000), and subject to supervision or examination by Federal,
State, Territorial or District of Columbia authority. If, pursuant to
law or to the requirements of the supervising or examining authority
referred to above, such Person publishes reports of condition at least
annually, then, for the purposes of this Section 4.01(a)(ii), the
combined capital and surplus of such Person shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published.
(b) If at any time the Capital Securities Guarantee Trustee shall
cease to be eligible to act under Section 4.01(a), the Capital Securities
Guarantee Trustee shall immediately resign, with the effect set forth in
Section 4.02(c).
(c) If the Capital Securities Guarantee Trustee has or shall
acquire any "conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Capital Securities Guarantee Trustee and Guarantor
shall comply in all respects with the provisions of Section 310(b) of the Trust
Indenture Act, subject to the penultimate paragraph thereof.
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SECTION 4.02 Appointment, Removal and Resignation of Capital Securities
Guarantee Trustee
(a) Subject to Section 4.02(b), the Capital Securities Guarantee
Trustee may be appointed or removed without cause at any time by the Guarantor
except during the continuance of an Event of Default.
(b) The Capital Securities Guarantee Trustee shall not be removed
in accordance with Section 4.02(a) until a Successor Capital Securities
Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Capital Securities Guarantee
Trustee and delivered to the Guarantor.
(c) The Capital Securities Guarantee Trustee shall hold office
until a Successor Capital Securities Guarantee Trustee shall have been
appointed or until such Capital Securities Guarantee Trustee's removal or
resignation. The Capital Securities Guarantee Trustee may resign from office
(without any prior or subsequent accounting) by an instrument in writing
executed by the Capital Securities Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Capital
Securities Guarantee Trustee has been appointed and has accepted such
appointment by written instrument delivered to the Guarantor and the resigning
Capital Securities Guarantee Trustee.
(d) If no Successor Capital Securities Guarantee Trustee shall
have been appointed and accepted appointment as provided in this Section 4.02
within 60 days after delivery of an instrument of removal or resignation, the
Capital Securities Guarantee Trustee resigning or being removed may petition
any court of competent jurisdiction for the appointment of a Successor Capital
Securities Guarantee Trustee. Such court may thereupon, after prescribing such
notice, if any, as it may deem proper, appoint a Successor Capital Securities
Guarantee Trustee.
(e) No Capital Securities Guarantee Trustee shall be liable for
the acts or omissions to act of any Successor Capital Securities Guarantee
Trustee.
(f) Upon termination of this Series A Capital Securities Guarantee
or removal or resignation of the Capital Securities Guarantee Trustee pursuant
to this Section 4.02, the Guarantor shall pay to the Capital Securities
Guarantee Trustee all accrued and unpaid amounts due to the Capital Securities
Guarantee Trustee through the date of such termination, removal or resignation.
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ARTICLE V
GUARANTEE
SECTION 5.01 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts, if any,
theretofore paid by the Issuer) as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of such required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 5.02 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Series A
Capital Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other required notices and demands.
SECTION 5.03 Obligations Not Affected
Except as otherwise provided herein, the obligations, covenants,
agreements and duties of the Guarantor under this Series A Capital Securities
Guarantee shall not be affected or impaired by reason of the occurrence from
time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of
the performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Series A Capital
Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Series A Capital Securities or
the extension of time for the performance of any other obligation under,
arising out of, or in connection with, the Series A Capital Securities (other
than an extension of time for payment of Distributions, Redemption Price,
Liquidation Distribution or other sum payable that results from the extension
of any interest payment period on the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part
of the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Series A Capital
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
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(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Issuer or any of the
assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Series A
Capital Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred;
(g) the consummation of the Exchange Offer; or
(h) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.03 that the obligations of the Guarantor with
respect to the Guarantee Payments shall be absolute and unconditional under any
and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.04 Rights of Holders
(a) The Holders of a Majority in liquidation amount of the Series
A Capital Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Capital Securities
Guarantee Trustee in respect of this Series A Capital Securities Guarantee or
exercising any trust or power conferred upon the Capital Securities Guarantee
Trustee under this Series A Capital Securities Guarantee; provided, however,
that, subject to Section 3.01, the Capital Securities Guarantee Trustee shall
have the right to decline to follow any such direction if it shall determine
that the action or proceeding so directed would be unjustly prejudicial to
Holders not taking part in such direction or if it were advised by counsel that
such action or proceeding may not lawfully be taken or if a Responsible Officer
of the Capital Securities Guarantee Trustee shall determine in good faith that
such action or proceeding would involve the Capital Securities Guarantee
Trustee in personal liability.
(b) If the Capital Securities Guarantee Trustee fails to enforce
such Series A Capital Securities Guarantee after the Holders of a Majority in
liquidation amount of the Series A Capital Securities have so directed the
Capital Securities Guarantee Trustee, any Holder may institute a legal
proceeding directly against the Guarantor to enforce the Capital Securities
Guarantee Trustee's rights and the obligations of the Guarantor under this
Series A Capital Securities Guarantee, without first instituting a legal
proceeding against the Issuer, the Capital Securities Guarantee Trustee or any
other Person. The Guarantor hereby waives any right or remedy to require that
any action be brought first against the Issuer or any other Person before
proceeding directly against the Guarantor.
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SECTION 5.05 Guarantee of Payment
This Series A Capital Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 5.06 Subrogation
The Guarantor shall be subrogated to all rights (if any) of the
Holders against the Issuer in respect of any amounts paid to such Holders by
the Guarantor under this Series A Capital Securities Guarantee; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any right that
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Series A Capital
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Series A Capital Securities Guarantee. If any amount
shall be paid to the Guarantor in violation of the preceding sentence, the
Guarantor agrees to hold such amount in trust for the Holders and to pay over
such amount to the Holders.
SECTION 5.07 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Series A
Capital Securities, and that the Guarantor shall be liable as principal and as
debtor hereunder to make Guarantee Payments pursuant to the terms of this
Series A Capital Securities Guarantee notwithstanding the occurrence of any
event referred to in subsections (a) through (h), inclusive, of Section 5.03
hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.01 Limitation of Transactions
So long as any Capital Securities remain outstanding, the Guarantor
shall not (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of the
Guarantor's capital stock (which includes common and preferred stock), (ii)
make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Guarantor (including any Other
Debentures) that rank pari passu with or junior in right of payment to the
Debentures or (iii) make any guarantee payments with respect to any guarantee
by the Guarantor of any securities of any subsidiary of the Guarantor
(including Other Guarantees) if such guarantee ranks pari passu with or junior
in right of payment to the Debentures (other than (a) dividends or
distributions in shares of, or options, warrants or rights to subscribe for or
purchase shares of, capital stock of the Guarantor, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights
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plan, or the issuance of stock under any such plan in the future, or the
redemption or repurchase of any such rights pursuant thereto, (c) payments
under this Series A Capital Securities Guarantee or the Series B Capital
Series Guarantee, (d) as a direct result of a reclassification of the
Guarantor's capital stock or the exchange or conversion of one class or series
of the Guarantor's capital stock for another class or series of the Guarantor's
capital stock, (e) the purchase of fractional interests in shares of the
Guarantor's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged or pursuant to
an acquisition in which fractional shares of the Guarantor's capital stock
would otherwise be issued and (f) purchases of common stock related to the
issuance of common stock or rights under any benefit plan for directors,
officers, agents or employees of the Guarantor or its subsidiaries or any of
the Guarantor's dividend reinvestment or director, officer, agent or employee
stock purchase plans) if at such time (A) an Event of Default (as defined in
the Indenture) shall have occurred and be continuing, or would occur upon the
taking of any action specified in clauses (i) through (iii) above, (B) there
shall have occurred any event of which the Guarantor has actual knowledge that
(x) is, or with the giving of notice or the lapse of time, or both, would be an
Event of Default (as defined in the Indenture) and (y) in respect of which the
Guarantor shall not have taken reasonable steps to cure, (C) if such Debentures
are held by the Property Trustee, the Guarantor shall be in default with
respect to its payment of any obligations under this Series A Capital
Securities Guarantee or (D) the Guarantor shall have given notice of its
election of the exercise of its right to extend the interest payment period
pursuant to Section 16.01 of the Indenture or with respect to Other Debentures
and any such extension shall be continuing.
SECTION 6.02 Ranking
This Series A Capital Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to Senior Indebtedness (as defined in the Indenture) to the
same extent and in the same manner that the Debentures are subordinated to
Senior Indebtedness pursuant to the Indenture, it being understood that the
terms of Article XV of the Indenture shall apply to the obligations of the
Guarantor under this Series A Capital Securities Guarantee as if (x) such
Article XV were set forth herein in full and (y) such obligations were
substituted for the term "Securities" appearing in such Article XV, (ii) pari
passu with the Debentures, the Other Debentures, the most senior preferred or
preference stock now outstanding or hereafter issued by the Guarantor, any
Other Guarantee, the Common Securities Guarantee, any Other Common Securities
Guarantee and any guarantee now or hereafter entered into by the Guarantor in
respect of any preferred or preference stock of any Affiliate of the Guarantor;
provided that if an Event of Default has occurred and is continuing, no
Guarantee Payments under the Common Securities Guarantee with respect to the
Common Securities or any guarantee payment under any Other Common Securities
Guarantees shall be made until the Holders shall be paid in full the Guarantee
Payments to which they are entitled under this Series A Capital Securities
Guarantee, and (iii) senior to the Guarantor's common stock.
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ARTICLE VII
TERMINATION
SECTION 7.01 Termination
This Series A Capital Securities Guarantee shall terminate (i) upon
full payment of the Redemption Price (as defined in the Declaration) of all
Series A Capital Securities, (ii) upon liquidation of the Issuer, the full
payment of the amounts payable in accordance with the Declaration or the
distribution of the Debentures to the Holders of all of the Series A Capital
Securities or (iii) upon exchange of all the Series A Capital Securities for
the Series B Capital Securities in the Exchange Offer and the execution and
delivery of the Series B Capital Securities Guarantee. Notwithstanding the
foregoing, this Series A Capital Securities Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any Holder
must restore payment of any sums paid under the Series A Capital Securities or
under this Series A Capital Securities Guarantee.
ARTICLE VII
COMPENSATION AND EXPENSES OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
The Guarantor covenants and agrees to pay to the Capital Securities
Guarantee Trustee from time to time, and the Capital Securities Guarantee
Trustee shall be entitled to, such compensation as shall be agreed to in
writing between the Guarantor and the Capital Securities Guarantee Trustee
(which agreement shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust), and the Guarantor will pay or
reimburse the Capital Securities Guarantee Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Capital
Securities Guarantee Trustee in accordance with any of the provisions of this
Capital Securities Guarantee (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ) except any such expense, disbursement or advance as may arise from
its negligence or bad faith. The Guarantor also covenants to indemnify the
Capital Securities Guarantee Trustee (and its officers, agents, directors and
employees) for, and to hold it harmless against, any and all loss, damage,
claim, liability or expense including taxes (other than taxes based on the
income of the Capital Securities Guarantee Trustee) incurred without negligence
or bad faith on the part of the Capital Securities Guarantee Trustee and
arising out of or in connection with the acceptance or administration of this
guarantee, including the costs and expenses of defending itself against any
claim of liability in the premises. The obligations of the Guarantor under
this Article VIII to compensate and indemnify the Capital Securities Guarantee
Trustee and to pay or reimburse the Capital Securities Guarantee Trustee for
expenses, disbursements and advances shall be secured by a lien prior to that
of the Series A Capital Securities upon all property and funds held or
collected by the Capital Securities Guarantee Trustee, except funds held in
trust for the benefit of the holders of particular Series A Capital Securities.
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The provisions of this Article shall survive the termination of this
Capital Securities Guarantee or the earlier resignation or removal of the
Capital Securities Guarantee Trustee.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed
or omitted by such Indemnified Person in good faith in accordance with this
Series A Capital Securities Guarantee and in a manner that such Indemnified
Person reasonably believed to be within the scope of the authority conferred on
such Indemnified Person by this Series A Capital Securities Guarantee or by
law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's negligence or
willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount of
assets from which Distributions to Holders might properly be paid.
SECTION 9.02 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and to
hold each Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 9.02 shall survive the termination of
this Series A Capital Securities Guarantee.
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ARTICLE X
MISCELLANEOUS
SECTION 10.01 Successors and Assigns
All guarantees and agreements contained in this Series A Capital
Securities Guarantee shall bind the successors, assigns, receivers, trustees
and representatives of the Guarantor and shall inure to the benefit of the
Holders then outstanding.
SECTION 10.02 Amendments
Except with respect to any changes that do not materially adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Series A Capital Securities Guarantee may only be amended with
the prior approval of the Holders of a Majority in liquidation amount of the
Series A Capital Securities. The provisions of the Declaration with respect to
consents to amendments thereof (whether at a meeting or otherwise) shall apply
to the giving of such approval.
SECTION 10.03 Notices
All notices provided for in this Series A Capital Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, as follows:
(a) if given to the Issuer, in care of the Administrative Trustees
at the Issuer's mailing address set forth below (or such other address as the
Issuer may give notice of to the Holders and the Capital Securities Guarantee
Trustee):
K N Capital Trust I
c/o K N Energy, Inc.
370 Van Gordon Street
P.O. Box 281304
Lakewood, Colorado 80228-8304
Attention: Chief Financial Officer
Telecopy: (303) 763-3517
(b) if given to the Capital Securities Guarantee Trustee, at the
Capital Securities Guarantee Trustee's mailing address set forth below (or such
other address as the Capital Securities Guarantee Trustee may give notice of to
the Holders and the Issuer):
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Wilmington Trust Company
1100 N. Market Street
Rodney Square North
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Telecopy: (302) 651-1576
(c) if given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders of the Series A Capital Securities and the Capital Securities
Guarantee Trustee):
K N Energy, Inc.
370 Van Gordon Street
P.O. Box 281304
Lakewood, Colorado 80228-8304
Attention: Chief Financial Officer
Telecopy: (303) 763-3517
(d) if given to any Holder of Series A Capital Securities, at the
address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 10.04 Exchange Offer
In the event an Exchange Offer Registration Statement (as defined in
the Registration Rights Agreement) becomes effective and the Issuer issues any
Series B Capital Securities in the Exchange Offer, the Guarantor will enter
into a new capital securities guarantee, in substantially the same form as this
Series A Capital Securities Guarantee, with respect to the Series B Capital
Securities.
SECTION 10.05 Benefit
This Series A Capital Securities Guarantee is solely for the benefit
of the Holders and, subject to Section 3.01(a), is not separately transferable
from the Series A Capital Securities.
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SECTION 10.06 Governing Law
THIS SERIES A CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
THIS SERIES A CAPITAL SECURITIES GUARANTEE is executed as of the day
and year first above written.
K N ENERGY, INC., as Guarantor
By: /s/ E. Wayne Lundhagen
--------------------------------------
Name: E. Wayne Lundhagen
Title: Vice President and Treasurer
WILMINGTON TRUST COMPANY, as
Capital Securities Guarantee Trustee
By: /s/ James P. Lawler
--------------------------------------
Name: James P. Lawler
Title: Vice President
22
<PAGE> 1
EXHIBIT 4.10
CAPITAL SECURITIES GUARANTEE
K N ENERGY, INC.
Dated as of ___________, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS AND INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.01 Definitions and Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
TRUST INDENTURE ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.01 Trust Indenture Act; Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.02 Lists of Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.03 Reports by the Capital Securities Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.04 Periodic Reports to Capital Securities Guarantee Trustee . . . . . . . . . . . . . . . . . . 6
SECTION 2.05 Evidence of Compliance with Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.06 Events of Default; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.07 Event of Default; Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.08 Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
POWERS, DUTIES AND RIGHTS OFCAPITAL SECURITIES GUARANTEE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.01 Powers and Duties of the Capital Securities Guarantee Trustee . . . . . . . . . . . . . . . . 8
SECTION 3.02 Certain Rights of Capital Securities Guarantee Trustee . . . . . . . . . . . . . . . . . . . 9
SECTION 3.03 Not Responsible for Recitals or Issuance of Capital Securities Guarantee . . . . . . . . . 12
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.01 Capital Securities Guarantee Trustee; Eligibility . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.02 Appointment, Removal and Resignation of Capital Securities Guarantee Trustee . . . . . . . 13
ARTICLE V
GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.01 Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.02 Waiver of Notice and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.03 Obligations Not Affected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.04 Rights of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.05 Guarantee of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.06 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.07 Independent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.01 Limitation of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.02 Ranking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VII
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.01 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VII
COMPENSATION AND EXPENSES OF
CAPITAL SECURITIES GUARANTEE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE IX
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 9.01 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 9.02 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE X
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 10.01 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 10.02 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 10.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 10.04 Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 10.05 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
ii
<PAGE> 4
CAPITAL SECURITIES GUARANTEE
This GUARANTEE (the "Capital Securities Guarantee"), dated as of
_________, 1997, is executed and delivered by K N ENERGY, INC., a Kansas
corporation (the "Guarantor"), and WILMINGTON TRUST COMPANY, a Delaware banking
corporation, as trustee (the "Capital Securities Guarantee Trustee"), for the
benefit of the Holders (as defined herein) from time to time of the Capital
Securities (as defined herein) of K N Capital Trust I, a Delaware statutory
business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of April 24, 1997, among the trustees of the Issuer,
the Guarantor, as sponsor, and the holders from time to time of undivided
beneficial interests in the assets of the Issuer, the Issuer issued on April
24, 1997 100,000 capital securities, having an aggregate liquidation amount of
$100,000,000, such capital securities being designated the 8.56% Series A
Capital Trust Pass-through Securities SM(1) (collectively the "Series A Capital
Securities") and, in connection with an Exchange Offer (as defined in the
Declaration) has agreed to execute and deliver this Capital Securities
Guarantee for the benefit of Holders of the Series B Capital Securities (as
defined in the Declaration) to be issued in the Exchange Offer.
WHEREAS, the Guarantor also desires to extend the benefit of this
Capital Securities Guarantee to the Holders of the Series A Capital Securities
and, having done so, to terminate the Series A Capital Securities Guarantee (as
defined herein) as redundant.
WHEREAS, as incentive for the Holders to acquire the Series B Capital
Securities in exchange for the Series A Capital Securities, the Guarantor
desires irrevocably and unconditionally to agree, to the extent set forth in
this Capital Securities Guarantee, to pay to the Holders the Guarantee Payments
(as defined below), and the Guarantor agrees to make certain other payments on
the terms and conditions set forth herein.
WHEREAS, the Guarantor has executed and delivered a guarantee (the
"Common Securities Guarantee"), with substantially identical terms to this
Capital Securities Guarantee, for the benefit of the holders of the Common
Securities (as defined herein), except that if an Event of Default (as defined
in the Declaration) has occurred and is continuing, the rights of holders of
the Common Securities to receive Guarantee Payments under the Common Securities
Guarantee are subordinated, to the extent and in the manner set forth in the
Common Securities Guarantee, to the rights of Holders of Series A Capital
Securities and the Series B Capital Securities to receive Guarantee Payments
under this Capital Securities Guarantee.
- ---------------
(1) Salomon Brothers Inc has filed an application with the United
States Patent and Trademark Office for the registration of the Capital Trust
Pass-through Securities service mark.
1
<PAGE> 5
NOW, THEREFORE, in consideration of the acquisition of the Series B
Capital Securities by each Holder pursuant to the Exchange Offer, which
acquisition the Guarantor hereby acknowledges shall benefit the Guarantor, the
Guarantor executes and delivers this Capital Securities Guarantee for the
benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.01 Definitions and Interpretation
In this Capital Securities Guarantee, unless the context otherwise
requires:
(a) capitalized terms used in this Capital Securities Guarantee
but not defined in the preamble above have the respective meanings assigned to
them in this Section 1.01;
(b) terms defined in the Declaration have the same meaning when
used in this Capital Securities Guarantee unless otherwise defined in this
Capital Securities Guarantee;
(c) a term defined anywhere in this Capital Securities Guarantee
has the same meaning throughout;
(d) all references to "the Capital Securities Guarantee" or "this
Capital Securities Guarantee" are to this Capital Securities Guarantee as
modified, supplemented or amended from time to time;
(e) all references in this Capital Securities Guarantee to
Articles and Sections are to Articles and Sections of this Capital Securities
Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same meaning
when used in this Capital Securities Guarantee, unless otherwise defined in
this Capital Securities Guarantee or unless the context otherwise requires; and
(g) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" means any day other than a Saturday or a Sunday, or a
day on which banking institutions in Wilmington, Delaware or New York, New York
are authorized or required by law or executive order to close.
"Capital Securities" means the Series A Capital Securities and the
Series B Capital Securities.
2
<PAGE> 6
"Capital Securities Guarantee Trustee" means Wilmington Trust Company,
a Delaware banking corporation, until a Successor Capital Securities Guarantee
Trustee has been appointed and has accepted such appointment pursuant to the
terms of this Capital Securities Guarantee and thereafter means each such
Successor Capital Securities Guarantee Trustee.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the Capital Securities
Guarantee Trustee at which the corporate trust business of the Capital
Securities Guarantee Trustee shall, at any particular time, be principally
administered, which office at the date of execution of this Capital Securities
Guarantee is located at 1100 N. Market Street, Rodney Square, Wilmington,
Delaware 19890-0001, Attention: Corporate Trust Administration.
"Covered Person" means any Holder or beneficial owner of Capital
Securities.
"Debentures" means either series of subordinated debt securities of
the Guarantor designated the 8.56% Junior Subordinated Deferrable Interest
Debentures due April 15, 2027 held by the Property Trustee (as defined in the
Declaration) of the Issuer.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Capital Securities Guarantee.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Capital Securities, to the extent not
paid or made by the Issuer: (i) any accumulated and unpaid Distributions (as
defined in the Declaration) that are required to be paid on such Capital
Securities to the extent the Issuer has funds on hand legally available
therefor at such time, (ii) the redemption price, including all accumulated and
unpaid Distributions to the date of redemption (the "Redemption Price") to the
extent the Issuer has funds on hand legally available therefor at such time,
with respect to any Capital Securities called for redemption by the Issuer, and
(iii) upon a voluntary or involuntary dissolution and liquidation of the Issuer
(other than in connection with the distribution of Debentures to the Holders in
exchange for Capital Securities as provided in the Declaration), the lesser of
(a) the aggregate of the liquidation amount and all accumulated and unpaid
Distributions on the Capital Securities to the date of payment, to the extent
the Issuer has funds on hand legally available therefor, and (b) the amount of
assets of the Issuer remaining available for distribution to Holders in
liquidation of the Issuer.
"Holder" shall mean any holder, as registered on the books and records
of the Issuer, of any Capital Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Capital
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor or any Affiliate of the Guarantor.
3
<PAGE> 7
"Indemnified Person" means the Capital Securities Guarantee Trustee,
any Affiliate of the Capital Securities Guarantee Trustee, or any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Capital Securities Guarantee Trustee.
"Indenture" means the Indenture dated as of April 24, 1997, between
the Guarantor (the "Debenture Issuer") and Wilmington Trust Company, as
trustee, pursuant to which the Debentures were or are to be issued to the
Property Trustee of the Issuer.
"Majority in liquidation amount of the Capital Securities" means,
except as provided by the Trust Indenture Act, a vote by Holder(s) of more than
50% of the aggregate liquidation amount (including the stated amount that would
be paid on redemption, liquidation or otherwise, plus accumulated and unpaid
Distributions to the date upon which the voting percentages are determined) of
all Capital Securities outstanding at the time of such vote.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman, a Vice Chairman, the Chief Executive
Officer, the President, a Vice President, the Comptroller, the Secretary or an
Assistant Secretary of such Person. Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for in this Capital
Securities Guarantee (other than pursuant to Section 314(a)(4) of the Trust
Indenture Act) shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions relating
thereto;
(b) a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(c) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Other Common Securities Guarantees" shall have the same meaning as
"Other Guarantees" in the Common Securities Guarantee.
"Other Debentures" means all subordinated debentures issued by the
Guarantor from time to time and sold to trusts to be established by the
Guarantor (if any), in each case similar to the Issuer.
"Other Guarantees" means all guarantees to be issued by the Guarantor
with respect to capital securities (if any) similar to the Capital Securities
issued by other trusts to be established by the Guarantor (if any), in each
case similar to the Issuer.
4
<PAGE> 8
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever
nature.
"Responsible Officer" means, with respect to the Capital Securities
Guarantee Trustee, any officer within the Corporate Trust Office of the Capital
Securities Guarantee Trustee, including any vice president, any assistant vice
president, any secretary, any assistant secretary, the treasurer, any assistant
treasurer, any trust officer, any senior trust officer or other officer in the
Corporate Trust Office of the Capital Securities Guarantee Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Series A Capital Securities Guarantee" means the Series A Capital
Securities Guarantee, dated as of April 24, 1997, between the Guarantor and
Wilmington Trust Company, as Trustee.
"Successor Capital Securities Guarantee Trustee" means a successor
Capital Securities Guarantee Trustee possessing the qualifications to act as
Capital Securities Guarantee Trustee under Section 4.01.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Trust Securities" means the Common Securities and the Capital
Securities, collectively.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.01 Trust Indenture Act; Application
(a) This Capital Securities Guarantee is subject to the provisions
of the Trust Indenture Act that are required to be part of this Capital
Securities Guarantee and shall, to the extent applicable, be governed by such
provisions; and
(b) if and to the extent that any provision of this Capital
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.02 Lists of Holders of Securities
(a) The Guarantor shall provide the Capital Securities Guarantee
Trustee (unless the Capital Securities Guarantee Trustee is otherwise the
registrar of the Capital Securities) with a
5
<PAGE> 9
list, in such form as the Capital Securities Guarantee Trustee may reasonably
require, of the names and addresses of the Holders ("List of Holders") as of
such date, (i) within one Business Day after each Record Date (as defined in
the Indenture), and (ii) at any other time within 30 days of receipt by the
Guarantor of a written request for a List of Holders as of a date no more than
14 days before such List of Holders is given to the Capital Securities
Guarantee Trustee; provided that the Guarantor shall not be obligated to
provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Capital Securities Guarantee
Trustee by the Guarantor. The Capital Securities Guarantee Trustee may destroy
any List of Holders previously given to it on receipt of a new List of Holders.
(b) The Capital Securities Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.03 Reports by the Capital Securities Guarantee Trustee
Within 90 days after December 31 of each year, commencing December 31,
1997, the Capital Securities Guarantee Trustee shall provide to the Holders
such reports as are required by Section 313(a) of the Trust Indenture Act, if
any, in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Capital Securities Guarantee Trustee shall also comply with
the other requirements of Section 313 of the Trust Indenture Act.
SECTION 2.04 Periodic Reports to Capital Securities Guarantee Trustee
The Guarantor shall provide to the Capital Securities Guarantee
Trustee such documents, reports and information as required by Section 314 (if
any) and the compliance certificate required by Section 314 of the Trust
Indenture Act in the form, in the manner and at the times required by Section
314 of the Trust Indenture Act, provided that such compliance certificate shall
be delivered on or before 120 days after the end of each fiscal year of the
Guarantor. Delivery of such reports, information and documents to the Capital
Securities Guarantee Trustee is for informational purposes only, and the
Capital Securities Guarantee Trustee's receipt of such reports, information and
documents shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Guarantor's compliance with any of its covenants hereunder (as to which the
Capital Securities Guarantee Trustee is entitled to rely exclusively on
Officers' Certificates).
SECTION 2.05 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Capital Securities Guarantee
Trustee such evidence of compliance with any conditions precedent, if any,
provided for in this Capital Securities Guarantee that relate to any of the
matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
6
<PAGE> 10
SECTION 2.06 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Capital Securities
may, on behalf of all the Holders, waive by vote any past Event of Default and
its consequences. Upon such waiver, any such Event of Default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Capital Securities Guarantee, but no such
waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent thereon.
SECTION 2.07 Event of Default; Notice
(a) The Capital Securities Guarantee Trustee shall, within 30
Business Days after the occurrence of an Event of Default becomes actually
known to a Responsible Officer of the Capital Securities Guarantee Trustee,
mail by first class postage prepaid to all Holders notices of all defaults
actually known to such Responsible Officer of the Capital Securities Guarantee
Trustee, unless such defaults have been cured before the giving of such notice;
provided, however, that, except in the case of default in the payment of any
Guarantee Payment, the Capital Securities Guarantee Trustee shall be protected
in withholding notice of such Event of Default if and so long as the board of
directors, the executive committee, or a trust committee of directors and/or
Responsible Officers of the Capital Securities Guarantee Trustee, acting in
good faith, determines that the withholding of such notice is in the interests
of the holders of the Capital Securities.
(b) The Capital Securities Guarantee Trustee shall not be deemed
to have knowledge of any Event of Default unless (i) the Capital Securities
Guarantee Trustee shall have received written notice from the Guarantor or a
Holder of such Event of Default or (ii) a Responsible Officer of the Capital
Securities Guarantee Trustee charged with the administration of the Capital
Securities Guarantee shall have obtained actual knowledge of such Event of
Default.
SECTION 2.08 Conflicting Interests
The Declaration shall be deemed to be specifically described in this
Capital Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
7
<PAGE> 11
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.01 Powers and Duties of the Capital Securities Guarantee Trustee
(a) This Capital Securities Guarantee shall be held by the Capital
Securities Guarantee Trustee for the benefit of the Holders, and the Capital
Securities Guarantee Trustee shall not transfer this Capital Securities
Guarantee to any Person except a Holder exercising its rights pursuant to
Section 5.04(b) or to a Successor Capital Securities Guarantee Trustee on
acceptance by such Successor Capital Securities Guarantee Trustee of its
appointment to act as Successor Capital Securities Guarantee Trustee. The
right, title and interest of the Capital Securities Guarantee Trustee shall
automatically vest in any Successor Capital Securities Guarantee Trustee, and
such vesting and succession of title shall be effective whether or not
conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Capital Securities Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer
of the Capital Securities Guarantee Trustee has occurred and is continuing, the
Capital Securities Guarantee Trustee shall enforce this Capital Securities
Guarantee for the benefit of the Holders.
(c) Before the occurrence of any Event of Default and after the
curing or waiving of all Events of Default that may have occurred, the Capital
Securities Guarantee Trustee shall undertake to perform only such duties as are
specifically set forth in this Capital Securities Guarantee, and no implied
covenants shall be read into this Capital Securities Guarantee against the
Capital Securities Guarantee Trustee. If an Event of Default has occurred
(that has not been cured or waived pursuant to Section 2.06) and is actually
known to a Responsible Officer of the Capital Securities Guarantee Trustee, the
Capital Securities Guarantee Trustee shall exercise such of the rights and
powers vested in it by this Capital Securities Guarantee, and use the same
degree of care and skill in its exercise thereof, as a prudent person would
exercise or use under the same or similar circumstances in the conduct of his
or her own affairs.
(d) No provision of this Capital Securities Guarantee shall be
construed to relieve the Capital Securities Guarantee Trustee from liability
for its own negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and
after the curing or waiving of all such Events of Default that may
have occurred:
(A) the duties and obligations of the Capital
Securities Guarantee Trustee shall be determined solely by the
express provisions of this Capital Securities Guarantee, and
the Capital Securities Guarantee Trustee shall not be liable
except for the performance of such duties and obligations as
are specifically
8
<PAGE> 12
set forth in this Capital Securities Guarantee, and no implied
covenants or obligations shall be read into this Capital
Securities Guarantee against the Capital Securities Guarantee
Trustee; and
(B) in the absence of bad faith on the part of
the Capital Securities Guarantee Trustee, the Capital
Securities Guarantee Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished
to the Capital Securities Guarantee Trustee and conforming to
the requirements of this Capital Securities Guarantee;
provided that, in the case of any such certificates or
opinions that are specifically required to be furnished to the
Capital Securities Guarantee Trustee by any provision hereof,
the Capital Securities Guarantee Trustee shall be under a duty
to examine such certificates or opinions to determine whether
or not they conform to the requirements of this Capital
Securities Guarantee;
(ii) the Capital Securities Guarantee Trustee shall not be
liable for any error in judgment made in good faith by a Responsible
Officer of the Capital Securities Guarantee Trustee, unless it shall
be proved that the Capital Securities Guarantee Trustee was negligent
in ascertaining the pertinent facts upon which such judgment was made;
(iii) the Capital Securities Guarantee Trustee shall not be
liable with respect to any action taken or omitted to be taken by it
in good faith in accordance with the direction of the Holders of a
Majority in liquidation amount of the Capital Securities relating to
the time, method and place of conducting any proceeding for any remedy
available to the Capital Securities Guarantee Trustee, or exercising
any trust or power conferred upon the Capital Securities Guarantee
Trustee under this Capital Securities Guarantee; and
(iv) no provision of this Capital Securities Guarantee
shall require the Capital Securities Guarantee Trustee to expend or
risk or its own funds or otherwise incur personal financial liability
in the performance of its duties or in the exercise of its rights or
powers, if the Capital Securities Guarantee Trustee shall have
reasonable grounds for believing that the repaying of such funds or
liability is not reasonably assured to it under the terms of this
Capital Securities Guarantee or indemnity, reasonably satisfactory to
the Capital Securities Guarantee Trustee, against such risk or
liability is not reasonably assured to it.
SECTION 3.02 Certain Rights of Capital Securities Guarantee Trustee
(a) Subject to the provisions of Section 3.01:
(i) The Capital Securities Guarantee Trustee may
conclusively rely, and shall be fully protected in acting or
refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond,
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debenture, note, other evidence of indebtedness or other paper or
document believe by it to be genuine and to have been signed, sent or
presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Capital Securities Guarantee may be sufficiently evidenced by an
Officers' Certificate.
(iii) Whenever, in the administration of this Capital
Securities Guarantee, the Capital Securities Guarantee Trustee shall
deem it desirable that a matter be proved or established before
taking, suffering or omitting any action hereunder, and in the absence
of bad faith on its part, the Capital Securities Guarantee Trustee may
request, shall be entitled to receive and may conclusively rely upon
an Officers' Certificate (unless other evidence is herein specifically
prescribed) which shall be promptly delivered by the Guarantor upon
receipt of such request.
(iv) The Capital Securities Guarantee Trustee shall have
no duty to see to any recording, filing or registration of any
instrument (or any rerecording, refiling or registration thereof).
(v) The Capital Securities Guarantee Trustee may consult
with counsel of its own selection, and the advice or opinion of such
counsel with respect to legal matters shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance with such
advice or opinion. Such counsel may be counsel to the Guarantor or
any of its Affiliates and may include any of its employees. The
Capital Securities Guarantee Trustee shall have the right at any time
to seek instructions concerning the administration of this Capital
Securities Guarantee from any court of competent jurisdiction.
(vi) The Capital Securities Guarantee Trustee shall be
under no obligation to exercise any of the rights or powers vested in
it by this Capital Securities Guarantee at the request or direction of
any Holder, unless such Holder shall have provided to the Capital
Securities Guarantee Trustee security and indemnity reasonably
satisfactory to the Capital Securities Guarantee Trustee against the
costs, expenses (including attorneys' fees and expenses and the
expenses of the Capital Securities Guarantee Trustee's agents,
nominees or custodians) and liabilities that might be incurred by it
in complying with such request or direction, including such reasonable
advances as may be requested by the Capital Securities Guarantee
Trustee; provided that nothing contained in this Section 3.02(a)(vi)
shall be taken to relieve the Capital Securities Guarantee Trustee of
its obligation to exercise the rights and powers vested in it by this
Capital Securities Guarantee upon the occurrence of an Event of
Default.
(vii) The Capital Securities Guarantee Trustee shall not be
bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture,
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note, other evidence of indebtedness or other paper or document, but
the Capital Securities Guarantee Trustee, in its own discretion, may
make such further inquiry or investigation into such facts or matters
as it sees fit.
(viii) The Capital Securities Guarantee Trustee may execute
any of the trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents, nominees, custodians or
attorneys, and the Capital Securities Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any agent
or attorney appointed with due care by it hereunder.
(ix) Any action taken by the Capital Securities Guarantee
Trustee or its agents hereunder shall bind the Holders, and the
signature of the Capital Securities Guarantee Trustee or its agents
alone shall be sufficient and effective to perform any such action. No
third party shall be required to inquire as to the authority of the
Capital Securities Guarantee Trustee to so act or as to its compliance
with any of the terms and provisions of this Capital Securities
Guarantee, both of which shall be conclusively evidenced by the
Capital Securities Guarantee Trustee's or its agent's taking such
action.
(x) Whenever in the administration of this Capital
Securities Guarantee, the Capital Securities Guarantee Trustee shall
deem it desirable to receive instructions with respect to enforcing
any remedy or right or taking any other action hereunder, the Capital
Securities Guarantee Trustee (i) may request instructions from the
Holders of a Majority in liquidation amount of the Capital Securities,
(ii) may refrain from enforcing such remedy or right or taking such
other action until such instructions are received and (iii) shall be
protected in conclusively relying on or acting in accordance with such
instructions.
(xi) The Capital Securities Guarantee Trustee shall not be
liable for any action taken, suffered, or omitted to be taken by it in
good faith, without negligence, and reasonably believed by it to be
authorized or within the discretion, rights or powers conferred upon
it by this Capital Securities Guarantee.
(xii) Except as otherwise expressly provided by this
Capital Securities Guarantee, the Capital Securities Guarantee Trustee
shall not be under any obligation to take any action that is
discretionary hereunder.
(b) No provision of this Capital Securities Guarantee shall be
deemed to impose any duty or obligation on the Capital Securities Guarantee
Trustee to perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it in any jurisdiction in which it shall be
illegal, or in which the Capital Securities Guarantee Trustee shall be
unqualified or incompetent in accordance with applicable law to perform any
such act or acts or to exercise any such right, power, duty or obligation, or
which would expose the Capital Securities
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Guarantee Trustee to liability, financial or otherwise. No permissive power or
authority available to the Capital Securities Guarantee Trustee shall be
construed to be a duty.
SECTION 3.03 Not Responsible for Recitals or Issuance of Capital Securities
Guarantee
The recitals contained in this Capital Securities Guarantee shall be
taken as the statements of the Guarantor, and the Capital Securities Guarantee
Trustee does not assume any responsibility for their correctness. The Capital
Securities Guarantee Trustee makes no representation as to the validity or
sufficiency of this Capital Securities Guarantee.
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.01 Capital Securities Guarantee Trustee; Eligibility
(a) There shall at all times be a Capital Securities Guarantee
Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or other Person
permitted by the Securities and Exchange Commission to act as an
institutional trustee under the Trust Indenture Act, authorized under
such laws to exercise corporate trust powers, having a combined
capital and surplus of at least fifty million U.S. dollars
($50,000,000), and subject to supervision or examination by Federal,
State, Territorial or District of Columbia authority. If, pursuant to
law or to the requirements of the supervising or examining authority
referred to above, such Person publishes reports of condition at least
annually, then, for the purposes of this Section 4.01(a)(ii), the
combined capital and surplus of such Person shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published.
(b) If at any time the Capital Securities Guarantee Trustee shall
cease to be eligible to act under Section 4.01(a), the Capital Securities
Guarantee Trustee shall immediately resign, with the effect set forth in
Section 4.02(c).
(c) If the Capital Securities Guarantee Trustee has or shall
acquire any "conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Capital Securities Guarantee Trustee and Guarantor
shall comply in all respects with the provisions of Section 310(b) of the Trust
Indenture Act, subject to the penultimate paragraph thereof.
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SECTION 4.02 Appointment, Removal and Resignation of Capital Securities
Guarantee Trustee
(a) Subject to Section 4.02(b), the Capital Securities Guarantee
Trustee may be appointed or removed without cause at any time by the Guarantor
except during the continuance of an Event of Default.
(b) The Capital Securities Guarantee Trustee shall not be removed
in accordance with Section 4.02(a) until a Successor Capital Securities
Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Capital Securities Guarantee
Trustee and delivered to the Guarantor.
(c) The Capital Securities Guarantee Trustee shall hold office
until a Successor Capital Securities Guarantee Trustee shall have been
appointed or until such Capital Securities Guarantee Trustee's removal or
resignation. The Capital Securities Guarantee Trustee may resign from office
(without any prior or subsequent accounting) by an instrument in writing
executed by the Capital Securities Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Capital
Securities Guarantee Trustee has been appointed and has accepted such
appointment by written instrument delivered to the Guarantor and the resigning
Capital Securities Guarantee Trustee.
(d) If no Successor Capital Securities Guarantee Trustee shall
have been appointed and accepted appointment as provided in this Section 4.02
within 60 days after delivery of an instrument of removal or resignation, the
Capital Securities Guarantee Trustee resigning or being removed may petition
any court of competent jurisdiction for the appointment of a Successor Capital
Securities Guarantee Trustee. Such court may thereupon, after prescribing such
notice, if any, as it may deem proper, appoint a Successor Capital Securities
Guarantee Trustee.
(e) No Capital Securities Guarantee Trustee shall be liable for
the acts or omissions to act of any Successor Capital Securities Guarantee
Trustee.
(f) Upon termination of this Capital Securities Guarantee or
removal or resignation of the Capital Securities Guarantee Trustee pursuant to
this Section 4.02, the Guarantor shall pay to the Capital Securities Guarantee
Trustee all accrued and unpaid amounts due to the Capital Securities Guarantee
Trustee through the date of such termination, removal or resignation.
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ARTICLE V
GUARANTEE
SECTION 5.01 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts, if any,
theretofore paid by the Issuer) as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of such required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 5.02 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Capital
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other required notices and demands.
SECTION 5.03 Obligations Not Affected
Except as otherwise provided herein, the obligations, covenants,
agreements and duties of the Guarantor under this Capital Securities Guarantee
shall not be affected or impaired by reason of the occurrence from time to time
of any of the following:
(a) the release or waiver, by operation of law or otherwise, of
the performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Capital Securities to be
performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Capital Securities or the
extension of time for the performance of any other obligation under, arising
out of, or in connection with, the Capital Securities (other than an extension
of time for payment of Distributions, Redemption Price, Liquidation
Distribution or other sum payable that results from the extension of any
interest payment period on the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part
of the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Capital
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
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(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Issuer or any of the
assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Capital
Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred;
(g) the consummation of the Exchange Offer; or
(h) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.03 that the obligations of the Guarantor with
respect to the Guarantee Payments shall be absolute and unconditional under any
and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.04 Rights of Holders
(a) The Holders of a Majority in liquidation amount of the Capital
Securities have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Capital Securities Guarantee
Trustee in respect of this Capital Securities Guarantee or exercising any trust
or power conferred upon the Capital Securities Guarantee Trustee under this
Capital Securities Guarantee; provided, however, that, subject to Section 3.01,
the Capital Securities Guarantee Trustee shall have the right to decline to
follow any such direction if it shall determine that the action or proceeding
so directed would be unjustly prejudicial to Holders not taking part in such
direction or if it were advised by counsel that such action or proceeding may
not lawfully be taken or if a Responsible Officer of the Capital Securities
Guarantee Trustee shall determine in good faith that such action or proceeding
would involve the Capital Securities Guarantee Trustee in personal liability.
(b) If the Capital Securities Guarantee Trustee fails to enforce
this Capital Securities Guarantee after the Holders of a Majority in
liquidation amount of the Capital Securities have so directed the Capital
Securities Guarantee Trustee, any Holder may institute a legal proceeding
directly against the Guarantor to enforce the Capital Securities Guarantee
Trustee's rights and the obligations of the Guarantor under this Capital
Securities Guarantee, without first instituting a legal proceeding against the
Issuer, the Capital Securities Guarantee Trustee or any other Person. The
Guarantor hereby waives any right or remedy to require that any action be
brought first against the Issuer or any other Person before proceeding directly
against the Guarantor.
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SECTION 5.05 Guarantee of Payment
This Capital Securities Guarantee creates a guarantee of payment and
not of collection.
SECTION 5.06 Subrogation
The Guarantor shall be subrogated to all rights (if any) of the
Holders against the Issuer in respect of any amounts paid to such Holders by
the Guarantor under this Capital Securities Guarantee; provided, however, that
the Guarantor shall not (except to the extent required by mandatory provisions
of law) be entitled to enforce or exercise any right that it may acquire by way
of subrogation or any indemnity, reimbursement or other agreement, in all cases
as a result of payment under this Capital Securities Guarantee, if, at the time
of any such payment, any amounts are due and unpaid under this Capital
Securities Guarantee. If any amount shall be paid to the Guarantor in
violation of the preceding sentence, the Guarantor agrees to hold such amount
in trust for the Holders and to pay over such amount to the Holders.
SECTION 5.07 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Capital
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Capital
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (h), inclusive, of Section 5.03 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.01 Limitation of Transactions
So long as any Capital Securities remain outstanding, the Guarantor
shall not (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of the
Guarantor's capital stock (which includes common and preferred stock), (ii)
make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Guarantor (including any Other
Debentures) that rank pari passu with or junior in right of payment to the
Debentures or (iii) make any guarantee payments with respect to any guarantee
by the Guarantor of any securities of any subsidiary of the Guarantor
(including Other Guarantees) if such guarantee ranks pari passu with or junior
in right of payment to the Debentures (other than (a) dividends or
distributions in shares of, or options, warrants or rights to subscribe for or
purchase shares of, capital stock of the Guarantor, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption
or repurchase of any such rights pursuant thereto, (c) payments under this
Capital Series Guarantee, (d) as a
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direct result of a reclassification of the Guarantor's capital stock or the
exchange or conversion of one class or series of the Guarantor's capital stock
for another class or series of the Guarantor's capital stock, (e) the purchase
of fractional interests in shares of the Guarantor's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged or pursuant to an acquisition in which fractional
shares of the Guarantor's capital stock would otherwise be issued and (f)
purchases of common stock related to the issuance of common stock or rights
under any benefit plan for directors, officers, agents or employees of the
Guarantor or its subsidiaries or any of the Guarantor's dividend reinvestment
or director, officer, agent or employee stock purchase plans) if at such time
(A) an Event of Default (as defined in the Indenture) shall have occurred and
be continuing, or would occur upon the taking of any action specified in
clauses (i) through (iii) above, (B) there shall have occurred any event of
which the Guarantor has actual knowledge that (x) is, or with the giving of
notice or the lapse of time, or both, would be an Event of Default (as defined
in the Indenture) and (y) in respect of which the Guarantor shall not have
taken reasonable steps to cure, (C) if such Debentures are held by the Property
Trustee, the Guarantor shall be in default with respect to its payment of any
obligations under this Capital Securities Guarantee or (D) the Guarantor shall
have given notice of its election of the exercise of its right to extend the
interest payment period pursuant to Section 16.01 of the Indenture or with
respect to Other Debentures and any such extension shall be continuing.
SECTION 6.02 Ranking
This Capital Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right
of payment to Senior Indebtedness (as defined in the Indenture) to the same
extent and in the same manner that the Debentures are subordinated to Senior
Indebtedness pursuant to the Indenture, it being understood that the terms of
Article XV of the Indenture shall apply to the obligations of the Guarantor
under this Capital Securities Guarantee as if (x) such Article XV were set
forth herein in full and (y) such obligations were substituted for the term
"Securities" appearing in such Article XV, (ii) pari passu with the Debentures,
the Other Debentures, the most senior preferred or preference stock now
outstanding or hereafter issued by the Guarantor, any Other Guarantee, the
Common Securities Guarantee, any Other Common Securities Guarantee and any
guarantee now or hereafter entered into by the Guarantor in respect of any
preferred or preference stock of any Affiliate of the Guarantor; provided that
if an Event of Default has occurred and is continuing, no Guarantee Payments
under the Common Securities Guarantee with respect to the Common Securities or
any guarantee payment under any Other Common Securities Guarantees shall be
made until the Holders shall be paid in full the Guarantee Payments to which
they are entitled under this Capital Securities Guarantee, and (iii) senior to
the Guarantor's common stock.
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ARTICLE VII
TERMINATION
SECTION 7.01 Termination
(a) This Capital Securities Guarantee shall terminate (i) upon
full payment of the Redemption Price (as defined in the Declaration) of all
Capital Securities or (ii) upon liquidation of the Issuer, the full payment of
the amounts payable in accordance with the Declaration or the distribution of
the Debentures to the Holders of all of the Capital Securities.
Notwithstanding the foregoing, this Capital Securities Guarantee will continue
to be effective or will be reinstated, as the case may be, if at any time any
Holder must restore payment of any sums paid under the Capital Securities or
under this Capital Securities Guarantee.
(b) The Series A Capital Securities Guarantee shall terminate upon
the execution and delivery of this Capital Securities Guarantee, it being
intended that Holders of Series A Capital Securities shall have the same rights
and benefits hereunder as they had under the Series A Capital Securities
Guarantee when originally executed and delivered, without diminution or
enlargement in any manner whatsoever. The provisions of this Section 7.01(b)
are also intended to amend the provisions of clause (iii) of Section 7.01 of
the Series A Capital Securities Guarantee accordingly. Specifically, the words
"exchange of all the Series A Capital Securities for the Series B Capital
Securities in the Exchange Offer and" appearing in such clause are hereby
deleted. Such amendment does not, in the judgment of the Guarantor, materially
adversely affect the rights of Holders of Series A Capital Securities and,
therefore, does not require the consent of such Holders.
ARTICLE VII
COMPENSATION AND EXPENSES OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
The Guarantor covenants and agrees to pay to the Capital Securities
Guarantee Trustee from time to time, and the Capital Securities Guarantee
Trustee shall be entitled to, such compensation as shall be agreed to in
writing between the Guarantor and the Capital Securities Guarantee Trustee
(which agreement shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust), and the Guarantor will pay or
reimburse the Capital Securities Guarantee Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Capital
Securities Guarantee Trustee in accordance with any of the provisions of this
Capital Securities Guarantee (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ) except any such expense, disbursement or advance as may arise from
its negligence or bad faith. The Guarantor also covenants to indemnify the
Capital Securities Guarantee Trustee (and its officers, agents, directors and
employees) for, and to hold it harmless against, any and all loss, damage,
claim, liability or expense including taxes (other than taxes based on the
income of the
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Capital Securities Guarantee Trustee) incurred without negligence or bad faith
on the part of the Capital Securities Guarantee Trustee and arising out of or
in connection with the acceptance or administration of this guarantee,
including the costs and expenses of defending itself against any claim of
liability in the premises. The obligations of the Guarantor under this Article
VIII to compensate and indemnify the Capital Securities Guarantee Trustee and
to pay or reimburse the Capital Securities Guarantee Trustee for expenses,
disbursements and advances shall be secured by a lien prior to that of the
Capital Securities upon all property and funds held or collected by the Capital
Securities Guarantee Trustee, except funds held in trust for the benefit of the
holders of particular Capital Securities.
The provisions of this Article shall survive the termination of this
Capital Securities Guarantee or the earlier resignation or removal of the
Capital Securities Guarantee Trustee.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed
or omitted by such Indemnified Person in good faith in accordance with this
Capital Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Capital Securities Guarantee or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount of
assets from which Distributions to Holders might properly be paid.
SECTION 9.02 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and to
hold each Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any
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claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder. The obligation to indemnify as set forth in this
Section 9.02 shall survive the termination of this Capital Securities
Guarantee.
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Successors and Assigns
All guarantees and agreements contained in this Capital Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
then outstanding.
SECTION 10.02 Amendments
Except with respect to any changes that do not materially adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Capital Securities Guarantee may only be amended with the prior
approval of the Holders of a Majority in liquidation amount of the Capital
Securities. The provisions of the Declaration with respect to consents to
amendments thereof (whether at a meeting or otherwise) shall apply to the
giving of such approval.
SECTION 10.03 Notices
All notices provided for in this Capital Securities Guarantee shall be
in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, as follows:
(a) if given to the Issuer, in care of the Administrative Trustees
at the Issuer's mailing address set forth below (or such other address as the
Issuer may give notice of to the Holders and the Capital Securities Guarantee
Trustee):
K N Capital Trust I
c/o K N Energy, Inc.
370 Van Gordon Street
P.O. Box 281304
Lakewood, Colorado 80228-8304
Attention: Chief Financial Officer
Telecopy: (303) 763-3517
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(b) if given to the Capital Securities Guarantee Trustee, at the
Capital Securities Guarantee Trustee's mailing address set forth below (or such
other address as the Capital Securities Guarantee Trustee may give notice of to
the Holders and the Issuer):
Wilmington Trust Company
1100 N. Market Street
Rodney Square North
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Telecopy: (302) 651-1576
(c) if given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders and the Capital Securities Guarantee Trustee):
K N Energy, Inc.
370 Van Gordon Street
P.O. Box 281304
Lakewood, Colorado 80228-8304
Attention: Chief Financial Officer
Telecopy: (303) 763-3517
(d) if given to any Holder, at the address set forth on the books
and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 10.04 Benefit
This Capital Securities Guarantee is solely for the benefit of the
Holders and, subject to Section 3.01(a), is not separately transferable from
the Capital Securities.
SECTION 10.05 Governing Law
THIS CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
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THIS CAPITAL SECURITIES GUARANTEE is executed as of the day and year
first above written.
K N ENERGY, INC., as Guarantor
By:
---------------------------------------
Name: E. Wayne Lundhagen
Title: Vice President and Treasurer
WILMINGTON TRUST COMPANY, as Capital
Securities Guarantee Trustee
By:
---------------------------------------
Name: James P. Lawler
Title: Vice President
22
<PAGE> 1
EXHIBIT 4.11
COMMON SECURITIES GUARANTEE
K N ENERGY, INC.
Dated as of April 24, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS AND INTERPRETATION
ARTICLE II
GUARANTEE
SECTION 2.01. Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.02. Waiver of Notice and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.03. Obligations Not Affected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.04. Rights of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.05. Guarantee of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.06. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.07. Independent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.01. Limitation of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.02. Ranking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE IV
TERMINATION
SECTION 4.01. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE V
MISCELLANEOUS
SECTION 5.01. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 5.02. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 5.03. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 5.04. Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 5.05. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
<PAGE> 3
COMMON SECURITIES GUARANTEE
This COMMON SECURITIES GUARANTEE (the "Common Securities
Guarantee"), dated as of April 24, 1997, is executed and delivered by K N
ENERGY, INC., a Kansas corporation (the "Guarantor"), for the benefit of the
Holders (as defined herein) from time to time of the Common Securities (as
defined herein) of K N Capital Trust I, a Delaware statutory business trust
(the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of April 24, 1997, among the Trustees of
the Issuer named therein, the Guarantor, as sponsor, and the holders from time
to time of undivided beneficial interests in the assets of the Issuer, the
Issuer is issuing on the date hereof common securities designated the 8.56%
Common Securities (the "Common Securities"), having an aggregate stated
liquidation amount of $3,100,000;
WHEREAS, as incentive for the Holders to purchase the Common
Securities, the Guarantor desires to irrevocably and unconditionally agree, to
the extent set forth in this Common Securities Guarantee, to pay to the Holders
of the Common Securities the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein; and
WHEREAS, the Guarantor is also executing and delivering a
guarantee (the "Series A Capital Securities Guarantee") for the benefit of the
holders of the Series A Capital Securities (as defined in the Declaration) and,
upon consummation of the Exchange Offer (as defined in the Declaration), will
execute and deliver a guarantee (the "Series B Capital Securities Guarantee")
for the benefit of the holders of the Series B Capital Securities (as defined
in the Declaration), each having substantially identical terms to this Common
Securities Guarantee, except that if an Event of Default (as defined in the
Declaration) has occurred and is continuing, the rights of Holders of the
Common Securities to receive Guarantee Payments under this Common Securities
Guarantee are subordinated to the rights of holders of Capital Securities (as
defined in the Declaration) to receive Guarantee Payments under the Series A
Capital Securities Guarantee or the Series B Capital Securities Guarantee, as
the case may be.
NOW, THEREFORE, in consideration of the purchase by each
Holder of Common Securities, which purchase the Guarantor hereby acknowledges
shall benefit the Guarantor, the Guarantor executes and delivers this Common
Securities Guarantee for the benefit of the Holders.
<PAGE> 4
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.01. Definitions and Interpretation.
In this Common Securities Guarantee, unless the context
otherwise requires:
(a) Capitalized terms used in this Common Securities
Guarantee but not defined in the preamble above have the respective
meanings assigned to them in this Article I;
(b) Terms defined in the Declaration as at the date of
execution of this Common Securities Guarantee have the same meaning
when used in this Common Securities Guarantee unless otherwise defined
in this Common Securities Guarantee;
(c) A term defined anywhere in this Common Securities
Guarantee has the same meaning throughout;
(d) All references to "the Common Securities Guarantee"
or "this Common Securities Guarantee" are to this Common Securities
Guarantee as modified, supplemented or amended from time to time;
(e) All references in this Common Securities Guarantee to
Articles and Sections are to Articles and Sections of this Common
Securities Guarantee unless otherwise specified; and
(f) A reference to the singular includes the plural and
vice versa.
"Guarantee Payments" means, with respect to the Common
Securities, the following payments or distributions, without duplication, to
the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions that are required to be paid on such Common Securities to the
extent the Issuer has funds on hand legally available therefor at such time,
(ii) with respect to any Common Securities called for redemption by the Issuer,
the redemption price, including all accrued and unpaid Distributions to the
date of redemption (the "Redemption Price") to the extent the Issuer has funds
on hand legally available therefor at such time and (iii) upon a voluntary or
involuntary termination and liquidation of the Issuer (other than in connection
with a distribution of Debentures to the Holders in exchange for Common
Securities as provided in the Declaration), the lesser of (a) the aggregate of
the liquidation amount and all accumulated and unpaid Distributions on the
Common Securities to the date of payment, to the extent the Issuer has funds on
hand legally available therefor, and (b) the amount of assets of the Issuer
remaining available for distribution to Holders upon the liquidation of the
Issuer (in either case, the "Liquidation Distribution"). If an Event of
Default has occurred and is continuing, no Guarantee Payments with respect to
the Common Securities shall be made until holders of Capital Securities shall
be paid in full the Guarantee Payments
2
<PAGE> 5
to which they are entitled under the Series A Capital Securities Guarantee or
the Series B Capital Securities Guarantee, as the case may be.
"Holder" means any holder, as registered on the books and
records of the Issuer, of any Common Securities.
"Issuer" means K N Capital Trust I.
"Other Guarantees" means all guarantees to be issued by the
Guarantor with respect to common securities (if any) similar to the Common
Securities issued by other trusts to be established by the Guarantor (if any),
in each case similar to the Issuer.
ARTICLE II
GUARANTEE
SECTION 2.01. Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts, if
any, theretofore paid by the Issuer) as and when due, regardless of any
defense, right of set-off or counterclaim which the Issuer may have or assert.
The Guarantor's obligation to make a Guarantee Payment may be satisfied by
direct payment of such required amounts by the Guarantor to the Holders or by
causing the Issuer to pay such amounts to the Holders.
SECTION 2.02. Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this
Common Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other required notices and demands.
SECTION 2.03. Obligations Not Affected
Except as otherwise provided herein, the obligations,
covenants, agreements and duties of the Guarantor under this Common Securities
Guarantee shall not be affected or impaired by reason of the occurrence from
time to time of any of the following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by the Issuer of any
express or implied agreement, covenant, term or condition relating to
the Common Securities to be performed or observed by the Issuer;
3
<PAGE> 6
(b) the extension of time for the payment by the Issuer
of all or any portion of the Distributions, Redemption Price,
Liquidation Distribution or any other sums payable under the terms of
the Common Securities or the extension of time for the performance of
any other obligation under, arising out of, or in connection with, the
Common Securities (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or other sum
payable that results from the extension of any interest payment period
on the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on
the part of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant to the
terms of the Common Securities, or any action on the part of the
Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation,
dissolution, sale of any collateral, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of debt of, or other similar
proceedings affecting, the Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the
Common Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a
guarantor, it being the intent of this Section 2.03 that the
obligations of the Guarantor with respect to the Guarantee Payments
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 2.04. Rights of Holders
The Guarantor expressly acknowledges that any Holder may
institute a legal proceeding directly against the Guarantor to enforce its
rights under this Common Securities Guarantee, without first instituting a
legal proceeding against the Issuer or any other Person.
SECTION 2.05. Guarantee of Payment
This Common Securities Guarantee creates a guarantee of
payment and not of collection.
4
<PAGE> 7
SECTION 2.06. Subrogation
The Guarantor shall be subrogated to all rights (if any) of
the Holders against the Issuer in respect of any amounts paid to such Holders
by the Guarantor under this Common Securities Guarantee; provided, however,
that the Guarantor shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any rights which it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Common Securities
Guarantee, if, at the time of any such payment, any amounts are due and unpaid
under this Common Securities Guarantee. If any amount shall be paid to the
Guarantor in violation of the preceding sentence, the Guarantor agrees to hold
such amount in trust for the Holders and to pay over such amount to the
Holders.
SECTION 2.07. Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Common
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Common
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 2.03 hereof.
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.01. Limitation of Transactions
So long as any Common Securities remain outstanding, the
Guarantor shall not (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any
of the Guarantor's capital stock (which includes common and preferred stock),
(ii) make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Guarantor (including any Other
Debentures (as defined in the Indenture)) that rank pari passu with or junior
in right of payment to the Debentures or (iii) make any guarantee payments
with respect to any guarantee by the Guarantor of any securities of any
subsidiary of the Guarantor (including Other Guarantees) if such guarantee
ranks pari passu with or junior in right of payment to the Debentures (other
than (a) dividends or distributions in shares of, or options, warrants or
rights to subscribe for or purchase shares of, capital stock of the Guarantor,
(b) any declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto,
(c) payments under the Series A Capital Securities Guarantee or the Series B
Capital Securities Guarantee, (d) as a direct result of a reclassification of
the Guarantor's capital stock or the exchange or conversion of one class or
series of the Guarantor's capital stock for another class or series of the
Guarantor's capital stock, (e) the purchase of fractional interests in shares
of the Guarantor's capital stock pursuant to the conversion or exchange
provisions
5
<PAGE> 8
of such capital stock or the security being converted or exchanged or pursuant
to an acquisition in which fractional shares of the Guarantor's capital stock
would otherwise be issued and (f) purchases of common stock related to the
issuance of common stock or rights under any benefit plan for directors,
officers, agents or employees of the Guarantor or its subsidiaries or any of
the Guarantor's dividend reinvestment or director, officer, agent or employee
stock purchase plans) if at such time (A) an Event of Default (as defined in
the Indenture) shall have occurred and be continuing, or would occur upon the
taking of any action specified in clauses (i) through (iii) above, (B) there
shall have occurred any event of which the Guarantor has actual knowledge that
(x) is, or with the giving of notice or the lapse of time, or both, would be an
Event of Default (as defined in the Indenture) and (y) in respect of which the
Guarantor shall not have taken reason able steps to cure, (C) if such
Debentures are held by the Property Trustee, the Guarantor shall be in default
with respect to its payment of any obligations under this Series A Capital
Securities Guarantee or the Series B Capital Securities Guarantee or (D) the
Guarantor shall have given notice of its election of the exercise of its right
to extend the interest payment period pursuant to Section 16.01 of the
Indenture or with respect to any Other Debentures and any such extension shall
be continuing.
SECTION 3.02. Ranking
This Common Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right
of payment to Senior Indebtedness (as defined in the Indenture), to the same
extent and in the same manner that the Debentures are subordinated to Senior
Indebtedness pursuant to the Indenture, it being understood that the terms of
Article XV of the Indenture shall apply to the obligations of the Guarantor
under this Common Securities Guarantee as if (x) such Article XV were set forth
herein in full and (y) such obligations were substituted for the term
"Securities" appearing in such Article XV, (ii) pari passu with the Debentures,
any Other Debentures and with the most senior preferred or preference stock now
or hereafter issued by the Guarantor and with any Other Guarantee and any
guarantee now or hereafter entered into by the Guarantor in respect of any
preferred or preference stock of any Affiliate of the Guarantor, and (iii)
senior to the Guarantor's common stock.
ARTICLE IV
TERMINATION
SECTION 4.01. Termination
This Common Securities Guarantee shall terminate (i) upon full
payment of the Redemption Price of all Common Securities, (ii) upon the
distribution of the Debentures to all the Holders or (iii) upon full payment of
the amounts payable in accordance with the Declaration upon liquidation of the
Issuer. Notwithstanding the foregoing, this Common Securities Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder must restore payment of any sums paid under the Common
Securities or under this Common Securities Guarantee.
6
<PAGE> 9
ARTICLE V
MISCELLANEOUS
SECTION 5.01. Successors and Assigns
All guarantees and agreements contained in this Common
Securities Guarantee shall bind the successors, assigns, receivers, trustees
and representatives of the Guarantor and shall inure to the benefit of the
Holders then outstanding.
SECTION 5.02. Amendments
Except with respect to any changes which do not adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Common Securities Guarantee may only be amended with the prior
approval of the Holders of at least a majority in liquidation amount of all the
outstanding Common Securities. The provisions of Section 12.02 of the
Declaration with respect to meetings of Holders apply to the giving of such
approval.
SECTION 5.03. Notices
All notices provided for in this Common Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by registered or certified mail, as follows:
(1) if given to the Issuer, in care of the Administrative
Trustees at the Issuer's mailing address set forth below (or such
other address as the Issuer may give notice of to the Holders):
K N Capital Trust I
c/o K N Energy, Inc.
370 Van Gordon Street
P.O. Box 281304
Lakewood, Colorado 80228-8304
Attention: Chief Financial Officer
Telecopy: (303) 763-3517
(2) if given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may
give notice of to the Holders):
7
<PAGE> 10
K N Energy, Inc.
370 Van Gordon Street
P.O. Box 281304
Lakewood, Colorado 80228-8304
Attention: Chief Financial Officer
Telecopy: (303) 763-3517
(3) if given to any Holder, at the address set forth on
the books and records of the Issuer.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 5.04. Benefit
This Common Securities Guarantee is solely for the benefit of
the Holders of the Common Securities and is not separately transferable from
the Common Securities.
SECTION 5.05. Governing Law
THIS COMMON SECURITIES GUARANTEE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
8
<PAGE> 11
THIS COMMON SECURITIES GUARANTEE is executed as of the day and
year first above written.
K N ENERGY, INC.
By: /s/ E. Wayne Lundhagen
-----------------------------------
Name: E. Wayne Lundhagen
Title: Vice President and Treasurer
9
<PAGE> 1
EXHIBIT 4.12
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of April 24, 1997
among
K N ENERGY, INC.,
K N CAPITAL TRUST I
and
SALOMON BROTHERS INC
MERRILL LYNCH & CO.,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED,
as Initial Purchasers
================================================================================
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
and entered into as of April 24, 1997 among K N ENERGY, INC., a Kansas
corporation (the "Company"), K N CAPITAL TRUST I, a business trust formed under
the laws of the state of Delaware (the "Trust"), and SALOMON BROTHERS INC
("Salomon Brothers") and MERRILL LYNCH & CO., Merrill Lynch, Pierce, Fenner &
Smith Incorporated (together with Salomon Brothers, the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement
dated April 17, 1997 (the "Purchase Agreement"), among the Company, as issuer
of the 8.56% Series A Junior Subordinated Deferrable Interest Debentures due
April 15, 2027 (the "Series A Debentures"), the Trust and the Initial
Purchasers, which provides for among other things, the sale by the Trust to the
Initial Purchasers of 100,000 of the Trust's 8.56% Series A Capital Trust
Pass-through Securities(SM)(1) liquidation amount $1,000 per Capital Trust
Pass-through Security (the "Series A Capital Securities") the proceeds of which
will be used by the Trust to purchase Series A Debentures. The Series A
Capital Securities, together with the Series A Debentures and the Company's
guarantee of the Series A Capital Securities (the "Series A Capital Securities
Guarantee") are collectively referred to as the "Series A Securities". In
order to induce the Initial Purchasers to enter into the Purchase Agreement,
the Company and the Trust have agreed to provide to the Initial Purchasers and
their direct and indirect transferees the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a condition to
closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the
following capitalized defined terms shall have the following meanings:
"Advice" shall have the meaning set forth in the last paragraph of
Section 3 hereof.
"Applicable Period" shall have the meaning set forth in Section 3(t)
hereof.
"Business Day" means any day other than a Saturday, a Sunday, or a day
on which banking institutions in New York, New York or Wilmington, Delaware are
authorized or required by law or executive order to close.
"Closing Time" shall mean the Closing Time as defined in the Purchase
Agreement.
"Company" shall have the meaning set forth in the preamble to this
Agreement and also includes the Company's successors and permitted assigns.
- ---------------
(1) Salomon Brothers Inc has filed an application with the
United States Patent and Trademark Office for the registration of the "Capital
Trust Pass-through Securities" service mark.
<PAGE> 3
2
"Declaration" or "Declaration of Trust" shall mean the Amended and
Restated Declaration of Trust, dated as of April 24, 1997, by the trustees
named therein and the Company as sponsor.
"Depositary" shall mean The Depository Trust Company, or any other
depositary appointed by the Trust; provided, however, that such depositary must
have an address in the Borough of Manhattan, in The City of New York.
"Effectiveness Period" shall have the meaning set forth in Section
2(b) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Exchange Offer" shall mean the offer by the Company and the Trust to
the Holders to exchange all of the Registrable Securities (other than Private
Exchange Securities) for a like liquidation or principal amount of Exchange
Securities pursuant to Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the
Securities Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another appropriate
form), and all amendments and supplements to such registration statement, in
each case including the Prospectus contained therein, all exhibits thereto and
all material incorporated by reference therein.
"Exchange Period" shall have the meaning set forth in Section 2(a)
hereof.
"Exchange Securities" shall mean (i) with respect to the Series A
Debentures, the 8.56% Series B Junior Subordinated Deferrable Interest
Debentures due April 15, 2027 (the "Exchange Debentures") containing terms
identical to the Series A Debentures (except that they will not contain terms
with respect to the transfer restrictions under the Securities Act, and will
not provide for any increase in the interest rate thereon as a result of a
failure to effect an exchange of such securities upon consummation of an
exchange offer similar to the Exchange Offer), (ii) with respect to the Series
A Capital Securities, the Trust's 8.56% Series B Capital Trust Pass-through
Securities, liquidation amount $1,000 per Capital Trust Pass-through Security
(the "Exchange Capital Securities"), which will have terms identical to the
Series A Capital Securities (except they will not contain terms with respect to
transfer restrictions under the Securities Act and will not provide for any
increase in the distribution rate thereon as a result of a failure to effect an
exchange of such securities upon consummation of an exchange offer similar to
the Exchange Offer) and (iii) with respect to the Series A Capital Securities
Guarantee, the Company's guarantee (the "Exchange Capital Securities
Guarantee") of the Exchange Capital Securities which will have terms identical
to the Series A Capital Securities Guarantee.
<PAGE> 4
3
"Holder" shall mean the Initial Purchasers, for so long as they own
any Registrable Securities, and each of its respective successors, assigns and
direct and indirect transferees who become registered owners of Registrable
Securities under the Indenture or Declaration of Trust.
"Indenture" shall mean the Indenture relating to the Series A
Debentures and the Exchange Debentures dated as of April 24, 1997 between the
Company, as issuer, and Wilmington Trust Company, as trustee, as the same may
be amended from time to time in accordance with the terms thereof.
"Initial Purchasers" shall have the meaning set forth in the preamble
to this Agreement.
"Inspectors" shall have the meaning set forth in Section 3(n) hereof.
"Issue Date" shall mean the date of original issuance of the Series A
Securities.
"Liquidated Damages" shall have the meaning set forth in Section 2(e)
hereof.
"Majority Holders" shall mean the Holders of a majority of the
aggregate liquidation or principal amount of outstanding Series A Securities or
Exchange Securities.
"Material Event" shall have the meaning set forth in Section 3(e)
hereof.
"Participating Broker-Dealer" shall have the meaning set forth in
Section 3(t) hereof.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, limited liability company, or a government or
agency or political subdivision thereof.
"Private Exchange" shall have the meaning set forth in Section 2(a)
hereof.
"Private Exchange Securities" shall have the meaning set forth in
Section 2(a) hereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
therein.
"Purchase Agreement" shall have the meaning set forth in the preamble
to this Agreement.
<PAGE> 5
4
"Records" shall have the meaning set forth in Section 3(n) hereof.
"Registrable Securities" shall mean the Series A Securities and, if
issued, the Private Exchange Securities; provided, however, that Series A
Securities or Private Exchange Securities, as the case may be, shall cease to
be Registrable Securities when (i) a Registration Statement with respect to
such Series A Securities or Private Exchange Securities for the exchange or
resale thereof, as the case may be, shall have been declared effective under
the Securities Act and such Series A Securities or Private Exchange Securities,
as the case may be, shall have been disposed of pursuant to such Registration
Statement, (ii) such Series A Securities or Private Exchange Securities, as the
case may be, shall have been sold to the public pursuant to Rule 144 (or any
similar provision then in force, but not Rule 144A) under the Securities Act,
(iii) such Series A Securities or Private Exchange Securities, as the case may
be, shall have ceased to be outstanding or (iv) with respect to the Series A
Securities, such Series A Securities have been exchanged for Exchange
Securities upon consummation of the Exchange Offer and are thereafter freely
tradeable by the holder thereof (other than an affiliate of the Company).
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC or National Association of Securities Dealers,
Inc. (the "NASD") registration and filing fees, including, if applicable, the
fees and expenses of any "qualified independent underwriter" (and its counsel)
that is required to be retained by any Holder of Registrable Securities in
accordance with the rules and regulations of the NASD, (ii) all fees and
expenses incurred in connection with compliance with state securities or blue
sky laws (including reasonable fees and disbursements of counsel for any
underwriters or Holders in connection with blue sky qualification of any of the
Exchange Securities or Registrable Securities) and compliance with the rules of
the NASD, (iii) all expenses of any Persons in preparing or assisting in
preparing, word processing, printing and distributing any Registration
Statement, any Prospectus and any amendments or supplements thereto, and in
preparing or assisting in preparing, printing and distributing any underwriting
agreements, securities sales agreements and other documents relating to the
performance of and compliance with this Agreement, (iv) all rating agency fees,
(v) the fees and disbursements of counsel for the Company and of the
independent certified public accountants of the Company, including the expenses
of any "cold comfort" letters required by or incident to such performance and
compliance, (vi) the fees and expenses of the Trustees, and any exchange agent
or custodian, (vii) all fees and expenses incurred in connection with the
listing, if any, of any of the Registrable Securities on any securities
exchange or exchanges, and (viii) the reasonable fees and expenses of any
special experts retained by the Company in connection with any Registration
Statement.
"Registration Statement" shall mean any registration statement of the
Company and the Trust which covers any of the Exchange Securities or
Registrable Securities pursuant to the provisions of this Agreement, and all
amendments and supplements to any such Registration Statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
<PAGE> 6
5
"Rule 144(k) Period" shall mean the period of three years (or such
shorter period as may hereafter be referred to in Rule 144(k) under the
Securities Act (or similar successor rule)) commencing on the Issue Date.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
"Series A Securities" shall have the meaning set forth in the preamble
to this Agreement.
"Shelf Registration" shall mean a registration effected pursuant to
Section 2(b) hereof.
"Shelf Registration Event" shall have the meaning set forth in Section
2(b) hereof.
"Shelf Registration Event Date" shall have the meaning set forth in
Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company and the Trust pursuant to the provisions of Section
2(b) hereof which covers all of the Registrable Securities or all of the
Private Exchange Securities, as the case may be, on an appropriate form under
Rule 415 under the Securities Act, or any similar rule that may be adopted by
the SEC, and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"TIA" shall have the meaning set forth in Section 3(l) hereof.
"Trust Securities" shall mean the Series A Capital Securities and the
Common Securities (as defined in the Declaration).
"Trustees" shall mean any and all trustees with respect to (i) the
Series A Capital Securities under the Declaration, (ii) the Series A Debentures
under the Indenture and (iii) the Series A Capital Securities Guarantee.
"underwritten offering" or "underwritten registration" shall mean an
offering or registration in which securities of an issuer are sold to an
underwriter for reoffering to the public.
2. Registration Under the Securities Act.
(a) Exchange Offer. To the extent not prohibited by any
applicable law or applicable interpretation of the staff of the SEC, the
Company and the Trust shall, for the benefit of the Holders, at the Company's
cost, use their best efforts to (i) cause to be filed with the SEC within 150
days after the Issue Date an Exchange Offer Registration Statement on an
appropriate
<PAGE> 7
6
form under the Securities Act covering the Exchange Offer, (ii) cause such
Exchange Offer Registration Statement to be declared effective under the
Securities Act by the SEC not later than the date which is 180 days after the
Issue Date, and (iii) keep such Exchange Offer Registration Statement effective
for not less than 30 calendar days (or longer if required by applicable law)
after the date notice of the Exchange Offer is mailed to the Holders.
Notwithstanding the foregoing, in the event that the Company shall determine in
good faith that there is a reasonable likelihood that, or a material
uncertainty as to whether, consummation of the Exchange Offer would result in
an adverse tax consequence to the Company (a "Tax Contingency"), the Trust and
the Company may elect, in lieu of the commencement of the Exchange Offer, to
file and cause to be declared effective a Shelf Registration Statement covering
resales of the Series A Securities as provided in Section 2(b) hereof. Upon
the effectiveness of the Exchange Offer Registration Statement, the Company and
the Trust shall promptly commence the Exchange Offer, it being the objective of
such Exchange Offer to enable each Holder eligible and electing to exchange
Registrable Securities for a like principal amount of Exchange Debentures or a
like liquidation amount of Exchange Capital Securities, together with the
Exchange Guarantee, as applicable (assuming that such Holder is not an
affiliate of the Company within the meaning of Rule 405 under the Securities
Act and is not a broker-dealer tendering Registrable Securities acquired
directly from the Company for its own account, acquires the Exchange Securities
in the ordinary course of such Holder's business and has no arrangements or
understandings with any Person to participate in the Exchange Offer for the
purpose of distributing the Exchange Securities) to transfer such Exchange
Securities from and after their receipt without any limitations or restrictions
under the Securities Act and under state securities or blue sky laws.
In connection with the Exchange Offer, the Company and the
Trust shall:
(i) mail to each Holder a copy of the Prospectus forming part of
the Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(ii) keep the Exchange Offer open for acceptance for a period of
not less than 30 days after the date notice thereof is mailed to the Holders
(or longer if required by applicable law) (such period referred to herein as
the "Exchange Period");
(iii) utilize the services of the Depositary for the Exchange Offer;
(iv) permit Holders to withdraw tendered Series A Securities at
any time prior to the close of business, New York time, on the last Business
Day of the Exchange Period by sending to the institution specified in the
notice, a telegram, telex, facsimile transmission or letter setting forth the
name of such Holder, the principal amount of Series A Securities delivered for
exchange, and a statement that such Holder is withdrawing his election to have
such Series A Securities exchanged;
<PAGE> 8
7
(v) notify each Holder that any Series A Security not tendered by
such Holder in the Exchange Offer will remain outstanding and continue to
accrue interest or accumulate distributions, as the case may be, but will not
retain any rights under this Agreement (except in the case of the Initial
Purchasers and Participating Broker-Dealers as provided herein); and
(vi) otherwise comply in all respects with all applicable laws
relating to the Exchange Offer.
If any Initial Purchaser determines upon advice of its outside
counsel that it is not eligible to participate in the Exchange Offer with
respect to the exchange of Securities constituting any portion of an unsold
allotment in the initial distribution, as soon as practicable upon receipt by
the Company and the Trust of a written request from such Initial Purchaser, the
Company and the Trust, as applicable, shall issue and deliver to such Initial
Purchaser in exchange (the "Private Exchange") for the Series A Securities held
by such Initial Purchaser, a like liquidation amount of Capital Securities of
the Trust, together with the Exchange Guarantee, or a like principal amount of
the Series A Debentures of the Company, as applicable, that are identical
(except that such securities may bear a customary legend with respect to
restrictions on transfer pursuant to the Securities Act) to the Exchange
Securities (the "Private Exchange Securities") and which are issued pursuant to
the Indenture, the Declaration or the Guarantee (which provides that the
Exchange Securities will not be subject to the transfer restrictions set forth
in the Indenture or the Declaration, as applicable, and that the Exchange
Securities, the Private Exchange Securities and the Series A Securities will
vote and consent together on all matters as one class and that neither the
Exchange Securities, the Private Exchange Securities nor the Series A
Securities will have the right to vote or consent as a separate class on any
matter). The Private Exchange Securities shall be of the same series as the
Exchange Securities and the Company and the Trust will seek to cause the CUSIP
Service Bureau to issue the same CUSIP Numbers for the Private Exchange
Securities as for the Exchange Securities issued pursuant to the Exchange
Offer.
As soon as practicable after the close of the Exchange Offer
and, if applicable, the Private Exchange, the Company and the Trust, as the
case requires, shall:
(i) accept for exchange all Series A Securities or portions
thereof tendered and not validly withdrawn pursuant to the Exchange Offer or
the Private Exchange;
(ii) deliver, or cause to be delivered, to the applicable Trustee
for cancellation all Series A Securities or portions thereof so accepted for
exchange by the Company and the Trust; and
(iii) issue, and cause the applicable Trustee under the Indenture,
the Declaration or the Guarantee, as applicable, to promptly authenticate and
deliver to each Holder, new Exchange Securities or Private Exchange Securities,
as applicable, equal in principal amount to the
<PAGE> 9
8
principal amount of the Series A Debentures or equal in liquidation amount to
the liquidation amount of the Series A Capital Securities (together with the
guarantee thereof) as are surrendered by such Holder.
Distributions on each Exchange Capital Security and Private
Exchange Security and interest on each Exchange Debenture and Private Exchange
Security issued pursuant to the Registered Exchange Offer and in the Private
Exchange will accumulate or accrue, as the case may be, from the last date on
which a distribution or interest was paid on the Series A Capital Security or
the Series A Debenture surrendered in exchange therefor or, if no distribution
or interest has been paid on such Series A Capital Security or Series A
Debenture, from the Issue Date. To the extent not prohibited by any law or
applicable interpretation of the staff of the SEC, the Company and the Trust
shall use their best efforts to complete the Exchange Offer as provided above,
and shall comply with the applicable requirements of the Securities Act, the
Exchange Act and other applicable laws in connection with the Exchange Offer.
The Exchange Offer shall not be subject to any conditions, other than that the
Exchange Offer does not violate applicable law or any applicable interpretation
of the staff of the SEC and that, with respect to any Series A Security
tendered for exchange, a Tax Contingency shall not have occurred prior to the
date such security is exchanged. Each Holder of Registrable Securities who
wishes to exchange such Registrable Securities for Exchange Securities in the
Exchange Offer will be required to make certain customary representations in
connection therewith, including, in the case of any Holder of Series A Capital
Securities and/or Series A Debentures, representations that (i) it is not an
affiliate of the Trust or the Company, (ii) the Exchange Securities to be
received by it were acquired in the ordinary course of its business and (iii)
at the time of the Exchange Offer, it has no arrangement with any Person to
participate in the distribution (within the meaning of the Securities Act) of
the Exchange Capital Securities. The Company and the Trust shall inform the
Initial Purchasers, after consultation with the Trustee, of the names and
addresses of the Holders to whom the Exchange Offer is made, and the Initial
Purchasers shall have the right to contact such Holders and otherwise
facilitate the tender of Registrable Securities in the Exchange Offer.
Upon consummation of the Exchange Offer in accordance with
this Section 2(a), the provisions of this Agreement shall continue to apply,
mutatis mutandis, solely with respect to Registrable Securities that are
Private Exchange Securities and Exchange Securities held by Participating
Broker-Dealers, and the Company and the Trust shall have no further obligation
to register the Registrable Securities (other than Private Exchange Securities)
pursuant to Section 2(b) of this Agreement.
(b) Shelf Registration. In the event that (i) the
Company, the Trust or the Majority Holders reasonably determine, after
conferring with counsel (which may be in-house counsel), that the Exchange
Offer Registration provided in Section 2(a) above is not available because of
any change in law or in currently prevailing interpretations of the staff of
the SEC, (ii) the Exchange Offer Registration Statement is not declared
effective within 180 days of the
<PAGE> 10
9
Issue Date, (iii) upon the request of any Initial Purchaser with respect to any
Registrable Securities held by it, if such Initial Purchaser is not permitted,
in the reasonable opinion of Shearman & Sterling, pursuant to applicable law or
applicable interpretations of the staff of the SEC, to participate in the
Exchange Offer and thereby receive securities that are freely tradeable without
restriction under the Securities Act and applicable blue sky or state
securities laws (any of the events specified in (i) - (iii) being a "Shelf
Registration Event" and the date of occurrence thereof, the "Shelf Registration
Event Date"), the Company and the Trust shall, at their cost, use their best
efforts to cause to be filed, within 180 days after the Issue Date, or within
45 days after any Shelf Registration Event Date, whichever first occurs, a
Shelf Registration Statement providing for the sale by the Holders of all of
the Registrable Securities, and shall use their best efforts to have such Shelf
Registration Statement declared effective by the SEC within 210 days of the
Issue Date, or as soon thereafter as practicable. In addition, if the Company
determines in good faith that a Tax Contingency has occurred and elects to file
and cause to be declared a Shelf Registration Statement providing for sale by
the Holders of all the Registrable Securities in lieu of commencing an Exchange
Offer, the Company shall, at their cost, cause to be filed within 180 days
after the Issue Date or as promptly thereafter as practicable, such Shelf
Registration Statement and cause such Shelf Registration Statement to be
declared effective within 210 days of the Issue Date, or as soon thereafter as
practicable. No Holder of Registrable Securities shall be entitled to include
any of its Registrable Securities in any Shelf Registration pursuant to this
Agreement unless and until such Holder agrees in writing to be bound by all of
the provisions of this Agreement applicable to such Holder and furnishes to the
Company and the Trust in writing, within 15 days after receipt of a request
therefor, such information as the Company and the Trust may, after conferring
with counsel with regard to information relating to Holders that would be
required by the SEC to be included in such Shelf Registration Statement or
Prospectus included therein, reasonably request for inclusion in any Shelf
Registration Statement or Prospectus included therein. Each Holder as to which
any Shelf Registration is being effected agrees to furnish to the Company and
the Trust all information with respect to such Holder necessary to make the
information previously furnished to the Company by such Holder not materially
misleading.
The Company and the Trust agree to use their best efforts to
keep the Shelf Registration Statement continuously effective for the Rule
144(k) Period (subject to extension pursuant to the last paragraph of Section 3
hereof) or for such shorter period which will terminate when all of the
Registrable Securities covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement or cease to be outstanding
(the "Effectiveness Period"). The Company and the Trust shall not permit any
securities other than Registrable Securities to be included in the Shelf
Registration. The Company and the Trust will, in the event a Shelf
Registration Statement is declared effective, provide to each Holder a
reasonable number of copies of the Prospectus which is part of the Shelf
Registration Statement, notify each such Holder when the Shelf Registration has
become effective and use its best efforts to take all other actions required to
permit resales of the Registrable Securities. The Company and the Trust
further agree, if necessary, to supplement or amend the Shelf Registration
Statement, if required
<PAGE> 11
10
by the rules, regulations or instructions applicable to the registration form
used by the Company for such Shelf Registration Statement or by the Securities
Act or by any other rules and regulations thereunder for shelf registrations,
and the Company and the Trust agree to furnish to the Holders of Registrable
Securities copies of any such supplement or amendment promptly after its being
used or filed with the SEC.
(c) Expenses. The Company shall pay all Registration
Expenses in connection with the registration pursuant to Section 2(a) or 2(b)
hereof and will reimburse the Initial Purchasers for the reasonable fees and
disbursements of Shearman & Sterling, counsel for the Initial Purchasers,
incurred in connection with the Exchange Offer and, if applicable, the Private
Exchange Offer, and either Shearman & Sterling or any one other counsel
designated in writing by the Majority Holders to act as counsel for the Holders
of the Registrable Securities in connection with a Shelf Registration
Statement, which other counsel shall be reasonably satisfactory to the Company.
Except as provided herein, each Holder shall pay all expenses of its counsel,
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of such Holder's Registrable Securities pursuant to the
Shelf Registration Statement.
(d) Effective Registration Statement. An Exchange Offer
Registration Statement pursuant to Section 2(a) hereof or a Shelf Registration
Statement pursuant to Section 2(b) hereof will not be deemed to have become
effective unless it has been declared effective by the SEC; provided, however,
that if, after such Registration Statement has been declared effective, the
offering of Registrable Securities pursuant to a Shelf Registration Statement
is interfered with by any stop order, injunction or other order or requirement
of the SEC or any other governmental agency or court, such Registration
Statement will be deemed not to have been effective during the period of such
interference, until the offering of Registrable Securities pursuant to such
Registration Statement may legally resume. The Company and the Trust will be
deemed not to have used their best efforts to cause the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may be,
to become, or to remain, effective during the requisite period if either of
them voluntarily takes any action that would result in any such Registration
Statement not being declared effective or in the Holders of Registrable
Securities covered thereby not being able to exchange or offer and sell such
Registrable Securities during that period unless such action is required by
applicable law.
(e) Liquidated Damages. In the event that (i) (A)
neither the Exchange Offer Registration Statement nor a Shelf Registration
Statement is filed with the SEC on or prior to the applicable required filing
date or (B) notwithstanding that the Company and the Trust have consummated or
will consummate an Exchange Offer, the Company and the Trust are required to
file a Shelf Registration Statement and such Shelf Registration Statement is
not filed on or prior to the date required by Section 2(b) hereof, then
commencing on the day after the applicable required filing date, additional
interest shall accrue on the principal amount of the Series A Debentures, and
additional distributions shall accumulate on the liquidation amount of the
Trust Securities, each at a rate of 0.25% per annum; or
<PAGE> 12
11
(ii) (A) neither the Exchange Offer Registration Statement nor a
Shelf Registration Statement is declared effective by the SEC on or prior to
the 30th day after the applicable required filing date or (B) notwithstanding
that the Company and the Trust have consummated or will consummate an Exchange
Offer, the Company and the Trust are required to file a Shelf Registration
Statement and such Shelf Registration Statement is not declared effective by
the SEC on or prior to the 30th day after such Shelf Registration Statement was
required to be filed, then, commencing on the 31st day after the applicable
required filing date, additional interest shall accrue on the principal amount
of the Series A Debentures, and additional distributions shall accumulate on
the liquidation amount of the Trust Securities, each at a rate of 0.25% per
annum; or
(iii) either (A) the Trust has not exchanged an Exchange Capital
Security for each Series A Capital Security or the Company has not exchanged an
Exchange Capital Securities Guarantee or Exchange Debenture for each Series A
Capital Securities Guarantee or Series A Debenture validly tendered, in
accordance with the terms of the Exchange Offer on or prior to the 45th day
after the date on which the Exchange Offer Registration Statement was declared
effective or (B) if applicable, the Shelf Registration Statement has been
declared effective and such Shelf Registration Statement ceases to be effective
at any time prior to expiration of the Rule 144(k) Period (other than after
such time as all Series A Capital Securities have been disposed of thereunder
or otherwise cease to be Registrable Securities within the meaning of this
Agreement), then additional interest shall accrue on the principal amount of
Series A Debentures, and additional distributions shall accumulate on the
liquidation amount of the Trust Securities, each at a rate of 0.25% per annum
commencing on (x) the 46th day after such effective date, in the case of (A)
above, or (y) the day such Shelf Registration Statement ceases to be effective
in the case of (B) above; provided that if, in the case of (B) above, such
Shelf Registration Statement ceases to be effective as a result of a Material
Event, neither Additional Distributions nor Additional Interest shall
accumulate or accrue so long as such Shelf Registration Statement again becomes
effective within 60 days of the date notice of such Material Event was received
by holders of Series A Capital Securities, the Series A Capital Securities
Guarantee and Series A Debentures; and provided, further, that if such Shelf
Registration Statement does not again become effective within such 60-day
period, Additional Interest shall accrue and Additional Distributions shall
accumulate, each at a rate of 0.25% per annum, commencing on the 61st day after
such Shelf Registration Statement ceases to be effective.
Notwithstanding the foregoing, neither the additional interest
rate on the Series A Debentures, nor the additional distributions rate on the
liquidation amount of the Trust Securities may exceed 0.25% per annum; provided
that (1) upon the filing of the Exchange Offer Registration Statement or a
Shelf Registration Statement (in the case of clause (i) above), (2) upon the
effectiveness of the Exchange Offer Registration Statement or a Shelf
Registration Statement (in the case of clause (ii) above), or (3) upon the
exchange of the Exchange Capital Securities, Exchange Capital Securities
Guarantee and Exchange Debentures for all Series A Capital Securities, the
Series A Capital Securities Guarantee and Series A Debentures tendered
<PAGE> 13
12
(in the case of clause (iii)(A) above), or, upon the effectiveness of the Shelf
Registration Statement which had ceased to remain effective (in the case of
clause (iii)(B) above), additional interest on the Series A Debentures, and
additional distributions on the liquidation amount of the Trust Securities as a
result of such clause (or the relevant subclause thereof), as the case may be,
shall cease to accrue or accumulate, as the case may be.
Any amounts of additional interest and additional
distributions due pursuant to Section 2(e)(i), (ii) or (iii) above ("Liquidated
Damages") will be payable, as liquidated damages, in cash on the next
succeeding April 15 or October 15, as the case may be, to holders on the
relevant record dates for the payment of interest and distributions pursuant to
the Indenture and the Declaration, respectively.
3. Registration Procedures. In connection with the
obligations of the Company and the Trust with respect to the Registration
Statements pursuant to Sections 2(a) and 2(b) hereof, the Company and the Trust
shall use their best efforts to:
(a) prepare and file with the SEC a Registration
Statement or Registration Statements as prescribed by Sections 2(a)
and 2(b) hereof within the relevant time period specified in Section 2
hereof on the appropriate form under the Securities Act, which form
(i) shall be selected by the Company and the Trust, (ii) shall, in the
case of a Shelf Registration, be available for the sale of the
Registrable Securities by the selling Holders thereof and (iii) shall
comply as to form in all material respects with the requirements of
the applicable form and include (or incorporate by reference) all
financial statements required by the SEC to be included therein; and
use its best efforts to cause such Registration Statement to become
effective and remain effective in accordance with Section 2 hereof;
provided, however, that if (1) such filing is pursuant to Section
2(b), or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2(a) is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Securities, before filing any Registration Statement
or Prospectus or any amendments or supplements thereto, the Company
and the Trust shall furnish to and afford the Holders of the
Registrable Securities and each such Participating Broker-Dealer who
has delivered to the Company the notice referred to in Section 3(e),
as the case may be, covered by such Registration Statement, their
counsel and the managing underwriters, if any, a reasonable
opportunity to review copies of all such documents (including copies
of any documents to be incorporated by reference therein and all
exhibits thereto) proposed to be filed. The Company and the Trust
shall not file any Registration Statement or Prospectus or any
amendments or supplements thereto in respect of which the Holders must
be afforded an opportunity to review prior to the filing of such
document if the Majority Holders or such Participating Broker-Dealer,
as the case may be, their counsel or the managing underwriters, if
any, shall reasonably object;
<PAGE> 14
13
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be
necessary to keep such Registration Statement effective for the
Effectiveness Period or the Applicable Period, as the case may be; and
cause each Prospectus to be supplemented, if so determined by the
Company or the Trust or requested by the SEC, by any required
prospectus supplement and as so supplemented to be filed pursuant to
Rule 424 (or any similar provision then in force) under the Securities
Act, and comply with the provisions of the Securities Act, the
Exchange Act and the rules and regulations promulgated thereunder
applicable to it with respect to the disposition of all securities
covered by each Registration Statement during the Effectiveness Period
or the Applicable Period, as the case may be, in accordance with the
intended method or methods of distribution by the selling Holders
thereof described in this Agreement (including sales by any
Participating Broker-Dealer);
(c) in the case of a Shelf Registration, (i) notify each
Holder of Registrable Securities included in the Shelf Registration
Statement, at least three Business Days prior to filing, that a Shelf
Registration Statement with respect to the Registrable Securities is
being filed and advising such Holder that the distribution of
Registrable Securities will be made in accordance with the method
selected by the Majority Holders; and (ii) furnish to each Holder of
Registrable Securities included in the Shelf Registration Statement
and to each underwriter of an underwritten offering of Registrable
Securities, if any, without charge, as many copies of each Prospectus,
including each preliminary Prospectus, and any amendment or supplement
thereto and such other documents as such Holder or underwriter may
reasonably request, in order to facilitate the public sale or other
disposition of the Registrable Securities; and (iii) consent to the
use of the Prospectus or any amendment or supplement thereto by each
of the selling Holders of Registrable Securities included in the Shelf
Registration Statement in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any amendment or
supplement thereto;
(d) in the case of a Shelf Registration, register or
qualify the Registrable Securities under all applicable state
securities or "blue sky" laws of such jurisdictions by the time the
applicable Registration Statement is declared effective by the SEC as
any Holder of Registrable Securities covered by a Registration
Statement and each underwriter of an underwritten offering of
Registrable Securities shall reasonably request in writing in advance
of such date of effectiveness, and do any and all other acts and
things which may be reasonably necessary or advisable to enable such
Holder and underwriter to consummate the disposition in each such
jurisdiction of such Registrable Securities owned by such Holder;
provided, however, that the Company and the Trust shall not be
required to (i) qualify as a foreign corporation or as a dealer in
securities in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (ii) file any general
consent to service of process in any jurisdiction where it would
<PAGE> 15
14
not otherwise be subject to such service of process or (iii) subject
itself to taxation in any such jurisdiction if it is not then so
subject;
(e) in the case of (1) a Shelf Registration or (2)
Participating Broker-Dealers from whom the Company or the Trust has
received prior written notice that they will be utilizing the
Prospectus contained in the Exchange Offer Registration Statement as
provided in Section 3(t) hereof, are seeking to sell Exchange
Securities and are required to deliver Prospectuses, notify each
Holder of Registrable Securities, or such Participating
Broker-Dealers, as the case may be, their counsel and the managing
underwriters, if any, promptly and promptly confirm such notice in
writing (i) when a Registration Statement has become effective and
when any post-effective amendments and supplements thereto become
effective, (ii) of any request by the SEC or any state securities
authority for amendments and supplements to a Registration Statement
or Prospectus or for additional information after the Registration
Statement has become effective, (iii) of the issuance by the SEC or
any state securities authority of any stop order suspending the
effectiveness of a Registration Statement or the qualification of the
Registrable Securities or the Exchange Securities to be offered by any
Participating Broker-Dealer in any jurisdiction described in Section
3(d) hereof or the initiation of any proceedings for that purpose,
(iv) in the case of a Shelf Registration, if between the effective
date of a Registration Statement and the closing of any sale of
Registrable Securities covered thereby, the representations and
warranties of the Company and the Trust contained in any purchase
agreement, securities sales agreement or other similar agreement, if
any, cease to be true and correct in all material respects, and (v) of
the happening of any event or the failure of any event to occur or the
discovery of any facts or otherwise (each a "Material Event"), during
the Effectiveness Period which makes any statement made in such
Registration Statement or the related Prospectus untrue in any
material respect or which causes such Registration Statement or
Prospectus to omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, and (vi) the Company's and the Trust's
reasonable determination that a post-effective amendment to the
Registration Statement would be appropriate;
(f) obtain the withdrawal of any order suspending the
effectiveness of a Registration Statement at the earliest possible
moment;
(g) in the case of a Shelf Registration, furnish to each
Holder of Registrable Securities included within the coverage of such
Shelf Registration Statement, without charge, at least one conformed
copy of each Registration Statement relating to such Shelf
Registration and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits thereto,
unless requested);
(h) in the case of a Shelf Registration, cooperate with
the selling Holders of Registrable Securities to facilitate the timely
preparation and delivery of certificates
<PAGE> 16
15
representing Registrable Securities to be sold and not bearing any
restrictive legends and in such denominations (consistent with the
provisions of the Indenture and the Declaration) and registered in
such names as the selling Holders or the underwriters may reasonably
request at least two Business Days prior to the closing of any sale of
Registrable Securities pursuant to such Shelf Registration Statement;
(i) in the case of a Shelf Registration or an Exchange
Offer Registration, upon the occurrence of any circumstance
contemplated by Section 3(e)(ii), 3(e)(iii), 3(e)(v) or 3(e)(vi)
hereof, prepare a supplement or post-effective amendment to a
Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable
Securities, such Prospectus will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; and notify each Holder to suspend use of
the Prospectus as promptly as practicable after the occurrence of such
an event, and each Holder hereby agrees to suspend use of the
Prospectus until the Company has amended or supplemented the
Prospectus to correct such misstatement or omission;
(j) in the case of a Shelf Registration, a reasonable
time prior to the filing of any document which is to be incorporated
by reference into a Registration Statement or a Prospectus after the
initial filing of a Registration Statement, provide a reasonable
number of copies of such document to the Holders; and make such of the
representatives of the Company and the Trust as shall be reasonably
requested by the Holders of Registrable Securities or the Initial
Purchasers on behalf of such Holders available for discussion of such
documents;
(k) obtain a CUSIP number for all Exchange Capital
Securities (and if the Trust has made a distribution of the Series A
Debentures to the Holders of the Series A Capital Securities, the
Exchange Debentures), as the case may be, prior to the original
issuance thereof, and provide the Property Trustee (as defined in the
Declaration) with one or more certificates for the Exchange Securities
or the Registrable Securities, as the case may be, in a form eligible
for deposit with the Depositary;
(l) cause the Indenture, the Declaration, the Guarantee
and the Exchange Guarantee to be qualified under the Trust Indenture
Act of 1939, as amended (the "TIA"), in connection with the
registration of the Exchange Securities or Registrable Securities, as
the case may be, and effect such changes to such documents as may be
required for them to be so qualified in accordance with the terms of
the TIA and execute, and use its best efforts to cause the relevant
trustee to execute, all documents as may be required to affect such
changes, and all other forms and documents required to be filed with
the SEC to enable such documents to be so qualified in a timely
manner;
<PAGE> 17
16
(m) in the case of a Shelf Registration, (i) enter into
such agreements (including, with respect to any underwritten offering,
underwriting agreements) as are customary and take all such other
appropriate actions as are reasonably requested in order to expedite
or facilitate the registration or the disposition of the Registrable
Securities covered thereby (including, without limitation, preparing
at the expense of the Company a supplement to the Shelf Registration
Statement and obtaining opinions of counsel to the Company and the
Trust and updates thereof (which may be in the form of a reliance
letter) in form and substance reasonably satisfactory to the managing
underwriters (if any) and the Holders of a majority in principal or
liquidation amount, as applicable, of the Registrable Securities being
sold, addressed to each selling Holder and the underwriters (if any)
covering the matters customarily covered in opinions requested in such
shelf offerings (it being agreed that the matters to be covered by
such opinion may be subject to customary qualifications and
exceptions)), and (ii) in connection with any underwritten offering of
Registrable Securities pursuant to a Shelf Registration Statement, if
requested by the managing underwriters of such underwritten offering,
at the closing under the applicable underwriting agreement: (A) make
such representations and warranties to the underwriters with respect
to the business of the Trust, the Company and its subsidiaries as then
conducted and the Registration Statement, Prospectus and documents, if
any, incorporated or deemed to be incorporated by reference therein,
in each case, as are customarily made by issuers to underwriters in
underwritten offerings, and confirm the same if and when requested;
(B) obtain opinions of counsel to the Company and the Trust and
updates thereof (which may be in the form of a reliance letter) in
form and substance reasonably satisfactory to the managing
underwriters, addressed to the underwriters covering the matters
customarily covered in opinions requested in underwritten offerings
and such other matters as may be reasonably requested by such
underwriters (it being agreed that the matters to be covered by such
opinion may be subject to customary qualifications and exceptions);
(C) obtain "cold comfort" letters and updates thereof in form and
substance reasonably satisfactory to the managing underwriters from
the independent certified public accountants of the Company and the
Trust (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company and the Trust or of any
business acquired by the Company and the Trust for which financial
statements and financial data are, or are required to be, included in
the Registration Statement), addressed to each of the underwriters,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with
underwritten offerings and such other matters as reasonably requested
by such underwriters in accordance with Statement on Auditing
Standards No. 72; and (D) if an underwriting agreement is entered
into, the same shall contain indemnification provisions and procedures
no less favorable than those set forth in Section 4 hereof (or such
other provisions and procedures acceptable to the managing
underwriters) with respect to all parties to be indemnified pursuant
to said Section (including, without limitation, such underwriters and
selling Holders);
<PAGE> 18
17
(n) if (1) a Shelf Registration is filed pursuant to
Section 2(b) or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2(a) is required to
be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, make reasonably available for inspection by any
selling Holder of such Registrable Securities being sold, or each such
Participating Broker-Dealer, as the case may be, any underwriter
participating in any such disposition of Registrable Securities, if
any, and any attorney, accountant or other agent retained by any such
selling Holder or each such Participating Broker-Dealer, as the case
may be, or underwriter (collectively, the "Inspectors"), at the
offices where normally kept, during reasonable business hours, all
financial and other records, pertinent corporate documents and
properties of the Trust, the Company and its subsidiaries
(collectively, the "Records") as shall be reasonably necessary to
enable them to exercise any applicable due diligence responsibilities,
and cause the officers, directors and employees of the Trust, the
Company and its subsidiaries to supply all relevant information in
each case reasonably requested by any such Inspector in connection
with such Registration Statement; provided, however, that the
foregoing inspection and information gathering shall be coordinated on
behalf of the Holders by the Initial Purchasers and on behalf of the
other parties, by one counsel designated by the Initial Purchasers.
Records which the Company and the Trust determine, in good faith, to
be confidential and any records which the Company notifies the
Inspectors are confidential shall not be disclosed by the Inspectors
unless (i) the disclosure of such Records is necessary to avoid or
correct a material misstatement or omission in such Registration
Statement, (ii) the release of such Records is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction or is
necessary in connection with any action, suit or proceeding or (iii)
the information in such Records has been made generally available to
the public. Each selling Holder of such Registrable Securities and
each such Participating Broker-Dealer will be required as a condition
to the receipt of such information to agree in writing that
information obtained by it as a result of such inspections shall be
deemed confidential and shall not be used by it as the basis for any
market transactions in the securities of the Trust or the Company
unless and until such is made generally available to the public. Each
selling Holder of such Registrable Securities and each such
Participating Broker-Dealer will be required to further agree in
writing that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, give notice to the
Company and allow the Company at its expense to undertake appropriate
action to prevent disclosure of the Records deemed confidential;
(o) comply with all applicable rules and regulations of
the SEC so long as any provision of this Agreement shall be applicable
and make generally available to its security holders earning
statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule
promulgated under the Securities Act) no later than 45 days after the
end of any 12-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year) (i) commencing at the
<PAGE> 19
18
end of any fiscal quarter in which Registrable Securities are sold to
underwriters in a firm commitment or best efforts underwritten
offering and (ii) if not sold to underwriters in such an offering,
commencing on the first day of the first fiscal quarter of the Company
after the effective date of a Registration Statement, which statements
shall cover said 12-month periods;
(p) upon consummation of an Exchange Offer or a Private
Exchange, if requested by a Trustee or if the Indenture so requires,
obtain an opinion of counsel to the Company addressed to the Trustee
for the benefit of all Holders of Registrable Securities participating
in the Exchange Offer or the Private Exchange, as the case may be, and
which includes an opinion that (i) the Company and the Trust, as the
case requires, have duly authorized, executed and delivered the
Exchange Securities and Private Exchange Securities, and (ii) each of
the Exchange Securities or the Private Exchange Securities, as the
case may be, constitutes a legal, valid and binding obligation of the
Company or the Trust, as the case requires, enforceable against the
Company or the Trust, as the case requires, in accordance with its
respective terms (in each case, with customary exceptions);
(q) if an Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Securities by Holders to
the Company or the Trust, as applicable (or to such other Person as
directed by the Company or the Trust, respectively), in exchange for
the Exchange Securities or the Private Exchange Securities, as the
case may be, the Company or the Trust, as applicable, shall mark, or
cause to be marked, on such Registrable Securities delivered by such
Holders that such Registrable Securities are being cancelled in
exchange for the Exchange Securities or the Private Exchange
Securities, as the case may be; in no event shall such Registrable
Securities be marked as paid or otherwise satisfied;
(r) cooperate with each seller of Registrable Securities
covered by any Registration Statement and each underwriter, if any,
participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be
made with the NASD;
(s) take all other steps necessary to effect the
registration of the Registrable Securities covered by a Registration
Statement contemplated hereby;
(t) in the case of the Exchange Offer Registration
Statement (i) include in the Exchange Offer Registration Statement a
section entitled "Plan of Distribution," which section shall be
reasonably acceptable to the Initial Purchasers or another
representative of the Participating Broker-Dealers identified to the
Company in writing, and which shall contain a summary statement of the
positions taken or policies made by the staff of the SEC with respect
to the potential "underwriter" status of any broker-dealer (a
<PAGE> 20
19
"Participating Broker-Dealer") that holds Registrable Securities
acquired for its own account as a result of market-making activities
or other trading activities and that will be the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act) of Exchange Securities
to be received by such broker-dealer in the Exchange Offer, whether
such positions or policies have been publicly disseminated by the
staff of the SEC or such positions or policies, in the reasonable
judgment of the Initial Purchasers or such other representative,
represent the prevailing views of the staff of the SEC, including a
statement that any such broker-dealer who receives Exchange Securities
for Registrable Securities pursuant to the Exchange Offer may be
deemed a statutory underwriter and must deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale
of such Exchange Securities, (ii) furnish to each Participating
Broker-Dealer who has delivered to the Company the notice referred to
in Section 3(e), without charge, as many copies of each Prospectus
included in the Exchange Offer Registration Statement, including any
preliminary Prospectus, and any amendment or supplement thereto, as
such Participating Broker-Dealer may reasonably request (each of the
Company and the Trust hereby consents to the use of the Prospectus
forming part of the Exchange Offer Registration Statement or any
amendment or supplement thereto by any Person subject to the
prospectus delivery requirements of the Securities Act, including all
participating Broker-Dealers, in connection with the sale or transfer
of the Exchange Securities covered by the Prospectus or any amendment
or supplement thereto), (iii) keep the Exchange Offer Registration
Statement effective and amend and supplement the Prospectus contained
therein in order to permit such Prospectus to be lawfully delivered by
all Persons subject to the prospectus delivery requirements of the
Securities Act for such period of time as such Persons must comply
with such requirements under the Securities Act and applicable rules
and regulations in order to resell the Exchange Securities; provided,
however, that such period shall not be required to exceed 90 days (or
such longer period if extended pursuant to the last sentence of
Section 3 hereof) (the "Applicable Period"), and (iv) include in the
transmittal letter or similar documentation to be executed by an
exchange offeree in order to participate in the Exchange Offer (x) the
following provision:
"If the exchange offeree is a broker-dealer holding
Registrable Securities acquired for its own account as a
result of market-making activities or other trading
activities, it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any
resale of Exchange Securities received in respect of such
Registrable Securities pursuant to the Exchange Offer";
and (y) a statement to the effect that by a broker-dealer making the
acknowledgment described in clause (x) and by delivering a Prospectus
in connection with the exchange of Registrable Securities, the
broker-dealer will not be deemed to admit that it is an underwriter
within the meaning of the Securities Act.
<PAGE> 21
20
The Company or the Trust may require each seller of
Registrable Securities as to which any registration is being effected to
furnish to the Company or the Trust, as applicable, such information regarding
such seller as may be required by the securities laws or regulations to be
included in a Registration Statement. The Company or the Trust may exclude
from such registration the Registrable Securities of any seller who
unreasonably fails to furnish such information within a reasonable time (which
time shall in no event exceed 15 days) after receiving such request. The
Company shall have no obligation to register under the Securities Act the
Registrable Securities of a seller who so fails to furnish such information.
In the case of (i) a Shelf Registration Statement or (2)
Participating Broker-Dealers who have notified the Company and the Trust that
they will be utilizing the Prospectus contained in the Exchange Offer
Registration Statement as provided in Section 3(t) hereof, are seeking to sell
Exchange Securities and are required to deliver Prospectuses each Holder agrees
that, upon receipt of any notice from the Company or the Trust of the happening
of any event of the kind described in Section 3(e)(ii), 3(e)(iii), 3(e)(v) or
3(e)(vi) hereof, such Holder will forthwith discontinue disposition of
Registrable Securities pursuant to a Registration Statement until such Holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 3(i) hereof or until it is advised in writing (the "Advice") by the
Company and the Trust that the use of the applicable Prospectus may be resumed,
and, if so directed by the Company and the Trust, such Holder will deliver to
the Company or the Trust (at the Company's or the Trust's expense, as the case
requires) all copies in such Holder's possession, other than permanent file
copies then in such Holder's possession, of the Prospectus covering such
Registrable Securities or Exchange Securities, as the case may be, current at
the time of receipt of such notice of suspension or disposition. If the
Company or the Trust shall give any such notice to suspend the disposition of
Registrable Securities or Exchange Securities, as the case may be, pursuant to
a Registration Statement, the Company and the Trust shall use their best
efforts to file and have declared effective (if an amendment) as soon as
practicable following an amendment or supplement to the Registration Statement
and shall extend the period during which such Registration Statement shall be
maintained effective pursuant to this Agreement by the number of days in the
period from and including the date of the giving of such notice to and
including the date when the Company and the Trust shall have made available to
the Holders (x) copies of the supplemented or amended Prospectus necessary to
resume such dispositions or (y) the Advice.
4. Indemnification and Contribution. (a) In connection
with any Registration Statement, the Company and the Trust agree to jointly and
severally indemnify and hold harmless each Initial Purchaser, each Holder, each
Participating Broker-Dealer and each Person, if any, who controls any of such
parties within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, joint or several, as incurred, arising out of
any untrue statement or alleged untrue statement
<PAGE> 22
21
of a material fact contained in any Registration Statement (or any
amendment thereto), covering Registrable Securities or Exchange
Securities, including all documents incorporated therein by reference,
or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any
Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, joint or several, as incurred, to the extent
of the aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any court or governmental agency or
body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue
statement or omission, if such settlement is effected with the prior
written consent of the Company; and
(iii) against any and all expenses whatsoever, as incurred
(including reasonable fees and disbursements of counsel chosen by such
Holder or such Participating Broker-Dealer (except to the extent
otherwise expressly provided in Section 4(c) hereof)), reasonably
incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any court or
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense in not paid under subparagraph (i) or (ii) of this Section
4(a);
provided, however, that (i) this indemnity does not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished in writing to the
Company or the Trust by such Holder or Participating Broker-Dealer with respect
to such Holder or Participating Broker-Dealer, as the case may be, expressly
for use in the Registration Statement (or any amendment thereto) or any
Prospectus (or any amendment or supplement thereto) and (ii) the Company and
the Trust shall not be liable to any such Holder, Participating Broker-Dealer
or controlling person, with respect to any untrue statement or alleged untrue
statement or omission or alleged omission in any preliminary Prospectus to the
extent that any such loss, liability, claim, damage or expense of any Holder,
Participating Broker-Dealer or controlling person results from the fact that
such Holder or Participating Broker-Dealer sold Registrable Securities or
Exchange Securities to a Person to whom there was not sent or given, at or
prior to the written confirmation of such sale, a copy of the final Prospectus
as then amended or supplemented if the Company had previously furnished copies
thereof to such Holder or Participating Broker-Dealer and the loss, liability,
claim, damage or expense of such Holder, Participating Broker-Dealer or
controlling person results from an untrue statement or omission of
<PAGE> 23
22
a material fact contained in the preliminary Prospectus which was corrected in
the final Prospectus. Any amounts advanced by the Company or the Trust to an
indemnified party pursuant to this Section 4 shall be returned to the Company
or the Trust if it shall be finally determined by such a court in a judgment
not subject to appeal or final review that such indemnified party was not
entitled to indemnification by the Company or the Trust.
(b) Each Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Trust and the other selling
Holders and each of their respective directors, officers and trustees
(including each director, officer or trustee of the Company and the Trust who
signed the Registration Statement), employees and agents and each Person, if
any, who controls the Company, the Trust or any other selling Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any and all loss, liability, claim, damage and expense
whatsoever described in the indemnity contained in Section 4(a) hereof, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto)
in reliance upon and in conformity with written information furnished to the
Company or the Trust by such selling Holder with respect to such Holder
expressly for use in the Registration Statement (or any amendment thereto), or
any such Prospectus (or any amendment thereto); provided, however, that, in the
case of a Shelf Registration Statement, no such Holder shall be liable for any
claims hereunder in excess of the amount of net proceeds received by such
Holder from the sale of Registrable Securities pursuant to such Shelf
Registration Statement.
(c) Each indemnified party shall give prompt notice to
each indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, enclosing a copy of all papers properly
served on such indemnified party, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability which it may
have under this Section 4, except to the extent that it is materially
prejudiced by such failure. An indemnifying party may participate at its own
expense in the defense of such action. If an indemnifying party so elects
within a reasonable time after receipt of such notice, an indemnifying party,
severally or jointly with any other indemnifying parties receiving such notice,
may assume the defense of such action with counsel chosen by it and reasonably
acceptable to the indemnified parties defendant in such action, provided,
however, that if (i) representation of such indemnified party by the same
counsel would present a conflict of interest or (ii) the actual or potential
defendants in, or targets of, any such action include both the indemnified
party and the indemnifying party and any such indemnified party reasonably
determines that there are likely to be legal defenses available to such
indemnified party which are inconsistent or in conflict with those available to
such indemnifying parties, then in the case of clauses (i) and (ii) of this
Section 4(c) such indemnifying party and counsel for each indemnifying party or
parties shall not be entitled to assume such defense. If an indemnifying party
is not entitled to assume the defense of such action as a result of the proviso
to the preceding sentence, counsel for such indemnifying party and counsel for
each indemnified party
<PAGE> 24
23
or parties shall be entitled to conduct the defense of such indemnified party
or parties. If an indemnifying party assumes the defense of such action, in
accordance with and as permitted by the provisions of this paragraph, such
indemnifying parties shall not be liable for any fees and expenses of counsel
for the indemnified parties incurred thereafter in connection with such action.
In no event shall the indemnifying parties be liable for the fees and expenses
of more than one counsel (in addition to local counsel), separate from their
own counsel, for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 4 (whether
or not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent (i) includes an unconditional written
release in form and substance satisfactory to the indemnified parties of each
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of
any indemnified party.
(d) Notwithstanding the last sentence of Section 4(a), if
at any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for reasonable fees and expenses of counsel
pursuant to Section 4(a)(iii) above, such indemnifying party agrees that it
shall be liable for any settlement effected without its written consent if (i)
such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement; provided that an indemnifying party shall not be
liable for any such settlement effected without its consent if such
indemnifying party (1) reimburses such indemnified party in accordance with
such request to the extent it considers reasonable and (2) provides written
notice to the indemnified party substantiating the unpaid balance as
unreasonable, in each case prior to the date of such settlement. [Note: these
provisions track last year's documents almost verbatim.]
(e) In order to provide for just and equitable
contribution in circumstances under which any of the indemnity provisions set
forth in this Section 4 is for any reason held to be unavailable to the
indemnified parties although applicable in accordance with its terms, the
Company, the Trust, and the Holders shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement incurred by the Company, the Trust and the Holders, as
incurred; provided that no Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any Person that was not guilty of such fraudulent
misrepresentation. As
<PAGE> 25
24
between the Company, the Trust, and the Holders, such parties shall contribute
to such aggregate losses, liabilities, claims, damages and expenses of the
nature contemplated by such indemnity agreement in such proportion as shall be
appropriate to reflect the relative fault of the Company and Trust, on the one
hand, and the Holders, on the other hand, with respect to the statements or
omissions which resulted in such loss, liability, claim, damage or expense, or
action in respect hereof, as well as any other relevant equitable
considerations. The relative fault of the Company and the Trust, on the one
hand, and of the Holders, on the other hand, shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Trust, on the one hand,
or by or on behalf of the Holders, on the other, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company, the Trust and the Holders of the
Registrable Securities agree that it would not be just and equitable if
contribution pursuant to this Section 4(e) were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the relevant equitable considerations. For purposes of this Section 4(e), each
affiliate of a Holder, and each director, officer, employee, agent and Person,
if any, who controls a Holder or such affiliate within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as such Holder, and each director of each of the Company
or the Trust, each officer of each of the Company or the Trust who signed the
Registration Statement, and each Person, if any, who controls each of the
Company or the Trust within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution as
each of the Company or the Trust.
5. Participation in Underwritten Registrations. No
Holder may participate in any underwritten registration hereunder unless such
Holder (a) agrees to sell such Holder's Registrable Securities on the basis
provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (b) completes and executes all
reasonable questionnaires, lock-up letters and other documents reasonably
required under the terms of such underwriting arrangements.
6. Selection of Underwriters. The Holders of
Registrable Securities covered by the Shelf Registration Statement who desire
to do so may sell the securities covered by such Shelf Registration in an
underwritten offering; provided that such securities represent at least 10% of
the aggregate principal or liquidation amount of Registrable Securities
outstanding. In any such underwritten offering, the underwriter or
underwriters and manager or managers that will administer the offering will be
selected by the Holders of a majority in aggregate principal or liquidation
amount of the Registrable Securities included in such underwritten offering;
provided, however, that such underwriters and managers must be reasonably
satisfactory to the Company and the Trust.
<PAGE> 26
25
7. Miscellaneous.
(a) Rule 144 and Rule 144A. For so long as the Company
or the Trust is subject to the reporting requirements of Section 13 or 15 of
the Exchange Act and any Registrable Securities remain outstanding, it will use
its best efforts to file the reports or other filings required to be filed by
it under the Securities Act and Section 13(a) or 15(d) of the Exchange Act and
the rules and regulations adopted by the SEC thereunder; provided that if it
ceases to be so required to file such reports or other filings, it will, upon
the request of any Holder of Registrable Securities (a) make publicly available
such information as is necessary to permit sales of its Registrable Securities
pursuant to Rule 144 under the Securities Act, (b) deliver such information to
a prospective purchaser as is necessary to permit sales of its securities
pursuant to Rule 144A under the Securities Act and it will take such further
action as any Holder of Registrable Securities may reasonably request, and (c)
take such further action that is reasonable in the circumstances, in each case,
to the extent required from time to time to enable such Holder to sell its
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (i) Rule 144 under the Securities Act,
as such rule may be amended from time to time, (ii) Rule 144A under the
Securities Act, as such rule may be amended from time to time, or (iii) any
similar rules or regulations hereafter adopted by the SEC. Upon the request of
any Holder of Registrable Securities, the Company or the Trust, as applicable,
will deliver to such Holder a written statement as to whether it has complied
with such requirements.
(b) No Inconsistent Agreements. The Company or the Trust
has not entered into nor will the Company or the Trust on or after the date of
this Agreement enter into any agreement which is inconsistent with the rights
granted to the Holders of Registrable Securities in this Agreement or otherwise
conflicts with the provisions hereof. The rights granted to the Holders
hereunder do not in any way conflict with the rights granted to the holders of
the Company's or the Trust's other issued and outstanding securities under any
such agreements.
(c) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given unless the Company and the Trust have
obtained the written consent of Holders of at least a majority in aggregate
principal or liquidation amount of the outstanding Registrable Securities
affected by such amendment, modification, supplement, waiver or departure;
provided no amendment, modification or supplement or waiver or consent to the
departure with respect to the provisions of Section 4 hereof shall be effective
as against any Holder of Registrable Securities unless consented to in writing
by such Holder of Registrable Securities. Notwithstanding the foregoing
sentence, (i) this Agreement may be amended, without the consent of any Holder
of Registrable Securities, by written agreement signed by the Company, the
Trust and Salomon Brothers, to cure any ambiguity, correct or supplement any
provision of this Agreement that may be inconsistent with any other provision
of this Agreement or to make any other provisions with respect to matters or
<PAGE> 27
26
questions arising under this Agreement which shall not be inconsistent with
other provisions of this Agreement, (ii) this Agreement may be amended,
modified or supplemented, and waivers and consents to departures from the
provisions hereof may be given, by written agreement signed by the Company, the
Trust and Salomon Brothers to the extent that any such amendment, modification,
supplement, waiver or consent is, in their reasonable judgment, necessary or
appropriate to comply with applicable law (including any interpretation of the
Staff of the SEC) or any change therein and (iii) to the extent any provision
of this Agreement relates to the Initial Purchasers, such provision may be
amended, modified or supplemented, and waivers or consents to departures from
such provisions may be given, by written agreement signed by Salomon Brothers,
the Company and the Trust.
(d) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
registered first-class mail, telex, telecopier, or any courier guaranteeing
overnight delivery (i) if to a Holder, at the most current address given by
such Holder to the Company or the Trust by means of a notice given in
accordance with the provisions of this Section 7(d), which address initially
is, with respect to the Initial Purchasers, the address set forth in the
Purchase Agreement; and (ii) if to the Company or the Trust, initially at the
Company's address set forth in the Purchase Agreement and thereafter at such
other address, notice of which is given in accordance with the provisions of
this Section 7(d).
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied;
and on the next Business Day, if timely delivered to an air courier
guaranteeing overnight delivery.
Copies of all such notices, demands, or other communications
shall be concurrently delivered by the Person giving the same to the Trustee,
at the address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors, assigns and transferees
of the Initial Purchasers, including, without limitation and without the need
for an express assignment, subsequent Holders; provided, however, that nothing
herein shall be deemed to permit any assignment, transfer or other disposition
of Registrable Securities in violation of the terms of the Purchase Agreement
or the Indenture. If any transferee of any Holder shall acquire Registrable
Securities, in any manner, whether by operation of law or otherwise, such
Registrable Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Securities, such Person
shall be conclusively deemed to have agreed to be bound by and to perform all
of the terms of this Agreement and such Person shall be entitled to receive the
benefits hereof.
<PAGE> 28
27
(f) Third Party Beneficiary. Each of the Initial
Purchasers shall be a third party beneficiary of the agreements made hereunder
between the Company and the Trust, on the one hand, and the Holders, on the
other hand, and shall have the right to enforce such agreements directly to the
extent it deems such enforcement necessary or advisable to protect its rights
or the rights of Holders hereunder.
(g) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO
HAVE BEEN MADE IN THE STATE OF NEW YORK. THE VALIDITY AND INTERPRETATION OF
THIS AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE
OF NEW YORK. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE NON-EXCLUSIVE
JURISDICTION OF THE COMPETENT COURTS OF THE STATE OF NEW YORK SITTING IN THE
CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT.
(j) Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
(k) Securities Held by the Company, the Trust or its
Affiliates. Whenever the consent or approval of Holders of a specified
percentage of Registrable Securities is required hereunder, Registrable
Securities held by the Company, the Trust or its affiliates (as such term is
defined in Rule 405 under the Securities Act) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
<PAGE> 29
28
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
K N ENERGY, INC.
By: /s/ E. Wayne Lundhagen
-----------------------------------
Name: E. Wayne Lundhagen
Title: Vice President and Treasurer
K N CAPITAL TRUST I
By: /s/ E. Wayne Lundhagen
----------------------------------
Name: E. Wayne Lundhagen
Title: Administrative Trustee
By: /s/ Clyde E. McKenzie
----------------------------------
Name: Clyde E. McKenzie
Title: Administrative Trustee
Confirmed and accepted as of
the date first above written:
SALOMON BROTHERS INC
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: SALOMON BROTHERS INC
By: /s/ Phillip J. Ream
-------------------------------------
Name: Phillip J. Ream
Title: Vice President
<PAGE> 1
EXHIBIT 5.1
VINSON & ELKINS L.L.P.
2300 FIRST CITY TOWER
1001 FANNIN STREET
HOUSTON, TEXAS 77002-6760
JULY 2, 1997
K N Energy, Inc. and
K N Capital Trust I
370 Van Gordon Street
Lakewood, Colorado 80228
Gentlemen:
We have acted as counsel for K N Energy, Inc., a Kansas corporation (the
"Company"), in connection with the filing by the Company and K N Capital Trust
I, a Delaware statutory business trust (the "Trust"), with the Securities and
Exchange Commission of a Registration Statement on Form S-4 (the "Registration
Statement") with respect to: (i) the issuance by the Trust of up to $100,000,000
aggregate Liquidation Amount of its 8.56% Series B Capital Trust Pass-through
Securities(SM) (the "Exchange Capital Securities"), registered pursuant to the
Registration Statement under the Securities Act of 1933, as amended (the
"Securities Act"), in exchange for up to $100,000,000 aggregate Liquidation
Amount of the Trust's outstanding 8.56% Series A Capital Trust Pass-through
Securities(SM) (the "Old Capital Securities"); (ii) the issuance by the Company
to the Trust of $103,100,000 aggregate principal amount of the Company's 8.56%
Series B Junior Subordinated Deferrable Interest Debentures due April 15, 2027
(the "Exchange Subordinated Debt Securities"), registered pursuant to the
Registration Statement under the Securities Act, in exchangee for $103,100,000
aggregate principal amount of the Company's outstanding 8.56% Series A Junior
Subordinated Deferrable Interest Debentures due April 15, 2027 (the "Old
Subordinated Debt Securities"); and (iii) the Company's guarantee (the "Exchange
Guarantee"), which guarantees the payment of Distributions and payments on
liquidation or redemption of the Old Capital Securities and the Exchange Capital
Securities, also registered pursuant to the Registration Statement under the
Securities Act. The Exchange Subordinated Debt Securities are to be issued
pursuant to an Indenture dated as of April 24, 1997 (the "Indenture") between
the Company and Wilmington Trust Company, as Debenture Trustee, and the Exchange
Guarantee is to be issued pursuant to the Capital Securities Guarantee (the
"Guarantee Agreement") to be entered into between the Company and Wilmington
Trust Company, as Guarantee Trustee.
Before rendering our opinions hereinafter set forth, we examined such
certificates, instruments and records of the Company and the Trust, including
the Indenture, the Declaration and the form of the Guarantee Agreement filed as
exhibits to the Registration Statement, and we reviewed such questions of law,
as we considered appropriate.
Based upon the foregoing, we are of the opinion that:
(i) When the Registration Statement has become effective under the
Securities Act, and the Exchange Subordinated Debt Securities have been
duly executed and authenticated in accordance with the Indenture and issued
as contemplated in the Registration Statement, the Exchange Subordinated
Debt Securities will constitute valid and legally binding obligations of
the Company, subject to bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium and similar laws relating to or affecting creditors' rights
generally and to general equitable principles.
(ii) When the Registration Statement has become effective under the
Securities Act and the Guarantee Agreement has been duly executed and
delivered by the Company and the Guarantee Trustee, the Exchange Guarantee
will constitute valid and legally binding obligations of the
<PAGE> 2
Company, subject to bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers), reorganization, moratorium and
similar laws relating to or affecting creditors' rights generally and to
general equitable principles.
(iii) Assuming that the Trust was formed and is maintained in
compliance with the terms of the Declaration, we hereby confirm that the
discussion and the legal conclusions set forth in the Registration
Statement under the heading "Certain Federal Income Tax Consequences" are
accurate and complete in all material respects and constitute our opinion,
which is subject to the qualifications set forth therein, as to the
material tax consequences of the purchase, ownership and disposition of the
Old Capital Securities and the Exchange Capital Securities.
We hereby consent to the statements made with respect to us under the
captions "Legal Matters" and "Certain Federal Income Tax Consequences" in the
prospectus contained in the Registration Statement and to the filing of this
opinion as an exhibit to the Registration Statement. By giving such consent, we
do not admit that we are within the category of persons whose consent is
required under Section 7 of the Securities Act or the rules and regulations of
the Commission issued thereunder.
Very truly yours,
/s/ VINSON & ELKINS L.L.P.
<PAGE> 1
EXHIBIT 5.2
RICHARDS, LAYTON & FINGER
ONE RODNEY SQUARE
P.O. BOX 551
WILMINGTON, DELAWARE 19899
JULY 2, 1997
K N Energy, Inc. and
K N Capital Trust I
370 Van Gordon Street
Lakewood, Colorado 80228
Ladies and Gentlemen:
We have acted as special Delaware counsel for K N Energy, Inc., a Kansas
corporation (the "Company"), and K N Capital Trust I, a Delaware business trust
(the "Trust"), in connection with the matters set forth herein. At your request,
this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our examination
of documents has been limited to the examination of originals or copies of the
following:
(a) The Certificate of Trust of the Trust, dated as of March 31, 1997
(the "Certificate"), as filed in the office of the Secretary of State of
the State of Delaware (the "Secretary of State") on April 4, 1997;
(b) The Declaration of Trust of the Trust, dated as of March 31, 1997,
among the Company and the trustees of the Trust named therein;
(c) The Amended and Restated Declaration of Trust of the Trust, dated
as of April 24, 1997 (including Annex I and Exhibits A-1 and A-2 thereto)
(the "Declaration"), among the Company, as sponsor, the trustees of the
Trust named therein and the holders, from time to time, of undivided
beneficial interests in the assets of the Trust;
(d) The Registration Statement on Form S-4 (the "Registration
Statement"), including a preliminary prospectus (the "Prospectus"),
relating to the exchange of the 8.56% Series B Capital Trust Pass-Through
Securities (each, an "Exchange Capital Security" and collectively, the
"Exchange Capital Securities") for the 8.56% Series A Capital Trust
Pass-Through Securities, as proposed to be filed by the Company and the
Trust with the Securities and Exchange Commission on or about July 2, 1997;
and
(e) A Certificate of Good Standing for the Trust, dated July 2, 1997,
obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are used
as defined in the Declaration.
For purposes of this opinion, we have not reviewed any documents other than
the documents listed in paragraphs (a) through (e) above. In particular, we have
not reviewed any document (other than the documents listed in paragraphs (a)
through (e) above) that is referred to in or incorporated by reference into the
documents reviewed by us. We have assumed that there exists no provision in any
document that we have not reviewed that is inconsistent with the opinions stated
herein. We have conducted no independent factual investigation of our own but
rather have relied solely upon the foregoing documents, the statements and
information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
<PAGE> 2
For purposes of this opinion, we have assumed (i) that the Declaration
constitutes the entire agreement among the parties thereto with respect to the
subject matter thereof, including with respect to the creation, operation and
termination of the Trust, and that the Declaration and the Certificate are in
full force and effect and have not been amended, (ii) except to the extent
provided in paragraph 1 below, the due creation or due organization or due
formation, as the case may be, and valid existence in good standing of each
party to the documents examined by us under the laws of the jurisdiction
governing its creation, organization or formation, (iii) the legal capacity of
natural persons who are parties to the documents examined by us, (iv) that each
of the parties to the documents examined by us has the power and authority to
execute and deliver, and to perform its obligations under, such documents, (v)
the due authorization, execution and delivery by all parties thereto of all
documents examined by us, (vi) the receipt by each Person to whom an Exchange
Capital Security is to be issued by the Trust (collectively, the "Exchange
Capital Security Holders") of a certificate (substantially in the form attached
as Exhibit A-1 to the Declaration) evidencing the Exchange Capital Security and
the consideration for the Exchange Capital Security acquired by it in accordance
with the Declaration, and as described in the Registration Statement, and (vii)
that the Exchange Capital Securities are issued to the Exchange Capital Security
Holders in accordance with the Declaration, and as described in the Registration
Statement. We have not participated in the preparation of the Registration
Statement and assume no responsibility for its contents.
This opinion is limited to the laws of the State of Delaware (excluding the
securities laws of the State of Delaware), and we have not considered and
express no opinion on the laws of any other jurisdiction, including federal laws
and rules and regulations relating thereto. Our opinions are rendered only with
respect to Delaware laws and rules, regulations and orders thereunder which are
currently in effect.
Based upon the foregoing, and upon our examination of such questions of law
and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
i. The Trust has been duly created and is validly existing in good
standing as a business trust under the Business Trust Act.
ii. The Exchange Capital Securities will represent valid and, subject
to the qualifications set forth in paragraph 3 below, fully paid and
nonassessable undivided beneficial interests in the assets of the Trust.
iii. The Exchange Capital Security Holders, as beneficial owners of
the Trust, will be entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit organized under
the General Corporation Law of the State of Delaware. We note that the
Exchange Capital Security Holders may be obligated to make payments as set
forth in the Declaration.
We consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit to the Registration Statement. We also consent to
Vinson & Elkins L.L.P.'s relying as to matters of Delaware law upon this opinion
in connection with an opinion to be rendered by it on the date hereof as
described in the Prospectus. In addition, we hereby consent to the use of our
name under the heading "Legal Matters" in the Prospectus. In giving the
foregoing consents, we do not thereby admit that we come within the category of
Persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder. Except as stated above, without our prior written
consent, this opinion may not be furnished or quoted to, or relied upon by, any
other Person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger
<PAGE> 1
EXHIBIT 12.1
K N ENERGY, INC. AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
QUARTER
ENDED YEARS ENDED DECEMBER 31
MARCH 31, -------------------------------------------------
1997 1996 1995 1994 1993 1992
--------- -------- -------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Earnings:
Income From Continuing Operations
per Statements of Income...... $20,358 $ 63,819 $ 52,522 $15,321 $30,869 $36,342
Add:
Interest and Debt Expense..... 11,626 37,760 34,316 32,009 31,478 27,608
Income Taxes.................. 11,702 35,897 29,050 9,500 18,599 20,068
Portion of Rents
Representative of the
Interest Factor............. 4,018 7,417 5,082 3,492 2,863 1,901
------- -------- -------- ------- ------- -------
Income as Adjusted............... $47,704 $144,893 $120,970 $60,322 $83,809 $85,919
======= ======== ======== ======= ======= =======
Fixed Charges:
Interest and Debt Expense per
Statements of Income (Includes
Amortization of Debt Discount,
Premium and Expense).......... $ 9,656 $ 35,933 $ 34,211 $31,815 $30,909 $27,090
Add:
Interest Capitalized.......... 1,970 1,827 105 338 965 842
Portion of Rents
Representative of the
Interest Factor............. 4,018 7,417 5,082 3,492 2,863 1,901
Preferred Stock Dividends of
Subsidiary.................. -- -- -- -- 69 3,084
------- -------- -------- ------- ------- -------
Fixed Charges...................... $15,644 $ 45,177 $ 39,398 $35,645 $34,806 $32,917
======= ======== ======== ======= ======= =======
Ratio of Earnings to Fixed
Charges.......................... 3.05 3.21 3.07 1.69 2.41 2.61
======= ======== ======== ======= ======= =======
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement of our report dated February 4,
1997, included in K N Energy, Inc.'s Annual Report on Form 10-K, as amended, for
the year ended December 31, 1996 and to all references to our Firm included in
this Registration Statement.
/s/ ARTHUR ANDERSEN LLP
------------------------------------
Arthur Andersen LLP
Denver, Colorado
July 2, 1997
<PAGE> 1
EXHIBIT 24.1
LIMITED POWER OF ATTORNEY
K N ENERGY, INC.
KNOW ALL MEN BY THESE PRESENTS that, the undersigned director or officer of
K N Energy, Inc., a Kansas corporation, does hereby make, constitute and appoint
LARRY D. HALL, CLYDE E. McKENZIE, and E. WAYNE LUNDHAGEN and each of them acting
individually, his true and lawful attorney with power to act without the other
and with full power of substitution, to execute, deliver and file, for and on
his behalf, and in his name and in his capacity or capacities as aforesaid, (A)
a Registration Statement on Form S-4 for filing with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, with respect to an
exchange offer for a series of preferred securities to be issued by K N Capital
Trust I, a statutory business trust created under the laws of Delaware, and
certain related guarantees and debt securities of K N Energy, Inc., and any and
all amendments thereto or other documents in support thereof or supplemental
thereto, and (B) a second Registration Statement on Form S-3 respecting a
secondary offering of such securities, and any and all amendments thereto or
other documents in support thereof or supplemental thereto, hereby granting to
said attorneys and each of them full power and authority to do and perform each
and every act and thing whatsoever as said attorney or attorneys may deem
necessary or advisable to carry out fully the intent of the foregoing as the
undersigned might or could do personally or in the capacity or capacities as
aforesaid, hereby ratifying and confirming all acts and things which said
attorney or attorneys may do or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 10th day
of April 1997.
<TABLE>
<C> <C>
/s/ LARRY D. HALL /s/ CLYDE E. MCKENZIE
- ----------------------------------------------------- -----------------------------------------------------
Larry D. Hall Clyde E. McKenzie
/s/ E. W. LUNDHAGEN /s/ E. H. AUSTIN, JR.
- ----------------------------------------------------- -----------------------------------------------------
E. Wayne Lundhagen Edward H. Austin, Jr.
/s/ C. W. BATTEY /s/ STEWART A. BLISS
- ----------------------------------------------------- -----------------------------------------------------
Charles W. Battey Stewart A. Bliss
/s/ DAVID W. BURKHOLDER /s/ DAVID M. CARMICHAEL
- ----------------------------------------------------- -----------------------------------------------------
David W. Burkholder David M. Carmichael
/s/ ROBERT H. CHITWOOD /s/ HOWARD P. COGHLAN
- ----------------------------------------------------- -----------------------------------------------------
Robert H. Chitwood Howard P. Coghlan
/s/ JORDAN L. HAINES /s/ WILLIAM J. HYBL
- ----------------------------------------------------- -----------------------------------------------------
Jordan L. Haines William J. Hybl
/s/ EDWARD RANDALL, III /s/ JAMES C. TAYLOR
- ----------------------------------------------------- -----------------------------------------------------
Edward Randall, III James C. Taylor
/s/ H. A. TRUE, III /s/ R. G. SHEARER
- ----------------------------------------------------- -----------------------------------------------------
H.A. True, III R. Gordon Shearer
</TABLE>
<PAGE> 1
EXHIBIT 25.1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) ___
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
K N ENERGY, INC.
(Exact name of obligor as specified in its charter)
Kansas 48-0290000
(State of incorporation) (I.R.S. employer identification no.)
370 Van Gordon Street
P. O. Box 281304
Lakewood, Colorado 80228-8304
(Address of principal executive offices) (Zip Code)
8.56% Junior Subordinated Deferrable Interest Debentures
due April 15, 2027 of K N Energy, Inc.
(Title of the indenture securities)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the
obligor is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Wilmington Trust Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all in the
City of Wilmington and State of Delaware on the 18th day of June, 1997.
WILMINGTON TRUST COMPANY
[SEAL]
Attest:/s/ W. Chris Sponenberg By:/s/ Christopher L. Kaiser
--------------------------- --------------------------
Assistant Secretary Name: Christopher L. Kaiser
Title: Vice President
2
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the
name of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment
filed in the Office of the Secretary of State on March 18, A.D. 1903, and the
Charter or Act of Incorporation of which company has been from time to time
amended and changed by merger agreements pursuant to the corporation law for
state banks and trust companies of the State of Delaware, does hereby alter and
amend its Charter or Act of Incorporation so that the same as so altered and
amended shall in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of
Delaware is at Rodney Square North, in the City of Wilmington,
County of New Castle; the name of its resident agent is WILMINGTON
TRUST COMPANY whose address is Rodney Square North, in said City.
In addition to such principal office, the said corporation maintains
and operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County, Delaware,
at Claymont, New Castle County, Delaware, at Greenville, New Castle
County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate
branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other branch
offices or places of business as may be authorized from time to time
by the agency or agencies of the government of the State of Delaware
empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this
Corporation are to do any or all of the things herein mentioned as
fully and to the same extent as natural persons might or could do
and in any part of the world, viz.:
(1) To sue and be sued, complain and defend in any Court of
law or equity and to make and use a common seal, and alter
the seal at pleasure, to hold, purchase, convey, mortgage or
otherwise deal in real and personal estate and property, and
to appoint such officers and agents as the business of the
<PAGE> 5
Corporation shall require, to make by-laws not inconsistent
with the Constitution or laws of the United States or of this
State, to discount bills, notes or other evidences of debt,
to receive deposits of money, or securities for money, to buy
gold and silver bullion and foreign coins, to buy and sell
bills of exchange, and generally to use, exercise and enjoy
all the powers, rights, privileges and franchises incident to
a corporation which are proper or necessary for the
transaction of the business of the Corporation hereby
created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or claims,
adverse to his interest therein, and to prepare and give
certificates of title for any lands or premises in the State
of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all descriptions, and to prepare and execute all
papers which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers of
every description, and to carry on the business of
conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property
of every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other
persons and individuals, and from all corporations whether
state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage,
bond or other instrument issued by any state, municipality,
body politic, corporation, association or person, either
alone or in conjunction with any other person or persons,
corporation or corporations.
2
<PAGE> 6
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any
trust, office, duty, contract or agreement, either by itself
or in conjunction with any other person, or persons,
corporation, or corporations, or in like manner become surety
upon any bond, recognizance, obligation, judgment, suit,
order, or decree to be entered in any court of record within
the State of Delaware or elsewhere, or which may now or
hereafter be required by any law, judge, officer or court in
the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian, bailee, or
in any other trust capacity in the receiving, holding,
managing, and disposing of any and all estates and property,
real, personal or mixed, and to be appointed as such trustee,
trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian or bailee by
any persons, corporations, court, officer, or authority, in
the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation,
court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other
trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as
security for the performance of the duties devolving upon it
by such appointment.
(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or be
called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to
receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to receive,
collect, receipt for, and dispose of interest, dividends and
income upon and from any of the bonds, mortgages, debentures,
notes, shares of capital stock, securities, obligations,
contracts, evidences of indebtedness and other property held
and owned by it, and to exercise in respect of all such
bonds, mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of indebtedness
and other property, any and all the rights, powers and
privileges of individual
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<PAGE> 7
owners thereof, including the right to vote thereon; to
invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner as it may
think fit and proper, and from time to time to vary or
realize such investments; to issue bonds and secure the same
by pledges or deeds of trust or mortgages of or upon the
whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and when
the Board of Directors shall determine, and in the promotion
of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell,
assign, transfer, pledge, mortgage and convey real and
personal property of any name and nature and any estate or
interest therein.
(b) In furtherance of, and not in limitation, of the powers
conferred by the laws of the State of Delaware, it is hereby
expressly provided that the said Corporation shall also have the
following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.
(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of the
assets and liabilities of any person, firm, association or
corporation, and to pay for the same in cash, stock of this
Corporation, bonds or otherwise; to hold or in any manner to
dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any
part of any business so acquired, and to exercise all the
powers necessary or convenient in and about the conduct and
management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or corporation,
and, without limit as to amount, to draw, make, accept,
endorse, discount, execute and issue promissory notes,
drafts, bills of exchange, warrants, bonds, debentures, and
other negotiable or transferable instruments.
(5) To have one or more offices, to carry on all or any of
its operations and businesses, without restriction to the
same extent as natural persons might or could do, to purchase
or otherwise acquire, to hold, own, to mortgage, sell, convey
or otherwise dispose of, real and personal property, of every
class and description, in any State, District, Territory or
Colony of the United States, and in any foreign country or
place.
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<PAGE> 8
(6) It is the intention that the objects, purposes and
powers specified and clauses contained in this paragraph
shall (except where otherwise expressed in said paragraph) be
nowise limited or restricted by reference to or inference
from the terms of any other clause of this or any other
paragraph in this charter, but that the objects, purposes and
powers specified in each of the clauses of this paragraph
shall be regarded as independent objects, purposes and
powers.
FOURTH: - (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is forty-one
million (41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as "Preferred
Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in
one or more series as may from time to time be determined by the
Board of Directors each of said series to be distinctly designated.
All shares of any one series of Preferred Stock shall be alike in
every particular, except that there may be different dates from
which dividends, if any, thereon shall be cumulative, if made
cumulative. The voting powers and the preferences and relative,
participating, optional and other special rights of each such
series, and the qualifications, limitations or restrictions thereof,
if any, may differ from those of any and all other series at any
time outstanding; and, subject to the provisions of subparagraph 1
of Paragraph (c) of this Article FOURTH, the Board of Directors of
the Corporation is hereby expressly granted authority to fix by
resolution or resolutions adopted prior to the issuance of any
shares of a particular series of Preferred Stock, the voting powers
and the designations, preferences and relative, optional and other
special rights, and the qualifications, limitations and restrictions
of such series, including, but without limiting the generality of
the foregoing, the following:
(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time
by like action of the Board of Directors;
(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred Stock of
such series shall be paid, the extent of the preference or
relation, if any, of such dividends to the dividends payable
on any other class or classes, or series of the same or other
class of
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<PAGE> 9
stock and whether such dividends shall be cumulative or
non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same
for, shares of any other class or classes or of any series of
the same or any other class or classes of stock of the
Corporation and the terms and conditions of such conversion
or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices and
the time or times at which, and the terms and conditions on
which, Preferred Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and
(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the generality
of the foregoing include the right, voting as a series or by
itself or together with other series of Preferred Stock or
all series of Preferred Stock as a class, to elect one or
more directors of the Corporation if there shall have been a
default in the payment of dividends on any one or more series
of Preferred Stock or under such circumstances and on such
conditions as the Board of Directors may determine.
(c) (1) After the requirements with respect to preferential
dividends on the Preferred Stock (fixed in accordance with the
provisions of section (b) of this Article FOURTH), if any, shall
have been met and after the Corporation shall have complied with all
the requirements, if any, with respect to the setting aside of sums
as sinking funds or redemption or purchase accounts (fixed in
accordance with the provisions of section (b) of this Article
FOURTH), and subject further to any conditions which may be fixed in
accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to
time by the Board of Directors.
(2) After distribution in full of the preferential amount,
if any, (fixed in accordance with the provisions of section
(b) of this Article FOURTH), to be distributed to the holders
of Preferred Stock in the event of voluntary or involuntary
liquidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation, the holders of the Common
Stock shall be entitled to
6
<PAGE> 10
receive all of the remaining assets of the Corporation,
tangible and intangible, of whatever kind available for
distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be
adopted by the Board of Directors pursuant to section (b) of
this Article FOURTH, each holder of Common Stock shall have
one vote in respect of each share of Common Stock held on all
matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock
or of options, warrants or other rights to purchase shares of any
class or series of stock or of other securities of the Corporation
shall have any preemptive right to purchase or subscribe for any
unissued stock of any class or series or any additional shares of
any class or series to be issued by reason of any increase of the
authorized capital stock of the Corporation of any class or series,
or bonds, certificates of indebtedness, debentures or other
securities convertible into or exchangeable for stock of the
Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of
stock or securities convertible into or exchangeable for stock, or
carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons,
firms, corporations or associations, whether such holders or others,
and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case,
be as fixed from time to time by the Board of Directors in the
resolution or resolutions adopted pursuant to authority granted in
section (b) of this Article FOURTH and the consent, by class or
series vote or otherwise, of the holders of such of the series of
Preferred Stock as are from time to time outstanding shall not be
required for the issuance by the Board of Directors of any other
series of Preferred Stock whether or not the powers, preferences and
rights of such other series shall be fixed by the Board of Directors
as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided,
however, that the Board of Directors may provide in the resolution
or resolutions as to any series of Preferred Stock adopted pursuant
to section (b) of this Article FOURTH that the consent of the
holders of a majority (or such greater proportion as shall be
therein fixed) of the outstanding shares of such series voting
thereon shall be required for the issuance of any or all other
series of Preferred Stock.
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<PAGE> 11
(f) Subject to the provisions of section (e), shares of any series
of Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such
terms and for such consideration as shall be fixed by the Board of
Directors.
(h) The authorized amount of shares of Common Stock and of
Preferred Stock may, without a class or series vote, be increased or
decreased from time to time by the affirmative vote of the holders
of a majority of the stock of the Corporation entitled to vote
thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of
directors constituting the entire Board shall be not less than five
nor more than twenty-five as fixed from time to time by vote of a
majority of the whole Board, provided, however, that the number of
directors shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that the
number of directors constituting the whole Board shall be
twenty-four until otherwise fixed by a majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office
for a term expiring at the next succeeding annual meeting, directors
of the second class shall be elected to hold office for a term
expiring at the second succeeding annual meeting and directors of
the third class shall be elected to hold office for a term expiring
at the third succeeding annual meeting. Any vacancies in the Board
of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the
Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen
shall hold office until the next annual election of directors. At
such election, the stockholders shall elect a successor to such
director to hold office until the next election of the class for
which such director shall have been chosen and until his successor
shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the By-Laws of the Corporation),
any director or the entire Board of Directors of the
8
<PAGE> 12
Corporation may be removed at any time without cause, but only by
the affirmative vote of the holders of two- thirds or more of the
outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this
purpose as one class) cast at a meeting of the stockholders called
for that purpose.
(d) Nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote for the
election of directors. Such nominations shall be made by notice in
writing, delivered or mailed by first class United States mail,
postage prepaid, to the Secretary of the Corporation not less than
14 days nor more than 50 days prior to any meeting of the
stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given
to stockholders, such written notice shall be delivered or mailed,
as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of
the meeting was mailed to stockholders. Notice of nominations which
are proposed by the Board of Directors shall be given by the
Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name,
age, business address and, if known, residence address of each
nominee proposed in such notice, (ii) the principal occupation or
employment of such nominee and (iii) the number of shares of stock
of the Corporation which are beneficially owned by each such
nominee.
(f) The Chairman of the meeting may, if the facts warrant,
determine and declare to the meeting that a nomination was not made
in accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the Corporation may be
taken without a meeting, and the power of stockholders to consent in
writing, without a meeting, to the taking of any action is
specifically denied.
SIXTH: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from time to
time find necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
9
<PAGE> 13
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority
of the whole Board, may designate any of their number to constitute
an Executive Committee, which Committee, to the extent provided in
said resolution, or in the By-Laws of the Company, shall have and
may exercise all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and shall
have power to authorize the seal of the Corporation to be affixed to
all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the
world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation
by a vote of the majority of the entire Board. The stockholders may
make, alter or repeal any By-Law whether or not adopted by them,
provided however, that any such additional By-Laws, alterations or
repeal may be adopted only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class).
FOURTEENTH: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be
from time to time designated by them.
FIFTEENTH: - (a) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b) and
(c) of this Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation,
would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair market
value of $1,000,000 or more, or
10
<PAGE> 14
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or
(E) any reclassification of securities (including any
reverse stock split), or recapitalization of the Corporation,
or any merger or consolidation of the Corporation with any of
its Subsidiaries or any similar transaction (whether or not
with or into or otherwise involving an Interested
Stockholder) which has the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares
of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder, or any Affiliate of any
Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of
the outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any
national securities exchange or otherwise.
(2) The term "business combination" as used in this
Article FIFTEENTH shall mean any transaction which is
referred to any one or more of clauses (A) through (E) of
paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article FIFTEENTH
shall not be applicable to any particular business
combination and such business combination shall require only
such affirmative vote as is required by law and any other
provisions of the Charter or Act of Incorporation of By-Laws
if such business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any
Subsidiary) who or which as of the record date for the determination
of stockholders entitled to notice of and to vote on
11
<PAGE> 15
such business combination, or immediately prior to the consummation
of any such transaction:
(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial owner,
directly or indirectly, of not less than 10% of the then
outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any
share of capital stock of the Corporation which were at any
time within two years prior thereto beneficially owned by any
Interested Stockholder, and such assignment or succession
shall have occurred in the course of a transaction or series
of transactions not involving a public offering within the
meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own, directly
or indirectly, or
(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of capital stock
of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement,
or upon exercise of conversion rights, warrants or options or
otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December
31, 1981.
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<PAGE> 16
(6) "Subsidiary" shall mean any corporation of which a majority of
any class of equity security (as defined in Rule 3a11-1 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as in effect in December 31, 1981) is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty
to determine for the purposes of this Article FIFTEENTH on
the basis of information known to them, (1) the number of
Voting Shares beneficially owned by any person (2) whether a
person is an Affiliate or Associate of another, (3) whether a
person has an agreement, arrangement or understanding with
another as to the matters referred to in paragraph (3) of
section (c), or (4) whether the assets subject to any
business combination or the consideration received for the
issuance or transfer of securities by the Corporation, or any
Subsidiary has an aggregate fair market value of $1,00,000 or
more.
(e) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or
Act of Incorporation or the By-Laws of the Corporation (and in
addition to any other vote that may be required by law, this Charter
or Act of Incorporation by the By-Laws), the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the
capital stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one class)
shall be required to amend, alter or repeal any provision of
Articles FIFTH, THIRTEENTH, FIFTEENTH or SIXTEENTH of this Charter
or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a Director, except to the extent such
exemption from liability or limitation thereof is not permitted
under the Delaware General Corporation Laws as the same exists or
may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect
to any act or omission occurring prior to the time of such
repeal or modification."
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<PAGE> 17
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
<PAGE> 18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at
any time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be
given by mailing to each stockholder at least ten (10) days before said
meeting, at his last known address, a written or printed notice fixing the time
and place of such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one
vote, either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its
<PAGE> 19
members, or at the call of the Chairman of the Board of Directors or the
President.
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall
be necessary to constitute a quorum for the transaction of business at any
meeting of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal,
inability to act, or disqualification of any director, the Board of Directors,
although less than a quorum, shall have the right to elect the successor who
shall hold office for the remainder of the full term of the class of directors
in which the vacancy occurred, and until such director's successor shall have
been duly elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect
from its own members a Chairman of the Board of Directors and a President who
may be the same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person, may appoint at
any time such other committees and elect or appoint such other officers as it
may deem advisable. The Board of Directors may also elect at such meeting one
or more Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be
in charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section I. Executive Committee
(A) The Executive Committee shall be composed of not
more than nine members who shall be selected by the Board of Directors from its
own members and who shall hold office during the pleasure of the Board.
2
<PAGE> 20
(B) The Executive Committee shall have all the powers
of the Board of Directors when it is not in session to transact all business
for and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Executive Committee or at the call of the Chairman of the Board of Directors.
The majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be
held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee
shall be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the Company, and
shall direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.
(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Company by its directors and officers as contemplated by these By-Laws any
two available members of the Executive Committee as constituted immediately
prior to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the provisions of Article III of these By-Laws; and if less than three
members of the Trust Committee is constituted immediately prior to such
disaster shall be available for the transaction of its business, such Executive
Committee shall also be empowered to exercise all of the powers reserved to the
Trust Committee under Article III Section 2 hereof. In the event of the
unavailability, at such time, of a minimum of two members of such Executive
Committee, any three available directors shall constitute the Executive
Committee for the full conduct and management of the affairs and business of
the Company in accordance with the foregoing provisions of this Section. This
By-Law shall be subject to implementation by Resolutions of the Board of
Directors presently existing or hereafter passed from time to time for that
purpose, and any provisions of these By-Laws (other than this Section) and any
resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such
a disaster period until it shall be determined by any interim Executive
Committee acting under this section that it shall be to the advantage of the
Company to resume the conduct and management of its affairs and business under
all of the other provisions of these By-Laws.
3
<PAGE> 21
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more
than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.
(B) The Trust Committee shall have general supervision
over the Trust Department and the investment of trust funds, in all matters,
however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members or at the call of its chairman. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business.
(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general supervision
over the Audit Division in all matters however subject to the approval of the
Board of Directors; it shall consider all matters brought to its attention by
the officer in charge of the Audit Division, review all reports of examination
of the Company made by any governmental agency or such independent auditor
employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper for the
transaction of its business, and a majority of its Committee shall constitute a
quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of
not more than
4
<PAGE> 22
five (5) members who shall be selected by the Board of Directors from its own
members who are not officers of the Company and who shall hold office during
the pleasure of the Board.
(B) The Compensation Committee shall in general advise
upon all matters of policy concerning the Company brought to its attention by
the management and from time to time review the management of the Company,
major organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the Chairman
of the Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to attend
all directors meetings and participate in the discussion of all matters brought
to the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of
any Committee created under Article III of the By-Laws of this Company, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time
confer and direct. He shall also exercise such powers and perform such duties
as may from time to time be agreed upon between himself and the President of
the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of
the Board of
5
<PAGE> 23
Directors shall preside at all meetings of the Board of Directors at which the
Chairman of the Board shall not be present and shall have such further
authority and powers and shall perform such duties as the Board of Directors or
the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties
pertaining to the office of the President conferred or imposed upon him by
statute or assigned to him by the Board of Directors in the absence of the
Chairman of the Board the President shall have the powers and duties of the
Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President
as designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and
responsible for all monies, funds and valuables of the Company and for the
keeping of proper records of the evidence of property or indebtedness and of
all the transactions of the Company. He shall have general supervision of the
expenditures of the Company and shall report to the Board of Directors at each
regular meeting of the condition of the Company, and perform such other duties
as may be assigned to him from time to time by the Board of Directors of the
Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
6
<PAGE> 24
There may be one or more subordinate accounting or controller
officers however denominated, who may perform the duties of the Controller and
such duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be
in charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit
Officers, however denominated, who may perform all the duties of the Auditor
and such duties as may be prescribed by the officer in charge of the Audit
Division.
Section 10. There may be one or more officers, subordinate in rank
to all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman
of the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of
the Company and a transfer book shall be kept in which all transfers of stock
shall be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new
certificate or certificates shall be issued in lieu thereof. Duplicate
certificates of stock shall be issued only upon giving such security as may be
satisfactory to the Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to
fix in advance a record date for the determination of the stockholders entitled
to notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of
7
<PAGE> 25
any dividend, or to any allotment or rights, or to exercise any rights in
respect of any change, conversion or exchange of capital stock, or in
connection with obtaining the consent of stockholders for any purpose, which
record date shall not be more than 60 nor less than 10 days proceeding the date
of any meeting of stockholders or the date for the payment of any dividend, or
the date for the allotment of rights, or the date when any change or conversion
or exchange of capital stock shall go into effect, or a date in connection with
obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar
year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver
and the Secretary or any Assistant Secretary shall have full power and
authority to attest and affix the corporate seal of the Company to any and all
deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
8
<PAGE> 26
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors
who serve as members of committees, other than salaried employees of the
Company, shall be paid such reasonable honoraria or fees for services as
members of committees as the Board of Directors shall from time to time
determine and directors and associate directors may be employed by the Company
for such special services as the Board of Directors may from time to time
determine and shall be paid for such special services so performed reasonable
compensation as may be determined by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless,
to the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or
was a director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee,
fiduciary or agent of another corporation or of a partnership, joint venture,
trust, enterprise or non-profit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
reasonably incurred by such person. The Corporation shall indemnify a person
in connection with a proceeding initiated by such person only if the proceeding
was authorized by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided,
however, that the payment of expenses incurred by a Director officer in his
capacity as a Director or officer in advance of the final disposition of the
proceeding shall be made only upon receipt of an undertaking by the Director or
officer to repay all amounts advanced if it should be ultimately determined
that the Director or officer is not entitled to be indemnified under this
Article or otherwise.
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in
whole or in part, shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden of proving
that the claimant was not entitled to the requested indemnification of payment
of expenses under applicable law.
9
<PAGE> 27
(D) The rights conferred on any person by this Article
X shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to
the time of such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By- Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
10
<PAGE> 28
EXHIBIT C
SECTION 321(B) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: June 18, 1997 By: /s/ Christopher L. Kaiser
-------------------------
Name: Christopher L. Kaiser
Title: Vice President
<PAGE> 29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your
state publication requirements.
REPORT OF CONDITION
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- --------------------------------- -----------------
Name of Bank City
in the State of DELAWARE , at the close of business on March 31, 1997.
ASSETS
<TABLE>
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . . . . . . . . . . . . . . . . . . 181,744
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 445,954
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 767,337
Federal funds sold and securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . . 86,900
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,685,616
LESS: Allowance for loan and lease losses. . . . . . 52,478
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . . . . . . . . . . 3,633,138
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,513
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,702
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . . . . . . . . . . . . . 20
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,012
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,524
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,320,844
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 30
<TABLE>
<S> <C>
LIABILITIES
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,618,174
Noninterest-bearing . . . . . . . . 784,267
Interest-bearing. . . . . . . . . . 2,833,907
Federal funds purchased and Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . . 293,862
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,550
Trading liabilities (from Schedule RC-D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 774,000
With original maturity of more than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,000
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities (from Schedule RC-G) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,672
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,889,258
EQUITY CAPITAL
Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus (exclude all surplus related to preferred stock) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,118
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 371,107
Net unrealized holding gains (losses) on available-for-sale securities . . . . . . . . . . . . . . . . . . . (2,139)
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 431,586
Total liabilities, limited-life preferred stock, and equity capital . . . . . . . . . . . . . . . . . . . . . . 5,320,844
Thousands of dollars
</TABLE>
2
<PAGE> 1
EXHIBIT 25.2
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) ___
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
K N ENERGY, INC.
K N CAPITAL TRUST I
(Exact name of obligor as specified in its charter)
Kansas 48-0290000
Delaware 52-6850829
(State of incorporation) (I.R.S. employer identification no.)
370 Van Gordon Street
P. O. Box 281304
Lakewood, Colorado 80228-8304
(Address of principal executive offices) (Zip Code)
8.56% Series B Capital Trust Pass-through Securities
of K N Capital Trust I
(Title of the indenture securities)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the
obligor is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Wilmington Trust Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all in the
City of Wilmington and State of Delaware on the 18th day of June, 1997.
WILMINGTON TRUST COMPANY
[SEAL]
Attest:/s/ W. Chris Sponenberg By:/s/ Christopher L. Kaiser
--------------------------- --------------------------
Assistant Secretary Name: Christopher L. Kaiser
Title: Vice President
2
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the
name of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment
filed in the Office of the Secretary of State on March 18, A.D. 1903, and the
Charter or Act of Incorporation of which company has been from time to time
amended and changed by merger agreements pursuant to the corporation law for
state banks and trust companies of the State of Delaware, does hereby alter and
amend its Charter or Act of Incorporation so that the same as so altered and
amended shall in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of
Delaware is at Rodney Square North, in the City of Wilmington,
County of New Castle; the name of its resident agent is WILMINGTON
TRUST COMPANY whose address is Rodney Square North, in said City.
In addition to such principal office, the said corporation maintains
and operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County, Delaware,
at Claymont, New Castle County, Delaware, at Greenville, New Castle
County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate
branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other branch
offices or places of business as may be authorized from time to time
by the agency or agencies of the government of the State of Delaware
empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this
Corporation are to do any or all of the things herein mentioned as
fully and to the same extent as natural persons might or could do
and in any part of the world, viz.:
(1) To sue and be sued, complain and defend in any Court of
law or equity and to make and use a common seal, and alter
the seal at pleasure, to hold, purchase, convey, mortgage or
otherwise deal in real and personal estate and property, and
to appoint such officers and agents as the business of the
<PAGE> 5
Corporation shall require, to make by-laws not inconsistent
with the Constitution or laws of the United States or of this
State, to discount bills, notes or other evidences of debt,
to receive deposits of money, or securities for money, to buy
gold and silver bullion and foreign coins, to buy and sell
bills of exchange, and generally to use, exercise and enjoy
all the powers, rights, privileges and franchises incident to
a corporation which are proper or necessary for the
transaction of the business of the Corporation hereby
created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or claims,
adverse to his interest therein, and to prepare and give
certificates of title for any lands or premises in the State
of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all descriptions, and to prepare and execute all
papers which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers of
every description, and to carry on the business of
conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property
of every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other
persons and individuals, and from all corporations whether
state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage,
bond or other instrument issued by any state, municipality,
body politic, corporation, association or person, either
alone or in conjunction with any other person or persons,
corporation or corporations.
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<PAGE> 6
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any
trust, office, duty, contract or agreement, either by itself
or in conjunction with any other person, or persons,
corporation, or corporations, or in like manner become surety
upon any bond, recognizance, obligation, judgment, suit,
order, or decree to be entered in any court of record within
the State of Delaware or elsewhere, or which may now or
hereafter be required by any law, judge, officer or court in
the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian, bailee, or
in any other trust capacity in the receiving, holding,
managing, and disposing of any and all estates and property,
real, personal or mixed, and to be appointed as such trustee,
trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian or bailee by
any persons, corporations, court, officer, or authority, in
the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation,
court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other
trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as
security for the performance of the duties devolving upon it
by such appointment.
(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or be
called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to
receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to receive,
collect, receipt for, and dispose of interest, dividends and
income upon and from any of the bonds, mortgages, debentures,
notes, shares of capital stock, securities, obligations,
contracts, evidences of indebtedness and other property held
and owned by it, and to exercise in respect of all such
bonds, mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of indebtedness
and other property, any and all the rights, powers and
privileges of individual
3
<PAGE> 7
owners thereof, including the right to vote thereon; to
invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner as it may
think fit and proper, and from time to time to vary or
realize such investments; to issue bonds and secure the same
by pledges or deeds of trust or mortgages of or upon the
whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and when
the Board of Directors shall determine, and in the promotion
of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell,
assign, transfer, pledge, mortgage and convey real and
personal property of any name and nature and any estate or
interest therein.
(b) In furtherance of, and not in limitation, of the powers
conferred by the laws of the State of Delaware, it is hereby
expressly provided that the said Corporation shall also have the
following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.
(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of the
assets and liabilities of any person, firm, association or
corporation, and to pay for the same in cash, stock of this
Corporation, bonds or otherwise; to hold or in any manner to
dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any
part of any business so acquired, and to exercise all the
powers necessary or convenient in and about the conduct and
management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or corporation,
and, without limit as to amount, to draw, make, accept,
endorse, discount, execute and issue promissory notes,
drafts, bills of exchange, warrants, bonds, debentures, and
other negotiable or transferable instruments.
(5) To have one or more offices, to carry on all or any of
its operations and businesses, without restriction to the
same extent as natural persons might or could do, to purchase
or otherwise acquire, to hold, own, to mortgage, sell, convey
or otherwise dispose of, real and personal property, of every
class and description, in any State, District, Territory or
Colony of the United States, and in any foreign country or
place.
4
<PAGE> 8
(6) It is the intention that the objects, purposes and
powers specified and clauses contained in this paragraph
shall (except where otherwise expressed in said paragraph) be
nowise limited or restricted by reference to or inference
from the terms of any other clause of this or any other
paragraph in this charter, but that the objects, purposes and
powers specified in each of the clauses of this paragraph
shall be regarded as independent objects, purposes and
powers.
FOURTH: - (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is forty-one
million (41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as "Preferred
Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in
one or more series as may from time to time be determined by the
Board of Directors each of said series to be distinctly designated.
All shares of any one series of Preferred Stock shall be alike in
every particular, except that there may be different dates from
which dividends, if any, thereon shall be cumulative, if made
cumulative. The voting powers and the preferences and relative,
participating, optional and other special rights of each such
series, and the qualifications, limitations or restrictions thereof,
if any, may differ from those of any and all other series at any
time outstanding; and, subject to the provisions of subparagraph 1
of Paragraph (c) of this Article FOURTH, the Board of Directors of
the Corporation is hereby expressly granted authority to fix by
resolution or resolutions adopted prior to the issuance of any
shares of a particular series of Preferred Stock, the voting powers
and the designations, preferences and relative, optional and other
special rights, and the qualifications, limitations and restrictions
of such series, including, but without limiting the generality of
the foregoing, the following:
(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time
by like action of the Board of Directors;
(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred Stock of
such series shall be paid, the extent of the preference or
relation, if any, of such dividends to the dividends payable
on any other class or classes, or series of the same or other
class of
5
<PAGE> 9
stock and whether such dividends shall be cumulative or
non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same
for, shares of any other class or classes or of any series of
the same or any other class or classes of stock of the
Corporation and the terms and conditions of such conversion
or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices and
the time or times at which, and the terms and conditions on
which, Preferred Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and
(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the generality
of the foregoing include the right, voting as a series or by
itself or together with other series of Preferred Stock or
all series of Preferred Stock as a class, to elect one or
more directors of the Corporation if there shall have been a
default in the payment of dividends on any one or more series
of Preferred Stock or under such circumstances and on such
conditions as the Board of Directors may determine.
(c) (1) After the requirements with respect to preferential
dividends on the Preferred Stock (fixed in accordance with the
provisions of section (b) of this Article FOURTH), if any, shall
have been met and after the Corporation shall have complied with all
the requirements, if any, with respect to the setting aside of sums
as sinking funds or redemption or purchase accounts (fixed in
accordance with the provisions of section (b) of this Article
FOURTH), and subject further to any conditions which may be fixed in
accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to
time by the Board of Directors.
(2) After distribution in full of the preferential amount,
if any, (fixed in accordance with the provisions of section
(b) of this Article FOURTH), to be distributed to the holders
of Preferred Stock in the event of voluntary or involuntary
liquidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation, the holders of the Common
Stock shall be entitled to
6
<PAGE> 10
receive all of the remaining assets of the Corporation,
tangible and intangible, of whatever kind available for
distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be
adopted by the Board of Directors pursuant to section (b) of
this Article FOURTH, each holder of Common Stock shall have
one vote in respect of each share of Common Stock held on all
matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock
or of options, warrants or other rights to purchase shares of any
class or series of stock or of other securities of the Corporation
shall have any preemptive right to purchase or subscribe for any
unissued stock of any class or series or any additional shares of
any class or series to be issued by reason of any increase of the
authorized capital stock of the Corporation of any class or series,
or bonds, certificates of indebtedness, debentures or other
securities convertible into or exchangeable for stock of the
Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of
stock or securities convertible into or exchangeable for stock, or
carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons,
firms, corporations or associations, whether such holders or others,
and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case,
be as fixed from time to time by the Board of Directors in the
resolution or resolutions adopted pursuant to authority granted in
section (b) of this Article FOURTH and the consent, by class or
series vote or otherwise, of the holders of such of the series of
Preferred Stock as are from time to time outstanding shall not be
required for the issuance by the Board of Directors of any other
series of Preferred Stock whether or not the powers, preferences and
rights of such other series shall be fixed by the Board of Directors
as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided,
however, that the Board of Directors may provide in the resolution
or resolutions as to any series of Preferred Stock adopted pursuant
to section (b) of this Article FOURTH that the consent of the
holders of a majority (or such greater proportion as shall be
therein fixed) of the outstanding shares of such series voting
thereon shall be required for the issuance of any or all other
series of Preferred Stock.
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<PAGE> 11
(f) Subject to the provisions of section (e), shares of any series
of Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such
terms and for such consideration as shall be fixed by the Board of
Directors.
(h) The authorized amount of shares of Common Stock and of
Preferred Stock may, without a class or series vote, be increased or
decreased from time to time by the affirmative vote of the holders
of a majority of the stock of the Corporation entitled to vote
thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of
directors constituting the entire Board shall be not less than five
nor more than twenty-five as fixed from time to time by vote of a
majority of the whole Board, provided, however, that the number of
directors shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that the
number of directors constituting the whole Board shall be
twenty-four until otherwise fixed by a majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office
for a term expiring at the next succeeding annual meeting, directors
of the second class shall be elected to hold office for a term
expiring at the second succeeding annual meeting and directors of
the third class shall be elected to hold office for a term expiring
at the third succeeding annual meeting. Any vacancies in the Board
of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the
Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen
shall hold office until the next annual election of directors. At
such election, the stockholders shall elect a successor to such
director to hold office until the next election of the class for
which such director shall have been chosen and until his successor
shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the By-Laws of the Corporation),
any director or the entire Board of Directors of the
8
<PAGE> 12
Corporation may be removed at any time without cause, but only by
the affirmative vote of the holders of two- thirds or more of the
outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this
purpose as one class) cast at a meeting of the stockholders called
for that purpose.
(d) Nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote for the
election of directors. Such nominations shall be made by notice in
writing, delivered or mailed by first class United States mail,
postage prepaid, to the Secretary of the Corporation not less than
14 days nor more than 50 days prior to any meeting of the
stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given
to stockholders, such written notice shall be delivered or mailed,
as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of
the meeting was mailed to stockholders. Notice of nominations which
are proposed by the Board of Directors shall be given by the
Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name,
age, business address and, if known, residence address of each
nominee proposed in such notice, (ii) the principal occupation or
employment of such nominee and (iii) the number of shares of stock
of the Corporation which are beneficially owned by each such
nominee.
(f) The Chairman of the meeting may, if the facts warrant,
determine and declare to the meeting that a nomination was not made
in accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the Corporation may be
taken without a meeting, and the power of stockholders to consent in
writing, without a meeting, to the taking of any action is
specifically denied.
SIXTH: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from time to
time find necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
9
<PAGE> 13
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority
of the whole Board, may designate any of their number to constitute
an Executive Committee, which Committee, to the extent provided in
said resolution, or in the By-Laws of the Company, shall have and
may exercise all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and shall
have power to authorize the seal of the Corporation to be affixed to
all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the
world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation
by a vote of the majority of the entire Board. The stockholders may
make, alter or repeal any By-Law whether or not adopted by them,
provided however, that any such additional By-Laws, alterations or
repeal may be adopted only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class).
FOURTEENTH: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be
from time to time designated by them.
FIFTEENTH: - (a) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b) and
(c) of this Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation,
would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair market
value of $1,000,000 or more, or
10
<PAGE> 14
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or
(E) any reclassification of securities (including any
reverse stock split), or recapitalization of the Corporation,
or any merger or consolidation of the Corporation with any of
its Subsidiaries or any similar transaction (whether or not
with or into or otherwise involving an Interested
Stockholder) which has the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares
of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder, or any Affiliate of any
Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of
the outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any
national securities exchange or otherwise.
(2) The term "business combination" as used in this
Article FIFTEENTH shall mean any transaction which is
referred to any one or more of clauses (A) through (E) of
paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article FIFTEENTH
shall not be applicable to any particular business
combination and such business combination shall require only
such affirmative vote as is required by law and any other
provisions of the Charter or Act of Incorporation of By-Laws
if such business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any
Subsidiary) who or which as of the record date for the determination
of stockholders entitled to notice of and to vote on
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<PAGE> 15
such business combination, or immediately prior to the consummation
of any such transaction:
(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial owner,
directly or indirectly, of not less than 10% of the then
outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any
share of capital stock of the Corporation which were at any
time within two years prior thereto beneficially owned by any
Interested Stockholder, and such assignment or succession
shall have occurred in the course of a transaction or series
of transactions not involving a public offering within the
meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own, directly
or indirectly, or
(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of capital stock
of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement,
or upon exercise of conversion rights, warrants or options or
otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December
31, 1981.
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(6) "Subsidiary" shall mean any corporation of which a majority of
any class of equity security (as defined in Rule 3a11-1 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as in effect in December 31, 1981) is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty
to determine for the purposes of this Article FIFTEENTH on
the basis of information known to them, (1) the number of
Voting Shares beneficially owned by any person (2) whether a
person is an Affiliate or Associate of another, (3) whether a
person has an agreement, arrangement or understanding with
another as to the matters referred to in paragraph (3) of
section (c), or (4) whether the assets subject to any
business combination or the consideration received for the
issuance or transfer of securities by the Corporation, or any
Subsidiary has an aggregate fair market value of $1,00,000 or
more.
(e) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or
Act of Incorporation or the By-Laws of the Corporation (and in
addition to any other vote that may be required by law, this Charter
or Act of Incorporation by the By-Laws), the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the
capital stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one class)
shall be required to amend, alter or repeal any provision of
Articles FIFTH, THIRTEENTH, FIFTEENTH or SIXTEENTH of this Charter
or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a Director, except to the extent such
exemption from liability or limitation thereof is not permitted
under the Delaware General Corporation Laws as the same exists or
may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect
to any act or omission occurring prior to the time of such
repeal or modification."
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EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
<PAGE> 18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at
any time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be
given by mailing to each stockholder at least ten (10) days before said
meeting, at his last known address, a written or printed notice fixing the time
and place of such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one
vote, either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its
<PAGE> 19
members, or at the call of the Chairman of the Board of Directors or the
President.
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall
be necessary to constitute a quorum for the transaction of business at any
meeting of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal,
inability to act, or disqualification of any director, the Board of Directors,
although less than a quorum, shall have the right to elect the successor who
shall hold office for the remainder of the full term of the class of directors
in which the vacancy occurred, and until such director's successor shall have
been duly elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect
from its own members a Chairman of the Board of Directors and a President who
may be the same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person, may appoint at
any time such other committees and elect or appoint such other officers as it
may deem advisable. The Board of Directors may also elect at such meeting one
or more Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be
in charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section I. Executive Committee
(A) The Executive Committee shall be composed of not
more than nine members who shall be selected by the Board of Directors from its
own members and who shall hold office during the pleasure of the Board.
2
<PAGE> 20
(B) The Executive Committee shall have all the powers
of the Board of Directors when it is not in session to transact all business
for and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Executive Committee or at the call of the Chairman of the Board of Directors.
The majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be
held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee
shall be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the Company, and
shall direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.
(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Company by its directors and officers as contemplated by these By-Laws any
two available members of the Executive Committee as constituted immediately
prior to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the provisions of Article III of these By-Laws; and if less than three
members of the Trust Committee is constituted immediately prior to such
disaster shall be available for the transaction of its business, such Executive
Committee shall also be empowered to exercise all of the powers reserved to the
Trust Committee under Article III Section 2 hereof. In the event of the
unavailability, at such time, of a minimum of two members of such Executive
Committee, any three available directors shall constitute the Executive
Committee for the full conduct and management of the affairs and business of
the Company in accordance with the foregoing provisions of this Section. This
By-Law shall be subject to implementation by Resolutions of the Board of
Directors presently existing or hereafter passed from time to time for that
purpose, and any provisions of these By-Laws (other than this Section) and any
resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such
a disaster period until it shall be determined by any interim Executive
Committee acting under this section that it shall be to the advantage of the
Company to resume the conduct and management of its affairs and business under
all of the other provisions of these By-Laws.
3
<PAGE> 21
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more
than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.
(B) The Trust Committee shall have general supervision
over the Trust Department and the investment of trust funds, in all matters,
however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members or at the call of its chairman. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business.
(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general supervision
over the Audit Division in all matters however subject to the approval of the
Board of Directors; it shall consider all matters brought to its attention by
the officer in charge of the Audit Division, review all reports of examination
of the Company made by any governmental agency or such independent auditor
employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper for the
transaction of its business, and a majority of its Committee shall constitute a
quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of
not more than
4
<PAGE> 22
five (5) members who shall be selected by the Board of Directors from its own
members who are not officers of the Company and who shall hold office during
the pleasure of the Board.
(B) The Compensation Committee shall in general advise
upon all matters of policy concerning the Company brought to its attention by
the management and from time to time review the management of the Company,
major organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the Chairman
of the Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to attend
all directors meetings and participate in the discussion of all matters brought
to the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of
any Committee created under Article III of the By-Laws of this Company, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time
confer and direct. He shall also exercise such powers and perform such duties
as may from time to time be agreed upon between himself and the President of
the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of
the Board of
5
<PAGE> 23
Directors shall preside at all meetings of the Board of Directors at which the
Chairman of the Board shall not be present and shall have such further
authority and powers and shall perform such duties as the Board of Directors or
the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties
pertaining to the office of the President conferred or imposed upon him by
statute or assigned to him by the Board of Directors in the absence of the
Chairman of the Board the President shall have the powers and duties of the
Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President
as designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and
responsible for all monies, funds and valuables of the Company and for the
keeping of proper records of the evidence of property or indebtedness and of
all the transactions of the Company. He shall have general supervision of the
expenditures of the Company and shall report to the Board of Directors at each
regular meeting of the condition of the Company, and perform such other duties
as may be assigned to him from time to time by the Board of Directors of the
Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
6
<PAGE> 24
There may be one or more subordinate accounting or controller
officers however denominated, who may perform the duties of the Controller and
such duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be
in charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit
Officers, however denominated, who may perform all the duties of the Auditor
and such duties as may be prescribed by the officer in charge of the Audit
Division.
Section 10. There may be one or more officers, subordinate in rank
to all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman
of the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of
the Company and a transfer book shall be kept in which all transfers of stock
shall be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new
certificate or certificates shall be issued in lieu thereof. Duplicate
certificates of stock shall be issued only upon giving such security as may be
satisfactory to the Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to
fix in advance a record date for the determination of the stockholders entitled
to notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of
7
<PAGE> 25
any dividend, or to any allotment or rights, or to exercise any rights in
respect of any change, conversion or exchange of capital stock, or in
connection with obtaining the consent of stockholders for any purpose, which
record date shall not be more than 60 nor less than 10 days proceeding the date
of any meeting of stockholders or the date for the payment of any dividend, or
the date for the allotment of rights, or the date when any change or conversion
or exchange of capital stock shall go into effect, or a date in connection with
obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar
year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver
and the Secretary or any Assistant Secretary shall have full power and
authority to attest and affix the corporate seal of the Company to any and all
deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
8
<PAGE> 26
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors
who serve as members of committees, other than salaried employees of the
Company, shall be paid such reasonable honoraria or fees for services as
members of committees as the Board of Directors shall from time to time
determine and directors and associate directors may be employed by the Company
for such special services as the Board of Directors may from time to time
determine and shall be paid for such special services so performed reasonable
compensation as may be determined by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless,
to the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or
was a director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee,
fiduciary or agent of another corporation or of a partnership, joint venture,
trust, enterprise or non-profit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
reasonably incurred by such person. The Corporation shall indemnify a person
in connection with a proceeding initiated by such person only if the proceeding
was authorized by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided,
however, that the payment of expenses incurred by a Director officer in his
capacity as a Director or officer in advance of the final disposition of the
proceeding shall be made only upon receipt of an undertaking by the Director or
officer to repay all amounts advanced if it should be ultimately determined
that the Director or officer is not entitled to be indemnified under this
Article or otherwise.
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in
whole or in part, shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden of proving
that the claimant was not entitled to the requested indemnification of payment
of expenses under applicable law.
9
<PAGE> 27
(D) The rights conferred on any person by this Article
X shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to
the time of such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By- Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
10
<PAGE> 28
EXHIBIT C
SECTION 321(B) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: June 18, 1997 By: /s/ Christopher L. Kaiser
-------------------------
Name: Christopher L. Kaiser
Title: Vice President
<PAGE> 29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your
state publication requirements.
REPORT OF CONDITION
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- --------------------------------- -----------------
Name of Bank City
in the State of DELAWARE , at the close of business on March 31, 1997.
ASSETS
<TABLE>
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . . . . . . . . . . . . . . . . . . 181,744
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 445,954
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 767,337
Federal funds sold and securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . . 86,900
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,685,616
LESS: Allowance for loan and lease losses. . . . . . 52,478
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . . . . . . . . . . 3,633,138
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,513
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,702
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . . . . . . . . . . . . . 20
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,012
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,524
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,320,844
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 30
<TABLE>
<S> <C>
LIABILITIES
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,618,174
Noninterest-bearing . . . . . . . . 784,267
Interest-bearing. . . . . . . . . . 2,833,907
Federal funds purchased and Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . . 293,862
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,550
Trading liabilities (from Schedule RC-D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 774,000
With original maturity of more than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,000
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities (from Schedule RC-G) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,672
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,889,258
EQUITY CAPITAL
Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus (exclude all surplus related to preferred stock) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,118
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 371,107
Net unrealized holding gains (losses) on available-for-sale securities . . . . . . . . . . . . . . . . . . . (2,139)
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 431,586
Total liabilities, limited-life preferred stock, and equity capital . . . . . . . . . . . . . . . . . . . . . . 5,320,844
Thousands of dollars
</TABLE>
2
<PAGE> 1
EXHIBIT 25.3
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) ___
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
K N ENERGY, INC.
(Exact name of obligor as specified in its charter)
Kansas 48-0290000
(State of incorporation) (I.R.S. employer identification no.)
370 Van Gordon Street
P. O. Box 281304
Lakewood, Colorado 80228-8304
(Address of principal executive offices) (Zip Code)
Guarantee of K N Energy, Inc. with respect to the
8.56% Series B Capital Trust Pass-Through Securities
(Title of the indenture securities)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the
obligor is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Wilmington Trust Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all in the
City of Wilmington and State of Delaware on the 18th day of June, 1997.
WILMINGTON TRUST COMPANY
[SEAL]
Attest:/s/ W. Chris Sponenberg By:/s/ Christopher L. Kaiser
--------------------------- --------------------------
Assistant Secretary Name: Christopher L. Kaiser
Title: Vice President
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EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the
name of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment
filed in the Office of the Secretary of State on March 18, A.D. 1903, and the
Charter or Act of Incorporation of which company has been from time to time
amended and changed by merger agreements pursuant to the corporation law for
state banks and trust companies of the State of Delaware, does hereby alter and
amend its Charter or Act of Incorporation so that the same as so altered and
amended shall in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of
Delaware is at Rodney Square North, in the City of Wilmington,
County of New Castle; the name of its resident agent is WILMINGTON
TRUST COMPANY whose address is Rodney Square North, in said City.
In addition to such principal office, the said corporation maintains
and operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County, Delaware,
at Claymont, New Castle County, Delaware, at Greenville, New Castle
County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate
branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other branch
offices or places of business as may be authorized from time to time
by the agency or agencies of the government of the State of Delaware
empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this
Corporation are to do any or all of the things herein mentioned as
fully and to the same extent as natural persons might or could do
and in any part of the world, viz.:
(1) To sue and be sued, complain and defend in any Court of
law or equity and to make and use a common seal, and alter
the seal at pleasure, to hold, purchase, convey, mortgage or
otherwise deal in real and personal estate and property, and
to appoint such officers and agents as the business of the
<PAGE> 5
Corporation shall require, to make by-laws not inconsistent
with the Constitution or laws of the United States or of this
State, to discount bills, notes or other evidences of debt,
to receive deposits of money, or securities for money, to buy
gold and silver bullion and foreign coins, to buy and sell
bills of exchange, and generally to use, exercise and enjoy
all the powers, rights, privileges and franchises incident to
a corporation which are proper or necessary for the
transaction of the business of the Corporation hereby
created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or claims,
adverse to his interest therein, and to prepare and give
certificates of title for any lands or premises in the State
of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all descriptions, and to prepare and execute all
papers which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers of
every description, and to carry on the business of
conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property
of every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other
persons and individuals, and from all corporations whether
state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage,
bond or other instrument issued by any state, municipality,
body politic, corporation, association or person, either
alone or in conjunction with any other person or persons,
corporation or corporations.
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(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any
trust, office, duty, contract or agreement, either by itself
or in conjunction with any other person, or persons,
corporation, or corporations, or in like manner become surety
upon any bond, recognizance, obligation, judgment, suit,
order, or decree to be entered in any court of record within
the State of Delaware or elsewhere, or which may now or
hereafter be required by any law, judge, officer or court in
the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian, bailee, or
in any other trust capacity in the receiving, holding,
managing, and disposing of any and all estates and property,
real, personal or mixed, and to be appointed as such trustee,
trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian or bailee by
any persons, corporations, court, officer, or authority, in
the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation,
court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other
trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as
security for the performance of the duties devolving upon it
by such appointment.
(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or be
called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to
receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to receive,
collect, receipt for, and dispose of interest, dividends and
income upon and from any of the bonds, mortgages, debentures,
notes, shares of capital stock, securities, obligations,
contracts, evidences of indebtedness and other property held
and owned by it, and to exercise in respect of all such
bonds, mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of indebtedness
and other property, any and all the rights, powers and
privileges of individual
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owners thereof, including the right to vote thereon; to
invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner as it may
think fit and proper, and from time to time to vary or
realize such investments; to issue bonds and secure the same
by pledges or deeds of trust or mortgages of or upon the
whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and when
the Board of Directors shall determine, and in the promotion
of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell,
assign, transfer, pledge, mortgage and convey real and
personal property of any name and nature and any estate or
interest therein.
(b) In furtherance of, and not in limitation, of the powers
conferred by the laws of the State of Delaware, it is hereby
expressly provided that the said Corporation shall also have the
following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.
(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of the
assets and liabilities of any person, firm, association or
corporation, and to pay for the same in cash, stock of this
Corporation, bonds or otherwise; to hold or in any manner to
dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any
part of any business so acquired, and to exercise all the
powers necessary or convenient in and about the conduct and
management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or corporation,
and, without limit as to amount, to draw, make, accept,
endorse, discount, execute and issue promissory notes,
drafts, bills of exchange, warrants, bonds, debentures, and
other negotiable or transferable instruments.
(5) To have one or more offices, to carry on all or any of
its operations and businesses, without restriction to the
same extent as natural persons might or could do, to purchase
or otherwise acquire, to hold, own, to mortgage, sell, convey
or otherwise dispose of, real and personal property, of every
class and description, in any State, District, Territory or
Colony of the United States, and in any foreign country or
place.
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<PAGE> 8
(6) It is the intention that the objects, purposes and
powers specified and clauses contained in this paragraph
shall (except where otherwise expressed in said paragraph) be
nowise limited or restricted by reference to or inference
from the terms of any other clause of this or any other
paragraph in this charter, but that the objects, purposes and
powers specified in each of the clauses of this paragraph
shall be regarded as independent objects, purposes and
powers.
FOURTH: - (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is forty-one
million (41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as "Preferred
Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in
one or more series as may from time to time be determined by the
Board of Directors each of said series to be distinctly designated.
All shares of any one series of Preferred Stock shall be alike in
every particular, except that there may be different dates from
which dividends, if any, thereon shall be cumulative, if made
cumulative. The voting powers and the preferences and relative,
participating, optional and other special rights of each such
series, and the qualifications, limitations or restrictions thereof,
if any, may differ from those of any and all other series at any
time outstanding; and, subject to the provisions of subparagraph 1
of Paragraph (c) of this Article FOURTH, the Board of Directors of
the Corporation is hereby expressly granted authority to fix by
resolution or resolutions adopted prior to the issuance of any
shares of a particular series of Preferred Stock, the voting powers
and the designations, preferences and relative, optional and other
special rights, and the qualifications, limitations and restrictions
of such series, including, but without limiting the generality of
the foregoing, the following:
(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time
by like action of the Board of Directors;
(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred Stock of
such series shall be paid, the extent of the preference or
relation, if any, of such dividends to the dividends payable
on any other class or classes, or series of the same or other
class of
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<PAGE> 9
stock and whether such dividends shall be cumulative or
non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same
for, shares of any other class or classes or of any series of
the same or any other class or classes of stock of the
Corporation and the terms and conditions of such conversion
or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices and
the time or times at which, and the terms and conditions on
which, Preferred Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and
(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the generality
of the foregoing include the right, voting as a series or by
itself or together with other series of Preferred Stock or
all series of Preferred Stock as a class, to elect one or
more directors of the Corporation if there shall have been a
default in the payment of dividends on any one or more series
of Preferred Stock or under such circumstances and on such
conditions as the Board of Directors may determine.
(c) (1) After the requirements with respect to preferential
dividends on the Preferred Stock (fixed in accordance with the
provisions of section (b) of this Article FOURTH), if any, shall
have been met and after the Corporation shall have complied with all
the requirements, if any, with respect to the setting aside of sums
as sinking funds or redemption or purchase accounts (fixed in
accordance with the provisions of section (b) of this Article
FOURTH), and subject further to any conditions which may be fixed in
accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to
time by the Board of Directors.
(2) After distribution in full of the preferential amount,
if any, (fixed in accordance with the provisions of section
(b) of this Article FOURTH), to be distributed to the holders
of Preferred Stock in the event of voluntary or involuntary
liquidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation, the holders of the Common
Stock shall be entitled to
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receive all of the remaining assets of the Corporation,
tangible and intangible, of whatever kind available for
distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be
adopted by the Board of Directors pursuant to section (b) of
this Article FOURTH, each holder of Common Stock shall have
one vote in respect of each share of Common Stock held on all
matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock
or of options, warrants or other rights to purchase shares of any
class or series of stock or of other securities of the Corporation
shall have any preemptive right to purchase or subscribe for any
unissued stock of any class or series or any additional shares of
any class or series to be issued by reason of any increase of the
authorized capital stock of the Corporation of any class or series,
or bonds, certificates of indebtedness, debentures or other
securities convertible into or exchangeable for stock of the
Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of
stock or securities convertible into or exchangeable for stock, or
carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons,
firms, corporations or associations, whether such holders or others,
and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case,
be as fixed from time to time by the Board of Directors in the
resolution or resolutions adopted pursuant to authority granted in
section (b) of this Article FOURTH and the consent, by class or
series vote or otherwise, of the holders of such of the series of
Preferred Stock as are from time to time outstanding shall not be
required for the issuance by the Board of Directors of any other
series of Preferred Stock whether or not the powers, preferences and
rights of such other series shall be fixed by the Board of Directors
as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided,
however, that the Board of Directors may provide in the resolution
or resolutions as to any series of Preferred Stock adopted pursuant
to section (b) of this Article FOURTH that the consent of the
holders of a majority (or such greater proportion as shall be
therein fixed) of the outstanding shares of such series voting
thereon shall be required for the issuance of any or all other
series of Preferred Stock.
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(f) Subject to the provisions of section (e), shares of any series
of Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such
terms and for such consideration as shall be fixed by the Board of
Directors.
(h) The authorized amount of shares of Common Stock and of
Preferred Stock may, without a class or series vote, be increased or
decreased from time to time by the affirmative vote of the holders
of a majority of the stock of the Corporation entitled to vote
thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of
directors constituting the entire Board shall be not less than five
nor more than twenty-five as fixed from time to time by vote of a
majority of the whole Board, provided, however, that the number of
directors shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that the
number of directors constituting the whole Board shall be
twenty-four until otherwise fixed by a majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office
for a term expiring at the next succeeding annual meeting, directors
of the second class shall be elected to hold office for a term
expiring at the second succeeding annual meeting and directors of
the third class shall be elected to hold office for a term expiring
at the third succeeding annual meeting. Any vacancies in the Board
of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the
Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen
shall hold office until the next annual election of directors. At
such election, the stockholders shall elect a successor to such
director to hold office until the next election of the class for
which such director shall have been chosen and until his successor
shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the By-Laws of the Corporation),
any director or the entire Board of Directors of the
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Corporation may be removed at any time without cause, but only by
the affirmative vote of the holders of two- thirds or more of the
outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this
purpose as one class) cast at a meeting of the stockholders called
for that purpose.
(d) Nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote for the
election of directors. Such nominations shall be made by notice in
writing, delivered or mailed by first class United States mail,
postage prepaid, to the Secretary of the Corporation not less than
14 days nor more than 50 days prior to any meeting of the
stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given
to stockholders, such written notice shall be delivered or mailed,
as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of
the meeting was mailed to stockholders. Notice of nominations which
are proposed by the Board of Directors shall be given by the
Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name,
age, business address and, if known, residence address of each
nominee proposed in such notice, (ii) the principal occupation or
employment of such nominee and (iii) the number of shares of stock
of the Corporation which are beneficially owned by each such
nominee.
(f) The Chairman of the meeting may, if the facts warrant,
determine and declare to the meeting that a nomination was not made
in accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the Corporation may be
taken without a meeting, and the power of stockholders to consent in
writing, without a meeting, to the taking of any action is
specifically denied.
SIXTH: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from time to
time find necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
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NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority
of the whole Board, may designate any of their number to constitute
an Executive Committee, which Committee, to the extent provided in
said resolution, or in the By-Laws of the Company, shall have and
may exercise all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and shall
have power to authorize the seal of the Corporation to be affixed to
all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the
world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation
by a vote of the majority of the entire Board. The stockholders may
make, alter or repeal any By-Law whether or not adopted by them,
provided however, that any such additional By-Laws, alterations or
repeal may be adopted only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class).
FOURTEENTH: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be
from time to time designated by them.
FIFTEENTH: - (a) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b) and
(c) of this Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation,
would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair market
value of $1,000,000 or more, or
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(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or
(E) any reclassification of securities (including any
reverse stock split), or recapitalization of the Corporation,
or any merger or consolidation of the Corporation with any of
its Subsidiaries or any similar transaction (whether or not
with or into or otherwise involving an Interested
Stockholder) which has the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares
of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder, or any Affiliate of any
Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of
the outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any
national securities exchange or otherwise.
(2) The term "business combination" as used in this
Article FIFTEENTH shall mean any transaction which is
referred to any one or more of clauses (A) through (E) of
paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article FIFTEENTH
shall not be applicable to any particular business
combination and such business combination shall require only
such affirmative vote as is required by law and any other
provisions of the Charter or Act of Incorporation of By-Laws
if such business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any
Subsidiary) who or which as of the record date for the determination
of stockholders entitled to notice of and to vote on
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such business combination, or immediately prior to the consummation
of any such transaction:
(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial owner,
directly or indirectly, of not less than 10% of the then
outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any
share of capital stock of the Corporation which were at any
time within two years prior thereto beneficially owned by any
Interested Stockholder, and such assignment or succession
shall have occurred in the course of a transaction or series
of transactions not involving a public offering within the
meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own, directly
or indirectly, or
(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of capital stock
of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement,
or upon exercise of conversion rights, warrants or options or
otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December
31, 1981.
12
<PAGE> 16
(6) "Subsidiary" shall mean any corporation of which a majority of
any class of equity security (as defined in Rule 3a11-1 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as in effect in December 31, 1981) is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty
to determine for the purposes of this Article FIFTEENTH on
the basis of information known to them, (1) the number of
Voting Shares beneficially owned by any person (2) whether a
person is an Affiliate or Associate of another, (3) whether a
person has an agreement, arrangement or understanding with
another as to the matters referred to in paragraph (3) of
section (c), or (4) whether the assets subject to any
business combination or the consideration received for the
issuance or transfer of securities by the Corporation, or any
Subsidiary has an aggregate fair market value of $1,00,000 or
more.
(e) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or
Act of Incorporation or the By-Laws of the Corporation (and in
addition to any other vote that may be required by law, this Charter
or Act of Incorporation by the By-Laws), the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the
capital stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one class)
shall be required to amend, alter or repeal any provision of
Articles FIFTH, THIRTEENTH, FIFTEENTH or SIXTEENTH of this Charter
or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a Director, except to the extent such
exemption from liability or limitation thereof is not permitted
under the Delaware General Corporation Laws as the same exists or
may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect
to any act or omission occurring prior to the time of such
repeal or modification."
13
<PAGE> 17
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
<PAGE> 18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at
any time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be
given by mailing to each stockholder at least ten (10) days before said
meeting, at his last known address, a written or printed notice fixing the time
and place of such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one
vote, either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its
<PAGE> 19
members, or at the call of the Chairman of the Board of Directors or the
President.
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall
be necessary to constitute a quorum for the transaction of business at any
meeting of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal,
inability to act, or disqualification of any director, the Board of Directors,
although less than a quorum, shall have the right to elect the successor who
shall hold office for the remainder of the full term of the class of directors
in which the vacancy occurred, and until such director's successor shall have
been duly elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect
from its own members a Chairman of the Board of Directors and a President who
may be the same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person, may appoint at
any time such other committees and elect or appoint such other officers as it
may deem advisable. The Board of Directors may also elect at such meeting one
or more Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be
in charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section I. Executive Committee
(A) The Executive Committee shall be composed of not
more than nine members who shall be selected by the Board of Directors from its
own members and who shall hold office during the pleasure of the Board.
2
<PAGE> 20
(B) The Executive Committee shall have all the powers
of the Board of Directors when it is not in session to transact all business
for and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Executive Committee or at the call of the Chairman of the Board of Directors.
The majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be
held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee
shall be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the Company, and
shall direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.
(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Company by its directors and officers as contemplated by these By-Laws any
two available members of the Executive Committee as constituted immediately
prior to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the provisions of Article III of these By-Laws; and if less than three
members of the Trust Committee is constituted immediately prior to such
disaster shall be available for the transaction of its business, such Executive
Committee shall also be empowered to exercise all of the powers reserved to the
Trust Committee under Article III Section 2 hereof. In the event of the
unavailability, at such time, of a minimum of two members of such Executive
Committee, any three available directors shall constitute the Executive
Committee for the full conduct and management of the affairs and business of
the Company in accordance with the foregoing provisions of this Section. This
By-Law shall be subject to implementation by Resolutions of the Board of
Directors presently existing or hereafter passed from time to time for that
purpose, and any provisions of these By-Laws (other than this Section) and any
resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such
a disaster period until it shall be determined by any interim Executive
Committee acting under this section that it shall be to the advantage of the
Company to resume the conduct and management of its affairs and business under
all of the other provisions of these By-Laws.
3
<PAGE> 21
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more
than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.
(B) The Trust Committee shall have general supervision
over the Trust Department and the investment of trust funds, in all matters,
however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members or at the call of its chairman. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business.
(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general supervision
over the Audit Division in all matters however subject to the approval of the
Board of Directors; it shall consider all matters brought to its attention by
the officer in charge of the Audit Division, review all reports of examination
of the Company made by any governmental agency or such independent auditor
employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper for the
transaction of its business, and a majority of its Committee shall constitute a
quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of
not more than
4
<PAGE> 22
five (5) members who shall be selected by the Board of Directors from its own
members who are not officers of the Company and who shall hold office during
the pleasure of the Board.
(B) The Compensation Committee shall in general advise
upon all matters of policy concerning the Company brought to its attention by
the management and from time to time review the management of the Company,
major organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the Chairman
of the Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to attend
all directors meetings and participate in the discussion of all matters brought
to the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of
any Committee created under Article III of the By-Laws of this Company, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time
confer and direct. He shall also exercise such powers and perform such duties
as may from time to time be agreed upon between himself and the President of
the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of
the Board of
5
<PAGE> 23
Directors shall preside at all meetings of the Board of Directors at which the
Chairman of the Board shall not be present and shall have such further
authority and powers and shall perform such duties as the Board of Directors or
the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties
pertaining to the office of the President conferred or imposed upon him by
statute or assigned to him by the Board of Directors in the absence of the
Chairman of the Board the President shall have the powers and duties of the
Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President
as designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and
responsible for all monies, funds and valuables of the Company and for the
keeping of proper records of the evidence of property or indebtedness and of
all the transactions of the Company. He shall have general supervision of the
expenditures of the Company and shall report to the Board of Directors at each
regular meeting of the condition of the Company, and perform such other duties
as may be assigned to him from time to time by the Board of Directors of the
Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
6
<PAGE> 24
There may be one or more subordinate accounting or controller
officers however denominated, who may perform the duties of the Controller and
such duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be
in charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit
Officers, however denominated, who may perform all the duties of the Auditor
and such duties as may be prescribed by the officer in charge of the Audit
Division.
Section 10. There may be one or more officers, subordinate in rank
to all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman
of the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of
the Company and a transfer book shall be kept in which all transfers of stock
shall be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new
certificate or certificates shall be issued in lieu thereof. Duplicate
certificates of stock shall be issued only upon giving such security as may be
satisfactory to the Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to
fix in advance a record date for the determination of the stockholders entitled
to notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of
7
<PAGE> 25
any dividend, or to any allotment or rights, or to exercise any rights in
respect of any change, conversion or exchange of capital stock, or in
connection with obtaining the consent of stockholders for any purpose, which
record date shall not be more than 60 nor less than 10 days proceeding the date
of any meeting of stockholders or the date for the payment of any dividend, or
the date for the allotment of rights, or the date when any change or conversion
or exchange of capital stock shall go into effect, or a date in connection with
obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar
year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver
and the Secretary or any Assistant Secretary shall have full power and
authority to attest and affix the corporate seal of the Company to any and all
deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
8
<PAGE> 26
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors
who serve as members of committees, other than salaried employees of the
Company, shall be paid such reasonable honoraria or fees for services as
members of committees as the Board of Directors shall from time to time
determine and directors and associate directors may be employed by the Company
for such special services as the Board of Directors may from time to time
determine and shall be paid for such special services so performed reasonable
compensation as may be determined by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless,
to the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or
was a director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee,
fiduciary or agent of another corporation or of a partnership, joint venture,
trust, enterprise or non-profit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
reasonably incurred by such person. The Corporation shall indemnify a person
in connection with a proceeding initiated by such person only if the proceeding
was authorized by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided,
however, that the payment of expenses incurred by a Director officer in his
capacity as a Director or officer in advance of the final disposition of the
proceeding shall be made only upon receipt of an undertaking by the Director or
officer to repay all amounts advanced if it should be ultimately determined
that the Director or officer is not entitled to be indemnified under this
Article or otherwise.
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in
whole or in part, shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden of proving
that the claimant was not entitled to the requested indemnification of payment
of expenses under applicable law.
9
<PAGE> 27
(D) The rights conferred on any person by this Article
X shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to
the time of such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By- Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
10
<PAGE> 28
EXHIBIT C
SECTION 321(B) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: June 18, 1997 By: /s/ Christopher L. Kaiser
-------------------------
Name: Christopher L. Kaiser
Title: Vice President
<PAGE> 29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your
state publication requirements.
REPORT OF CONDITION
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- --------------------------------- -----------------
Name of Bank City
in the State of DELAWARE , at the close of business on March 31, 1997.
ASSETS
<TABLE>
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . . . . . . . . . . . . . . . . . . 181,744
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 445,954
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 767,337
Federal funds sold and securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . . 86,900
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,685,616
LESS: Allowance for loan and lease losses. . . . . . 52,478
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . . . . . . . . . . 3,633,138
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,513
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,702
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . . . . . . . . . . . . . 20
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,012
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,524
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,320,844
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 30
<TABLE>
<S> <C>
LIABILITIES
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,618,174
Noninterest-bearing . . . . . . . . 784,267
Interest-bearing. . . . . . . . . . 2,833,907
Federal funds purchased and Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . . 293,862
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,550
Trading liabilities (from Schedule RC-D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 774,000
With original maturity of more than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,000
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities (from Schedule RC-G) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,672
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,889,258
EQUITY CAPITAL
Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus (exclude all surplus related to preferred stock) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,118
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 371,107
Net unrealized holding gains (losses) on available-for-sale securities . . . . . . . . . . . . . . . . . . . (2,139)
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 431,586
Total liabilities, limited-life preferred stock, and equity capital . . . . . . . . . . . . . . . . . . . . . . 5,320,844
Thousands of dollars
</TABLE>
2
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
K N CAPITAL TRUST I
OFFER TO EXCHANGE ITS
8.56% SERIES B CAPITAL TRUST PASS-THROUGH SECURITIESSM
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
8.56% SERIES A CAPITAL TRUST PASS-THROUGH SECURITIESSM
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
PURSUANT TO THE PROSPECTUS
DATED ________________, 1997
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON __________, 1997, UNLESS THE OFFER IS EXTENDED.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
WILMINGTON TRUST COMPANY
Inquiries by Telephone or Confirmations: (302) 651-8869 (Jill Rylee)
By Facsimile: (302) 651-1079
By mail/overnight delivery: By hand:
Wilmington Trust Company Wilmington Trust Company
1100 North Market Street 1105 North Market Street, 1st Floor
Wilmington, Delaware 19890-0001 Wilmington, Delaware 19890
Attn: Jill Rylee Attn: Corporate Trust Operations
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE ON TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A
NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. THE
INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF
TRANSMITTAL IS COMPLETED.
The undersigned acknowledges that it has received the Prospectus,
dated ____________, 1997 (the "Prospectus"), of K N Capital Trust I (the
"Trust") and K N Energy, Inc. ("K N" or the "Corporation"), and this Letter of
Transmittal (the "Letter of Transmittal"), which together constitute the
Trust's offer (the "Exchange Offer") to exchange up to $100,000,000 aggregate
Liquidation Amount of the Trust's 8.56% Series B Capital Trust Pass-through
SecuritiesSM (the "Exchange Capital Securities") for a like Liquidation Amount
of its outstanding 8.56% Series A Capital Trust Pass- through SecuritiesSM (the
"Old Capital Securities" and, together with the Exchange Capital Securities,
the "Capital Securities"). The terms of the Exchange Capital Securities are
identical in all material respects to the Old Capital Securities, except the
Exchange Capital Securities have been registered pursuant to the Securities Act
of 1933, as amended (the "Securities Act"), and, therefore, will not bear
legends restricting their transfer and will not contain certain provisions
providing for an increase in the Distribution rate thereon. The term
"Expiration Date" means 5:00 p.m., New York City time, on ________, 1997,
unless the Exchange Offer is extended as provided in the Prospectus, in which
case the term "Expiration Date" means the latest date and time to which the
Exchange Offer is extended. Capitalized terms used but not defined herein have
the same meanings given them in the Prospectus (as defined below).
<PAGE> 2
This Letter of Transmittal is to be completed by holders of Old
Capital Securities (as defined below) either (i) if Old Capital Securities are
forwarded herewith or (ii) if tender of Old Capital Securities is to be made by
book- entry transfer to an account maintained by Bankers Trust Company (the
"Exchange Agent") at The Depository Trust Company ("DTC") pursuant to the
procedures set forth in "The Exchange Offer--Procedures for Tendering Old
Capital Securities" in the Prospectus.
Holders of Old Capital Securities whose certificates (the
"Certificates") for such Old Capital Securities are not immediately available
or who cannot deliver their Certificates and all other required documents to
the Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration
Date or who cannot complete the procedures for book- entry transfer on a timely
basis must tender their Old Capital Securities according to the guaranteed
delivery procedures set forth in "The Exchange Offer--Procedures for Tendering
Old Capital Securities--Guaranteed Delivery" in the Prospectus. See
Instruction 1.
The term "Holder" with respect to the Exchange Offer means any person
in whose name Old Capital Securities are registered on the books of the Trust
or any other person who has obtained a properly completed bond power from the
registered holder. The undersigned has completed, executed and delivered this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer. Holders who wish to tender their Old
Capital Securities must complete this Letter of Transmittal in its entirety.
-2-
<PAGE> 3
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY
BEFORE COMPLETING THIS LETTER OF TRANSMITTAL.
ALL TENDERING HOLDERS COMPLETE THIS BOX
- --------------------------------------------------------------------------------
DESCRIPTION OF OLD CAPITAL SECURITIES TENDERED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Liquidation Amount
of Old Capital
Please Print Name Securities Tendered Number of
and Address of Old Capital (if Liquidation Beneficial Holders
Registered Holder Securities Tendered Amount of Old for whom Old
(please fill in if Certificate (attach additional Capital Securities Capital Securities
blank) Number(s)* list if necessary) is less than all)** are Held
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Total Amount Tendered:
- --------------------------------------------------------------------------------
* Need not be completed by book-entry holders.
** Old Capital Securities may be tendered in whole or in part in
denominations of $100,000 Liquidation Amount and integral multiples of
$1,000 in excess thereof, provided that if any Old Capital Securities
are tendered for exchange in part, the untendered Liquidation Amount
thereof must be $100,000 or any integral multiple of $1,000 in excess
thereof. All Old Capital Securities held shall be deemed tendered
unless a lesser number is specified in this column.
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
[ ] Check here if tendered Old Capital Securities are being delivered by
book-entry transfer made to the account maintained by the Exchange
Agent with DTC and complete the following (only participants in DTC
may deliver Capital Securities by book-entry transfer (see instruction
1)):
Name of Tendering Institution:
-----------------------------------------
DTC Account Number:
----------------------------------------------------
Transaction Code Number:
-----------------------------------------------
[ ] Check here and enclose a photocopy of the notice of guaranteed
delivery if tendered Pld Capital Securities are being delivered
pursuant to a Notice of Guaranteed Delivery previously sent to the
Exchange Agent and complete the following (see instruction 5):
Name of Registered Holder(s):
------------------------------------------
Window Ticket Number (if any):
-----------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
--------------------
Name of Institution which Guaranteed Delivery :
------------------------
If guaranteed delivery is to be made by book-entry transfer:
Name of Tendering Institution:
-----------------------------------------
DTC Account Number:
----------------------------------------------------
Transaction Code Number:
-----------------------------------------------
-3-
<PAGE> 4
[ ] Check here if Old Capital Securities tendered by book-entry transfer
but not exchanged are to be returned by crediting the DTC account
number set forth above.
[ ] Check here if you are a broker-dealer who acquired the Old Capital
Securities for its own account as a result of market-making or other
trading activities and wish to receive 10 additional copies of the
prospectus and 10 copies of any amendments or supplements thereto.
Name:
------------------------------------------------------------------
Address:
---------------------------------------------------------------
Area Code and Telephone Number:
----------------------------------------
Contact Person:
--------------------------------------------------------
-4-
<PAGE> 5
Ladies and Gentlemen:
The undersigned hereby tenders to the Trust and K N the above
described aggregate Liquidation Amount of Old Capital Securities in exchange
for a like aggregate Liquidation Amount of Exchange Capital Securities.
Subject to and effective upon the acceptance for exchange of all or
any portion of the Old Capital Securities tendered herewith in accordance with
the terms and conditions of the Exchange Offer (including, if the Exchange
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Trust all right, title and interest in and to such Old Capital
Securities as are being tendered herewith. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent as its agent and attorney-in-fact
(with full knowledge that the Exchange Agent is also acting as agent of the
Corporation and the Trust in connection with the Exchange Offer) with respect
to the tenderd Old Capital Securities, with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), subject only to the right of withdrawal described in the Prospectus,
to (i) deliver Certificates for Old Capital Securities together with all
accompanying evidences of transfer and authenticity to, or upon the order of,
the Trust, upon receipt by the Exchange Agent, as the undersigned's agent, of
the Exchange Capital Securities to be issued in exchange for such Old Capital
Securities, (ii) present Certificates for such Old Capital Securities for
transfer, and to transfer the Old Capital Securities on the books of the Trust,
and (iii) receive for the account of the Trust all benefits and otherwise
exercise all rights of beneficial ownership of such Old Capital Securities, all
in accordance with the terms and conditions of the Exchange Offer.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED
HAS FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE
OLD CAPITAL SECURITIES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR
EXCHANGE, THE TRUST WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE
THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES,
AND THAT THE OLD CAPITAL SECURITIES TENDERED HEREBY ARE NOT SUBJECT TO ANY
ADVERSE CLAIMS OR PROXIES. THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND
DELIVER ANY ADDITIONAL DOCUMENTS DEEMED BY THE CORPORATION, THE TRUST OR THE
EXCHANGE AGENT TO BE NECESSARY OR DESIRABLE TO COMPLETE THE EXCHANGE,
ASSIGNMENT AND TRANSFER OF THE OLD CAPITAL SECURITIES TENDERED HEREBY. THE
UNDERSIGNED HAS READ AND AGREES TO ALL OF THE TERMS OF THE EXCHANGE OFFER.
The name(s) and address(es) of the registered holder(s) of the Old
Capital Securities tendered hereby should be printed above, if they are not
already set forth above, as they appear on the Certificates representing such
Old Capital Securities. The Certificate number(s) and the Old Capital
Securities that the undersigned wishes to tender should be indicated in the
appropriate boxes above.
-5-
<PAGE> 6
If any tendered Old Capital Securities are not exchanged pursuant to
the Exchange Offer for any reason, or if Certificates are submitted for more
Old Capital Securities than are tendered or accepted for exchange, Certificates
for such nonexchanged or nontendered Old Capital Securities will be returned
(or, in the case of Old Capital Securities tendered by book-entry transfer,
such Old Capital Securities will be credited to an account maintained at DTC),
without expense to the tendering holder, promptly following the expiration or
termination of the Exchange Offer.
The undersigned understands that tender of Old Capital Securities
pursuant to any one of the procedures described in "The Exchange
Offer--Procedures for Tendering Old Capital Securities" in the Prospectus and
in this Letter of Transmittal, and the Corporation's and the Trust's acceptance
for exchange of such tendered Old Capital Securities, will constitute a binding
agreement between the undersigned, the Corporation and the Trust upon the terms
and subject to the conditions of the Exchange Offer. The undersigned
recognizes that, under certain circumstances set forth in the Prospectus, the
Corporation and the Trust may not be required to accept for exchange any of the
Old Capital Securities tendered hereby.
Unless otherwise indicated herein in the box entitled "Special
Issuance Instructions" below, the undersigned hereby directs that the Exchange
Capital Securities be issued in the name(s) of the undersigned or, in the case
of book- entry transfer of Old Capital Securities, that such Exchange Capital
Securities be credited to the account indicated above maintained at DTC. If
applicable, substitute Certificates representing Old Capital Securities not
exchanged or not accepted for exchange will be issued to the undersigned or, in
the case of a book-entry transfer of Old Capital Securities, will be credited
to the account indicated above maintained at DTC. Similarly, unless otherwise
indicated under "Special Delivery Instructions," please deliver Exchange
Capital Securities to the undersigned at the address shown below the
undersigned's signature.
BY TENDERING OLD CAPITAL SECURITIES AND EXECUTING THIS LETTER OF
TRANSMITTAL, THE UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT (I) THE
UNDERSIGNED IS NOT AN "AFFILIATE" OF THE CORPORATION OR THE TRUST, (II) ANY
EXCHANGE CAPITAL SECURITIES TO BE RECEIVED BY THE UNDERSIGNED ARE BEING
ACQUIRED IN THE ORDINARY COURSE OF ITS BUSINESS, (III) THE UNDERSIGNED HAS NO
ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN A DISTRIBUTION
(WITHIN THE MEANING OF THE SECURITIES ACT) OF EXCHANGE CAPITAL SECURITIES TO BE
RECEIVED IN THE EXCHANGE OFFER, AND (IV) IF THE UNDERSIGNED IS NOT A BROKER-
-6-
<PAGE> 7
DEALER, THE UNDERSIGNED IS NOT ENGAGED IN, AND DOES NOT INTEND TO ENGAGE IN, A
DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF SUCH EXCHANGE
CAPITAL SECURITIES. BY TENDERING OLD CAPITAL SECURITIES PURSUANT TO THE
EXCHANGE OFFER AND EXECUTING THIS LETTER OF TRANSMITTAL, A HOLDER OF OLD
CAPITAL SECURITIES WHICH IS A BROKER-DEALER REPRESENTS AND AGREES, CONSISTENT
WITH CERTAIN INTERPRETIVE LETTERS ISSUED BY THE STAFF OF THE DIVISION OF
CORPORATION FINANCE OF THE SECURITIES AND EXCHANGE COMMISSION TO THIRD PARTIES,
THAT (A) SUCH OLD CAPITAL SECURITIES HELD BY THE BROKER-DEALER ARE HELD ONLY AS
A NOMINEE OR (B) SUCH OLD CAPITAL SECURITIES WERE ACQUIRED BY SUCH
BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR
OTHER TRADING ACTIVITIES AND IT WILL DELIVER A PROSPECTUS (AS AMENDED OR
SUPPLEMENTED FROM TIME TO TIME) MEETING THE REQUIREMENTS OF THE SECURITIES ACT
IN CONNECTION WITH ANY RESALE OF SUCH EXCHANGE CAPITAL SECURITIES (PROVIDED
THAT, BY SO ACKNOWLEDGING AND BY DELIVERING A PROSPECTUS, SUCH BROKER-DEALER
WILL NOT BE DEEMED TO ADMIT THAT IS AN "UNDERWRITER" WITHIN THE MEANING OF THE
SECURITIES ACT).
THE CORPORATION AND THE TRUST HAVE AGREED THAT, SUBJECT TO THE
PROVISIONS OF THE REGISTRATION AGREEMENT, THE PROSPECTUS, AS IT MAY BE AMENDED
OR SUPPLEMENTED FROM TIME TO TIME, MAY BE USED BY A PARTICIPATING BROKER-DEALER
(AS DEFINED BELOW) IN CONNECTION WITH RESALES OF EXCHANGE CAPITAL SECURITIES
RECEIVED IN EXCHANGE FOR OLD CAPITAL SECURITIES, WHERE SUCH OLD CAPITAL
SECURITIES WERE ACQUIRED BY SUCH PARTICIPATING BROKER-DEALER FOR ITS OWN
ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES,
FOR A PERIOD ENDING 90 DAYS AFTER THE EXPIRATION DATE (SUBJECT TO EXTENSION
UNDER CERTAIN LIMITED CIRCUMSTANCES DESCRIBED IN THE REGISTRATION AGREEMENT)
OR, IF EARLIER, WHEN ALL SUCH EXCHANGE CAPITAL SECURITIES HAVE BEEN DISPOSED OF
BY SUCH PARTICIPATING BROKER-DEALER. IN THAT REGARD, EACH BROKER-DEALER WHO
ACQUIRED OLD CAPITAL SECURITIES FOR ITS OWN ACCOUNT AS A RESULT OF
MARKET-MAKING OR OTHER TRADING ACTIVITIES (A "PARTICIPATING BROKER-DEALER"), BY
TENDERING SUCH OLD CAPITAL SECURITIES AND EXECUTING THIS LETTER OF TRANSMITTAL,
AGREES THAT, UPON RECEIPT OF NOTICE FROM THE CORPORATION OR THE TRUST OF THE
OCCURRENCE OF ANY EVENT OR THE DISCOVERY OF ANY FACT WHICH MAKES ANY STATEMENT
CONTAINED OR INCORPORATED BY REFERENCE IN THE PROSPECTUS UNTRUE IN ANY MATERIAL
RESPECT OR WHICH CAUSES THE PROSPECTUS TO OMIT TO STATE A MATERIAL FACT
NECESSARY IN ORDER TO MAKE THE STATEMENTS CONTAINED OR INCORPORATED BY
REFERENCE THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE,
NOT MISLEADING OR OF THE OCCURRENCE OF CERTAIN OTHER EVENTS SPECIFIED IN THE
REGISTRATION AGREEMENT, SUCH PARTICIPATING BROKER-DEALER WILL SUSPEND THE SALE
OF EXCHANGE CAPITAL SECURITIES PURSUANT TO THE PROSPECTUS UNTIL THE CORPORATION
AND THE TRUST HAVE AMENDED OR SUPPLEMENTED THE PROSPECTUS TO CORRECT SUCH
MISSTATEMENT OR OMISSION AND HAVE FURNISHED COPIES OF THE AMENDED OR
SUPPLEMENTED PROSPECTUS TO THE PARTICIPATING BROKER-DEALER OR THE CORPORATION
AND THE TRUST HAVE GIVEN NOTICE THAT THE SALE OF THE EXCHANGE CAPITAL
SECURITIES MAY BE RESUMED, AS THE CASE MAY BE. IF THE CORPORATION OR THE TRUST
GIVES SUCH NOTICE TO SUSPEND THE SALE OF THE EXCHANGE CAPITAL SECURITIES, IT
SHALL EXTEND THE 90 DAY PERIOD REFERRED
-7-
<PAGE> 8
TO ABOVE DURING WHICH PARTICIPATING BROKER-DEALERS ARE ENTITLED TO USE THE
PROSPECTUS IN CONNECTION WITH THE RESALE OF EXCHANGE CAPITAL SECURITIES BY THE
NUMBER OF DAYS DURING THE PERIOD FROM AND INCLUDING THE DATE OF THE GIVING OF
SUCH NOTICE TO AND INCLUDING THE DATE WHEN PARTICIPATING BROKER-DEALERS SHALL
HAVE RECEIVED COPIES OF THE SUPPLEMENTED OR AMENDED PROSPECTUS NECESSARY TO
PERMIT RESALES OF THE EXCHANGE CAPITAL SECURITIES OR TO AND INCLUDING THE DATE
ON WHICH THE CORPORATION AND THE TRUST GIVE NOTICE THAT THE SALE OF EXCHANGE
CAPITAL SECURITIES MAY BE RESUMED, AS THE CASE MAY BE.
Holders of Old Capital Securities whose Old Capital Securities are
accepted for exchange will not receive accumulated Distributions on such Old
Capital Securities for any period from and after the last Distribution Date to
which Distributions have been paid on such Old Capital Securities prior to the
original issue date of the Exchange Capital Securities, or, if no such
Distribution Date has occurred, from the original issue date of such Old
Capital Securities (April 24, 1997), and the undersigned waives the right to
receive any such Distributions.
Except as stated in the Prospectus, this tender is irrevocable.
-8-
<PAGE> 9
HOLDER(S) SIGN HERE
(SEE INSTRUCTIONS 2, 5 AND 6)
(PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW)
(NOTE: SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED
BY INSTRUCTION 2.)
Must be signed by registered holder(s) exactly as name(s) appear(s) on
Certificate(s) for the Old Capital Securities hereby tendered or on a security
position listing, or by any person(s) authorized to become the registered
holder(s) by endorsements and documents transmitted herewith (including such
opinions of counsel, certifications and other information as may be required by
K N or any Issuer Trustee for the Old Capital Securities to comply with the
restrictions on transfer applicable to the Old Capital Securities). If
signature is by an attorney-in-fact, trustee, officer of a corporation or
another acting in a fiduciary capacity or representative capacity, please set
forth the signer's full title. See Instruction 5.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF HOLDER(S))
Date: , 1997
------------------------------------
Name(s):
----------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
--------------------------------------------------------
(PLEASE PRINT)
Address:
---------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
-------------------------------------------------
Tax Identification or Social Security Number:
-----------------------------------
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 2 AND 5)
- --------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
Date: , 1997
------------------------------------
Name of Firm:
-----------------------------------------------------------------
Capacity (full title):
----------------------------------------------------------
(PLEASE PRINT)
Address:
------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
-------------------------------------------------
-9-
<PAGE> 10
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if the Exchange Capital Securities are to be
issued in the name of someone other than the registered holder of the Old
Capital Securities whose name(s) appear(s) above.
Issue
(___) Exchange Capital Securities and/or
(___) Old Capital Securities not tendered
to:
Name(s):
----------------------------------------------------------------------
Address:
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and
Telephone Number:
-------------------------------------------------------------
Tax Identification or Social Security Number(s):
------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if Exchange Capital Securities are to be sent to
someone other than the registered holder of the Old Capital Securities whose
name(s) appear(s) above, or to such registered holder(s) at an address other
than that shown above.
Issue
(___) Exchange Capital Securities and/or
(___) Old Capital Securities not tendered
to:
Name(s):
----------------------------------------------------------------------
Address:
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and
Telephone Number:
-------------------------------------------------------------
Tax Identification or Social Security Number(s):
------------------------------
-10-
<PAGE> 11
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES;
GUARANTEED DELIVERY PROCEDURES. This Letter of Transmittal is to be completed
either if (a) Certificates are forwarded herewith or (b) tenders are to be made
pursuant to the procedures for tender by book-entry transfer set forth in "The
Exchange Offer--Procedures for Tendering Old Capital Securities" in the
Prospectus. Certificates for Old Capital Securities being tendered, or timely
confirmation of a book-entry transfer of such Old Capital Securities into the
Exchange Agent's account at DTC, as well as this Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, and any other documents required by this Letter of
Transmittal, must be received by the Exchange Agent at its address set forth
herein prior to 5:00 p.m., New York City time, on the Expiration Date. Old
Capital Securities may be tendered in whole or in part in the Liquidation
Amount of $100,000 (100 Capital Securities) and integral multiples of $1,000 in
excess thereof; provided that, if any Old Capital Securities are tendered for
exchange in part, the untendered Liquidation Amount thereof must be $100,000
(100 Capital Securities) or any integral multiple of $1,000 in excess thereof.
Holders who wish to tender their Old Capital Securities and
(i) whose Old Capital Securities are not immediately available or (ii) who
cannot deliver their Old Capital Securities, this Letter of Transmittal and all
other required documents to the Exchange Agent prior to 5:00 p.m., New York
City time, on the Expiration Date or (iii) who cannot complete the procedures
for delivery by book-entry transfer on a timely basis may tender their Old
Capital Securities by properly completing and duly executing a Notice of
Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth in
"The Exchange Offer--Procedures for Tendering Old Capital
Securities--Guaranteed Delivery" in the Prospectus. Pursuant to such
procedures: (i) such tender must be made by or through an Eligible Institution
(as defined below); (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form made available by the
Corporation and the Trust, must be received by the Exchange Agent prior to 5:00
p.m., New York City time, on the Expiration Date; and (iii) the Certificates
(or a Book-Entry Confirmation (as defined in the Prospectus)) representing all
tendered Old Capital Securities, in proper form for transfer, together with a
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
within five New York Stock Exchange, Inc. trading days after the date of
execution of such Notice of Guaranteed Delivery, all as provided in "The
Exchange Offer--Procedures for Tendering Old Capital Securities" in the
Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or
transmitted by facsimile or mail to the Exchange Agent, and must include a
guarantee by an Eligible Institution in the form set forth in such Notice. As
used herein and in the Prospectus, "Eligible Institution" means a firm or other
entity identified in Rule 17Ad-15 under the Exchange Act as "an eligible
guarantor institution", including (as such terms are defined therein): (i) a
bank, (ii) a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer; (iii) a credit union; (iv) a national
securities exchange, registered securities association or clearing agency; or
(v) a savings association that is a participant in a Securities Transfer
Association.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF
THE TENDERING HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY
RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Neither the Corporation nor the Trust will accept any
alternative, conditional or contingent tenders. Each tendering holder, by
execution of a Letter of Transmittal (or facsimile thereof), waives any right
to receive any notice of the acceptance of such tender.
-11-
<PAGE> 12
2. GUARANTEE OF SIGNATURES. No signature guarantee on this
Letter of Transmittal is required if:
(i) this Letter of Transmittal is signed by the
registered holder (which term, for purposes of this document, shall include any
participant in DTC whose name appears on a security position listing as the
owner of the Old Capital Securities) of Old Capital Securities tendered
herewith, unless such holder has completed either the box entitled "Special
Issuance Instructions" or the box entitled "Special Delivery Instructions"
above, or
(ii) such Old Capital Securities are tendered for the
account of a firm that is an Eligible Institution.
In all other cases, an Eligible Institution must guarantee the
signature(s) on this Letter of Transmittal. See Instruction 5.
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Old Capital Securities Tendered" is inadequate, the Certificate
number(s) and/or the Liquidation Amount of Old Capital Securities and any other
required information should be listed on a separate signed schedule which is
attached to this Letter of Transmittal.
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. Tenders of Old Capital
Securities will be accepted only in the Liquidation Amount of $100,000 (100
Capital Securities) and integral multiples of $1,000 in excess thereof,
provided that if any Old Capital Securities are tendered for exchange in part,
the untendered Liquidation Amount thereof must be $100,000 (100 Capital
Securities) or any integral multiple of $1,000 in excess thereof. If fewer
than all the Old Capital Securities evidenced by any Certificate submitted are
to be tendered, fill in the Liquidation Amount of Old Capital Securities which
are to be tendered in the box entitled "Liquidation Amount of Old Capital
Securities Tendered (if Liquidation Amount of Old Capital Securities less than
all)". In such case, new Certificate(s) for the remainder of the Old Capital
Securities that were evidenced by such old Certificate(s) will only be sent to
the holder of the Old Capital Securities, promptly after the Expiration Date.
All Old Capital Securities represented by Certificates delivered to the
Exchange Agent will be deemed to have been tendered unless otherwise indicated.
Except as otherwise provided herein, tenders of Old Capital
Securities may be withdrawn at any time prior to 5:00 p.m., New York City time,
on the Expiration Date. In order for a withdrawal to be effective on or prior
to that time, a written, telegraphic, telex or facsimile transmission of such
notice of withdrawal must be timely received by the Exchange Agent at one of
its addresses set forth above or in the Prospectus prior to 5:00 p.m., New York
City time, on the Expiration Date. Any such notice of withdrawal must specify
the name of the person who tendered the Old Capital Securities to be withdrawn,
the aggregate Liquidation Amount of Old Capital Securities to be withdrawn, and
(if Certificates for Old Capital Securities have been tendered) the name of the
registered holder of the Old Capital Securities as set forth on the Certificate
for the Old Capital Securities, if different from that of the person who
tendered such Old Capital Securities. If Certificates for the Old Capital
Securities have been delivered or otherwise identified to the Exchange Agent,
then prior to the physical release of such Certificates for the Old Capital
Securities, the tendering holder must submit the serial numbers shown on the
particular Certificates for the Old Capital Securities to be withdrawn and the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution, except in the case of Old Capital Securities tendered for the
account of an Eligible Institution. If Old Capital Securities have been
tendered pursuant to the procedures for book-entry transfer set forth in "The
Exchange Offer-- Procedures for Tendering Old Capital Securities," the notice
of withdrawal must specify the name and number of the account at DTC to be
credited with the withdrawal of Old Capital Securities, in which case a notice
of withdrawal will be effective if delivered to the Exchange Agent by written,
telegraphic, telex or facsimile transmission. Withdrawals of tenders of Old
Capital Securities may not be rescinded. Old Capital Securities properly
withdrawn will not be deemed validly tendered for purposes of the Exchange
Offer, but may be retendered at any subsequent time prior to 5:00 p.m., New
York City time, on the Expiration Date by following any of the procedures
described in the Prospectus under "The Exchange Offer--Procedures for Tendering
Old Capital Securities".
-12-
<PAGE> 13
All questions as to the validity, form and eligibility
(including time of receipt) of such withdrawal notices will be determined by
the Corporation and the Trust, in their sole discretion, whose determination
shall be final and binding on all parties. The Corporation, the Trust, any
affiliates or assigns of the Corporation and the Trust, the Exchange Agent or
any other person shall not be under any duty to give any notification of any
irregularities in any notice of withdrawal or incur any liability for failure
to give any such notification. Any Old Capital Securities which have been
tendered but which are withdrawn will be returned to the holder thereof without
cost to such holder promptly after withdrawal.
5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND
ENDORSEMENTS. If this Letter of Transmittal is signed by the registered
holder(s) of the Old Capital Securities tendered hereby, the signature(s) must
correspond exactly with the name(s) as written on the face of the
Certificate(s) without alteration, enlargement or any change whatsoever.
If any of the Old Capital Securities tendered hereby is owned
of record by two or more joint owners, all such owners must sign this Letter of
Transmittal.
If any tendered Old Capital Securities are registered in
different name(s) on several Certificates, it will be necessary to complete,
sign and submit as many separate Letters of Transmittal (or facsimiles thereof)
as there are different registrations of Certificates.
If this Letter of Transmittal or any Certificates or bond
powers are signed by trustees, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, such persons should so
indicate when signing and must submit proper evidence satisfactory to the
Corporation and the Trust, in their sole discretion, of such persons' authority
to so act.
When this Letter of Transmittal is signed by the registered
owner(s) of the Old Capital Securities listed and transmitted hereby, no
endorsement(s) of Certificate(s) or separate bond power(s) are required unless
Exchange Capital Securities are to be issued in the name of a person other than
the registered holder(s). Signature(s) on such Certificate(s) or bond power(s)
must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than
the registered owner(s) of the Old Capital Securities listed, the Certificates
must be endorsed or accompanied by appropriate bond power(s), signed exactly as
the name or names of the registered owner(s) appear(s) on the Certificates, and
also must be accompanied by such opinions of counsel, certifications and other
information as the Corporation or any Issuer Trustee for the Old Capital
Securities may require in accordance with the restrictions on transfer
applicable to the Old Capital Securities. Signatures on such Certificates or
bond powers must be guaranteed by an Eligible Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If Exchange
Capital Securities are to be issued in the name of a person other than the
signer of this Letter of Transmittal, or if Exchange Capital Securities are to
be sent to someone other than the signer of this Letter of Transmittal or to an
address other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed. Certificates for Old Capital Securities not
exchanged will be returned by mail, or, if tendered by book-entry transfer, by
crediting the account indicated above maintained at DTC. See Instruction 4.
7. IRREGULARITIES. The Corporation and the Trust will determine,
in their sole discretion, all questions as to the form of documents, validity,
eligibility (including time of receipt) and acceptance for exchange of any
tender of Old Capital Securities, which determination shall be final and
binding on all parties. The Corporation and the Trust reserve the absolute
right to reject any and all tenders determined by either of them not to be in
proper form or the acceptance of which, or exchange for, may, in the view of
counsel to the Corporation and the Trust, be unlawful. The Corporation and
the Trust also reserve the absolute right, subject to applicable law, to waive
any of the conditions of the Exchange Offer set forth in the Prospectus under
"The Exchange Offer--Conditions to the Exchange Offer" or any conditions or
irregularity in any tender of Old Capital Securities of any particular holder
whether or nor similar conditions or irregularities are waived in the case of
other holders. The Corporation's and the Trust's interpretation of the terms
and conditions of the Exchange Offer (including this Letter of Transmittal and
the instructions hereto) will be final and binding. No tender of Old Capital
Securities will be deemed to have been validly made until all irregularities
-13-
<PAGE> 14
with respect to such tender have been cured or waived. Neither the
Corporation, the Trust, any affiliate or assign of the Corporation, the Trust
or the Exchange Agent nor any other person shall be under any duty to give
notification of any irregularities in tenders or incur any liability for
failure to give such notification.
8. QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES.
Questions and requests for assistance may be directed to the Exchange Agent at
its address and telephone number set forth on of this Letter of Transmittal.
Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the
Letter of Transmittal may be obtained from the Exchange Agent.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under the U.S.
Federal income tax law, a Holder whose tendered Old Capital Securities are
accepted for exchange is required to provide the Exchange Agent with such
Holder's correct taxpayer identification number ("TIN") on the Substitute Form
W-9 below. If the Exchange Agent is not provided with the correct TIN, the
Internal Revenue Service (the "IRS") may subject the Holder or the payee to a
$50 penalty. In addition, payments to such Holders or other payees with
respect to Exchange Capital Securities exchanged pursuant to the Exchange Offer
may be subject to 31% backup withholding.
The box in Part 3 of Substitute Form W-9 may be checked if the
tendering Holder has not been issued a TIN and has applied for a TIN or intends
to apply for a TIN in the near future. If the box in Part 3 is checked, the
Holder or other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Exchange Agent will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Exchange Agent. The Exchange Agent will retain such amounts
withheld during the 60 day period following the date of the Substitute Form
W-9. If the Holder furnishes the Exchange Agent with its TIN within 60 days
after the date of the Substitute Form W-9, the amounts retained during the 60
day period will be remitted to the Holder and no further amounts shall be
retained or withheld from payments made to the Holder thereafter. If, however,
the Holder has not provided the Exchange Agent with its TIN within such 60 day
period, amounts withheld will be remitted to the IRS as backup withholding. In
addition, 31% of all payments made thereafter will be withheld and remitted to
the IRS until a correct TIN is provided.
The Holder is required to give the Exchange Agent the TIN
(e.g., social security number or employer identification number) of the
registered owner of Old Capital Securities or of the last transferee appearing
on the transfers attached to, or endorsed on, the Old Capital Securities. If
the Old Capital Securities are registered in more than one name or are not in
the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
Certain Holders (including, among others, corporations,
financial institutions and certain foreign persons) may not be subject to these
backup withholding and reporting requirements. Such Holders should
nevertheless complete the Substitute Form W-9 below, and write "exempt" on the
face thereof, to avoid possible erroneous backup withholding. A foreign person
may qualify as an exempt recipient by submitting a properly completed IRS Form
W-8, signed under penalties of perjury, attesting to that Holder's exempt
status. Please consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
Holders are exempt from backup withholding.
Backup withholding is not an additional U.S. federal income
tax. Rather, the U.S. federal income tax liability of a person subject to
backup withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained.
10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificate(s)
representing Old Capital Securities have been lost, destroyed or stolen, the
holder should promptly notify the Exchange Agent. The Holder will then be
instructed as to the steps that must be taken in order to replace the
Certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, destroyed or stolen
Certificate(s) have been followed.
-14-
<PAGE> 15
11. SECURITY TRANSFER TAXES. Holders who tender their Old Capital
Securities for exchange will not be obligated to pay any transfer taxes in
connection therewith. If, however, Exchange Capital Securities are to be
delivered to, or are to be issued in the name of, any person other than the
registered holder of the Old Capital Securities tendered, or if a transfer tax
is imposed for any reason other than the exchange of Old Capital Securities in
connection with the Exchange Offer, then the amount of any such transfer tax
(whether imposed on the registered holder or any other persons) will be payable
by the tendering Holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted with this Letter of Transmittal, the
amount of such transfer taxes will be billed directly to such tendering holder.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF) AND ALL
OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00
P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
PAYER'S NAME: Wilmington Trust Company
- --------------------------------------------------------------------------------
SUBSTITUTE FORM W-9
Payer's Request for Taxpayer
Identification Number (TIN)
Part 1 PLEASE PROVIDE YOUR TIN IN THE BOX AT Social Security OR Employer
RIGHT AND CERTIFY BY SIGNING AND Identification Number
DATING BELOW.
---------------------------
Part 2 CERTIFICATION - Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer
Identification Number (or I am waiting for a number to be
issued to me) and
(2) I am not subject to backup withholding because: (a) I am
exempt from backup withholding or (b) I have not been notified
by the Internal Revenue Service (the "IRS") that I am subject
to backup withholding as a result of failure to report all
interest or dividends, or (c) the IRS has notified me that
I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS - You must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding because
of underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you are subject to backup withholding, you
received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out such item (2).
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF
THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING.
SIGNATURE DATE
-------------------------------------- -----------------------------
NAME (please print)
-------------------------------------------------------------
ADDRESS (please print)
----------------------------------------------------------
Part 3 - Awaiting TIN (___)
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU WITH RESPECT TO EXCHANGE CAPITAL SECURITIES
EXCHANGED PURSUANT TO THE EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED
"GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE
FORM W-9" FOR ADDITIONAL DETAILS.
-15-
<PAGE> 16
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (2)
I intend to mail or deliver an application in the near future. I understand
that if I do not provide a taxpayer identification number by the time of
payment, 31% of all reportable payments made to me will be withheld, but that
such amounts will be refunded to me if I then provide a Taxpayer Identification
Number within sixty (60) days.
SIGNATURE DATE
------------------------------------------ -------------------------
NAME (please print)
-------------------------------------------------------------
ADDRESS (please print)
----------------------------------------------------------
-16-
<PAGE> 1
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
8.56% SERIES A CAPITAL TRUST PASS-THROUGH SECURITIES(SM)
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
OF
K N CAPITAL TRUST I
FULLY AND UNCONDITIONALLY GUARANTEED
BY K N ENERGY, INC.
This Notice of Guaranteed Delivery, or one substantially equivalent to
this form, must be used for a holder of the Trust's (as defined below) 8.56%
Series A Capital Trust Pass-through Securities(SM) (the "Old Capital
Securities") to accept the Exchange Offer (as defined below) if (i)
certificates for such holder's Old Capital Securities are not immediately
available, (ii) such holder cannot deliver its certificates for Old Capital
Securities, the Letter of Transmittal and all other required documents to
Wilmington Trust Company (the "Exchange Agent") prior to 5:00 p.m., New York
City time, on the Expiration Date (as defined in the Prospectus referred to
below) or (iii) the procedures for delivery by book-entry transfer cannot be
completed on a timely basis. This Notice of Guaranteed Delivery may be
delivered by hand, overnight courier or mail, or transmitted by facsimile
transmission, to the Exchange Agent. See "The Exchange Offer--Procedures for
Tendering Old Capital Securities" in the Prospectus.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
WILMINGTON TRUST COMPANY
By mail/overnight delivery: By hand:
Wilmington Trust Company Wilmington Trust Company
1100 North Market Street 1105 North Market Street, 1st Floor
Wilmington, Delaware 19890 Wilmington, Delaware 19890
Attn: Jill Rylee, Attn: Corporate Trust Operations
Corporate Trust Operations
To confirm by telephone or for information:
(302) 651-8869
Jill Rylee
Facsimile transmissions: (302) 651-1079
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER
THAN AS SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY
VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to K N Capital Trust I, a Delaware
statutory business trust (the "Issuer"), upon the terms and subject to the
conditions set forth in the Prospectus dated ________________, 1997 (as the
same may be amended or supplemented from time to time, the "Prospectus"), and
the related Letter of Transmittal (which together constitute the "Exchange
Offer"), receipt of which is hereby acknowledged, the aggregate Liquidation
Amount of Old Capital Securities set forth below pursuant to the guaranteed
delivery procedures set forth in the Prospectus under the caption "The Exchange
Offer--Procedures for Tendering Old Capital Securities." All capitalized terms
used herein but not defined shall have the meanings ascribed to them in the
Prospectus.
The undersigned understands and acknowledges that the Exchange Offer
will expire at 5:00 p.m., New York City time, on _______________, 1997, unless
extended by the Issuer. The term "Expiration Date" shall mean 5:00 p.m., New
York City time, on ______________, 1997, unless the Exchange Offer is extended
as provided in the Prospectus, in which case the term "Expiration Date" shall
mean the latest date and time to which the Exchange Offer is extended.
SIGNATURE
x Date:
-------------------------------------------- -------------------------
x Date:
-------------------------------------------- -------------------------
Signature(s) of Registered Holder(s)
or Authorized Signatory
Area Code and Telephone Number:
--------------------------------------
Name(s):
-------------------------------------------------------------
(Please Print)
Capacity (full title), if signing in a fiduciary or representative capacity):
- -------------------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
(Including Zip Code)
Taxpayer Identification Number or
Social Security No.:
-----------------------------------------------------------
Aggregate Liquidation Amount of
Old Capital Securities Tendered
(must be at least $100,000 and
integral multiples of $1,000):
--------------------------------------------------
<PAGE> 3
Certificate Number(s) of Old Capital Securities (if
available):
---------------------------------------------------------------------
Aggregate Liquidation Amount
Represented by Certificate(s): $
------------------------------------------------
IF TENDERED OLD CAPITAL SECURITIES WILL BE
DELIVERED BY BOOK-ENTRY TRANSFER, PROVIDE
THE DEPOSITORY TRUST COMPANY
("DTC") ACCOUNT NO. AND TRANSACTION CODE
NUMBER (if available):
Account No.
--------------------------------------------------------------------
Transaction No.
----------------------------------------------------------------
GUARANTEE OF DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm or other entity identified as an "eligible
guarantor institution" within the meaning of Rule 17Ad-15 promulgated under the
Securities Exchange Act of 1934, as amended, guarantees deposit with the
Exchange Agent of a properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all tendered Old
Capital Securities in proper form for transfer, or confirmation of the
book-entry transfer of such Old Capital Securities into the Exchange Agent's
account at DTC as described in the Prospectus under the caption "The Exchange
Offer--Procedures for Tendering Old Capital Securities--Book-Entry Transfer"
and other documents required by the Letter of Transmittal, all by 5:00 p.m.,
New York City time, within five New York Stock Exchange trading days of the
date hereof.
Name of Eligible Institution:
--------------------------------------------------
Authorized Signature
Address: Name:
----------------------------- ----------------------------------
Title:
- ------------------------------------- ---------------------------------
Area Code and Telephone No. Date:
---------- ----------------------------------
NOTE: DO NOT SEND OLD CAPITAL SECURITIES WITH THIS NOTICE OF GUARANTEED
DELIVERY. ACTUAL SURRENDER OF OLD CAPITAL SECURITIES MUST BE MADE PURSUANT TO,
AND BE ACCOMPANIED BY, A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF
TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS.
<PAGE> 1
EXHIBIT 99.3
FORM OF EXCHANGE AGENCY AGREEMENT
, 1997
----------------
Wilmington Trust Company
1110 N. Market Street
Rodney Square North
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Ladies and Gentlemen:
K N Energy, Inc., a Kansas corporation, as Sponsor (the
"Corporation"), and K N Capital Trust I, a Delaware statutory business trust
(the "Trust"), hereby appoint Wilmington Trust Company ("Wilmington Trust") to
act as exchange agent (the "Exchange Agent") in connection with an exchange
offer by the Corporation and the Trust to exchange up to $100,000,000 aggregate
Liquidation Amount of the Trust's 8.56% Series B Capital Trust Pass-through
SecuritiesSM (the "Exchange Capital Securities"), which have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), for a like
aggregate Liquidation Amount of the Trust's 8.56% Series A Capital Trust
Pass-through SecuritiesSM (the "Old Capital Securities" and together with the
Exchange Capital Securities, the "Capital Securities"). The terms and
conditions of the exchange offer are set forth in a Prospectus dated
______________, 1997 (as the same may be amended or supplemented from time to
time, the "Prospectus") and in the related Letter of Transmittal, which
together constitute the "Exchange Offer." The registered holders of the Old
Capital Securities or the Exchange Capital Securities, as applicable, are
hereinafter referred to as "Holders." Capitalized terms used herein and not
defined shall have the respective meanings described thereto in the Prospectus.
On the basis of the representations, warranties and agreements of the
Corporation, the Trust and Wilmington Trust contained herein and subject to the
terms and conditions hereof, the following sets forth the agreement among the
Corporation, the Trust and Wilmington Trust as Exchange Agent with respect to
the Exchange Offer:
1. APPOINTMENT AND DUTIES AS EXCHANGE AGENT.
a. The Corporation and the Trust hereby appoint Wilmington Trust
to act as Exchange Agent in connection with the Exchange Offer and Wilmington
Trust agrees to act as Exchange Agent in connection with the Exchange Offer.
As Exchange Agent, Wilmington Trust will perform those services as are outlined
herein, including, but not limited to, accepting tenders of Old Capital
Securities and communicating generally regarding the Exchange Offer with
brokers, dealers, commercial banks, trust companies and other persons,
including Holders of the Old Capital Securities.
<PAGE> 2
b. The Corporation and the Trust acknowledge and agree that
Wilmington Trust has been retained pursuant to this Agreement to act solely as
Exchange Agent in connection with the Exchange Offer, and in such capacity
Wilmington Trust shall perform such duties in good faith as are outlined
herein.
c. Wilmington Trust will examine each of the Letters of
Transmittal and certificates for Old Capital Securities and any other documents
delivered or mailed to Wilmington Trust by or for Holders of the Old Capital
Securities, and any Book-Entry Confirmations (as defined in the Prospectus)
received by Wilmington Trust with respect to the Old Capital Securities, to
ascertain whether: (i) the Letters of Transmittal and such other documents are
duly executed and properly completed in accordance with the instructions set
forth therein and that such Book-Entry Confirmations are in due and proper form
and contain the information required to be set forth therein, (ii) the Old
Capital Securities have otherwise been properly tendered, (iii) Old Capital
Securities tendered in part are tendered in Liquidation Amounts of $100,000
(100 Capital Securities) and integral multiples of $1,000 in excess thereof and
that if any Old Capital Securities are tendered for exchange in part, the
untendered Liquidation Amount thereof is $100,000 (100 Capital Securities) or
any integral multiple of $1,000 in excess thereof, and (iv) Holders have
provided their correct Tax Identification Number and required certification.
Determination of all questions as to validity, form, eligibility and acceptance
for exchange of any Old Capital Securities shall be made by the Corporation or
the Trust, whose determination shall be final and binding. In each case where
the Letters of Transmittal or any other document has been improperly completed
or executed or where a Book-Entry Confirmation is not in due and proper form or
omits certain information, or any certificate for Old Capital Securities is not
in proper form for transfer or some other irregularity or deficiency in
connection with the tender or acceptance of the Old Capital Securities exists,
Wilmington Trust will endeavor to advise the tendering Holder of Old Capital
Securities of the irregularity or the deficiency in the tender and to take any
other action as the Corporation or the Trust may request to cause such
irregularity or deficiency to be corrected. Notwithstanding the above,
Wilmington Trust shall not be under any duty to give any notification of any
irregularities or deficiency in tenders or incur any liability for failure to
give any such notification.
d. With the approval of the President, any Vice President or the
Treasurer or any Assistant Treasurer of the Corporation (such approval, if
given orally, to be confirmed in writing), Wilmington Trust is authorized to
waive any irregularities or other deficiency in connection with any tender of
Old Capital Securities pursuant to the Exchange Offer.
e. Tenders of Old Capital Securities may be made only as set
forth in the Letters of Transmittal and in the section of the Prospectus
captioned "The Exchange Offer" and Old Capital Securities shall be considered
properly tendered only when tendered in accordance with the procedures set
forth therein.
f. Wilmington Trust shall advise the Corporation and the Trust of
the aggregate Liquidation Amount of Old Capital Securities received by it as
soon as possible after 5:00 p.m., New York City time, on the Expiration Date
and accept the Corporation's or the Trust's instructions with respect to the
disposition of such Old Capital Securities.
g. Wilmington Trust shall deliver certificates for Old Capital
Securities tendered in part to the transfer agent for split-up and shall return
any untendered Old Capital Securities and all Old Capital Securities which have
not been accepted by the Corporation and the Trust to the Holders thereof
promptly after the expiration or termination of the Exchange Offer.
-2-
<PAGE> 3
h. Upon acceptance by the Corporation and the Trust of any Old
Capital Securities duly tendered pursuant to the Exchange Offer (such
acceptance, if given orally, to be confirmed in writing), the Corporation and
the Trust will cause Exchange Capital Securities in exchange therefor to be
issued as promptly as possible and Wilmington Trust will deliver such Exchange
Capital Securities on behalf of the Corporation and the Trust at the rate of
$100,000 (100 Capital Securities) Liquidation Amount of Exchange Capital
Securities for each $100,000 Liquidation Amount of Old Capital Securities
tendered as promptly as possible after acceptance by the Corporation and the
Trust of the Old Capital Securities for exchange and notice (such notice, if
given orally, to be confirmed in writing) of such acceptance by the Corporation
and the Trust. Unless otherwise instructed by the Corporation or the Trust,
Wilmington Trust shall issue Exchange Capital Securities only in denominations
of $100,000 (100 Capital Securities) Liquidation Amount or any integral
multiple of $1,000 in excess thereof.
i. Tenders pursuant to the Exchange Offer are irrevocable, except
that, subject to the terms and the conditions set forth in the Prospectus and
the Letter of Transmittal, Old Capital Securities tendered pursuant to the
Exchange Offer may be withdrawn at any time prior to 5:00 p.m., New York City
time, on the Expiration Date in accordance with the terms of the Exchange
Offer.
j. Notice of any decision by the Corporation and the Trust not to
exchange any Old Capital Securities tendered shall be given by the Corporation
or the Trust to Wilmington Trust either orally (if given orally, to be
confirmed in writing) or in a written notice.
k. If, pursuant to the Exchange Offer, the Corporation and the
Trust do not accept for exchange all or part of the Old Capital Securities
tendered because of an invalid tender, the occurrence of certain other events
set forth in the Prospectus under the caption "The Exchange Offer -- Conditions
to the Exchange Offer" or otherwise, Wilmington Trust shall, upon notice from
the Corporation and the Trust (such notice, if given orally, to be confirmed in
writing), promptly after the expiration or termination of the Exchange Offer
return the certificates for unaccepted Old Capital Securities (or effect
appropriate book - entry transfer), together with any related required
documents and the Letters of Transmittal relating thereto that are in
Wilmington Trust's possession, to the persons who deposited such certificates.
l. Certificates, if issued in definitive form, for reissued Old
Capital Securities, unaccepted Old Capital Securities or Exchange Capital
Securities shall be forwarded (a) by first-class certified mail, return receipt
requested, under a blanket surety bond obtained by Wilmington Trust protecting
Wilmington Trust, the Corporation and the Trust from loss or liability arising
out of the non-receipt or non-delivery of such certificates or (b) by
registered mail insured by Wilmington Trust separately for the replacement
value of each such certificate.
m. Wilmington Trust is not authorized to pay or offer to pay any
concessions, commissions or solicitation fees to any broker, dealer, commercial
bank, trust company or other nominee or to engage or use any person to solicit
tenders.
n. As Exchange Agent, Wilmington Trust:
(i) shall have no duties or obligations other
than those specifically set forth herein or as may be subsequently
agreed to in writing;
-3-
<PAGE> 4
(ii) will make no representations and will have no
responsibilities as to the validity, value or genuineness of any of
the certificates for the Old Capital Securities deposited pursuant to
the Exchange Offer, and will not be required to and will make no
representation as to the validity, value or genuineness of the
Exchange Offer;
(iii) shall not be obligated to take any legal
action hereunder which might in Wilmington Trust's reasonable judgment
involve any expense or liability, unless Wilmington Trust shall have
been furnished with indemnity satisfactory to it and additional fees
for the taking of such action;
(iv) may conclusively rely on and shall be
protected in acting in reliance upon any certificate, instrument,
opinion, notice, letter, telegram or other document or security
delivered to Wilmington Trust and reasonably believed by Wilmington
Trust to be genuine and to have been signed by the proper party or
parties;
(v) may conclusively act upon any tender,
statement, request, comment, agreement or other instrument whatsoever
(not only as to the due execution and validity and effectiveness of
its provisions, but also as to the truth and accuracy of any
information contained therein) which Wilmington Trust believes in good
faith to be genuine and to have been signed or made by a proper person
or persons;
(vi) may conclusively rely on and shall be fully
protected in acting upon written or oral instructions from the
President, any Vice President, the Treasurer or any Assistant
Treasurer of the Corporation (such instruction, if given orally, to be
confirmed in writing);
(vii) may consult with its own counsel with respect
to any questions relating to Wilmington Trust's duties and
responsibilities and the advice of such counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted to be taken by Wilmington Trust hereunder in good
faith and in accordance with the advice of such counsel;
(viii) shall not advise any person tendering Old
Capital Securities pursuant to the Exchange Offer as to whether to
tender or refrain from tendering all or any portion of its Old Capital
Securities or as to the market value, decline or appreciation in
market value of any Old Capital Securities that may or may not occur
as a result of the Exchange Offer or as to the market value of the
Exchange Capital Securities; and
(ix) shall take such action as may from time to
time be requested by the Corporation or the Trust to furnish copies of
the Prospectus, the Letter of Transmittal, the Notice of Guaranteed
Delivery or such other forms as may be approved from time to time by
the Corporation and the Trust to all persons requesting such documents
and to accept and comply with telephone requests for information
relating to the Exchange Offer. The Corporation and the Trust will
furnish Wilmington Trust with copies of such documents at its request,
and Wilmington Trust will furnish from its own inventory the
Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
o. Wilmington Trust shall advise orally and promptly thereafter
confirm in writing to the Corporation and the Trust and such other person or
persons as the Corporation and the Trust may
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request, daily (and more frequently during the week immediately preceding the
Expiration Date and if otherwise reasonably requested) up to and including the
Expiration Date, the aggregate Liquidation Amount of Old Capital Securities
which have been tendered pursuant to the terms of the Exchange Offer and the
items received by Wilmington Trust pursuant to the Exchange Offer and this
Agreement. In addition, Wilmington Trust will also provide, and cooperate in
making available to the Corporation and the Trust or any such other person or
persons as the Corporation and the Trust may request from time to time, such
other information in its possession as the Corporation, the Trust or any such
other person or persons as the Corporation and the Trust may designate may
reasonably request (such request if made orally, to be confirmed in writing).
Such cooperation shall include, without limitation, the granting by Wilmington
Trust to the Corporation and the Trust, and such person or persons as the
Corporation and the Trust may request, access to those persons on Wilmington
Trust's staff who are responsible for receiving tenders, in order to ensure
that immediately prior to the Expiration Date the Corporation and the Trust
shall have received adequate information in sufficient detail to enable the
Corporation and the Trust to decide whether to extend the Exchange Offer.
Wilmington Trust shall prepare a final list of all persons whose tenders were
accepted, the aggregate Liquidation Amount of Old Capital Securities tendered
and the aggregate Liquidation Amount of Old Capital Securities accepted and
deliver said list to the Corporation and the Trust.
p. Letters of Transmittal, Book-Entry Confirmations and Notices
of Guaranteed Delivery shall be stamped by Wilmington Trust as to the date and
the time of receipt thereof and shall be preserved by Wilmington Trust for a
period of time at least equal to the period of time Wilmington Trust preserves
other records pertaining to the transfer of securities, or one year, whichever
is longer, and thereafter shall be delivered by Wilmington Trust to the
Corporation and the Trust. Wilmington Trust shall dispose of unused Letters of
Transmittal and other surplus materials by returning them to the Corporation or
the Trust.
2. COMPENSATION.
A fee of $3,000.00 will be payable by the Corporation to Wilmington
Trust in its capacity as Exchange Agent; provided, however, that Wilmington
Trust reserves the right to receive reimbursement from the Corporation for any
reasonable out-of-pocket expenses incurred as Exchange Agent in performing the
services described herein. The obligations of the Corporation hereunder shall
survive the termination of this Agreement.
3. INDEMNIFICATION.
a. The Corporation and the Trust hereby agree to protect, defend,
indemnify and hold harmless Wilmington Trust and its officers, directors,
employees and agents from and against any and all costs, losses, liabilities,
expenses (including reasonable counsel fees and disbursements) and claims
imposed upon or asserted against Wilmington Trust on account of any action
taken or omitted to be taken by Wilmington Trust in connection with its
acceptance of or performance of its duties under this Agreement and the
documents related hereto and to reimburse Wilmington Trust upon demand for the
reasonable costs and expenses of defending itself against any claim or
liability arising out of or relating to this Agreement and the documents
related hereto. This indemnification shall survive the release, discharge,
termination and/or satisfaction of this Agreement. Anything in this Agreement
to the contrary notwithstanding, neither the Corporation nor the Trust shall be
liable for indemnification or otherwise for any loss, liability, cost or
expense to the extent arising out of Wilmington Trust's bad faith, gross
negligence or willful misconduct. In no case shall the
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<PAGE> 6
Corporation or the Trust be liable under this indemnification agreement with
respect to any claim against Wilmington Trust until the Corporation and the
Trust shall be notified by Wilmington Trust, by letter of the written assertion
of a claim against Wilmington Trust or of any other action commenced against
Wilmington Trust. Such notice shall be delivered promptly after Wilmington
Trust shall have received any such written assertion or shall have been served
with a summons in connection therewith, provided, that, Wilmington Trust's
failure to give such notice shall not excuse the Corporation or the Trust from
its obligations hereunder (except to the extent the Corporation or the Trust is
prejudiced by such delay). The Corporation and the Trust shall be entitled to
participate at their own expense in the defense of any such claim or other
action, and, if the Corporation and the Trust so elect, the Corporation and the
Trust may assume the defense of any pending or threatened action against
Wilmington Trust in respect of which indemnification may be sought hereunder
with counsel reasonably acceptable to Wilmington Trust, in which case the
Corporation and the Trust shall not thereafter be responsible for the fees and
disbursements of legal counsel for Wilmington Trust under this paragraph;
provided, however, that the Corporation and the Trust shall not be entitled to
assume the defense of any such action if the named parties to such action
include the Corporation or the Trust and Wilmington Trust and representation of
the parties by the same legal counsel would, in the written opinion of counsel
for Wilmington Trust, be inappropriate due to actual or potential conflicting
interests between them. It is understood that the Corporation and the Trust
shall not be liable under this paragraph for the fees and disbursements of more
than one legal counsel for Wilmington Trust. In the event that the Corporation
and the Trust shall assume the defense of any such suit with counsel reasonably
acceptable to Wilmington Trust, neither the Corporation nor the Trust shall
thereafter be liable for the fees and expenses of any counsel retained by
Wilmington Trust subsequent to such assumption of defense by the Corporation or
the Trust.
b. Wilmington Trust agrees that, without the prior written
consent of the Corporation and the Trust (which consent shall not be
unreasonably withheld), it will not settle, compromise or consent to the entry
of any judgment in any pending or threatened claim, action or proceeding in
respect of which indemnification could be sought in accordance with the
indemnification provisions of this Agreement (whether or not Wilmington Trust,
the Corporation, the Trust or any of their respective directors, officers and
controlling persons is an actual or potential party to such claim, action or
proceeding).
c. The Corporation agrees to indemnify and hold harmless the
Trust from and against any and all losses, claims, damages and liabilities
whatsoever, which are due from the Trust under this Section.
4. TAX INFORMATION.
The Corporation and the Trust shall arrange to comply with all
requirements under the tax laws of the United States, including those relating
to missing Tax Identification Numbers, and shall file any appropriate reports
with the Internal Revenue Service. The Corporation and the Trust understand
that they are required, in certain instances, to deduct 31% with respect to
Distributions paid on the Exchange Capital Securities and proceeds from the
sale, exchange, redemption or retirement of the Exchange Capital Securities
from Holders of Exchange Capital Securities who have not supplied their
Taxpayer Identification Number or required certification. Such funds will be
turned over to the Internal Revenue Service. Wilmington Trust shall notify the
Corporation and the Trust of any Holder of Exchange Capital Securities who has
failed to supply such Taxpayer Identification Number or certification.
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<PAGE> 7
5. GOVERNING LAW.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware applicable to contracts executed in and to be
performed in that State.
6. NOTICES.
Except as otherwise provided herein, any communication or notice
provided for hereunder shall be in writing and shall be given (and shall be
deemed to have been given upon receipt) by delivery in person, facsimile or
overnight delivery or by registered or certified mail (postage prepaid, return
receipt requested) to the applicable party at the addresses indicated below:
If to the Corporation:
K N Energy, Inc.
370 Van Gordon Street
P.O. Box 281304
Lakewood, Colorado 80228-8304
Attention: Chief Financial Officer
Fax No.: (303) 763-3517
If to the Trust:
K N Capital Trust I
c/o K N Energy, Inc.
370 Van Gordon Street
P.O. Box 281304
Lakewood, Colorado 80228-8304
Attention: Chief Financial Officer
Fax No.: (303) 763-3517
If to Wilmington Trust Company:
Wilmington Trust Company
1110 N. Market Street
Rodney Square North
Wilmington, Delaware 19890-0001
Corporate Trust Administration
Attention:
Fax No.:
(302) 651-1576
or, as to each party, at such other address as shall be designated by such
party in a written notice complying as to delivery with the terms of this
Section.
7. PARTIES IN INTEREST.
This Agreement shall be binding upon and inure solely to the benefit
of each party hereto and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person
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<PAGE> 8
any right, benefit or remedy of any nature whatsoever under or by reason of
this Agreement. Without limitation of the foregoing, the parties hereto
expressly agree that no Holder of Old Capital Securities or Exchange Capital
Securities shall have any right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.
8. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, and by
different parties hereto on separate counterparts, each of which when so
executed shall be deemed an original, and all of such counterparts shall
together constitute one and the same agreement.
9. CAPTIONS.
The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
10. ENTIRE AGREEMENT; AMENDMENT.
This Agreement constitutes the entire understanding of the parties
hereto with respect to the subject matter hereof. This Agreement may not be
amended or modified nor may any provision hereof be waived except in writing
signed by each party to be bound thereby.
11. TERMINATION.
This Agreement shall terminate upon the earliest of (a) the 90th day
following the expiration, withdrawal or termination of the Exchange Offer, (b)
the close of business on the date of actual receipt of written notice by
Wilmington Trust from the Corporation and the Trust stating that this Agreement
is terminated, (c) one year following the date of this Agreement, and (d) the
time and date on which this Agreement shall be terminated by mutual consent of
the parties hereto.
12. MISCELLANEOUS.
Wilmington Trust hereby acknowledges receipt of the Prospectus and the
forms of the Letter of Transmittal and the Notice of Guaranteed Delivery and
further acknowledges that it has examined each of them. Any inconsistency
between this Agreement, on the one hand, and the Prospectus and the forms of
the Letter of Transmittal and the Notice of Guaranteed Delivery (as they may be
amended or supplemented from time to time), on the other hand, shall be
resolved in favor of the latter three documents, except with respect to the
duties, liabilities, rights, powers and indemnification of Wilmington Trust as
Exchange Agent, which shall be controlled by this Agreement.
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<PAGE> 9
Kindly indicate your willingness to act as Exchange Agent and your
acceptance of the foregoing provisions by signing in the space provided below
for that purpose and returning to the Corporation a copy of this Agreement so
signed, whereupon this Agreement and Wilmington Trust's acceptance shall
constitute a binding agreement among Wilmington Trust, the Corporation and the
Trust.
Very truly yours,
K N ENERGY, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
K N CAPITAL TRUST I
By:
--------------------------------
Name:
------------------------------
Title: Administrative Trustee
-----------------------------
Accepted and agreed to as of
the date first written above:
WILMINGTON TRUST COMPANY,
as Exchange Agent
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
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