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Securities And Exchange Commission
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported) November 19, 1998
K N ENERGY, INC.
(Exact name of registrant as specified in its charter)
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KANSAS 1-6446 48-0290000
(State or other jurisdiction (Commission File Number) (IRS Employer Identification
of incorporation) Number)
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370 VAN GORDON STREET
P.O. BOX 281304
LAKEWOOD, COLORADO 80228-8304
(Address of principal executive offices)
(303) 989-1740
(Registrant's telephone number, including area code)
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Item 5. Other Events
Pursuant to the terms and conditions of an Underwriting Agreement dated
November 19, 1998, among K N Energy, Inc. (the "Registrant") and Morgan Stanley
& Co. Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman,
Sachs & Co., Petrie Parkman & Co., Inc., Salomon Smith Barney Inc., Jefferies &
Company, Inc. and NationsBanc Montgomery Securities LLC, as representatives of
the several underwriters named therein, the Registrant will issue on or about
November 25, 1998, 10,706,000 of its 8.25% Premium Equity Participating Security
Units -- PEPS Units (the "PEPS Units").
Pursuant to the terms and conditions of an Underwriting Agreement dated
November 19, 1998, among the Registrant and Morgan Stanley & Co. Incorporated,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co.,
Salomon Smith Barney Inc., Jefferies & Company, Inc., NationsBanc Montgomery
Securities LLC and Petrie Parkman & Co., Inc., as the underwriters, the
Registrant will issue on or about November 25, 1998, $400,000,000 aggregate
principal amount of its 6.45% Senior Notes due 2001 (the "Senior Notes").
Item 7. Exhibits
Exhibit 1.1 Underwriting Agreement for the PEPS Units, dated November
19, 1998, among the Registrant and Morgan Stanley & Co.
Incorporated, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Goldman, Sachs & Co., Petrie Parkman & Co.,
Inc., Salomon Smith Barney Inc., Jefferies & Company, Inc.
and NationsBanc Montgomery Securities LLC, as
representatives of the several underwriters named therein.
Exhibit 1.2 Underwriting Agreement for the Senior Notes, dated November
19, 1998, among the Registrant and Morgan Stanley & Co.
Incorporated, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Goldman, Sachs & Co., Salomon Smith Barney
Inc., Jefferies & Company, Inc., NationsBanc Montgomery
Securities LLC and Petrie Parkman & Co., Inc., as the
underwriters.
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Exhibit 4.1 Form of 2001 Senior Note.
Exhibit 4.2 Form of PEPS Unit (Coupon Security).
Exhibit 4.3 Form of PEPS Unit (Zero-Coupon Security).
Exhibit 4.4 Purchase Contract Agreement dated as of November 25, 1998,
between the Registrant and U.S. Bank Trust National Association,
as Purchase Contract Agent.
Exhibit 4.5 Pledge Agreement dated as of November 25, 1998, among the
Registrant, the Purchase Contract Agent and The Chase Manhattan
Trust Company, National Association, as Collateral Agent.
Exhibit 8 Tax Opinion of Simpson Thacher & Bartlett.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
K N ENERGY, INC.
(Registrant)
By: /s/ Rose M. Robeson
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Name: Rose M. Robeson
Title: Vice President and Treasurer
Date: November 25, 1998
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Exhibit Index
Exhibits to Form 8-K
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Number in
Exhibit Table Exhibit
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1.1 Underwriting Agreement for the PEPS Units, dated November 19, 1998, among the Registrant and Morgan
Stanley & Co. Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co.,
Petrie Parkman & Co., Inc., Salomon Smith Barney Inc., Jefferies & Company, Inc. and NationsBanc
Montgomery Securities LLC, as representatives of the several underwriters named therein.
1.2 Underwriting Agreement for the Senior Notes, dated November 19, 1998, among the Registrant and
Morgan Stanley & Co. Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs &
Co., Salomon Smith Barney Inc., Jefferies & Company, Inc., NationsBanc Montgomery Securities LLC and
Petrie Parkman & Co., Inc., as the underwriters.
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Exhibit 4.1 Form of 2001 Senior Note.
Exhibit 4.2 Form of PEPS Unit (Coupon Security).
Exhibit 4.3 Form of PEPS Unit (Zero Coupon Security).
Exhibit 4.4 Purchase Contract Agreement dated as of November 25, 1998,
between the Registrant and U.S. Bank Trust National
Association, as Purchase Contract Agent.
Exhibit 4.5 Pledge Agreement dated as of November 25, 1998, among the
Registrant, the Purchase Contract Agent and The Chase
Manhattan Trust Company, National Association, as Collateral
Agent.
Exhibit 8 Tax Opinion of Simpson Thacher & Bartlett.
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Exhibit 1.1
CONFORMED COPY
K N ENERGY, INC.
9,310,000
8.25% PREMIUM EQUITY PARTICIPATING SECURITY UNITS - PEPS(SM) UNITS
UNDERWRITING AGREEMENT
November 19, 1998
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November 19, 1998
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Goldman, Sachs & Co.
Petrie Parkman & Co., Inc.
Salomon Smith Barney Inc.
Jefferies & Company, Inc.
NationsBanc Montgomery Securities LLC
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
K N Energy, Inc., a Kansas corporation (the "COMPANY"), proposes to
issue and sell to the several Underwriters listed in Schedule I hereto (the
"UNDERWRITERS"), for whom you are acting as representatives (the
"REPRESENTATIVES"), subject to the terms and conditions stated herein, an
aggregate of 9,310,000 8.25% Premium Equity Participating Security Units
- -PEPS(SM) Units (the "UNDERWRITTEN SECURITIES") of the Company. Each Security
(as defined below) will consist of (a) a stock purchase contract (a "PURCHASE
CONTRACT") under which (i) the holder of the Security will purchase from the
Company on November 30, 2001, for an amount in cash equal to the stated amount
per Security of $43 (the "STATED AMOUNT"), a number of shares of common stock,
par value $5.00 per share, of the Company (the "COMMON STOCK"), as set forth in
such Purchase Contract and (ii) the Company will pay contract fees as set forth
in such Purchase Contract (the "CONTRACT FEES") to the holder of the Security,
and (b) 5.875% United States Treasury Notes due November 30, 2001 that are held
through the Treasury/Reserve Automated Debt Entry System ("TREASURY NOTES")
having a principal amount equal to the Stated Amount, or security entitlements
in respect thereof. In connection therewith, the Underwriters will, subject to
the terms and conditions stated herein, purchase Treasury Notes (or security
entitlements in respect thereof) at the direction of the Company and for the
benefit of the holders of the Securities, which Treasury Notes (or security
entitlements in respect thereof) will be pledged by the holders of the
Securities to The Chase Manhattan Trust Company, National Association,
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as collateral agent for the Company (the "COLLATERAL AGENT"). Additionally, the
Company proposes to issue and sell to the several Underwriters, for the sole
purpose of covering over-allotments in connection with the sale of the
Underwritten Securities, at the option of the Underwriters, up to an additional
1,396,000 Securities (the "OPTION SECURITIES") and, in the event any such Option
Securities are purchased, the Underwriters propose to purchase and pledge to the
Collateral Agent the additional Treasury Notes (having an aggregate principal
amount equal to the aggregate Stated Amount times the number of Option
Securities to be purchased by the Underwriters upon the exercise of such
option), or security entitlements in respect thereof, constituting a part of
such Option Securities. The Underwritten Securities and any Option Securities
are herein referred to as the "SECURITIES". The Common Stock will have attached
thereto rights (the "RIGHTS") issued pursuant to a Rights Agreement (the "RIGHTS
AGREEMENT") dated as of August 21, 1995 between the Company and The Bank of New
York, as Rights Agent. The Company and U.S. Bank Trust National Association, as
Purchase Contract Agent (the "AGENT") propose to enter into a Purchase Contract
Agreement (the "PURCHASE CONTRACT AGREEMENT") to be dated as of the Closing Date
(as defined below). The Company and the Collateral Agent propose to enter into a
Pledge Agreement (the "PLEDGE AGREEMENT") to be dated as of the Closing Date.
The Purchase Contracts, the Purchase Contract Agreement and the Pledge Agreement
are herein collectively referred to as the "PEPS AGREEMENTS".
The Company has prepared and filed with the Securities and Exchange
Commission (the "COMMISSION"), in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "SECURITIES ACT"), a registration
statement on Form S-3 (registration no. 333-55921), including a related
prospectus, relating to the registration of certain securities of the Company
including the Securities (collectively, the "SHELF SECURITIES"), to be sold from
time to time by the Company. Such registration statement also constitutes
post-effective amendment number 1 to registration statement no. 333-44421 (the
"PRIOR REGISTRATION STATEMENT"). The registration statement as amended at the
date of this Agreement, including information, if any, deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A under
the Securities Act, together with the Prior Registration Statement, is
hereinafter referred to as the "REGISTRATION STATEMENT" and the prospectus
included therein relating to the Shelf Securities, in the form first used to
confirm sales of the Securities, is hereinafter referred to as the "BASIC
PROSPECTUS." The Basic Prospectus, as supplemented by the prospectus supplement
dated November 19, 1998 (the "PROSPECTUS SUPPLEMENT"), relating to the
Securities, in the form first used to confirm sales of the Securities is
hereinafter referred to as the "PROSPECTUS". If the Company has filed an
abbreviated registration statement
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pursuant to Rule 462(b) under the Securities Act (the "RULE 462 REGISTRATION
STATEMENT"), then any reference herein to the term "Registration Statement"
shall be deemed to include such Rule 462 Registration Statement. Any reference
to the term Registration Statement, any preliminary prospectus, the Basic
Prospectus or the Prospectus shall include the documents incorporated therein by
reference. The terms "SUPPLEMENT" and "AMENDMENT" or "AMEND" as used in this
Agreement shall include all documents subsequently filed by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), that are deemed to be incorporated by reference in the
Prospectus. Concurrently with the offering of Securities, the Company intends to
offer $400 million aggregate principal amount of senior unsecured notes (the
"DEBT OFFERING").
On January 30, 1998, the Company acquired from Occidental Petroleum
Corporation ("OCCIDENTAL") all of the capital stock of MidCon Corp. ("MIDCON")
and a short-term note in the aggregate principal amount of $1.39 billion for
$2.1 billion in cash and another short-term note in the aggregate principal
amount of $1.39 billion (the "ACQUISITION"). Upon the consummation of the
Acquisition, MidCon became a wholly owned subsidiary of the Company. MidCon,
MidCon Texas Pipeline Operator, Inc. and Natural Gas Pipeline Company of
America, K N Gas Gathering, Inc., K N Interstate Gas Transmission Co. and K N
Services, Inc. are referred to herein as "SIGNIFICANT SUBSIDIARIES".
1. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or
threatened by the Commission.
(b) (i) Each document, if any, filed or to be filed pursuant to
the Exchange Act and incorporated by reference in the Prospectus
complied or will comply when so filed in all material respects with
the Exchange Act and the applicable rules and regulations of the
Commission thereunder, (ii) on the original effective date of the
Registration Statement, and on the effective date of the most recent
post-effective amendment thereto, if any, the Registration Statement
did not contain and, as amended or supplemented, if applicable, will
not contain, any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading, (iii) the Registration
Statement and the Prospectus comply and, as amended or supplemented,
if applicable, will comply in all material respects with the
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Securities Act and the applicable rules and regulations of the
Commission thereunder and (iv) the Prospectus does not contain and,
as amended or supplemented, if applicable, 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, except
that the representations and warranties set forth in this paragraph
do not apply to statements or omissions in the Registration
Statement or the Prospectus based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter
or its counsel through you expressly for use therein.
(c) The Company has been duly incorporated, is validly existing as
a corporation in good standing under the laws of the state of
Kansas, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is
duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership
or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing
would not have a material adverse effect on the Company and its
consolidated subsidiaries, taken as a whole.
(d) Each Significant Subsidiary has been duly incorporated, is
validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as
described in the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a material
adverse effect on the Company and its consolidated subsidiaries,
taken as a whole; all of the issued shares of capital stock of each
such Significant Subsidiary have been duly and validly authorized
and issued, are fully paid and non-assessable and are owned directly
or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims.
(e) This Agreement has been duly authorized, executed and
delivered by the Company.
(f) The Securities and the PEPS Agreements have been duly
authorized and, at the Closing Date or, in the case of Purchase
Contracts constituting part of the Option Securities, the Option
Closing Date, will have been duly executed and delivered by the
Company, and, as of the Closing Date or the Option Closing Date, as
the case may be, assuming
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due authorization, execution and delivery by parties other than the
Company thereunder, the PEPS Agreements will be valid and legally
binding obligations of the Company, enforceable in accordance with
their respective terms, subject to applicable bankruptcy, insolvency
or similar laws relating to or affecting creditors' rights generally
and general principles of equity. The Securities and the PEPS
Agreements conform in all material respects to the descriptions
thereof contained in the Prospectus.
(g) The shares of Common Stock to be issued and sold by the
Company pursuant to the Purchase Contracts upon settlement thereof
have been duly and validly authorized and reserved for issuance.
Such Common Stock, when issued and delivered in accordance with the
provisions of the PEPS Agreements, will be duly authorized, validly
issued, fully paid and non-assessable, and the issuance of such
Common Stock will not be subject to any preemptive or similar
rights.
(h) The authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the
Prospectus.
(i) The shares of Common Stock outstanding prior to the issuance
of the Securities have been duly authorized and are validly issued,
fully paid and non-assessable.
(j) The Rights Agreement has been duly authorized, executed and
delivered by the Company; the Rights have been duly authorized by
the Company and, when issued upon issuance of the shares of Common
Stock upon settlement of the Purchase Contracts constituting a part
of the Securities, will be validly issued, and the shares of Class B
Junior Participating Series Preferred Stock issuable upon exercise
of the Rights have been duly authorized by the Company and validly
reserved for issuance, and when issued upon the exercise of the
Rights in accordance with the terms of the Rights Agreement, will be
validly issued, fully paid and non-assessable.
(k) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
and the PEPS Agreements and the consummation of the transactions
contemplated in this Agreement and the PEPS Agreements and
compliance by the Company with its obligations under this Agreement
and the PEPS Agreements will not contravene any provision of
applicable law or the articles of incorporation or by-laws of the
Company or any agreement or other instrument binding upon the
Company or any of its
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Significant Subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or any judgment, order or decree of
any governmental body, agency or court having jurisdiction over the
Company or any Significant Subsidiary, and no consent, approval,
authorization or order of, or qualification with, any governmental
body or agency is required for the performance by the Company of its
obligations under this Agreement, except the registration of the
Securities under the Securities Act and such as have been obtained
or as may be required by the securities or Blue Sky laws of the
various states in connection with the offer and sale of the
Securities.
(l) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole,
from that set forth in the Prospectus (exclusive of any amendments
or supplements thereto subsequent to the date of this Agreement).
(m) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a
party or to which any of the properties of the Company or any of its
subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or
any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or the documents incorporated therein by reference or to
be filed as an exhibit to the Registration Statement that are not
described or filed as required.
(n) Each preliminary prospectus relating to the Securities filed
as part of the Registration Statement as originally filed or as part
of any amendment thereto, or filed pursuant to Rule 424 under the
Securities Act, complied when so filed in all material respects with
the Securities Act and the applicable rules and regulations of the
Commission thereunder.
(o) The Company is not and, after giving effect to the offering
and sale of the Securities and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as such term is defined in the Investment Company Act of
1940, as amended.
(p) The Company and its subsidiaries (i) are in compliance with
any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes,
pollutants or contaminants
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("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws
to conduct their respective businesses and (iii) are in compliance
with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken
as a whole.
(q) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person
granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any
securities of the Company or to require the Company to include such
securities with the Securities registered pursuant to the
Registration Statement.
(r) To the knowledge of the Company, no person or corporation
which is a "holding company" or a "subsidiary of a holding company",
within the meaning of such terms as defined in the Public Utility
Holding Company Act of 1935, directly or indirectly owns, controls
or holds with power to vote 10% or more of the outstanding voting
securities of the Company; and the Company is not a "holding
company" or to its knowledge, a "subsidiary of a holding company" as
so defined.
(s) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state
or foreign regulatory authorities, including, without limitation,
the Federal Energy Regulatory Commission, necessary to conduct their
respective businesses as described in the Prospectus, except when
the failure to possess such certificates, authorizations or permits
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole, and neither the Company nor any such
subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material
adverse effect on the Company and its subsidiaries, taken as a
whole.
(t) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or
included or incorporated by reference in the Prospectus present
fairly in all material respects the financial position and results
of operations of the
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entities purported to be shown thereby, at the dates and for the
periods indicated, and have been prepared in conformity with
generally accepted accounting principles applied on a consistent
basis throughout the periods involved, except as otherwise stated
therein.
(u) The pro forma financial statements of the Company, and the
related notes thereto, included in the Prospectus present fairly in
all material respects the pro forma financial position of the
Company, as of the dates indicated and the results of their
operations for the periods specified; the pro forma combined
financial information, and the related notes thereto, included in
the Prospectus has been prepared in accordance with the applicable
requirements of the Exchange Act and is based upon good faith
estimates and assumptions believed by the Company to be reasonable.
(v) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) the
Company and its subsidiaries have not incurred any material
liability or obligation, direct or contingent, nor entered into any
material transaction not in the ordinary course of business; (ii)
the Company has not purchased any of its outstanding capital stock,
nor declared, paid or otherwise made any dividend or distribution of
any kind on its capital stock other than ordinary and customary
dividends; and (iii) there has not been any material change in the
capital stock, short-term debt or long-term debt of the Company and
its consolidated subsidiaries, except in each case as described in
the Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement).
2. Agreements to Sell and Purchase. The Company hereby agrees to sell
to the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the number of Underwritten Securities set forth in Schedule I hereto
opposite the name of such Underwriter. In connection therewith, the Underwriters
agree to purchase, at the direction of the Company and for the benefit of the
holders of the Securities, the Treasury Notes (or security entitlements in
respect thereof) constituting a part of the Underwritten Securities. The
Treasury Notes (or security entitlements in respect thereof) will be pledged to
the Collateral Agent to secure the holders' obligations to purchase Common Stock
under the Purchase Contracts. Such pledge shall be effected by the giving by the
Underwriters to the securities intermediary in respect of their security
entitlements with respect to the Treasury Notes to be pledged on the Closing
Date (as defined below) in accordance with the Pledge Agreement of entitlement
orders directing such
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securities intermediary to credit, or to instruct the securities intermediary
with whom the Collateral Agent maintains the applicable securities account to
credit, the securities account of the Collateral Agent with security
entitlements in respect of such Treasury Notes and the crediting by such
securities intermediary of such security entitlements to such securities
account.
The purchase price per Underwritten Security (the "PURCHASE PRICE") to
be paid by the Underwriters shall be $41.71, all of which shall be paid by the
Underwriters in the form of the purchase of the Treasury Notes (or security
entitlements in respect thereof) constituting a part of the Underwritten
Securities as provided above. The Company agrees to pay to the Underwriters an
amount per Underwritten Security (the "ADDITIONAL PURCHASE PRICE") representing
the difference between the purchase price (exclusive of any accrued interest) of
the Treasury Notes (or security entitlement in respect thereof) constituting a
part of the Underwritten Securities and the principal amount thereof.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Option Securities, and the Underwriters shall have a
one-time right to purchase, severally and not jointly, up to 1,396,000 Option
Securities. If you, on behalf of the Underwriters, elect to exercise such
option, you shall so notify the Company in writing not later than 30 days after
the date of this Agreement, which notice shall specify the number of Option
Securities to be purchased by the Underwriters and the date on which such shares
are to be purchased. Such date may be the same as the Closing Date (as defined
below) but not earlier than the Closing Date nor later than ten business days
after the date of such notice. Option Securities may be purchased as provided in
Section 4 hereof solely for the purpose of covering over-allotments made in
connection with the offering of the Underwritten Securities. If any Option
Securities are to be purchased, each Underwriter agrees, severally and not
jointly, to purchase the number of Option Securities (subject to such
adjustments to eliminate fractional units as you may determine) that bears the
same proportion to the total number of Option Securities to be purchased as the
number of Underwritten Securities set forth in Schedule I hereto opposite the
name of such Underwriter bears to the total number of Underwritten Securities.
In connection with the purchase of any Option Securities, the
Underwriters agree to purchase, at the direction of the Company and for the
benefit of the holders of the Securities, the Treasury Notes (or security
entitlements in respect thereof) constituting a part of such Option Securities.
The Treasury Notes (or security entitlements in respect thereof) will be pledged
to the Collateral Agent to secure the holders' obligations to purchase Common
Stock under the Purchase Contracts. Such pledge shall be effected by the giving
by the Underwriters to the
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securities intermediary in respect of their security entitlements with respect
to the Treasury Notes to be pledged on the Option Closing Date (as defined
below) in accordance with the Pledge Agreement of entitlement orders directing
such securities intermediary to credit, or to instruct the securities
intermediary with whom the Collateral Agent maintains the applicable securities
account to credit, the securities account of the Collateral Agent with security
entitlements in respect of such Treasury Notes and the crediting by such
securities intermediary of such security entitlements to such securities
account.
The purchase price per Option Security to be paid by the Underwriters
shall be the Purchase Price, all of which shall be paid by the Underwriters in
the form of the purchase of the Treasury Notes (or security entitlements in
respect thereof) constituting a part of the Option Securities purchased by the
Underwriters as provided above. The Company agrees to pay to the Underwriters an
amount per Option Security purchased by the Underwriters equal to the Additional
Purchase Price. Any difference between the purchase price paid by the
Underwriters for the Treasury Notes (or security entitlement with respect
thereof) constituting a part of the Option Securities purchased by the
Underwriters and the Underwritten Securities Treasury Note Purchase Price shall
be for the account of the Underwriters.
The Company hereby agrees that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the Underwriters, it will not,
during the period ending 90 days after the date of the final prospectus
supplement included in the Prospectus, (i) register, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any Securities,
Purchase Contracts or shares of Common Stock or any securities convertible into
or exercisable or exchangeable for Securities, Purchase Contracts or Common
Stock or (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Securities, Purchase Contracts or Common Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of
Securities, Purchase Contracts or Common Stock or such other securities, in cash
or otherwise. The foregoing sentence shall not apply to (A) the Securities to be
sold hereunder, (B) the issuance by the Company of shares of Common Stock
pursuant to, or the grant of options under the Company's existing stock option,
employee benefit or dividend reinvestment plans or in connection with the Thermo
acquisition (as described in the Prospectus), or (C) the issuance of shares of
Common Stock by the Company in connection with future acquisitions provided that
the recipients of such shares agree to be bound by the transfer restrictions set
forth herein.
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3. Terms of Public Offering. The Company is advised by you that the
Underwriters propose (i) to make a public offering of their respective portions
of the Securities as soon after the Registration Statement and this Agreement
have become effective as in your judgment is advisable and (ii) initially to
offer the Securities upon the terms set forth in the Prospectus.
In connection with the transactions contemplated by this Agreement,
the Company agrees to pay to the Underwriters an underwriting commission of
$1.29 per Security (the "UNDERWRITING COMMISSION") purchased by the
Underwriters.
4. Payment and Delivery. Delivery to you for the accounts of the
several Underwriters of the certificates for the Underwritten Securities, or
delivery to a securities intermediary designated by you of such certificates and
crediting to your securities account at such securities intermediary for the
account of the several Underwriters of security entitlements in respect of the
Underwritten Securities, against, in either case, crediting to the securities
account of the Collateral Agent of security entitlements in respect of the
Treasury Notes constituting a part of the Underwritten Securities as set forth
above, and payment to you of the Underwriting Commission with respect to the
Underwritten Securities by wire transfer in immediately available funds to an
account specified by you to the Company shall be made at 10:00 a.m., New York
City time, on the fourth business day after the date of this Agreement, or at
such other time on the same or such other date, not later than nine business
days after the date of this Agreement as shall be designated in writing by you.
The time and date of such payment are hereinafter referred to as the "CLOSING
DATE."
Delivery to the Representatives for the accounts of the several
Underwriters of the certificates for the Option Securities purchased by the
Underwriters, or delivery to a securities intermediary designated by the
Representatives of such certificates and crediting to your securities account at
such securities intermediary for the accounts of the several Underwriters of
security entitlements in respect of such Option Securities, against, in either
case, crediting to the securities account of the Collateral Agent of security
entitlements in respect of the Treasury Notes constituting a part of such Option
Securities as set forth above, and payment to the Representatives of the
Underwriting Commission with respect to such Option Securities in the manner set
forth above shall be made at 10:00 a.m., New York City time, on the date
specified in the notice described in Section 2 or at such other time on the same
or on such other date, in any event not later than 10 business days after the
expiration of the Underwriters' option to purchase Option Securities as shall be
designated in writing by you. The time and date of such payment are hereinafter
referred to as the "OPTION CLOSING DATE".
11
<PAGE> 13
The certificates, if any, for the Securities purchased by the
Underwriters shall be registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates,
if any, evidencing the Underwritten Securities or Option Securities shall be
delivered to you on the Closing Date or the Option Closing Date, as the case may
be, for the respective accounts of the several Underwriters, with any transfer
taxes payable in connection with the transfer of the Underwritten Securities or
Option Securities to the Underwriters duly paid, against payment of the Purchase
Price and the Additional Purchase Price therefor and the Underwriting Commission
with respect to such Securities.
5. Conditions to the Underwriters' Obligations. The obligations of
the Company to sell the Securities to the Underwriters and the several
obligations of the Underwriters to purchase and pay for the Securities on the
Closing Date are subject to the following further conditions:
(a) no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the Securities Act and no
proceedings for that purpose shall have been instituted or shall be
pending or, to your knowledge or the knowledge of the Company, shall
be contemplated by the Commission, and any request on the part of
the Commission for additional information shall have been complied
with to the reasonable satisfaction of counsel for the Underwriters.
(b) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor
shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that is with
negative implications, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule
436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations
of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus (exclusive of any amendments or
supplements thereto effected subsequent to the execution and
delivery of this Agreement) that, in your judgment, is material
and
12
<PAGE> 14
adverse and that makes it, in your judgment, impracticable to
market the Securities on the terms and in the manner
contemplated in the Prospectus.
(c) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date, and signed by each of the chief
executive officer and the chief financial officer of the Company, to
the effect set forth in Section 5(b)(i) above and to the effect that
the representations and warranties of the Company contained in this
Agreement are true and correct as of the Closing Date and that the
Company has complied with all of the agreements and satisfied all of
the conditions on its part to be performed or satisfied hereunder on
or before the Closing Date.
(d) The Underwriters shall have received on the Closing Date an
opinion or opinions of Simpson Thacher & Bartlett, outside counsel
for the Company, to the effect set forth in Exhibit A-1, an opinion
of Martha Wyrsch, Esq., Vice President, General Counsel and
Secretary of the Company, to the effect set forth in Exhibit A-2,
and an opinion of Polsinelli, White, Vardeman & Shalton, Kansas
counsel to the Company, to the effect set forth in Exhibit A-3, in
each case dated as of the Closing Date. Such opinions shall be
rendered to the Underwriters at the request of the Company and shall
so state therein.
(e) The Underwriters shall have received on the Closing Date an
opinion of Davis Polk & Wardwell, counsel for the Underwriters,
dated the Closing Date, in form and substance satisfactory to the
Underwriters.
(f) The Underwriters shall have received on each of the date
hereof and on the Closing Date letters, dated the date hereof or the
Closing Date, as the case may be, in form and substance satisfactory
to the Underwriters, from Arthur Andersen LLP, the Company's
independent public accountants, containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements
and certain financial information relating to each of the Company
and MidCon contained in or incorporated by reference in the
Registration Statement and the Prospectus; provided that such
letters delivered on the Closing Date shall use a "cut-off" date not
earlier than the date hereof.
(g) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and the executive officers and
directors of the Company relating to sales and certain other
dispositions of Common
13
<PAGE> 15
Stock or certain other securities, delivered to you on or before the
date hereof, shall be in full force and effect on the Closing Date.
(h) As of the Closing Date, the Securities and the shares of
Common Stock issuable upon settlement of the Purchase Contracts
constituting part of the Securities shall have been approved for
listing on the New York Stock Exchange, subject only to official
notice of issuance.
(i) The Company shall have obtained all consents, waivers and/or
amendments under the Bank Facility (as defined in the Prospectus)
necessary to consummate the Offering.
The several obligations of the Underwriters to purchase Option
Securities hereunder are subject to the delivery to you on the Option Closing
Date of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Option
Securities and other matters related to the issuance of the Option Securities.
6. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, seven signed copies of the
Registration Statement (including exhibits and documents
incorporated by reference thereto) and for delivery to each other
Underwriter a conformed copy of the Registration Statement (without
exhibits thereto) and to furnish to you in New York City, without
charge, prior to 10:00 a.m. New York City time on the business day
next succeeding the date of this Agreement and, during the period
mentioned in Section 6(d) below, as many copies of the Prospectus,
any documents incorporated by reference therein and any supplements
and amendments thereto or to the Registration Statement as you may
reasonably request.
(b) During the period in which the Prospectus is required by law
to be delivered in connection with sales of the Securities, before
amending or supplementing the Registration Statement or the
Prospectus, (including by filing any document that would as a result
thereof be incorporated by reference in the Prospectus) to furnish
to you a copy of each such proposed amendment, supplement or other
document and not to file any such proposed amendment, supplement or
other document to which you reasonably object, and to file with the
Commission within the applicable period specified in Rule 424(b)
under the Securities Act any prospectus required to be filed
pursuant to such Rule.
14
<PAGE> 16
(c) During the period when the Prospectus is required by law to be
delivered in connection with sales of the Securities, to file
promptly all documents required to be filed with the Commission
pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(d) If, during such period after the first date of the public
offering of the Securities as in the reasonable opinion of counsel
for the Underwriters or counsel for the Company the Prospectus is
required by law to be delivered in connection with sales by an
Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of
the circumstances existing when the Prospectus is delivered to a
purchaser, not misleading, or if in the reasonable opinion of
counsel for the Underwriters or counsel for the Company, it is
necessary to amend or supplement the Prospectus to comply with
applicable law, forthwith to prepare, file with the Commission and
furnish, at its own expense, to the Underwriters and to the dealers
(whose names and addresses you will furnish to the Company) to which
Securities may have been sold by you on behalf of the Underwriters
and to any other dealers upon request, either amendments or
supplements to the Prospectus, so that the statements in the
Prospectus as so amended or supplemented will not, in the light of
the circumstances when the Prospectus is delivered to a purchaser,
be misleading or so that the Prospectus, as so amended or
supplemented, will comply with law.
(e) To endeavor to qualify the Securities for offer and sale under
the securities or Blue Sky laws of such jurisdictions as you shall
reasonably request and to maintain such qualifications for as long
as the Underwriters shall reasonably request.
(f) To make generally available to the Company's security holders
and to you as soon as practicable an earning statement that
satisfies the provisions of Section 11(a) of the Securities Act and
the rules and regulations of the Commission thereunder.
(g) To use its best efforts to effect the listing of the
Securities and the shares of Common Stock issuable upon settlement
of the Purchase Contracts constituting a part of the Securities on
The New York Stock Exchange.
(h) For a period of five years after the Closing Date, to furnish
to you and, upon request, to each Underwriter, copies of all annual
reports,
15
<PAGE> 17
quarterly reports and current reports filed with the Commission on
Forms 10-K, 10-Q and 8-K, or such other similar forms as may be
designated by the Commission, and such other documents, reports and
information as shall be furnished by the Company to its stockholders
generally.
7. Expenses. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company agrees to
pay or cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company's counsel and the Company's accountants in connection
with the registration and delivery of the Securities under the Securities Act
and all other fees or expenses in connection with the preparation and filing of
the Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing costs
associated therewith, and the mailing and delivering of copies thereof to the
Underwriters and dealers, in the quantities hereinabove specified, (ii) all
costs and expenses related to the transfer and delivery of the Securities to the
Underwriters, including any transfer or other taxes payable thereon, (iii) the
cost of printing or producing any Blue Sky memorandum in connection with the
offer and sale of the Securities under state securities laws and all expenses in
connection with the qualification of the Securities for offer and sale under
state securities law as provided in Section 6(c) hereof, including filing fees
and the reasonable fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky
memorandum, (iv) all filing fees and the reasonable fees and disbursements of
counsel to the Underwriters, if any, incurred in connection with the review and
qualification of the offering of the Securities by the National Association of
Securities Dealers, Inc., (v) any fees charged by rating agencies for the rating
of the Securities, (vi) all costs and expenses incident to listing the
Securities and the shares of Common Stock issuable upon settlement of the
Purchase Contracts constituting part of the Securities on any national
securities exchanges, (vii) the cost of printing certificates representing the
Securities, (viii) the costs and charges of any transfer agent, registrar or
depositary for the Securities, (ix) the costs and expenses of the Company
relating to investor presentations on any "road show" undertaken in connection
with the marketing of the offering of the Securities, including, without
limitation, expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged in connection with the
road show presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company and any such
consultants, and the cost of any aircraft chartered in connection with the road
show, and (x) all other costs and expenses incident to the performance of the
obligations of the Company hereunder for which provision is not otherwise made
in this Section. It is understood, however, that except as provided in this
Section,
16
<PAGE> 18
Section 8 entitled "Indemnity and Contribution", and the last paragraph of
Section 10 below, the Underwriters will pay all of their costs and expenses,
including fees and disbursements of their counsel, stock transfer taxes payable
on resale of any of the Securities by them and any advertising expenses
connected with any offers they may make.
8. Indemnity and Contribution. (a) The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you or through
your counsel expressly for use therein; provided, however, that the foregoing
indemnity agreement with respect to any preliminary prospectus shall not inure
to the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased Securities, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Securities to such person, and if the Prospectus
(as so amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities, unless such failure is the result of
noncompliance by the Company with Section 6(a) hereof.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, the directors of the Company, the officers of the
Company who signed the Registration Statement and each person, if any, who
controls the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to such Underwriters, but only with reference to
information relating to such Underwriter furnished to the Company in writing by
such Underwriter through you or through your counsel expressly for use in the
17
<PAGE> 19
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 8(a) or 8(b), such person (the
"INDEMNIFIED PARTY") shall promptly notify the person against whom such
indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Morgan Stanley & Co. Incorporated in the case of
parties indemnified pursuant to Section 8(a), and by the Company, in the case of
parties indemnified pursuant to Section 8(b). The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, 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 as contemplated by the third
sentence of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
18
<PAGE> 20
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) To the extent the indemnification provided for in Section 8(a)
or 8(b) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Securities or (ii) if the allocation
provided by clause 8(d)(i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause 8(d)(i) above but also the relative fault of the Company on the one
hand and of the Underwriters on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other hand
in connection with the offering of the Securities shall be deemed to be in the
same respective proportions as the total price to public less underwriting
discounts and commissions, and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover of the Prospectus, bear to the total price to public of the Securities.
The relative fault of the Company on the one hand and the Underwriters 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
(including information relating to MidCon) or by the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Underwriters' respective
obligations to contribute pursuant to this Section 8 are several in proportion
to the respective number of Securities they have purchased hereunder, and not
joint.
(e) The Company and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 8(d). The amount paid or payable
by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such
19
<PAGE> 21
action or claim. Notwithstanding the provisions of this Section 8, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages that such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The remedies provided
for in this Section 8 are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any indemnified party at law or in
equity.
(f) The indemnity and contribution provisions contained in this
Section 8 and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter or by or on behalf of the Company, its officers or directors or
any person controlling the Company and (iii) acceptance of and payment for any
of the Securities.
9. Termination. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, the New York
Stock Exchange or the National Association of Securities Dealers, Inc., (ii)
trading of any securities of the Company shall have been suspended on any
exchange or in any over-the-counter market, (iii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or New York State authorities or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or any
calamity or crisis that, in your judgment, is material and adverse and (b) in
the case of any of the events specified in clauses 9(a)(i) through 9(a)(iv),
such event, singly or together with any other such event, makes it, in your
judgment, impracticable to market the Securities on the terms and in the manner
contemplated in the Prospectus.
10. Effectiveness; Defaulting Underwriters. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase
Securities that it has or they have agreed to purchase hereunder on such date,
and the aggregate number of Securities which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth
of the aggregate
20
<PAGE> 22
number of the Securities to be purchased on such date, the other Underwriters
shall be obligated severally in the proportions that the number of Underwritten
Securities set forth opposite their respective names in Schedule I bears to the
aggregate number of Underwritten Securities set forth opposite the names of all
such non-defaulting Underwriters, or in such other proportions as you may
specify, to purchase the Securities which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Securities that any Underwriter has agreed
to purchase pursuant to this Agreement be increased pursuant to this Section 10
by an amount in excess of one-ninth of such number of Securities without the
written consent of such Underwriter. If, on the Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Underwritten Securities and the
aggregate number of Underwritten Securities with respect to which such default
occurs is more than one-tenth of the aggregate number of Underwritten Securities
to be purchased, and arrangements satisfactory to you and the Company for the
purchase of such Underwritten Securities are not made within 36 hours after such
default, this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter or the Company. In any such case you shall have the
right to postpone the Closing Date, but in no event for longer than seven days,
in order that the required changes, if any, in the Registration Statement and in
the Prospectus or in any other documents or arrangements may be effected. If, on
the Option Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Option Securities and the aggregate number of Option Securities with
respect to which such default occurs is more than one-tenth of the aggregate
number of Option Securities to be purchased, the non-defaulting Underwriters
shall have the option to (i) terminate their obligation hereunder to purchase
Option Securities or (ii) purchase not less than the number of Option Securities
that such non-defaulting Underwriters would have been obligated to purchase in
the absence of such default. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the reasonable fees and disbursements of their
counsel) reasonably incurred by such Underwriters in connection with this
Agreement or the offering contemplated hereunder.
21
<PAGE> 23
11. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
12. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
13. Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
22
<PAGE> 24
Very truly yours,
K N ENERGY, INC.
By: s:\\ Rose M. Robeson
--------------------
Name: Rose M. Robeson
Title: Vice President and Treasurer
Accepted as of the date hereof
MORGAN STANLEY & CO.
INCORPORATED
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
GOLDMAN, SACHS & CO.
SALOMON SMITH BARNEY INC.
JEFFERIES & COMPANY, INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
PETRIE PARKMAN & CO., INC.
Acting severally on behalf of themselves and the
several Underwriters named in Schedule I
hereto.
By: Morgan Stanley & Co. Incorporated
By: s:\\ Bryan Andrzejewski
----------------------
Bryan Andrzejewski
Vice President
23
<PAGE> 25
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER-OF
UNDERWRITTEN SECURITIES
UBDERWRITTERS TO BE PURCHASED
- ------------------------------------------------------------------------------
<S> <C>
Morgan Stanley & Co. Incorporated.................... 1,855,100
Merrill Lynch, Pierce, Fenner & Smith 1,855,100
Incorporated................................
Goldman, Sachs & Co.................................. 1,406,980
Petrie Parkman & Co., Inc............................ 1,406,980
Salomon Smith Barney Inc............................. 1,406,980
Jefferies & Company, Inc............................. 464,430
NationsBanc Montgomery Securities LLC................ 464,430
Edward D. Jones & Co., L.P........................... 150,000
A.G. Edwards & Sons, Inc............................. 150,000
Dain Rauscher Incorporated........................... 150,000
---------
Total:...................................... 9,310,000
=========
</TABLE>
<PAGE> 26
EXHIBIT A
LOCK-UP LETTER
_______________ __, 1998
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Goldman Sachs & Co.
Salomon Smith Barney Inc.
Jefferies & Company, Inc.
NationsBanc Montgomery Securities LLC
Petrie Parkman & Co., Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Dear Sirs and Mesdames:
The undersigned understands that Morgan Stanley & Co. Incorporated
("MORGAN STANLEY") proposes to enter into an Underwriting Agreement (the
"UNDERWRITING AGREEMENT") with K N Energy, Inc., a Kansas corporation (the
"COMPANY"), providing for the public offering (the "PUBLIC OFFERING") by the
several Underwriters, including Morgan Stanley (the "UNDERWRITERS"), of an
aggregate of 8,000,000 ___% Premium Equity Participating Security Units
- -PEPS(SM) Units (each a, "SECURITY") which require any holder of a Security to,
among other things, purchase from the Company, on a future date, shares of the
Company's common stock (par value $5.00 per share) (the "COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of Morgan
Stanley on behalf of the Underwriters, the undersigned will not, during the
period commencing on the date of the Underwriting Agreement and ending 90 days
after the date of the final prospectus supplement relating to the Public
Offering (except that none of the following shall limit the undersigned's rights
under any existing stock option or employee benefit plans (as such plans are in
effect on the date hereof)), it being understood that any shares of Common Stock
acquired pursuant to such plans shall otherwise be subject to the terms of this
lock-up letter), (1) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option
<PAGE> 27
or contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of, directly or indirectly, any Securities or shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for any Securities or shares of Common Stock or (2) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Securities or shares of Common Stock, whether
any such transaction described in clause (1) or (2) above is to be settled by
delivery of Securities, Common Stock or such other securities, in cash or
otherwise.
The undersigned hereby acknowledges that, notwithstanding the
foregoing, if the undersigned is an individual, he or she may transfer any or
all of his or her shares of Common Stock either during his or her lifetime or on
death by gift, will or intestacy (i) to his or her immediate family, (ii) to a
trust, partnership or other entity, the beneficiaries, partners or equity
holders of which are exclusively the undersigned and/or a member or members of
his or her immediate family or (iii) to his or her alma mater; provided,
however, that in any such case, it shall be a condition to the transfer that the
transferee execute an agreement stating that the transferee is receiving and
holding the shares of Common Stock subject to the provisions of this lock-up
letter, and there shall be no further transfer of such shares of Common Stock
except in accordance with this lock-up letter. For purposes of this paragraph,
"immediate family" shall mean a lineal descendant, spouse, adopted child,
father, mother, brother or sister of the transferor and the spouses, adopted
children and lineal descendants of any of the foregoing.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
----------------------------------
(Name)
----------------------------------
(Address)
2
<PAGE> 28
EXHIBIT A-1
OPINION OF OUTSIDE COUNSEL FOR
THE COMPANY
The opinion of Simpson Thacher & Bartlett, outside counsel for the
Company to be delivered pursuant to Section 5(d) of the Underwriting Agreement,
shall be to the effect that:
(i) The Registration Statement has become effective under the Act and,
to such counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued or proceeding for that purpose has been
instituted or threatened by the Commission;
(ii) The issue and sale of the Securities by the Company and the
compliance by the Company with all of the provisions of the Underwriting
Agreement, the PEPS Agreements and the Securities will not violate any federal
or New York statute or any rule or regulation that has been issued pursuant to
any federal or New York statute or any order known to such counsel issued
pursuant to any federal or New York statute by any court or governmental agency
or body having jurisdiction over the Company or any of its subsidiaries or
properties, and no consent, approval, authorization, order, registration, or
qualification of or with, any federal or New York governmental body or agency
or, to our knowledge, any federal or New York court is required for the issue
and sale of the Securities by the Company and the compliance by the Company with
all of the provisions of this Agreement, the PEPS Agreements and the Securities
except for registration under the Act of the Securities and such as may be
required by the securities or Blue Sky laws of the various states in connection
with the purchase and distribution of the Securities by the Underwriters;
(iii) Assuming that the Purchase Contract Agreement, the Pledge
Agreement and the Purchase Contracts constituting a part of the Securities being
delivered at the Closing Date or Option Closing Date, as the case may be, and
the Securities have been duly authorized, executed and delivered by the Company,
each is a valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and general
principals of equity; provided, however, that the rights and remedies of the
Agent and the Collateral Agent provided in Sections 4.02 and 5.08 of the
Purchase Contract Agreement and Section 5(a) of the Pledge Agreement upon the
occurrence of a Termination Event will not be limited under the Bankruptcy Code
(11 U.S.C. 101 et seq.); provided, however, that procedural restrictions
respecting
A-1-1
<PAGE> 29
relief from the automatic stay under Section 362 of the Bankruptcy Code may
affect the timing of the exercise of such rights and remedies;
(iv) Assuming that (1) the Pledge Agreement has been duly authorized,
executed and delivered by the Agent on behalf of each of the holders of the
Securities (the "HOLDERS"), (2) the Agent is duly incorporated and validly
existing under the laws of the jurisdiction of its incorporation, (3) the Agent
and each of the Holders has full power, authority and legal right (including,
without limitation, any legal right dependent upon there being no necessary
governmental approvals or filings and no conflict with laws, governing documents
or contracts) to make and perform its obligations under the Pledge Agreement,
(4) the Pledge Agreement is the legal, valid, binding and enforceable obligation
of the Agent on behalf of each of the Holders, and (5) the Agent and each Holder
have sufficient rights in the Treasury Notes (or security entitlements in
respect thereof) for the security interest of the Collateral Agent for the
benefit of the Company to attach, then (a) the Pledge Agreement creates a valid
security interest in such Treasury Notes (or security entitlements in respect
thereof) and, subject to Section 9-306 of the Uniform Commercial Code as in
effect in the State of New York on the date hereof (the "UCC"), the proceeds
thereof, to secure the obligations of the Holders under the Purchase Contracts
and (b) assuming that (i) the securities intermediary with whom the Collateral
Agent maintains the securities account to which such security entitlements have
been credited (x) has not and will not agree to comply with entitlement orders
originated by any person other than the Collateral Agent in respect of such
security entitlements and (y) has waived any security interest or lien on such
security entitlements in its favor (other than any such security interest or
lien arising under the Pledge Agreement) and (ii) none of the Collateral Agent,
the Agent or any Holder has any notice of any adverse claim thereto, upon the
crediting by such securities intermediary of security entitlements in respect of
such Treasury Notes to a securities account of the Collateral Agent on the books
of such securities intermediary, such security interest shall be a perfected
security interest (as to which the Collateral Agent shall have control), subject
to no prior security interest arising under the UCC or 31 C.F.R. Section 357,
subject to customary qualifications reasonably acceptable to the
Representatives;
(v) The statements in the Prospectus under the captions, "Description
of Stock Purchase Contracts and Stock Purchase Units", "Description of the PEPS
Units," "Description of the Purchase Contracts," and "Certain Provisions of the
Purchase Contract Agreement and the Pledge Agreement", insofar as they purport
to constitute summaries of the terms of the Securities or the PEPS Agreements,
constitute accurate summaries of the terms of the Securities or the PEPS
Agreements, as the case may be, in all material respects;
A-1-2
<PAGE> 30
(vi) The statements made in the Prospectus under the caption "United
States Federal Income Tax Consequences," insofar as they purport to constitute
summaries of matters of United States federal tax law and regulations or legal
conclusions with respect thereto, constitute accurate summaries of the matters
described therein in all material respects;
(vii) The Company is not an "investment company" within the meaning of,
or subject to regulation under, the Investment Company Act of 1940, as amended;
and
(viii) Such counsel (A) is of the opinion that the Registration
Statement, as of its effective date, and Prospectus, as of the date of the
Underwriting Agreement, (except for financial statements and schedules and other
financial or statistical data included therein as to which such counsel need not
express any opinion) comply as to form in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder, (B) has no reason to believe that (except for financial statements
and schedules and other financial or statistical data as to which such counsel
need not express any belief) the Registration Statement at the time the
Registration Statement became effective or on the effective date of the most
recent post-effective amendment thereto, if any, contained any untrue statements
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading and (C) has
no reason to believe that (except for financial statements and schedules and
other financial or statistical data as to which such counsel need not express
any belief) the Prospectus at the time the Prospectus Supplement was issued or
at the Closing Date contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
A-1-3
<PAGE> 31
EXHIBIT A-2
OPINION OF GENERAL COUNSEL OF THE COMPANY
The opinion of Martha B. Wyrsch, Esq., Vice President, General Counsel
and Secretary of the Company, to be delivered pursuant to Section 5(d) of the
Underwriting Agreement, shall be to the effect that:
(i) Each of the Company and the Significant Subsidiaries (i) is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each jurisdiction which requires such qualification wherein it owns
or leases material properties or conducts material business, except where the
failure to be so qualified or in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole, and (ii) holds all
material approvals, authorizations, orders, licenses, certificates and permits
from governmental authorities necessary for the conduct of its business as
described in the Prospectus, except where the failure to hold such approvals,
authorizations, orders, licenses, certificates and/or permits would not,
singularly or in the aggregate, have a material adverse effect on the Company
and its subsidiaries, taken as a whole;
(ii) Each of the Significant Subsidiaries has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
jurisdiction in which it is incorporated, with full corporate power and
authority to own its properties and conduct its business as described in the
Prospectus except to the extent that the failure to be in good standing would
not have a material adverse effect on the Company and its subsidiaries, taken as
a whole;
(iii) All the outstanding shares of capital stock of each Significant
Subsidiary have been duly and validly authorized and issued and are fully paid
and nonassessable, and, except as otherwise set forth in the Prospectus, all of
such shares are owned by the Company either directly or through one or more
subsidiaries free and clear of any pledge, security interest, claims, lien or
other encumbrance;
(iv) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus;
(v) The shares of Common Stock outstanding prior to the issuance of the
Securities, have been duly authorized and validly issued and are fully paid and
non-assessable and none of such shares of Common Stock was issued in violation
of the preemptive or other similar rights known to such counsel of any
securityholder of the Company;
A-2-1
<PAGE> 32
(vi) The shares of Common Stock issuable upon settlement of the
Purchase Contracts constituting a part of the Securities have been duly
authorized and reserved for issuance and such Common Stock, when issued and
delivered by the Company against payment therefor in accordance with the
provisions of the Purchase Contracts, will be validly issued, fully paid and
nonassessable and the issuance of such Common Stock is not subject to any
preemptive or other similar rights arising by law;
(vii) Each of the Securities, the Underwriting Agreement, the PEPS
Agreements and the Rights Agreement has been duly executed and delivered by the
Company;
(viii) Such counsel does not know of any statutes or regulations, or
any pending or threatened legal or governmental proceedings, required to be
described in the Prospectus that are not described as required, nor of any
contracts or documents of a character required to be described or referred to in
the Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described, referred to or filed as required;
(ix) The descriptions included in or incorporated by reference in the
Prospectus of the statutes, regulations, legal or governmental proceedings,
contracts and other documents therein described are accurate and fairly
summarize the matters referred to therein;
(x) No consent, approval, authorization or order of any court or
governmental agency or body is required to be obtained by the Company or any
subsidiary for the consummation of the transactions contemplated herein in
connection with the purchase and sale of the Securities by the Underwriters,
except such approvals (specified in such opinion) as have been obtained;
(xi) The execution and delivery by the Company of the Underwriting
Agreement, the PEPS Agreements, the consummation by the Company of the
transactions contemplated therein and in the Registration Statement (including
the issuance and delivery of the Securities, and the use of the proceeds from
the sale of the Securities as described in the Prospectus under the caption "Use
of Proceeds") and compliance by the Company with the terms of the Underwriting
Agreement do not and will not result in any violation of the charter or by-laws
of the Company or any Significant Subsidiary, and do not and will not conflict
with, or result in a breach of any of the terms or provisions of, or constitute
a default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or asset of the Company or any Significant
Subsidiary under (A) any indenture, mortgage or loan agreement, or any other
agreement or
A-2-2
<PAGE> 33
instrument known to such counsel, to which the Company or any Significant
Subsidiary is a party or by which it may be bound or to which any of its
properties may be subject, (B) any existing applicable law, rule or regulation
(other than the securities or blue sky laws of the various states, as to which
such counsel need express no opinion), or (C) any judgment, order or decree of
any government, governmental instrumentality or court, domestic or foreign,
known to such counsel having jurisdiction over the Company or any Significant
Subsidiary or any of its properties (except, in the case of subclauses (A) and
(B) hereof, for such conflicts, breaches or defaults, liens, charges or
encumbrances that would not have a material adverse effect on the condition
(financial or otherwise), earnings, business affairs or business prospects of
the Company and its subsidiaries, considered as one enterprise or the
transactions contemplated by the Underwriting Agreement);
(xii) The Company and the Significant Subsidiaries hold all requisite
Certificates of Public Convenience and Necessity from the Federal Energy
Regulatory Commission to enable them to carry on the respective businesses in
which they are engaged;
(xiii) To the knowledge of such counsel (after due inquiry), none of
the Company or any Significant Subsidiary is in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, loan agreement, note, lease or other
agreement or instrument that is described or referred to in the Registration
Statement or Prospectus or filed as an exhibit to the Registration Statement;
(xiv) To the knowledge of such counsel, after due inquiry, no person or
corporation which is a "holding company" or a "subsidiary of a holding company,"
within the meaning of such terms as defined in the Public Utility Holding
Company Act of 1935, directly or indirectly owns, controls or holds with power
to vote 10% or more of the outstanding voting securities of the Company; and the
Company is not a "holding company" or to the knowledge of such counsel, after
due inquiry, a "subsidiary of a holding company" as so defined; and
(xv) The documents incorporated by reference in the Prospectus (except
for the consolidated financial statements and other financial or statistical
data included therein or omitted therefrom, as to which such counsel need
express no opinion), as of the dates they were filed with the Commission or to
the extent such documents were subsequently amended prior to the date hereof, at
the time so amended, complied as to form in all material respects with the
requirements of the Exchange Act and the regulations thereunder.
A-2-3
<PAGE> 34
In addition, such counsel shall state that such counsel has
participated in the preparation of the Registration Statement and the Prospectus
(including the documents incorporated by reference therein) and participated in
conferences with representatives of your legal counsel and representatives of
the Underwriters at which the contents of the Registration Statement and the
Prospectus and related matters were discussed. Such counsel shall also state
that although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus except as stated
above, such counsel advises you that, on the basis of the foregoing, no facts
have come to such counsel's attention which lead such counsel to believe that
(A) the Registration Statement or any amendments thereto (other than the
financial statements, the Statements of Eligibility and Qualification of the
Trustee on Form T-1s and other financial or statistical information included or
incorporated by reference therein as to which such counsel need not comment), at
the time the Registration Statement initially became effective or on the
effective date of the most recent post-effective amendment thereto, if any,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or (B) the Prospectus or any amendment or supplement thereto
(other than the financial statements and other financial or statistical
information included or incorporated by reference therein as to which such
counsel need not comment), at the time the Prospectus Supplement was issued or
at the Closing Date contained or contains an untrue statement of a material fact
or omitted or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
In rendering such opinions, such counsel may (A) state that her opinion
is limited to the laws of the State of Colorado, the General Corporation Law of
the State of Delaware and the federal laws of the United States and (B) rely as
to matters involving the application of laws of any jurisdiction other than the
State of Colorado or the United States, to the extent deemed proper and
specified in such opinion, upon the opinions of Polsinelli, White, Vardeman &
Shalton and other local counsel of good standing believed to be reliable and who
are satisfactory to counsel for the Underwriters and as to matters of fact, to
the extent deemed proper, on certificates of responsible officers of the Company
and public officials.
A-2-4
<PAGE> 35
EXHIBIT A-3
OPINION OF KANSAS COUNSEL OF THE COMPANY
The opinion of Polsinelli, White, Vardeman & Shalton, Kansas counsel to
the Company, to be delivered pursuant to Section 5(d) of the Underwriting
Agreement, shall be to the effect that:
(i) The Company is duly incorporated, validly existing and in good
standing under the laws of the State of Kansas, with corporate power and
authority under such laws to own, lease, and operate its properties and conduct
its business as described in the Prospectus;
(ii) The execution and delivery of each of the Securities, the PEPS
Agreements and the Underwriting Agreement has been duly authorized by the
Company;
(iii) The Rights Agreement has been duly authorized by the Company; the
Rights have been duly authorized by the Company and, when issued upon issuance
of the shares of Common Stock issuable upon settlement of the Purchase Contracts
constituting a part of the Securities, will be validly issued, and the shares of
Class B Junior Participating Series Preferred Stock issuable upon exercise of
the Rights have been duly authorized by the Company and, when issued upon such
exercise in accordance with the terms of the Rights Agreement, will be validly
issued, fully paid and non-assessable; and
(iv) No approval, authorization, consent or other action (other than
under the securities or blue sky laws of the State of Kansas) is required by any
regulatory authority or governmental body of the State of Kansas for the valid
issuance, sale, and delivery by the Company of the Securities pursuant to the
Underwriting Agreement and to the best of our knowledge, do not result in any
breach or violation of any judgment, order or decree of any governmental body,
agency or court located in Kansas having jurisdiction over the Company.
A-3-1
<PAGE> 1
EXHIBIT 1.2
UNDERWRITING AGREEMENT
November 19, 1998
K N Energy, Inc.
370 Van Gordon Street
Lakewood, CO 80228-8304
Dear Sirs and Mesdames:
We are acting on behalf of the underwriters (including ourselves) named
below (such underwriters being herein called the "UNDERWRITERS"), and we
understand that K N Energy, Inc., a Kansas corporation (the "COMPANY"), proposes
to issue and sell $400 million aggregate principal amount of its 6.45% senior
notes due 2001 (the "SENIOR NOTES"). (The Senior Notes are also referred to
herein as the "OFFERED SECURITIES"). The Senior Notes will be issued pursuant to
the provisions of an Indenture dated as of November 20, 1993 (the "INDENTURE")
between the Company and U.S. Bank Trust National Association, as successor
trustee (the "TRUSTEE"), as supplemented.
Subject to the terms and conditions set forth or incorporated by
reference herein, the Company hereby agrees to sell to the several Underwriters,
and each Underwriter agrees, severally and not jointly, to purchase from the
Company the respective principal amounts of Senior Notes set forth below
opposite their names at a purchase price of 99.578% of the principal amount of
Senior Notes:
<PAGE> 2
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
NAME SENIOR NOTES
- ---------------------------------------------------- -------------------
<S> <C>
Morgan Stanley & Co. Incorporated $160,000,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated $100,000,000
Goldman, Sachs & Co. $40,000,000
Salomon Smith Barney Inc. $40,000,000
Jefferies & Company, Inc. $20,000,000
NationsBanc Montgomery Securities LLC $20,000,000
Petrie Parkman & Co., Inc. $20,000,000
-----------------
Total...................................... $400,000,000
</TABLE>
The Underwriters will pay for the Offered Securities upon delivery
thereof at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New York,
NY 10017 at 10:00 a.m. (New York City time) on November 25, 1998, or at such
other time, not later than 5:00 p.m. (New York City time) on December 3, 1998,
as shall be designated by the Underwriters. The time and date of such payment
and delivery are hereinafter referred to as the "CLOSING DATE".
Terms of Senior Notes
The Offered Securities shall have the terms set forth in the Prospectus
dated October 19, 1998, and the Prospectus Supplement dated November 19, 1998,
including the following:
Maturity Date: November 30, 2001
Interest Rate: 6.45%
Redemption Provisions: None
Interest Payment Dates: May 31 and November 30
commencing May 31, 1999
Form and Denomination: Book entry, $1,000 minimum
denomination and integral
multiples thereof
All provisions contained in the document entitled K N Energy, Inc. Underwriting
Agreement Standard Provisions (Senior Debt Securities) dated November 19,
2
<PAGE> 3
1998, a copy of which is attached hereto, are herein incorporated by reference
in their entirety and shall be deemed to be a part of this Agreement to the same
extent as if such provisions had been set forth in full herein, except that (i)
if any term defined in such document is otherwise defined herein, the definition
set forth herein shall control, and (ii) all references in the Standard
Provisions to the "MANAGER" shall be deemed to be to the "UNDERWRITERS", as
defined herein.
3
<PAGE> 4
Please confirm your agreement by having an authorized officer sign a copy
of this Agreement in the space set forth below.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
GOLDMAN, SACHS & CO.
SALOMON SMITH BARNEY INC.
JEFFERIES & COMPANY, INC.
NATIONSBANC MONTGOMERY
SECURITIES LLC
PETRIE PARKMAN & CO., INC.
By: MORGAN STANLEY & CO.
INCORPORATED
Acting severally on behalf of themselves and the
several Underwriters named herein
By: s:\\ Harold J. Hendershot II
------------------------------
Name: Harold J. Hendershot III
Title: Vice President
Accepted:
K N ENERGY, INC.
By: s:\\ Rose M. Robeson
------------------------------------
Name: Rose M. Robeson
Title: Vice President and Treasury
<PAGE> 5
K N ENERGY, INC.
UNDERWRITING AGREEMENT
STANDARD PROVISIONS
(SENIOR DEBT SECURITIES)
November 19, 1998
From time to time, K N ENERGY, INC., a Kansas corporation (the
"COMPANY"), may enter into one or more underwriting agreements that provide for
the sale of designated securities to the several underwriters named therein. The
standard provisions set forth herein may be incorporated by reference in any
such underwriting agreement (an "UNDERWRITING AGREEMENT"). The Underwriting
Agreement, including the provisions incorporated therein by reference, is herein
sometimes referred to as this "Agreement". Terms defined in the Underwriting
Agreement are used herein as therein defined.
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement on Form S-3 (registration no. 333-
55921), including a prospectus, relating to certain Senior Debt Securities
(hereinafter, the "OFFERED SECURITIES") and other securities issuable by the
Company and has filed with, or transmitted for filing to, or shall promptly
hereafter file with or transmit for filing to, the Commission a prospectus
supplement (the "PROSPECTUS SUPPLEMENT") specifically relating to the Offered
Securities pursuant to Rule 424 under the Securities Act of 1933, as amended
(the "SECURITIES ACT"). Such registration statement also constitutes
post-effective amendment number 1 to registration statement no. 333-44421 (the
"PRIOR REGISTRATION STATEMENT"). The registration statement as amended at the
date of this Agreement, including information, if any, deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A under
the Securities Act, together with the Prior Registration Statement, is
hereinafter referred to as the "REGISTRATION STATEMENT". The term "BASIC
PROSPECTUS" means the prospectus relating to the Offered Securities included in
the Registration Statement. The term "PROSPECTUS" means the Basic Prospectus
together with the Prospectus Supplement. The term "PRELIMINARY PROSPECTUS" means
a preliminary prospectus supplement specifically relating to the Offered
Securities, together with the Basic Prospectus. As used herein, the terms
"Registration Statement", "Basic Prospectus", "Prospectus" and "preliminary
prospectus" shall include in each case the documents, if any, incorporated by
reference therein. The terms "SUPPLEMENT", "AMENDMENT" and "AMEND" as used
herein shall include all
1
<PAGE> 6
documents deemed to be incorporated by reference in the Prospectus that are
filed subsequent to the date of the Basic Prospectus by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"). If the Company has filed an abbreviated registration statement
to register additional Debt Securities pursuant to Rule 462(b) under the
Securities Act (the "RULE 462 REGISTRATION STATEMENT"), then any reference
herein to the term "REGISTRATION STATEMENT" shall be deemed to include such Rule
462 Registration Statement. Concurrently with the offering of the Offered
Securities, the Company intends to offer 8,000,000 Premium Equity Participating
Security Units -- PEPS(sm) Units (the "PEPS UNITS OFFERINg").
On January 30, 1998, the Company acquired from Occidental Petroleum
Corporation all of the capital stock of MidCon Corp. ("MIDCON") and a short term
note in the aggregate principal amount of $1.39 billion for $2.1 billion in cash
and another short-term note in the aggregate principal amount of $1.39 billion
(the "ACQUISITION"). Upon the consummation of the Acquisition, MidCon became a
wholly owned subsidiary of the Company. MidCon, MidCon Texas Pipeline Operator,
Inc., Natural Gas Pipeline Company of America, K N Gas Gathering, Inc., K N
Interstate Gas Transmission Co. and K N Services, Inc. are referred to herein as
"SIGNIFICANT SUBSIDIARIES".
1. Representations and Warranties. The Company represents and warrants
to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or
threatened by the Commission.
(b) (i) Each document, if any, filed or to be filed pursuant
to the Exchange Act and incorporated by reference in the Prospectus
complied or will comply when so filed in all material respects with the
Exchange Act and the applicable rules and regulations of the Commission
thereunder, (ii) on the original effective date of the Registration
Statement, and on the effective date of the most recent post-effective
amendment thereto, if any, the Registration Statement did not contain,
and, as amended or
2
<PAGE> 7
supplemented, if applicable, will not contain, any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading,
(iii) the Registration Statement and the Prospectus comply, and, as
amended or supplemented, if applicable, will comply in all material
respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder and (iv) the Prospectus does
not contain and, as amended or supplemented, if applicable, 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, except
that the representations and warranties set forth in this paragraph do
not apply (A) to statements or omissions in the Registration Statement
or the Prospectus based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through the
Manager or its counsel expressly for use therein or (B) to that part of
the Registration Statement that constitutes the Statement of
Eligibility (Form T-1) under the Trust Indenture Act of 1939, as
amended (the "TRUST INDENTURE ACT"), of the Trustee.
(c) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the state
of Kansas, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its consolidated
subsidiaries, taken as a whole.
(d) Each Significant Subsidiary has been duly incorporated, is
validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business
or its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and
its consolidated subsidiaries, taken as a whole; all of the issued
shares of capital stock of each such Significant Subsidiary have been
duly and validly authorized and issued, are fully paid and
non-assessable and are owned directly or indirectly by the Company,
free and clear of all liens, encumbrances, equities or claims.
(e) This Agreement has been duly authorized, executed and
delivered by the Company.
(f) The Indenture has been duly qualified under the Trust
Indenture Act and has been duly authorized, executed and delivered by
the Company and is a valid and binding agreement of the Company,
enforceable in accordance with its terms, subject to applicable
bankruptcy,
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<PAGE> 8
insolvency or similar laws relating to or affecting creditors' rights
generally and general principles of equity.
(g) The Offered Securities have been duly authorized and, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Underwriters in
accordance with the terms of the Underwriting Agreement, will be
entitled to the benefits of the Indenture, and will be valid and
binding obligations of the Company, in each case enforceable in
accordance with their respective terms, subject to applicable
bankruptcy, insolvency or similar laws relating to or affecting
creditors' rights generally and general principles of equity.
(h) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement,
the Indenture and the Offered Securities will not contravene any
provision of applicable law or the articles of incorporation or by-laws
of the Company or any agreement or other instrument binding upon the
Company or any of its Significant Subsidiaries that is material to the
Company and its subsidiaries, taken as a whole, or any judgment, order
or decree of any governmental body, agency or court having jurisdiction
over the Company or any Significant Subsidiary, and no consent,
approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the
Company of its obligations under this Agreement, the Indenture or the
Offered Securities, except the registration of the Offered Securities
under the Securities Act and such as have been obtained or as may be
required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Offered Securities.
(i) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement).
(j) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party
or to which any of the properties of the Company or any of its
subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or
any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or the documents incorporated
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<PAGE> 9
therein by reference or to be filed as an exhibit to the Registration
Statement that are not described or filed as required.
(k) Each preliminary prospectus relating to the Offered
Securities filed as part of the Registration Statement as originally
filed or as part of any amendment thereto, or filed pursuant to Rule
424 under the Securities Act, complied when so filed in all material
respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder.
(l) The Company is not and, after giving effect to the
offering and sale of the Offered Securities and the application of the
proceeds thereof as described in the Prospectus, will not be an
"investment company" as such term is defined in the Investment Company
Act of 1940, as amended.
(m) The Company and its subsidiaries are in compliance with
any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and are in
compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(n) To the knowledge of the Company, no person or corporation
which is a "holding company" or a "subsidiary of a holding company",
within the meaning of such terms as defined in the Public Utility
Holding Company Act of 1935, directly or indirectly owns, controls or
holds with power to vote 10% or more of the outstanding voting
securities of the Company; and the Company is not a "holding company"
or to its knowledge, a "subsidiary of a holding company" as so defined.
(o) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or
foreign regulatory authorities, including, without limitation, the
Federal Energy Regulatory Commission, necessary to conduct their
respective businesses as described in the Prospectus, except when the
failure to possess such certificates, authorizations or permits would
not have a
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<PAGE> 10
material adverse effect on the Company and its subsidiaries, taken as a
whole, and neither the Company nor any such subsidiary has received any
notice of proceedings relating to the revocation or modification of any
such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(p) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or
included or incorporated by reference in the Prospectus present fairly
in all material respects the financial position and results of
operations of the entities purported to be shown thereby, at the dates
and for the periods indicated, and have been prepared in conformity
with generally accepted accounting principles applied on a consistent
basis throughout the periods involved, except as otherwise stated
therein.
(q) The pro forma financial statements of the Company, and the
related notes thereto, included in the Prospectus present fairly in all
material respects the pro forma financial position of the Company, as
of the dates indicated and the results of their operations for the
periods specified; the pro forma combined financial information, and
the related notes thereto, included in the Prospectus has been prepared
in accordance with the applicable requirements of the Exchange Act and
is based upon good faith estimates and assumptions believed by the
Company to be reasonable.
(r) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, the Company
and its subsidiaries have not incurred any material liability or
obligation, direct or contingent, nor entered into any material
transaction not in the ordinary course of business; the Company has not
purchased any of its outstanding capital stock, nor declared, paid or
otherwise made any dividend or distribution of any kind on its capital
stock other than ordinary and customary dividends; and there has not
been any material change in the capital stock, short-term debt or
long-term debt of the Company and its consolidated subsidiaries, except
in each case as described in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this
Agreement).
2. Terms of Public Offering. The Company is advised by the Manager that
the Underwriters propose to make a public offering of their respective portions
of the Offered Securities as soon after this Agreement has been entered
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<PAGE> 11
into as in the Manager's judgment is advisable. The terms of the public offering
of the Offered Securities are set forth in the Prospectus.
3. Payment and Delivery. Payment for the Offered Securities shall be
made to the Company in Federal or other funds immediately available in New York
City at the time and place set forth in the Underwriting Agreement, upon
delivery to the Manager for the respective accounts of the several Underwriters
of the Offered Securities registered in such names and in such denominations as
the Manager shall request in writing not less than one full business day prior
to the date of delivery, with any transfer taxes payable in connection with the
transfer of the Offered Securities to the Underwriters duly paid.
4. Conditions to the Underwriters' Obligations. The several
obligations of the Underwriters hereunder are subject to the following
conditions:
(a) No stop order suspending the effectiveness of the
Registration Statement shall have been issued under the Securities
Act and no proceedings for that purpose shall have been instituted or
shall be pending or, to your knowledge or the knowledge of the
Company, shall be contemplated by the Commission, and any request on
the part of the Commission for additional information shall have been
complied with to the reasonable satisfaction of counsel for the
Underwriters.
(b) Subsequent to the execution and delivery of the
Underwriting Agreement and prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor
shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that is
with negative implications, in the rating accorded any of the
Company's securities by any "nationally recognized statistical
rating organization," as such term is defined for purposes of
Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a
whole, from that set forth in the Prospectus (exclusive of any
amendments or supplements thereto effected subsequent to the
execution and delivery of this Agreement) that, in the
judgment of the
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<PAGE> 12
Manager, is material and adverse and that makes it, in the
judgment of the Manager, impracticable to market the Offered
Securities on the terms and in the manner contemplated in the
Prospectus.
(c) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by each of the chief
executive officer and the chief financial officer of the Company, to
the effect set forth in Section and to the effect that the
representations and warranties of the Company contained in this
Agreement are true and correct as of the Closing Date sand that the
Company has complied with all of the agreements and satisfied all of
the conditions on its part to be performed or satisfied hereunder on
or before the Closing Date.
(d) The Underwriters shall have received on the Closing Date
an opinion or opinions of Simpson Thacher & Bartlett, outside counsel
for the Company, to the effect set forth in Exhibit A-1, an opinion
of Martha Wyrsch, Esq., Vice President, General Counsel and Secretary
of the Company, to the effect set forth in Exhibit A-2, and an
opinion of Polsinelli, White, Vardeman & Shalton, Kansas counsel to
the Company, to the effect set forth in Exhibit A-3, in each case,
dated the Closing Date. Such opinions shall be rendered to the
Underwriters at the request of the Company and shall so state
therein.
(e) The Underwriters shall have received on the Closing Date
an opinion of Davis Polk & Wardwell, counsel for the Underwriters,
dated the Closing Date, in form and substance satisfactory to the
Underwriters.
(f) The Underwriters shall have received on the date hereof
and on the Closing Date letters, dated the date hereof or the Closing
Date, as the case may be, in form and substance satisfactory to the
Underwriters, from Arthur Andersen LLP, the Company's independent
public accountants, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information relating to each of the Company and MidCon contained in
or incorporated by reference in the Registration Statement and the
Prospectus; provided that such letters delivered on the Closing Date
shall use a "cut-off date" not earlier than the date of the
Underwriting Agreement.
(g) The Company shall have obtained all consents, waivers
and/or amendments under the Bank Facility (as defined in the
Prospectus) necessary to consummate the Offering.
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<PAGE> 13
(h) The PEPS Units Offering shall have closed on, or prior to
the Closing Date hereof.
5. Covenants of the Company. In further consideration of the agreements
of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to the Manager, without charge, eight signed
copies of the Registration Statement (including exhibits thereto) and
for delivery to each other Underwriter a conformed copy of the
Registration Statement (without exhibits thereto) and to furnish to the
Manager in New York City, without charge, prior to 10:00 a.m. New York
City time on the business day next succeeding the date of this
Agreement and, during the period mentioned in Section below, as many
copies of the Prospectus, any documents incorporated by reference
therein and any supplements and amendments thereto or to the
Registration Statement as the Manager may reasonably request.
(b) During the period in which the Prospectus is required by
law to be delivered in connection with the sale of the Offered
Securities, before amending or supplementing the Registration Statement
or the Prospectus (including by filing any document that would as a
result thereof be incorporated by reference in the Prospectus), to
furnish to you a copy of each such proposed amendment, supplement or
other document and not to file any such proposed amendment, supplement
or other document to which you reasonably object, and to file with the
Commission within the applicable period specified in Rule 424(b) under
the Securities Act any prospectus required to be filed pursuant to such
Rule.
(c) If, during such period after the first date of the public
offering of the Offered Securities as in the reasonable opinion of
counsel for the Underwriters or counsel for the Company the Prospectus
is required by law to be delivered in connection with sales by an
Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus
in order to make the statements therein, in the light of the
circumstances existing when the Prospectus is delivered to a purchaser,
not misleading, or if, in the reasonable opinion of counsel for the
Underwriters or counsel for the Company, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to
the Underwriters and to the dealers (whose names and addresses the
Manager will furnish to the Company) to which Offered
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<PAGE> 14
Securities may have been sold by the Manager on behalf of the
Underwriters and to any other dealers upon request, either amendments
or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances existing when the Prospectus is delivered to a purchaser,
be misleading or so that the Prospectus, as so amended or supplemented,
will comply with law.
(d) To endeavor to qualify the Offered Securities for offer
and sale under the securities or Blue Sky laws of such jurisdictions as
the Manager shall reasonably request and to maintain such
qualifications for as long as the Manager shall reasonably request.
(e) To make generally available to the Company's security
holders and to the Manager as soon as practicable an earning statement
that satisfies the provisions of Section 11(a) of the Securities Act
and the rules and regulations of the Commission thereunder.
(f) During the period beginning on the date of the
Underwriting Agreement and continuing to and including the Closing
Date, not to offer, sell, contract to sell or otherwise dispose of any
debt securities of the Company or warrants to purchase or otherwise
acquire debt securities of the Company substantially similar to the
Offered Securities (other than (i) the Offered Securities and (ii)
commercial paper issued in the ordinary course of business), without
the prior written consent of the Manager.
(g) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Company's counsel and the Company's
accountants in connection with the registration and delivery of the
Offered Securities under the Securities Act and all other fees or
expenses in connection with the preparation and filing of the
Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all
printing costs associated therewith, and the mailing and delivering of
copies thereof to the Underwriters and dealers, in the quantities
hereinabove specified, (ii) all costs and expenses related to the
transfer and delivery of the Offered Securities to the Underwriters,
including any transfer or other taxes payable thereon, (iii) the cost
of printing or producing any Blue Sky memorandum in connection with the
offer and sale of the Offered Securities under state securities law and
all expenses in connection with the qualification of the Offered
Securities for
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<PAGE> 15
offer and sale under state law as provided in Section hereof,
including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection with such qualification and
in connection with the Blue Sky memorandum, (iv) all filing fees and
the reasonable fees and disbursements of counsel to the Underwriters,
if any, incurred in connection with the review and qualification of
the offering of the Offered Securities by the National Association of
Securities Dealers, Inc., (v) any fees charged by the rating agencies
for the rating of the Offered Securities, (vi) if applicable, all
costs and expenses incident to listing the Offered Securities on any
national securities exchanges and foreign stock exchanges, (vii) the
cost of printing certificates representing the Offered Securities,
(viii) the costs and charges of any trustee, transfer agent, registrar
or depositary, (ix) the costs and expenses of the Company relating to
investor presentations on any "road show" undertaken in connection
with the marketing of the offering of the Offered Securities,
including, without limitation, expenses associated with the production
of road show slides and graphics, fees and expenses of any consultants
engaged in connection with the road show presentations with the prior
approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants,
and the cost of any aircraft chartered in connection with the road
show, and (x) all other costs and expenses incident to the performance
of the obligations of the Company hereunder for which provision is not
otherwise made in this Section. It is understood, however, that except
as provided in this Section, Section 6 entitled "Indemnification and
Contribution", and the last paragraph of Section 8 below, the
Underwriters will pay all of their costs and expenses, including fees
and disbursements of their counsel, transfer taxes payable on resale
of any of the Offered Securities by them and any advertising expenses
connected with any offers they may make.
6. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
allegedly untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the Prospectus
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages
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<PAGE> 16
or liabilities are caused by any such untrue statement or omission or
allegedly untrue statement or omission based upon information relating
to any Underwriter furnished to the Company in writing by such
Underwriters through the Manager or its counsel expressly for use
therein; provided however, that the foregoing indemnity agreement with
respect to any preliminary prospectus shall not inure to the benefit of
any Underwriter from whom the person asserting any such losses, claims,
damages or liabilities purchased Offered Securities, or any person
controlling such Underwriter, if a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) was not sent or given by or on
behalf of such Underwriter to such person, if required by law so to
have been delivered, at or prior to the written confirmation of sale of
the Offered Securities to such person, and if the Prospectus (as so
amended or supplemented) would have cured the defect giving rise to
such losses, claims, damages or liabilities, unless such failure is the
result of noncompliance by the Company with Section 5(a) hereof.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers
who signed the Registration Statement and each person, if any, who
controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company to such Underwriter, but only
with reference to information relating to such Underwriter furnished to
the Company in writing by such Underwriter through the Manager or its
counsel expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements
thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to either Section or , such
person (the "INDEMNIFIED PARTY") shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in
writing and the indemnifying party, upon request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified
party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the
fees and disbursements of such counsel related to such proceeding. In
any such proceeding, any indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the indemnifying
party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal
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<PAGE> 17
expenses of any indemnified party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees
and expenses of more than one separate firm (in addition to any local
counsel) for all such indemnified parties and that all such fees and
expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by the Manager, in the case of parties
indemnified pursuant to Section above, and by the Company, in the case
of parties indemnified pursuant to Section above. The indemnifying
party shall not be liable for any settlement of any proceeding effected
without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party
agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, 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 as contemplated by the third
sentence of this paragraph, the indemnifying party agrees that it shall
be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request
and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of
such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is
or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on
claims that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in Section
or is unavailable to an indemnified party or insufficient in respect of
any losses, claims, damages or liabilities referred to therein, then
each indemnifying party under such paragraph, in lieu of indemnifying
such indemnified party thereunder, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other hand from the offering of the
Offered Securities or (ii) if the allocation provided by clause above
is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in
clause above but also the relative fault of the Company on the one hand
and of the Underwriters on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the
Offered Securities shall be deemed to be in the same respective
proportions as the net proceeds from the
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<PAGE> 18
offering of such Offered Securities (before deducting expenses)
received by the Company and the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in
the table on the cover of the Prospectus Supplement, bear to the
aggregate public offering price of the Offered Securities. The relative
fault of the Company on the one hand and the Underwriters 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 (including information relating to
MidCon) or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section are several in proportion to the
respective principal amounts of Offered Securities they have purchased
hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not
be just or equitable if contribution pursuant to this Section were
determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations
referred to in Section . The amount paid or payable by an indemnified
party as a result of the losses, claims, damages and liabilities
referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section , no Underwriter shall
be required to contribute any amount in excess of the amount by which
the total price at which the Offered Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount
of any damages that such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section
are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in
this Section and the representations, warranties and other statements
of the Company contained in this Agreement shall remain operative and
in full force and effect regardless of (i) any termination of this
Agreement, (ii) any investigation made by or on behalf of any
Underwriter or any person controlling any Underwriter or the Company,
its officers or directors or any person controlling the Company and
(iii) acceptance of and payment for any of the Offered Securities.
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<PAGE> 19
7. Termination. This Agreement shall be subject to termination by
notice given by the Manager to the Company, if (a) after the execution and
delivery of the Underwriting Agreement and prior to the Closing Date (i) trading
generally shall have been suspended or materially limited on or by, as the case
may be, the New York Stock Exchange or the National Association of Securities
Dealers, Inc., (ii) trading of any securities of the Company shall have been
suspended on any exchange or in any over-the-counter market, (iii) a general
moratorium on commercial banking activities in New York shall have been declared
by either Federal or New York State authorities or (iv) there shall have
occurred any outbreak or escalation of hostilities or any change in financial
markets or any calamity or crisis that, in the judgment of the Manager, is
material and adverse and (b) in the case of any of the events specified in
clauses through , such event, singly or together with any other such event,
makes it, in the judgment of the Manager, impracticable to market the Offered
Securities on the terms and in the manner contemplated in the Prospectus.
8. Defaulting Underwriters. If, on the Closing Date, any one or more
of the Underwriters shall fail or refuse to purchase Offered Securities that it
has or they have agreed to purchase hereunder on such date, and the aggregate
principal amount of Offered Securities which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth
of the aggregate principal amount of the Offered Securities to be purchased on
such date, the other Underwriters shall be obligated severally in the
proportions that the principal amount of Offered Securities set forth opposite
their respective names in the Underwriting Agreement bears to the aggregate
principal amount of Offered Securities set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as the Manager may
specify, to purchase the Offered Securities which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the principal amount of Offered Securities that any
Underwriter has agreed to purchase pursuant to this Agreement be increased
pursuant to this Section by an amount in excess of one-ninth of such principal
amount of Offered Securities without the written consent of such Underwriter.
If, on the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Offered Securities and the aggregate principal amount of Offered
Securities with respect to which such default occurs is more than one-tenth of
the aggregate principal amount of Offered Securities to be purchased on such
date, and arrangements satisfactory to the Manager and the Company for the
purchase of such Offered Securities are not made within 36 hours after such
default, this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter or the Company. In any such case either the Manager
or the Company shall have the right to postpone the Closing Date, but in no
event for longer than seven days, in order that the required changes, if
15
<PAGE> 20
any, in the Registration Statement and in the Prospectus or in any other
documents or arrangements may be effected. Any action taken under this paragraph
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
9. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
10. Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
11. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
16
<PAGE> 21
EXHIBIT A-1
OPINION OF OUTSIDE COUNSEL
FOR THE COMPANY
The opinion of Simpson Thacher & Bartlett, outside counsel for the
Company to be delivered pursuant to Section 4(d) of the Underwriting Agreement,
shall be to the effect that:
(i) The Registration Statement has become effective under the Act and,
to such counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued or proceeding for that purpose has been
instituted or threatened by the Commission;
(ii) The Indenture has been duly qualified under the Trust Indenture
Act and, assuming the Indenture has been duly authorized, executed and delivered
by the Company and the Trustee, constitutes a valid and legally binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally and general principal of equity;
(iii) Assuming the Offered Securities have been duly authorized,
executed and delivered by the Company and duly authenticated by the Trustee, and
upon payment and delivery thereof in accordance with the Underwriting Agreement,
the Offered Securities will constitute valid and legally binding obligations of
the Company, enforceable against the Company in accordance with their terms and
entitled to the benefits of the Indenture;
(iv) The issue and sale of the Offered Securities, and the compliance
by the Company with all of the provisions of the Underwriting Agreement and the
Indenture, will not violate any federal or New York statute or any rule or
regulation that has been issued pursuant to any federal or New York statute or
any order known by such counsel issued pursuant to any federal or New York
statute by any court or governmental agency or body or court having jurisdiction
over the Company or any of its subsidiaries or any properties, and no consent,
approval, authorization or order, registration, or qualification of or with, any
federal or New York governmental body or agency or, to our knowledge, any
federal or New York court is required for the issue and sale of the Offered
Securities by the Company and the compliance by the Company with all of the
provisions of this
<PAGE> 22
Agreement, the Indenture or the Offered Securities, except for registration
under the Act of the Offered Securities and such as may be required by the
securities or Blue Sky laws of the various states in connection with the
purchase and distribution of the Offered Securities;
(v) The statements in the Prospectus under the caption "Description of
the Senior Notes" insofar as they purport to constitute summaries of the terms
of the Offered Securities, constitute accurate summaries of the terms of such
Offered Securities in all material respects;
(vi) The Company is not an "investment company" within the meaning of,
and subject to regulation under, the Investment Company Act of 1940, as amended;
and
(vii) Such counsel (A) is of the opinion that the Registration
Statement, as of its effective date, and Prospectus, as of the date of the
Underwriting Agreement, (except for financial statements and schedules and other
financial data included therein as to which such counsel need not express any
opinion) comply as to form in all material respects with the Securities Act and
the applicable rules and regulations of the Commission thereunder, (B) has no
reason to believe that (except for financial statements and schedules and other
financial data as to which such counsel need not express any belief) the
Registration Statement at the time the Registration Statement became effective
or on the effective date of the most recent post-effective amendment thereto, if
any, contained any untrue statements of a material fact or omitted or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading and (C) has no reason to believe that (except
for financial statements and schedules and other financial or statistical data
as to which such counsel need not express any belief) the Prospectus at the time
the Prospectus Supplement was issued or at the Closing Date contained or
contains any untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
A-1-2
<PAGE> 23
EXHIBIT A-2
OPINION OF GENERAL COUNSEL OF THE COMPANY
The opinion of Martha B. Wyrsch, Esq., Vice President, General Counsel
and Secretary of the Company, to be delivered pursuant to Section 4(d) of the
Underwriting Agreement, shall be to the effect that:
(i) Each of the Company and the Significant Subsidiaries (i) is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each jurisdiction which requires such qualification wherein it owns
or leases material properties or conducts material business, except where the
failure to be so qualified or in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole, and (ii) holds all
material approvals, authorizations, orders, licenses, certificates and permits
from governmental authorities necessary for the conduct of its business as
described in the Prospectus, except where the failure to hold such approvals,
authorizations, orders, licenses, certificates and/or permits would not,
singularly or in the aggregate, have a material adverse effect on the Company
and its subsidiaries, taken as a whole;
(ii) Each of the Significant Subsidiaries has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
jurisdiction in which it is incorporated, with full corporate power and
authority to own its properties and conduct its business as described in the
Prospectus except to the extent that the failure to be in good standing would
not have a material adverse effect on the Company and its subsidiaries, taken as
a whole;
(iii) All the outstanding shares of capital stock of each Significant
Subsidiary have been duly and validly authorized and issued and are fully paid
and nonassessable, and, except as otherwise set forth in the Prospectus, all of
such shares are owned by the Company either directly or through one or more
subsidiaries free and clear of any pledge, security interest, claims, lien or
other encumbrance;
(iv) Such counsel does not know of any statutes or regulations, or any
pending or threatened legal or governmental proceedings, required to be
described in the Prospectus that are not described as required, nor of any
contracts or documents of a character required to be described or referred to in
the Registration
18
<PAGE> 24
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement that are not described, referred to or filed as required;
(v) The descriptions included in or incorporated by reference in the
Prospectus of the statutes, regulations, legal or governmental proceedings,
contracts and other documents therein described are accurate and fairly
summarize the matters referred to therein;
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required to be obtained by the Company or any
subsidiary for the consummation of the transactions contemplated herein in
connection with the purchase and sale of the Offered Securities by the
Underwriters, except such approvals (specified in such opinion) as have been
obtained;
(vii) The execution and delivery by the Company of the Underwriting
Agreement and the Indenture, the issuance and delivery of the Offered
Securities, the consummation by the Company of the transactions contemplated
therein and compliance by the Company with the terms of the Underwriting
Agreement do not and will not result in any violation of the charter or by-laws
of the Company or any Significant Subsidiary and do not and will not conflict
with, or result in a breach of any of the terms or provisions of, or constitute
a default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or asset of the Company or any Significant
Subsidiary under (A) any indenture, mortgage or loan agreement, or any other
agreement or instrument known to such counsel, to which the Company or any
Significant Subsidiary is a party or by which it may be bound or to which any of
its properties may be subject, (B) any existing applicable law, rule or
regulation (other than the securities or Blue Sky laws of the various states, as
to which such counsel need express no opinion), or (C) any judgment, order or
decree of any government, governmental instrumentality or court, domestic or
foreign, known to such counsel having jurisdiction over the Company or any
Significant Subsidiary or any of its properties (except, in the case of
subclauses (A) and (B) hereof, for such conflicts, breaches or defaults or
liens, charges or encumbrances that would not have a material adverse effect on
the condition (financial or otherwise), earnings, business affairs or business
prospects of the Company and its subsidiaries, considered as one enterprise or
the transactions contemplated by the Underwriting Agreement);
(viii) Each of the Underwriting Agreement, the Indenture and the
Offered Securities has been duly executed and delivered by the Company;
A-2-2
<PAGE> 25
(ix) The Offered Securities in global form have been duly executed and
delivered by the Company;
(x) The Company and the Significant Subsidiaries hold all requisite
Certificates of Public Convenience and Necessity from the Federal Energy
Regulatory Commission to enable them to carry on the respective businesses in
which they are engaged;
(xi) To the knowledge of such counsel (after due inquiry), none of the
Company or any Significant Subsidiary is in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, loan agreement, note, lease or other
agreement or instrument that is described or referred to in the Registration
Statement or Prospectus or filed as an exhibit to the Registration Statement;
(xii) To the knowledge of such counsel, after due inquiry, no person or
corporation which is a "holding company" or a "subsidiary of a holding company,"
within the meaning of such terms as defined in the Public Utility Holding
Company Act of 1935, directly or indirectly owns, controls or holds with power
to vote 10% or more of the outstanding voting securities of the Company; and the
Company is not a "holding company" or to the knowledge of such counsel, after
due inquiry, a "subsidiary of a holding company" as so defined; and
(xiii) The documents incorporated by reference in the Prospectus
(except for the consolidated financial statements and other financial or
statistical data included therein or omitted therefrom, as to which such counsel
need express no opinion), as of the dates they were filed with the Commission or
to the extent such documents were subsequently amended prior to the date hereof,
at the time so amended, complied as to form in all material respects with the
requirements of the Exchange Act and the regulations thereunder.
In addition, such counsel shall state that such counsel has
participated in the preparation of the Registration Statement and the Prospectus
(including the documents incorporated by reference therein) and participated in
conferences with representatives of your legal counsel and representatives of
the Underwriters at which the contents of the Registration Statement and the
Prospectus and related matters were discussed. Such counsel shall also state
that although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus except as stated
above, such counsel advises you that, on the basis of the foregoing, no facts
have come to such counsel's attention which lead such counsel to believe that
(A) the Registration Statement or any amendments thereto (other than the
financial statements and other financial or statistical
A-2-3
<PAGE> 26
information included or incorporated by reference therein as to which such
counsel need not comment and except for that part of the Registration Statement
that constitutes the Statement of Eligibility (Form T-1) under the Trust
Indenture Act of the Trustee), at the time the Registration Statement initially
became effective or on the effective date of the most recent post-effective
amendment thereto, if any, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or (B) the Prospectus or any
amendment or supplement thereto (other than the financial statements and other
financial or statistical information included or incorporated by reference
therein as to which such counsel need not comment and except for that part of
the Registration Statement that constitutes the Form T-1 heretofore referred
to), at the time the Prospectus Supplement was issued or at the Closing Date
contained or contains an untrue statement of a material fact or omitted or omits
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
In rendering such opinions, such counsel may (A) state that her opinion
is limited to the laws of the State of Colorado and the federal laws of the
United States and (B) rely as to matters involving the application of laws of
any jurisdiction other than the State of Colorado or the United States, to the
extent deemed proper and specified in such opinion, upon the opinions of
Polsinelli, White, Vardeman & Shalton and other local counsel of good standing
believed to be reliable and who are satisfactory to counsel for the Underwriters
and as to matters of fact, to the extent deemed proper, on certificates of
responsible officers of the Company and public officials.
A-2-4
<PAGE> 27
EXHIBIT A-3
OPINION OF KANSAS COUNSEL OF THE COMPANY
The opinion of Polsinelli, White, Vardeman & Shalton, Kansas counsel to
the Company, to be delivered pursuant to Section 4(d) of the Underwriting
Agreement, shall be to the effect that:
(i) The Company is duly incorporated, validly existing, and in good
standing under the laws of the State of Kansas, with corporate power and
authority under such laws to own, lease and operate its properties and conduct
its business as described in the Prospectus.
(ii) The execution and delivery of each of the Indenture and the
Underwriting Agreement have been duly authorized by all necessary corporate
action of the Company.
(iii) The execution and delivery of the Offered Securities have been
duly authorized by all necessary corporate action of the Company.
(iv) No approval, authorization, consent or other action (other than
under the securities or Blue Sky laws of the State of Kansas) is required by any
regulatory authority or governmental body of the State of Kansas for the valid
issuance, sale, and delivery by the Company of the Offered Securities pursuant
to the Underwriting Agreement and to the best of our knowledge, do not result in
any breach or violation of any judgment, order or decree of any governmental
body, agency or court located in Kansas having jurisdiction over the Company.
<PAGE> 1
Exhibit 4.1
THIS SECURITY IS A BOOK-ENTRY SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY 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 DEPOSITORY TO
A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY
OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN SUCH LIMITED
CIRCUMSTANCES.
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Company or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
K N ENERGY, INC.
6.45% Senior Notes due 2001
No. G-2 CUSIP No. 482-620-HA2
K N ENERGY, INC., a corporation duly organized and existing under the laws
of the State of Kansas (herein called the "Company", which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of TWO HUNDRED MILLION DOLLARS ($200,000,000) on November 30,
2001, and to pay interest thereon from November 25, 1998 or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semi-annually in arrears on May 31 and November 30 in each year, commencing May
31, 1999, at the rate of 6.45% per annum, until the principal hereof is fully
paid or made available for full payment. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, which shall be the fifteenth calendar day
(whether or not a Business Day) immediately preceding such Interest Payment
Date. Any such interest which is payable, but is not punctually paid or duly
provided for on any Interest Payment Date ("Defaulted Interest") will forthwith
cease to be payable to the Holder on such Regular Record Date and may either 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 for
the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities of this series not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the
<PAGE> 2
requirements of any securities exchange on which the Securities of this series
may be then listed, and upon such notice as may be required by such exchange,
all as more fully provided in such Indenture.
Payment of the principal of and interest on this Security shall be made at
the Corporate Trust Office of the Trustee in Chicago, Illinois, or at such other
office or agency of the Company as it may designate for such purpose pursuant to
the Indenture hereinafter referred to, in such immediately available funds of
the United States of America as at the time of payment are legal tender for
payment of public and private debts.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth in this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to below by manual signature of an authorized officer, this
Security shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
<PAGE> 3
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: November ___, 1998
K N ENERGY, INC.
By: _____________________________
Name:
Title:
ATTEST:
By:______________________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
Dated: November ___, 1998
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee
By:___________________________________
Authorized Officer
<PAGE> 4
[REVERSE OF SECURITY]
K N ENERGY, INC.
6.45% Senior Notes due 2001
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of November 20, 1993 (herein called the
"Indenture"), between the Company and U.S. Bank Trust National Association, as
successor Trustee (herein called the "Trustee", which term includes any
additional successor trustee under the Indenture), to which the Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitation of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Securities and of the terms upon
which the Securities are, and are to be, authenticated and delivered.
Capitalized terms used but not defined herein shall have the respective meanings
assigned to them in the Indenture. This is one of the Book-Entry Securities
representing the series designated on the face hereof, such series limited in
aggregate principal amount to $400,000,000.
The Securities of this series shall not be subject to redemption prior to
November 30, 2001.
The Securities of this series shall not be subject to a sinking fund
requirement.
The Indenture contains provisions for defeasance of (a) the entire
indebtedness of this Security and (b) certain restrictive covenants upon
compliance by the Company with certain conditions set forth therein.
If an Event of Default with respect to the Securities of this series shall
occur and be continuing, the unpaid principal of the Securities of this series
may be declared due and payable in the manner and with the effect provided in
the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of not less than a majority in principal amount of the
Securities at the time Outstanding of each series to be affected. The Indenture
also contains provisions permitting the Holders of specified percentages in
principal amount of the Securities of each series at the time Outstanding, on
behalf of the Holders of all the Securities of such series, to waive compliance
by the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or waiver
by the Holder of this Security shall be conclusive and binding upon such Holder
and upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not notation of such consent or waiver is made upon this Security.
As set forth in, and subject to, the provisions of the Indenture, no
Holder of any Security of this series shall have any right to institute any
proceeding with respect to the Indenture or for any remedy thereunder, unless
such Holder shall have previously given to the Trustee written notice of
<PAGE> 5
a continuing Event of Default with respect to the Securities of this series, the
Holders of not less than 25% in principal amount of the Outstanding Securities
of this series shall have made written request, and offered reasonable
indemnity, to the Trustee to institute such proceeding as trustee, and the
Trustee shall not have received from the Holders of a majority in principal
amount of the Outstanding Securities of this series a direction inconsistent
with such request and shall have failed to institute such proceeding within 60
days; provided, however, that such limitations shall not apply to a suit
instituted by the Holder hereof for the enforcement of payment of the principal
of or interest on this Security on or after the respective due dates expressed
herein.
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 interest on this
Security at the times, place and rate, and in the coin or currency, herein
prescribed.
This Security shall be exchangeable for Securities of this series
registered in the names of Persons other than the Depository with respect to
such series or its nominee only as provided in this paragraph. This Security
shall be so exchangeable if (x) such Depository notifies the Company that it is
unwilling or unable to continue as Depository for this Security or if at any
time such Depository ceases to be a clearing agency registered as such under the
Securities Exchange Act of 1934, (y) the Company executes and delivers to the
Trustee a written order providing that this Security shall be so exchangeable or
(z) there shall have occurred and be continuing an Event of Default with respect
to the Securities of this series. Securities so issued in exchange for this
Security shall be of the same series and of like tenor, in authorized
denominations and in the aggregate having the same unpaid principal amount as
this Security and registered in such names as such Depository shall direct.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and interest
on this Security are payable, duly endorsed by, or accompanied by a written
instrument 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 this series, and of like
tenor, of authorized denominations and for the same aggregate unpaid principal
amount, shall be issued to the designated transferee or transferees. At the date
of the original issuance of this Security, such office or agency of the Company
is maintained by U.S. Bank Trust National Association, at One Illinois Center,
Suite 3000, 111 East Wacker Drive, Chicago, Illinois 60601.
No service charge shall be made for any such exchange or registration of
transfer, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
<PAGE> 6
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused a CUSIP number to be
printed on this Security as a convenience to the Holder hereof. No
representation is made as to the accuracy of such number and reliance may be
placed only on the other identifying information printed hereon.
Interest on this Security shall be computed on the basis of a 360-day year
comprised of twelve 30-day months.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
The Indenture and this Security shall be governed by and construed in
accordance with the laws of the State of New York.
<PAGE> 7
ASSIGNMENT FORM
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee or transferee)
- --------------------------------------------------------------------------------
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint
------------------------------------------------------
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Dated: Signed:
---------------------------- -------------------------------
(Sign exactly as name appears above
or on the other side of this Security)
Signature Guarantee:
------------------------------------------
Participant in a recognized Signature Guarantee Medallion
Program (or other signature guarantor program reasonably
acceptable to the Trustee)
<PAGE> 1
Exhibit 4.2
THIS SECURITY CERTIFICATE IS A GLOBAL SECURITY CERTIFICATE WITHIN THE
MEANING OF THE PURCHASE CONTRACT AGREEMENT HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY ("DTC") OR A NOMINEE OF
DTC. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE PURCHASE CONTRACT AGREEMENT AND NO TRANSFER OF THIS SECURITY (OTHER THAN
A TRANSFER OF THIS SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A
NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN
LIMITED CIRCUMSTANCES.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
K N ENERGY, INC.
8.25% PREMIUM EQUITY PARTICIPATING SECURITY UNITS
(STATED AMOUNT $43 PER SECURITY)
No. G-1 CUSIP No. 482620507
10,706,000 Coupon Securities
This Security Certificate certifies that Cede & Co. is the registered
Holder of the number of Securities set forth above. Each Security represents
ownership by the Holder of 5.875% United States Treasury Notes due November 30,
2001 (CUSIP No. 9128272C5) that are held through the Treasury/Reserve Automated
Debt Entry System ("TREASURY NOTES"), or security entitlements in respect
thereof (together with Treasury Notes, "TREASURY SECURITIES"), with a principal
amount equal to the Stated Amount, subject to the Pledge of such Treasury
Securities by such Holder pursuant to the Pledge Agreement, and the rights and
obligations of
<PAGE> 2
the Holder under one Purchase Contract with K N Energy, Inc., a Kansas
corporation (the "COMPANY"). The Treasury Securities represented by this
Security Certificate were acquired by the Underwriters at the direction of the
Company for the benefit of the Holder hereof and are being conveyed to the
Holder of this Security Certificate (or such Holder's predecessor-in-interest)
and pledged pursuant to the Pledge Agreement simultaneously therewith.
Pursuant to the Pledge Agreement, the Treasury Securities constituting
part of each Security evidenced hereby are pledged to the Collateral Agent to
secure the obligation of the Holder under the Purchase Contract comprising a
portion of such Security.
The Pledge Agreement provides that all payments of principal of, or
interest on, any Treasury Notes corresponding to Treasury Securities comprising
a portion of the Securities received by the Collateral Agent shall be paid by
the Collateral Agent by wire transfer in same day funds no later than 12:00
noon, New York City time, on the Business Day such payment is received by the
Collateral Agent (provided that in the event such payment is received by the
Collateral Agent on a day that is not a Business Day or after 11:30 a.m., New
York City time, on a Business Day, then such payment shall be made no later than
10:00 a.m., New York City time, on the next succeeding Business Day) (i) in the
case of interest payments and any principal payments with respect to any
Treasury Notes corresponding to Treasury Securities that have been released from
the Pledge pursuant to the Pledge Agreement, to the Agent to the account
designated by it for such purpose and (ii) in the case of principal payments on
any Treasury Notes corresponding to Pledged Treasury Securities (as defined in
the Pledge Agreement), at the direction of the Agent on behalf of the Holders,
to the Company, in full satisfaction of the respective obligations of the
Holders of the Securities of which such Pledged Treasury Securities are a part
under the Purchase Contracts forming a part of such Securities. Interest on any
Treasury Note corresponding to any Treasury Security forming part of a Security
evidenced hereby that is paid on any May 31 or November 30, commencing May 31,
1999 (a "PAYMENT DATE"), shall, subject to receipt thereof by the Agent from the
Collateral Agent, be paid to the Person in whose name this Security Certificate
(or a Predecessor Security Certificate) is registered at the close of business
on the Record Date next preceding such Payment Date; provided, that on the first
Payment Date, the Agent shall remit to the Persons in whose names such Security
Certificates are registered on the Record Date with respect thereto, in addition
to interest on the Treasury Notes paid on such Payment Date, interest payable
with respect to the Treasury Notes for the period from the date of initial
issuance of the Securities until November 29, 1998. Interest payable with
respect to the Treasury Notes that accrued prior to the date of initial issuance
of the Securities, and that is payable on the first interest payment date with
respect to the Treasury Notes following the date of initial issuance of the
Securities shall be remitted by the
2
<PAGE> 3
Agent to Morgan Stanley & Co. Incorporated for the account of the Underwriters
by 2:00 p.m. New York City time on the date of receipt by the Agent.
Prior to November 15, 2001, the Holder of this Security Certificate
shall have the right to substitute Zero-Coupon Treasury Securities for the
Treasury Securities forming a part of the Securities evidenced hereby, thereby
forming Zero-Coupon Securities, in the manner set forth in the Purchase Contract
Agreement and the Pledge Agreement.
Each Purchase Contract evidenced hereby obligates the Holder of this
Security Certificate to purchase, and the Company to sell, on November 30, 2001
(the "FINAL SETTLEMENT DATE"), at a price equal to the Stated Amount, a number
of shares of common stock, par value $5.00 per share ("COMMON STOCK"), of the
Company, equal to the Settlement Rate, unless on or prior to the Final
Settlement Date there shall have occurred a Termination Event or Early
Settlement with respect to the Security of which such Purchase Contract is a
part, all as provided in the Purchase Contract Agreement referred to on the
reverse hereof and more fully described on the reverse hereof. The purchase
price for the Common Stock purchased pursuant to each Purchase Contract
evidenced hereby, if not paid earlier, shall be paid on the Final Settlement
Date by application of payment received in respect of the principal of the
Treasury Securities pledged to secure the obligations under such Purchase
Contract of the Holder of the Security of which such Purchase Contract is a
part.
The Company shall pay, on each Payment Date, in respect of each
Purchase Contract forming part of a Security evidenced hereby, an amount (the
"CONTRACT FEES") equal to 2.375% per annum of the Stated Amount, computed on the
basis of the actual number of days elapsed in a year of 365 or 366 days, as the
case may be, subject to deferral at the option of the Company as provided in the
Purchase Contract Agreement and more fully described on the reverse hereof. Such
Contract Fee shall be payable to the Person in whose name this Security
Certificate (or a Predecessor Security Certificate) is registered at the close
of business on the Record Date immediately preceding such Payment Date.
Interest on the Treasury Notes and the Contract Fees shall be payable
at the office or agency of the Agent in The City of New York or, at the option
of the Company, by check mailed to the address of the Person entitled thereto as
such address appears on Security Register.
Reference is hereby made to the further provisions set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Agent by manual signature, this Security Certificate shall not be entitled
to any
3
<PAGE> 4
benefit under the Pledge Agreement or the Purchase Contract Agreement or be
valid or obligatory for any purpose.
4
<PAGE> 5
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
K N ENERGY, INC.
By: _________________________
Name:
Title:
Attested by:
HOLDER SPECIFIED ABOVE (as to
obligations of such Holder under the
Purchase Contracts evidenced hereby)
By: U.S. BANK TRUST NATIONAL
ASSOCIATION, not individually
but solely as Attorney-in-Fact of
such Holder
By: _________________________
Authorized Signatory
Dated:
(Form of Certificate of Authentication)
This is one of the Security Certificates referred to in the within
mentioned Purchase Contract Agreement.
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Agent
By: ___________________________
Authorized Signatory
5
<PAGE> 6
[REVERSE OF SECURITY CERTIFICATE]
Each Purchase Contract evidenced hereby is governed by a Purchase
Contract Agreement, dated as of November 25, 1998 (the "PURCHASE CONTRACT
AGREEMENT"), between the Company and U.S. Bank Trust National Association, as
Purchase Contract Agent (herein called the "AGENT"), to which Purchase Contract
Agreement and supplemental agreements thereto reference is hereby made for a
description of the respective rights, limitations of rights, obligations, duties
and immunities thereunder of the Agent, the Company and the Holders and of the
terms upon which the Security Certificates are, and are to be, executed and
delivered.
Each Purchase Contract evidenced hereby shall obligate the Holder of
this Security Certificate to purchase, and the Company to sell, on the Final
Settlement Date at a price equal to the Stated Amount, a number of shares of
Common Stock of the Company equal to the Settlement Rate, unless, on or prior to
the Final Settlement Date, there shall have occurred a Termination Event or an
Early Settlement with respect to the Security of which such Purchase Contract is
a part. The "SETTLEMENT RATE" is equal to (a) if the Applicable Market Value (as
defined below) is greater than $51.60 (the "THRESHOLD APPRECIATION PRICE"),
.8333 of a share of Common Stock per Purchase Contract, (b) if the Applicable
Market Value is less than or equal to the Threshold Appreciation Price but is
greater than the Stated Amount, a fractional share of Common Stock per Purchase
Contract equal to the Stated Amount divided by the Applicable Market Value
(rounded upward or downward to the nearest 1/10,000th of a share) and (c) if the
Applicable Market Value is less than or equal to the Stated Amount, one share of
Common Stock per Purchase Contract, in each case subject to adjustment as
provided in the Purchase Contract Agreement. No fractional shares of Common
Stock shall be issued upon settlement of Purchase Contracts, as provided in the
Purchase Contract Agreement.
The "APPLICABLE MARKET VALUE" means the average of the Closing Prices
per share of Common Stock on each of the twenty consecutive Trading Days ending
on the second Trading Day immediately preceding the Final Settlement Date. The
"CLOSING PRICE" of the Common Stock on any date of determination means the
closing sale price (or, if no closing price is reported, the last reported sale
price) of the Common Stock on The New York Stock Exchange, Inc. (the "NYSE") on
such date or, if the Common Stock is not listed for trading on the NYSE on any
such date, as reported in the composite transactions for the principal United
States securities exchange on which the Common Stock is so listed or, if the
Common Stock is not so listed on a United States national or regional securities
exchange, as reported by the Nasdaq Stock Market or, if such price of the Common
Stock is not so reported, the last quoted bid price for the Common Stock in the
over-the-counter market as reported by the National Quotation Bureau or similar
organization or, if such bid price is not available, the market
6
<PAGE> 7
value of the Common Stock on such date as determined by a nationally recognized
independent investment banking firm retained for this purpose by the Company. A
"TRADING DAY" means a day on which the Common Stock (A) is not suspended from
trading on any national or regional securities exchange or association or
over-the-counter market at the close of business and (B) has traded at least
once on the national or regional securities exchange or association or
over-the-counter market that is the primary market for the trading of the Common
Stock.
The purchase price for the shares of Common Stock purchased pursuant to
each Purchase Contract shall be paid by application of payments received by the
Company on the Final Settlement Date from the Collateral Agent at the direction
of the Agent on behalf of the Holders pursuant to the Pledge Agreement in
respect of the principal of the Treasury Securities pledged to secure the
obligations of the relevant Holder under such Purchase Contract.
The Company shall not be obligated to issue any shares of Common Stock
in respect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received payment in full of the aggregate purchase
price for the shares of Common Stock to be purchased thereunder in the manner
set forth herein and in the Purchase Contract Agreement.
Subject to the next succeeding paragraph and the provisions of the
Purchase Contract Agreement, the Company shall pay, on each Payment Date, the
Contract Fee payable in respect of each Purchase Contract to the Person in whose
name the Security Certificate (or one or more Predecessor Security Certificates)
evidencing the Security of which such Purchase Contract is a part and is
registered at the close of business on the Record Date immediately preceding
such Payment Date.
The Company shall have the right, at any time prior to the Final
Settlement Date, to defer the payment of any or all of the Contract Fees
otherwise payable on any Payment Date (on a pro rata basis among all Outstanding
Securities), but only if the Company shall give the Holders and the Agent
written notice of its election to defer such payment (specifying the amount to
be deferred and the period of deferment) as provided in the Purchase Contract
Agreement. Any Contract Fees so deferred shall bear additional Contract Fees
thereon at the rate of 8.25% per annum (computed on the basis of the actual
number of days elapsed in a year of 365 or 366 days, as the case may be),
compounding on each succeeding Payment Date, until paid in full (such deferred
installments of Contract Fees, together with the additional Contract Fees
accrued thereon, are referred to herein as the "DEFERRED CONTRACT FEES").
Deferred Contract Fees shall be due on the next succeeding Payment Date except
to the extent that payment is deferred pursuant to the Purchase Contract
Agreement. No Contract Fees may be deferred to a date that is after the Final
Settlement Date.
7
<PAGE> 8
In the event that the Company elects to defer the payment of Contract
Fees on Purchase Contracts until the Final Settlement Date, the Holder of this
Security Certificate shall receive on the Final Settlement Date, in lieu of a
cash payment, a number of shares of Common Stock (in addition to a number of
Common Stock equal to the Settlement Rate) equal to (x) the aggregate amount of
Deferred Contract Fees payable to the Holder of this Security Certificate
divided by (y) the Applicable Market Value. No fractional shares of Common Stock
shall be issued with respect to the payment of Deferred Contract Fees on the
Final Settlement Date, as provided in the Purchase Contract Agreement.
In the event the Company exercises its option to defer the payment of
Contract Fees, then, until the Deferred Contract Fees have been paid in full,
the Company shall not declare or pay dividends on, make distributions with
respect to, or redeem, purchase or acquire, or make a liquidation payment with
respect to, any of its capital stock (other than purchases or acquisitions of
Common Stock in connection with the satisfaction by the Company or any of its
subsidiaries of their respective obligations under any benefit plans for
directors, officers, agents or employees or the Company's dividend reinvestment
or director, officer, agent or employee stock purchase plans, as a result of a
reclassification of the Company's capital stock or the exchange or conversion of
one class or series of capital stock for another class or series of the
Company's capital stock, the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of the
Company's capital stock or the security being converted or exchanged for the
Company's capital stock), dividends or distributions in the form of shares of,
or options, warrants or rights to subscribe for or purchase, shares of capital
stock of the Company or any declaration of a dividend in connection with the
implementation of extension of a stockholders' rights plan, or the issuance of
stock under any such plan (including the existing such plan) in the future, or
the redemption or repurchase of any such rights pursuant thereto)), shall not
make any payment of interest, principal or premium, if any, on, or repay,
repurchase or redeem any debt securities issued by the Company that rank pari
passu with or junior to such Contract Fees and (c) shall not make any guarantee
payments with respect to any guarantee by the Company of any securities of any
subsidiary of the Company if such guarantee ranks pari passu with or junior in
right of payment to the Contract Fees.
The Purchase Contracts and the obligations and rights of the Company
and the Holders thereunder, including, without limitation, the rights of the
Holders to receive and the obligation of the Company to pay any Contract Fee or
any Deferred Contract Fees, shall immediately and automatically terminate,
without the necessity of any notice or action by any Holder, the Agent or the
Company, if, on or prior to the Final Settlement Date, a Termination Event shall
have occurred. Upon the occurrence of a Termination Event, the Company shall
promptly but in no event more than two Business Days thereafter give written
notice to the Agent, the Collateral Agent and the Holders. Upon and after the
occurrence of a
8
<PAGE> 9
Termination Event, the Collateral Agent shall release the Treasury Securities
from the Pledge in accordance with the provisions of the Pledge Agreement. The
Securities shall thereafter represent the right to receive the Treasury
Securities forming a part of such Securities in accordance with the provisions
of the Purchase Contract Agreement and the Pledge Agreement.
Subject to and upon compliance with the provisions of the Purchase
Contract Agreement, at the option of the Holder thereof, any Purchase Contracts
underlying Securities may be settled early in whole multiples of 1,000
Securities ("EARLY SETTLEMENT") as provided in the Purchase Contract Agreement.
In order to exercise the right to effect Early Settlement with respect to any
Purchase Contracts evidenced by this Security Certificate, the Holder of this
Security Certificate shall deliver this Security Certificate to the Agent at the
Corporate Trust Office duly endorsed for transfer to the Company or in blank
with the form of Election to Settle Early set forth below duly completed and
accompanied by payment in the form of immediately available funds in an amount
(the "EARLY SETTLEMENT AMOUNT") equal to the product of the Stated Amount times
the number of Purchase Contracts with respect to which the Holder has elected to
effect Early Settlement plus if such delivery is made with respect to any
Purchase Contracts during the period from the close of business on any Record
Date immediately preceding any Payment Date to the opening of business of such
Payment Date, an amount equal to the sum of (x) the Contract Fees and Deferred
Contract Fees, if any, payable on such Payment Date with respect to such
Purchase Contracts plus (y) the interest with respect to the related Treasury
Notes payable on such Payment Date. Upon Early Settlement of Purchase Contracts
by a Holder of the related Securities, the Treasury Securities underlying such
Securities shall be released from the Pledge as provided in the Pledge Agreement
and the Holder shall be entitled to receive a number of shares of Common Stock
on account of each Purchase Contract forming part of a Security as to which
Early Settlement is effected equal to the Early Settlement Rate; provided,
however, that upon the Early Settlement of the Purchase Contracts, the Holder
thereof shall forfeit the right to receive accrued Contract Fees and any
Deferred Contract Fees on such Purchase Contracts. The "EARLY SETTLEMENT RATE"
shall initially be equal to .8333 and shall be adjusted in the same manner and
at the same time as the Settlement Rate is adjusted as provided in the Purchase
Contract Agreement.
The Security Certificates are issuable only in registered form and only
in denominations of a single Security and any integral multiple thereof. The
transfer of any Security Certificates shall be registered and Security
Certificates may be exchanged as provided in the Purchase Contract Agreement.
The Security Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents permitted by the Purchase
Contract Agreement. No service charge shall be required for any such
registration of transfer or exchange, but the Company and the Agent may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in
9
<PAGE> 10
connection therewith. For so long as the Purchase Contract underlying a Security
remains in effect, such Security shall not be separable into its constituent
parts (provided that the Holder shall have the right to effect a Collateral
Substitution), and the rights and obligations of the Holder of such Security in
respect of the Treasury Securities and Purchase Contract constituting such
Security may be transferred and exchanged only as a Security.
Upon registration of transfer of this Security Certificate, the
transferee shall be bound (without the necessity of any other action on the part
of such transferee) under the terms of the Purchase Contract Agreement, the
Purchase Contracts evidenced hereby and the Pledge Agreement, and the transferor
shall be released from the obligations under the Purchase Contracts evidenced by
this Security Certificate. The Company covenants and agrees, and the Holder, by
such Holder's acceptance hereof, likewise covenants and agrees, to be bound by
the provisions of this paragraph.
The Holder of this Security Certificate, by such Holder's acceptance
hereof, authorizes the Agent to enter into and perform the related Purchase
Contracts forming part of the Securities evidenced hereby on such Holder's
behalf as such Holder's attorney-in-fact, expressly withholds any consent to the
assumption (i.e., affirmance) of the Purchase Contracts by the Company or such
Holder's trustee in the event that the Company becomes the subject of a case
under the Bankruptcy Code, agrees to be bound by the terms and provisions
thereof, covenants and agrees to perform its obligations under the Purchase
Contracts forming a part of the Securities evidenced hereby, consents to the
provisions of the Purchase Contract Agreement, authorizes the Agent to enter
into and perform the Pledge Agreement on such Holder's behalf as such Holder's
attorney-in-fact, and consents to the Pledge of the Treasury Securities
underlying this Security Certificate pursuant to the Pledge Agreement. The
Holder, by such Holder's acceptance hereof, further covenants and agrees that,
to the extent and in the manner provided in the Purchase Contract Agreement and
the Pledge Agreement, but subject to the terms thereof, payments in respect of
principal of the Treasury Securities on the Final Settlement Date shall be paid
by the Collateral Agent to the Company in satisfaction of such Holder's
obligations under such Purchase Contract and such Holder shall acquire no right,
title or interest in such payments.
Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of at least 66 2/3% in
Stated Amount of the Outstanding Securities.
All terms used herein that are defined in the Purchase Contract
Agreement have the meanings set forth therein.
10
<PAGE> 11
The Purchase Contracts shall for all purposes be governed by, and
construed in accordance with, the laws of the State of New York.
The Company and the Agent, and any agent of the Company or the Agent,
may treat the Person in whose name this Security Certificate is registered as
the owner of the Securities evidenced hereby for the purpose of receiving
payments of interest on the Treasury Notes, receiving payments of Contract Fees
and any Deferred Contract Fees, performance of the Purchase Contracts and for
all other purposes whatsoever, whether or not the payment of interest on the
Treasury Notes or any Contract Fee payable in respect of the Purchase Contracts
constituting a part of the Securities evidenced thereby shall be overdue and
notwithstanding any notice to the contrary, and neither the Company, the Agent
nor any such agent shall be affected by notice to the contrary.
The Purchase Contracts shall not, prior to the settlement thereof,
entitle the Holder to any of the rights of a holder of shares of Common Stock.
A copy of the Purchase Contract Agreement is available for inspection
at the offices of the Agent.
11
<PAGE> 12
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Final Settlement Date of the
Purchase Contracts underlying the number of Securities evidenced by this
Security Certificate be registered in the name of, and delivered, together with
a check in payment for any fractional share, to, the undersigned at the address
indicated below, unless a different name and address have been indicated below.
If shares are to be registered in the name of a Person other than the
undersigned, the undersigned shall pay any transfer tax payable incident
thereto.
Dated:
Signature
If shares are to be registered in
the name of and delivered to a Person
other than the Holder, please print REGISTERED HOLDER
such Person's name and address:
Please print name and
address of Registered
Holder:
Name Name
Address Address
Social Security or other Taxpayer
Identification Number, if any
12
<PAGE> 13
ELECTION TO SETTLE EARLY
The undersigned Holder of this Security Certificate hereby irrevocably
exercises the option to effect Early Settlement in accordance with the terms of
the Purchase Contract Agreement with respect to the Purchase Contracts
underlying the number of Securities evidenced by this Security Certificate
specified below. The option to effect Early Settlement may be exercised only
with respect to whole multiples of 1,000 Securities. The undersigned Holder
directs that a certificate for shares of Common Stock deliverable upon such
Early Settlement be registered in the name of, and delivered, together with a
check in payment for any fractional share and any Security Certificate
representing any Securities evidenced hereby as to which Early Settlement of the
related Purchase Contracts is not effected, to, the undersigned at the address
indicated below, unless a different name and address have been indicated below.
Treasury Securities deliverable upon such Early Settlement shall be transferred
in accordance with the transfer instructions set forth below. If shares are to
be registered in the name of a Person other than the undersigned, the
undersigned shall pay any transfer tax payable incident thereto.
Dated:
Signature
13
<PAGE> 14
Number of Securities evidenced hereby as to which Early Settlement of
the related Purchase Contracts is being elected:
If shares or Security Certificates are to REGISTERED HOLDER
be registered in the name of and
delivered to and Treasury Securities
are to be transferred to a Person other
than the Holder, please print such
Person's name and address:
Please print name and
address of Registered
Holder:
Name Name
Address Address
Social Security or other Taxpayer
Identification Number, if any
Transfer Instructions for Treasury Securities transferable upon Early
Settlement:
14
<PAGE> 15
ELECTION TO SUBSTITUTE COLLATERAL
The undersigned Holder of this Security Certificate hereby irrevocably
exercises the option to effect Collateral Substitution in accordance with the
terms of the Purchase Contract Agreement and the Pledge Agreement with respect
to the number of Securities evidenced by this Security Certificate specified
below. The option to effect Collateral Substitution may be exercised only with
respect to whole multiples of 1,000 Securities. The undersigned Holder hereby
represents and warrants to the Company and the Agent that the undersigned Holder
has deposited with the Collateral Agent Zero-Coupon Treasury Securities having
an aggregate principal amount equal to the aggregate Stated Amount of the
Securities evidenced hereby with respect to which Collateral Settlement is being
elected, in the manner provided in the Pledge Agreement. The undersigned Holder
directs that a Security Certificate for Zero-Coupon Securities deliverable upon
such Collateral Substitution be registered in the name of, and delivered,
together with any Security Certificate representing any Securities evidenced
hereby as to which Collateral Substitution is not effected, to, the undersigned
at the address indicated below, unless a different name and address have been
indicated below. Coupon Treasury Securities deliverable upon such Collateral
substitution shall be transferred in accordance with the transfer instructions
set forth below. If Zero-Coupon Securities are to be registered in the name of a
Person other than the undersigned, the undersigned shall pay any transfer tax
payable incident thereto.
Dated:
Signature
15
<PAGE> 16
Number of Securities evidenced hereby as to which Collateral
Substitution is being elected:
If Security Certificates are to be REGISTERED HOLDER
registered in the name of and
delivered to and Treasury Securities
are to be transferred to a Person
other than the Holder, please print
such Person's name and address:
Please print name and
address of Registered
Holder:
Name Name
Address Address
Social Security or other Taxpayer
Identification Number, if any
Transfer Instructions for Treasury Securities transferable upon
Collateral Substitution:
16
<PAGE> 1
Exhibit 4.3
THIS SECURITY CERTIFICATE IS A GLOBAL SECURITY CERTIFICATE WITHIN THE
MEANING OF THE PURCHASE CONTRACT AGREEMENT HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY ("DTC") OR A NOMINEE OF
DTC. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE PURCHASE CONTRACT AGREEMENT AND NO TRANSFER OF THIS SECURITY (OTHER THAN
A TRANSFER OF THIS SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A
NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN
LIMITED CIRCUMSTANCES.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
K N ENERGY, INC.
8.25% PREMIUM EQUITY PARTICIPATING SECURITY UNITS
(STATED AMOUNT $43 PER SECURITY)
No. G-1 CUSIP No. 482620606
0 Zero-Coupon Securities
This Security Certificate certifies that Cede & Co. is the registered
Holder of the number of Securities set forth above. Each Security represents
ownership by the Holder of United States Treasury Strips due November 15, 2001
(CUSIP No. 912820BC0) that are held through the Treasury/Reserve Automated Debt
Entry System ("TREASURY STRIPS"), or security entitlements in respect thereof
(together with Treasury Strips, "TREASURY SECURITIES"), with a principal amount
equal to the Stated Amount, subject to the Pledge of such Treasury Securities by
such Holder pursuant to the Pledge Agreement, and the rights and obligations of
the Holder under one Purchase Contract with K N Energy, Inc., a Kansas
corporation (the "COMPANY"). The Treasury Securities represented by this
Security Certificate were acquired by the Holder hereof (or such Holder's
predecessor-in-interest) in the open market and are being conveyed to the Holder
of this Security Certificate (or such Holder's predecessor-in-interest) and
pledged pursuant to the Pledge Agreement simultaneously therewith.
<PAGE> 2
2
Pursuant to the Pledge Agreement, the Treasury Securities constituting
part of each Security evidenced hereby are pledged to the Collateral Agent to
secure the obligation of the Holder under the Purchase Contract comprising a
portion of such Security.
The Pledge Agreement provides that all payments of principal of any
Treasury Strips corresponding to Treasury Securities comprising a portion of the
Securities received by the Collateral Agent shall be paid by the Collateral
Agent by wire transfer in same day funds no later than 12:00 noon, New York City
time, on the Final Settlement Date (i) in the case of any principal payments
with respect to any Treasury Strips corresponding to Treasury Securities that
have been released from the Pledge pursuant to the Pledge Agreement, to the
Agent to the account designated by it for such purpose and (ii) in the case of
principal payments on any Treasury Strips corresponding to Pledged Treasury
Securities (as defined in the Pledge Agreement), at the direction of the Agent
on behalf of the Holders, to the Company, in full satisfaction of the respective
obligations of the Holders of the Securities of which such Pledged Treasury
Securities are a part under the Purchase Contracts forming a part of such
Securities.
Each Purchase Contract evidenced hereby obligates the Holder of this
Security Certificate to purchase, and the Company to sell, on November 30, 2001
(the "FINAL SETTLEMENT DATE"), at a price equal to the Stated Amount, a number
of shares of common stock, par value $5.00 per share ("COMMON STOCK"), of the
Company, equal to the Settlement Rate, unless on or prior to the Final
Settlement Date there shall have occurred a Termination Event or Early
Settlement with respect to the Security of which such Purchase Contract is a
part, all as provided in the Purchase Contract Agreement referred to on the
reverse hereof and more fully described on the reverse hereof. The purchase
price for the Common Stock purchased pursuant to each Purchase Contract
evidenced hereby, if not paid earlier, shall be paid on the Final Settlement
Date by application of payment received in respect of the principal of the
Treasury Securities pledged to secure the obligations under such Purchase
Contract of the Holder of the Security of which such Purchase Contract is a
part.
The Company shall pay, on each Payment Date, in respect of each
Purchase Contract forming part of a Security evidenced hereby, an amount (the
"CONTRACT FEES") equal to 2.375% per annum of the Stated Amount, computed on the
basis of the actual number of days elapsed in a year of 365 or 366 days, as the
case may be, subject to deferral at the option of the Company as provided in the
Purchase Contract Agreement and more fully described on the reverse hereof. Such
Contract Fee shall be payable to the Person in whose name this Security
Certificate (or a Predecessor Security Certificate) is registered at the close
of business on the Record Date immediately preceding such Payment Date.
The Contract Fees shall be payable at the office or agency of the Agent
in The City of New York or, at the option of the Company, by check mailed to the
address of the Person entitled thereto as such address appears on Security
Register.
Reference is hereby made to the further provisions set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.
<PAGE> 3
3
Unless the certificate of authentication hereon has been executed by
the Agent by manual signature, this Security Certificate shall not be entitled
to any benefit under the Pledge Agreement or the Purchase Contract Agreement or
be valid or obligatory for any purpose.
<PAGE> 4
4
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
K N ENERGY, INC.
By: _________________________
Name:
Title:
Attested by:
HOLDER SPECIFIED ABOVE (as to
obligations of such Holder under the
Purchase Contracts evidenced hereby)
By: U.S. BANK TRUST NATIONAL
ASSOCIATION, not individually
but solely as Attorney-in-Fact of
such Holder
By: _________________________
Authorized Signatory
Dated:
(Form of Certificate of Authentication)
This is one of the Security Certificates referred to in the within
mentioned Purchase Contract Agreement.
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Agent
By: ___________________________
Authorized Signatory
<PAGE> 5
5
[REVERSE OF SECURITY CERTIFICATE]
Each Purchase Contract evidenced hereby is governed by a Purchase
Contract Agreement, dated as of November 25, 1998 (the "PURCHASE CONTRACT
AGREEMENT"), between the Company and U.S. Bank Trust National Association, as
Purchase Contract Agent (herein called the "AGENT"), to which Purchase Contract
Agreement and supplemental agreements thereto reference is hereby made for a
description of the respective rights, limitations of rights, obligations, duties
and immunities thereunder of the Agent, the Company and the Holders and of the
terms upon which the Security Certificates are, and are to be, executed and
delivered.
Each Purchase Contract evidenced hereby shall obligate the Holder of
this Security Certificate to purchase, and the Company to sell, on the Final
Settlement Date at a price equal to the Stated Amount, a number of shares of
Common Stock of the Company equal to the Settlement Rate, unless, on or prior to
the Final Settlement Date, there shall have occurred a Termination Event or an
Early Settlement with respect to the Security of which such Purchase Contract is
a part. The "SETTLEMENT RATE" is equal to (a) if the Applicable Market Value (as
defined below) is greater than $51.60 (the "THRESHOLD APPRECIATION PRICE"),
.8333 of a share of Common Stock per Purchase Contract, (b) if the Applicable
Market Value is less than or equal to the Threshold Appreciation Price but is
greater than the Stated Amount, a fractional share of Common Stock per Purchase
Contract equal to the Stated Amount divided by the Applicable Market Value
(rounded upward or downward to the nearest 1/10,000th of a share) and (c) if the
Applicable Market Value is less than or equal to the Stated Amount, one share of
Common Stock per Purchase Contract, in each case subject to adjustment as
provided in the Purchase Contract Agreement. No fractional shares of Common
Stock shall be issued upon settlement of Purchase Contracts, as provided in the
Purchase Contract Agreement.
The "APPLICABLE MARKET VALUE" means the average of the Closing Prices
per share of Common Stock on each of the twenty consecutive Trading Days ending
on the second Trading Day immediately preceding the Final Settlement Date. The
"CLOSING PRICE" of the Common Stock on any date of determination means the
closing sale price (or, if no closing price is reported, the last reported sale
price) of the Common Stock on The New York Stock Exchange, Inc. (the "NYSE") on
such date or, if the Common Stock is not listed for trading on the NYSE on any
such date, as reported in the composite transactions for the principal United
States securities exchange on which the Common Stock is so listed or, if the
Common Stock is not so listed on a United States national or regional securities
exchange, as reported by the Nasdaq Stock Market or, if such price of the Common
Stock is not so reported, the last quoted bid price for the Common Stock in the
over-the-counter market as reported by the National Quotation Bureau or similar
organization or, if such bid price is not available, the market value of the
Common Stock on such date as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Company. A "TRADING
DAY" means a day on which the Common Stock (A) is not suspended from trading on
any national or regional securities exchange or association or over-the-counter
market at the close of business and (B) has traded at least once on the national
or regional securities exchange or association or over-the-counter market that
is the primary market for the trading of the Common Stock.
<PAGE> 6
6
The purchase price for the shares of Common Stock purchased pursuant to
each Purchase Contract shall be paid by application of payments received by the
Company on the Final Settlement Date from the Collateral Agent at the direction
of the Agent on behalf of the Holders pursuant to the Pledge Agreement in
respect of the principal of the Treasury Securities pledged to secure the
obligations of the relevant Holder under such Purchase Contract. The principal
of the Treasury Securities pledged to secure the Holders' obligations under the
Purchase Contracts will be paid at maturity to the Collateral Agent who will
hold such amount until the Final Settlement Date. Holders will not be entitled
to any interest in respect of amounts so held.
The Company shall not be obligated to issue any shares of Common Stock
in respect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received payment in full of the aggregate purchase
price for the shares of Common Stock to be purchased thereunder in the manner
set forth herein and in the Purchase Contract Agreement.
Subject to the next succeeding paragraph and the provisions of the
Purchase Contract Agreement, the Company shall pay, on each Payment Date, the
Contract Fee payable in respect of each Purchase Contract to the Person in whose
name the Security Certificate (or one or more Predecessor Security Certificates)
evidencing the Security of which such Purchase Contract is a part and is
registered at the close of business on the Record Date immediately preceding
such Payment Date.
The Company shall have the right, at any time prior to the Final
Settlement Date, to defer the payment of any or all of the Contract Fees
otherwise payable on any Payment Date (on a pro rata basis among all Outstanding
Securities), but only if the Company shall give the Holders and the Agent
written notice of its election to defer such payment (specifying the amount to
be deferred and the period of deferment) as provided in the Purchase Contract
Agreement. Any Contract Fees so deferred shall bear additional Contract Fees
thereon at the rate of 8.25% per annum (computed on the basis of the actual
number of days elapsed in a year of 365 or 366 days, as the case may be),
compounding on each succeeding Payment Date, until paid in full (such deferred
installments of Contract Fees, together with the additional Contract Fees
accrued thereon, are referred to herein as the "DEFERRED CONTRACT FEES").
Deferred Contract Fees shall be due on the next succeeding Payment Date except
to the extent that payment is deferred pursuant to the Purchase Contract
Agreement. No Contract Fees may be deferred to a date that is after the Final
Settlement Date.
In the event that the Company elects to defer the payment of Contract
Fees on Purchase Contracts until the Final Settlement Date, the Holder of this
Security Certificate shall receive on the Final Settlement Date, in lieu of a
cash payment, a number of shares of Common Stock (in addition to a number of
Common Stock equal to the Settlement Rate) equal to (x) the aggregate amount of
Deferred Contract Fees payable to the Holder of this Security Certificate
divided by (y) the Applicable Market Value. No fractional shares of Common Stock
shall be issued with respect to the payment of Deferred Contract Fees on the
Final Settlement Date, as provided in the Purchase Contract Agreement.
<PAGE> 7
7
In the event the Company exercises its option to defer the payment of
Contract Fees, then, until the Deferred Contract Fees have been paid in full,
the Company shall not declare or pay dividends on, make distributions with
respect to, or redeem, purchase or acquire, or make a liquidation payment with
respect to, any of its capital stock (other than purchases or acquisitions of
Common Stock in connection with the satisfaction by the Company or any of its
subsidiaries of their respective obligations under any benefit plans for
directors, officers, agents or employees or the Company's dividend reinvestment
or director, officer, agent or employee stock purchase plans, as a result of a
reclassification of the Company's capital stock or the exchange or conversion of
one class or series of capital stock for another class or series of the
Company's capital stock, the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of the
Company's capital stock or the security being converted or exchanged for the
Company's capital stock), dividends or distributions in the form of shares of,
or options, warrants or rights to subscribe for or purchase, shares of capital
stock of the Company or any declaration of a dividend in connection with the
implementation of extension of a stockholders' rights plan, or the issuance of
stock under any such plan (including the existing such plan) in the future, or
the redemption or repurchase of any such rights pursuant thereto)), shall not
make any payment of interest, principal or premium, if any, on, or repay,
repurchase or redeem any debt securities issued by the Company that rank pari
passu with or junior to such Contract Fees and (c) shall not make any guarantee
payments with respect to any guarantee by the Company of any securities of any
subsidiary of the Company if such guarantee ranks pari passu with or junior in
right of payment to the Contract Fees.
The Purchase Contracts and the obligations and rights of the Company
and the Holders thereunder, including, without limitation, the rights of the
Holders to receive and the obligation of the Company to pay any Contract Fee or
any Deferred Contract Fees, shall immediately and automatically terminate,
without the necessity of any notice or action by any Holder, the Agent or the
Company, if, on or prior to the Final Settlement Date, a Termination Event shall
have occurred. Upon the occurrence of a Termination Event, the Company shall
promptly but in no event more than two Business Days thereafter give written
notice to the Agent, the Collateral Agent and the Holders. Upon and after the
occurrence of a Termination Event, the Collateral Agent shall release the
Treasury Securities from the Pledge in accordance with the provisions of the
Pledge Agreement. The Securities shall thereafter represent the right to receive
the Treasury Securities forming a part of such Securities in accordance with the
provisions of the Purchase Contract Agreement and the Pledge Agreement.
Subject to and upon compliance with the provisions of the Purchase
Contract Agreement, at the option of the Holder thereof, any Purchase Contracts
underlying Securities may be settled early in whole multiples of 1,000
Securities ("EARLY SETTLEMENT") as provided in the Purchase Contract Agreement
at any time prior to November 15, 2001. In order to exercise the right to effect
Early Settlement with respect to any Purchase Contracts evidenced by this
Security Certificate, the Holder of this Security Certificate shall deliver this
Security Certificate to the Agent at the Corporate Trust Office duly endorsed
for transfer to the Company or in blank with the form of Election to Settle
Early set forth below duly completed and accompanied by payment in the form of
immediately available funds in an amount (the "EARLY SETTLEMENT AMOUNT") equal
to the product of the Stated Amount times the number of Purchase Contracts with
respect
<PAGE> 8
8
to which the Holder has elected to effect Early Settlement plus if such delivery
is made with respect to any Purchase Contracts during the period from the close
of business on any Record Date immediately preceding any Payment Date to the
opening of business of such Payment Date, an amount equal to the Contract Fees
and Deferred Contract Fees, if any, payable on such Payment Date with respect to
such Purchase Contracts. Upon Early Settlement of Purchase Contracts by a Holder
of the related Securities, the Treasury Securities underlying such Securities
shall be released from the Pledge as provided in the Pledge Agreement and the
Holder shall be entitled to receive a number of shares of Common Stock on
account of each Purchase Contract forming part of a Security as to which Early
Settlement is effected equal to the Early Settlement Rate; provided, however,
that upon the Early Settlement of the Purchase Contracts, the Holder thereof
shall forfeit the right to receive accrued Contract Fees and any Deferred
Contract Fees on such Purchase Contracts. The "EARLY SETTLEMENT RATE" shall
initially be equal to .8333 and shall be adjusted in the same manner and at the
same time as the Settlement Rate is adjusted as provided in the Purchase
Contract Agreement.
The Security Certificates are issuable only in registered form and only
in denominations of a single Security and any integral multiple thereof. The
transfer of any Security Certificates shall be registered and Security
Certificates may be exchanged as provided in the Purchase Contract Agreement.
The Security Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents permitted by the Purchase
Contract Agreement. No service charge shall be required for any such
registration of transfer or exchange, but the Company and the Agent may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. For so long as the Purchase Contract underlying
a Security remains in effect, such Security shall not be separable into its
constituent parts, and the rights and obligations of the Holder of such Security
in respect of the Treasury Securities and Purchase Contract constituting such
Security may be transferred and exchanged only as a Security.
Upon registration of transfer of this Security Certificate, the
transferee shall be bound (without the necessity of any other action on the part
of such transferee) under the terms of the Purchase Contract Agreement, the
Purchase Contracts evidenced hereby and the Pledge Agreement, and the transferor
shall be released from the obligations under the Purchase Contracts evidenced by
this Security Certificate. The Company covenants and agrees, and the Holder, by
such Holder's acceptance hereof, likewise covenants and agrees, to be bound by
the provisions of this paragraph.
The Holder of this Security Certificate, by such Holder's acceptance
hereof, authorizes the Agent to enter into and perform the related Purchase
Contracts forming part of the Securities evidenced hereby on such Holder's
behalf as such Holder's attorney-in-fact, expressly withholds any consent to the
assumption (i.e., affirmance) of the Purchase Contracts by the Company or such
Holder's trustee in the event that the Company becomes the subject of a case
under the Bankruptcy Code, agrees to be bound by the terms and provisions
thereof, covenants and agrees to perform its obligations under the Purchase
Contracts forming a part of the Securities evidenced hereby, consents to the
provisions of the Purchase Contract Agreement, authorizes the Agent to enter
into and perform the Pledge Agreement on such Holder's behalf as such Holder's
<PAGE> 9
9
attorney-in-fact, and consents to the Pledge of the Treasury Securities
underlying this Security Certificate pursuant to the Pledge Agreement. The
Holder, by such Holder's acceptance hereof, further covenants and agrees that,
to the extent and in the manner provided in the Purchase Contract Agreement and
the Pledge Agreement, but subject to the terms thereof, payments in respect of
principal of the Treasury Securities on the Final Settlement Date shall be paid
by the Collateral Agent to the Company in satisfaction of such Holder's
obligations under such Purchase Contract and such Holder shall acquire no right,
title or interest in such payments.
Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of at least 66 2/3% in
Stated Amount of the Outstanding Securities.
All terms used herein that are defined in the Purchase Contract
Agreement have the meanings set forth therein.
The Purchase Contracts shall for all purposes be governed by, and
construed in accordance with, the laws of the State of New York.
The Company and the Agent, and any agent of the Company or the Agent,
may treat the Person in whose name this Security Certificate is registered as
the owner of the Securities evidenced hereby for the purpose of receiving
payments of Contract Fees and any Deferred Contract Fees, performance of the
Purchase Contracts and for all other purposes whatsoever, whether or not the
payment of any Contract Fee payable in respect of the Purchase Contracts
constituting a part of the Securities evidenced thereby shall be overdue and
notwithstanding any notice to the contrary, and neither the Company, the Agent
nor any such agent shall be affected by notice to the contrary.
The Purchase Contracts shall not, prior to the settlement thereof,
entitle the Holder to any of the rights of a holder of shares of Common Stock.
A copy of the Purchase Contract Agreement is available for inspection
at the offices of the Agent.
<PAGE> 10
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SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Final Settlement Date of the
Purchase Contracts underlying the number of Securities evidenced by this
Security Certificate be registered in the name of, and delivered, together with
a check in payment for any fractional share, to, the undersigned at the address
indicated below, unless a different name and address have been indicated below.
If shares are to be registered in the name of a Person other than the
undersigned, the undersigned shall pay any transfer tax payable incident
thereto.
Dated:
Signature
If shares are to be registered in the
name of and delivered to a Person other
than the Holder, please print REGISTERED HOLDER
such Person's name and address:
Please print name and
address of Registered
Holder:
Name Name
Address Address
Social Security or other Taxpayer
Identification Number, if any
<PAGE> 11
11
ELECTION TO SETTLE EARLY
The undersigned Holder of this Security Certificate hereby irrevocably
exercises the option to effect Early Settlement in accordance with the terms of
the Purchase Contract Agreement with respect to the Purchase Contracts
underlying the number of Securities evidenced by this Security Certificate
specified below. The option to effect Early Settlement may be exercised only
with respect to whole multiples of 1,000 Securities. The undersigned Holder
directs that a certificate for shares of Common Stock deliverable upon such
Early Settlement be registered in the name of, and delivered, together with a
check in payment for any fractional share and any Security Certificate
representing any Securities evidenced hereby as to which Early Settlement of the
related Purchase Contracts is not effected, to, the undersigned at the address
indicated below, unless a different name and address have been indicated below.
Treasury Securities deliverable upon such Early Settlement shall be transferred
in accordance with the transfer instructions set forth below. If shares are to
be registered in the name of a Person other than the undersigned, the
undersigned shall pay any transfer tax payable incident thereto.
Dated:
Signature
<PAGE> 12
12
Number of Securities evidenced hereby as to which Early Settlement of
the related Purchase Contracts is being elected:
If shares or Security Certificates are to REGISTERED HOLDER
be registered in the name of and
delivered to and Treasury Securities
are to be transferred to a Person other
than the Holder, please print such
Person's name and address:
Please print name and
address of Registered
Holder:
Name Name
Address Address
Social Security or other Taxpayer
Identification Number, if any
Transfer Instructions for Treasury Securities transferable upon Early
Settlement:
<PAGE> 1
Exhibit 4.4
K N ENERGY, INC.
AND
U.S. BANK TRUST NATIONAL ASSOCIATION,
AS PURCHASE CONTRACT AGENT
PURCHASE CONTRACT AGREEMENT
DATED AS OF NOVEMBER 25, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.01. Definitions..................................................................... 1
SECTION 1.02. Compliance Certificates and Opinions............................................ 9
SECTION 1.03. Form of Documents Delivered to Agent............................................ 10
SECTION 1.04. Acts of Holders; Record Dates................................................... 10
SECTION 1.05. Notices, Etc., to Agent and the Company......................................... 12
SECTION 1.06. Notice to Holders; Waiver....................................................... 13
SECTION 1.07. Effect of Headings and Table of Contents........................................ 13
SECTION 1.08. Successors and Assigns.......................................................... 13
SECTION 1.09. Separability Clause............................................................. 13
SECTION 1.10. Benefits of Agreement........................................................... 13
SECTION 1.11. Governing Law................................................................... 14
SECTION 1.12. Legal Holidays.................................................................. 14
SECTION 1.13. Counterparts.................................................................... 14
SECTION 1.14. Inspection of Agreement......................................................... 14
SECTION 1.15. Appointment of Financial Institution as Agent for the
Company............................................................................... 14
ARTICLE 2
SECURITY CERTIFICATE FORMS
SECTION 2.01. Forms of Security Certificates Generally........................................ 15
SECTION 2.02. Form of Agent's Certificate of Authentication................................... 17
ARTICLE 3
THE SECURITIES
SECTION 3.01. Title and Terms; Denominations.................................................. 17
SECTION 3.02. Rights and Obligations Evidenced by the Security
Certificates.......................................................................... 18
SECTION 3.03. Execution, Authentication, Delivery and Dating.................................. 18
SECTION 3.04. Temporary Security Certificates................................................. 19
SECTION 3.05. Registration; Registration of Transfer and Exchange............................. 20
SECTION 3.06. Mutilated, Destroyed, Lost and Stolen Security Certificates..................... 22
SECTION 3.07. Persons Deemed Owners........................................................... 23
SECTION 3.08. Cancellation.................................................................... 24
SECTION 3.09. Securities Not Separable........................................................ 24
</TABLE>
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<TABLE>
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SECTION 3.10. No Consent to Assumption........................................................ 24
ARTICLE 4
THE TREASURY SECURITIES
SECTION 4.01. Payment of Interest; Interest Rights Preserved.................................. 25
SECTION 4.02. Transfer of Treasury Securities Upon Occurrence of
Termination Event..................................................................... 26
SECTION 4.03. Substitution of Collateral...................................................... 27
ARTICLE 5
THE PURCHASE CONTRACTS
SECTION 5.01. Purchase of Shares of Common Stock.............................................. 28
SECTION 5.02. Contract Fees................................................................... 30
SECTION 5.03. Deferral of Payment Dates for Contract Fees..................................... 31
SECTION 5.04. Payment of Purchase Price....................................................... 33
SECTION 5.05. Issuance of Shares of Common Stock.............................................. 33
SECTION 5.06. Adjustment of Settlement Rate................................................... 34
SECTION 5.07. Notice of Adjustments and Certain Other Events.................................. 41
SECTION 5.08. Termination Event; Notice....................................................... 41
SECTION 5.09. Early Settlement................................................................ 42
SECTION 5.10. No Fractional Shares............................................................ 43
SECTION 5.11. Charges and Taxes............................................................... 44
ARTICLE 6
REMEDIES
SECTION 6.01. Unconditional Right of Holders to Receive Contract Fees
and Purchase Common Stock............................................................. 44
SECTION 6.02. Restoration of Rights and Remedies.............................................. 45
SECTION 6.03. Rights and Remedies Cumulative.................................................. 45
SECTION 6.04. Delay or Omission Not Waiver.................................................... 45
SECTION 6.05. Undertaking for Costs........................................................... 45
SECTION 6.06. Waiver of Stay or Extension Laws................................................ 46
ARTICLE 7
THE AGENT
SECTION 7.01. Certain Duties and Responsibilities............................................. 46
SECTION 7.02. Notice of Default............................................................... 47
</TABLE>
ii
<PAGE> 4
<TABLE>
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SECTION 7.03. Certain Rights of Agent......................................................... 47
SECTION 7.04. Not Responsible for Recitals or Issuance of Securities.......................... 48
SECTION 7.05. May Hold Securities............................................................. 48
SECTION 7.06. Money Held in Custody........................................................... 49
SECTION 7.07. Compensation and Reimbursement.................................................. 49
SECTION 7.08. Corporate Agent Required; Eligibility........................................... 49
SECTION 7.09. Resignation and Removal; Appointment of Successor............................... 50
SECTION 7.10. Acceptance of Appointment by Successor.......................................... 51
SECTION 7.11. Merger, Conversion, Consolidation or Succession to
Business.............................................................................. 52
SECTION 7.12. Preservation of Information; Communications to Holders.......................... 52
SECTION 7.13. No Obligations of Agent......................................................... 52
SECTION 7.14. Tax Compliance.................................................................. 53
ARTICLE 8
SUPPLEMENTAL AGREEMENTS
SECTION 8.01. Supplemental Agreements Without Consent of Holders.............................. 53
SECTION 8.02. Supplemental Agreements with Consent of Holders................................. 54
SECTION 8.03. Execution of Supplemental Agreements............................................ 55
SECTION 8.04. Effect of Supplemental Agreements............................................... 55
SECTION 8.05. Reference to Supplemental Agreements............................................ 56
ARTICLE 9
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 9.01. Covenant Not to Merge, Consolidate, Sell or Convey
Property Except Under Certain Conditions.............................................. 56
SECTION 9.02. Rights and Duties of Successor Corporation...................................... 56
SECTION 9.03. Opinion of Counsel to Agent..................................................... 57
ARTICLE 10
COVENANTS
SECTION 10.01. Performance under Purchase Contracts........................................... 57
SECTION 10.02. Maintenance of Office or Agency................................................ 58
SECTION 10.03. Company to Reserve Common Stock................................................ 58
SECTION 10.04. Covenant as to Common Stock.................................................... 58
SECTION 10.05. Statement of Officers of the Company as to Default............................. 59
</TABLE>
iii
<PAGE> 5
PURCHASE CONTRACT AGREEMENT, dated as of November 25, 1998, between K N
Energy, Inc., a Kansas corporation (the "COMPANY"), and U.S. Bank Trust National
Association, acting as purchase contract agent for the Holders (as defined
below) from time to time (the "AGENT").
RECITALS
The Company has duly authorized the execution and delivery of this
Agreement and the Security Certificates evidencing the Securities.
All things necessary to make the Company's obligations under the
Securities, when the Security Certificates are executed by the Company and
authenticated, executed on behalf of the Holders and delivered by the Agent, as
in this Agreement provided, the valid obligations of the Company, enforceable in
accordance with their terms, and to constitute these presents a valid agreement
of the Company, enforceable in accordance with its terms, have been done.
W I T N E S S E T H:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed as follows:
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.01. Definitions. For all purposes of this Agreement, except
as otherwise expressly provided or unless the context otherwise requires:
(i) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
and
(ii) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.
"ACT" when used with respect to any Holder, has the meaning specified
in Section 1.04.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control
<PAGE> 6
with such specified Person. For the purposes of this definition, "control" when
used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"AGENT" means the Person named as the "Agent" in the first paragraph of
this instrument until a successor Agent shall have become such pursuant to the
applicable provisions of this Agreement, and thereafter "Agent" shall mean the
Person who is then the Agent hereunder.
"AGREEMENT" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions hereof.
"APPLICABLE MARKET VALUE" has the meaning specified in Section 5.01.
"BANKRUPTCY CODE" means title 11 of the United States Code, or any
other law of the United States that from time to time provides a uniform system
of bankruptcy laws.
"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 Depositary, or on the books of a Person maintaining an account
with such Depositary (directly as a Depositary Participant or as an indirect
participant, in each case in accordance with the rules of such Depositary).
"BOARD OF DIRECTORS" means the board of directors of the Company or a
duly authorized committee of that board.
"BOARD RESOLUTION" means one or more resolutions of the Board of
Directors, a copy of which has been 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 Agent.
"BOOK ENTRY INTEREST" means a beneficial interest in a Global Security
Certificate registered in the name of a Depositary or a nominee thereof,
ownership and transfers of which shall be maintained and made through book
entries by such Depositary as described in Section 2.01.
2
<PAGE> 7
"BUSINESS DAY" means any day that is not a Saturday, a Sunday or a day
on which the NYSE or banking institutions or trust companies in The City of New
York are authorized or obligated by law or executive order to be closed.
"CLOSING PRICE" has the meaning specified in Section 5.01.
"COLLATERAL AGENT" means The Chase Manhattan Trust Company, National
Association, as Collateral Agent under the Pledge Agreement until a successor
Collateral Agent shall have become such pursuant to the applicable provisions of
the Pledge Agreement, and thereafter "Collateral Agent" shall mean the Person
who is then the Collateral Agent thereunder.
"COLLATERAL SUBSTITUTION" has the meaning specified in Section 4.03(a).
"COLLATERAL SUBSTITUTION DATE " has the meaning specified in Section
4.03(a).
"COMMON STOCK" means the common stock, par value $5.00 per share, of
the Company.
"COMPANY" means the Person named as the "Company" in the first
paragraph of this instrument until a successor shall have become such pursuant
to the applicable provisions of this Agreement, and thereafter "Company" shall
mean such successor.
"CONSTITUENT PERSON" has the meaning specified in Section 5.06(b).
"CONTRACT FEES" means the fees payable by the Company on each Payment
Date in respect of each Purchase Contract as provided in the Purchase Contract.
"CORPORATE TRUST OFFICE" means the principal corporate trust office of
the Agent at which, at any particular time, its corporate trust business shall
be administered, which office at the date hereof is located at One Illinois
Center, Suite 3000, 111 East Wacker Drive, Chicago, Illinois 60601 Attention:
Corporate Trust Services Division, except that for purposes of Section 10.02,
such term shall mean the office or agency of the Agent in the Borough of
Manhattan, the City of New York, which office at the date hereof is located at
100 Wall Street, Suite 2000, New York, New York 10005.
"COUPON SECURITY" means the collective rights and obligations of a
Holder of a Security Certificate in respect of Coupon Treasury Securities with a
3
<PAGE> 8
principal amount equal to the Stated Amount, subject to the Pledge thereof, and
a Purchase Contract.
"COUPON TREASURY SECURITIES" means Treasury Notes and security
entitlements in respect thereof.
"CURRENT MARKET PRICE" has the meaning specified in Section
5.06(a)(ix).
"DEFERRED CONTRACT FEES" has the meaning specified in Section 5.03.
"DEPOSITARY" means a clearing agency registered under the Exchange Act
that is designated to act as Depositary for the Securities as contemplated by
Section 2.01.
"DEPOSITARY PARTICIPANT" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Depositary effects
book entry transfers and pledges of securities deposited with the Depositary.
"EARLY SETTLEMENT" has the meaning specified in Section 5.09(a).
"EARLY SETTLEMENT AMOUNT" has the meaning specified in Section
5.09(a).
"EARLY SETTLEMENT DATE" has the meaning specified in Section 5.09(a).
"EARLY SETTLEMENT RATE" has the meaning specified in Section 5.09(b).
"EVENT CONSIDERATION" has the meaning specified in Section 5.06(b).
"EXCHANGE ACT" means the Securities Exchange Act of 1934 and any
statute successor thereto, in each case as amended from time to time, and the
rules and regulations promulgated thereunder.
"EXCESS COUPON TREASURY SECURITIES" and "EXCESS ZERO-COUPON TREASURY
SECURITIES" have the respective meanings specified in Section 4.02.
"EXPIRATION DATE" has the meaning specified in Section 1.04.
"EXPIRATION TIME" has the meaning specified in Section 5.06(a)(vi).
"FINAL SETTLEMENT DATE" means November 30, 2001.
"FINAL SETTLEMENT FUND" has the meaning specified in Section 5.05.
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"GLOBAL SECURITY CERTIFICATE" means a Security Certificate that
evidences all or part of the Securities and is registered in the name of a
Depositary or a nominee thereof.
"HOLDER" when used with respect to a Security Certificate (or a
Security) means a Person in whose name the Security evidenced by such Security
Certificate (or the Security Certificate evidencing such Security) is registered
in the Security Register, subject to Section 3.07.
"ISSUER ORDER" or "ISSUER REQUEST" means a written order or request
signed in the name of the Company by its Chairman of the Board, any Vice
Chairman, its President or a Vice President and by its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the Agent.
"MARKETABLE COMMON STOCK" has the meaning specified in Section
5.06(b).
"NYSE" means The New York Stock Exchange, Inc.
"OFFICERS' CERTIFICATE" means a certificate signed by the Chairman of
the Board, any Vice Chairman of the Board, the President or any Vice President
and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary of the Company and delivered to the Agent.
"OPINION OF COUNSEL" means an opinion in writing signed by legal
counsel, who may be an employee of or counsel to the Company and who shall be
reasonably acceptable to the Agent.
"OUTSTANDING SECURITIES" means, as of the date of determination, all
Securities evidenced by then Outstanding Security Certificates, except:
(i) if a Termination Event has occurred, Securities for which (A) the
underlying Treasury Notes or Treasury Strips, as the case may be, have
been theretofore deposited with the Agent or (B) security entitlements
in respect of the underlying Treasury Notes or Treasury Strips, as the
case may be, have been credited to a securities account of the Agent,
in either case in trust for the Holders of such Securities; and
(ii) on and after the applicable Early Settlement Date, Securities as
to which the Holder has elected to effect Early Termination of the
related Purchase Contracts;
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<PAGE> 10
provided, however, that in determining whether the Holders of the requisite
number of Securities have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, Securities owned by, or in respect of which
security entitlements are owned by, the Company or any Affiliate of the Company
shall be disregarded and deemed not to be outstanding, except that, in
determining whether the Agent shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Securities that the Agent knows to be so owned, or in respect of which the Agent
knows security entitlements to be so held, shall be so disregarded. Securities
so owned, or security entitlements in respect thereof that are so owned, that
have been pledged in good faith may be regarded as outstanding if the pledgee
establishes to the satisfaction of the Agent the pledgee's right so to act with
respect to such Securities or security entitlements and that the pledgee is not
the Company or any Affiliate of the Company.
"OUTSTANDING SECURITY CERTIFICATES" means, as of the date of
determination, all Security Certificates theretofore authenticated, executed and
delivered under this Agreement, except:
(i) Security Certificates theretofore canceled by the Agent or
delivered to the Agent for cancellation; and
(ii) Security Certificates in exchange for or in lieu of which other
Security Certificates have been authenticated, executed on behalf of
the Holder and delivered pursuant to this Agreement, other than any
such Security Certificate in respect of which there shall have been
presented to the Agent proof satisfactory to it that such Security
Certificate is held by a protected purchaser in whose hands the
Securities evidenced by such Security Certificate are valid obligations
of the Company.
"PAYMENT DATE" means each May 31 and November 30, commencing May 31,
1999.
"PERSON" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"PLEDGE" means the pledge under the Pledge Agreement of the Treasury
Securities constituting a part of the Securities.
"PLEDGE AGREEMENT" means the Pledge Agreement, dated as of the date
hereof, among the Company, the Collateral Agent and the Agent on its own behalf
and as attorney-in-fact for the Holders from time to time of the Securities.
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"PREDECESSOR SECURITY CERTIFICATE" of any particular Security
Certificate means every previous Security Certificate evidencing all or a
portion of the rights and obligations of the Holder under the Securities
evidenced thereby; and, for the purposes of this definition, any Security
Certificate authenticated and delivered under Section 3.06 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security Certificate shall be
deemed to evidence the same rights and obligations of the Holder as the
mutilated, destroyed, lost or stolen Security Certificate.
"PURCHASE CONTRACT" when used with respect to any Security, means the
contract obligating the Company to sell and the Holder of such Security to
purchase Common Stock on the terms and subject to the conditions set forth in
Article 5 hereof.
"PURCHASED SHARES" has the meaning specified in Section 5.06(a)(vi).
"RECORD DATE" for the interest and Contract Fees payable on any Payment
Date means, as to any Securities evidenced by a Global Security Certificate, the
Business Day immediately preceding such Payment Date and, as to any Securities
evidenced by any other Security Certificate, 15 days prior to such Payment Date.
"REORGANIZATION EVENT" has the meaning specified in Section 5.06(b).
"RESPONSIBLE OFFICER" when used with respect to the Agent, means any
officer of the Agent assigned by the Agent to administer its corporate trust
matters.
"RIGHTS" has the meaning specified in Section 5.06(a)(vii).
"SECURITIES" means Coupon Securities or Zero-Coupon Securities.
"SECURITY CERTIFICATE" means a certificate evidencing the rights and
obligations of a Holder in respect of the number of Securities specified on such
certificate.
"SECURITY REGISTER" and "SECURITY REGISTRAR" have the respective
meanings specified in Section 3.05.
"SETTLEMENT RATE" has the meaning specified in Section 5.01.
"STATED AMOUNT" means $43.
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"TERMINATION DATE" means the date, if any, on which a Termination
Event occurs.
"TERMINATION EVENT" means the occurrence of any of the following
events: (i) at any time on or prior to the Final Settlement Date, a judgment,
decree or order by a court having jurisdiction in the premises shall have been
entered granting relief under the Bankruptcy Code, adjudicating the Company to
be insolvent, or approving as properly filed a petition seeking reorganization
or liquidation of the Company under the Bankruptcy Code or any other similar
applicable Federal or State law, and, unless such judgment, decree or order
shall have been entered within 60 days prior to the Final Settlement Date, such
decree or order shall have continued undischarged and unstayed for a period of
60 days; or (ii) a judgment, decree or order of a court having jurisdiction in
the premises for the appointment of a receiver or liquidator or trustee or
assignee in bankruptcy or insolvency of the Company or of its property, or for
the winding up or liquidation of its affairs, shall have been entered, and,
unless such judgment, decree or order shall have been entered within 60 days
prior to the Final Settlement Date, such judgment, decree or order shall have
continued undischarged and unstayed for a period of 60 days, or (iii) at any
time on or prior to the Final Settlement Date the Company shall file a petition
for relief under the Bankruptcy Code, or shall consent to the filing of a
bankruptcy proceeding against it, or shall file a petition or answer or consent
seeking reorganization or liquidation under the Bankruptcy Code or any other
similar applicable Federal or State law, or shall consent to the filing of any
such petition, or shall consent to the appointment of a receiver or liquidator
or trustee or assignee in bankruptcy or insolvency of it or of any substantial
part of its property, or shall make an assignment for the benefit of creditors,
or shall admit in writing its inability to pay its debts generally as they
become due.
"THRESHOLD APPRECIATION PRICE" has the meaning specified in Section
5.01.
"TIA" means the Trust Indenture Act of 1939, as amended, or any
successor statute.
"TRADING DAY" has the meaning specified in Section 5.01.
"TREASURY NOTES" means 5.875% United States Treasury Notes due November
30, 2001 (CUSIP No. 9128272C5) that are held through the Treasury/Reserve
Automated Debt Entry System.
"TREASURY SECURITIES" means Coupon Treasury Securities or Zero-
Coupon Treasury Securities.
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"TREASURY STRIPS" means zero-coupon United States Treasury Strips due
November 15, 2001 (CUSIP No. 912820BC0) that are held through the
Treasury/Reserve Automated Debt Entry System.
"UNDERWRITERS" means the several Underwriters named in the
Underwriting Agreement.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement dated
November 19, 1998 between the Company and Morgan Stanley & Co. Incorporated,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co., Petrie
Parkman & Co., Inc., Salomon Smith Barney Inc., Jefferies & Company, Inc. and
NationsBanc Montgomery Securities LLC, as representatives of the several
Underwriters named therein, and relating to the Securities.
"VICE PRESIDENT" means any vice president, whether or not designated by
a number or a word or words added before or after the title "vice president."
"ZERO-COUPON SECURITY" means the collective rights and obligations of a
Holder of a Security Certificate in respect of Zero-Coupon Treasury Securities
with a principal amount equal to the Stated Amount, subject to the Pledge
thereof, and a Purchase Contract.
"ZERO-COUPON TREASURY SECURITIES" means Treasury Strips and security
entitlements in respect thereof.
SECTION 1.02. Compliance Certificates and Opinions. Except as otherwise
expressly provided by this Agreement, upon any application or request by the
Company to the Agent to take any action under any provision of this Agreement,
the Company shall furnish to the Agent an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Agreement 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, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Agreement relating to such particular application or request, no
additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
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<PAGE> 14
(b) 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;
(c) a statement that, in the opinion of each such individual, such
individual has made such examination or investigation as is necessary to enable
such individual 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 each such individual,
such condition or covenant has been complied with.
SECTION 1.03. Form of Documents Delivered to Agent. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such officer's certificate or opinion is
based are erroneous. Any such certificate or Opinion of Counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representation by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
SECTION 1.04. Acts of Holders; Record Dates. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Holders may be embodied in and evidenced
by one or more instruments of substantially similar tenor signed by such Holders
in
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<PAGE> 15
person or by an agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Agent and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"ACT" of the Holders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Agreement and (subject to Section 7.01)
conclusive in favor of the Agent and the Company, if made in the manner provided
in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to such notary public or other officer
the execution thereof. Where such execution is by a signer acting in a capacity
other than such signer's individual capacity, such certificate or affidavit
shall also constitute sufficient proof of such signer's authority. The fact and
date of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other manner that the Agent
deems sufficient.
(c) The ownership of Securities shall be proved by the Security
Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security Certificate evidencing
such Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered to
be done by the Agent or the Company in reliance thereon, whether or not notation
of such action is made upon such Security Certificate.
(e) The Company may set any date as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Agreement to be given, made or taken by
Holders. If any record date is set pursuant to this paragraph, the Holders of
Outstanding Securities on such record date, and no other Holders, shall be
entitled to take the relevant action, whether or not such Holders remain Holders
after such record date; provided that no such action shall be effective
hereunder unless taken on or prior to the applicable Expiration Date by Holders
of the requisite number of Outstanding Securities on such record date. Nothing
in this paragraph shall be construed to prevent the Company from setting a new
record date for any action
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for which a record date has previously been set pursuant to this paragraph
(whereupon the record date previously set shall automatically and with no action
by any Person be canceled and of no effect), and nothing in this paragraph shall
be construed to render ineffective any action taken by Holders of the requisite
number of Outstanding Securities on the date such action is taken. Promptly
after any record date is set pursuant to this paragraph, the Company, at its own
expense, shall cause notice of such record date, the proposed action by Holders
and the applicable Expiration Date to be given to the Agent in writing and to
each Holder in the manner set forth in Section 1.06.
With respect to any record date set pursuant to this Section, the
Company may designate any date as the "EXPIRATION DATE" and from time to time
may change the Expiration Date to any earlier or later day; provided that no
such change shall be effective unless notice of the proposed new Expiration Date
is given to the Agent in writing, and to each Holder in the manner set forth in
Section 1.06, on or prior to the existing Expiration Date. If an Expiration Date
is not designated with respect to any record date set pursuant to this Section,
the Company shall be deemed to have initially designated the 180th day after
such record date as the Expiration Date with respect thereto, subject to its
right to change the Expiration Date as provided in this paragraph.
Notwithstanding the foregoing, no Expiration Date shall be later than the 180th
day after the applicable record date.
SECTION 1.05. Notices, Etc., to Agent and the Company. Any request,
demand, authorization, direction, notice, consent, waiver or Act of Holders or
other document provided or permitted by this Agreement to be made upon, given or
furnished to, or filed with,
(a) the Agent by any Holder or by the Company shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if made,
given, furnished or filed in writing and personally delivered or mailed,
first-class postage prepaid or by guaranteed overnight courier, to the Agent at
One Illinois Center, Suite 3000, 111 East Wacker Drive, Chicago, Illinois 60601,
Attention: Corporate Trust Services Division, or at any other address previously
furnished for such purpose in writing by the Agent to the Holders and the
Company, or
(b) the Company by the Agent or by any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if made,
given, furnished or filed in writing and personally delivered or mailed,
first-class postage prepaid or by guaranteed overnight courier, to the Company
at 370 Van Gordon Street, Lakewood, Colorado 80228-1740, Attention: Treasurer,
or at any other address previously furnished for such purpose in writing to the
Agent by the Company.
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SECTION 1.06. Notice to Holders; Waiver. Where this Agreement provides
for notice to Holders of any event, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at such
Holder's address as it appears in the Security Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Holders is given by mail, neither
the failure to mail such notice nor any defect in any notice so mailed to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Where this Agreement provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Agent, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Agent shall
constitute a sufficient notification for every purpose hereunder.
SECTION 1.07. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 1.08. Successors and Assigns. All covenants and agreements in
this Agreement by the Company shall bind its successors and assigns, whether so
expressed or not.
SECTION 1.09. Separability Clause. In case any provision in this
Agreement or in the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions hereof and
thereof shall not in any way be affected or impaired thereby.
SECTION 1.10. Benefits of Agreement. Except as set forth below, nothing
in this Agreement or in the Securities, express or implied, shall give to any
Person, other than the parties hereto and their successors hereunder and the
Holders, any benefits or any legal or equitable right, remedy or claim under
this Agreement. The Holders from time to time shall be beneficiaries of this
Agreement and shall be bound by all of the terms and conditions hereof and of
the Securities evidenced by their Security Certificates by their acceptance of
delivery thereof. The Underwriters shall be third-party beneficiaries of Section
4.01, and
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shall have the same rights to enforce Section 4.01 as if the Underwriters were
parties hereto.
SECTION 1.11. Governing Law. This Agreement and the Securities shall
be governed by and construed in accordance with the laws of the State of New
York.
SECTION 1.12. Legal Holidays. In any case where any Payment Date, any
Early Settlement Date or the Final Settlement Date shall not be a Business Day,
then (notwithstanding any other provision of this Agreement or of the
Securities) payment in respect of interest on Treasury Notes, Contract Fees or
Deferred Contract Fees shall not be made, Purchase Contracts shall not be
performed and Early Settlement shall not be effected on such date, but such
payments shall be made, Purchase Contracts performed or Early Settlement
effected, as applicable, on the next succeeding Business Day with the same force
and effect as if made on such Payment Date, Early Settlement Date or Final
Settlement Date, as the case may be; provided, that no interest shall accrue or
be payable by the Company or any Holder for the period from and after any such
Payment Date, Early Settlement Date or Final Settlement Date, as the case may
be.
SECTION 1.13. Counterparts. This Agreement may be executed in any
number of counterparts, each of which, when so executed, shall be deemed an
original, but all such counterparts shall together constitute one and the same
instrument.
SECTION 1.14. Inspection of Agreement. A copy of this Agreement shall
be available at all reasonable times at the Corporate Trust Office for
inspection by any Holder.
SECTION 1.15. Appointment of Financial Institution as Agent for the
Company. The Company may appoint a financial institution (which may be the
Collateral Agent) to act as its agent in performing its obligations, and in
accepting and enforcing performance of the obligations of the Agent and the
Holders, under this Agreement and the Purchase Contracts, by giving notice of
such appointment in the manner provided in Section 1.05 hereof. Any such
appointment shall not relieve the Company in any way from its obligations
hereunder.
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ARTICLE 2
SECURITY CERTIFICATE FORMS
SECTION 2.01. Forms of Security Certificates Generally. The Security
Certificates (including the form of Purchase Contracts forming part of the
Securities evidenced thereby) shall be in substantially the form set forth in
Exhibit A hereto (in the case of Security Certificates evidencing Coupon
Securities) or Exhibit B hereto (in the case of Security Certificates evidencing
Zero-Coupon Securities), with such letters, numbers or other marks of
identification or designation and such legends or endorsements printed,
lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Securities are listed or Depositary therefor,
or as may, consistently herewith, be determined by the officers of the Company
executing such Security Certificates, as evidenced by their execution of the
Security Certificates.
The definitive Security Certificates (if any) shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers of the Company executing the
Security Certificates, consistent with the provisions of this Agreement, as
evidenced by their execution thereof.
Every Global Security Certificate authenticated, executed on behalf of
the Holders and delivered hereunder shall bear a legend in substantially the
following form:
THIS SECURITY CERTIFICATE IS A GLOBAL SECURITY CERTIFICATE WITHIN THE
MEANING OF THE PURCHASE CONTRACT AGREEMENT HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY ("DTC") OR A NOMINEE OF
DTC. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE PURCHASE CONTRACT AGREEMENT AND NO TRANSFER OF THIS SECURITY (OTHER THAN
A TRANSFER OF THIS SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A
NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN
LIMITED CIRCUMSTANCES.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC, TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
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OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
The Securities will be initially issued in the form of one or more
fully registered Global Security Certificates, to be delivered to the Depositary
or its custodian by or on behalf of the Company. The Company hereby designates
The Depository Trust Company as the initial Depositary. Such Global Security
Certificates shall initially be registered in the Security Register in the name
of Cede & Co., the nominee of the Depositary, and no Holder will receive a
definitive Security Certificate representing such Holder's interests in such
Global Security Certificates, except as provided in this Section 2.01.
Unless and until definitive, fully registered Security Certificates
have been issued to a Holder pursuant to the provisions of this Section 2.01:
(a) the provisions of this Section 2.01 shall be in full force and
effect;
(b) the Company and the Agent shall be entitled to deal with the
Depositary for all purposes of this Agreement (including the payment of any
amounts on the Global Security Certificates and receiving approvals, votes or
consents hereunder) as the Holder and the sole owner of the Global Security
Certificates;
(c) to the extent that the provisions of this Section 2.01 conflict
with any other provisions of this Agreement or the Purchase Contracts, the
provisions of this Section 2.01 shall control; and
(d) the rights of the Beneficial Owners shall be exercised only
through the Depositary and shall be limited to those established by law and
agreements between such Beneficial Owners and the Depositary and/or the
Depositary Participants. The Depositary will make book entry transfers among the
Depositary Participants and receive and transmit payments of amounts on the
Global Security Certificates to such Depositary Participants.
Whenever a notice or other communication to the Holders is required to
be given under this Agreement, unless and until definitive Security Certificates
shall have been issued, the Company and the Agent shall give all such notices
and communications, specified herein to be given to Holders, to the Depositary
and,
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with respect to any Security Certificate registered in the name of the
Depositary or the nominee of the Depositary, the Company and the Agent shall
have no notice obligations to Beneficial Owners.
If the Depositary elects to discontinue its services as securities
depositary with respect to the Securities, the Company may, in its sole
discretion, appoint a successor Depositary with respect to the Securities.
If (i) the Depositary elects to discontinue its services as securities
depositary with respect to the Securities and a successor Depositary is not
appointed within 90 days after such discontinuance or (ii) the Company elects
after consultation with the Agent to terminate the book entry system through the
Depositary with respect to the Securities, then (x) definitive Security
Certificates shall be prepared by the Agent on behalf of the Company with
respect to such Securities and (y) upon surrender of the Global Security
Certificates by the Depositary, accompanied by registration instructions, the
Agent shall cause definitive Security Certificates to be delivered to Holders in
accordance with the instructions of the Depositary. Each definitive Security
Certificate so delivered shall evidence Securities of the same tenor (Coupon
Securities or Zero-Coupon Securities) as the Global Security Certificate so
surrendered in respect thereof.
Neither the Agent nor the Company shall be liable for any delay in
delivery of such instructions and each of them may conclusively rely on and
shall be protected in relying on, such instructions.
SECTION 2.02. Form of Agent's Certificate of Authentication. The
Agent's certificate of authentication of the Securities shall be in
substantially the form set forth on the form of the Security Certificates.
ARTICLE 3
THE SECURITIES
SECTION 3.01. Title and Terms; Denominations. The aggregate number of
Securities evidenced by Security Certificates authenticated, executed on behalf
of the Holders and delivered hereunder is limited to 9,310,000 (subject to
increase up to a maximum of 1,396,000 to the extent the over-allotment option of
the Underwriters granted in the Underwriting Agreement is exercised), except for
Security Certificates authenticated, executed and delivered upon registration of
transfer of, in exchange for, or in lieu of, other Security Certificates
pursuant to Section 3.04, 3.05, 3.06, 5.09 or 8.05.
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The Security Certificates shall be issuable only in registered form and
only in denominations of a single Security and any integral multiple thereof.
SECTION 3.02. Rights and Obligations Evidenced by the Security
Certificates. Each Security Certificate shall evidence the number and tenor
(Coupon Securities or Zero-Coupon Securities) of Securities specified therein,
with each such Security representing the ownership by the Holder thereof of
Treasury Securities with a principal amount equal to the Stated Amount, subject
to the Pledge of such Treasury Securities by such Holder pursuant to the Pledge
Agreement, and the rights and obligations of the Holder under one Purchase
Contract. The Agent is hereby authorized by each Holder to act as
attorney-in-fact for and on behalf of such Holder to pledge, pursuant to the
Pledge Agreement, the Treasury Securities to the Collateral Agent and grant to
the Collateral Agent a security interest in the right, title and interest of
such Holders in the Treasury Securities, for the benefit of the Company, to
secure the obligation of the Holders under the Purchase Contracts to purchase
the Common Stock of the Company. Prior to the purchase, if any, of shares of
Common Stock under the Purchase Contracts, the Securities shall not entitle the
Holders to any of the rights of a holder of shares of Common Stock, including,
without limitation, the right to vote or receive any dividends or other payments
or to consent or to receive notice as stockholders in respect of the meetings of
stockholders or for the election of directors of the Company or for any other
matter, or any other rights whatsoever as stockholders of the Company, except to
the extent otherwise expressly provided in this Agreement.
SECTION 3.03. Execution, Authentication, Delivery and Dating. Upon the
execution and delivery of this Agreement, and at any time from time to time
thereafter, the Company may deliver Security Certificates executed by the
Company to the Agent for authentication, execution on behalf of the Holders and
delivery, together with its Issuer Order for authentication of such Security
Certificates, and the Agent in accordance with such Issuer Order shall
authenticate, execute on behalf of the Holder and deliver such Security
Certificates.
The Security Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its Vice Chairman of the Board, its President or one
of its Vice Presidents, under its corporate seal reproduced thereon attested by
its Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Security Certificates may be manual or facsimile.
Security Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
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hold such offices prior to the authentication and delivery of such Security
Certificates or did not hold such offices at the date of such Security
Certificates.
No Purchase Contract underlying a Security evidenced by a Security
Certificate shall be valid until such Security Certificate has been executed on
behalf of the Holder by the manual signature of an authorized signatory of the
Agent, as such Holder's attorney-in-fact. Such signature by an authorized
signatory of the Agent shall be conclusive evidence that the Holder of such
Security Certificate has entered into the Purchase Contracts underlying the
Securities evidenced by such Security Certificate.
Each Security Certificate shall be dated the date of its
authentication.
No Security Certificate shall be entitled to any benefit under this
Agreement or be valid or obligatory for any purpose unless there appears on such
Security Certificate a certificate of authentication substantially in the form
provided for herein executed by an authorized signatory of the Agent by manual
signature, and such certificate upon any Security Certificate shall be
conclusive evidence, and the only evidence, that such Security Certificate has
been duly authenticated and delivered hereunder.
SECTION 3.04. Temporary Security Certificates. Pending the preparation
of definitive Security Certificates, the Company may execute and deliver to the
Agent, and the Agent shall authenticate, execute on behalf of the Holders, and
deliver, in lieu of such definitive Security Certificates, temporary Security
Certificates that are in substantially the form set forth in Exhibit A hereto,
with such letters, numbers or other marks of identification or designation and
such legends or endorsements printed, lithographed or engraved thereon as may be
required by the rules of any securities exchange on which the Securities are
listed, or as may, consistently herewith, be determined by the officers of the
Company executing such Security Certificates, as evidenced by their execution of
the Security Certificates.
If temporary Security Certificates are issued, the Company shall cause
definitive Security Certificates to be prepared without unreasonable delay.
After the preparation of definitive Security Certificates, the temporary
Security Certificates shall be exchangeable for definitive Security Certificates
upon surrender of the temporary Security Certificates at the Corporate Trust
Office, at the expense of the Company and without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Security Certificates,
the Company shall execute and deliver to the Agent, and the Agent shall
authenticate, execute on behalf of the Holder, and deliver in exchange therefor,
one or more definitive Security Certificates of authorized denominations and
evidencing a like number of
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Securities as the temporary Security Certificate or Security Certificates so
surrendered. Each definitive Security Certificate so delivered shall evidence
Securities of the same tenor (Coupon Securities or Zero-Coupon Securities) as
the temporary Security Certificate so surrendered in exchange therefor. Until so
exchanged, the temporary Security Certificates shall in all respects evidence
the same benefits and the same obligations with respect to the Securities
evidenced thereby as definitive Security Certificates.
SECTION 3.05. Registration; Registration of Transfer and Exchange. The
Agent shall keep at the Corporate Trust Office a register (the register
maintained in such office being herein referred to as the "SECURITY REGISTER")
in which, subject to such reasonable regulations as it may prescribe, the Agent
shall provide for the registration of Security Certificates and of transfers of
Security Certificates (the Agent, in such capacity, the "SECURITY REGISTRAR").
The Security Register shall record separately the registration and transfer of
Security Certificates evidencing Coupon Securities and Zero-Coupon Securities.
Upon surrender for registration of transfer of any Security Certificate
at the Corporate Trust Office, the Company shall execute and deliver to the
Agent, and the Agent shall authenticate, execute on behalf of the designated
transferee or transferees, and deliver, in the name of the designated transferee
or transferees, one or more new Security Certificates of any authorized
denominations and evidencing a like number of Securities of the same tenor
(Coupon Securities or Zero-Coupon Securities).
At the option of the Holder, Security Certificates may be exchanged for
other Security Certificates, of any authorized denominations and evidencing a
like number of Securities of the same tenor (Coupon Securities or Zero-Coupon
Securities), upon surrender of the Security Certificates to be exchanged at the
Corporate Trust Office. Whenever any Security Certificates are so surrendered
for exchange, the Company shall execute and deliver to the Agent, and the Agent
shall authenticate, execute on behalf of the Holder, and deliver the Security
Certificates that the Holder making the exchange is entitled to receive.
All Security Certificates issued upon any registration of transfer or
exchange of a Security Certificate shall evidence the ownership of the same
number of Securities of the same tenor (Coupon Securities or Zero-Coupon
Securities) and be entitled to the same benefits and be subject to the same
obligations, under this Agreement as the Securities evidenced by the Security
Certificate surrendered upon such registration of transfer or exchange.
Every Security Certificate presented or surrendered for registration of
transfer or for exchange shall (if so required by the Agent) be duly endorsed,
or be
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accompanied by a written instrument of transfer in form satisfactory to the
Company and the Agent duly executed, by the Holder thereof or such Holder's
attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of a Security Certificate, but the Company and the Agent may require
payment from the Holder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Security Certificates, other than any exchanges pursuant
to Sections 3.04, 3.06, 5.09 and 8.05 not involving any transfer.
Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Agent, and the Agent shall not be obligated to
authenticate, execute on behalf of the Holder and deliver any Security
Certificate presented or surrendered for registration of transfer or for
exchange on or after the Final Settlement Date or the Termination Date. In lieu
of delivery of a new Security Certificate, upon satisfaction of the applicable
conditions specified above in this Section and receipt of appropriate
registration or transfer instructions from such Holder, the Agent shall (i) if
the Final Settlement Date has occurred, deliver the shares of Common Stock
issuable in respect of the Purchase Contracts forming a part of the Securities
evidenced by such Security Certificate, or (ii) if a Termination Event shall
have occurred prior to the Final Settlement Date, transfer the principal amount
of the Treasury Securities evidenced thereby, in each case subject to the
applicable conditions and in accordance with the applicable provisions of
Article 5 hereof.
The provisions of paragraphs (a), (b), (c) and (d) below shall apply
only to Global Security Certificates:
(a) Each Global Security Certificate authenticated and executed on
behalf of the Holders under this Agreement shall be registered in the name of
Cede & Co., as the nominee of the Depositary as set forth in Section 2.01.
(b) Notwithstanding any other provision in this Agreement, no Global
Security Certificate may be exchanged in whole or in part for Security
Certificates registered, and no transfer of a Global Security Certificate in
whole or in part may be registered, in the name of any Person other than the
Depositary for such Global Security Certificate or a nominee thereof unless (i)
the Depositary elects to discontinue its services as securities depositary with
respect to the Securities and a successor Depositary is not appointed within 90
days after such discontinuance or (ii) the Company elects after consultation
with the Agent to terminate the book entry system through the Depositary with
respect to the Securities.
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(c) Subject to clause (b) above, any exchange of a Global Security
Certificate for other Security Certificates may be made in whole or in part, and
all Security Certificates issued in exchange for a Global Security Certificate
or any portion thereof shall be registered in such names as the Depositary for
such shall direct.
(d) Every Security Certificate authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Global Security
Certificate or any portion thereof, whether pursuant to this Section, Section
3.04, 3.06, 5.09 or 8.05 or otherwise, shall be authenticated, executed on
behalf of the Holders and delivered in the form of, and shall be, a Global
Security Certificate, unless such Security Certificate is registered in the name
of a Person other than the Depositary for such Global Security Certificate or a
nominee thereof.
SECTION 3.06. Mutilated, Destroyed, Lost and Stolen Security
Certificates. If any mutilated Security Certificate is surrendered to the Agent,
the Company shall execute and deliver to the Agent, and the Agent shall
authenticate, execute on behalf of the Holder, and deliver in exchange therefor,
a new Security Certificate, evidencing the same number of Securities of the same
tenor (Coupon Securities or Zero Coupon Securities) and bearing a number not
contemporaneously outstanding.
If there shall be delivered to the Company and the Agent (i) evidence
to their satisfaction of the destruction, loss or theft of any Security
Certificate, and (ii) such security or indemnity as may be required by them to
save each of them and any agent of any of them harmless, then, in the absence of
notice to the Company or the Agent that such Security Certificate has been
acquired by a protected purchaser, the Company shall execute and deliver to the
Agent, and the Agent shall authenticate, execute on behalf of the Holder, and
deliver to the Holder, in lieu of any such destroyed, lost or stolen Security
Certificate, a new Security Certificate, evidencing the same number of
Securities of the same tenor (Coupon Securities or Zero-Coupon Securities) and
bearing a number not contemporaneously outstanding.
Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Agent, and the Agent shall not be obligated to
authenticate, execute on behalf of the Holder, and deliver to the Holder, a
Security Certificate on or after the Final Settlement Date or the Termination
Date. In lieu of delivery of a new Security Certificate, upon satisfaction of
the applicable conditions specified above in this Section and receipt of
appropriate registration or transfer instructions from such Holder, the Agent
shall (i) if the Final Settlement Date has occurred, deliver the shares of
Common Stock issuable in respect of the Purchase Contracts forming a part of the
Securities evidenced by
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such Security Certificate, or (ii) if a Termination Event shall have occurred
prior to the Final Settlement Date, transfer the principal amount of the
Treasury Securities evidenced thereby, in each case subject to the applicable
conditions and in accordance with the applicable provisions of Article 5 hereof.
Upon the issuance of any new Security Certificate under this Section,
the Company and the Agent may require the payment by the Holder of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto.
Every new Security Certificate issued pursuant to this Section in lieu
of any destroyed, lost or stolen Security Certificate shall constitute an
original additional contractual obligation of the Company and of the Holder,
whether or not the destroyed, lost or stolen Security Certificate shall be at
any time enforceable by anyone, and shall be entitled to all the benefits and be
subject to all the obligations of this Agreement equally and proportionately
with any and all other Security Certificates delivered 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 or
settlement of mutilated, destroyed, lost or stolen Security Certificates.
SECTION 3.07. Persons Deemed Owners. Prior to due presentment of a
Security Certificate for registration of transfer, the Company and the Agent,
and any agent of the Company or the Agent, may treat the Person in whose name
such Security Certificate is registered as the owner of the Securities evidenced
thereby, for the purpose of receiving payments of interest on the Treasury Notes
(in the case of Coupon Securities), receiving payments of Contract Fees and any
Deferred Contract Fees, delivery of the Treasury Securities, performance of the
Purchase Contracts and for all other purposes whatsoever, whether or not the
payment of interest on the Treasury Notes (in the case of Coupon Securities) or
any Contract Fees payable in respect of the Purchase Contracts constituting a
part of the Securities evidenced thereby shall be overdue and notwithstanding
any notice to the contrary, and neither the Company nor the Agent, nor any agent
of the Company or the Agent, shall be affected by notice to the contrary.
Notwithstanding the foregoing, with respect to any Global Security
Certificate, nothing herein shall prevent the Company, the Agent or any agent of
the Company or the Agent, from giving effect to any written certification, proxy
or other authorization furnished by any Depositary (or its nominee), as a
Holder, with respect to such Global Security Certificate or impair, as between
such Depositary and the Beneficial Owners, the operation of customary practices
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governing the exercise of rights of such Depositary (or its nominee) as Holder
of such Global Security Certificate.
SECTION 3.08. Cancellation. All Security Certificates surrendered for
delivery of shares of Common Stock on or after the Final Settlement Date,
transfer of Treasury Securities after the occurrence of a Termination Event or
pursuant to an Early Settlement or Collateral Substitution or registration of
transfer or exchange shall, if surrendered to any Person other than the Agent,
be delivered to the Agent and, if not already canceled, shall be promptly
canceled by it. The Company may at any time deliver to the Agent for
cancellation any Security Certificates previously authenticated, executed and
delivered hereunder that the Company may have acquired in any manner whatsoever,
and all Security Certificates so delivered shall, upon the receipt by the Agent
of an Issuer Order requesting such cancellation, be promptly canceled by the
Agent. No Security Certificates shall be authenticated, executed on behalf of
the Holder and delivered in lieu of or in exchange for any Security Certificates
canceled as provided in this Section, except as expressly permitted by this
Agreement. All canceled Security Certificates held by the Agent shall be
disposed of as directed in an Issuer Order.
If the Company or any Affiliate of the Company shall acquire any
Security Certificate, such acquisition shall not operate as a cancellation of
such Security Certificate unless and until such Security Certificate is
delivered to the Agent canceled or for cancellation.
SECTION 3.09. Securities Not Separable. Notwithstanding anything
contained herein or in the Security Certificates to the contrary (except as
provided in Section 4.03), for so long as the Purchase Contract comprising a
portion of a Security remains in effect, such Security shall not be separable
into its constituent parts for purposes of transfer or exchange of such
Security, and the rights and obligations of the Holder of such Security in
respect of the Treasury Securities and Purchase Contracts comprising such
Security may be acquired, and may be transferred and exchanged, only as a
Security. Other than a Security Certificate evidencing a Security, no Holder of
a Security, or any transferee thereof, shall be entitled to receive a
certificate evidencing the ownership of Treasury Securities (except as provided
in Section 4.03) or the rights and obligations of the Holder and the Company
under a Purchase Contract for so long as the Purchase Contract underlying the
Security remains in effect.
SECTION 3.10. No Consent to Assumption. Each Holder of a Security, by
acceptance thereof, shall be deemed expressly to have withheld any consent to
the assumption under Section 365 of the Bankruptcy Code or otherwise, of the
Purchase Contract by the Company or its trustee in the event that the Company
becomes a debtor under the Bankruptcy Code.
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ARTICLE 4
THE TREASURY SECURITIES
SECTION 4.01. Payment of Interest; Interest Rights Preserved. Interest
on any Treasury Note that is paid on any Payment Date shall, subject to receipt
thereof by the Agent from the Collateral Agent as provided by the terms of the
Pledge Agreement, be paid to the Person in whose name the Security Certificate
(or one or more Predecessor Security Certificates) representing the Securities
of which the Treasury Security corresponding to such Treasury Note is a part is
registered at the close of business on the Record Date immediately preceding
such Payment Date; provided, that on the first Payment Date, the Agent shall
remit to the Persons in whose names such Security Certificates are registered on
the Record Date with respect thereto, in addition to interest on the Treasury
Notes paid on such Payment Date, interest payable with respect to the Treasury
Notes for the period from the date of initial issuance of the Securities until
November 29, 1998. Interest payable with respect to the Treasury Notes that
accrued prior to the date of initial issuance of the Securities and that is
payable on the first interest payment date with respect to the Treasury Notes,
received from the Collateral Agent following the date of initial issuance of the
Securities, shall be remitted by the Agent, upon its receipt thereof, to Morgan
Stanley & Co. Incorporated for the account of the Underwriters by 2:00 p.m. New
York City time on the date of receipt by the Agent. Funds received by the
Purchase Contract Agent for interest accrued from and including the date of
initial issuance to the first interest payment date with respect to the Treasury
Notes shall remain uninvested.
Except as otherwise provided in the immediately preceding paragraph,
each Security Certificate that evidences, in part, Coupon Treasury Securities
delivered under this Agreement upon registration of transfer of or in exchange
for or in lieu of any other Security Certificate shall carry the rights to
interest accrued and unpaid, and to accrue, that were carried by the Coupon
Treasury Securities forming a part of the Securities represented by such other
Security Certificate.
In the case of any Coupon Security with respect to which Early
Settlement of the underlying Purchase Contract is effected on an Early
Settlement Date, or with respect to which a Collateral Substitution is effected
on any Collateral Substitution Date, in either case after any Record Date and on
or prior to the next succeeding Payment Date, the Agent shall remit to the
Person in whose name the Security Certificate representing such Coupon Security
is registered on the Record Date with respect thereto interest on the Treasury
Notes corresponding to the Treasury Securities underlying such Security
otherwise payable on such Payment Date notwithstanding the release of the
Treasury Securities pursuant to such Early
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Settlement or Collateral Substitution. Except as otherwise expressly provided in
the immediately preceding sentence, in the case of any Coupon Security with
respect to which Early Settlement of the underlying Purchase Contract is
effected on an Early Settlement Date or Collateral Substitution is effected on a
Collateral Substitution Date, interest on the related Treasury Notes that would
otherwise be payable after the Early Settlement Date or the Collateral
Substitution Date, as the case may be, shall not be payable hereunder to the
Holder of such Security.
SECTION 4.02. Transfer of Treasury Securities Upon Occurrence of
Termination Event. Upon the occurrence of a Termination Event and the transfer
to the Agent of the Treasury Securities forming a part of the Securities
pursuant to the terms of the Pledge Agreement, the Agent shall request transfer
instructions with respect to such Treasury Securities from each Holder by
written request mailed to such Holder at such Holder's address as it appears in
the Security Register, in respect of the Treasury Securities forming a part of
the Securities represented by the Security Certificate held by such Holder. Upon
surrender to the Agent of a Security Certificate with such transfer instructions
in proper form for transfer of the Treasury Securities by Federal Reserve
Bank-Wire or other appropriate procedure, the Agent shall transfer the Treasury
Securities evidenced by such Security Certificate to such Holder in accordance
with such instructions. If a Security Certificate is not duly surrendered to the
Agent with appropriate transfer instructions, the Agent shall hold the Treasury
Securities evidenced by such Security Certificate as custodian for the Holder of
such Security Certificate.
Treasury Securities shall be transferred only in denominations of
$1,000 and integral multiples thereof. As promptly as practicable following the
occurrence of a Termination Event, the Agent shall determine (i) the excess of
(A) the aggregate principal amount of Coupon Treasury Securities underlying the
Outstanding Securities that are Coupon Securities over (B) the aggregate
principal amount of Coupon Treasury Securities in denominations of $1,000 and
integral multiples thereof transferrable to Holders of record on the date of
such Termination Event (such excess being herein referred to as the "EXCESS
COUPON TREASURY SECURITIES") and (ii) the excess of (A) the aggregate principal
amount of Zero-Coupon Treasury Securities underlying the Outstanding Securities
that are Zero-Coupon Securities over (B) the aggregate principal amount of
Zero-Coupon Treasury Securities in denominations of $1,000 and integral
multiples thereof transferrable to Holders of record on the date of such
Termination Event (such excess being herein referred to as the "EXCESS
ZERO-COUPON TREASURY SECURITIES"). As soon as practicable after transfer to the
Agent of the Treasury Securities underlying the Outstanding Securities as
provided in the Pledge Agreement, the Agent shall sell the Excess Coupon
Treasury Securities and the Excess Zero-Coupon Treasury Securities to or through
one or more U.S. Government securities dealers at then prevailing prices. The
Agent shall deduct
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from the proceeds of such sales all commissions and other out-of-pocket
transaction costs incurred in connection with such sales and, until the net
proceeds of such sale or sales have been distributed to Holders, the Agent shall
hold such proceeds as custodian for the Holders. Such proceeds shall be held by
the Agent uninvested without liability to any Person for interest or other
compensation thereon. Each Holder of Coupon Securities shall be entitled to
receive a portion, if any, of the net proceeds of such sales of Excess Coupon
Treasury Securities in lieu of Treasury Securities with a principal amount of
less than $1,000 determined by multiplying the aggregate amount of such net
proceeds by a fraction, the numerator of which is the fraction of $1,000 in
principal amount of Treasury Securities to which such Holder would otherwise be
entitled (after taking into account all Securities then held by such Holder) and
the denominator of which is the aggregate principal amount of Excess Coupon
Treasury Securities. Each Holder of Zero-Coupon Securities shall be entitled to
receive a portion, if any, of the net proceeds of such sales of Excess
Zero-Coupon Treasury Securities in lieu of Treasury Securities with a principal
amount of less than $1,000 determined by multiplying the aggregate amount of
such net proceeds by a fraction, the numerator of which is the fraction of
$1,000 in principal amount of Treasury Securities to which such Holder would
otherwise be entitled (after taking into account all Securities then held by
such Holder) and the denominator of which is the aggregate principal amount of
Excess Zero-Coupon Treasury Securities.
SECTION 4.03. Substitution of Collateral. (a) Subject to and upon
compliance with the provisions of this Section 4.03, at any time prior to
November 15, 2001, the Holder of any Coupon Securities may, in integral
multiples of 1,000 Securities, substitute Zero-Coupon Treasury Securities for
the Coupon Treasury Securities forming a part thereof, thereby forming
Zero-Coupon Securities ("COLLATERAL SUBSTITUTION") as provided herein. In order
to exercise the right to effect Collateral Substitution with respect to any
Coupon Securities, the Holder of the Security Certificate evidencing such
Securities shall (i) deposit with the Collateral Agent Zero-Coupon Treasury
Securities having an aggregate principal amount equal to the aggregate Stated
Amount of such Securities, in the manner provided in the Pledge Agreement, and
(ii) shall deliver such Security Certificate to the Agent at the Corporate Trust
Office duly endorsed for transfer to the Company or in blank with the form of
Election to Substitute Collateral on the reverse thereof duly completed. If the
foregoing requirements are first satisfied with respect to any Securities at or
prior to 5:00 p.m., New York City time, on a Business Day, such day shall be the
"COLLATERAL SUBSTITUTION DATE" with respect to such Securities and if such
requirements are first satisfied after 5:00 p.m, New York City time, on a
Business Day or on a day that is not a Business Day, the "COLLATERAL
SUBSTITUTION DATE" with respect to such Securities shall be the next succeeding
Business Day.
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(b) Upon a Collateral Substitution, the Company shall execute, and the
Agent shall authenticate, execute on behalf of the Holder and deliver to the
Holder a Security Certificate evidencing a number of Zero-Coupon Securities
equal to the number of Coupon Securities evidenced by the Security Certificate
surrendered.
(c) The Company shall cause the Coupon Treasury Securities deliverable
upon Collateral Substitution to be released from the Pledge by the Collateral
Agent and credited to a securities account of the Agent for delivery or credit
to the Holder or its designee no later than 5:00 p.m. New York City time on the
third Business Day after the applicable Collateral Substitution Date.
(d) Upon Collateral Substitution, and subject to receipt thereof from
the Collateral Agent, the Agent shall, in accordance with the instructions
provided by the Holder on the applicable form of Election to Substitute
Collateral on the reverse of the Security Certificate evidencing the relevant
Securities, credit the Treasury Securities forming a part of such Securities to
the securities account so designated by such Holder.
(e) In the event that Collateral Substitution is effected with respect
to less than all the Securities evidenced by a Security Certificate, upon such
Collateral Substitution, the Company shall execute, and the Agent shall
authenticate, execute on behalf of the Holder and deliver to the Holder, at the
expense of the Company, a Security Certificate evidencing the Securities as to
which Collateral Substitution was not effected.
ARTICLE 5
THE PURCHASE CONTRACTS
SECTION 5.01. Purchase of Shares of Common Stock. Each Purchase
Contract shall obligate the Holder of the related Security to purchase, and the
Company to sell, on the Final Settlement Date at a price equal to the Stated
Amount, a number of shares of Common Stock equal to the Settlement Rate, unless,
on or prior to the Final Settlement Date, there shall have occurred a
Termination Event or an Early Settlement with respect to the Security of which
such Purchase Contract is a part. The "SETTLEMENT RATE" is equal to (a) if the
Applicable Market Value (as defined below) is greater than $51.60 (the
"THRESHOLD APPRECIATION PRICE"), .8333 of a share of Common Stock per Purchase
Contract, (b) if the Applicable Market Value is less than or equal to the
Threshold Appreciation Price but is greater than the Stated Amount, a fractional
share of Common Stock per Purchase Contract equal to the Stated Amount
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<PAGE> 33
divided by the Applicable Market Value (rounded upward or downward to the
nearest 1/10,000th of a share) and (c) if the Applicable Market Value is less
than or equal to the Stated Amount, one share of Common Stock per Purchase
Contract, in each case subject to adjustment as provided in Section 5.06. As
provided in Section 5.10, no fractional shares of Common Stock shall be issued
upon settlement of Purchase Contracts.
Subject to Section 5.06(b), the "APPLICABLE MARKET VALUE" means the
average of the Closing Prices per share of Common Stock on each of the twenty
consecutive Trading Days ending on the second Trading Day immediately preceding
the Final Settlement Date. The "CLOSING PRICE" of the Common Stock on any date
of determination means the closing sale price (or, if no closing price is
reported, the last reported sale price) of the Common Stock on the NYSE on such
date or, if the Common Stock is not listed for trading on the NYSE on any such
date, as reported in the composite transactions for the principal United States
securities exchange on which the Common Stock is so listed or, if the Common
Stock is not so listed on a United States national or regional securities
exchange, as reported by the Nasdaq Stock Market or, if such price of the Common
Stock is not so reported, the last quoted bid price for the Common Stock in the
over-the-counter market as reported by the National Quotation Bureau or similar
organization or, if such bid price is not available, the market value of the
Common Stock on such date as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Company. A "TRADING
DAY" means a day on which the Common Stock (A) is not suspended from trading on
any national or regional securities exchange or association or over-the-counter
market at the close of business and (B) has traded at least once on the national
or regional securities exchange or association or over-the-counter market that
is the primary market for the trading of the Common Stock.
Each Holder of a Security, by such Holder's acceptance thereof,
authorizes the Agent to enter into and perform the related Purchase Contracts on
such Holder's behalf as such Holder's attorney-in-fact, agrees to be bound by
the terms and provisions thereof, expressly withholds any consent to the
assumption (i.e., affirmance) of the Purchase Contracts by the Company or its
trustee in the event that the Company becomes the subject of a case under the
Bankruptcy Code, covenants and agrees to perform such Holder's obligations under
such Purchase Contracts, consents to the provisions hereof, authorizes the Agent
to enter into and perform the Pledge Agreement on such Holder's behalf as such
Holder's attorney-in-fact, and consents to and agrees to be bound by the Pledge
of the Treasury Securities underlying such Security Certificate pursuant to the
Pledge Agreement; provided that upon a Termination Event the rights of the
Holder of such Security under the Purchase Contract may be enforced without
regard to any other rights or obligations. Each Holder of a Security, by such
Holder's
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<PAGE> 34
acceptance thereof, further covenants and agrees that, to the extent and in the
manner provided in Section 5.04 and the Pledge Agreement, but subject to the
terms thereof, payments in respect of principal of the Treasury Securities on
the Final Settlement Date shall be paid by the Collateral Agent to the Company
in satisfaction of such Holder's obligations under such Purchase Contract and
such Holder shall acquire no right, title or interest in such payments.
Upon registration of transfer of a Security Certificate evidencing
Purchase Contracts, the transferee shall be bound (without the necessity of any
other action on the part of such transferee) under the terms of this Agreement,
the Purchase Contracts evidenced thereby and the Pledge Agreement, and the
transferor shall be released from the obligations under the Purchase Contracts
evidenced by the Security Certificates so transferred. The Company covenants and
agrees, and each Holder of a Security Certificate, by such Holder's acceptance
thereof, likewise covenants and agrees, to be bound by the provisions of this
paragraph.
SECTION 5.02. Contract Fees. Subject to Section 5.03, the Company shall
pay by 10:00 A.M. New York City time to the Agent, on each Payment Date, the
Contract Fees payable in respect of each Purchase Contract for the benefit of
the Person in whose name the Security Certificate (or one or more Predecessor
Security Certificates) evidencing the Security of which such Purchase Contract
is a part is registered at the close of business on the Record Date next
preceding such Payment Date. The Contract Fees shall be payable at the office or
agency of the Agent in The City of New York maintained for that purpose or, at
the option of the Company, by check mailed to the address of the Person entitled
thereto at such address as it appears on the Security Register. Notwithstanding
any provisions of this Agreement and the Securities to the contrary, if the
Company and a Holder of at least $1,000,000 Stated Amount of Securities so
agree, payments of Contract Fees and Deferred Contract Fees, if any, payable in
respect of each Purchase Contract, and interest on the Treasury Notes (in the
case of Coupon Securities), in each case underlying such Securities shall be
made by the Agent, upon receipt from the Company and the Collateral Agent (in
the case of Coupon Securities) of immediately available funds by 1:00 P.M. New
York City time (or such other time as may be agreed to between the Company and
the Agent), directly to the Holder of such Security (by Federal funds wire
transfer or otherwise within the United States) if the Holder has delivered
written instructions to the Agent at least 15 days prior to such Payment Date
requesting that such payment shall be so made and designating the bank account
in the United States to which such payment shall be so made. The Agent shall be
entitled to rely on the last instruction delivered by the Holder pursuant to
this Section 5.02 unless a new instruction is delivered at least 15 days prior
to a Payment Date.
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Each Security Certificate delivered under this Agreement upon
registration of transfer of or in exchange for or in lieu of any other Security
Certificate shall carry the rights to Contract Fees and Deferred Contract Fees,
if any, accrued and unpaid, and to accrue, which were carried by the Purchase
Contracts that were a part of the Securities evidenced by such other Security
Certificate.
In the case of any Security with respect to which Early Settlement of
the underlying Purchase Contract is effected on an Early Settlement Date after
any Record Date and on or prior to the next succeeding Payment Date, Contract
Fees and Deferred Contract Fees, if any, otherwise payable on such Payment Date
shall be payable on such Payment Date notwithstanding such Early Settlement, and
such Contract Fees and Deferred Contract Fees, if any, shall be paid to the
Person in whose name the Security Certificate evidencing such Security (or one
or more Predecessor Security Certificates) is registered at the close of
business on such Record Date. Except as otherwise expressly provided in the
immediately preceding sentence, in the case of any Security with respect to
which Early Settlement of the underlying Purchase Contract is effected on an
Early Settlement Date, Contract Fees and Deferred Contract Fees, if any, that
would otherwise be payable after the Early Settlement Date with respect to the
Purchase Contract underlying such Security shall not be payable.
The Company's obligations with respect to Contract Fees and Deferred
Contract Fees, if any, are subordinate and junior in right of payment to all
other liabilities of the Company (other than liabilities that expressly provide
that they are pari passu with the Company's obligations with respect to Contract
Fees and Deferred Contract Fees, if any) and pari passu with the most senior
preferred stock directly issued from time to time, if any, by the Company.
SECTION 5.03. Deferral of Payment Dates for Contract Fees. The Company
shall have the right, at any time prior to the Final Settlement Date, to defer
the payment of any or all of the Contract Fees otherwise payable on any Payment
Date (on a pro rata basis among all Outstanding Securities), but only if the
Company shall give the Holders and the Agent written notice of its election to
defer such payment (specifying the amount to be deferred and the period of
deferment) at least ten Business Days prior to the earlier of (i) the next
succeeding Payment Date or (ii) the date the Company is required to give notice
of the Record Date or Payment Date with respect to payment of such Contract Fees
to the NYSE or other applicable self-regulatory organization or to Holders, but
in any event not less than two Business Days prior to such Record Date. Any
Contract Fees so deferred shall bear additional Contract Fees thereon at the
rate of 8.25% per annum (computed on the basis of the actual number of days
elapsed in a year of 365 or 366 days, as the case may be), compounding on each
succeeding Payment Date, until paid in full (such deferred installments of
Contract Fees,
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together with the additional Contract Fees accrued thereon, are referred to
herein as the "DEFERRED CONTRACT FEES"). The Company may pay the Deferred
Contract Fees in whole or in part on any Payment Date (on a pro rata basis among
all Outstanding Securities). No Contract Fees or Deferred Contract Fees may be
deferred to a date that is after the Final Settlement Date.
In the event that the Company elects to defer the payment of Contract
Fees on the Purchase Contracts until the Final Settlement Date, each Holder
shall receive on the Final Settlement Date, in lieu of a cash payment, a number
of shares of Common Stock (in addition to a number of shares of Common Stock
equal to the Settlement Rate) equal to (x) the aggregate amount of Deferred
Contract Fees payable to a Holder divided by (y) the Applicable Market Value.
No fractional shares of Common Stock shall be issued by the Company
with respect to the payment of Deferred Contract Fees on the Final Settlement
Date. In lieu of fractional shares otherwise issuable with respect to such
payment of Deferred Contract Fees, the Holder shall be entitled to receive an
amount in cash as provided in Section 5.10.
In the event the Company exercises its option to defer the payment of
Contract Fees, then, until the Deferred Contract Fees have been paid in full,
the Company (a) shall not declare or pay dividends on, make distributions with
respect to, or redeem, purchase or acquire, or make a liquidation payment with
respect to, any of its capital stock (other than (i) purchases or acquisitions
of Common Stock in connection with the satisfaction by the Company or any of its
subsidiaries of their respective obligations under any benefit plans for
directors, officers, agents or employees or the Company's dividend reinvestment
or director, officer, agent or employee stock purchase plans, (ii) as a 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 capital stock, (iii) the purchase of fractional interests in
shares of the Company's capital stock pursuant to the conversion or exchange
provisions of the Company's capital stock or the security being converted or
exchanged for the Company's capital stock, (iv) dividends or distributions in
the form of shares of, or options, warrants or rights to subscribe for or
purchase, shares of capital stock of the Company or (v) any declaration of a
dividend in connection with the implementation of extension of a stockholders'
rights plan, or the issuance of stock under any such plan (including the
existing such plan) in the future, or the redemption or repurchase of any such
rights pursuant thereto)), (b) shall not make any payment of interest, principal
or premium, if any, on, or repay, repurchase or redeem any debt securities
issued by the Company that rank pari passu with or junior to such Contract Fees
and (c) shall not make any guarantee payments with respect to any guarantee by
the Company of any securities of any subsidiary of the
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Company if such guarantee ranks pari passu with or junior in right of payment to
the Contract Fees.
SECTION 5.04. Payment of Purchase Price. Unless a Holder settles the
underlying Purchase Contract either through the early delivery of cash to the
Agent in the manner described in Section 5.09 or otherwise, the purchase price
for the shares of Common Stock purchased pursuant to a Purchase Contract shall
be paid by application of payments received by the Company on the Final
Settlement Date from the Collateral Agent pursuant to the Pledge Agreement in
respect of the principal of the Treasury Securities pledged to secure the
obligations of the relevant Holder under such Purchase Contract. Such
application shall satisfy in full the obligations under such Purchase Contract
of the Holder of the Security of which such Purchase Contract is a part. The
Company shall not be obligated to issue any shares of Common Stock in respect of
a Purchase Contract or deliver any certificates therefor to the Holder unless it
shall have received payment in full of the aggregate purchase price for the
shares of Common Stock to be purchased thereunder in the manner herein set
forth.
SECTION 5.05. Issuance of Shares of Common Stock. Unless a Termination
Event or an Early Settlement shall have occurred on or prior to the Final
Settlement Date, on the Final Settlement Date, upon its receipt of payment in
full of the purchase price for the shares of Common Stock purchased by the
Holders pursuant to the foregoing provisions of this Article, and in payment of
Deferred Contract Fees, if any, owed by the Company to the Holders and subject
to Section 5.06(b), the Company shall issue and deposit with the Agent, for the
benefit of the Holders of the Outstanding Securities, one or more certificates
representing the shares of Common Stock to which the Holders are entitled
hereunder, registered in the name of the Agent (or its nominee) as custodian for
the Holders (such certificates for shares of Common Stock, together with any
dividends or distributions with respect thereto, being hereinafter referred to
as the "FINAL SETTLEMENT FUND"). Subject to the foregoing, upon surrender of a
Security Certificate to the Agent on or after the Final Settlement Date,
together with settlement instructions thereon duly completed and executed, the
Holder of such Security Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of whole shares of Common Stock
that such Holder is entitled to receive pursuant to the provisions of this
Article 5 (after taking into account all Securities then held by such Holder)
together with cash in lieu of fractional shares as provided in Section 5.10 and
any dividends or distributions with respect to such shares constituting part of
the Final Settlement Fund, but without any interest thereon, and the Security
Certificate so surrendered shall forthwith be canceled. Each certificate
evidencing such shares shall be registered in the name of the Holder or the
Holder's designee as specified in the settlement instructions on the Security
Certificate. If any shares of Common Stock
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issued in respect of a Purchase Contract and in payment of any Deferred Contract
Fees are to be registered to a Person other than the Person in whose name the
Security Certificate evidencing such Purchase Contract is registered, no such
registration shall be made unless the Person requesting such registration has
paid any transfer and other taxes required by reason of such registration in a
name other than that of the registered Holder of the Security Certificate
evidencing such Purchase Contract or has established to the satisfaction of the
Company that such tax either has been paid or is not payable.
SECTION 5.06. Adjustment of Settlement Rate. (a) Adjustments for
Dividends, Distributions, Stock Splits, Etc.
(i) In case the Company shall pay or make a dividend or other
distribution on any class of common stock of the Company in Common
Stock, the Settlement Rate in effect at the opening of business on the
day following the date fixed for the determination of stockholders
entitled to receive such dividend or other distribution shall be
increased by dividing such Settlement Rate by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at
the close of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the total
number of shares constituting such dividend or other distribution, such
increase to become effective immediately after the opening of business
on the day following the date fixed for such determination. For the
purposes of this clause (i), the number of shares of Common Stock at
any time outstanding shall not include shares held in the treasury of
the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of Common Stock. The Company
shall not pay any dividend or make any distribution on shares of Common
Stock held in the treasury of the Company.
(ii) In case the Company shall issue rights, options or
warrants to all holders of its Common Stock (not being available on an
equivalent basis to Holders upon settlement of the Purchase Contracts
underlying such Securities) entitling them, for a period expiring
within 45 days after the record date for the determination of
stockholders entitled to receive such rights, options or warrants, to
subscribe for or purchase shares of Common Stock at a price per share
less than the Current Market Price per share of Common Stock on the
date fixed for the determination of stockholders entitled to receive
such rights, options or warrants (other than pursuant to a dividend
reinvestment plan), the Settlement Rate in effect at the opening of
business on the day following the date fixed for such determination
shall be increased by dividing such Settlement Rate by a
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fraction of which the numerator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock that the
aggregate of the offering price of the total number of shares of Common
Stock so offered for subscription or purchase would purchase at such
Current Market Price and the denominator shall be the number of shares
of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock so
offered for subscription or purchase, such increase to become effective
immediately after the opening of business on the day following the date
fixed for such determination. For the purposes of this clause (ii), the
number of shares of Common Stock at any time outstanding shall not
include shares held in the treasury of the Company but shall include
shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Common Stock. The Company shall not issue any
such rights, options or warrants in respect of shares of Common Stock
held in the treasury of the Company.
(iii) In case outstanding shares of Common Stock shall be
subdivided or split into a greater number of shares of Common Stock,
the Settlement Rate in effect at the opening of business on the day
following the day upon which such subdivision or split becomes
effective shall be proportionately increased, and, conversely, in case
outstanding shares of Common Stock shall each be combined into a
smaller number of shares of Common Stock, the Settlement Rate in effect
at the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately reduced, such
increase or reduction, as the case may be, to become effective
immediately after the opening of business on the day following the day
upon which such subdivision, split or combination becomes effective.
(iv) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock evidences of its
indebtedness, shares of capital stock, securities, cash or property
(excluding any rights or warrants referred to in Section 5.06(a)(ii),
any dividend or distribution paid exclusively in cash and any dividend
or distribution referred to in Section 5.06(a)(i)), the Settlement Rate
shall be adjusted so that the same shall equal the rate determined by
dividing the Settlement Rate in effect immediately prior to the close
of business on the date fixed for the determination of stockholders
entitled to receive such distribution by a fraction of which the
numerator shall be the Current Market Price per share of Common Stock
on the date fixed for such determination less the then fair market
value (as determined by the Board
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of Directors, whose determination shall be conclusive and described in
a Board Resolution filed with the Agent) of the portion of the assets
or evidences of indebtedness so distributed applicable to one share of
Common Stock and the denominator shall be such Current Market Price per
share of Common Stock, such adjustment to become effective immediately
prior to the opening of business on the day following the date fixed
for the determination of stockholders entitled to receive such
distribution.
(v) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock cash (excluding (x) any
quarterly cash dividend on the Common Stock to the extent that the
aggregate cash dividend per share of Common Stock in any fiscal quarter
does not exceed the greater of (A) the amount per share of Common Stock
of the next preceding quarterly cash dividend on the Common Stock to
the extent that such preceding quarterly dividend did not require an
adjustment of the Settlement Rate pursuant to this Section 5.06(a)(v)
(as adjusted to reflect subdivisions or combinations of the Common
Stock), and (B) 3.75% of the arithmetic average of the Closing Prices
of the Common Stock during the ten consecutive Trading Days immediately
prior to the date of declaration of such dividend, and (y) any dividend
or distribution in connection with the liquidation, dissolution or
winding up of the Company, whether voluntary or involuntary), then, in
such case, the Settlement Rate shall be increased so that the same
shall equal the rate determined by multiplying the Settlement Rate in
effect immediately prior to the close of business on such record date
by a fraction of which the numerator shall be the Current Market Price
of the Common Stock, and the denominator shall be the Current Market
Price of the Common Stock on the record date less the amount of cash so
distributed (and not excluded as provided above) applicable to one
share of Common Stock, such increase to be effective immediately prior
to the opening of business on the day following the record date;
provided, however, that in the event the portion of the cash so
distributed applicable to one share of Common Stock of the Company is
equal to or greater than the Current Market Price of the Common Stock
of the Company on the record date, in lieu of the foregoing adjustment,
adequate provision shall be made so that each holder of a Security
shall have the right to receive upon settlement of the Securities the
amount of cash such Holder would have received had such Holder settled
each Security on the record date. In the event that such dividend or
distribution is not so paid or made, the Settlement Rate shall again be
adjusted to be the Settlement Rate which would then be in effect if
such dividend or distribution had not been declared. If any adjustment
is required to be made as set forth in this Section 5.06(a)(v) as a
result of a
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distribution that is a quarterly dividend, such adjustment shall be
based upon the amount by which such distribution exceeds the amount of
the quarterly cash dividend permitted to be excluded pursuant to this
Section 5.06(a)(v) (notwithstanding the provisions of Section
5.06(a)(x)). If an adjustment is required to be made as set forth in
this Section 5.06(a)(v) above as a result of a distribution that is not
a quarterly dividend, such adjustment shall be based upon the full
amount of the distribution.
(vi) In case of a tender or exchange offer made by a Person
other than the Company or any subsidiary of the Company for an amount
which increases the offeror's ownership of Common Stock of the Company
to more than 25% of the Common Stock outstanding and shall involve the
payment by such Person of consideration per share of Common Stock
having a fair market value (as determined by the Board of Directors,
whose determination shall be conclusive, and described in a Board
Resolution) at the last time (the "EXPIRATION TIME") tenders or
exchanges may be made pursuant to such tender or exchange offer (as it
shall have been amended) that exceeds the Current Market Price of the
Common Stock on the Trading Day next succeeding the Expiration Time,
and in which, as of the Expiration Time, the Board of Directors is
recommending acceptance of the offer, the Settlement Rate shall be
increased so that the same shall equal the rate determined by
multiplying the Settlement Rate in effect immediately prior to the
Expiration Time by a fraction of which the numerator shall be the sum
of (x) the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to
any maximum specified in the terms of the tender or exchange offer) of
all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum,
being referred to as the "PURCHASED SHARES") and (y) the product of the
number of shares of Common Stock of the Company outstanding (less any
Purchased Shares) on the Expiration Time and the Current Market Price
of the Common Stock on the Trading Day next succeeding the Expiration
Time, and the denominator shall be the number of shares of Common Stock
of the Company outstanding (including any tendered or exchanged shares)
on the Expiration Time multiplied by the Current Market Price of the
Common Stock on the Trading Day next succeeding the Expiration Time,
such increase to become effective immediately prior to the opening of
business on the day following the Expiration Time. In the event that
such Person is obligated to purchase shares pursuant to any such tender
or exchange offer, but such Person is permanently prevented by
applicable law from effecting any such purchases or all such purchases
are rescinded, the Settlement Rate shall again be adjusted to be the
Settlement Rate which would then be in effect
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if such tender or exchange offer had not been made. Notwithstanding the
foregoing, the adjustment described in this Section 5.06(a)(vi) shall
not be made if, as of the Expiration Time, the offering documents with
respect to such offer disclose a plan or intention to cause the Company
to engage in a consolidation or merger of the Company or a sale of all
or substantially all of the assets of the Company.
(vii) In the event that the rights (the "RIGHTS") are
separated from the Common Stock in accordance with the provisions of
the Rights Agreement dated as of August 21, 1995 between the Company
and The Bank of New York, as Rights Agent (or any successor rights
plan) such that the Holders would thereafter not be entitled to receive
any such Rights in respect of the Common Stock issuable pursuant to the
Purchase Contracts, the Settlement Rate shall be adjusted as provided
in Section 5.06(a)(iv) (subject to readjustment in the event of the
expiration, termination or redemption of the Rights).
(viii) The reclassification of Common Stock into securities
including securities other than Common Stock (other than any
reclassification upon a Reorganization Event to which Section 5.06(b)
applies) shall be deemed to involve (A) a distribution of such
securities other than Common Stock to all holders of Common Stock (and
the effective date of such reclassification shall be deemed to be "the
date fixed for the determination of stockholders entitled to receive
such distribution" and the "date fixed for such determination" within
the meaning of paragraph (iv) of this Section), and (B) a subdivision,
split or combination, as the case may be, of the number of shares of
Common Stock outstanding immediately prior to such reclassification
into the number of shares of Common Stock outstanding immediately
thereafter (and the effective date of such reclassification shall be
deemed to be "the date upon which such subdivision or split becomes
effective" or "the day upon which such combination becomes effective",
as the case may be and "the day upon which such subdivision, split or
combination becomes effective" within the meaning of Section
5.06(a)(iii)).
(ix) The "CURRENT MARKET PRICE" per share of Common Stock on
any day means the average of the daily Closing Prices for the five
consecutive Trading Days selected by the Company commencing not more
than 20 Trading Days before, and ending not later than, the earlier of
the day in question and the day before the "ex date" with respect to
the issuance or distribution requiring such computation. For purposes
of this paragraph, the term "EX DATE", when used with respect to any
issuance or distribution, shall mean the first date on which the Common
Stock trades
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regular way on the applicable exchange or in the applicable market
without the right to receive such issuance or distribution.
(x) All adjustments to the Settlement Rate shall be calculated
to the nearest 1/10,000th of a share of Common Stock (or if there is
not a nearest 1/10,000th of a share to the next lower 1/10,000th of a
share). No adjustment in the Settlement Rate shall be required unless
such adjustment would require an increase or decrease of at least one
percent therein; provided, however, that any adjustments that by reason
of this clause (x) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. If an adjustment
is made to the Settlement Rate pursuant to Section 5.06(a)(i), (ii),
(iii), (iv), (v), (vi), (vii), (viii) or (xi), an adjustment shall also
be made to the Applicable Market Value solely to determine which of
clauses (a), (b) or (c) of the definition of Settlement Rate in Section
5.01 shall apply on the Final Settlement Date. Such adjustment shall be
made by multiplying the Applicable Market Value by a fraction of which
the numerator shall be the Settlement Rate immediately after such
adjustment pursuant to Section 5.06(a)(i), (ii), (iii), (iv), (v),
(vi), (vii), (viii) or (xi) and the denominator shall be the Settlement
Rate immediately before such adjustment.
(xi) The Company may make such increases in the Settlement
Rate, in addition to those required by this Section, as the Board of
Directors deems advisable in order to avoid or diminish any income tax
to any holders of Common Stock resulting from any dividend or
distribution of stock or issuance of rights or warrants to purchase or
subscribe for stock or from any event treated as such for income tax
purposes or for any other reasons.
(b) Adjustment for Consolidation, Merger or Other Reorganization
Event. In the event of (i) any consolidation or merger of the Company with or
into another Person (other than a merger or consolidation in which the Company
is the continuing corporation and in which the Common Stock outstanding
immediately prior to the merger or consolidation is not exchanged for cash,
securities or other property of the Company or another corporation), (ii) any
sale, transfer, lease or conveyance to another Person of the property of the
Company as an entirety or substantially as an entirety, (iii) any statutory
exchange of securities of the Company with another Person (other than in
connection with a merger or acquisition) or (iv) any liquidation, dissolution or
winding up of the Company other than as a result of or after the occurrence of a
Termination Event (any such event, a "REORGANIZATION EVENt"), the Settlement
Rate shall be adjusted to provide that each Holder of Securities shall receive
on the Final Settlement Date with respect to each Purchase Contract forming a
part thereof, the kind and
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amount of securities, cash and other property (the "EVENT CONSIDERATION")
receivable upon consummation of the Reorganization Event by a holder of a number
of shares of Common Stock equal to the Settlement Rate, assuming such holder of
Common Stock is not a Person with which the Company consolidated or into which
the Company merged or that merged into the Company or to which such sale or
transfer was made, as the case may be ("CONSTITUENT PERSON"), or an Affiliate of
a Constituent Person, and that such holder failed to exercise such holder's
rights of election, if any, as to the kind or amount of securities, cash and
other property receivable upon such Reorganization Event (provided that if the
kind or amount of securities, cash and other property receivable upon such
Reorganization Event is not the same for each share of Common Stock held
immediately prior to such Reorganization Event by other than a Constituent
Person or an Affiliate thereof and in respect of which such rights of election
shall not have been exercised ("NON-ELECTING SHARE"), then for the purpose of
this Section the kind and amount of securities, cash and other property
receivable upon such Reorganization Event by each non-electing share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
non-electing shares). Following a Reorganization Event, the Applicable Market
Value shall equal the value of the Event Consideration receivable in respect of
one share of Common Stock, determined in the following manner: (i) for any Event
Consideration consisting of cash, the amount of such cash; (ii) for any Event
Consideration consisting of Marketable Common Stock, the average of the Closing
Prices per share of such Marketable Common Stock on each of the twenty
consecutive Trading Days ending on the second Trading Day immediately preceding
the Final Settlement Date; and (iii) for any Event Consideration consisting of
securities or other property other than cash or Marketable Common Stock, an
amount equal to the fair market value of such Event Consideration on the Final
Settlement Date as determined by the Board of Directors. "MARKETABLE COMMON
STOCK" means any common equity securities listed on a U.S. national exchange or
automated quotation system. In the event of such a Reorganization Event, the
Person formed by such consolidation, merger or exchange or the Person that
acquires the assets of the Company or, in the event of a liquidation or
dissolution of the Company, the Company or a liquidating trust created in
connection therewith, shall execute and deliver to the Agent an agreement
supplemental hereto providing that the Holders of each Outstanding Security
shall have the rights provided by this Section 5.06. Such supplemental agreement
shall provide for adjustments that, for events subsequent to the effective date
of such supplemental agreement, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section, and shall provide
for such modifications to the definition of "Common Stock" and such other
provisions hereof and of the Securities as shall be necessary to carry out the
economic intent of this Agreement. The above provisions of this Section shall
similarly apply to successive Reorganization Events.
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SECTION 5.07. Notice of Adjustments and Certain Other Events. (a)
Whenever the Settlement Rate is adjusted as herein provided, the Company shall:
(i) forthwith compute the adjusted Settlement Rate in
accordance with Section 5.06 and prepare and transmit to the Agent an
Officers' Certificate setting forth the adjusted Settlement Rate, the
method of calculation thereof in reasonable detail and the facts
requiring such adjustment and upon which such adjustment is based; and
(ii) within 10 Business Days following the occurrence of an
event that permits or requires an adjustment to the Settlement Rate
pursuant to Section 5.06 (or if the Company is not aware of such
occurrence, as soon as practicable after becoming so aware), provide a
written notice to the Holders of the occurrence of such event and a
statement in reasonable detail setting forth the method by which the
adjustment to the Settlement Rate was determined and setting forth the
adjusted Settlement Rate.
(b) The Agent shall not at any time be under any duty or
responsibility to any Holder to determine whether any facts exist that may
require any adjustment of the Settlement Rate, or with respect to the nature or
extent or calculation of any such adjustment when made, or with respect to the
method employed in making the same. The Agent shall not be accountable with
respect to the validity or value (or the kind or amount) of any shares of Common
Stock, or of any securities or property, which may at the time be issued or
delivered with respect to any Purchase Contract; and the Agent makes no
representation with respect thereto. The Agent shall not be responsible for any
failure of the Company to issue, transfer or deliver any shares of Common Stock
pursuant to a Purchase Contract or to comply with any of the duties,
responsibilities or covenants of the Company contained in this Article.
SECTION 5.08. Termination Event; Notice. The Purchase Contracts and the
obligations and rights of the Company and the Holders thereunder, including,
without limitation, the rights of the Holders to receive and the obligation of
the Company to pay any Contract Fees or any Deferred Contract Fees, shall
immediately and automatically terminate, without the necessity of any notice or
action by any Holder, the Agent or the Company, if, on or prior to the Final
Settlement Date, a Termination Event shall have occurred. Upon and after the
occurrence of a Termination Event, the Securities shall thereafter represent the
right to receive the Treasury Securities forming a part of such Securities in
accordance with the provisions of Section 4.02 and the Pledge Agreement. Upon
the occurrence of a Termination Event, the Company shall promptly but in no
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event more than two Business Days thereafter give written notice to the Agent,
the Collateral Agent and the Holders.
SECTION 5.09. Early Settlement. (a) Subject to and upon compliance with
the provisions of this Section 5.09, at the option of the Holder thereof, any
Purchase Contracts in integral multiples of 1,000 Securities may be settled
early ("EARLY SETTLEMENT") as provided herein. In order to exercise the right to
effect Early Settlement with respect to any Purchase Contracts, the Holder of
the Security Certificate evidencing such Purchase Contracts shall deliver such
Security Certificate to the Agent at the Corporate Trust Office duly endorsed
for transfer to the Company or in blank with the form of Election to Settle
Early on the reverse thereof duly completed and accompanied by payment in the
form of immediately available funds in an amount (the "EARLY SETTLEMENT AMOUNT")
equal to (i) the product of (A) the Stated Amount times (B) the number of
Purchase Contracts with respect to which the Holder has elected to effect Early
Settlement plus (ii) if such delivery is made with respect to any Purchase
Contracts during the period from the close of business on any Record Date
immediately preceding any Payment Date to the opening of business on such
Payment Date, an amount equal to the sum of (x) the Contract Fees and Deferred
Contract Fees, if any, payable on such Payment Date with respect to such
Purchase Contracts plus (y) if such Security Certificate evidences Coupon
Securities, the interest on the related Treasury Notes payable on such Payment
Date. Except as provided in the immediately preceding sentence and subject to
the second to the last paragraph of Section 5.02, no payment or adjustment shall
be made upon Early Settlement of any Purchase Contract on account of any
Contract Fees or Deferred Contract Fees, if any, accrued on such Purchase
Contract or on account of any dividends on the Common Stock issued upon such
Early Settlement. If the foregoing requirements are first satisfied with respect
to Purchase Contracts underlying any Securities at or prior to 5:00 p.m., New
York City time, on a Business Day, such day shall be the "EARLY SETTLEMENT DATE"
with respect to such Securities and if such requirements are first satisfied
after 5:00 p.m, New York City time, on a Business Day or on a day that is not a
Business Day, the "EARLY SETTLEMENT DATE" with respect to such Securities shall
be the next succeeding Business Day. Notwithstanding the foregoing, a Holder of
Zero-Coupon Securities will not have the right to elect Early Settlement on any
Early Settlement Date occurring after November 14, 2001.
(b) Upon Early Settlement of Purchase Contracts by a Holder of the
related Securities, the Company shall issue, and the Holder shall be entitled to
receive, a number of shares of Common Stock on account of each Purchase Contract
as to which Early Settlement is effected equal to the Early Settlement Rate;
provided, however, that upon the Early Settlement of the Purchase Contracts, the
Holder of such related Securities shall forfeit the right to receive
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accrued Contract Fees and any Deferred Contract Fees. The "EARLY SETTLEMENT
RATE" shall initially be equal to .8333 and shall be adjusted in the same manner
and at the same time as the Settlement Rate is adjusted. As promptly as
practicable after Early Settlement of Purchase Contracts in accordance with the
provisions of this Section 5.09, the Company shall issue and shall deliver to
the Agent at the Corporate Trust Office a certificate or certificates for the
full number of shares of Common Stock issuable upon such Early Settlement
together with payment in lieu of any fraction of a share, as provided in Section
5.10.
(c) The Company shall cause the shares of Common Stock issuable, and
Treasury Securities deliverable, upon Early Settlement of Purchase Contracts to
be issued and delivered to the Agent, in the case of such shares of Common
Stock, and released from the Pledge by the Collateral Agent and credited to a
securities account of the Agent, in the case of such Treasury Securities, for
delivery or credit to the Holder thereof or its designee, no later than 5:00
p.m. New York City time the third Business Day after the applicable Early
Settlement Date.
(d) Upon Early Settlement of any Purchase Contracts, and subject to
receipt thereof from the Company or the Collateral Agent, as applicable, the
Agent shall, in accordance with the instructions provided by the Holder thereof
on the applicable form of Election to Settle Early on the reverse of the
Security Certificate evidencing the related Securities, (i) credit the Treasury
Securities forming a part of such Securities to the securities account so
designated by such Holder and (ii) deliver a certificate or certificates for the
full number of shares of Common Stock issuable upon such Early Settlement
together with payment in lieu of any fraction of a share, as provided in Section
5.10.
(e) In the event that Early Settlement is effected with respect to
Purchase Contracts underlying less than all the Securities evidenced by a
Security Certificate, upon such Early Settlement the Company shall execute, and
the Agent shall authenticate, execute on behalf of the Holder and deliver to the
Holder, at the expense of the Company, a Security Certificate evidencing the
Securities as to which Early Settlement was not effected.
SECTION 5.10. No Fractional Shares. No fractional shares or scrip
representing fractional shares of Common Stock shall be issued or delivered upon
settlement on the Final Settlement Date or upon Early Settlement of any Purchase
Contracts or with respect to the payment of Deferred Contract Fees, if any, on
the Final Settlement Date. If Security Certificates evidencing more than one
Purchase Contract shall be surrendered for settlement at one time by the same
Holder, the number of full shares of Common Stock that shall be delivered upon
settlement shall be computed on the basis of the aggregate number of Purchase
Contracts evidenced by the Security Certificates so surrendered. Instead of any
fractional
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shares of Common Stock that would otherwise be deliverable upon settlement of
any Purchase Contracts on the Final Settlement Date or upon Early Settlement or
with respect to the payment of any Deferred Contract Fees, the Company, through
the Agent, shall make a cash payment in respect of such fractional interest in
an amount equal to the value of such fractional shares at the Closing Price per
share on the second Trading Day immediately preceding the Final Settlement Date
or the related Early Settlement Date, respectively. The Company shall provide
the Agent from time to time with sufficient funds to permit the Agent to make
all cash payments required by this Section 5.10 in a timely manner.
SECTION 5.11. Charges and Taxes. The Company shall pay all stock
transfer and similar taxes attributable to the initial issuance and delivery of
the shares of Common Stock pursuant to the Purchase Contracts and in payment of
any Deferred Contract Fees; provided, however, that the Company shall not be
required to pay any such tax or taxes that may be payable in respect of any
exchange of or substitution for a Security Certificate evidencing a Purchase
Contract or any issuance of a share of Common Stock in a name other than that of
the registered Holder of a Security Certificate surrendered in respect of the
Purchase Contracts evidenced thereby, other than in the name of the Agent, as
custodian for such Holder, and the Company shall not be required to issue or
deliver such share certificates or Security Certificates unless or until the
Person or Persons requesting the transfer or issuance thereof shall have paid to
the Company the amount of such tax or shall have established to the satisfaction
of the Company that such tax has been paid or is not payable.
ARTICLE 6
REMEDIES
SECTION 6.01. Unconditional Right of Holders to Receive Contract Fees
and Purchase Common Stock. The Holder of any Security shall have the right,
which is absolute and unconditional (subject to the right of the Company to
defer payment thereof pursuant to Section 5.03 and subject to the forfeiture of
accrued Contract Fees and any Deferred Contract Fees upon Early Settlement
pursuant to Section 5.09(b) and upon a Termination Event pursuant to Section
5.08), to receive payment of each installment of the Contract Fees with respect
to the Purchase Contract constituting a part of such Security on the respective
Payment Date for such Security and to purchase Common Stock pursuant to such
Purchase Contract and, in each such case, to institute suit for the enforcement
of any such payment and right to purchase Common Stock, and such rights shall
not be impaired without the consent of such Holder.
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SECTION 6.02. Restoration of Rights and Remedies. If any Holder has
instituted any proceeding to enforce any right or remedy under this Agreement
and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to such Holder, then and in every such case, subject
to any determination in such proceeding, the Company and such Holder shall be
restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of such Holder shall continue as though no
such proceeding had been instituted.
SECTION 6.03. Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement of mutilated, destroyed, lost or stolen
Security Certificates in the last paragraph of Section 3.06, no right or remedy
herein conferred upon or reserved to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 6.04. Delay or Omission Not Waiver. No delay or omission of any
Holder to exercise any right or remedy shall impair any such right or remedy or
constitute a waiver of any such right. Every right and remedy given by this
Article or by law to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by such Holders.
SECTION 6.05. Undertaking for Costs. All parties to this Agreement
agree, and each Holder of any Security by such Holder's acceptance of the
Security Certificate evidencing such Security shall be deemed to have agreed,
that any court may in its discretion require, in any suit for the enforcement of
any right or remedy under this Agreement, or in any suit against the Agent for
any action taken, suffered or omitted by it as Agent, 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, 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;
provided that the provisions of this Section shall not apply to any suit
instituted by the Company, to any suit instituted by the Agent, to any suit
instituted by any Holder, or group of Holders, holding in the aggregate more
than 10% of the Outstanding Securities, or to any suit instituted by any Holder
for the enforcement of the payment of the interest on any Treasury Note or the
Contract Fees or Deferred Contract Fees, if any, on any Purchase Contract on or
after the respective Payment Date therefor constituting a part of the Securities
held by such Holder, or for enforcement of the right to
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purchase Common Stock under the Purchase Contracts constituting a part of the
Securities held by such Holder.
SECTION 6.06. Waiver of Stay or Extension Laws. The Company covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of this
Agreement; and the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law and covenants that it
shall not hinder, delay or impede the execution of any power herein granted to
the Agent or the Holders, but shall suffer and permit the execution of every
such power as though no such law had been enacted.
ARTICLE 7
THE AGENT
SECTION 7.01. Certain Duties and Responsibilities.
(a) (i) the Agent undertakes to perform, with respect to the
Securities, such duties and only such duties as are specifically set
forth in this Agreement and the Pledge Agreement, and no implied
covenants or obligations shall be read into this Agreement against the
Agent; and
(ii) in the absence of bad faith or negligence on its part, the Agent
may, with respect to the Securities, conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Agent and
conforming to the requirements of this Agreement, but in the case of
any certificates or opinions that by any provision hereof are
specifically required to be furnished to the Agent, the Agent shall be
under a duty to examine the same to determine whether or not they
conform to the requirements of this Agreement; and
(iii) in case of a Termination Event, the Agent shall exercise such of
the rights and powers vested in it by this Agreement, 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 Agreement shall be construed to relieve the
Agent from liability for its own negligent action, its own negligent failure to
act, or its own wilful misconduct, except that
(i) this Subsection shall not be construed to limit the effect
of Subsection (a) of this Section;
(ii) the Agent shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Agent was negligent in ascertaining the pertinent facts; and
(iii) no provision of this Agreement shall require the Agent
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if adequate indemnity is not
provided to it.
(c) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Agent shall be subject to the provisions of this
Section.
SECTION 7.02. Notice of Default. Within 30 days after the occurrence of
any default by the Company in the performance of any of its obligations
hereunder, of which a Responsible Officer of the Agent has actual knowledge, the
Agent shall transmit by mail to all Holders, as their names and addresses appear
in the Security Register, notice of such default hereunder, unless such default
shall have been cured or waived.
SECTION 7.03. Certain Rights of Agent. Subject to the provisions of
Section 7.01:
(a) the Agent may rely and shall be 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 or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by an Officers' Certificate, Issuer Order or Issuer
Request, and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this Agreement the Agent shall
deem it desirable that a matter be proved or established prior to taking,
suffering
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or omitting any action hereunder, the Agent (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely upon
an Officers' Certificate;
(d) the Agent may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(e) the Agent 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 Agent,
in its discretion, may make reasonable further inquiry or investigation into
such facts or matters related to the issuance of the Securities and the
execution, delivery and performance of the Purchase Contracts as it may see fit,
and, if the Agent shall determine to make such further inquiry or investigation,
it shall be entitled to examine the books, records and promises of the Company,
personally or by agent or attorney; and
(f) the Agent may execute any of its powers hereunder or perform any
duties hereunder either directly or by or through agents or attorneys or an
Affiliate and the Agent shall not be responsible for any misconduct or
negligence on the part of any agent or attorney or an Affiliate appointed with
due care by it hereunder.
SECTION 7.04. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Security Certificates shall be taken as
the statements of the Company and the Agent assumes no responsibility for their
accuracy. The Agent makes no representations as to the validity or sufficiency
of either this Agreement or of the Securities, or of the Pledge Agreement or the
Pledge. The Agent shall not be accountable for the use or application by the
Company of the proceeds in respect of the Purchase Contracts.
SECTION 7.05. May Hold Securities. Any Security Registrar or any other
agent of the Company, or the Agent and its Affiliates, in their individual or
any other capacity, may become the owner or pledgee of Securities and may
otherwise deal with the Company, the Collateral Agent or any other Person with
the same rights it would have if it were not Security Registrar or such other
agent, or the Agent.
SECTION 7.06. Money Held in Custody. Money held by the Agent in
custody hereunder need not be segregated from the other funds except to the
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extent required by law. The Agent shall be under no obligation to invest or pay
interest on any money received by it hereunder except pursuant to the provisions
of Section 4.01 or as otherwise agreed in writing with the Company.
SECTION 7.07. Compensation and Reimbursement. The Company agrees:
(a) to pay to the Agent from time to time reasonable
compensation for all services rendered by it hereunder as the Company
and the Agent shall, from time to time, agree in writing;
(b) except as otherwise expressly provided herein, to
reimburse the Agent upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Agent in accordance
with any provision of this Agreement (including the reasonable
compensation and the expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(c) to indemnify the Agent and any predecessor Agent for, and
to hold each of them harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of its duties
hereunder, including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance
of any of its powers or duties hereunder.
SECTION 7.08. Corporate Agent Required; Eligibility. There shall at all
times be an Agent hereunder, which shall be a corporation organized and doing
business under the laws of the United States of America, any State thereof or
the District of Columbia, authorized under such laws to exercise corporate trust
powers, having (or being a member of a bank holding company having) a combined
capital and surplus of at least $50,000,000, subject to supervision or
examination by Federal or State authority, if there be such a corporation
qualified and eligible under this Article and willing to act on reasonable
terms. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, 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 the 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
hereinafter specified in this Article.
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SECTION 7.09. Resignation and Removal; Appointment of Successor. (a) No
resignation or removal of the Agent and no appointment of a successor Agent
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Agent in accordance with the applicable
requirements of Section 7.10.
(b) The Agent may resign at any time by giving written notice thereof
to the Company 60 days prior to the effective date of such resignation. If the
instrument of acceptance by a successor Agent required by Section 7.10 shall not
have been delivered to the Agent within 30 days after the giving of such notice
of resignation, the resigning Agent may petition any court of competent
jurisdiction for the appointment of a successor Agent.
(c) The Agent may be removed at any time by Act of the Holders of a
majority in Stated Amount of the Outstanding Securities delivered to the Agent
and the Company.
(d) If at any time
(i) the Agent fails to comply with Section 310(b) of the TIA,
as if the Agent were an indenture trustee under an indenture qualified
under the TIA, after written request therefor by the Company or by any
Holder who has been a Holder of a Security for at least six months, or
(ii) the Agent shall cease to be eligible under Section 7.08
and shall fail to resign after written request therefor by the Company
or by any such Holder, or
(iii) the Agent shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Agent or of its
property shall be appointed or any public officer shall take charge or
control of the Agent or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Agent, or (ii) any Holder who has been a 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 Agent and the appointment
of a successor Agent.
(e) If the Agent shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Agent for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Agent and
shall comply
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with the applicable requirements of Section 7.10. If no successor Agent shall
have been so appointed by the Company and accepted appointment in the manner
required by Section 7.10, any Holder who has been a 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 appointment of a successor
Agent.
(f) The Company shall give, or shall cause such successor Agent to
give, notice of each resignation and each removal of the Agent and each
appointment of a successor Agent by mailing written notice of such event by
first-class mail, postage prepaid, to all Holders as their names and addresses
appear in the Security Register. Each notice shall include the name of the
successor Agent and the address of its Corporate Trust Office.
SECTION 7.10. Acceptance of Appointment by Successor. (a) In case of
the appointment hereunder of a successor Agent, every such successor Agent so
appointed shall execute, acknowledge and deliver to the Company and to the
retiring Agent an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Agent shall become effective and such
successor Agent, without any further act, deed or conveyance, shall become
vested with all the rights, powers, agencies and duties of the retiring Agent;
but, on the request of the Company or the successor Agent, such retiring Agent
shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Agent all the rights, powers and trusts of the
retiring Agent and shall duly assign, transfer and deliver to such successor
Agent all property and money held by such retiring Agent hereunder.
(b) Upon request of any such successor Agent, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Agent all such rights, powers and agencies referred
to in Section 7.10(a).
(c) No successor Agent shall accept its appointment unless at the time
of such acceptance such successor Agent shall be qualified and eligible under
this Article.
SECTION 7.11. Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Agent 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 Agent shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Agent, shall be the successor of the Agent hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution
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or filing of any paper or any further act on the part of any of the parties
hereto. In case any Security Certificates shall have been authenticated and
executed on behalf of the Holders, but not delivered, by the Agent then in
office, any successor by merger, conversion or consolidation to such Agent may
adopt such authentication and execution and deliver the Security Certificates so
authenticated and executed with the same effect as if such successor Agent had
itself authenticated and executed such Securities.
SECTION 7.12. Preservation of Information; Communications to Holders.
(a) The Agent shall preserve, in as current a form as is reasonably practicable,
the names and addresses of Holders received by the Agent in its capacity as
Security Registrar.
(b) If one or more Holders (herein referred to as "APPLICANTS") apply
in writing to the Agent, and furnish to the Agent 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 with respect to their rights
under this Agreement or under the Securities and is accompanied by a copy of the
form of proxy or other communication that such applicants propose to transmit,
then the Agent shall, within five Business Days after the receipt of such
application, afford such applicants access to the information preserved at the
time by the Agent in accordance with Section 7.12(a).
(c) Every Holder, by receiving and holding the Security Certificates
evidencing the Securities, agrees with the Company and the Agent that none of
the Company, the Agent nor any agent of any of them shall be held accountable by
reason of the disclosure of any such information as to the names and addresses
of the Holders in accordance with Section 7.12(b), regardless of the source from
which such information was derived.
SECTION 7.13. No Obligations of Agent. Except to the extent otherwise
provided in this Agreement, the Agent assumes no obligations and shall not be
subject to any liability under this Agreement, the Pledge Agreement or any
Purchase Contract in respect of the obligations of the Holder of any Security
thereunder. The Company agrees, and each Holder of a Security Certificate, by
such Holder's acceptance thereof, shall be deemed to have agreed, that the
Agent's execution of the Security Certificates on behalf of the Holders shall be
solely as agent and attorney-in-fact for the Holders, and that the Agent shall
have no obligation to perform such Purchase Contracts on behalf of the Holders,
except to the extent expressly provided in Article 5 hereof.
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SECTION 7.14. Tax Compliance. (a) The Agent, on its own behalf and on
behalf of the Company, shall comply with all applicable certification,
information reporting and withholding (including "backup" withholding)
requirements imposed by applicable tax laws, regulations or administrative
practice with respect to (i) any payments made with respect to the Securities or
(ii) the issuance, delivery, holding, transfer, redemption or exercise of rights
under the Securities. Such compliance shall include, without limitation, the
preparation and timely filing of required returns and the timely payment of all
amounts required to be withheld to the appropriate taxing authority or its
designated agent.
(b) The Agent shall comply with any direction received from the
Company with respect to the application of such requirements to particular
payments or Holders or in other particular circumstances, and may for purposes
of this Agreement rely on any such direction in accordance with the provisions
of Section 7.01(a)(ii) hereof.
(c) The Agent shall maintain all appropriate records documenting
compliance with such requirements, and shall make such records available, on
written request, to the Company or to its authorized representative within a
reasonable period of time after receipt of such request.
ARTICLE 8
SUPPLEMENTAL AGREEMENTS
SECTION 8.01. Supplemental Agreements Without Consent of Holders.
Without the consent of any Holders, the Company and the Agent, at any time and
from time to time, may enter into one or more agreements supplemental hereto, in
form satisfactory to the Company and the Agent, for any of the following
purposes:
(a) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company herein and
in the Security Certificates; or
(b) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the Company;
or
(c) to evidence and provide for the acceptance of appointment
hereunder by a successor Agent; or
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(d) to make provision with respect to the rights of Holders pursuant
to the requirements of Section 5.06(b); or
(e) to make any of the following changes with respect to the Treasury
Securities underlying a Security: (i) from a Treasury Note or a Treasury Strip,
as the case may be, to a security entitlement in respect thereof, (ii) from a
security entitlement in respect of a Treasury Note or a Treasury Strip, as the
case may be, to a Treasury Note or a Treasury Strip, as the case may be, or
(iii) from a security entitlement in respect of one securities account to a
security entitlement in respect of another securities account, whether or not
with the same securities intermediary; or
(f) to cure any ambiguity, to correct or supplement any provisions
herein that may be inconsistent with any other provisions herein, or to make any
other provisions with respect to such matters or questions arising under this
Agreement, provided in each case that such action shall not adversely affect the
interests of the Holders.
SECTION 8.02. Supplemental Agreements with Consent of Holders. With the
consent of the Holders of not less than 66 2/3% in Stated Amount of the
Outstanding Securities, by Act of said Holders delivered to the Company and the
Agent, the Company, when authorized by a Board Resolution, and the Agent may
enter into an agreement or agreements supplemental hereto for the purpose of
modifying in any manner the terms of the Securities, or the provisions of this
Agreement or the rights of the Holders in respect of the Securities; provided,
however, that no such supplemental agreement shall, without the consent of the
Holder of each Outstanding Security affected thereby,
(a) change any Payment Date;
(b) change the amount or type (other than a change of the type
described in Section 8.01(e)) of Treasury Securities underlying a Security,
impair the right of the Holder of any Security to receive interest payments on
the Coupon Treasury Securities underlying Coupon Securities or otherwise
adversely affect the Holder's rights in or to any such Treasury Securities;
(c) change the place or currency of payment or reduce any Contract
Fees or any Deferred Contract Fees;
(d) impair the right to institute suit for the enforcement of any
Purchase Contract;
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(e) reduce the number of shares of Common Stock purchasable under any
Purchase Contract, increase the price to purchase Common Stock upon settlement
of any Purchase Contract, change the Final Settlement Date or otherwise
adversely affect the Holder's rights under any Purchase Contract; or
(f) reduce the percentage of the Outstanding Securities the consent of
whose Holders is required for any modification or amendment of the provisions of
the Purchase Contracts or this Agreement.
Notwithstanding the foregoing, if any agreement supplemental hereto
would modify only the terms of the Coupon Securities or the Zero-Coupon
Securities, or would modify the rights of Holders of only Coupon Securities or
Zero-Coupon Securities, then only Holders of Coupon Securities or Zero-Coupon
Securities, as the case may be, shall be entitled to consent or withhold consent
with respect thereto, and, with the consent of the Holders of not less than 66
2/3% in Stated Amount of the Outstanding Securities that are Coupon Securities
or Zero-Coupon Securities, as the case may be, by Act of said Holders delivered
to the Company and the Agent, the Company, when authorized by a Board
Resolution, and the Agent may enter to such agreement supplemental hereto.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental agreement, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 8.03. Execution of Supplemental Agreements. In executing, or
accepting the additional agencies created by, any supplemental agreement
permitted by this Article or the modifications thereby of the agencies created
by this Agreement, the Agent shall be entitled to receive and (subject to
Section 7.01) shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental agreement is authorized or
permitted by this Agreement. The Agent may, but shall not be obligated to, enter
into any such supplemental agreement that affects the Agent's own rights, duties
or immunities under this Agreement or otherwise.
SECTION 8.04. Effect of Supplemental Agreements. Upon the execution of
any supplemental agreement under this Article, this Agreement shall be modified
in accordance therewith, and such supplemental agreement shall form a part of
this Agreement for all purposes; and every Holder of Security Certificates
theretofore or thereafter authenticated, executed on behalf of the Holders and
delivered hereunder shall be bound thereby.
SECTION 8.05. Reference to Supplemental Agreements. Security
Certificates authenticated, executed on behalf of the Holders and delivered
after
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the execution of any supplemental agreement pursuant to this Article may, and
shall if required by the Agent, bear a notation in form approved by the Agent as
to any matter provided for in such supplemental agreement. If the Company shall
so determine, new Security Certificates so modified as to conform, in the
opinion of the Agent and the Company, to any such supplemental agreement may be
prepared and executed by the Company and authenticated, executed on behalf of
the Holders and delivered by the Agent in exchange for Outstanding Security
Certificates.
ARTICLE 9
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 9.01. Covenant Not to Merge, Consolidate, Sell or Convey
Property Except Under Certain Conditions. The Company covenants that it shall
not merge or consolidate with any other Person or sell, assign, transfer, lease
or convey all or substantially all of its properties and assets to any Person or
group of affiliated Persons in one transaction or a series of related
transactions, unless (a) either the Company shall be the continuing corporation,
or the successor (if other than the Company) shall be a corporation organized
and existing under the laws of the United States of America or a State thereof
or the District of Columbia and such corporation shall expressly assume all the
obligations of the Company under the Purchase Contracts, this Agreement and the
Pledge Agreement by one or more supplemental agreements in form satisfactory to
the Agent and the Collateral Agent, executed and delivered to the Agent and the
Collateral Agent by such corporation, and (b) the Company or such successor
corporation, as the case may be, shall not, immediately after such merger or
consolidation, or such sale, assignment, transfer, lease or conveyance, be in
default in the performance of any covenant or condition hereunder, under any of
the Securities or under the Pledge Agreement.
SECTION 9.02. Rights and Duties of Successor Corporation. In case of
any such consolidation, merger, sale, assignment, transfer, lease or conveyance
and upon any such assumption by the successor corporation in accordance with
Section 9.01 such successor corporation shall succeed to and be substituted for
the Company with the same effect as if it had been named herein as the Company;
provided that no consolidation or merger with or into, and no such sale,
assignment, transfer, lease or conveyance to, one or more subsidiaries of the
Company shall relieve the Company from any of its obligations under this
Agreement or the Securities. Such successor corporation thereupon may cause to
be signed, and may issue either in its own name or in the name of K N Energy,
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Inc., any or all of the Security Certificates evidencing Securities issuable
hereunder that theretofore shall not have been signed by the Company and
delivered to the Agent; and, upon the order of such successor corporation,
instead of the Company, and subject to all the terms, conditions and limitations
in this Agreement prescribed, the Agent shall authenticate and execute on behalf
of the Holders and deliver any Security Certificates that previously shall have
been signed and delivered by the officers of the Company to the Agent for
authentication and execution, and any Security Certificates evidencing
Securities that such successor corporation thereafter shall cause to be signed
and delivered to the Agent for that purpose. All the Security Certificates so
issued shall in all respects have the same legal rank and benefit under this
Agreement as the Security Certificates theretofore or thereafter issued in
accordance with the terms of this Agreement as though all of such Security
Certificates had been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance such change in phraseology and form (but not in substance)
may be made in Security Certificates evidencing Securities thereafter to be
issued as may be appropriate.
SECTION 9.03. Opinion of Counsel to Agent. The Agent, subject to
Sections 7.01 and 7.03, shall receive an Opinion of Counsel as conclusive
evidence that any such consolidation, merger, sale, assignment, transfer, lease
or conveyance, and any such assumption, complies with the provisions of this
Article and that all conditions precedent to the consummation of any such
consolidation, merger, sale, assignment, transfer, lease or conveyance have been
met.
ARTICLE 10
COVENANTS
SECTION 10.01. Performance under Purchase Contracts. The Company
covenants and agrees for the benefit of the Holders from time to time that it
shall duly and punctually perform its obligations under the Purchase Contracts
in accordance with the terms of the Purchase Contracts and this Agreement.
SECTION 10.02. Maintenance of Office or Agency. The Company shall
maintain in the Borough of Manhattan, The City of New York, an office or agency
where Security Certificates may be presented or surrendered for acquisition of
shares of Common Stock upon settlement or Early Settlement and
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for transfer of Treasury Securities upon occurrence of a Termination Event,
where Security Certificates may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Securities and this Agreement may be served. The Company shall give prompt
written notice to the Agent of the location, and any change in the location, of
such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Agent with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office, and the Company hereby appoints the
Agent as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other
offices or agencies where Security Certificates may be presented or surrendered
for any or all purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York, for such purposes. The Company shall
give prompt written notice to the Agent of any such designation or rescission
and of any change in the location of any such other office or agency. The
Company hereby designates as the place of payment for the Securities the
Corporate Trust Office and appoints the Agent at its Corporate Trust Office as
paying agent in such city.
SECTION 10.03. Company to Reserve Common Stock. The Company shall at
all times prior to the Final Settlement Date reserve and keep available, free
from preemptive rights, out of its authorized but unissued Common Stock the full
number of shares of Common Stock issuable (x) against tender of payment in
respect of all Purchase Contracts constituting a part of the Securities
evidenced by Outstanding Security Certificates and (y) in payment of Deferred
Contract Fees, if any, owed by the Company to the Holders.
SECTION 10.04. Covenant as to Common Stock. The Company covenants that
all Common Stock that may be issued against tender of payment in respect of any
Purchase Contract constituting a part of the Outstanding Securities and in
payment of any Deferred Contract Fees shall, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable.
SECTION 10.05. Statement of Officers of the Company as to Default. The
Company shall deliver to the Agent, within 120 days after the end of each fiscal
year of the Company ending after the date hereof, an Officers' Certificate,
stating whether or not to the best knowledge of the signers thereof the Company
is in default in the performance and observance of any of the terms, provisions
and
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conditions hereof, and if the Company shall be in default, specifying all such
defaults and the nature and status thereof of which they may have knowledge.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
K N ENERGY, INC.
By: _______________________________________
Name:
Title:
U.S. BANK TRUST NATIONAL
ASSOCIATION, as Agent
By: _______________________________________
Name:
Title:
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<PAGE> 65
EXHIBIT A
THIS SECURITY CERTIFICATE IS A GLOBAL SECURITY CERTIFICATE WITHIN THE MEANING OF
THE PURCHASE CONTRACT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF THE DEPOSITORY TRUST COMPANY ("DTC") OR A NOMINEE OF DTC. THIS SECURITY
IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC
OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE
CONTRACT AGREEMENT AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF
THIS SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO
DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, TO
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
K N ENERGY, INC.
8.25% PREMIUM EQUITY PARTICIPATING SECURITY UNITS
(STATED AMOUNT $43 PER SECURITY)
No. CUSIP No. 482620507
_____ Coupon Securities
This Security Certificate certifies that Cede & Co. is the registered
Holder of the number of Securities set forth above. Each Security represents (i)
ownership by the Holder of 5.875% United States Treasury Notes due November 30,
2001 (CUSIP No. 9128272C5) that are held through the Treasury/Reserve
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Automated Debt Entry System ("TREASURY NOTES"), or security entitlements in
respect thereof (together with Treasury Notes, "TREASURY SECURITIES"), with a
principal amount equal to the Stated Amount, subject to the Pledge of such
Treasury Securities by such Holder pursuant to the Pledge Agreement, and (ii)
the rights and obligations of the Holder under one Purchase Contract with K N
Energy, Inc., a Kansas corporation (the "COMPANY"). The Treasury Securities
represented by this Security Certificate were acquired by the Underwriters at
the direction of the Company for the benefit of the Holder hereof and are being
conveyed to the Holder of this Security Certificate (or such Holder's
predecessor-in-interest) and pledged pursuant to the Pledge Agreement
simultaneously therewith.
Pursuant to the Pledge Agreement, the Treasury Securities constituting
part of each Security evidenced hereby are pledged to the Collateral Agent to
secure the obligation of the Holder under the Purchase Contract comprising a
portion of such Security.
The Pledge Agreement provides that all payments of principal of, or
interest on, any Treasury Notes corresponding to Treasury Securities comprising
a portion of the Securities received by the Collateral Agent shall be paid by
the Collateral Agent by wire transfer in same day funds no later than 12:00
noon, New York City time, on the Business Day such payment is received by the
Collateral Agent (provided that in the event such payment is received by the
Collateral Agent on a day that is not a Business Day or after 11:30 a.m., New
York City time, on a Business Day, then such payment shall be made no later than
10:00 a.m., New York City time, on the next succeeding Business Day) (i) in the
case of (A) interest payments and (B) any principal payments with respect to any
Treasury Notes corresponding to Treasury Securities that have been released from
the Pledge pursuant to the Pledge Agreement, to the Agent to the account
designated by it for such purpose and (ii) in the case of principal payments on
any Treasury Notes corresponding to Pledged Treasury Securities (as defined in
the Pledge Agreement), at the direction of the Agent on behalf of the Holders,
to the Company, in full satisfaction of the respective obligations of the
Holders of the Securities of which such Pledged Treasury Securities are a part
under the Purchase Contracts forming a part of such Securities. Interest on any
Treasury Note corresponding to any Treasury Security forming part of a Security
evidenced hereby that is paid on any May 31 or November 30, commencing May 31,
1999 (a "PAYMENT DATE"), shall, subject to receipt thereof by the Agent from the
Collateral Agent, be paid to the Person in whose name this Security Certificate
(or a Predecessor Security Certificate) is registered at the close of business
on the Record Date next preceding such Payment Date; provided, that on the first
Payment Date, the Agent shall remit to the Persons in whose names such Security
Certificates are registered on the Record Date with respect thereto, in addition
to
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interest on the Treasury Notes paid on such Payment Date, interest payable with
respect to the Treasury Notes for the period from the date of initial issuance
of the Securities until November 29, 1998. Interest payable with respect to the
Treasury Notes that accrued prior to the date of initial issuance of the
Securities, and that is payable on the first interest payment date with respect
to the Treasury Notes following the date of initial issuance of the Securities
shall be remitted by the Agent to Morgan Stanley & Co. Incorporated for the
account of the Underwriters by 2:00 p.m. New York City time on the date of
receipt by the Agent.
The Holder of this Security Certificate shall have the right to
substitute Zero-Coupon Treasury Securities for the Treasury Securities forming a
part of the Securities evidenced hereby, thereby forming Zero-Coupon Securities,
in the manner set forth in the Purchase Contract Agreement and the Pledge
Agreement.
Each Purchase Contract evidenced hereby obligates the Holder of this
Security Certificate to purchase, and the Company to sell, on November 30, 2001
(the "FINAL SETTLEMENT DATE"), at a price equal to the Stated Amount, a number
of shares of common stock, par value $5.00 per share ("COMMON STOCK"), of the
Company, equal to the Settlement Rate, unless on or prior to the Final
Settlement Date there shall have occurred a Termination Event or Early
Settlement with respect to the Security of which such Purchase Contract is a
part, all as provided in the Purchase Contract Agreement referred to on the
reverse hereof and more fully described on the reverse hereof. The purchase
price for the Common Stock purchased pursuant to each Purchase Contract
evidenced hereby, if not paid earlier, shall be paid on the Final Settlement
Date by application of payment received in respect of the principal of the
Treasury Securities pledged to secure the obligations under such Purchase
Contract of the Holder of the Security of which such Purchase Contract is a
part.
The Company shall pay, on each Payment Date, in respect of each
Purchase Contract forming part of a Security evidenced hereby, an amount (the
"CONTRACT FEES") equal to 2.375% per annum of the Stated Amount, computed on the
basis of the actual number of days elapsed in a year of 365 or 366 days, as the
case may be, subject to deferral at the option of the Company as provided in the
Purchase Contract Agreement and more fully described on the reverse hereof. Such
Contract Fee shall be payable to the Person in whose name this Security
Certificate (or a Predecessor Security Certificate) is registered at the close
of business on the Record Date immediately preceding such Payment Date.
Interest on the Treasury Notes and the Contract Fees shall be payable
at the office or agency of the Agent in The City of New York or, at the option
of the Company, by check mailed to the address of the Person entitled thereto as
such address appears on Security Register.
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Reference is hereby made to the further provisions set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Agent by manual signature, this Security Certificate shall not be entitled
to any benefit under the Pledge Agreement or the Purchase Contract Agreement or
be valid or obligatory for any purpose.
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
K N ENERGY, INC.
By: _________________________
Name:
Title:
Attested by:
_________________________ HOLDER SPECIFIED ABOVE (as to
obligations of such Holder under the
Purchase Contracts evidenced hereby)
By: U.S. BANK TRUST NATIONAL
ASSOCIATION, not individually
but solely as Attorney-in-Fact of
such Holder
By: _________________________
Authorized Signatory
Dated:
(Form of Certificate of Authentication)
This is one of the Security Certificates referred to in the within
mentioned Purchase Contract Agreement.
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Agent
By: ___________________________
Authorized Signatory
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[FORM OF REVERSE OF SECURITY CERTIFICATE]
Each Purchase Contract evidenced hereby is governed by a Purchase
Contract Agreement, dated as of November 25, 1998 (the "PURCHASE CONTRACT
AGREEMENT"), between the Company and U.S. Bank Trust National Association, as
Purchase Contract Agent (herein called the "AGENT"), to which Purchase Contract
Agreement and supplemental agreements thereto reference is hereby made for a
description of the respective rights, limitations of rights, obligations, duties
and immunities thereunder of the Agent, the Company and the Holders and of the
terms upon which the Security Certificates are, and are to be, executed and
delivered.
Each Purchase Contract evidenced hereby shall obligate the Holder of
this Security Certificate to purchase, and the Company to sell, on the Final
Settlement Date at a price equal to the Stated Amount, a number of shares of
Common Stock of the Company equal to the Settlement Rate, unless, on or prior to
the Final Settlement Date, there shall have occurred a Termination Event or an
Early Settlement with respect to the Security of which such Purchase Contract is
a part. The "SETTLEMENT RATE" is equal to (a) if the Applicable Market Value (as
defined below) is greater than $51.60 (the "THRESHOLD APPRECIATION PRICE"),
.8333 of a share of Common Stock per Purchase Contract, (b) if the Applicable
Market Value is less than or equal to the Threshold Appreciation Price but is
greater than the Stated Amount, a fractional share of Common Stock per Purchase
Contract equal to the Stated Amount divided by the Applicable Market Value
(rounded upward or downward to the nearest 1/10,000th of a share) and (c) if the
Applicable Market Value is less than or equal to the Stated Amount, one share of
Common Stock per Purchase Contract, in each case subject to adjustment as
provided in the Purchase Contract Agreement. No fractional shares of Common
Stock shall be issued upon settlement of Purchase Contracts, as provided in the
Purchase Contract Agreement.
The "APPLICABLE MARKET VALUE" means the average of the Closing Prices
per share of Common Stock on each of the twenty consecutive Trading Days ending
on the second Trading Day immediately preceding the Final Settlement Date. The
"CLOSING PRICE" of the Common Stock on any date of determination means the
closing sale price (or, if no closing price is reported, the last reported sale
price) of the Common Stock on The New York Stock Exchange, Inc. (the "NYSE") on
such date or, if the Common Stock is not listed for trading on the NYSE on any
such date, as reported in the composite transactions for the principal United
States securities exchange on which the Common Stock is so listed or, if the
Common Stock is not so listed on a United States national or regional securities
exchange, as reported by the Nasdaq Stock Market or, if such price of the Common
Stock is not so reported, the last quoted bid price for the Common
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Stock in the over-the-counter market as reported by the National Quotation
Bureau or similar organization or, if such bid price is not available, the
market value of the Common Stock on such date as determined by a nationally
recognized independent investment banking firm retained for this purpose by the
Company. A "TRADING DAY" means a day on which the Common Stock (A) is not
suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (B) has
traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the Common Stock.
The purchase price for the shares of Common Stock purchased pursuant to
each Purchase Contract shall be paid by application of payments received by the
Company on the Final Settlement Date from the Collateral Agent at the direction
of the Agent on behalf of the Holders pursuant to the Pledge Agreement in
respect of the principal of the Treasury Securities pledged to secure the
obligations of the relevant Holder under such Purchase Contract.
The Company shall not be obligated to issue any shares of Common Stock
in respect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received payment in full of the aggregate purchase
price for the shares of Common Stock to be purchased thereunder in the manner
set forth herein and in the Purchase Contract Agreement.
Subject to the next succeeding paragraph and the provisions of the
Purchase Contract Agreement, the Company shall pay, on each Payment Date, the
Contract Fee payable in respect of each Purchase Contract to the Person in whose
name the Security Certificate (or one or more Predecessor Security Certificates)
evidencing the Security of which such Purchase Contract is a part and is
registered at the close of business on the Record Date immediately preceding
such Payment Date.
The Company shall have the right, at any time prior to the Final
Settlement Date, to defer the payment of any or all of the Contract Fees
otherwise payable on any Payment Date (on a pro rata basis among all Outstanding
Securities), but only if the Company shall give the Holders and the Agent
written notice of its election to defer such payment (specifying the amount to
be deferred and the period of deferment) as provided in the Purchase Contract
Agreement. Any Contract Fees so deferred shall bear additional Contract Fees
thereon at the rate of 8.25% per annum (computed on the basis of the actual
number of days elapsed in a year of 365 or 366 days, as the case may be),
compounding on each succeeding Payment Date, until paid in full (such deferred
installments of Contract Fees, together with the additional Contract Fees
accrued thereon, are
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referred to herein as the "DEFERRED CONTRACT FEES"). Deferred Contract Fees
shall be due on the next succeeding Payment Date except to the extent that
payment is deferred pursuant to the Purchase Contract Agreement. No Contract
Fees may be deferred to a date that is after the Final Settlement Date.
In the event that the Company elects to defer the payment of Contract
Fees on Purchase Contracts until the Final Settlement Date, the Holder of this
Security Certificate shall receive on the Final Settlement Date, in lieu of a
cash payment, a number of shares of Common Stock (in addition to a number of
Common Stock equal to the Settlement Rate) equal to (x) the aggregate amount of
Deferred Contract Fees payable to the Holder of this Security Certificate
divided by (y) the Applicable Market Value. No fractional shares of Common Stock
shall be issued with respect to the payment of Deferred Contract Fees on the
Final Settlement Date, as provided in the Purchase Contract Agreement.
In the event the Company exercises its option to defer the payment of
Contract Fees, then, until the Deferred Contract Fees have been paid in full,
the Company (a) shall not declare or pay dividends on, make distributions with
respect to, or redeem, purchase or acquire, or make a liquidation payment with
respect to, any of its capital stock (other than (i) purchases or acquisitions
of Common Stock in connection with the satisfaction by the Company or any of its
subsidiaries of their respective obligations under any benefit plans for
directors, officers, agents or employees or the Company's dividend reinvestment
or director, officer, agent or employee stock purchase plans, (ii) as a result
of a reclassification of the Company's capital stock or the exchange or
conversion of one class or series of capital stock for another class or series
of the Company's capital stock, (iii) the purchase of fractional interests in
shares of the Company's capital stock pursuant to the conversion or exchange
provisions of the Company's capital stock or the security being converted or
exchanged for the Company's capital stock), (iv) dividends or distributions in
the form of shares of, or options, warrants or rights to subscribe for or
purchase, shares of capital stock of the Company or (v) any declaration of a
dividend in connection with the implementation of extension of a stockholders'
rights plan, or the issuance of stock under any such plan (including the
existing such plan) in the future, or the redemption or repurchase of any such
rights pursuant thereto)), (b) shall not make any payment of interest, principal
or premium, if any, on, or repay, repurchase or redeem any debt securities
issued by the Company that rank pari passu with or junior to such Contract Fees
and (c) shall not make any guarantee payments with respect to any guarantee by
the Company of any securities of any subsidiary of the Company if such guarantee
ranks pari passu with or junior in right of payment to the Contract Fees.
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The Purchase Contracts and the obligations and rights of the Company
and the Holders thereunder, including, without limitation, the rights of the
Holders to receive and the obligation of the Company to pay any Contract Fee or
any Deferred Contract Fees, shall immediately and automatically terminate,
without the necessity of any notice or action by any Holder, the Agent or the
Company, if, on or prior to the Final Settlement Date, a Termination Event shall
have occurred. Upon the occurrence of a Termination Event, the Company shall
promptly but in no event more than two Business Days thereafter give written
notice to the Agent, the Collateral Agent and the Holders. Upon and after the
occurrence of a Termination Event, the Collateral Agent shall release the
Treasury Securities from the Pledge in accordance with the provisions of the
Pledge Agreement. The Securities shall thereafter represent the right to receive
the Treasury Securities forming a part of such Securities in accordance with the
provisions of the Purchase Contract Agreement and the Pledge Agreement.
Subject to and upon compliance with the provisions of the Purchase
Contract Agreement, at the option of the Holder thereof, any Purchase Contracts
underlying Securities having an aggregate Stated Amount equal to $43,000 or an
integral multiple thereof may be settled early ("EARLY SETTLEMENT") as provided
in the Purchase Contract Agreement. In order to exercise the right to effect
Early Settlement with respect to any Purchase Contracts evidenced by this
Security Certificate, the Holder of this Security Certificate shall deliver this
Security Certificate to the Agent at the Corporate Trust Office duly endorsed
for transfer to the Company or in blank with the form of Election to Settle
Early set forth below duly completed and accompanied by payment in the form of
immediately available funds in an amount (the "EARLY SETTLEMENT AMOUNT") equal
to (i) the product of (A) the Stated Amount times (B) the number of Purchase
Contracts with respect to which the Holder has elected to effect Early
Settlement plus (ii) if such delivery is made with respect to any Purchase
Contracts during the period from the close of business on any Record Date
immediately preceding any Payment Date to the opening of business of such
Payment Date, an amount equal to the sum of (x) the Contract Fees and Deferred
Contract Fees, if any, payable on such Payment Date with respect to such
Purchase Contracts plus (y) the interest with respect to the related Treasury
Notes payable on such Payment Date. Upon Early Settlement of Purchase Contracts
by a Holder of the related Securities, the Treasury Securities underlying such
Securities shall be released from the Pledge as provided in the Pledge Agreement
and the Holder shall be entitled to receive a number of shares of Common Stock
on account of each Purchase Contract forming part of a Security as to which
Early Settlement is effected equal to the Early Settlement Rate; provided,
however, that upon the Early Settlement of the Purchase Contracts, the Holder
thereof shall forfeit the right to receive accrued Contract Fees and any
Deferred Contract Fees on such Purchase Contracts. The "EARLY SETTLEMENT RATE"
shall initially be equal to .8333 and shall be adjusted in
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the same manner and at the same time as the Settlement Rate is adjusted as
provided in the Purchase Contract Agreement.
The Security Certificates are issuable only in registered form and only
in denominations of a single Security and any integral multiple thereof. The
transfer of any Security Certificates shall be registered and Security
Certificates may be exchanged as provided in the Purchase Contract Agreement.
The Security Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents permitted by the Purchase
Contract Agreement. No service charge shall be required for any such
registration of transfer or exchange, but the Company and the Agent may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. For so long as the Purchase Contract underlying
a Security remains in effect, such Security shall not be separable into its
constituent parts (provided that the Holder shall have the right to effect a
Collateral Substitution), and the rights and obligations of the Holder of such
Security in respect of the Treasury Securities and Purchase Contract
constituting such Security may be transferred and exchanged only as a Security.
Upon registration of transfer of this Security Certificate, the
transferee shall be bound (without the necessity of any other action on the part
of such transferee) under the terms of the Purchase Contract Agreement, the
Purchase Contracts evidenced hereby and the Pledge Agreement, and the transferor
shall be released from the obligations under the Purchase Contracts evidenced by
this Security Certificate. The Company covenants and agrees, and the Holder, by
such Holder's acceptance hereof, likewise covenants and agrees, to be bound by
the provisions of this paragraph.
The Holder of this Security Certificate, by such Holder's acceptance
hereof, authorizes the Agent to enter into and perform the related Purchase
Contracts forming part of the Securities evidenced hereby on such Holder's
behalf as such Holder's attorney-in-fact, expressly withholds any consent to the
assumption (i.e., affirmance) of the Purchase Contracts by the Company or such
Holder's trustee in the event that the Company becomes the subject of a case
under the Bankruptcy Code, agrees to be bound by the terms and provisions
thereof, covenants and agrees to perform its obligations under the Purchase
Contracts forming a part of the Securities evidenced hereby, consents to the
provisions of the Purchase Contract Agreement, authorizes the Agent to enter
into and perform the Pledge Agreement on such Holder's behalf as such Holder's
attorney-in-fact, and consents to the Pledge of the Treasury Securities
underlying this Security Certificate pursuant to the Pledge Agreement. The
Holder, by such Holder's acceptance hereof, further covenants and agrees that,
to the extent and in the manner provided in the Purchase Contract Agreement and
the Pledge
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Agreement, but subject to the terms thereof, payments in respect of principal of
the Treasury Securities on the Final Settlement Date shall be paid by the
Collateral Agent to the Company in satisfaction of such Holder's obligations
under such Purchase Contract and such Holder shall acquire no right, title or
interest in such payments.
Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of at least 66 2/3% in
Stated Amount of the Outstanding Securities.
All terms used herein that are defined in the Purchase Contract
Agreement have the meanings set forth therein.
The Purchase Contracts shall for all purposes be governed by, and
construed in accordance with, the laws of the State of New York.
The Company and the Agent, and any agent of the Company or the Agent,
may treat the Person in whose name this Security Certificate is registered as
the owner of the Securities evidenced hereby for the purpose of receiving
payments of interest on the Treasury Notes, receiving payments of Contract Fees
and any Deferred Contract Fees, performance of the Purchase Contracts and for
all other purposes whatsoever, whether or not the payment of interest on the
Treasury Notes or any Contract Fee payable in respect of the Purchase Contracts
constituting a part of the Securities evidenced thereby shall be overdue and
notwithstanding any notice to the contrary, and neither the Company, the Agent
nor any such agent shall be affected by notice to the contrary.
The Purchase Contracts shall not, prior to the settlement thereof,
entitle the Holder to any of the rights of a holder of shares of Common Stock.
A copy of the Purchase Contract Agreement is available for inspection
at the offices of the Agent.
A-11
<PAGE> 76
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Final Settlement Date of the
Purchase Contracts underlying the number of Securities evidenced by this
Security Certificate be registered in the name of, and delivered, together with
a check in payment for any fractional share, to, the undersigned at the address
indicated below, unless a different name and address have been indicated below.
If shares are to be registered in the name of a Person other than the
undersigned, the undersigned shall pay any transfer tax payable incident
thereto.
Dated:
_________________________ _________________________
Signature
If shares are to be registered in the
name of and delivered to a Person
other than the Holder, please print REGISTERED HOLDER
such Person's name and address:
Please print name and address
of Registered Holder:
_________________________ _________________________
Name Name
_________________________ _________________________
Address Address
_________________________
Social Security or other Taxpayer
Identification Number, if any _________________________
A-12
<PAGE> 77
ELECTION TO SETTLE EARLY
The undersigned Holder of this Security Certificate hereby irrevocably
exercises the option to effect Early Settlement in accordance with the terms of
the Purchase Contract Agreement with respect to the Purchase Contracts
underlying the number of Securities evidenced by this Security Certificate
specified below. The option to effect Early Settlement may be exercised only
with respect to integral multiples of 1,000 Securities. The undersigned Holder
directs that a certificate for shares of Common Stock deliverable upon such
Early Settlement be registered in the name of, and delivered, together with a
check in payment for any fractional share and any Security Certificate
representing any Securities evidenced hereby as to which Early Settlement of the
related Purchase Contracts is not effected, to, the undersigned at the address
indicated below, unless a different name and address have been indicated below.
Treasury Securities deliverable upon such Early Settlement shall be transferred
in accordance with the transfer instructions set forth below. If shares are to
be registered in the name of a Person other than the undersigned, the
undersigned shall pay any transfer tax payable incident thereto.
Dated:
_________________________ _________________________
Signature
A-13
<PAGE> 78
Number of Securities evidenced hereby as to which Early Settlement of
the related Purchase Contracts is being elected:
If shares or Security Certificates are to REGISTERED HOLDER
be registered in the name of and
delivered to and Treasury Securities
are to be transferred to a Person other
than the Holder, please print such
Person's name and address:
Please print name and address
of Registered Holder:
Name Name
_________________________ _________________________
Address Address
_________________________ _________________________
Social Security or other Taxpayer
Identification Number, if any _________________________
Transfer Instructions for Treasury Securities transferable upon Early
Settlement:
A-14
<PAGE> 79
ELECTION TO SUBSTITUTE COLLATERAL
The undersigned Holder of this Security Certificate hereby irrevocably
exercises the option to effect Collateral Substitution in accordance with the
terms of the Purchase Contract Agreement and the Pledge Agreement with respect
to the number of Securities evidenced by this Security Certificate specified
below. The option to effect Collateral Substitution may be exercised only with
respect to integral multiples of 1,000 Securities. The undersigned Holder hereby
represents and warrants to the Company and the Agent that the undersigned Holder
has deposited with the Collateral Agent Zero-Coupon Treasury Securities having
an aggregate principal amount equal to the aggregate Stated Amount of the
Securities evidenced hereby with respect to which Collateral Settlement is being
elected, in the manner provided in the Pledge Agreement. The undersigned Holder
directs that a Security Certificate for Zero-Coupon Securities deliverable upon
such Collateral Substitution be registered in the name of, and delivered,
together with any Security Certificate representing any Securities evidenced
hereby as to which Collateral Substitution is not effected, to, the undersigned
at the address indicated below, unless a different name and address have been
indicated below. Coupon Treasury Securities deliverable upon such Collateral
substitution shall be transferred in accordance with the transfer instructions
set forth below. If Zero-Coupon Securities are to be registered in the name of a
Person other than the undersigned, the undersigned shall pay any transfer tax
payable incident thereto.
Dated:
_________________________ _________________________
Signature
A-15
<PAGE> 80
Number of Securities evidenced hereby as to which Collateral
Substitution is being elected:
If Security Certificates are to be REGISTERED HOLDER
registered in the name of and
delivered to and Treasury Securities
are to be transferred to a Person
other than the Holder, please print
such Person's name and address:
Please print name and address
of Registered Holder:
Name Name
_________________________ _________________________
Address Address
_________________________ _________________________
Social Security or other Taxpayer
Identification Number, if any _________________________
Transfer Instructions for Treasury Securities transferable upon
Collateral Substitution:
A-16
<PAGE> 81
EXHIBIT B
THIS SECURITY CERTIFICATE IS A GLOBAL SECURITY CERTIFICATE WITHIN THE
MEANING OF THE PURCHASE CONTRACT AGREEMENT HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY ("DTC") OR A NOMINEE OF
DTC. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE PURCHASE CONTRACT AGREEMENT AND NO TRANSFER OF THIS SECURITY (OTHER THAN
A TRANSFER OF THIS SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A
NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN
LIMITED CIRCUMSTANCES.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC, TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
K N ENERGY, INC.
8.25% PREMIUM EQUITY PARTICIPATING SECURITY UNITS
(STATED AMOUNT $43 PER SECURITY)
No. CUSIP No. 482620606
B-1
<PAGE> 82
_____ Zero-Coupon Securities
This Security Certificate certifies that Cede & Co. is the registered
Holder of the number of Securities set forth above. Each Security represents (i)
ownership by the Holder of United States Treasury Strips due November 15, 2001
(CUSIP No. 912820BC0) that are held through the Treasury/Reserve Automated Debt
Entry System ("TREASURY STRIPS"), or security entitlements in respect thereof
(together with Treasury Strips, "TREASURY SECURITIES"), with a principal amount
equal to the Stated Amount, subject to the Pledge of such Treasury Securities by
such Holder pursuant to the Pledge Agreement, and (ii) the rights and
obligations of the Holder under one Purchase Contract with K N Energy, Inc., a
Kansas corporation (the "COMPANY"). The Treasury Securities represented by this
Security Certificate were acquired by the Holder hereof (or such Holder's
predecessor-in-interest) in the open market and are being conveyed to the Holder
of this Security Certificate (or such Holder's predecessor-in-interest) and
pledged pursuant to the Pledge Agreement simultaneously therewith.
Pursuant to the Pledge Agreement, the Treasury Securities constituting
part of each Security evidenced hereby are pledged to the Collateral Agent to
secure the obligation of the Holder under the Purchase Contract comprising a
portion of such Security.
The Pledge Agreement provides that all payments of principal of any
Treasury Strips corresponding to Treasury Securities comprising a portion of the
Securities received by the Collateral Agent shall be paid by the Collateral
Agent by wire transfer in same day funds no later than 12:00 noon, New York City
time, on the Final Settlement Date (i) in the case of any principal payments
with respect to any Treasury Strips corresponding to Treasury Securities that
have been released from the Pledge pursuant to the Pledge Agreement, to the
Agent to the account designated by it for such purpose and (ii) in the case of
principal payments on any Treasury Strips corresponding to Pledged Treasury
Securities (as defined in the Pledge Agreement), at the direction of the Agent
on behalf of the Holders, to the Company, in full satisfaction of the respective
obligations of the Holders of the Securities of which such Pledged Treasury
Securities are a part under the Purchase Contracts forming a part of such
Securities.
Each Purchase Contract evidenced hereby obligates the Holder of this
Security Certificate to purchase, and the Company to sell, on November 30, 2001
(the "FINAL SETTLEMENT DATE"), at a price equal to the Stated Amount, a number
of
B-2
<PAGE> 83
shares of common stock, par value $5.00 per share ("COMMON STOCK"), of the
Company, equal to the Settlement Rate, unless on or prior to the Final
Settlement Date there shall have occurred a Termination Event or Early
Settlement with respect to the Security of which such Purchase Contract is a
part, all as provided in the Purchase Contract Agreement referred to on the
reverse hereof and more fully described on the reverse hereof. The purchase
price for the Common Stock purchased pursuant to each Purchase Contract
evidenced hereby, if not paid earlier, shall be paid on the Final Settlement
Date by application of payment received in respect of the principal of the
Treasury Securities pledged to secure the obligations under such Purchase
Contract of the Holder of the Security of which such Purchase Contract is a
part.
The Company shall pay, on each Payment Date, in respect of each
Purchase Contract forming part of a Security evidenced hereby, an amount (the
"CONTRACT FEES") equal to 2.375% per annum of the Stated Amount, computed on the
basis of the actual number of days elapsed in a year of 365 or 366 days, as the
case may be, subject to deferral at the option of the Company as provided in the
Purchase Contract Agreement and more fully described on the reverse hereof. Such
Contract Fee shall be payable to the Person in whose name this Security
Certificate (or a Predecessor Security Certificate) is registered at the close
of business on the Record Date immediately preceding such Payment Date.
The Contract Fees shall be payable at the office or agency of the Agent
in The City of New York or, at the option of the Company, by check mailed to the
address of the Person entitled thereto as such address appears on Security
Register.
Reference is hereby made to the further provisions set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Agent by manual signature, this Security Certificate shall not be entitled
to any benefit under the Pledge Agreement or the Purchase Contract Agreement or
be valid or obligatory for any purpose.
B-3
<PAGE> 84
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
K N ENERGY, INC.
By: _________________________
Name:
Title:
Attested by:
_________________________
HOLDER SPECIFIED ABOVE (as to
obligations of such Holder under the
Purchase Contracts evidenced hereby)
By: U.S. BANK TRUST NATIONAL
ASSOCIATION, not individually
but solely as Attorney-in-Fact of
such Holder
By: _________________________
Authorized Signatory
Dated:
(Form of Certificate of Authentication)
This is one of the Security Certificates referred to in the within
mentioned Purchase Contract Agreement.
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Agent
By: ___________________________
Authorized Signatory
B-4
<PAGE> 85
[FORM OF REVERSE OF SECURITY CERTIFICATE]
Each Purchase Contract evidenced hereby is governed by a Purchase
Contract Agreement, dated as of November 25, 1998 (the "PURCHASE CONTRACT
AGREEMENT"), between the Company and U.S. Bank Trust National Association, as
Purchase Contract Agent (herein called the "AGENT"), to which Purchase Contract
Agreement and supplemental agreements thereto reference is hereby made for a
description of the respective rights, limitations of rights, obligations, duties
and immunities thereunder of the Agent, the Company and the Holders and of the
terms upon which the Security Certificates are, and are to be, executed and
delivered.
Each Purchase Contract evidenced hereby shall obligate the Holder of
this Security Certificate to purchase, and the Company to sell, on the Final
Settlement Date at a price equal to the Stated Amount, a number of shares of
Common Stock of the Company equal to the Settlement Rate, unless, on or prior to
the Final Settlement Date, there shall have occurred a Termination Event or an
Early Settlement with respect to the Security of which such Purchase Contract is
a part. The "SETTLEMENT RATE" is equal to (a) if the Applicable Market Value (as
defined below) is greater than $51.60 (the "THRESHOLD APPRECIATION PRICE"),
.8333 of a share of Common Stock per Purchase Contract, (b) if the Applicable
Market Value is less than or equal to the Threshold Appreciation Price but is
greater than the Stated Amount, a fractional share of Common Stock per Purchase
Contract equal to the Stated Amount divided by the Applicable Market Value
(rounded upward or downward to the nearest 1/10,000th of a share) and (c) if the
Applicable Market Value is less than or equal to the Stated Amount, one share of
Common Stock per Purchase Contract, in each case subject to adjustment as
provided in the Purchase Contract Agreement. No fractional shares of Common
Stock shall be issued upon settlement of Purchase Contracts, as provided in the
Purchase Contract Agreement.
The "APPLICABLE MARKET VALUE" means the average of the Closing Prices
per share of Common Stock on each of the twenty consecutive Trading Days ending
on the second Trading Day immediately preceding the Final Settlement Date. The
"CLOSING PRICE" of the Common Stock on any date of determination means the
closing sale price (or, if no closing price is reported, the last reported sale
price) of the Common Stock on The New York Stock Exchange, Inc. (the "NYSE") on
such date or, if the Common Stock is not listed for trading on the NYSE on any
such date, as reported in the composite transactions for the principal United
States securities exchange on which the Common Stock is so listed or, if the
Common Stock is not so listed on a United States national or regional securities
exchange, as reported by the Nasdaq Stock Market or, if such price of the Common
Stock is not so reported, the last quoted bid price for the Common
B-5
<PAGE> 86
Stock in the over-the-counter market as reported by the National Quotation
Bureau or similar organization or, if such bid price is not available, the
market value of the Common Stock on such date as determined by a nationally
recognized independent investment banking firm retained for this purpose by the
Company. A "TRADING DAY" means a day on which the Common Stock (A) is not
suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (B) has
traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the Common Stock.
The purchase price for the shares of Common Stock purchased pursuant to
each Purchase Contract shall be paid by application of payments received by the
Company on the Final Settlement Date from the Collateral Agent at the direction
of the Agent on behalf of the Holders pursuant to the Pledge Agreement in
respect of the principal of the Treasury Securities pledged to secure the
obligations of the relevant Holder under such Purchase Contract.
The Company shall not be obligated to issue any shares of Common Stock
in respect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received payment in full of the aggregate purchase
price for the shares of Common Stock to be purchased thereunder in the manner
set forth herein and in the Purchase Contract Agreement.
Subject to the next succeeding paragraph and the provisions of the
Purchase Contract Agreement, the Company shall pay, on each Payment Date, the
Contract Fee payable in respect of each Purchase Contract to the Person in whose
name the Security Certificate (or one or more Predecessor Security Certificates)
evidencing the Security of which such Purchase Contract is a part and is
registered at the close of business on the Record Date immediately preceding
such Payment Date.
The Company shall have the right, at any time prior to the Final
Settlement Date, to defer the payment of any or all of the Contract Fees
otherwise payable on any Payment Date (on a pro rata basis among all Outstanding
Securities), but only if the Company shall give the Holders and the Agent
written notice of its election to defer such payment (specifying the amount to
be deferred and the period of deferment) as provided in the Purchase Contract
Agreement. Any Contract Fees so deferred shall bear additional Contract Fees
thereon at the rate of 8.25% per annum (computed on the basis of the actual
number of days elapsed in a year of 365 or 366 days, as the case may be),
compounding on each succeeding Payment Date, until paid in full (such deferred
installments of Contract Fees, together with the additional Contract Fees
accrued thereon, are
B-6
<PAGE> 87
referred to herein as the "DEFERRED CONTRACT FEES"). Deferred Contract Fees
shall be due on the next succeeding Payment Date except to the extent that
payment is deferred pursuant to the Purchase Contract Agreement. No Contract
Fees may be deferred to a date that is after the Final Settlement Date.
In the event that the Company elects to defer the payment of Contract
Fees on Purchase Contracts until the Final Settlement Date, the Holder of this
Security Certificate shall receive on the Final Settlement Date, in lieu of a
cash payment, a number of shares of Common Stock (in addition to a number of
Common Stock equal to the Settlement Rate) equal to (x) the aggregate amount of
Deferred Contract Fees payable to the Holder of this Security Certificate
divided by (y) the Applicable Market Value. No fractional shares of Common Stock
shall be issued with respect to the payment of Deferred Contract Fees on the
Final Settlement Date, as provided in the Purchase Contract Agreement.
In the event the Company exercises its option to defer the payment of
Contract Fees, then, until the Deferred Contract Fees have been paid in full,
the Company (a) shall not declare or pay dividends on, make distributions with
respect to, or redeem, purchase or acquire, or make a liquidation payment with
respect to, any of its capital stock (other than (i) purchases or acquisitions
of Common Stock in connection with the satisfaction by the Company or any of its
subsidiaries of their respective obligations under any benefit plans for
directors, officers, agents or employees or the Company's dividend reinvestment
or director, officer, agent or employee stock purchase plans, (ii) as a result
of a reclassification of the Company's capital stock or the exchange or
conversion of one class or series of capital stock for another class or series
of the Company's capital stock, (iii) the purchase of fractional interests in
shares of the Company's capital stock pursuant to the conversion or exchange
provisions of the Company's capital stock or the security being converted or
exchanged for the Company's capital stock), (iv) dividends or distributions in
the form of shares of, or options, warrants or rights to subscribe for or
purchase, shares of capital stock of the Company or (v) any declaration of a
dividend in connection with the implementation of extension of a stockholders'
rights plan, or the issuance of stock under any such plan (including the
existing such plan) in the future, or the redemption or repurchase of any such
rights pursuant thereto)), (b) shall not make any payment of interest, principal
or premium, if any, on, or repay, repurchase or redeem any debt securities
issued by the Company that rank pari passu with or junior to such Contract Fees
and (c) shall not make any guarantee payments with respect to any guarantee by
the Company of any securities of any subsidiary of the Company if such guarantee
ranks pari passu with or junior in right of payment to the Contract Fees.
B-7
<PAGE> 88
The Purchase Contracts and the obligations and rights of the Company
and the Holders thereunder, including, without limitation, the rights of the
Holders to receive and the obligation of the Company to pay any Contract Fee or
any Deferred Contract Fees, shall immediately and automatically terminate,
without the necessity of any notice or action by any Holder, the Agent or the
Company, if, on or prior to the Final Settlement Date, a Termination Event shall
have occurred. Upon the occurrence of a Termination Event, the Company shall
promptly but in no event more than two Business Days thereafter give written
notice to the Agent, the Collateral Agent and the Holders. Upon and after the
occurrence of a Termination Event, the Collateral Agent shall release the
Treasury Securities from the Pledge in accordance with the provisions of the
Pledge Agreement. The Securities shall thereafter represent the right to receive
the Treasury Securities forming a part of such Securities in accordance with the
provisions of the Purchase Contract Agreement and the Pledge Agreement.
Subject to and upon compliance with the provisions of the Purchase
Contract Agreement, at the option of the Holder thereof, any Purchase Contracts
underlying Securities having an aggregate Stated Amount equal to $43,000 or an
integral multiple thereof may be settled early ("EARLY SETTLEMENT") as provided
in the Purchase Contract Agreement. In order to exercise the right to effect
Early Settlement with respect to any Purchase Contracts evidenced by this
Security Certificate, the Holder of this Security Certificate shall deliver this
Security Certificate to the Agent at the Corporate Trust Office duly endorsed
for transfer to the Company or in blank with the form of Election to Settle
Early set forth below duly completed and accompanied by payment in the form of
immediately available funds in an amount (the "EARLY SETTLEMENT AMOUNT") equal
to (i) the product of (A) the Stated Amount times (B) the number of Purchase
Contracts with respect to which the Holder has elected to effect Early
Settlement plus (ii) if such delivery is made with respect to any Purchase
Contracts during the period from the close of business on any Record Date
immediately preceding any Payment Date to the opening of business of such
Payment Date, an amount equal to the Contract Fees and Deferred Contract Fees,
if any, payable on such Payment Date with respect to such Purchase Contracts.
Upon Early Settlement of Purchase Contracts by a Holder of the related
Securities, the Treasury Securities underlying such Securities shall be released
from the Pledge as provided in the Pledge Agreement and the Holder shall be
entitled to receive a number of shares of Common Stock on account of each
Purchase Contract forming part of a Security as to which Early Settlement is
effected equal to the Early Settlement Rate; provided, however, that upon the
Early Settlement of the Purchase Contracts, the Holder thereof shall forfeit the
right to receive accrued Contract Fees and any Deferred Contract Fees on such
Purchase Contracts. The "EARLY SETTLEMENT RATE" shall initially be equal to
.8333 and shall be adjusted in the same manner
B-8
<PAGE> 89
and at the same time as the Settlement Rate is adjusted as provided in the
Purchase Contract Agreement.
The Security Certificates are issuable only in registered form and only
in denominations of a single Security and any integral multiple thereof. The
transfer of any Security Certificates shall be registered and Security
Certificates may be exchanged as provided in the Purchase Contract Agreement.
The Security Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents permitted by the Purchase
Contract Agreement. No service charge shall be required for any such
registration of transfer or exchange, but the Company and the Agent may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. For so long as the Purchase Contract underlying
a Security remains in effect, such Security shall not be separable into its
constituent parts, and the rights and obligations of the Holder of such Security
in respect of the Treasury Securities and Purchase Contract constituting such
Security may be transferred and exchanged only as a Security.
Upon registration of transfer of this Security Certificate, the
transferee shall be bound (without the necessity of any other action on the part
of such transferee) under the terms of the Purchase Contract Agreement, the
Purchase Contracts evidenced hereby and the Pledge Agreement, and the transferor
shall be released from the obligations under the Purchase Contracts evidenced by
this Security Certificate. The Company covenants and agrees, and the Holder, by
such Holder's acceptance hereof, likewise covenants and agrees, to be bound by
the provisions of this paragraph.
The Holder of this Security Certificate, by such Holder's acceptance
hereof, authorizes the Agent to enter into and perform the related Purchase
Contracts forming part of the Securities evidenced hereby on such Holder's
behalf as such Holder's attorney-in-fact, expressly withholds any consent to the
assumption (i.e., affirmance) of the Purchase Contracts by the Company or such
Holder's trustee in the event that the Company becomes the subject of a case
under the Bankruptcy Code, agrees to be bound by the terms and provisions
thereof, covenants and agrees to perform its obligations under the Purchase
Contracts forming a part of the Securities evidenced hereby, consents to the
provisions of the Purchase Contract Agreement, authorizes the Agent to enter
into and perform the Pledge Agreement on such Holder's behalf as such Holder's
attorney-in-fact, and consents to the Pledge of the Treasury Securities
underlying this Security Certificate pursuant to the Pledge Agreement. The
Holder, by such Holder's acceptance hereof, further covenants and agrees that,
to the extent and in the manner provided in the Purchase Contract Agreement and
the Pledge Agreement, but subject to the terms thereof, payments in respect of
principal of
B-9
<PAGE> 90
the Treasury Securities on the Final Settlement Date shall be paid by the
Collateral Agent to the Company in satisfaction of such Holder's obligations
under such Purchase Contract and such Holder shall acquire no right, title or
interest in such payments.
Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of at least 66 2/3% in
Stated Amount of the Outstanding Securities.
All terms used herein that are defined in the Purchase Contract
Agreement have the meanings set forth therein.
The Purchase Contracts shall for all purposes be governed by, and
construed in accordance with, the laws of the State of New York.
The Company and the Agent, and any agent of the Company or the Agent,
may treat the Person in whose name this Security Certificate is registered as
the owner of the Securities evidenced hereby for the purpose of receiving
payments of Contract Fees and any Deferred Contract Fees, performance of the
Purchase Contracts and for all other purposes whatsoever, whether or not the
payment of any Contract Fee payable in respect of the Purchase Contracts
constituting a part of the Securities evidenced thereby shall be overdue and
notwithstanding any notice to the contrary, and neither the Company, the Agent
nor any such agent shall be affected by notice to the contrary.
The Purchase Contracts shall not, prior to the settlement thereof,
entitle the Holder to any of the rights of a holder of shares of Common Stock.
A copy of the Purchase Contract Agreement is available for inspection
at the offices of the Agent.
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<PAGE> 91
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Final Settlement Date of the
Purchase Contracts underlying the number of Securities evidenced by this
Security Certificate be registered in the name of, and delivered, together with
a check in payment for any fractional share, to, the undersigned at the address
indicated below, unless a different name and address have been indicated below.
If shares are to be registered in the name of a Person other than the
undersigned, the undersigned shall pay any transfer tax payable incident
thereto.
Dated:
_________________________ _________________________
Signature
If shares are to be registered in
the name of and delivered to a Person
other than the Holder, please print REGISTERED HOLDER
such Person's name and address:
Please print name and address
of Registered Holder:
Name Name
_________________________ _________________________
Address Address
_________________________ _________________________
Social Security or other Taxpayer
Identification Number, if any _________________________
B-11
<PAGE> 92
ELECTION TO SETTLE EARLY
The undersigned Holder of this Security Certificate hereby irrevocably
exercises the option to effect Early Settlement in accordance with the terms of
the Purchase Contract Agreement with respect to the Purchase Contracts
underlying the number of Securities evidenced by this Security Certificate
specified below. The option to effect Early Settlement may be exercised only
with respect to integral multiples of 1,000 Securities. The undersigned Holder
directs that a certificate for shares of Common Stock deliverable upon such
Early Settlement be registered in the name of, and delivered, together with a
check in payment for any fractional share and any Security Certificate
representing any Securities evidenced hereby as to which Early Settlement of the
related Purchase Contracts is not effected, to, the undersigned at the address
indicated below, unless a different name and address have been indicated below.
Treasury Securities deliverable upon such Early Settlement shall be transferred
in accordance with the transfer instructions set forth below. If shares are to
be registered in the name of a Person other than the undersigned, the
undersigned shall pay any transfer tax payable incident thereto.
Dated:
_________________________ _________________________
Signature
B-12
<PAGE> 93
Number of Securities evidenced hereby as to which Early Settlement of
the related Purchase Contracts is being elected:
If shares or Security Certificates are to REGISTERED HOLDER
be registered in the name of and
delivered to and Treasury Securities
are to be transferred to a Person other
than the Holder, please print such
Person's name and address:
Please print name and address
of Registered Holder:
Name Name
_________________________ _________________________
Address Address
_________________________ _________________________
Social Security or other Taxpayer
Identification Number, if any _________________________
Transfer Instructions for Treasury Securities transferable upon Early
Settlement:
B-13
<PAGE> 1
Exhibit 4.5
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of November 25, 1998 (the "AGREEMENT"),
among K N Energy, Inc., a Kansas corporation (the "COMPANY"), The Chase
Manhattan Trust Company, National Association, located in Pittsburgh,
Pennsylvania, not individually but solely as collateral agent (in such capacity,
together with its successors in such capacity, the "COLLATERAL AGENT") and, in
its individual capacity, as "securities intermediary" (as defined in Section
8-102(a)(14) of the UCC (as hereinafter defined) and in 31 C.F.R. Section 357.2,
as amended (in such capacity, together with its successors in such capacity, the
"SECURITIES INTERMEDIARY")) in respect of the Collateral Account (as hereinafter
defined) and for any Treasury Securities (as hereinafter defined) credited to
the Collateral Account, and U.S. Bank Trust National Association, not
individually but solely as purchase contract agent and as attorney-in-fact of
the Holders (as defined in the Purchase Contract Agreement as hereinafter
defined) from time to time of the Securities (as hereinafter defined) (in such
capacity, together with its successors in such capacity, the "PURCHASE CONTRACT
AGENT") under the Purchase Contract Agreement (as hereinafter defined).
RECITALS
The Company and the Purchase Contract Agent are parties to the Purchase
Contract Agreement, dated as of the date hereof (as modified and supplemented
and in effect from time to time, the "PURCHASE CONTRACT AGREEMENT"), pursuant to
which there will be issued 8.25% Premium Equity Participating Security Units (as
further defined in the Purchase Contract Agreement, the "SECURITIES" and each a
"SECURITY").
Each Security consists of (a) one Purchase Contract (as defined in the
Purchase Contract Agreement) and (b) Treasury Securities (as defined in the
Purchase Contract Agreement) having a principal amount equal to $43 (the "STATED
AMOUNT"), subject to the pledge of such Treasury Securities created hereby.
The Company has caused the Underwriters (as defined in the Purchase
Contract Agreement) to purchase the Treasury Securities for the benefit of
Holders, to be settled on November 30, 1998, with the proceeds of the offering
of the Securities and other funds to be provided by the Company. The Company
will cause the Underwriters to transfer such Treasury Securities to the Holders
as a part of the Securities.
Pursuant to the terms of the Purchase Contract Agreement and the
Purchase Contracts, the Holders from time to time of the Securities have
<PAGE> 2
authorized the Purchase Contract Agent, as attorney-in-fact of such Holders,
among other things to execute and deliver this Agreement on behalf of such
Holders and to grant the pledge provided hereby of the Treasury Securities
constituting part of such Securities as provided herein and subject to the terms
hereof.
Accordingly, the Company, the Collateral Agent, the Securities
Intermediary and the Purchase Contract Agent, on its own behalf and as
attorney-in-fact of the Holders from time to time of the Securities, agree as
follows:
SECTION 1. Definitions. Capitalized terms used herein and not otherwise
defined have the meanings specified in the Purchase Contract Agreement. For all
purposes of this Agreement, except as otherwise expressly provided or unless the
context otherwise requires:
(a) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular;
and
(b) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.
"AGREEMENT" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions hereof.
"APPLICABLE TREASURY REGULATIONS" means Subpart O - Book-Entry
Procedure of Title 31 of the Code of Federal Regulations (31 C.F.R. Section
306.115 et seq.) and any other regulations of the United States Treasury
Department from time to time applicable to the transfer or pledge of book-entry
U.S. Treasury Securities, including, without limitation, the regulations set
forth in 31 CFR Part 357.
"COLLATERAL" has the meaning specified in Section 2 hereof.
"COLLATERAL ACCOUNT" means the securities account of the Collateral
Agent maintained at the Securities Intermediary and designated "The Chase
Manhattan Trust Company, National Association, as Collateral Agent of K N
Energy, Inc., as pledgee of U.S. Bank Trust National Association, as Purchase
Contract Agent".
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<PAGE> 3
"OPINION OF COUNSEL" means an opinion in writing signed by legal
counsel, who may be an employee of or counsel to the Company and who shall be
reasonably acceptable to the Collateral Agent.
"PLEDGE" has the meaning specified in Section 2 hereof.
"PLEDGED TREASURY SECURITIES" has the meaning specified in Section 2
hereof.
"SECURITIES INTERMEDIARY" has the meaning specified in the first
paragraph of this instrument.
"UCC" has the meaning specified in Section 6 hereof.
SECTION 2. The Pledge. Each Holder from time to time of any Securities,
acting through the Purchase Contract Agent as such Holder's attorney-in-fact,
hereby pledges and grants to the Collateral Agent for the benefit of the
Company, as collateral security for the performance when due by such Holder of
such Holder's obligations under the Purchase Contracts comprising a portion of
such Securities, a security interest in all right, title and interest of such
Holder in the Treasury Securities (including Treasury Securities delivered in
substitution therefor pursuant to Section 4.03 of the Purchase Contract
Agreement) comprising a portion of such Securities, the Collateral Account, all
funds, securities, security entitlements, financial assets, investment property
and other property of any kind from time to time credited to the Collateral
Account, all security entitlements in respect of any of the foregoing and all
proceeds of any of the foregoing (collectively, the "COLLATERAL"). Concurrently
with the issuance and delivery of the Securities, Morgan Stanley & Co.
Incorporated, as representative of the Underwriters, shall cause (i) the
Treasury Securities to be credited to an account of the Securities Intermediary
at the Federal Reserve Bank of New York by Federal Reserve Bank-Wire and (ii)
the Securities Intermediary to credit the Treasury Securities to the Collateral
Account, in each case in accordance with Applicable Treasury Regulations and the
UCC and pursuant to instructions from the Purchase Contract Agent on behalf of
the Holders. The pledge provided in this Section 2 is herein referred to as the
"PLEDGE" and the Treasury Securities subject to the Pledge, excluding any
Treasury Securities released from the Pledge as provided in Section 5 hereof,
are hereinafter referred to as the "PLEDGED TREASURY SECURITIES." Subject to the
Pledge, and to the provisions of Article 4 of the Purchase Contract Agreement,
the Holders from time to time of the Securities shall have full beneficial
ownership of the Treasury Securities credited to the Collateral Account and all
security entitlements (as defined in 31 C.F.R. Section 357.2 or Article 8 of the
UCC or any similar provision of the law of any State)) in respect thereof.
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<PAGE> 4
Notwithstanding any other provision of this Agreement, the Securities
Intermediary hereby agrees that (a) it will comply with "entitlement orders"
(within the meaning of Section 8-102(a)(8) of the UCC or any similar provision
of the law of any other State) with respect to the Collateral Account, financial
assets credited thereto and security entitlements in respect of any of the
foregoing issued by the Collateral Agent without further consent by the Purchase
Contract Agent or any Holder and (b) it hereby waives any right of set-off or
recoupment that it may have with respect to, and any lien, security interest or
other encumbrance it may have on, the Collateral Account, any financial asset
credited thereto and any security entitlement in respect of any of the
foregoing. The Purchase Contract Agent, for itself and for each Holder from time
to time of any Security, hereby consents to such agreement. The Securities
Intermediary hereby represents and warrants that (a) it has not entered into,
and hereby agrees that until the termination of the Purchase Contract Agreement
it will not enter into, (i) any agreement in connection with or arising under
the Collateral, the Collateral Account or this Agreement with any of the parties
hereto specifying any jurisdiction other than the State of New York as the
securities intermediary's jurisdiction for purposes of, without limitation, the
UCC, or (ii) any agreement pursuant to which it has agreed to comply with
entitlement orders with respect to the Collateral Account, any financial asset
credited thereto and any security entitlement in respect of any of the foregoing
issued by any Person other than the Collateral Agent, (b) the Collateral Account
is a "securities account" as defined in Section 8-501(a) of the UCC and (c) the
Securities Intermediary is a "securities intermediary" as defined in Section
8-102(a)(14) of the UCC.
The Securities Intermediary, the Collateral Agent, the Company and the
Purchase Contract Agent, for itself and as attorney-in-fact on behalf of the
Holders from time to time of the Securities, hereby agree that all securities,
security entitlements, cash balances and other property or assets of any kind or
nature credited at any time to the Collateral Account shall, to the fullest
extent permitted under applicable law, be treated as financial assets within the
meaning of Article 8 of the UCC and any similar provision of the law of any
other State.
SECTION 3. Distribution of Principal and Interest. All payments of
principal of, or interest on, any Treasury Notes corresponding to Treasury
Securities constituting part of the Securities received by the Collateral Agent
shall be paid by the Collateral Agent by wire transfer in same day funds no
later than 12:00 noon, New York City time on the Business Day such payment is
received by the Collateral Agent (provided that in the event such payment is
received by the Collateral Agent on a day that is not a Business Day or after
11:30 a.m., New York City time, on a Business Day, then such payment shall be
made no later than 10:00 a.m., New York City time, on the next succeeding
Business Day) (i) in the case of (A) interest payments and (B) any principal
payments with respect to any
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<PAGE> 5
Treasury Notes corresponding to Treasury Securities that have been released from
the Pledge pursuant to Section 4 or 5 hereof, to the Purchase Contract Agent to
the account designated by it for such purpose and (ii) in the case of principal
payments on any Treasury Notes corresponding to Pledged Treasury Securities, the
Purchase Contract Agent on behalf of the Holders hereby directs the Collateral
Agent to make such payments to the Company, in full satisfaction of the
respective obligations of the Holders of the Securities of which such Pledged
Treasury Securities are a part under the Purchase Contracts forming a part of
such Securities.
All payments of principal of any Treasury Strips corresponding to
Treasury Securities constituting part of the Securities received by the
Collateral Agent shall be paid by the Collateral Agent by wire transfer in same
day funds no later than 12:00 noon, New York City time, on the Final Settlement
Date (i) in the case of any principal payments with respect to any Treasury
Strips corresponding to Treasury Securities that have been released from the
Pledge pursuant to Section 5 hereof, to the Purchase Contract Agent to the
account designated by it for such purpose and (ii) in the case of principal
payments on any Treasury Strips corresponding to Pledged Treasury Securities,
the Purchase Contract Agent on behalf of the Holders hereby directs the
Collateral Agent to make such payments to the Company, in full satisfaction of
the respective obligations of the Holders of the Securities of which such
Pledged Treasury Securities are a part under the Purchase Contracts forming a
part of such Securities. If the Collateral Agent receives any principal payment
on any Treasury Strips corresponding to Treasury Securities constituting part of
the Securities prior to the Final Settlement Date, the Collateral Agent shall
hold such payment until the Final Settlement Date uninvested, as Collateral, and
shall have no liability to the Company, any Holder or any other Person for
interest or other compensation thereon.
All such payments received by the Purchase Contract Agent as provided
herein shall be applied by the Purchase Contract Agent pursuant to the
provisions of the Purchase Contract Agreement. If, notwithstanding the
foregoing, the Purchase Contract Agent shall receive any payments of principal
on account of any Treasury Notes or Treasury Strips corresponding to Pledged
Treasury Securities, the Purchase Contract Agent shall hold the same as trustee
of an express trust for the benefit of the Company (and promptly deliver over to
the Company) for application to the obligations of the Holders of the Securities
of which such Treasury Securities are a part under the Purchase Contracts
relating to the Securities of which such Treasury Securities are a part, and
such Holders shall acquire no right, title or interest in any such payments of
principal so received.
SECTION 4. Substitution of Collateral. (a) Subject to and upon
compliance with the provisions of Section 4.03 of the Purchase Contract
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<PAGE> 6
Agreement, at any time prior to November 15, 2001, the Holder of any Coupon
Securities may, in integral multiples of 1,000 Securities, substitute as
Collateral Zero-Coupon Treasury Securities for the Coupon Treasury Securities
forming a part thereof, thereby forming Zero-Coupon Securities ("COLLATERAL
SUBSTITUTION") as provided in the Purchase Contract Agreement. In order to
exercise the right to effect Collateral Substitution with respect to any Coupon
Securities, the Holder of the Security Certificate evidencing such Securities
shall (i) deposit with the Collateral Agent Zero-Coupon Treasury Securities
having an aggregate principal amount equal to the aggregate Stated Amount of
such Securities by causing (A) such Zero-Coupon Treasury Securities to be
credited to an account of the Securities Intermediary at the Federal Reserve
Bank of New York by Federal Reserve Bank-Wire and (B) the Securities
Intermediary to credit such Zero-Coupon Treasury Securities to the Collateral
Account, and (ii) comply with the other provisions of Section 4.03 of the
Purchase Contract Agreement. Following a Collateral Substitution, the
Zero-Coupon Treasury Securities deposited with the Collateral Agent shall
constitute Collateral. Any Collateral Substitution shall not constitute a
novation of the security interest created hereby.
(b) Upon written notice to the Collateral Agent by the Purchase
Contract Agent that one or more Holders have elected to effect Collateral
Substitution with respect to such Securities in accordance with the terms of
this Agreement and the Purchase Contract Agreement (setting forth the number of
such Securities as to which such Holders have elected to effect Collateral
Substitution), and that all conditions to such Collateral Substitution have been
satisfied, then the Company shall direct the Collateral Agent to release from
the Pledge and transfer to the Purchase Contract Agent, free and clear of any
lien, pledge or security interest created by or arising through it as the
Collateral Agent or Securities Intermediary hereunder, Coupon Treasury
Securities with a principal amount equal to the product of (i) the Stated Amount
times (ii) the number of such Securities as to which such Holders have elected
to effect Collateral Substitution (provided that no such transfer shall take
place prior to December 1, 1998).
(c) Transfers of Coupon Treasury Securities pursuant to Section 4(b)
shall be by Federal Reserve Bank-Wire or in another appropriate manner for
credit to the securities account designated by the Purchase Contract Agent, (i)
if the Collateral Agent shall have received such notification at or prior to
10:00 a.m. New York City time on a Business Day, then no later than the close of
business for the Federal Reserve Bank of New York on such Business Day and (ii)
if the Collateral Agent shall have received such notification on a day that is
not a Business Day or after 10:00 a.m. New York City time on a Business Day,
then no later than 10:00 a.m. New York City time on the next succeeding Business
Day.
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<PAGE> 7
SECTION 5. Release of Pledged Treasury Securities. (a) Upon written
notice to the Collateral Agent by the Company or the Purchase Contract Agent
that there has occurred a Termination Event, the Collateral Agent shall release
all Pledged Treasury Securities from the Pledge and shall transfer all such
Treasury Securities, free and clear of any lien, pledge or security interest
created by or arising through it as the Collateral Agent or Securities
Intermediary hereunder, to the Purchase Contract Agent.
If such Termination Event shall result from the Company's becoming a
debtor under the Bankruptcy Code, and if the Collateral Agent shall for any
reason fail immediately to effectuate the release and transfer of all Pledged
Treasury Securities as provided by this Section 5(a), the Purchase Contract
Agent shall, subject to Section 7(j), (i) use its best efforts to obtain an
opinion of a nationally recognized law firm reasonably acceptable to the
Collateral Agent to the effect that the Collateral Agent will not, as a result
of the Company's being the debtor in such a bankruptcy case, be prohibited from
releasing or transferring the Treasury Securities as provided in this Section
5(a), and shall deliver such opinion to the Collateral Agent within ten days
after the occurrence of such Termination Event, and if (x) the Purchase Contract
Agent shall be unable to obtain such opinion within ten days after the
occurrence of such Termination Event or (y) the Collateral Agent shall continue,
after delivery of such opinion, to refuse to effectuate the release and transfer
of all Pledged Treasury Securities as provided in this Section 5(a), then the
Purchase Contract Agent shall within fifteen days after the occurrence of such
Termination Event commence an action or proceeding in the court with
jurisdiction of the Company's case under the Bankruptcy Code seeking an order
requiring the Collateral Agent to effectuate the release and transfer of all
Pledged Treasury Securities as provided by this Section 5(a) or (ii) commence an
action or proceeding like that described in clause (i)(y) above within ten days
after the occurrence of such Termination Event.
(b) Upon written notice to the Collateral Agent by the Purchase
Contract Agent that one or more Holders have elected to effect Early Settlement
of their respective obligations under the Purchase Contracts forming a part of
such Securities in accordance with the terms of the Purchase Contracts and the
Purchase Contract Agreement (setting forth the number of such Purchase Contracts
as to which such Holders have elected to effect Early Settlement), and that the
Purchase Contract Agent has received from such Holders, and paid to the Company,
the related Early Settlement Amounts pursuant to the terms of the Purchase
Contracts and the Purchase Contract Agreement and that all conditions to such
Early Settlement have been satisfied, then the Company shall direct the
Collateral Agent to release from the Pledge and transfer to the Purchase
Contract Agent, free and clear of any lien, pledge or security interest created
hereby, Treasury Securities with a principal amount equal to the product of (i)
the Stated
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<PAGE> 8
Amount times (ii) the number of such Purchase Contracts as to which such Holders
have elected to effect Early Settlement (provided that no such transfer shall
take place prior to December 1, 1998).
(c) Transfers of Treasury Securities pursuant to Section 5(a) or 5(b)
shall be by Federal Reserve Bank-Wire or in another appropriate manner for
credit to the securities account designated by the Purchase Contract Agent, (i)
if the Collateral Agent shall have received such notification at or prior to
10:00 a.m. New York City time on a Business Day, then no later than the close of
business for the Federal Reserve Bank of New York on such Business Day and (ii)
if the Collateral Agent shall have received such notification on a day that is
not a Business Day or after 10:00 a.m. New York City time on a Business Day,
then no later than 10:00 a.m. New York City time on the next succeeding Business
Day.
SECTION 6. Rights and Remedies. (a) The Collateral Agent shall have all
of the rights and remedies with respect to the Collateral of a secured party
under the Uniform Commercial Code as in effect in the State of New York (the
"UCC") (whether or not the UCC is in effect in the jurisdiction where the rights
and remedies are asserted) and such additional rights and remedies to which a
secured party is entitled under the laws in effect in any jurisdiction where any
rights and remedies hereunder may be asserted.
(b) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, in the event the Collateral Agent is unable
to make payments to the Company on account of principal payments of any Treasury
Notes or Treasury Strips as provided in Section 3 hereof in satisfaction of the
obligations of the Holder of the Securities of which the corresponding Pledged
Treasury Securities are a part under the Purchase Contracts forming a part of
such Securities, the Collateral Agent shall have and may exercise, with
reference to such Pledged Treasury Securities and such obligations of such
Holder, any and all of the rights and remedies available to a secured party
under the UCC after default by a debtor, and as otherwise granted herein or
under any other law.
(c) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, the Collateral Agent is hereby irrevocably
authorized to receive and collect all payments of principal of or interest on
the Pledged Treasury Securities.
(d) The Purchase Contract Agent agrees that, from time to time, (upon
the written request of either the Company or the Collateral Agent) it shall take
all actions necessary, including the filing of UCC financing statements and
continuation statements, to create and maintain a perfected security interest in
the Collateral for the Collateral Agent and the Purchase Contract Agent shall
execute
8
<PAGE> 9
and deliver such further documents and do such other acts and things as are
necessary or as the Collateral Agent may reasonably request in order to maintain
the Pledge, and the perfection and priority thereof, and to confirm the rights
of the Collateral Agent hereunder.
SECTION 7. The Collateral Agent, the Securities Intermediary and the
Purchase Contract Agent. It is hereby agreed as follows:
(a) Appointment, Powers and Immunities. The Collateral Agent shall act
as agent for the Company hereunder with such powers as are specifically vested
in the Collateral Agent by the terms of this Agreement, together with such other
powers as are reasonably incidental thereto. The Collateral Agent: (a) shall
have no duties or responsibilities except those expressly set forth in this
Agreement and no implied covenants or obligations shall be inferred from this
Agreement against the Collateral Agent, nor shall the Collateral Agent be bound
by the provisions of any agreement by any party hereto beyond the specific terms
hereof; (b) shall not be responsible for any recitals contained in this
Agreement, or in any certificate or other document referred to or provided for
in, or received by it under, this Agreement, the Securities or the Purchase
Contract Agreement, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of the Collateral, this Agreement (other than as
against the Collateral Agent), the Securities or the Purchase Contract Agreement
or any other document referred to or provided for herein or therein or for any
failure by the Company or any other Person (except the Collateral Agent) to
perform any of its obligations hereunder or thereunder; (c) shall not be
required to initiate or conduct any litigation or collection proceedings
hereunder (except pursuant to directions furnished under Section 7(b)); (d)
shall not be responsible for any action taken or omitted to be taken by it
hereunder or under any other document or instrument referred to or provided for
herein or in connection herewith or therewith, except for its own negligence;
and (e) shall not be required to advise any party as to selling or retaining, or
taking or refraining from taking any action with respect to, any securities or
other property deposited hereunder. Subject to the foregoing, during the term of
this Agreement, the Collateral Agent shall take all reasonable action in
connection with the safe keeping and preservation of the Collateral hereunder.
No provision of this Agreement shall require the Collateral Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder. In no event shall the Collateral
Agent be liable for any amount in excess of the value of the Collateral, and the
Collateral Agent shall not be liable for loss of interest or penalties
occasioned by a liquidation of Collateral prior to its maturity. The Collateral
Agent shall have no duty or responsibility to do tax reporting to or on behalf
of Holders.
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<PAGE> 10
(b) Instructions of the Company. The Company shall have the right, by
one or more instruments in writing executed and delivered to the Collateral
Agent, to direct the time, method and place of conducting any proceeding for any
right or remedy available to the Collateral Agent, or of exercising any power
conferred on the Collateral Agent, or to direct the taking or refraining from
taking of any action authorized by this Agreement; provided, however, that (i)
such direction shall not conflict with the provisions of any law or of this
Agreement and (ii) the Collateral Agent shall be adequately indemnified as
provided herein. Nothing in this Section 7(b) shall impair the right of the
Collateral Agent in its discretion to take any action or omit to take any action
that it deems proper and that is not inconsistent with such direction.
(c) Reliance by Collateral Agent and Securities Intermediary. The
Collateral Agent and the Securities Intermediary shall be entitled to rely upon
any certification, order, judgment, opinion, notice or other communication
(including, without limitation, any thereof by telephone, telecopy, telex,
telegram or cable) reasonably believed by them to be genuine and correct and to
have been signed or sent by or on behalf of the proper Person or Persons
(without being required to determine the correctness of any fact stated
therein), and upon advice and statements of legal counsel and other experts
selected by the Collateral Agent or the Securities Intermediary, as the case may
be. As to any matters not expressly provided for by this Agreement, the
Collateral Agent and Securities Intermediary shall in all cases be fully
protected in acting, or in refraining from acting, hereunder in accordance with
instructions given by the Company in accordance with this Agreement. The
Collateral Agent shall not be liable for any action taken or omitted by it in
good faith unless a court of competent jurisdiction determines that the
Collateral Agent's willful misconduct was the primary cause of a loss to the
Company. In the administration of this Agreement, the Collateral Agent may
execute any of its powers and perform its duties hereunder directly or through
agents or attorneys and may consult with counsel, accountants and other skilled
persons to be selected and retained by it. The Collateral Agent shall not be
liable for anything done, suffered or omitted in good faith by it in accordance
with the advice or opinion of any such counsel, accountants or other skilled
persons selected by it in good faith.
(d) Rights in Other Capacities. The Collateral Agent, the Securities
Intermediary and their respective affiliates may (without having to account
therefor to the Company) accept deposits from, lend money to, make investments
in and generally engage in any kind of banking, trust or other business with the
Purchase Contract Agent and any Holder (and any of their subsidiaries or
affiliates) as if it were not acting as the Securities Intermediary or
Collateral Agent, as the case may be, and the Collateral Agent, the Securities
Intermediary and their respective affiliates may accept fees and other
consideration from the
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<PAGE> 11
Purchase Contract Agent and any Holder without having to account for the same to
the Company, provided that the Collateral Agent and Securities Intermediary
hereby represent, covenant and agree with the Company that neither the
Securities Intermediary nor the Collateral Agent has accepted, received or
permitted there to be created in its favor, and neither the Securities
Intermediary nor the Collateral Agent will accept, receive or permit there to be
created in its favor, any security interest, lien or other encumbrance of any
kind in or upon the Collateral.
(e) Non-Reliance on Collateral Agent. Neither the Securities
Intermediary nor the Collateral Agent shall be required to keep itself informed
as to the performance or observance by the Purchase Contract Agent or any Holder
of this Agreement, the Purchase Contract Agreement, the Securities or any other
document referred to or provided for herein or therein or to inspect the
properties or books of the Purchase Contract Agent or any Holder. Neither the
Securities Intermediary nor the Collateral Agent shall have any duty or
responsibility to provide the Company with any credit or other information
concerning the affairs, financial condition or business of the Purchase Contract
Agent or any Holder (or any of their affiliates) that may come into the
possession of the Collateral Agent, the Securities Intermediary or any of their
respective affiliates. Neither the Collateral Agent nor the Securities
Intermediary shall have any responsibility for the filing of UCC financing
statements or continuation statements.
(f) Compensation and Indemnity. The Company agrees: (i) to pay the
Collateral Agent and the Securities Intermediary (which for purposes of this
paragraph (f) shall include their officers, directors, employees and agents)
from time to time reasonable compensation for all services rendered by them
hereunder, (ii) to indemnify each of the Purchase Contract Agent, the Securities
Intermediary and the Collateral Agent for, and to hold it harmless against, any
loss, liability or expense (including out-of-pocket incidental expenses and
allocated costs and expenses of in-house counsel and legal staff) incurred
without gross negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of its powers and duties under
this Agreement, including the costs and expenses (including reasonable fees and
expenses of counsel) of defending itself against any claim or liability or any
other costs in connection with the exercise or performance of such powers and
duties (this indemnity shall survive the resignation or removal of the
Collateral Agent and the termination of this Agreement) and (iii) to pay, upon
receipt of an invoice, the fees and expenses of counsel to the Collateral Agent
on the date of the execution of this Agreement in connection with the
preparation, execution and delivery of this Agreement and related documentation.
(g) Failure to Act. In the event of any ambiguity in the provisions of
this Agreement or any dispute between or conflicting claims by or among the
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<PAGE> 12
parties hereto and/or any other Person with respect to any funds or property
deposited, or in which a lien or security interest is granted, hereunder, the
Collateral Agent shall be entitled, at its sole option, to refuse to comply with
any and all claims, demands or instructions with respect to such property or
funds so long as such dispute or conflict shall continue, and the Collateral
Agent shall not be or become liable in any way to any of the parties hereto for
its failure or refusal to comply with such conflicting claims, demands or
instructions. The Collateral Agent shall be entitled to refuse to act until
either (i) such conflicting or adverse claims or demands shall have been finally
determined by a court of competent jurisdiction or settled by agreement between
the conflicting parties as evidenced in a writing, satisfactory to the
Collateral Agent or (ii) the Collateral Agent shall have received security or an
indemnity satisfactory to the Collateral Agent sufficient to save the Collateral
Agent harmless from and against any and all loss, liability or expense that the
Collateral Agent may incur by reason of its acting. The Collateral Agent may in
addition elect to commence an interpleader action or seek other judicial relief
or orders as the Collateral Agent may deem necessary. Notwithstanding anything
contained herein to the contrary, the Collateral Agent shall not be required to
take any action that is in its opinion contrary to law or to the terms of this
Agreement, or that would in its opinion subject it or any of its officers,
employees or directors to liability.
(h) Resignation of Collateral Agent. Subject to the appointment and
acceptance of a successor Collateral Agent as provided below, (a) the Collateral
Agent may resign at any time by giving notice thereof to the Company and the
Purchase Contract Agent, (b) the Collateral Agent may be removed at any time by
the Company and (c) if the Collateral Agent fails to perform any of its material
obligations hereunder in any material respect for a period of not less than 20
days after receiving written notice of such failure by the Purchase Contract
Agent and such failure shall be continuing, the Collateral Agent may be removed
by the Purchase Contract Agent. The Purchase Contract Agent shall promptly
notify the Company of any removal of the Collateral Agent pursuant to clause (c)
of the immediately preceding sentence. Upon any such resignation or removal, the
Company shall have the right to appoint a successor Collateral Agent. If no
successor Collateral Agent shall have been so appointed and shall have accepted
such appointment within 30 days after the retiring Collateral Agent's giving of
notice of resignation or such removal, then the retiring Collateral Agent may
petition any court of competent jurisdiction for the appointment of a successor
Collateral Agent. The Collateral Agent shall be a bank that has an office in New
York, New York, and that has a combined capital and surplus of at least
$50,000,000. Upon the acceptance of any appointment as Collateral Agent
hereunder by a successor Collateral Agent, such successor Collateral Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Collateral Agent, and the retiring Collateral Agent
shall
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<PAGE> 13
take all appropriate action to transfer any money and property held by it
hereunder (including the Pledged Treasury Securities and any other Collateral)
to such successor Collateral Agent. Such successor Collateral Agent shall also
become, and shall succeed to and become vested with all the rights, powers,
privileges and duties of, the Securities Intermediary. The retiring Collateral
Agent shall, upon such succession, be discharged from its duties and obligations
as Collateral Agent hereunder. After any retiring Collateral Agent's resignation
hereunder as Collateral Agent, the provisions of this Section 7 shall continue
in effect for its benefit in respect of any actions taken or omitted to be taken
by it while it was acting as the Collateral Agent.
Promptly following the removal or resignation of the Collateral Agent
the Company shall give written notice thereof to Moody's Investors Service, Inc.
Any corporation or association into which the Collateral Agent and
Securities Intermediary in its individual capacity may be merged or converted or
with which it may be consolidated, or any corporation or association resulting
from any merger, conversion or consolidation to which the Collateral Agent and
Securities Intermediary in its individual capacity shall be a party, or any
corporation or association to which all or substantially all the corporate trust
business of the Collateral Agent and Securities Intermediary in its individual
capacity may be sold or otherwise transferred, shall be the Collateral Agent and
Securities Intermediary hereunder without further act. Promptly thereafter,
however, the successor Collateral Agent and Securities Intermediary shall notify
the Company and the Purchase Contract Agent of their succession.
(i) Limitation on Liability. Anything in this Agreement to the
contrary notwithstanding, in no event shall the Collateral Agent or Securities
Intermediary or its respective officers, employees or agents be liable under
this Agreement to any third party for indirect, special, punitive, or
consequential loss or damage of any kind whatsoever, including lost profits,
whether or not the likelihood of such loss or damage was known to the Collateral
Agent or Securities Intermediary, or any of them.
(j) The Purchase Contract Agent. The duties and responsibilities of
the Purchase Contract Agent under this Agreement shall in each case be governed
by Article 7 of the Purchase Contract Agreement.
SECTION 8. Amendment.
(a) Amendment Without Consent of Holders. Without the consent of any
Holders, the Company, the Collateral Agent, the Securities Intermediary and the
Purchase Contract Agent, at any time and from time to time, may amend this
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<PAGE> 14
Agreement, in form satisfactory to the Company, the Collateral Agent, the
Securities Intermediary and the Purchase Contract Agent, for any of the
following purposes:
(i) to evidence the succession of another Person to the Company,
and the assumption by any such successor of the covenants of the
Company; or
(ii) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company; or
(iii) to evidence and provide for the acceptance of appointment
hereunder by a successor Collateral Agent or Purchase Contract Agent;
or
(iv) to make any of the following changes with respect to the
Treasury Securities underlying a Security (A) from a Treasury Note or a
Treasury Strip, as the case may be, to a security entitlement in
respect thereof, (B) from a security entitlement in respect of a
Treasury Note or a Treasury Strip, as the case may be, to a Treasury
Note or a Treasury Strip, as the case may be, or (C) from a security
entitlement in respect of one securities account to a security
entitlement in respect of another securities account, whether or not
with the same securities intermediary; or
(v) to cure any ambiguity, to correct or supplement any provisions
herein that may be inconsistent with any other such provisions herein,
or to make any other provisions with respect to such matters or
questions arising under this Agreement, provided such action shall not
adversely affect the interests of the Holders.
(b) Amendment With Consent of Holders. With the consent of the Holders
of not less than 66 2/3% in Stated Amount of the Outstanding Securities, by Act
of said Holders delivered to the Company, the Purchase Contract Agent, the
Securities Intermediary and the Collateral Agent, the Company, when authorized
by a Board Resolution, the Purchase Contract Agent, the Securities Intermediary
and the Collateral Agent may amend this Agreement for the purpose of modifying
in any manner the provisions of this Agreement or the rights of the Holders in
respect of the Securities; provided, however, that no such amendment shall,
without the consent of the Holder of each Outstanding Security affected thereby,
(i) change any Payment Date;
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<PAGE> 15
(ii) change the amount or type (other than a change of the type
described in Section 8(a)(iv)) of Treasury Securities underlying a
Security, impair the right of the Holder of any Security to receive
interest payments on the Coupon Treasury Securities underlying Coupon
Securities or otherwise adversely affect the Holder's rights in or to
any such Treasury Securities;
(iii) impair the right to institute suit for the enforcement of
any Purchase Contract;
(iv) otherwise effect any action that would require the consent of
the Holder of each Outstanding Security affected thereby pursuant to
the Purchase Contract Agreement if such action were effected by an
agreement supplemental thereto; or
(v) reduce the percentage of Outstanding Securities the consent of
whose Holders is required for any such amendment.
Notwithstanding the foregoing, if any amendment hereto would modify
only the terms of the Coupon Securities or the Zero-Coupon Securities, or would
modify the rights of Holders of only Coupon Securities or Zero-Coupon
Securities, then only Holders of Coupon Securities or Zero-Coupon Securities, as
the case may be, shall be entitled to consent or withhold consent with respect
thereto, and, with the consent of the Holders of not less than 66 2/3% in Stated
Amount of the Outstanding Securities that are Coupon Securities or Zero-Coupon
Securities, as the case may be, by Act of said Holders delivered to the Company,
the Purchase Contract Agent, the Securities Intermediary and the Collateral
Agent, the Company, when authorized by a Board Resolution, the Purchase Contract
Agent, the Securities Intermediary and the Collateral Agent may enter to such
amendment hereto.
It shall not be necessary for any Act of Holders under this Section
8(b) approve the particular form of any proposed amendment, but it shall be
sufficient if such Act shall approve the substance thereof.
(c) Execution of Amendments. In executing any amendment permitted by
this Section, the Collateral Agent and the Purchase Contract Agent shall be
entitled to receive and (subject to Section 7(a) hereof, with respect to the
Collateral Agent, and Section 7.01 of the Purchase Contract Agreement, with
respect to the Purchase Contract Agent) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and applicable law and that all
conditions precedent to such execution and delivery have been satisfied.
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<PAGE> 16
(d) Effect of Amendments. Upon the execution of any amendment under
this Section, this Agreement shall be modified in accordance therewith, and such
amendment shall form a part of this Agreement for all purposes; and every Holder
of Security Certificates theretofore or thereafter authenticated, executed on
behalf of the Holders and delivered under the Purchase Contract Agreement shall
be bound thereby.
(e) Reference to Amendments. Security Certificates authenticated,
executed on behalf of the Holders and delivered after the execution of any
amendment pursuant to this Section may, and shall if required by the Collateral
Agent or the Purchase Contract Agent, bear a notation in form approved by the
Purchase Contract Agent and/or the Collateral Agent, as the case may be, as to
any matter provided for in such amendment. If the Company shall so determine,
new Security Certificates so modified as to conform, in the opinion of the
Purchase Contract Agent and the Company, to any such amendment may be prepared
and executed by the Company and authenticated, executed on behalf of the Holders
and delivered by the Purchase Contract Agent in accordance with the Purchase
Contract Agreement in exchange for Outstanding Security Certificates.
SECTION 9. Miscellaneous.
(a) No Waiver. No failure on the part of the Collateral Agent or any
of its agents to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the Collateral Agent
or any of its agents of any right, power or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
The remedies herein are cumulative and are not exclusive of any remedies
provided by law.
(b) Governing Law. THIS AGREEMENT, THE COLLATERAL ACCOUNT, AND
PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION AND THE PRIORITY OF
THE SECURITY INTEREST IN THE COLLATERAL (INCLUDING ANY TREASURY NOTES OR
TREASURY STRIPS OR ANY SECURITY ENTITLEMENT WITH RESPECT THERETO) SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AND THE SECURITIES INTERMEDIARY'S JURISDICTION WILL BE THE STATE OF NEW YORK FOR
PURPOSES OF 31 C.F.R. Section 357.11(b), AS AMENDED, THE UCC AND ANY SIMILAR
STATE LAW. The Company, the Collateral Agent, the Securities Intermediary, and
the Holders from time to time of the Securities, acting through the Purchase
Contract Agent as their attorney-in-
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<PAGE> 17
fact, hereby submit to the nonexclusive jurisdiction of the United States
District Court for the Southern District of New York and of any New York state
court sitting in the Borough of Manhattan in New York City for the purposes of
all legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. The Company, the Collateral Agent, the
Securities Intermediary, and the Holders from time to time of the Securities,
acting through the Purchase Contract Agent as their attorney-in-fact,
irrevocably waive, to the fullest extent permitted by applicable law, any
objection that they may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.
(c) Notices. All notices, requests, consents and other communications
provided for herein (including, without limitation, any modifications of, or
waivers or consents under, this Agreement) shall be given or made in writing
(including, without limitation, by telecopy) delivered to the intended recipient
at the "Address for Notices" specified below its name on the signature pages
hereof or, as to any party, at such other address as shall be designated by such
party in a notice to the other parties. Except as otherwise provided in this
Agreement, all such communications shall be deemed to have been duly given when
transmitted by telecopier or personally delivered or, in the case of a mailed
notice, upon receipt, in each case given or addressed as aforesaid.
(d) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of the Company,
the Collateral Agent, the Securities Intermediary and the Purchase Contract
Agent, and the Holders from time to time of the Securities, by their acceptance
of the same, shall be deemed to have agreed to be bound by the provisions hereof
and to have ratified the agreements of, and the grant of the Pledge hereunder
by, the Purchase Contract Agent.
(e) Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
(f) Severability. If any provision hereof is invalid and unenforceable
in any jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in order to carry out the intentions of the parties
hereto as nearly as may be possible and (ii) the invalidity or unenforceability
of any provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
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<PAGE> 18
(g) Expenses, etc. The Company agrees to reimburse the Collateral
Agent for: (i) all reasonable out-of-pocket costs and expenses of the Collateral
Agent (including, without limitation, the reasonable fees and expenses of
counsel to the Collateral Agent), in connection with (A) the negotiation,
preparation, execution and delivery or performance of this Agreement and any
amendments hereto and (B) any modification, supplement or waiver of any of the
terms of this Agreement; (ii) all reasonable costs and expenses of the
Collateral Agent (including, without limitation, reasonable fees and expenses of
counsel) in connection with (A) any enforcement or proceedings resulting or
incurred in connection with causing any Holder to satisfy its obligations under
the Purchase Contracts forming a part of the Securities and (B) the enforcement
of this Section 9(g); and (iii) all transfer, stamp, documentary or other
similar taxes, assessments or charges levied by any governmental or revenue
authority in respect of this Agreement or any other document referred to herein
and all costs, expenses, taxes, assessments and other charges incurred in
connection with any filing, registration, recording or perfection of any
security interest contemplated hereby.
(h) Security Interest Absolute. All rights of the Collateral Agent and
security interests hereunder, and all obligations of the Holders from time to
time of the Securities hereunder, shall be absolute and unconditional
irrespective of:
(i) any lack of validity or enforceability of any provision of the
Purchase Contracts or the Securities or any other agreement or
instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or any
other term of, or any increase in the amount of, all or any of the
obligations of Holders under the related Purchase Contracts, or any
other amendment or waiver of any term of, or any consent to any
departure from any requirement of, the Purchase Contract Agreement or
any Purchase Contract or any other agreement or instrument relating
thereto; or
(iii) any other circumstance that might otherwise constitute a
defense available to, or discharge of, a borrower, a guarantor or a
pledgor.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
K N ENERGY, INC.
By: __________________________
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<PAGE> 19
Name:
Title:
Address for Notices:
370 Van Gordon Street
Lakewood, Colorado 80228-1740
Attention: Treasurer
Telecopy: (303) 763-3155
U.S. BANK TRUST NATIONAL
ASSOCIATION,
as Purchase Contract Agent
and as attorney-in-fact of the
Holders from time to time of the
Securities
By: __________________________
Name:
Title:
Address for Notices:
111 East Wacker Drive
Suite 3000
Chicago, IL 60601
Attention: Corporate Trust Services
Division - K N Energy
Telecopy: (312) 228-9401
THE CHASE MANHATTAN TRUST
COMPANY, NATIONAL ASSOCIATION,
as Collateral Agent
By: __________________________
Name:
Title:
Address for Notices:
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<PAGE> 20
One Oxford Centre
301 Grant Street
Suite #1100
Pittsburgh, Pennsylvania 15219
Tel: (412) 291-2017
Fax: (412) 456-5568
Attention: Global Trust Department
THE CHASE MANHATTAN TRUST
COMPANY, NATIONAL ASSOCIATION
in its individual capacity as
Securities Intermediary
By:_____________________________
Name:
Address for Notices:
One Oxford Centre
301 Grant Street
Suite #1100
Pittsburgh, Pennsylvania 15219
Tel: (412) 291-2017
Fax: (412) 456-5568
20
<PAGE> 1
Exhibit 8
[Simpson Thacher & Bartlett Letterhead]
November 24, 1998
Re: Issuance and Sale of PEPS
Units by K N Energy, Inc.
K N Energy, Inc.
370 Van Gordon Street
Lakewood, Colorado 80228
Ladies and Gentlemen:
We have acted as special tax counsel ("Tax Counsel") to K N
Energy, Inc., a Kansas corporation (the "Company"), in connection with the
preparation of the Prospectus Supplement dated November 19, 1998 to the
Prospectus of the Company dated October 19, 1998 (collectively, the
"Prospectus") with respect to the issuance and sale of the 8.25% PEPS Units (the
"PEPS Units") by the Company pursuant to the Purchase Contract Agreement (the
"Purchase Contract Agreement") between the Company and U.S. Bank Trust National
Association, as Purchase Contract Agent (in such capacity, the "Purchase
Contract Agent"). The PEPS Units will be offered for sale to investors pursuant
to the Prospectus. All capitalized terms used in this opinion letter and not
otherwise defined herein shall have the meaning ascribed to such terms in the
Prospectus. In delivering this opinion letter, we have reviewed and relied upon:
(i) the Prospectus; (ii) a form of the Purchase Contract Agreement; (iii) a form
of the PEPS Units; and (iv) a form of the Pledge Agreement between the Company,
The Chase Manhattan Trust
<PAGE> 2
K N Energy, Inc. -2- November 24, 1998
Company, National Association, as collateral agent and as securities
intermediary, and the Purchase Contract Agent. We also have examined and relied
upon originals or copies, certified or otherwise identified to our satisfaction,
of such records of the Company and such other documents, certificates and
records as we have deemed necessary or appropriate as a basis for the opinion
set forth herein.
In our examination of such material, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals and the conformity to original documents of all copies of documents
submitted to us. In addition, we also have assumed that the transactions related
to the issuance of the PEPS Units will be consummated in accordance with the
terms of the documents and forms of documents described herein.
On the basis of the foregoing, we hereby confirm our opinion set
forth in the Prospectus under the caption "United States Federal Income Tax
Consequences".
We express no opinion with respect to the transactions referred
to herein or in the Prospectus other than as expressly set forth herein.
Our opinion is based upon the Internal Revenue Code of 1986, as
amended, the Treasury regulations promulgated thereunder and other relevant
authorities and law, all as in effect on the date hereof. Consequently, future
changes in the law may cause the tax treatment of the transactions referred to
herein to be materially different from that described above.
We are members of the Bar of the State of New York, and we do not
express any opinion herein concerning any law other than the federal law of the
United States.
We hereby consent to the use of our name in the Prospectus under
the caption "United States Federal Income Tax Consequences" and "Legal Matters".
This opinion is being
<PAGE> 3
K N Energy, Inc. -3- November 24, 1998
rendered to you in connection with the above-described transaction. This opinion
may not be relied upon by you for any other purpose, or relied upon by, or
furnished to, any other person, firm or corporation without our prior written
consent.
Very truly yours,
/s/Simpson Thacher & Bartlett
SIMPSON THACHER & BARTLETT
