<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 25, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
APACHE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE NO. 41-0747868
(State of incorporation) (I.R.S. Employer
Identification Number)
ONE POST OAK CENTRAL Z. S. KOBIASHVILI
2000 POST OAK BOULEVARD, SUITE 100 2000 POST OAK BOULEVARD, SUITE 100
HOUSTON, TEXAS 77056-4400 HOUSTON, TEXAS 77056-4400
(713) 296-6000 (713) 296-6000
(Address, including zip code, and (Name, address, including zip code, and telephone
telephone number, including area code, of number, including area code, of agent for service)
registrant's executive offices)
</TABLE>
---------------------
COPIES TO:
RALPH K. MILLER, JR.
WOODARD HALL & PRIMM, P.C.
7100 TEXAS COMMERCE TOWER
HOUSTON, TEXAS 77002
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 ("Securities Act"), other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
============================================================================================================
PROPOSED PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE MAXIMUM OFFERING AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PRICE PER UNIT(2) PRICE(2) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities(3).................... $300,000,000 100% $300,000,000 $103,449
=============================================================================================================
</TABLE>
(1) In no event will the aggregate initial offering price of all Debt Securities
issued from time to time pursuant to this Registration Statement exceed
$300,000,000. Any Debt Securities registered hereunder may be sold
separately or as units with other Debt Securities registered hereunder.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) Subject to note (1) above, there are being registered hereunder an
indeterminate principal amount of Debt Securities. If any Debt Securities
are being issued at an original issue discount, then the offering price
shall be in such greater principal amount as shall result in an aggregate
initial offering price not to exceed $300,000,000 less the dollar amount of
any securities issued hereunder.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
***************************************************************************
* *
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED *
* WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT *
* BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE *
* REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT *
* CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY *
* NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH *
* SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO *
* REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH *
* STATE. *
* *
***************************************************************************
SUBJECT TO COMPLETION, DATED SEPTEMBER 25, 1996
PROSPECTUS
$300,000,000
[APACHE CORPORATION LOGO]
DEBT SECURITIES
Apache Corporation (the "Company" or "Apache") intends from time to time to
issue senior unsecured debt securities ("Debt Securities") in one or more
series, at an aggregate initial offering price not to exceed $300,000,000, at
prices and on terms to be determined at or prior to the time of sale. The
specific designation, aggregate principal amount, maturity, interest rate,
method of distribution, and any prepayment or other variable terms with regard
to the Debt Securities in respect of which this Prospectus is delivered will be,
to the extent not set forth herein, set forth in an accompanying Prospectus
Supplement.
Unless otherwise specified herein or in the applicable Prospectus Supplement,
the Debt Securities will be issued in fully registered book-entry form and will
be registered in the name of The Depository Trust Company, as depository
("DTC"), or its nominee. Interests in the Debt Securities will be shown on, and
transfers thereof will be effected only through, records maintained by DTC and
its participants. Debt Securities issued in book-entry form will not be issuable
as certificated securities except as specified herein or in the applicable
Prospectus Supplement. See "DTC Book-Entry-Only System." Payment of the
principal of, and premium, if any, and interest on the Debt Securities will be
made to DTC if and so long as DTC or its nominee is the registered owner of the
Debt Securities. The disbursement of such payments to beneficial owners of the
Debt Securities ("Beneficial Owners") will be the responsibility of the DTC
Participants and the Indirect Participants, all as defined and more fully
described in this Prospectus under the caption "DTC Book-Entry-Only System."
The applicable Prospectus Supplement will contain information, where applicable
and to the extent not set forth herein, concerning certain United States federal
income tax considerations relating to the Debt Securities covered by such
Prospectus Supplement.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
The Debt Securities may be sold directly by the Company to one or more
institutional purchasers, through agents designated from time to time, through
dealers or underwriters, or through any combination of the above. If any agents
of the Company or any underwriters are involved in the sale of the Debt
Securities, the names of such agents or underwriters and any applicable
commissions or discounts will be set forth in the Prospectus Supplement. See
"Plan of Distribution" for indemnification arrangements which the Company is
prepared to make available to underwriters and agents for the sale of the Debt
Securities.
---------------------
The date of this Prospectus is , 1996.
<PAGE> 3
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBT SECURITIES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
---------------------
AVAILABLE INFORMATION
Apache is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "SEC"). Reports, proxy statements and other information filed by
Apache can be inspected and copied at the public reference facilities maintained
by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's
Regional Offices at Seven World Trade Center, 13th Floor, New York, New York
10048 and CitiCorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can be obtained by mail from the Public
Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. In addition, reports, proxy statements and other
information concerning Apache may be inspected at the offices of The New York
Stock Exchange, Inc. ("NYSE"), 20 Broad Street, New York, New York 10005, and
also at the offices of the Chicago Stock Exchange ("CSE"), One Financial Place,
440 S. LaSalle Street, Chicago, Illinois 60605-1070. The address of the
Company's principal executive offices and its telephone number are 2000 Post Oak
Boulevard, Suite 100, Houston, Texas 77056-4400 and (713) 296-6000.
The Company has filed with the SEC a Registration Statement under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
securities offered hereby. This Prospectus does not contain all the information
set forth in the Registration Statement and the exhibits and schedules thereto,
certain portions of which have been omitted pursuant to the rules and
regulations of the SEC. The information so omitted may be obtained from the
SEC's principal office in Washington, D.C. upon payment of the fees prescribed
by the SEC. For further information, reference is hereby made to the
Registration Statement. Any statements contained herein concerning the
provisions of any document filed as an exhibit to the Registration Statement or
otherwise filed with the SEC are not necessarily complete, and in each instance
reference is made to the copy of such document so filed, each such statement
being qualified in its entirety by such reference.
---------------------
INFORMATION INCORPORATED BY REFERENCE
The following documents previously filed by the Company with the SEC
pursuant to the Exchange Act (SEC File No. 1-4300) are incorporated in and made
a part of this Prospectus:
(i) Annual Report on Form 10-K for the fiscal year ended December 31,
1995.
(ii) Current Report on Form 8-K dated September 24, 1996.
(iii) Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1996, as amended.
(iv) Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
1996.
All documents which the Company files pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering described herein shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
of such reports and documents. Any statement contained in a document
incorporated by reference, or deemed to be incorporated by reference, shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document or in any accompanying Prospectus Supplement modifies or supersedes
such statement.
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<PAGE> 4
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company undertakes to provide without charge, upon the written or oral
request of any person to whom a copy of this Prospectus has been delivered, a
copy of any or all of the documents referred to above which are incorporated in
this Prospectus by reference, other than exhibits to such documents. Requests
should be directed to Cheri L. Peper, Corporate Secretary, Apache Corporation,
2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056-4400; (713) 296-6000.
---------------------
All defined terms under Rule 4-10(a) of Regulation S-X promulgated under
the Securities Act shall have their statutorily-prescribed meanings when used in
this Prospectus. Quantities of natural gas are expressed in this Prospectus in
terms of thousand cubic feet ("Mcf"), million cubic feet ("MMcf") or billion
cubic feet ("Bcf"). Oil (which includes condensate) is quantified in terms of
barrels ("bbls"), thousands of barrels ("Mbbls") and millions of barrels
("MMbbls"). One barrel of oil is the energy equivalent of six Mcf of natural
gas, expressed as a barrel of oil equivalent. Natural gas is compared to oil in
terms of thousand barrels of oil equivalent ("Mboe") and in million barrels of
oil equivalents ("MMboe"). Oil and natural gas liquids are compared with natural
gas in terms of million cubic feet equivalent ("MMcfe") and billion cubic feet
equivalent ("Bcfe"). Daily oil and gas production is expressed in terms of
barrels of oil per day ("bopd") and thousands of cubic feet of gas per day
("Mcfd"), respectively. The Company's "net" working interest in wells or acreage
is determined by multiplying gross wells or acreage by the Company's working
interest therein. Unless otherwise specified, all references to wells and acres
are gross.
3
<PAGE> 5
THE COMPANY
Apache Corporation, a Delaware corporation formed in 1954, is an
independent energy company that explores for, develops and produces crude oil
and natural gas. In North America, the Company's exploration and production
interests are focused on the Gulf of Mexico, the Anadarko Basin, the Permian
Basin, the Gulf Coast and the Western Sedimentary Basin of Canada. Outside of
North America, the Company has exploration and production interests offshore
Western Australia and in Egypt, and exploration interests in, among other areas,
Indonesia and offshore the Ivory Coast. The Company's common stock, par value
$1.25 per share ("Apache Common Stock"), has been listed on the NYSE since 1969,
and on the CSE since 1960.
The Company holds interests in many of its North American and international
properties through operating subsidiaries, such as Apache Canada Ltd., MW
Petroleum Corporation, Apache Energy Limited, Apache International, Inc., Apache
Overseas, Inc., and The Phoenix Resource Companies, Inc. The Company treats all
operations as one segment of business.
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement, the net
proceeds from the sale of the Debt Securities will be used to refinance
outstanding indebtedness and for other general corporate purposes. To the extent
proceeds are used to refinance outstanding indebtedness, certain terms of the
indebtedness being refinanced will be set forth in the applicable Prospectus
Supplement.
RATIO OF EARNINGS TO FIXED CHARGES
The Company's ratios of earnings to fixed charges were as follows for the
respective periods indicated:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31
- ------------- ----------------------------------------
1996 1995 1995 1994 1993 1992 1991
- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
2.14 1.05 1.15 2.34 2.37 0.72 --
</TABLE>
The Company's ratios of earnings to fixed charges were computed based on:
(A) income or losses from continuing operations before income taxes and fixed
charges (excluding interest capitalized); and (B) fixed charges, which consist
of interest on indebtedness (including amounts capitalized), amortization of
debt discount and expense and the estimated portion of rental expense
attributable to interest. Earnings were inadequate to cover fixed charges by
$68.1 million for 1991, and by $14.8 million for 1992, due to write downs of the
carrying value of the U.S. and Canadian oil and gas properties of DEK Energy
Company ("DEKALB"), formerly known as DEKALB Energy Company, and losses incurred
on the divestiture of certain of DEKALB's U.S. assets.
4
<PAGE> 6
DESCRIPTION OF DEBT SECURITIES
Unless otherwise specified in the applicable Prospectus Supplement, the
Debt Securities will be issued under an indenture (the "Indenture") entered into
between the Company and The Chase Manhattan Bank, as trustee and successor to
Chemical Bank (the "Trustee"). The Debt Securities to be offered by this
Prospectus are limited to an aggregate initial offering price not to exceed
$300,000,000. However, the Indenture does not limit the amount of Debt
Securities which can be issued thereunder and provides that additional Debt
Securities of any series may be issued thereunder up to the aggregate principal
amount which may be authorized from time to time by the Company. The payment of
principal of, or premium, if any, or interest on the Debt Securities will rank
pari passu with all other unsecured unsubordinated indebtedness of the Company.
Unless otherwise indicated herein or in the applicable Prospectus Supplement,
the Debt Securities will be issued in denominations of $100,000 and integral
multiples of $1,000 in excess thereof.
The maturity date, interest payment dates, and rate of interest of the Debt
Securities will be as set forth in the Prospectus Supplement applicable thereto.
Subject to certain exceptions therein set forth, the Indenture provides for the
payment of interest on any interest payment date only to persons in whose names
the Debt Securities are registered on the regular record date, which is the last
day of the respective calendar months preceding the month in which an interest
payment is due (whether or not a business day).
A copy of the Indenture is an exhibit to the Registration Statement of
which this Prospectus is a part. The information herein includes a summary of
certain provisions of the Indenture and does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all provisions of
the Indenture including the definition therein of certain terms. The following
summaries set forth certain general terms and provisions of the Debt Securities
to which any Prospectus Supplement may relate. The particular terms of the Debt
Securities offered by any Prospectus Supplement and the extent, if any, to which
such general provisions may apply to the Debt Securities so offered will, to the
extent not described herein, be described in the Prospectus Supplement relating
to such Debt Securities.
PROVISIONS APPLICABLE TO ALL DEBT SECURITIES
General
Reference is made to the Prospectus Supplement that accompanies this
Prospectus for the following terms, to the extent permitted by the Indenture,
and other information with respect to the Debt Securities being offered thereby,
to the extent not described herein: (i) the designation, aggregate principal
amount and authorized denominations of such Debt Securities; (ii) the percentage
of the principal amount at which such Debt Securities will be issued; (iii) the
date (or the manner of determining or extending the date or dates) on which the
principal of such Debt Securities will be payable; (iv) whether such Debt
Securities will be issued in fully registered form or in bearer form or any
combination thereof; (v) whether such Debt Securities will be issued in the form
of one or more global securities and whether such global securities are to be
issuable in a temporary global form or permanent global form; (vi) if other than
U.S. dollars, the currency or currencies or currency unit or units in which Debt
Securities may be denominated and purchased and the currency or currencies or
currency units in which principal, premium (if any) and any interest may be
payable; (vii) if the currency for which Debt Securities may be purchased or in
which principal, premium (if any) and any interest may be payable is at the
election of the Company or the purchaser, the manner in which such an election
may be made and the terms of such election; (viii) the rate or rates per annum
at which such Debt Securities will bear interest, if any, or the method or
methods of determination of such rate or rates and the basis upon which interest
will be calculated if other than that of a 360-day year consisting of twelve
30-day months; (ix) the date or dates from which such interest, if any, on such
Debt Securities will accrue or the method or methods, if any, by which such date
or dates are to be determined, the date or dates on which such interest, if any,
will be payable, the date on which payment of such interest, if any, will
commence and the Regular Record Dates for such Interest Payment Dates, if any;
(x) the date or dates, if any, on or after which, or the
5
<PAGE> 7
period or periods, if any, within which, and the price or prices at which the
Debt Securities may, pursuant to any optional redemption provisions, be redeemed
at the option of the Company or of the holder thereof and the other terms and
provisions of such optional redemption; (xi) information with respect to book-
entry procedures relating to global Debt Securities; (xii) whether and under
what circumstances the Company will pay Additional Amounts as contemplated by
Section 1004 of the Indenture (the term "interest," as used in this Prospectus,
shall include such Additional Amounts) on such Debt Securities to any holder who
is a United States Alien (as defined in the Indenture) (including any
modification to the definition of such terms contained in the Indenture as
originally executed) in respect of any tax, assessment or governmental charge
and, if so, whether the Company will have the option to redeem such Debt
Securities rather than pay such Additional Amounts (and the terms of any such
option); (xiii) any deletions from, modifications of or additions to the Events
of Default or covenants of the Company with respect to any of such Debt
Securities; (xiv) if either or both of Section 402(2) relating to defeasance or
Section 402(3) relating to covenant defeasance shall not be applicable to the
Debt Securities of such series, or any covenants in addition to those specified
in Section 402(3) relating to the Debt Securities of such series shall be
subject to covenant defeasance, and any deletions from, or modifications or
additions to, the provisions of Article Four of the Indenture relating to
satisfaction and discharge in respect of the Debt Securities of such series;
(xv) any index or other method used to determine the amount of payments of
principal, premium (if any) and interest, if any, on such Debt Securities; (xvi)
if a trustee other than Chemical Bank is named for such Debt Securities, the
name of such trustee; and (xvii) any other specific terms of the Debt
Securities. All Debt Securities of any one series need not be issued at the same
time and all the Debt Securities of any one series need not bear interest at the
same rate or mature on the same date.
If any of the Debt Securities are sold for foreign currencies or foreign
currency units or if the principal of, or premium, if any, or interest, if any,
on any series of Debt Securities is payable in foreign currencies or foreign
currency units, the restrictions, elections, tax consequences, specific terms
and other information with respect to such Debt Securities and such foreign
currencies or foreign currency units will be set forth in the applicable
Prospectus Supplement.
Other than as described below under "Limitation on Liens" and "Company's
Obligation to Purchase Debt Securities on Change in Control," the Indenture does
not contain any provision that would limit the ability of the Company to incur
indebtedness or that would afford holders of Debt Securities protection in the
event of a decline in the credit quality of the Company or a takeover,
recapitalization or highly leveraged or similar transaction involving the
Company. Reference is made to the Prospectus Supplement relating to the
particular series of Debt Securities offered thereby, to the extent not
otherwise described herein, for any information with respect to any deletions
from, modifications of or additions to the Events of Default described below or
covenants of the Company contained in the Indenture, including any addition of a
covenant or other provision providing event risk or similar protection.
Interest Rates
The Debt Securities will earn interest at the fixed or floating rate for
the period of time specified in the applicable Prospectus Supplement.
If the Debt Securities earn interest at a floating rate, the applicable
Prospectus Supplement shall state the Interest Rate Basis or Bases (including
(a) the applicable Spread, if any, and/or (b) multiplied by the applicable
Spread Multiplier, if any), the Interest Payment Period and Dates, the Index
Maturity and the Maximum Interest Rate and/or Minimum Interest Rate, if any, as
such terms are defined below. If one or more of the applicable Interest Rate
Bases is LIBOR, the Prospectus Supplement must also specify the Index Currency
and Designated LIBOR Page, as such terms are defined below. Unless otherwise
specified in the applicable Prospectus Supplement, the Debt Securities shall
bear interest on the basis of a 360-day year consisting of twelve 30-day months.
The "Spread" is the number of basis points to be added to or subtracted
from the related Interest Rate Basis or Bases applicable to each respective Debt
Security. The "Spread Multiplier" is the
6
<PAGE> 8
percentage of the related Interest Rate Basis or Bases by which such Interest
Rate Basis or Bases will be multiplied to determine the applicable interest
rate. The "Index Maturity" is the period to maturity of the instrument or
obligation with respect to which the related Interest Rate Basis or Bases will
be calculated.
Unless otherwise specified in the Prospectus Supplement, the Interest Rate
Basis may, as described below, include (i) the Commercial Paper Rate, (ii)
LIBOR, (iii) the Treasury Rate, or (iv) such other Interest Rate Basis or
interest rate formula as may be specified in the applicable Prospectus
Supplement.
The applicable Prospectus Supplement will specify whether the floating rate
of interest will be reset daily, weekly, monthly, quarterly, semiannually or
annually or on such other specified basis (each, an "Interest Reset Period") and
the dates on which such rate of interest will be reset (each, an "Interest Reset
Date"). Unless otherwise specified in the applicable Prospectus Supplement, the
Interest Reset Dates will be, in the case of a floating interest rate which
resets: (i) daily, each Business Day; (ii) weekly, the Wednesday of each week
(unless the Treasury Rate is an applicable Interest Rate Basis, in which case
the Tuesday of each week except as described below); (iii) monthly, the third
Wednesday of each month; (iv) quarterly, the third Wednesday of March, June,
September and December of each year, (v) semiannually, the third Wednesday of
the two months specified in the applicable Prospectus Supplement; and (vi)
annually, the third Wednesday of the month specified in the applicable
Prospectus Supplement. If any Interest Reset Date would otherwise be a day that
is not a Business Day, such Interest Reset Date will be postponed to the next
succeeding Business Day, unless LIBOR is an applicable Interest Rate Basis and
such Business Day falls in the next succeeding calendar month, in which case
such Interest Reset Date will be the immediately preceding Business Day. In
addition, if the Treasury Rate is an applicable Interest Rate Basis and the
Interest Determination Date would otherwise fall on an Interest Reset Date, then
such Interest Reset Date will be postponed to the next succeeding Business Day.
The interest rate applicable to each Interest Reset Period commencing on
the related Interest Reset Date will be the rate determined as of the applicable
Interest Determination Date on or prior to the Calculation Date (as hereinafter
defined). The "Interest Determination Date" (i) with respect to the Commercial
Paper Rate will be the second Business Day immediately preceding the applicable
Interest Reset Date; (ii) with respect to LIBOR will be the second London
Business Day immediately preceding the applicable Interest Reset Date, unless
the Index Currency is British pounds sterling, in which case the "Interest
Determination Date" will be the applicable Interest Reset Date; and (iii) with
respect to the Treasury Rate will be the day that Treasury Bills (as hereinafter
defined) are auctioned during or for the week in which the applicable Interest
Reset Date falls (Treasury Bills being normally sold at an auction held on
Monday of each week, unless that day is a legal holiday, in which case the
auction is normally held on the following Tuesday, except that such auction may
be held on the preceding Friday); provided, however, that if an auction is held
on the Friday of the week preceding the applicable Interest Reset Date, the
Interest Determination Date will be such preceding Friday. The "Interest
Determination Date" pertaining to a floating interest rate which is determined
by reference to two or more Interest Rate Bases will be the most recent Business
Day which is at least two Business Days prior to the applicable Interest Reset
Date on which each Interest Rate Basis is determinable. Each Interest Rate Basis
will be determined as of such date, and the applicable interest rate will take
effect on the applicable Interest Reset Date.
Either or both of the following may also apply to the floating interest
rate on Debt Securities: (i) a Maximum Interest Rate, or ceiling, that may
accrue during any Interest Reset Period, and (ii) a Minimum Interest Rate, or
floor, that may accrue during any Interest Reset Period. In addition to any
Maximum Interest Rate that may apply, the interest rate on any Debt Securities
will in no event be higher than the maximum rate permitted by New York law, as
the same may be modified by United States laws of general application.
Except as provided below or in the applicable Prospectus Supplement,
interest will be payable, in the case of floating interest rates which reset:
(i) daily, weekly or monthly, on the third Wednesday of each month or on the
third Wednesday of March, June, September and December of each year, as
7
<PAGE> 9
specified in the applicable Prospectus Supplement; (ii) quarterly, on the third
Wednesday of March, June, September and December of each year, (iii)
semiannually, on the third Wednesday of the two months of each year specified in
the applicable Prospectus Supplement; and (iv) annually, on the third Wednesday
of the month of each year specified in the applicable Prospectus Supplement. If
any Interest Payment Date for the payment of interest at a floating rate would
otherwise be a day that is not a Business Day, such Interest Payment Date will
be postponed to the next succeeding Business Day, except that if LIBOR is an
applicable Interest Rate Basis and such Business Day falls in the next
succeeding calendar month, such Interest Payment Date will be the immediately
preceding Business Day.
All percentages resulting from any calculation of floating interest rates
will be rounded to the nearest one hundred-thousandth of a percentage point,
with five one-millionths of a percentage point rounded upwards (e.g., 9.876545%
(or .09876545) would be rounded to 9.87655% (or .0987655)), and all amounts used
in or resulting from such calculation will be rounded, in the case of United
States dollars, to the nearest cent or, in the case of a foreign currency or
composite currency, to the nearest unit (with one-half cent or unit being
rounded upwards).
Accrued floating rate interest will be calculated by multiplying the
principal amount of the Debt Securities to which it relates by an accrued
interest factor. Such accrued interest factor will be computed by adding the
interest factor calculated for each day in the applicable Interest Reset Period.
Unless otherwise specified in the applicable Prospectus Supplement, the interest
factor for each such day will be computed by dividing the interest rate
applicable to such day by 360, if an applicable Interest Rate Basis is the
Commercial Paper Rate or LIBOR, or by the actual number of days in the year if
an applicable Interest Rate Basis is the Treasury Rate. Unless otherwise
specified in the applicable Prospectus Supplement, if the floating interest rate
is calculated with reference to two or more Interest Rate Bases, the interest
factor will be calculated in each period in the same manner as if only one of
the applicable Interest Rate Bases applied as specified in the applicable
Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, The
Chase Manhattan Bank will be the "Calculation Agent." Upon request of the
Beneficial Owner of any Debt Securities, the Calculation Agent will disclose the
interest rate then in effect and, if determined, the interest rate that will
become effective as a result of a determination made for the next succeeding
Interest Reset Date with respect to such Debt Securities. Unless otherwise
specified in the applicable Prospectus Supplement, the "Calculation Date," if
applicable, pertaining to any Interest Determination Date will be the earlier of
(i) the tenth calendar day after such Interest Determination Date or, if such
day is not a Business Day, the next succeeding Business Day or (ii) the Business
Day immediately preceding the applicable Interest Payment Date or the Maturity
Date, as the case may be.
Unless otherwise specified in the applicable Prospectus Supplement, the
Calculation Agent shall determine each Interest Rate Basis in accordance with
the following provisions.
Commercial Paper Rate. Unless otherwise specified in the applicable
Prospectus Supplement, "Commercial Paper Rate" means, with respect to any
Interest Determination Date for which the interest rate is determined with
reference to the Commercial Paper Rate (a "Commercial Paper Rate Interest
Determination Date"), the Money Market Yield (as hereinafter defined) on such
date of the rate for commercial paper having the Index Maturity specified in the
applicable Prospectus Supplement as published in H.15(519) under the heading
"Commercial Paper." In the event that such rate is not published by 3:00 p.m.,
New York City time, on the related Calculation Date, then the Commercial Paper
Rate on such Commercial Paper Rate Interest Determination Date will be the Money
Market Yield of the rate for commercial paper having the Index Maturity
specified in the applicable Prospectus Supplement as published in Composite
Quotations under the heading "Commercial Paper" (with an Index Maturity of one
month or three months being deemed to be equivalent to an Index Maturity of 30
days or 90 days, respectively). If such rate is not yet published in either
H.15(519) or Composite Quotations by 3:00 p.m., New York City time, on the
related Calculation Date, then the Commercial Paper Rate on such Commercial
Paper Rate Interest Determination Date will be calculated by the Calculation
Agent and will
8
<PAGE> 10
be the Money Market Yield of the arithmetic mean of the offered rates at
approximately 11:00, New York City time, on such Commercial Paper Rate Interest
Determination Date of three leading dealers of commercial paper in New York, New
York selected by the Calculation Agent, after consultation with the Company, for
commercial paper having the Index Maturity specified in the applicable
Prospectus Supplement placed for an industrial issuer whose bond rating is "AA,"
or the equivalent, from a nationally recognized statistical rating organization;
provided, however, that if the dealers so selected by the Calculation Agent are
not quoting as mentioned in this sentence, the Commercial Paper Rate determined
as of such Commercial Paper Rate Interest Determination Date will be the
Commercial Paper Rate in effect on such Commercial Paper Rate Interest
Determination Date.
"Money Market Yield" means a yield (expressed as a percentage) calculated
in accordance with the following formula:
<TABLE>
<S> <C> <C>
D X 360
Money Market Yield = -------------- X 100
360 - (D X M)
</TABLE>
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the Interest Period for which interest is being calculated.
LIBOR. Unless otherwise specified in the applicable Prospectus Supplement,
"LIBOR" means the rate determined in accordance with the following provisions:
(i) With respect to any Interest Determination Date for which the
interest rate is determined with reference to LIBOR (a "LIBOR Interest
Determination Date"), LIBOR will be either: (a) if "LIBOR Reuters" is
specified in the applicable Prospectus Supplement, the arithmetic mean of
the offered rates (unless the Designated LIBOR Page by its terms provides
only for a single rate, in which case such single rate shall be used) for
deposits in the Index Currency having the Index Maturity specified in such
Prospectus Supplement, commencing on the applicable Interest Reset Date,
that appear (or, if only a single rate is required as aforesaid, appears)
on the Designated LIBOR Page as of 11:00 a.m., London time, on such LIBOR
Interest Determination Date, or (b) if "LIBOR Telerate" is specified in the
applicable Prospectus Supplement or if neither "LIBOR Reuters" nor "LIBOR
Telerate" is specified in the applicable Prospectus Supplement as the
method for calculating LIBOR, the rate for deposits in the Index Currency
having the Index Maturity specified in such Prospectus Supplement,
commencing on such Interest Reset Date, that appears on the Designated
LIBOR Page as of 11:00 a.m., London time, on such LIBOR Interest
Determination Date. If fewer than two such offered rates appear, or if no
such rate appears, as applicable, LIBOR on such LIBOR Interest
Determination Date will be determined in accordance with the provisions
described in clause (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which
fewer than two offered rates appear, or no rate appears, as the case may
be, on the Designated LIBOR Page as specified in clause (i) above, the
Calculation Agent will request the principal London offices of each of four
major reference banks in the London interbank market, as selected by the
Calculation Agent, after consultation with the Company, to provide the
Calculation Agent with its offered quotation for deposits in the Index
Currency for the period of the Index Maturity specified in the applicable
Prospectus Supplement, commencing on the applicable Interest Reset Date, to
prime banks in the London interbank market at approximately 11:00 a.m.,
London time, on such LIBOR Interest Determination Date and in a principal
amount that is representative for a single transaction in such Index
Currency in such market at such time. If at least two such quotations are
so provided, then LIBOR on such LIBOR Interest Determination Date will be
the arithmetic mean of such quotations. If fewer than two such quotations
are so provided, then LIBOR on such LIBOR Interest Determination Date will
be the arithmetic mean of the rates quoted at approximately 11:00 a.m., in
the applicable Principal Financial Center, on such LIBOR Interest
Determination Date by three major banks in such Principal Financial Center
selected by the Calculation Agent, after consultation with the Company, for
loans in the Index Currency to leading European banks, having the Index
Maturity specified in the
9
<PAGE> 11
applicable Prospectus Supplement and in a principal amount that is
representative for a single transaction in such Index Currency in such
market at such time; provided, however, that if the banks so selected by
the Calculation Agent are not quoting as mentioned in this sentence, LIBOR
determined as of such LIBOR Interest Determination Date will be LIBOR in
effect on such LIBOR Interest Determination Date.
"Index Currency" means the currency or composite currency specified in the
applicable Prospectus Supplement as to which LIBOR shall be calculated. If no
such currency or composite currency is specified in the applicable Prospectus
Supplement, the Index Currency shall be United States dollars.
"Principal Financial Center" means the capital city of the country issuing
the Index Currency, except that with respect to United States dollars,
Australian dollars, Deutsche marks, Dutch guilders, Italian lire, Swiss francs
and ECUs, the Principal Financial Center shall be New York City, Sydney,
Frankfurt, Amsterdam, Milan, Zurich and Luxembourg, respectively.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified in the
applicable Prospectus Supplement, the display on the Reuters Monitor Money Rates
Service (or any successor service) for the purpose of displaying the London
interbank rates of major banks for the applicable Index Currency, or (b) if
"LIBOR Telerate" is specified in the applicable Prospectus Supplement or neither
"LIBOR Reuters" nor "LIBOR Telerate" is specified in the applicable Prospectus
Supplement as the method for calculating LIBOR, the display on the Dow Jones
Telerate Service (or any successor service) for the purpose of displaying the
London interbank rates of major banks for the applicable Index Currency.
Treasury Rate. Unless otherwise specified in the applicable Prospectus
Supplement, "Treasury Rate" means, with respect to any Interest Determination
Date for which the interest rate is determined by reference to the Treasury Rate
(a "Treasury Rate Interest Determination Date"), the rate from the auction held
on such Treasury Rate Interest Determination Date (the "Auction") of direct
obligations of the United States ("Treasury Bills") having the Index Maturity
specified in the applicable Prospectus Supplement, as such rate is published in
H.15(519) under the heading "Treasury Bills -- auction average (investment)" or,
if not published by 3:00 p.m., New York City time, on the related Calculation
Date, the auction average rate of such Treasury Bills (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis) as otherwise announced by the United States Department of the
Treasury. In the event that the results of the Auction of Treasury Bills having
the Index Maturity specified in the applicable Prospectus Supplement are not
reported as provided by 3:00 p.m., New York City time, on the related
Calculation Date, or if no such Auction is held, then the Treasury Rate will be
calculated by the Calculation Agent, after consultation with the Company, and
will be a yield to maturity (expressed as a bond equivalent on the basis of a
year of 365 or 366 days, as applicable, and applied on a daily basis) of the
arithmetic mean of the secondary market bid rates, as of approximately 3:30
p.m., New York City time, on such Treasury Rate Interest Determination Date, of
three leading primary United States government securities dealers selected by
the Calculation Agent, after consultation with the Company, for the issue of
Treasury Bills with a remaining maturity closest to the Index Maturity specified
in the applicable Prospectus Supplement; provided, however, that if the dealers
so selected by the Calculation Agent are not quoting as mentioned in this
sentence, the Treasury Rate determined as of such Treasury Rate Interest
Determination Date will be the Treasury Rate in effect on such Treasury Rate
Interest Determination Date.
Discount, Series, Maturities, Registration, and Payment
The Debt Securities may be sold at a substantial discount below their
stated principal amount, bearing no interest or interest at a rate that at the
time of issuance is below market rates. See "Certain United States Federal
Income Tax Considerations" herein. Federal income tax consequences and special
considerations applicable to any such series may also be described in the
Prospectus Supplement relating thereto.
10
<PAGE> 12
The Debt Securities may be issued in one or more series with the same or
various maturities. (Section 301) Debt Securities may be issued solely in fully
registered form without coupons ("Registered Securities"), solely in bearer form
with or without coupons ("Bearer Securities"), or as both Registered Securities
and Bearer Securities. (Section 301) Registered Securities may be exchangeable
for other Debt Securities of the same series, registered in the same name, for a
like aggregate principal amount in authorized denominations and will be
transferable at any time or from time to time at the aforementioned office. No
service charge will be made to the holder for any such exchange or transfer,
except for any tax or governmental charge incidental thereto. If Debt Securities
of any series are issued as Bearer Securities, the applicable Prospectus
Supplement will contain any restrictions applicable to the offer, sale or
delivery of Bearer Securities and the terms upon which Bearer Securities of the
series may be exchanged for Registered Securities of the series and, if
permitted by applicable laws and regulations, the terms upon which Registered
Securities of the series may be exchanged for Bearer Securities of the series,
whether such Debt Securities are to be issuable in permanent global form with or
without coupons and, if so, whether beneficial owners of interests in any such
permanent global security may exchange such interests for Debt Securities of
such series and the circumstances under which any such exchanges may occur.
Unless otherwise specified in the applicable Prospectus Supplement,
principal and interest, if any, on the Debt Securities offered thereby are to be
payable at the office or agency of the Company maintained for such purposes in
the city where the principal corporate trust office of the Trustee is located,
and will initially be the principal corporate trust office of the Trustee,
provided that payment of interest, if any, may be made (subject to collection)
at the option of the Company by check mailed to the persons in whose names the
Debt Securities are registered at the close of business on the day specified in
the applicable Prospectus Supplement.
Form, Exchange, Registration and Transfer
Debt Securities will be exchangeable for other Debt Securities of the same
series and of like tenor, of any authorized denominations and of a like
aggregate principal amount and Stated Maturity (as defined in the Indenture).
Registered Securities may be presented for registration of transfer (with the
form of transfer endorsed thereon duly executed) at the office of the Trustee or
at the office of any transfer agent designated by the Company for such purpose,
without service charge and upon payment of any taxes and other governmental
charges as described in the Indenture. Such transfer or exchange will be
effected upon the books of the Trustee or such transfer agent contingent upon
such Trustee or transfer agent, as the case may be, being satisfied with the
documents of title and identity of the person making the request. (Section 305)
In the event of any redemption of Debt Securities, the Company shall not be
required to: (i) issue, register the transfer of or exchange such Debt
Securities during a period beginning at the opening of business 15 days before
any selection of such Debt Securities to be redeemed and ending at the close of
business on the day of mailing of the relevant notice of redemption; or (ii)
register the transfer of or exchange any such Debt Security, or portion thereof,
called for redemption, except the unredeemed portion of any such Debt Security
being redeemed in part. (Section 305)
Limitation on Liens
Nothing in the Indenture or the Debt Securities will in any way limit the
amount of indebtedness or securities (other than the Debt Securities) which may
be incurred or issued by the Company or any of its Subsidiaries (as defined in
the Indenture). The Indenture provides that neither the Company nor any
Subsidiary will issue, assume or guarantee any notes, bonds, debentures or other
similar evidences of indebtedness for money borrowed secured by a mortgage,
lien, pledge, security interest or other encumbrance (defined in the Indenture
as "Liens") upon any of its property, subject to certain exceptions set forth in
the Indenture, without making effective provisions whereby any and all Debt
Securities then outstanding shall be secured by a Lien equally and ratably with
any and all other obligations thereby secured. Such restrictions will not,
however, apply to (a) Liens existing on the date of
11
<PAGE> 13
the Indenture or provided for under the terms of agreements existing on the date
thereof; (b) Liens securing (i) all or part of the cost of exploring, producing,
gathering, processing, marketing, drilling or developing any properties of the
Company or any of its Subsidiaries, or securing indebtedness incurred to provide
funds therefor; or (ii) indebtedness incurred to finance all or part of the cost
of acquiring, constructing, altering, improving or repairing any such property
or assets, or securing indebtedness incurred to provide funds therefor; (c)
Liens which secure only indebtedness owing by a Subsidiary to the Company, or to
one or more Subsidiaries, or the Company and one or more Subsidiaries; (d) Liens
on the property of any corporation or other entity existing at the time such
corporation or entity becomes a Subsidiary; (e) Liens on any property to secure
indebtedness incurred in connection with the construction, installation or
financing of pollution control or abatement facilities or other forms of
industrial revenue bond financing or indebtedness issued or guaranteed by the
United States, any state or any department, agency or instrumentality of either
or indebtedness issued to or guaranteed for the benefit of a foreign government,
any state or any department, agency or instrumentality of either or an
international finance agency or any division or department thereof, including
the World Bank, the International Finance Corp. and the Multilateral Investment
Guarantee Agency; (f) any extension, renewal or replacement (or successive
extensions, renewals or replacements) of any Lien referred to in the foregoing
clauses (a) through (e) existing on the date of the Indenture; (g) certain Liens
incurred in the ordinary course of business or (h) Liens which secure Limited
Recourse Indebtedness (as defined in the Indenture). The following types of
transactions, among others, shall not be deemed to create indebtedness secured
by Liens: (i) the sale or other transfer of crude oil, natural gas or other
petroleum hydrocarbons in place for a period of time until, or in an amount such
that, the transferee will realize therefrom a specified amount (however
determined) of money or such crude oil, natural gas or other petroleum
hydrocarbons, or the sale or other transfer of any other interest in property of
the character commonly referred to as a production payment, overriding royalty,
forward sale or similar interest and (ii) Liens required by any contract or
statute in order to permit the Company or a Subsidiary to perform any contract
or subcontract made by it with or at the request of the United States government
or any foreign government or international finance agency, any state or any
department thereof, or any agency or instrumentality of either, or to secure
partial, progress, advance or other payments to the Company or any Subsidiary by
any such entity pursuant to the provisions of any contract or statute. (Section
1005)
Limitation on Sale/Leaseback Transactions
The Indenture provides that neither the Company nor any Subsidiary will
enter into any arrangement with any person (other than the Company or a
Subsidiary) providing for the leasing to the Company or a Subsidiary for a
period of more than three years of any property which has been, or is to be,
sold or transferred by the Company or such Subsidiary to such person or to any
person (other than the Company or a Subsidiary) to which funds have been or are
to be advanced by such person on the security of the leased property unless
either (a) the Company or such Subsidiary would be entitled, pursuant to the
provisions described under "Limitation on Liens" above, to incur indebtedness in
a principal amount equal to or exceeding the value of such sale/leaseback
transaction, secured by a Lien on the property to be leased; (b) since the date
of the Indenture and within a period commencing six months prior to the
consummation of such arrangement and ending six months after the consummation
thereof, the Company or such Subsidiary has expended or will expend for any
property (including amounts expended for the acquisition, exploration, drilling
or development thereof, and for additions, alterations, improvements and repairs
thereto) an amount equal to all or a portion of the net proceeds of such
arrangement and the Company elects to designate such amount as a credit against
such arrangement (with any such amount not being so designated to be applied as
set forth in (c) below); or (c) the Company, during or immediately after the
expiration of the 12 months after the effective date of such transaction,
applies to the voluntary defeasance or retirement of the Debt Securities and its
other Senior Indebtedness (as defined in the Indenture) an amount equal to the
greater of the net proceeds of the sale or transfer of the property leased in
such transaction or the fair value, in the opinion of the board of directors of
the Company of such property at the time of entering into such transaction (in
either case adjusted to reflect the remaining term of the lease and any amount
utilized by the Company as set forth in (b) above), less
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<PAGE> 14
an amount equal to the principal amount of Senior Indebtedness voluntarily
retired by the Company within such 12-month period. (Section 1006)
Events of Default
Unless otherwise specified in the applicable Prospectus Supplement, any one
of the following events will constitute an Event of Default under the Indenture
with respect to the Debt Securities of any series: (a) failure to pay any
interest on any Debt Security of such series when due, continued for 30 days;
(b) failure to pay principal of (or premium, if any) on the Debt Securities of
such series when due and payable, either at maturity or, if applicable, at 12:00
noon on the Business Day following the Change in Control Purchase Date; (c)
failure to perform, or breach of, any other covenant or warranty of the Company
in the Indenture or the Debt Securities (other than a covenant or warranty
included in the Indenture solely for the benefit of a series of securities other
than the Debt Securities), continued for 60 days after written notice as
provided in the Indenture; (d) the acceleration of any Indebtedness (as defined
in the Indenture) of the Company or any Subsidiary in excess of an aggregate of
$25,000,000 in principal amount under any event of default as defined in any
mortgage, indenture or instrument and such acceleration has not been rescinded
or annulled within 30 days after written notice as provided in the Indenture
specifying such Event of Default and requiring the Company to cause such
acceleration to be rescinded or annulled; (e) failure to pay, bond or otherwise
discharge within 60 days of entry, a judgment, court order or uninsured monetary
damage award against the Company or any Subsidiary exceeding an aggregate of
$25,000,000 in principal amount which is not stayed on appeal or otherwise being
appropriately contested in good faith; (f) certain events of bankruptcy,
insolvency or reorganization involving the Company or any Subsidiary; and (g)
any other Event of Default provided with respect to the Debt Securities of that
series. (Section 501)
If an Event of Default with respect to the Debt Securities of any series
(other than an Event of Default described in (e) or (f) of the preceding
paragraph) occurs and is continuing, either the Trustee or the holders of at
least 25% in aggregate principal amount of the outstanding Debt Securities of
such series by notice as provided in the Indenture may declare the principal
amount of such Debt Securities to be due and payable immediately. At any time
after a declaration of acceleration has been made, but before a judgment or
decree for payment of money has been obtained by the Trustee, and subject to
applicable law and certain other provisions of the Indenture, the holders of a
majority in aggregate principal amount of the Debt Securities of such series
may, under certain circumstances, rescind and annul such acceleration. An Event
of Default described in (e) or (f) of the preceding paragraph shall cause the
principal amount and accrued interest (or such lesser amount as provided for in
the Debt Securities of such series) to become immediately due and payable
without any declaration or other act by the Trustee or any holder. (Section 502)
The Indenture provides that, within 90 days after the occurrence of any
Event of Default thereunder with respect to the Debt Securities of any series,
the Trustee shall transmit, in the manner set forth in the Indenture, notice of
such Event of Default to the holders of the Debt Securities of such series
unless such Event of Default has been cured or waived; provided, however, that
except in the case of a default in the payment of principal of, or premium, if
any, or interest, if any, or additional amounts, if any, on any Debt Security of
such series, the Trustee may withhold such notice if and so long as the board of
directors, the executive committee or a trust committee of directors or
Responsible Officers of the Trustee has in good faith determined that the
withholding of such notice is in the interest of the holders of Debt Securities
of such series. (Section 602)
If an Event of Default occurs and is continuing with respect to the Debt
Securities of any series, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the holders of Debt Securities of such
series by all appropriate judicial proceedings. (Section 504)
The Indenture provides that, subject to the duty of the Trustee during any
default to act with the required standard of care, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the holders of Debt Securities, unless such
13
<PAGE> 15
holders shall have offered to the Trustee reasonable indemnity. (Section 601)
Subject to such provisions for the indemnification of the Trustee, and subject
to applicable law and certain other provisions of the Indenture, the holders of
a majority in aggregate principal amount of the outstanding Debt Securities of a
series will have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred on the Trustee, with respect to the Debt Securities of such
series. (Section 512)
Company's Obligation to Purchase Debt Securities on Change in Control
Upon the occurrence of a "Change in Control" as defined in the Indenture,
the Company shall mail within 15 days of the occurrence of such Change in
Control written notice regarding such Change in Control to the Trustee of the
Debt Securities of each series and to every holder thereof, after which the
Company shall be obligated, at the election of each holder thereof, to purchase
such Debt Securities. Under the Indenture, a "Change in Control" is deemed to
occur upon (a) the occurrence of any event requiring the filing of any report
under or in response to Schedule 13D or 14D-1 pursuant to the Exchange Act
disclosing beneficial ownership of either (i) 50% or more of the Company's
Common Stock then outstanding, or (ii) 50% or more of the voting power of the
voting stock of the Company then outstanding, (b) the consummation of sale,
transfer, lease, or conveyance of the Company's properties and assets
substantially as an entirety to any Person or Persons who are not Subsidiaries
of the Company; and (c) the consummation of any consolidation of the Company
with or merger of the Company into any other Person in a transaction in which
either (i) the Company is not the sole surviving corporation or (ii) Common
Stock existing prior to such transaction is converted into cash, securities or
other property and those exchanging the Company's Common Stock do not receive
either (x) 75% or more of the survivor's common stock or (y) 75% or more of the
voting power of the survivor's voting stock, following the consummation of such
transaction. The notice to be sent to every Trustee and holder upon a Change in
Control shall, in addition, be published at least once in an Authorized
Newspaper (as defined in the Indenture) and shall state (a) the event causing
the Change in Control and the date thereof, (b) the date by which notice of such
Change in Control is required by the Indenture to be given, (c) the date (which
date shall be 35 business days after the occurrence of the Change in Control) by
which the Company shall purchase Debt Securities to be purchased pursuant to the
selling holder's exercise of rights on Change in Control (the "Change in Control
Purchase Date"), (d) the price specified in such Debt Securities for their
purchase by the Company (the "Change in Control Purchase Price"), (e) the name
and address of the Trustee, (f) the procedure for surrendering Debt Securities
to the Trustee or other designated office or agent for payment, (g) a statement
of the Company's obligation to make prompt payment on proper surrender of such
Debt Securities, (h) the procedure for holders' exercise of rights of sale of
such Debt Securities by delivery of a "Change in Control Purchase Notice," and
(i) the procedures for withdrawing a Change in Control Purchase Notice. No
purchase of any Debt Securities shall be made if there has occurred and is
continuing an Event of Default under the Indenture (other than default in
payment of the Change in Control Purchase Price). In connection with any
purchase of Debt Securities under this paragraph, the Company will comply with
all Federal and state securities laws, including, specifically, Rule 13E-4, if
applicable, of the Exchange Act, and any related Schedule 13E-4 required to be
submitted under such Rule. (Section 1601)
Discharge, Defeasance and Covenant Defeasance
The Company may discharge certain obligations to holders of any series of
Debt Securities that have not already been delivered to the Trustee for
cancellation and that either have become due and payable or will become due and
payable within one year (or scheduled for redemption within one year) by
depositing with the Trustee, in trust, funds in U.S. dollars or in the Foreign
Currency in which such Debt Securities are payable in an amount sufficient to
pay the entire indebtedness on such Debt Securities with respect to principal
(and premium, if any) and interest to the date of such deposit (if such Debt
Securities have become due and payable) or to the Maturity thereof, as the case
may be. (Section 401)
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<PAGE> 16
The Indenture provides that, unless the provisions of Section 402 thereof
are made inapplicable to the Debt Securities of or within any series pursuant to
Section 301 thereof, the Company may elect either (a) to defease and be
discharged from any and all obligations with respect to such Debt Securities
(except for, among other things, the obligation to pay Additional Amounts, if
any upon the occurrence of certain events of taxation, assessment or
governmental charge with respect to payments on such Debt Securities and other
obligations to register the transfer or exchange of such Debt Securities, to
replace temporary or mutilated, destroyed, lost or stolen Debt Securities, to
maintain an office or agency with respect to such Debt Securities and to hold
moneys for payment in trust) ("defeasance") (Section 402(2)) or (b) to be
released from its obligations with respect to such Debt Securities under the
covenants described in "Limitation on Liens" and "Limitation on Sale/Leaseback
Transactions" above or, if provided pursuant to Section 301 of the Indenture,
its obligations with respect to any other covenant, and any omission to comply
with such obligations shall not constitute a default or an Event of Default with
respect to such Debt Securities ("covenant defeasance"). (Section 402(3))
Defeasance or covenant defeasance, as the case may be, shall be conditioned upon
the irrevocable deposit by the Company with the Trustee, in trust of an amount,
in U.S. dollars or in the Foreign Currency in which such Debt Securities are
payable at Stated Maturity, or Government Obligations (as defined below), or
both, applicable to such Debt Securities which through the scheduled payment of
principal and interest in accordance with their terms will provide money in an
amount sufficient to pay the principal of (and premium, if any) and interest on
such Debt Securities on the scheduled due dates therefor. (Section 402(4))
Such a trust may only be established if, among other things, (i) the
applicable defeasance or covenant defeasance does not result in a breach or
violation of, or constitute a default under, the Indenture or any other material
agreement or instrument to which the Company is a party or by which it is bound,
(ii) no default or Event of Default with respect to the Debt Securities to be
defeased shall have occurred and be continuing on the date of the establishment
of such a trust and (iii) the Company has delivered to the Trustee an Opinion of
Counsel (as specified in the Indenture) to the effect that the holders of such
Debt Securities will not recognize income, gain or loss for U.S. federal income
tax purposes as a result of such defeasance or covenant defeasance and will be
subject to U.S. federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance or covenant
defeasance had not occurred, and such Opinion of Counsel, in the case of
defeasance, must refer to and be based upon a letter ruling of the Internal
Revenue Service received by the Company, a Revenue Ruling published by the
Internal Revenue Service or a change in applicable U.S. federal income tax law
occurring after the date of the Indenture. (Section 402(4)(d) and (e))
"Foreign Currency" means any currency, currency unit or composite currency,
including, without limitation, the ECU, issued by the government of one or more
countries other than the United States of America or by any recognized
confederation or association of such governments. (Section 101)
"Government Obligations" means securities which are (i) direct obligations
of the United States of America or the government or the governments in the
confederation which issued the Foreign Currency in which the Debt Securities of
a particular series are payable, for the payment of which its full faith and
credit is pledged or (ii) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States of America or
such government or governments which issued the Foreign Currency in which the
Debt Securities of such series are payable, the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America or such other government or governments, which, in the case of
clauses (i) and (ii), are not callable or redeemable at the option of the issuer
or issuers thereof, and shall also include a depository receipt issued by a bank
or trust company as custodian with respect to any such Government Obligation or
a specific payment of interest on or principal of or any other amount with
respect to any such Government Obligation held by such custodian for the account
of the holder of such depository receipt, provided that (except as required by
law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian with respect
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to the Government Obligation or the specific payment of interest on or principal
of or any other amount with respect to the Government Obligation evidenced by
such depository receipt. (Section 101)
Unless otherwise provided in the applicable Prospectus Supplement, if after
the Company has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any series,
(a) the holder of a Debt Security of such series is entitled to, and does, elect
pursuant to Section 301 of the Indenture or the terms of such Debt Security to
receive payment in a currency other than that in which such deposit has been
made in respect of such Debt Security, or (b) a Conversion Event (as defined
below) occurs in respect of the Foreign Currency in which such deposit has been
made, the indebtedness represented by such Debt Security shall be deemed to have
been, and will be, fully discharged and satisfied through the payment of the
principal of (and premium, if any) and interest, if any, on such Debt Security
as such Debt Security becomes due out of the proceeds yielded by converting the
amount or other properties so deposited in respect of such Debt Security into
the currency in which such Debt Security becomes payable as a result of such
election or such Conversion Event based on (x) in the case of payments made
pursuant to clause (a) above, the applicable market exchange rate for such
currency in effect on the second business day prior to such payment date, or (y)
with respect to a Conversion Event, the applicable market exchange rate for such
Foreign Currency in effect (as nearly as feasible) at the time of the Conversion
Event. (Section 402(5))
"Conversion Event" means the cessation of use of (i) a Foreign Currency
other than the ECU both by the government of the country or the confederation
which issued such Foreign Currency and for the settlement of transactions by a
central bank or other public institutions of or within the international banking
community, (ii) the ECU both within the European Monetary System and for the
settlement of transactions by public institutions of or within the European
Community or (iii) any currency unit or composite currency other than the ECU
for the purposes for which it was established. Unless otherwise provided in the
applicable Prospectus Supplement, all payments of principal of (and premium, if
any) and interest on any Debt Security that are payable in a Foreign Currency
that ceases to be used by the government or confederation of issuance shall be
made in U.S. dollars.
In the event the Company effects covenant defeasance with respect to any
Debt Securities and such Debt Securities are declared due and payable because of
the occurrence of any Event of Default other than an Event of Default with
respect to Sections 1005 and 1006 of the Indenture (which Sections would no
longer be applicable to such Debt Securities after such covenant defeasance) or
with respect to any other covenant as to which there has been covenant
defeasance, the amount in such Foreign Currency in which such Debt Securities
are payable, and Government Obligations on deposit with the Trustee, will be
sufficient to pay amounts due on such Debt Securities at the time of the Stated
Maturity but may not be sufficient to pay amounts due on such Debt Securities at
the time of the acceleration resulting from such Event of Default. However, the
Company would remain liable to make payment of such amounts due at the time of
acceleration.
The applicable Prospectus Supplement may further describe the provisions,
if any, permitting defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
Under the Indenture, the Company is required to furnish to the Trustee
annually a statement as to performance by the Company of certain of its
obligations under the Indenture and as to any default in such performance. The
Company is also required to deliver to the Trustee, within five days after
occurrence thereof, written notice of any event which after notice or lapse of
time or both would constitute an Event of Default. (Section 1009)
Modification and Waiver
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the holders of not less than a majority in
aggregate principal amount of the Debt Securities of each series affected
thereby; provided, however, that no such modification or amendment may, without
the consent of the holder of each Debt Security affected thereby, (a) change the
Stated Maturity of the
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principal of, or premium, if any, on, or any installment of principal, if any,
of or interest on, or any Additional Amounts with respect to, any Debt Security,
(b) reduce the principal amount of, or premium or interest on, or any Additional
Amounts with respect to any Debt Security, (c) change the coin or currency in
which any Debt Security or any premium or any interest thereon or any Additional
Amounts with respect thereto is payable, (d) impair the right to institute suit
for the enforcement of any payment on or after the Stated Maturity of any Debt
Securities (or, in the case of redemption, on or after the Redemption Date or,
in the case of repayment at the option of any holder, on or after the date for
repayment or in the case of a change in control, after the change in control
purchase date), (e) reduce the percentage and principal amount of the
outstanding Debt Securities, the consent of whose holders is required in order
to take certain actions, (f) change any obligation of the Company to maintain an
office or agency in the places and for the purposes required by the Indenture,
or (g) modify any of the above provisions. (Section 902)
The holders of at least a majority in aggregate principal amount of Debt
Securities of any series may, on behalf of the holders of all Debt Securities of
such series, waive compliance by the Company with certain restrictive provisions
of the Indenture. (Section 1008) The holders of not less than a majority in
aggregate principal amount of Debt Securities of any series may, on behalf of
all holders of Debt Securities of such series, waive any past default and its
consequences under the Indenture with respect to the Debt Securities of such
series, except a default (a) in the payment of principal of (or premium, if any)
or any interest on or any Additional Amounts with respect to Debt Securities of
such series or (b) in respect of a covenant or provision of the Indenture that
cannot be modified or amended without the consent of the holder of each Debt
Security of any series. (Section 513)
Consolidation, Merger and Sale of Assets
The Company may, without the consent of the holders of the Debt Securities,
consolidate or merge with or into, or convey, transfer or lease its properties
and assets substantially as an entirety to, any Person that is a corporation,
limited liability company, partnership or trust organized and validly existing
under the laws of any domestic jurisdiction, or may permit any such Person to
consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, provided that
any successor Person assumes the Company's obligations on the Debt Securities
and under the Indenture, that after giving effect to the transaction no Event of
Default, and no event which, after notice or lapse of time or both, would become
an Event of Default, shall have occurred and be continuing, and that certain
other conditions are met. (Section 801)
Concerning the Trustee
Unless otherwise specified in the applicable Prospectus Supplement, The
Chase Manhattan Bank, New York, New York, successor to Chemical Bank, will be
the Trustee under the Indenture.
DTC BOOK-ENTRY-ONLY SYSTEM
Unless otherwise indicated in the applicable Prospectus Supplement, the
Debt Securities will be registered under a book-entry-only system maintained by
The Depository Trust Company, New York, New York ("DTC"). The book-entry-only
system will evidence ownership interests in the Debt Securities in
book-entry-only form. Purchasers of ownership interests in the Debt Securities
will not receive certificates representing their interests in the Debt
Securities purchased. Transfers of ownership interests will be effected on the
records of DTC and its participating organizations (the "DTC Participants")
pursuant to rules and procedures established by DTC.
Certain of the following information concerning the procedures and record
keeping with respect to ownership interests in the Debt Securities, payment of
interest and other payments on the Debt Securities to DTC Participants or
Beneficial Owners (as hereafter defined), confirmation and transfer of ownership
interests in the Debt Securities and other related transactions by and between
DTC, the DTC Participants and Beneficial Owners is based solely on information
contained in a published report of DTC.
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DTC, an automated clearinghouse for securities transactions, will act as
securities depository for the Debt Securities. DTC is a limited-purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the 1934 Act. DTC was created to hold securities of
the DTC Participants and to facilitate the clearance and settlement of
securities transactions among DTC Participants in such securities through
electronic book-entry changes in accounts of the DTC Participants, thereby
eliminating the need for physical movement of security certificates. DTC
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations, some of which (and/or
their representatives) own DTC. Access to the DTC system is also available to
others such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a DTC Participant, either directly or
indirectly (the "Indirect Participants").
The ownership of the fully-registered Debt Securities will be registered in
the name of Cede & Co., as nominee for DTC. Ownership interests in the Debt
Securities may be purchased by or through DTC Participants and will be recorded
on the records of the DTC Participants, whose interests in turn will be recorded
on a computerized book-entry-only system operated by DTC. Such DTC Participants
and the person for whom they acquire interests in the Debt Securities as
nominees ("Beneficial Owner") will not receive Debt Security certificates, but
each such DTC Participant will receive a credit balance in the records of DTC in
the amount of such DTC Participant's interest in the Debt Securities, which will
be confirmed in accordance with DTC's standard procedures. Each such Beneficial
Owner for whom a DTC Participant acquires an interest in the Debt Securities, as
nominee, may desire to make arrangements with such DTC Participant to have all
communications of the Company and the Trustee to DTC which may affect such
Beneficial Owner forwarded in writing by such DTC Participant and to have
notifications made of all payments of principal and interest with respect to his
beneficial interest. The Company and the Trustee will treat DTC (or its nominee)
as the sole and exclusive owner of the Debt Securities registered in its name
for the purposes of payment of the principal and interest on the Debt
Securities, giving any notice permitted or required to be given to holders under
the Indenture, registering the transfer of Debt Securities, and for all other
purposes whatsoever, and shall not be affected by any notice to the contrary.
The Company and the Trustee shall not have any responsibility or obligation to
any DTC Participant, any person claiming a beneficial ownership interest in the
Debt Securities under or through DTC or any DTC Participant, or any other person
which is not shown on the registration books of the Trustee as being a holder,
with respect to: (i) the accuracy of any records maintained by DTC or any DTC
Participant; (ii) the payment by DTC or any DTC Participant of any amount in
respect of the principal or interest on the Debt Securities; (iii) any notice
which is permitted or required to be given to holders thereunder or under the
conditions to transfers or exchanges adopted by the Company; or (iv) any other
action taken by DTC as a holder. Principal and interest on the Debt Securities
will be paid by the Trustee. Disbursement of such payments to the DTC
Participants is the responsibility of DTC and disbursement of such payments to
the Beneficial Owners is the responsibility of the DTC Participants or the
Indirect Participants. NEITHER THE COMPANY NOR THE TRUSTEE WILL HAVE ANY
RESPONSIBILITY OR OBLIGATIONS TO SUCH DTC PARTICIPANTS OR THE PERSONS FOR WHOM
THEY ACT AS NOMINEES WITH RESPECT TO THE PAYMENTS TO OR THE PROVIDING OF NOTICE
FOR THE DTC PARTICIPANTS, OR THE INDIRECT PARTICIPANTS, OR THE BENEFICIAL
OWNERS.
SO LONG AS CEDE & CO., AS NOMINEE OF DTC, IS THE REGISTERED OWNER OF THE
DEBT SECURITIES, REFERENCES HEREIN TO THE SECURITY HOLDERS OR REGISTERED OWNERS
OF THE DEBT SECURITIES SHALL MEAN CEDE & CO., AND SHALL NOT MEAN THE BENEFICIAL
OWNERS.
For every transfer and exchange of beneficial ownership of Debt Securities,
a Beneficial Owner may be charged a sum sufficient to cover any tax, fee or
other governmental charge that may be imposed in relation thereto.
When reference is made to any action which is required or permitted to be
taken by the Beneficial Owners, such reference shall only relate to action by
such Beneficial Owner, or others permitted to act (by statute, regulation or
otherwise) on behalf of such Beneficial Owners for such purposes. When
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notices are given, they shall be sent by the Trustee to DTC only. Conveyance of
notices and other communications by DTC to DTC Participants and Indirect
Participants and in turn by DTC Participants and Indirect Participants to
Beneficial Owners will be governed by arrangements among them, subject to any
statutory and regulatory requirements then in effect.
Principal and interest payments on the Debt Securities will be made to DTC
or its nominee, Cede & Co., as registered owner of the Debt Securities. Upon
receipt of any such payments, DTC's current practice is to immediately credit
the accounts of the DTC Participants in accordance with their respective
holdings shown on the records of DTC. Payments by DTC Participants and Indirect
Participants to Beneficial Owners will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such DTC Participant or Indirect Participant.
DTC may determine to discontinue providing its services with respect to the
Debt Securities at any time by giving notice to the Company and discharging its
responsibilities with respect thereto under applicable law. In addition, the
Company may determine that continuation of the system of book-entry-only
transfers through DTC (or a successor securities depository) is not in the best
interests of the Beneficial Owners or is burdensome to the Company. If for
either reason the book-entry-only system is discontinued, certificates for the
Debt Securities will be delivered to the Beneficial Owners thereof.
Certain of the information contained in this sub-section has been extracted
from a report from DTC. No representation is made by the Company as to the
completeness or the accuracy of such information or as to the absence of
material adverse changes in such information subsequent to the date hereof.
Same-Day Settlement and Payment
Unless otherwise indicated in the applicable Prospectus Supplement,
settlement for the Debt Securities will be made by a purchaser in immediately
available funds. While the Debt Securities are in the book-entry-only system
described above, all payments of principal and interest will be made by the
Trustee on behalf of the Company to DTC in immediately available funds.
Secondary trading in long-term debt securities is generally settled in
clearing-house or next-day funds. Unless otherwise set forth in the applicable
Prospectus Supplement, while the Debt Securities are in the book-entry-only
system described above, they will trade in DTC's Same-Day Fund Settlement System
until maturity. During such period, secondary market trading activity in the
Debt Securities will settle in immediately available funds. No assurance can be
given as to the effect, if any, of settlement in immediately available funds on
the trading activity in the Debt Securities.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary, which is based upon the advice of Woodard, Hall &
Primm, P.C., Houston, Texas, special tax counsel to the Company whose opinion is
set forth herein, of certain United States Federal income tax consequences of
the purchase, ownership and disposition of the Debt Securities is based upon
laws, regulations, rulings and decisions now in effect, all of which are subject
to change or possible differing interpretations. It deals only with Debt
Securities held as capital assets and does not purport to deal with persons in
special tax situations, such as financial institutions, insurance companies,
regulated investment companies, dealers in securities or currencies, persons
holding Debt Securities as a hedge against currency risks or as a position in a
"straddle" for tax purposes, or persons whose functional currency is not the
United States dollar. It also does not deal with holders other than original
purchasers (except where otherwise specifically noted). Persons considering the
purchase of the Debt Securities should consult their own tax advisors concerning
the application of United States Federal income tax laws to their particular
situations as well as any consequences of the purchase, ownership and
disposition of the Debt Securities arising under the laws of any other taxing
jurisdiction.
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As used herein, the term "U.S. Holder" means a beneficial owner of a Debt
Security that is for United States Federal income tax purposes (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any
political subdivision thereof, (iii) an estate or trust the income of which is
subject to United States Federal income taxation regardless of its source or
(iv) any other person whose income or gain in respect of a Debt Security is
effectively connected with the conduct of a United States trade or business. As
used herein, the term "non-U.S. Holder" means a holder of a Debt Security that
is not a U.S. Holder.
U.S. Holders
Payments of Interest. Payments of interest on a Debt Security generally
will be taxable to a U.S. Holder as ordinary interest income at the time such
payments are accrued or are received (in accordance with the U.S. Holder's
regular method of tax accounting).
Original Issue Discount. The following summary is a general discussion of
the United States Federal income tax consequences to U.S. Holders of the
purchase, ownership and disposition of Debt Securities issued with original
issue discount ("Discount Debt Securities"). The following summary is based upon
final Treasury regulations (the "1994 Regulations"), which were released by the
Internal Revenue Service ("IRS") on January 27, 1994 under the original issue
discount provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), and amended by final Treasury regulations released by the IRS on June
11, 1996 (the "Final 1996 Regulations"). The 1994 Regulations, as amended by the
Final 1996 Regulations, are referred to for purposes of this summary as the "OID
Regulations." The OID Regulations generally apply to variable rate debt
instruments issued on or after April 4, 1994, and the Final 1996 Regulations
apply to contingent payment debt instruments issued on or after August 13, 1996.
For United States Federal income tax purposes, original issue discount is
the excess of the stated redemption price at maturity of a Debt Security over
its issue price, if such excess equals or exceeds a de minimis amount (generally
1/4 of 1% of the Debt Security's stated redemption price at maturity multiplied
by the number of complete years to its maturity from its issue date or, in the
case of a Debt Security providing for the payment of any amount other than
qualified stated interest, as defined below, prior to maturity, multiplied by
the weighted average maturity of such Debt Security). The issue price of an
issue of Debt Securities equals the first price at which a substantial amount of
such Debt Securities has been sold (ignoring sales to bond houses, brokers, or
similar persons or organizations acting in the capacity of underwriters,
placement agents or wholesalers). The stated redemption price at maturity of a
Debt Security is the sum of all payments provided by the Debt Security other
than "qualified stated interest" payments. The term "qualified stated interest"
generally means stated interest that is unconditionally payable in cash or
property (other than debt instruments of the issuer) at least annually at a
single fixed rate. In addition, under the OID Regulations, if a Debt Security
bears interest for one or more accrual periods at a rate below the rate
applicable for the remaining term of such Debt Security (e.g., Debt Securities
with teaser rates or interest holidays), and if the greater of either the
resulting foregone interest on such Debt Security or any "true" discount on such
Debt Security (i.e., the excess of the Debt Security's stated principal amount
over its issue price) equals or exceeds a specified de minimis amount, then the
stated interest on the Debt Security would be treated as original issue discount
rather than qualified stated interest.
Payments of qualified stated interest on a Debt Security are taxable to a
U.S. Holder as ordinary interest income at the time such payments are accrued or
are received (in accordance with the U.S. Holder's regular method of tax
accounting). A U.S. Holder of a Discount Debt Security must include original
issue discount in income as ordinary interest for United States Federal income
tax purposes as it accrues over the entire term of the Discount Debt Security
under a constant yield method in advance of receipt of the cash payments
attributable to such income, regardless of such U.S. Holder's regular method of
tax accounting. In general, the amount of original issue discount includible in
income by the initial U.S. Holder of a Discount Debt Security is the sum of the
daily portions of original issue discount with respect to such Discount Debt
Security for each day during the taxable year (or portion of the
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taxable year) on which such U.S. Holder held such Discount Debt Security. The
"daily portion" of original issue discount on any Discount Debt Security is
determined by allocating to each day in any accrual period a ratable portion of
the original issue discount allocable to that accrual period. An "accrual
period" may be of any length and the accrual period may vary in length over the
term of the Discount Debt Security, provided that each accrual period is no
longer than one year and each scheduled payment of principal or interest occurs
either on the final day of an accrual period or on the first day of an accrual
period. The amount of original issue discount allocable to each accrual period
is generally equal to the difference between (i) the product of the Discount
Debt Security's adjusted issue price at the beginning of such accrual period and
its yield to maturity (determined on the basis of compounding at the close of
each accrual period and appropriately adjusted to take into account the length
of the particular accrual period) and (ii) the amount of any qualified stated
interest payments, allocable to such accrual period. The "adjusted issue price"
of a Discount Debt Security at the beginning of any accrual period is the sum of
the issue price of the Discount Debt Security plus the amount of original issue
discount allocable to all prior accrual periods minus the amount of any prior
payments on the Discount Debt Security that were not qualified stated interest
payments. Under these rules, U.S. Holders generally will have to include in
income increasingly greater amounts of original issue discount in successive
accrual periods.
A U.S. Holder who purchases a Discount Debt Security for an amount that is
greater than its adjusted issue price as of the purchase date and less than or
equal to the sum of all amounts payable on the Discount Debt Security after the
purchase date, other than payments of qualified stated interest, will be
considered to have purchased the Discount Debt Security at an "acquisition
premium." Under the acquisition premium rules, the amount of original issue
discount which such U.S. Holder must include in its gross income with respect to
such Discount Debt Security for any taxable year (or portion thereof in which
the U.S. Holder holds the Discount Debt Security) will be reduced (but not below
zero) by the portion of the acquisition premium properly allocable to the
period.
Under the OID Regulations, Debt Securities that provide for stated interest
at one or more variable interest rates ("Floating Rate Debt Securities") are
subject to special rules whereby a Floating Rate Debt Security will qualify as a
"variable rate debt instrument" if (a) its issue price does not exceed the total
noncontingent principal payments due under the Floating Rate Debt Security by
more than a specified de minimis amount; (b) it provides for stated interest,
paid or compounded at least annually, at current values of (i) one or more
qualified floating rates, (ii) a single fixed rate and one or more qualified
floating rates, (iii) a single objective rate, or (iv) a single fixed rate and a
single objective rate that is a qualified inverse floating rate; (c) it provides
that the qualified floating rate or single objective rate in effect at any time
equals a current value of that rate; and (d) it does not provide for any
payments of principal that are contingent.
A "qualified floating rate" is any variable rate where variations in the
value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
Floating Rate Debt Security is denominated. Although a multiple of a qualified
floating rate will generally not itself constitute a qualified floating rate, a
variable rate equal to the product of a qualified floating rate and a fixed
multiple that is greater than 0.65 but not more than 1.35 will constitute a
qualified floating rate. A variable rate equal to the product of a qualified
floating rate and a fixed multiple that is greater than 0.65 but not more than
1.35, increased or decreased by a fixed rate, will also constitute a qualified
floating rate. In addition, under the OID Regulations, two or more qualified
floating rates that can reasonably be expected to have approximately the same
values throughout the term of the Floating Rate Debt Security (e.g., two or more
qualified floating rates with values within 25 basis points of each other as
determined on the Floating Rate Debt Security's issue date) will be treated as a
single qualified floating rate. Notwithstanding the foregoing, a variable rate
that would otherwise constitute a qualified floating rate but which is subject
to one or more restrictions such as a maximum numerical limitation (i.e., a cap)
or a minimum numerical limitation (i.e., a floor) may under certain
circumstances, fail to be treated as a qualified floating rate under the OID
Regulations. An "objective rate" is a rate that is not itself a qualified
floating rate but which is determined using a single fixed formula and which is
based upon objective financial or economic information. A rate unique to the
circumstances
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of the issuer or a related party, or based on information within the control of
the issuer or related party, would not qualify as an objective rate, but a rate
based on the credit quality of the issuer would not, solely on that basis, be
disqualified as an objective rate. The OID Regulations also provide that other
variable interest rates may be treated as objective rates if so designated by
the IRS in the future. Despite the foregoing, a variable rate of interest on a
Floating Rate Debt Security will not constitute an objective rate if it is
reasonably expected that the average value of such rate during the first half of
the Floating Rate Debt Security's term will be either significantly less than or
significantly greater than the average value of the rate during the final half
of the Floating Rate Debt Security term.
A "qualified inverse floating rate" is any objective rate where such rate
is equal to a fixed rate minus a qualified floating rate, as long as variations
in the rate can reasonably be expected to inversely reflect contemporaneous
variations in the cost of newly borrowed funds. The OID Regulations also provide
that if a Floating Rate Debt Security provides for stated interest at a fixed
rate for an initial period of less than one year followed by a variable rate
that is either a qualified floating rate or an objective rate and if the
variable rate on the Floating Rate Debt Security's issue date is intended to
approximate the fixed rate (e.g., the value of the variable rate on the issue
date does not differ from the value of the fixed rate by more than 25 basis
points), then the fixed rate and the variable rate together will constitute
either a single qualified floating rate or objective rate, as the case may be.
If a Floating Rate Debt Security that provides for stated interest at
either a single qualified floating rate or a single objective rate throughout
the term thereof qualifies as a "variable rate debt instrument" under the OID
Regulations, then any stated interest on such Debt Security which is
unconditionally payable in cash or property (other than debt instruments of the
issuer) at least annually will constitute qualified stated interest and will be
taxed accordingly. Thus, a Floating Rate Debt Security that provides for stated
interest at either a single qualified floating rate or a single objective rate
throughout the term thereof and that qualifies as a "variable rate debt
instrument" under the OID Regulations will generally not be treated as having
been issued with original issue discount unless the Floating Rate Debt Security
is issued at a "true" discount (i.e., at a price below the Debt Security's
stated principal amount) in excess of a specified de minimis amount. Original
issue discount on such a Floating Rate Debt Security arising from "true"
discount is allocated to an accrual period using the constant yield method
described above by assuming that the variable rate is a fixed rate equal to (i)
in the case of a qualified floating rate or qualified inverse floating rate, the
value, as of the issue date, of the qualified floating rate or qualified inverse
floating rate, or (ii) in the case of an objective rate (other than a qualified
floating rate or qualified inverse floating rate), a fixed rate that reflects
the yield that is reasonably expected for the Floating Rate Debt Security.
Qualified stated interest allocable to an accrual period will be increased (or
decreased) if the interest actually paid during the accrual period exceeds (or
is less than) the interest assumed to be paid during the accrual period,
according to the formula set forth in the preceding sentence.
In general, any other Floating Rate Debt Security that qualifies as a
"variable rate debt instrument" will be converted into an "equivalent" fixed
rate debt instrument for purposes of determining the amount and accrual of
original issue discount and qualified stated interest on the Floating Rate Debt
Security. The OID Regulations generally require that such a Floating Rate Debt
Security be converted into an "equivalent" fixed rate debt instrument by
substituting any qualified floating rate or qualified inverse floating rate
provided for under the terms of the Floating Rate Debt Security with a fixed
rate equal to the value of the qualified floating rate or qualified inverse
floating rate, as the case may be, as of the Floating Rate Debt Security's issue
date. Any objective rate (other than a qualified inverse floating rate) provided
for under the terms of the Floating Rate Debt Security is converted into a fixed
rate that reflects the yield that is reasonably expected for the Floating Rate
Debt Security. In the case of a Floating Rate Debt Security that qualifies as a
"variable rate debt instrument" and provides for stated interest at a fixed rate
in addition to either one or more qualified floating rates or a qualified
inverse floating rate, the fixed rate is initially converted into a qualified
floating rate (or a qualified inverse floating rate, if the Floating Rate Debt
Security provides for a qualified inverse floating rate). Under such
circumstances, the qualified floating rate or qualified inverse floating rate
that replaces the fixed rate must be such that the fair market value of the
Floating Rate Debt Security as of the Floating Rate Debt Security's issue date
is approximately the
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same as the fair market value of an otherwise identical debt instrument that
provides for either the qualified floating rate or qualified inverse floating
rate rather than the fixed rate. Subsequent to converting the fixed rate into
either a qualified floating rate or a qualified inverse floating rate, the
Floating Rate Debt Security is then converted into an "equivalent" fixed rate
debt instrument in the manner described above.
Once the Floating Rate Debt Security is converted into an "equivalent"
fixed rate debt instrument pursuant to the foregoing rules, the amount of
original issue discount and qualified stated interest, if any, are determined
for the "equivalent" fixed rate debt instrument by applying the general original
issue discount rules to the "equivalent" fixed rate debt instrument and a U.S.
Holder of the Floating Rate Debt Security will account for such original issue
discount and qualified stated interest as if the U.S. Holder held the
"equivalent" fixed rate debt instrument. Each accrual period appropriate
adjustments will be made to the amount of qualified stated interest or original
issue discount assumed to have been accrued or paid with respect to the
"equivalent" fixed rate debt instrument in the event that such amounts differ
from the actual amount of interest accrued or paid on the Floating Rate Debt
Security during the accrual period.
If a Floating Rate Debt Security does not qualify as a "variable rate debt
instrument" under the OID Regulations, the Floating Rate Debt Security would be
treated as a contingent payment debt obligation. The Final 1996 Regulations
generally apply to contingent payment debt obligations issued on or after August
13, 1996. The proper United States Federal income tax treatment of Floating Rate
Debt Securities that are treated as contingent payment debt obligations will be
more fully described in the applicable Pricing Supplement. Furthermore, any
other special United States Federal income tax considerations not otherwise
discussed herein, which are applicable to any particular issue of Floating Rate
Debt Securities, will be discussed in the applicable Prospectus Supplement.
Certain of the Debt Securities (i) may be redeemable at the option of the
Company prior to their stated maturity (a "call option") and/or (ii) may be
repayable at the option of the holder prior to their stated maturity (a "put
option"). Debt Securities containing such features may be subject to rules that
differ from the general rules discussed above. Investors intending to purchase
Debt Securities with such features should consult their own tax advisors, since
the original issue discount consequences will depend, in part, on the particular
terms and features of the purchased Debt Securities. Additionally, upon the
occurrence of a "Change in Control" as defined in the Indenture, each Holder of
Debt Securities of any series then outstanding may elect, by proper execution
and delivery of a Change in Control Purchase Notice, to require the Company to
purchase such Debt Securities prior to their stated maturity. The original issue
discount consequences of such an election and purchase will depend on the
particular terms and features of the Debt Securities, and Holders should consult
their own tax advisors prior to making such an election.
U.S. Holders may generally, upon election, include in income all interest
(including stated interest, acquisition discount, original issue discount, de
minimis original issue discount, market discount, de minimis market discount,
and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium) that accrues on a debt instrument by using the constant
yield method applicable to original issue discount, subject to certain
limitations and exceptions. This election is only available for debt instruments
acquired on or after April 4, 1994.
Market Discount. If a U.S. Holder purchases a Debt Security, other than a
Discount Debt Security, for an amount that is less than its issue price (or, in
the case of a subsequent purchaser, its stated redemption price at maturity) or,
in the case of a Discount Debt Security, for an amount that is less than its
adjusted issue price as of the purchase date, such U.S. Holder will be treated
as having purchased such Debt Security "market discount," unless such market
discount is less than a specified de minimis amount.
Under the market discount rules a U.S. Holder will be required to treat any
partial principal payment (or, in the case of a Discount Debt Security, any
payment that does not constitute qualified stated interest) on, or any gain
realized on the sale, exchange, retirement or other disposition of, a Debt
Security
23
<PAGE> 25
as ordinary income to the extent of the lesser of (i) the amount of such payment
or realized gain or (ii) the market discount which has not previously been
included in income and is treated as having accrued on such Debt Security at the
time of such payment or disposition. Market discount will be considered to
accrue ratably during the period from the date of acquisition to the maturity
date of the Debt Security, unless the U.S. Holder elects to accrue market
discount on the basis of semiannual compounding.
A U.S. Holder may be required to defer the deduction of all or a portion of
the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry a Debt Security with market discount until the maturity of the
Debt Security or its earlier disposition in a taxable transaction, because a
current deduction is only allowed to the extent the interest expense exceeds an
allocable portion of market discount. A U.S. Holder may elect to include market
discount in income currently as it accrues (on either a ratable or semiannual
compounding basis), in which case the rules described above regarding the
treatment as ordinary income of gain upon the disposition of the Debt Security
and upon the receipt of certain cash payments and regarding the deferral of
interest deductions will not apply. Generally, such currently included market
discount is treated as ordinary interest for United States Federal income tax
purposes.
Premium. If a U.S. Holder purchases a Debt Security for an amount that is
greater than the sum of all amounts payable on the Debt Security after the
purchase date other than payments of qualified stated interest, such U.S. Holder
will be considered to have purchased the Debt Security with "amortizable bond
premium" equal in amount to such excess. A U.S. Holder may elect to amortize
such premium using a constant yield method over the remaining term of the Debt
Security and may offset interest otherwise required to be included in respect of
the Debt Security during any taxable year by the amortized amount of such excess
for the taxable year. However, if the Debt Security may be optionally redeemed
after the U.S. Holder acquires it at a price in excess of its stated redemption
price at maturity, special rules would apply which could result in a deferral of
the amortization of some bond premium until later in the term of the Debt
Security.
Disposition of a Debt Security. Except as discussed above, upon the sale,
exchange or retirement of a Debt Security, a U.S. Holder generally will
recognize taxable gain or loss equal to the difference between the amount
realized on the sale, exchange or retirement and such U.S. Holder's adjusted tax
basis in the Debt Security. A U.S. Holder's adjusted tax basis in a Debt
Security generally will equal such U.S. Holder's initial investment in the Debt
Security increased by any original issue discount included in income (and
accrued market discount, if any, if the U.S. Holder has included such market
discount in income) and decreased by the amount of any payments, other than
qualified stated interest payments, received and amortizable bond premium taken
with respect to such Debt Security. Such gain or loss generally will be
long-term capital gain or loss if the Debt Security were held for more than one
year.
Foreign Currency Debt Securities. Any special United States Federal income
tax considerations applicable to Debt Securities that provide for the payment of
principal, premium (if any) or interest in a currency other than U.S. dollars
will be discussed in the applicable Prospectus Supplement.
Non-U.S. Holders
A non-U.S. Holder will not be subject to United States Federal income taxes
on payments of principal, premium (if any) or interest (including original issue
discount, if any) on a Debt Security, unless such non-U.S. Holder is a direct or
indirect 10% or greater shareholder of the Company, a controlled foreign
corporation related to the Company or a bank receiving interest described in
section 881(c)(3)(A) of the Code. To qualify for the exemption from taxation,
the last United States payor in the chain of payment prior to payment to a
non-U.S. Holder (the "Withholding Agent") must have received in the year in
which a payment of interest or principal occurs, or in either of the two
preceding calendar years, a statement that (i) is signed by the beneficial owner
of the Debt Security under penalties of perjury, (ii) certifies that such owner
is not a U.S. Holder and (iii) provides the name and address of the beneficial
owner. The statement may be made on an IRS Form W-8 or a substantially
24
<PAGE> 26
similar form, and the beneficial owner must inform the Withholding Agent of any
change in the information on the statement within 30 days of such change. If a
Debt Security is held through a securities clearing organization or certain
other financial institutions, the organization or institution may provide a
signed statement to the Withholding Agent. However, in such case, the signed
statement must be accompanied by a copy of the IRS Form W-8 or the substitute
form provided by the beneficial owner to the organization or institution. The
Treasury Department is considering implementation of further certification
requirements aimed at determining whether the issuer of a debt obligation is
related to holders thereof.
Generally, a non-U.S. Holder will not be subject to Federal income taxes on
any amount which constitutes capital gain upon retirement or disposition of a
Debt Security, provided the gain is not effectively connected with the conduct
of a trade or business in the United States by the non-U.S. Holder. Certain
other exceptions may be applicable, and a non-U.S. Holder should consult its tax
advisor in this regard.
The Debt Securities will not be includible in the estate of a non-U.S.
Holder unless the individual is a direct or indirect 10% or greater shareholder
of the Company or, at the time of such individual's death, payments in respect
of the Debt Securities would have been effectively connected with the conduct by
such individual of a trade or business in the United States.
Backup Withholding
Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments made in respect of the Debt Securities to registered owners
who are not "exempt recipients" and who fail to provide certain identifying
information (such as the registered owner's taxpayer identification number) in
the required manner. Generally, individuals are not exempt recipients, whereas
corporations and certain other entities generally are exempt recipients.
Payments made in respect of the Debt Securities to a U.S. Holder must be
reported to the IRS, unless the U.S. Holder is an exempt recipient or
establishes an exemption. Compliance with the identification procedures
described in the preceding section would establish an exemption from backup
withholding for those non-U.S. Holders who are not exempt recipients.
In addition, upon the sale of a Debt Security to (or through) a broker, the
broker must withhold 31% of the entire purchase price, unless either (i) the
broker determines that the seller is a corporation or other exempt recipient or
(ii) the seller provides, in the required manner, certain identifying
information and, in the case of a non-U.S. Holder, certifies that such seller is
a non-U.S. Holder (and certain other conditions are met). Such a sale must also
be reported by the broker to the IRS, unless either (i) the broker determines
that the seller is an exempt recipient or (ii) the seller certifies its non-U.S.
status (and certain other conditions are met). Certification of the registered
owner's non-U.S. status would be made normally on an IRS Form W-8 under
penalties of perjury, although in certain cases it may be possible to submit
other documentary evidence.
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities (i) through underwriters or
dealers, (ii) directly to a limited number of institutional purchasers or to a
single purchaser, (iii) through agents, or (iv) through any combination of the
above. An accompanying Prospectus Supplement will set forth the terms of the
offering of the Debt Securities offered thereby, including the name or names of
any underwriters, the purchase price of the Debt Securities and the net proceeds
to the Company from such sale, any underwriting discounts and other items
constituting underwriters' compensation, any initial public offering price and
any discounts or concessions allowed or reallowed or paid to dealers.
25
<PAGE> 27
If underwriters are used in the sale of Debt Securities, such Debt
Securities will be acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Unless otherwise set forth in the Prospectus Supplement,
the several obligations of the underwriters to purchase any Debt Securities
offered thereby will be subject to certain conditions precedent and the
underwriters will be obligated to take and pay for all of such Debt Securities,
if any are taken.
The Debt Securities may be sold directly by the Company or through
underwriters or agents designated by the Company from time to time. Any agent
involved in the offer or sale of the Debt Securities will be named, and any
commissions payable by the Company to such agents will be set forth, in an
accompanying Prospectus Supplement. Unless otherwise indicated in such
Prospectus Supplement, any such agent will be acting on a reasonable efforts
basis for the period of its appointment.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters or other persons acting as the Company's agents to solicit offers
by certain institutions to purchase Debt Securities from the Company pursuant to
contracts providing for payment and delivery on a future date. Institutions with
which such contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases such institutions must be approved by
the Company. The obligations of any purchaser under such contract will be
subject to the condition that the purchase of the offered Debt Securities shall
not at the time of delivery be prohibited under the laws of the jurisdiction to
which such purchaser is subject. The underwriters and such other agents will not
have any responsibility in respect to the validity of performance of such
contracts.
Certain of the underwriters or agents and their associates may be customers
of, engage in transactions with and perform services for the Company in the
ordinary course of business.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil liabilities,
including liabilities under the Securities Act.
The place and time of delivery for the Debt Securities in respect of which
this Prospectus is delivered are set forth in the accompanying Prospectus
Supplement.
LEGAL MATTERS
Certain legal matters regarding the Debt Securities offered hereby under
laws other than federal or state securities laws have been passed upon for the
Company by its Vice President and General Counsel, Z. S. Kobiashvili. As of the
date of this Prospectus, Mr. Kobiashvili owns 960 shares of Apache Common Stock
through the Company's retirement/401(k) savings plan and holds employee stock
options to purchase 24,900 shares of Apache Common Stock, of which options to
purchase 7,000 shares are currently exercisable. Certain legal matters will also
be passed upon for the Company by Woodard, Hall & Primm, P.C., Houston, Texas,
and for any of the underwriters or agents by counsel to be named by such
underwriters or agents.
EXPERTS
The audited consolidated financial statements of the Company and the
audited consolidated financial statements of The Phoenix Resource Companies,
Inc., each incorporated by reference into this Prospectus, have been audited by
Arthur Andersen LLP, independent public accountants ("Arthur Andersen"), as
indicated in their reports with respect thereto. In Arthur Andersen's report on
the consolidated financial statements of the Company, that firm states that with
respect to DEKALB, as of and for the years ended December 31, 1993 and 1994, its
opinion is based on the report of other independent public accountants, namely
Coopers & Lybrand, Chartered Accountants. The financial
26
<PAGE> 28
statements referred to above have been incorporated by reference herein in
reliance upon the authority of those firms as experts in accounting and auditing
in giving said reports.
The audited consolidated financial statements of DEKALB incorporated by
reference into this Prospectus have been audited by Coopers & Lybrand, Chartered
Accountants, as indicated in their report with respect thereto, and have been
incorporated by reference herein in reliance upon the authority of that firm as
experts in accounting and auditing in giving said report.
The information incorporated by reference herein regarding the total proved
reserves of the Company was prepared by the Company and reviewed by Ryder Scott
Company Petroleum Engineers ("Ryder Scott"), as stated in their letter reports
with respect thereto, and is so incorporated by reference in reliance upon the
authority of said firm as experts in such matters. The information incorporated
by reference herein regarding the total estimated proved reserves acquired from
Texaco Exploration and Production Inc. was prepared by the Company and reviewed
by Ryder Scott, as stated in their letter reports with respect thereto, and is
so incorporated by reference in reliance upon the authority of said firm as
experts in such matters. The information incorporated by reference herein
regarding the total proved reserves of DEKALB was prepared by DEKALB and for the
four years ended December 31, 1994 was reviewed by Ryder Scott, as stated in
their letter reports with respect thereto, and is so incorporated by reference
in reliance upon the authority of said firm as experts in such matters.
A portion of the information incorporated by reference herein regarding the
total proved reserves of Aquila Energy Resources Corporation ("Aquila") acquired
by the Company was prepared by Netherland, Sewell & Associates, Inc.
("Netherland, Sewell") as of December 31, 1994, as stated in their letter report
with respect thereto, and is so incorporated by reference in reliance upon the
authority of said firm as experts in such matters. Netherland, Sewell did not
review any of the reserves of Aquila acquired during 1995.
27
<PAGE> 29
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Estimated expenses, other than underwriting discounts and commissions, in
connection with the issuance and distribution of the Debt Securities are as
follows:
<TABLE>
<S> <C>
Securities and Exchange Commission filing fee.................... $103,449
Blue Sky fees and expenses....................................... 15,000
Rating agency fees............................................... 50,000
Legal fees and expenses.......................................... 200,000
Accounting fees and expenses..................................... 75,000
Trustee's fees and expenses...................................... 12,000
Printing and engraving........................................... 100,000
Miscellaneous.................................................... 19,551
--------
Total.................................................. $575,000
=========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law, inter alia, authorizes
a corporation to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding (other than an action by or in the right of the corporation) because
such person is or was a director, officer, employee or agent of the corporation
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reason to believe his conduct was
unlawful. Similar indemnity is authorized for such persons against expenses
(including attorneys' fees) actually and reasonably incurred in defense or
settlement of any such pending, completed or threatened action or suit by or in
the right of the corporation if such person acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and provided further that (unless a court of competent jurisdiction
otherwise provides) such person shall not have been adjudged liable to the
corporation. Any such indemnification may be made only as authorized in each
specific case upon a determination by the stockholders or disinterested
directors that indemnification is proper because the indemnitee has met the
applicable standard of conduct.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would otherwise have the power to indemnify him. The Company maintains policies
insuring its and its subsidiaries' officers and directors against certain
liabilities for actions taken in such capacities, including liabilities under
the Securities Act of 1933, as amended.
Article VII of the Company's bylaws provides, in substance, that directors,
officers, employees and agents of the Company shall be indemnified to the extent
permitted by Section 145 of the Delaware General Corporation Law. Additionally,
Article Seventeen of the Company's Restated Certificate of Incorporation
eliminates in certain circumstances the monetary liability of directors of the
Company for a breach of their fiduciary duty as directors. These provisions do
not eliminate the liability of a director (i) for a breach of the director's
duty of loyalty to the corporation or its stockholders; (ii) for acts or
II-1
<PAGE> 30
omissions by the director not in good faith; (iii) for acts or omissions by a
director involving intentional misconduct or a knowing violation of the law;
(iv) under Section 174 of the Delaware General Corporation Law (relating to the
declaration of dividends and purchase or redemption of shares in violation of
the Delaware General Corporation Law); and (v) for transactions from which the
director derived an improper personal benefit.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and controlling
persons of the Company pursuant to the above provisions or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of the
Company in the successful defense of any action, suit or proceeding) is asserted
against the Company by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
Reference is made to Section 6 of the form of Underwriting Agreement filed
as Exhibit 1.1 hereto for a description of the indemnification arrangements the
Company is prepared to make in connection with the proposed offering of the Debt
Securities registered hereby.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<S> <C> <C>
1.1 -- Form of Underwriting Agreement.(1)
4.1 -- Form of Indenture between the Company and The Chase Manhattan Bank, as
Trustee and successor to Chemical Bank, governing the Debt Securities
(incorporated by reference to Exhibit 4.1 to Apache's Registration
Statement on Form S-3, Registration No. 33-63923, filed November 2,
1995).
4.2 -- Form of Debt Securities (Note).(1)
5.1 -- Opinion of legal counsel regarding legality of securities being
registered.(1)
8.1 -- Opinion of Woodard, Hall & Primm, P.C. as to certain United States
federal income tax matters.(1)
12.1 -- Statement of computation of ratio of earnings to fixed charges.(1)
23.1 -- Consent of Arthur Andersen LLP, Houston, Texas.(1)
23.2 -- Consent of Arthur Andersen LLP, Oklahoma City, Oklahoma.(1)
23.3 -- Consent of Coopers & Lybrand, Chartered Accountants.(1)
23.4 -- Consent of Ryder Scott Company Petroleum Engineers.(1)
23.5 -- Consent of Netherland, Sewell & Associates, Inc.(1)
23.6 -- Consent of legal counsel (included in Exhibit 5.1).(1)
23.7 -- Consent of Woodard, Hall & Primm, P.C. (included in Exhibit 8.1).(1)
24.1 -- Power of Attorney (included in Part II as a part of the signature
pages of the Registration Statement).(1)
25.1 -- Statement of Eligibility and Qualification under Trust Indenture Act
of 1939 of The Chase Manhattan Bank, Trustee, is filed separately on
Form T-1.(1)
</TABLE>
- ---------------
(1) Filed herewith.
II-2
<PAGE> 31
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this registration statement
or any material change to such information in this registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Company
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Company's annual report pursuant
to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in this registration statement relating
to the securities offered therein, shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(5) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4), or 497(h) under the Securities Act of 1933 shall be
deemed to be part of this registration statement as of the time it was
declared effective.
(6) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions of Article 15, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-3
<PAGE> 32
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Houston, State of Texas.
APACHE CORPORATION
Date: September 24, 1996 By: /s/ RAYMOND PLANK
--------------------------------
Raymond Plank
Chairman and Chief Executive Officer
POWER OF ATTORNEY
The undersigned directors and officers of Apache Corporation do hereby
constitute and appoint Raymond Plank, G. Steven Farris, Z.S. Kobiashvili and
Mark Jackson, and each of them, with full power of substitution, our true and
lawful attorneys-in-fact to sign and execute, on behalf of the undersigned, any
and all amendments (including post-effective amendments) to this Registration
Statement; and each of the undersigned does hereby ratify and confirm all that
said attorneys-in-fact shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- -------------------------- -------------------
<C> <S> <C>
/s/ RAYMOND PLANK Chairman and Chief September 24, 1996
- --------------------------------------------- Executive Officer
(Raymond Plank) (Principal Executive
Officer)
/s/ MARK A. JACKSON Vice President and Chief September 24, 1996
- --------------------------------------------- Financial Officer
(Mark A. Jackson) (Principal Financial
Officer)
/s/ THOMAS L. MITCHELL Controller and Chief September 24, 1996
- --------------------------------------------- Accounting Officer
(Thomas L. Mitchell) (Principal Accounting
Officer)
</TABLE>
<PAGE> 33
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- -------------------------- -------------------
<S> <C> <C>
/s/ FREDERICK M. BOHEN Director September 24, 1996
- ---------------------------------------------
(Frederick M. Bohen)
/s/ VIRGIL B. DAY Director September 24, 1996
- ---------------------------------------------
(Virgil B. Day)
/s/ G. STEVEN FARRIS Director September 24, 1996
- ---------------------------------------------
(G. Steven Farris)
/s/ RANDOLPH M. FERLIC Director September 24, 1996
- ---------------------------------------------
(Randolph M. Ferlic)
Director
- ---------------------------------------------
(Eugene C. Fiedorek)
/s/ W. BROOKS FIELDS Director September 24, 1996
- ---------------------------------------------
(W. Brooks Fields)
/s/ ROBERT V. GISSELBECK Director September 24, 1996
- ---------------------------------------------
(Robert V. Gisselbeck)
/s/ STANLEY K. HATHAWAY Director September 24, 1996
- ---------------------------------------------
(Stanley K. Hathaway)
/s/ JOHN A. KOCUR Director September 24, 1996
- ---------------------------------------------
(John A. Kocur)
/s/ GEORGE D. LAWRENCE, JR. Director September 24, 1996
- ---------------------------------------------
(George D. Lawrence, Jr.)
/s/ MARY RALPH LOWE Director September 24, 1996
- ---------------------------------------------
(Mary Ralph Lowe)
/s/ JOSEPH A. RICE Director September 24, 1996
- ---------------------------------------------
(Joseph A. Rice)
</TABLE>
<PAGE> 34
INDEX TO EXHIBITS
(a) Exhibits
<TABLE>
<S> <C> <C>
1.1 -- Form of Underwriting Agreement.(1)
4.1 -- Form of Indenture between the Company and The Chase Manhattan Bank, as
Trustee and successor to Chemical Bank, governing the Debt Securities
(incorporated by reference to Exhibit 4.1 to Apache's Registration
Statement on Form S-3, Registration No. 33-63923, filed November 2,
1995).
4.2 -- Form of Debt Securities (Note).(1)
5.1 -- Opinion of legal counsel regarding legality of securities being
registered.(1)
8.1 -- Opinion of Woodard, Hall & Primm, P.C. as to certain United States
federal income tax matters.(1)
12.1 -- Statement of computation of ratio of earnings to fixed charges.(1)
23.1 -- Consent of Arthur Andersen LLP, Houston, Texas.(1)
23.2 -- Consent of Arthur Andersen LLP, Oklahoma City, Oklahoma.(1)
23.3 -- Consent of Coopers & Lybrand, Chartered Accountants.(1)
23.4 -- Consent of Ryder Scott Company Petroleum Engineers.(1)
23.5 -- Consent of Netherland, Sewell & Associates, Inc.(1)
23.6 -- Consent of legal counsel (included in Exhibit 5.1).(1)
23.7 -- Consent of Woodard, Hall & Primm, P.C. (included in Exhibit 8.1).(1)
24.1 -- Power of Attorney (included in Part II as a part of the signature
pages of the Registration Statement).(1)
25.1 -- Statement of Eligibility and Qualification under Trust Indenture Act
of 1939 of The Chase Manhattan Bank, Trustee, is filed separately on
Form T-1.(1)
</TABLE>
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(1) Filed herewith.
<PAGE> 1
EXHIBIT 1.1
FORM
OF
TERMS AGREEMENT
, 1996
Apache Corporation
2000 Post Oak Boulevard, Suite 100
Houston, Texas 77056-4400
Dear Sirs:
The undersigned underwriters (the "Underwriters") understand that
Apache Corporation (the "Company") proposes to issue and sell $
aggregate principal amount of its debt securities (the "Offered Securities").
Subject to the terms and conditions set forth herein or incorporated by
reference herein, the Underwriters offer to purchase, severally and not
jointly, the principal amount of Offered Securities set forth below opposite
their respective names at of the principal amount thereof
together with accrued interest thereon from
, 1996 to the Closing Time:
Principal
Amount of
Underwriter Debt Securities
---------------------
Total $
=====================
The Offered Securities shall have the following terms:
Principal amount:
Form:
Denomination:
<PAGE> 2
Date of maturity:
Interest rate, rates or formula
(or method of calculation
of interest accrual):
Date from which interest accrues:
Interest payment dates, if any:
Initial price to public:
Closing Time:
Place of delivery:
Company account for wire
transfer of payment:
Redemption provisions, if any:
Lock-up pursuant to Section 3(i)
of the Basic Terms, as defined
below: [yes] [no]
Securities Exchanges, if any, on
which application will be made
to list the Offered Securities:
Delayed Delivery Contracts: [authorized] [not authorized]
Delivery date:
Expiration date:
Compensation to Underwriters:
Minimum contract:
Maximum aggregate principal amount:
Other terms, if any:
All the provisions contained in "Apache Corporation-Debt
Securities--Underwriting Agreement Basic Terms" (the "Basic Terms"), to be
filed as an exhibit to the Registration Statement relating to the Offered
Securities and attached hereto as Annex A, are herein incorporated by reference
in their entirety and shall be deemed to be a part of this Terms Agreement to
the same extent as if such provisions had been set forth in full herein. Terms
defined in such document are used herein as therein defined.
Any notice by the Company to the Underwriters pursuant to this Terms
Agreement shall be sufficient if given in accordance with Section 11 of the
Basic Terms addressed to: [insert name and address of the lead manager or
manager or, if only one underwriter is a party hereto, of such firm] which
shall, for all purposes of this Agreement, be the "Representatives".
- 2 -
<PAGE> 3
Very truly yours,
REPRESENTATIVES
By:
----------------------------------
[Acting for themselves and as
Representatives
of the Underwriters]
By:
----------------------------------
( )
Accepted:
APACHE CORPORATION
By:
---------------------------------
Name:
Title:
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<PAGE> 4
ANNEX A
Apache Corporation
Debt Securities
UNDERWRITING AGREEMENT BASIC TERMS
<PAGE> 5
APACHE CORPORATION
Debt Securities
UNDERWRITING AGREEMENT BASIC TERMS
Apache Corporation, a Delaware corporation (the "Company"), may issue
and sell from time to time its debt securities (the "Debt Securities"). The
Debt Securities are issuable under an indenture, dated as of February 15, 1996
(the "Indenture"), between the Company and Chemical Bank, as trustee (the
"Trustee"). Each issue of Debt Securities may vary as to series, aggregate
principal amount, maturity, interest rate or rates and timing of payments
thereof, redemption provisions, if any, and any other variable terms as set
forth in the Terms Agreement (as defined below) relating thereto which the
Indenture contemplates may be set forth in the Debt Securities as issued from
time to time.
Whenever the Company determines to make an offering of Debt
Securities, the Company will enter into an agreement (the "Terms Agreement")
providing for the sale of such securities (the "Offered Securities") to, and
the purchase and offering thereof by, one or more underwriters specified in the
Terms Agreement (the "Underwriters", which term shall include any Underwriters
substituted pursuant to Section 10 hereof). The Terms Agreement relating to
the Offered Securities shall specify the names of the Underwriters
participating in such offering, the amount of Offered Securities which each
such Underwriter severally agrees to purchase, the price at which the Offered
Securities are to be purchased by the Underwriters from the Company, the
initial public offering price, the time and place of delivery and payment, such
other information as is indicated in Exhibit A hereto and such other terms as
are agreed by the Company and the Underwriters. In addition, each Terms
Agreement shall specify whether the Company has agreed to grant to the
Underwriters an option to purchase additional Offered Securities to cover
over-allotments, if any, and the amount of Offered Securities subject to such
option (the "Option Securities"). As used herein, the term "Offered
Securities" shall include the Option Securities, if any, and "Representatives"
shall mean the Underwriter or Underwriters so specified in the Terms Agreement
or, if no Underwriter is so specified, shall mean each Underwriter. The Terms
Agreement may be in the form of an exchange of any standard form of written
telecommunication between the Underwriters and the Company. The offering of
the Offered Securities will be governed by the Terms Agreement, as supplemented
hereby (collectively, this "Agreement"), and this Agreement shall inure to the
benefit of and be binding upon each Underwriter participating in the offering
of the Offered Securities.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (No.
333-_____) for the registration of Debt Securities, including the Offered
Securities, under the Securities Act of 1933, as amended (the "1933 Act"), and
the offering thereof from time to time in accordance with Rule
- 2 -
<PAGE> 6
415 of the rules and regulations of the Commission under the 1933 Act (the
"1933 Act Regulations"), and has prepared and filed such amendments thereto as
may have been required to the date hereof. Such registration statement, as
amended, has been declared effective by the Commission, and the Indenture has
been qualified under the Trust Indenture Act of 1939 (the "1939 Act"). As
provided in Section 3(a), a prospectus supplement reflecting the terms of the
Offered Securities, the terms of the offering thereof and the other matters set
forth therein has been prepared and will be filed pursuant to Rule 424 under
the 1933 Act. Such prospectus supplement, in the form first filed after the
date of the Terms Agreement pursuant to Rule 424, is herein referred to as the
"Prospectus Supplement". Such registration statement, as amended at the date
of the Terms Agreement, including the exhibits thereto and the documents
incorporated by reference therein, is herein called the "Registration
Statement", and the basic prospectus included therein relating to all offerings
of Debt Securities under the Registration Statement, as supplemented by the
Prospectus Supplement, is herein called the "Prospectus", except that, if such
basic prospectus is amended or supplemented on or prior to the date on which
the Prospectus Supplement is first filed pursuant to Rule 424, the term
"Prospectus" shall refer to the basic prospectus as so amended or supplemented
and as supplemented by the Prospectus Supplement or, if any revised prospectus
shall be provided to the Underwriters by the Company for their use in
connection with the offering of the Offered Securities which differs from such
basic prospectus and Prospectus Supplement (whether or not required to be filed
by the Company pursuant to Rule 424), the term "Prospectus" shall refer to such
revised prospectus (including any prospectus supplement) from and after the
time it is first provided to the Underwriters for such use, in either case
including the documents filed by the Company with the Commission pursuant to
the Securities Exchange Act of 1934, as amended (the "1934 Act"), that are
incorporated by reference therein.
SECTION 1. Representations and Warranties. The Company represents
and warrants to each Underwriter named in the Terms Agreement as of the date
thereof and as of the Closing Time referred to in Section 2(c) hereof, and as
of each Date of Delivery (if any) referred to in Section 2(b) hereof (in each
case, a "Representation Date"), as follows:
(a) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware with corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this
Agreement; and the Company is duly qualified as a foreign corporation
to transact business and is in good standing in the State of Texas and
in each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify and be in
good standing would not have a material adverse effect on the
condition, financial or otherwise, or the results of operations,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise.
(b) Each "significant subsidiary" of the Company as defined
in Rule 405 of Regulation C of the 1933 Act Regulations (collectively,
the "Significant Subsidiaries") has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, has corporate power and
authority to
- 3 -
<PAGE> 7
own, lease and operate its properties and conduct its business as
described in the Prospectus and is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify and be in good
standing would not have a material adverse effect on the condition,
financial or otherwise, or the results of operations, business affairs
or business prospects of the Company and its subsidiaries considered
as one enterprise; and, except as described in the Prospectus, all of
the issued and outstanding capital stock of each Significant
Subsidiary has been duly authorized and validly issued, is fully paid
and non-assessable and, except for directors' qualifying shares (if
applicable), is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity.
(c) At the time the Registration Statement became effective
and as of each Representation Date, the Registration Statement
complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and the 1939
Act and the rules and regulations of the Commission promulgated
thereunder; the Registration Statement, at the time it became
effective, did not, and at each time thereafter at which any amendment
to the Registration Statement becomes effective or any Annual Report
on Form 10-K is filed by the Company with the Commission and as of
each Representation Date, will not, contain an 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;
and the Prospectus, as of each Representation Date, does not and will
not include an untrue statement of a material fact or omit 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; provided, however, that the representations and warranties
in this subsection shall not apply to statements in or omissions from
the Registration Statement or the Prospectus made in reliance upon and
in conformity with information furnished to the Company in writing by
the Underwriters expressly for use in the Registration Statement or
the Prospectus.
(d) The documents incorporated by reference in the
Prospectus, at the time they were or hereafter are filed with the
Commission, complied or when so filed will comply, as the case may be,
in all material respects with the requirements of the 1934 Act and the
rules and regulations of the Commission promulgated thereunder (the
"1934 Act Regulations"), and, when read together and with the other
information in the Prospectus, did not and will not include an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were or
are made, not misleading.
(e) The accountants who certified the financial statements
included or incorporated by reference in the Registration Statement
and the Prospectus are independent public accountants with respect to
the Company as required by the 1933 Act and the 1933 Act Regulations.
- 4 -
<PAGE> 8
(f) The financial statements and any supporting schedules of
the Company and its subsidiaries included or incorporated by
reference in the Registration Statement and the Prospectus present
fairly the consolidated financial position of the Company and its
subsidiaries as of the dates indicated and the consolidated results of
their operations for the periods specified; except as stated therein,
said financial statements have been prepared in conformity with U.S.
generally accepted accounting principles applied on a consistent
basis; and the supporting schedules included or incorporated by
reference in the Registration Statement and the Prospectus present
fairly the information required to be stated therein.
(g) The petroleum engineers who have consented to being named
as having reviewed certain reserve data included or incorporated by
reference in the Prospectus are independent engineers with respect to
the Company and its subsidiaries.
(h) This Agreement and the applicable Delayed Delivery
Contracts (as defined below), if any, have been duly authorized,
executed and delivered by the Company and, upon execution and delivery
by the Underwriters, will be valid and legally binding agreements of
the Company; on and after the Closing Time, the Indenture will have
been duly authorized, executed and delivered by the Company and,
assuming due execution and delivery by the Trustee, will be a valid
and legally binding agreement of the Company enforceable in accordance
with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting enforcement of creditors' rights generally or
by general equity principles, and except further as enforcement
thereof may be limited by (1) requirements that a claim with respect
to any Debt Securities denominated other than in U.S. dollars (or a
foreign currency or composite currency judgment in respect of such
claim) be converted into U.S. dollars at a rate of exchange prevailing
on a date determined pursuant to applicable law or (2) governmental
authority to limit, delay or prohibit the making of payments outside
the United States. The Offered Securities have been duly and validly
authorized for issuance, offer and sale pursuant to this Agreement and
each Delayed Delivery Contract, if any, and when issued, authenticated
and delivered pursuant to the provisions of this Agreement and the
Indenture against payment of the consideration therefor, the Offered
Securities will constitute valid and legally binding obligations of
the Company enforceable in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting
enforcement of creditors' rights generally or by general equity
principles, and except further as enforcement thereof may be limited
by (1) requirements that a claim with respect to any Offered
Securities denominated other than in U.S. dollars (or a foreign
currency or composite currency judgment in respect of such claim) be
converted into U.S. dollars at a rate or exchange prevailing on a date
determined pursuant to applicable law or (2) governmental authority to
limit, delay or prohibit the making of payments outside the United
States. The Offered Securities and the Indenture will be
substantially in the form heretofore delivered to the Underwriters and
conform in all material respects to all statements relating thereto
contained in the Prospectus; and each Holder (as defined in the
Indenture) of Offered Securities will be entitled to the benefits of
the Indenture.
- 5 -
<PAGE> 9
(i) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as may
otherwise be stated therein or contemplated thereby, (1) there has
been no material adverse change in the condition, financial or
otherwise, or in the results of operations, business affairs or
business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of
business, and (2) there have been no material transactions entered
into by the Company or any of its subsidiaries other than those in the
ordinary course of business.
(j) Neither the Company nor any of its subsidiaries is in
violation of its charter or in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which it is a party or
by which it or any of them or their properties may be bound, where the
consequences of such violation or default would have a material
adverse effect on the condition, financial or otherwise, or the
results of operations, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise; and the
execution and delivery of this Agreement, each Delayed Delivery
Contract, if any, and the Indenture and the consummation of the
transactions contemplated herein and therein have been duly authorized
by all necessary corporate action of the Company and will not conflict
with or constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant
to, any contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Company or any of its subsidiaries is a
party or by which it or any of them may be bound or to which any of
the property or assets of the Company or any subsidiary thereof is
subject, nor will such action result in any violation of the
provisions of the charter or by-laws of the Company or any law,
administrative regulation or administrative or court order or decree,
where the consequences of such conflict, breach, creation, imposition,
violation or default would have a material adverse effect on the
condition, financial or otherwise, or the results of operations,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise.
(k) No consent, approval, authorization, order or decree of
any court or governmental agency or body is required for the
consummation by the Company of the transactions contemplated by this
Agreement or in connection with the sale of Offered Securities
hereunder, except such as have been obtained or rendered, as the case
may be, or as may be required under state securities laws ("Blue
Sky").
(l) Except as may be included or incorporated by reference in
the Registration Statement and the Prospectus, there is no action,
suit or proceeding before or by any court or governmental agency or
body, domestic or foreign, now pending or, to the knowledge of the
Company, threatened against the Company or any of its subsidiaries
which might, in the opinion of the Company, result in any material
adverse change in the condition, financial or otherwise, or in the
results of operations, business affairs or business prospects of the
Company and its subsidiaries considered as one
- 6 -
<PAGE> 10
enterprise, or could reasonably be expected to materially and
adversely affect the properties or assets thereof or could reasonably
be expected to materially and adversely affect the consummation of
this Agreement or the Indenture or any transaction contemplated hereby
or thereby.
(m) There are no contracts or documents of the Company or any
of its subsidiaries which are required to be filed as exhibits to the
Registration Statement by the 1933 Act or by the 1933 Act Regulations
which have not been so filed.
(n) Neither the Company nor any of its subsidiaries is in
violation of any law, ordinance, governmental rule or regulation or
court decree to which it may be subject or has failed to obtain any
license, permit, franchise or other governmental authorization
necessary to the ownership of its property or to the conduct of its
business, which violation or failure would materially adversely affect
the condition, financial or otherwise, or the results of operations,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise; and the Company and its
subsidiaries own or possess or have obtained all governmental
licenses, permits, consents, orders, approvals and other
authorizations and have properly filed with the appropriate
authorities all notices, applications and other documents necessary to
lease or own their respective properties and to carry on their
respective businesses as presently conducted, except where the failure
to possess such licenses or authorizations or make such filings would
not materially adversely affect the condition, financial or otherwise,
or the results of operations, business affairs or business prospects
of the Company and its subsidiaries considered as one enterprise.
(o) The Company and its subsidiaries own or possess, or can
acquire on reasonable terms, adequate trademarks, service marks and
trade names necessary to conduct the business now operated by them,
except as set forth or incorporated by reference in the Registration
Statement or except where the failure to own or possess the same would
not materially adversely affect the condition, financial or otherwise,
or the results of operations, business affairs or business prospects
of the Company and its subsidiaries considered as one enterprise, and
neither the Company nor any of its subsidiaries has received any
notice of infringement of or conflict with asserted rights of others
with respect to any trademarks, service marks or trade names which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially adversely affect the condition,
financial or otherwise, or the results of operations, business affairs
or business prospects of the Company and its subsidiaries considered
as one enterprise.
(p) The Company and its subsidiaries have legal, valid and
defensible title to all of their interests in oil and gas properties
and to all other real and personal property owned by them and any
other real property and buildings held under lease by the Company and
its subsidiaries are held by them under valid, subsisting and
enforceable leases, in each case free and clear of all mortgages,
pledges, liens, security interests, claims, restrictions or
encumbrances and defects of any kind, except such as (1) are described
in the Prospectus, (2) liens and encumbrances under operating
agreements,
- 7 -
<PAGE> 11
unitization and pooling agreements, production sales contracts,
farm-out agreements and other oil and gas exploration and production
agreements, in each case that secure payment of amounts not yet due
and payable for the performance of other inchoate obligations and are
of a scope and nature customary in connection with similar drilling
and producing operations or (3) those that do not have a material
adverse effect on the condition, financial or otherwise, or the
results of operations, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise.
(q) The information underlying the estimates of oil and gas
reserves as described in the Prospectus is complete and accurate in
all material respects (or, with regard to any information underlying
the estimates prepared by any petroleum engineers retained by the
seller of such oil and gas reserves, is, to the best knowledge of the
Company, complete and accurate in all material respects); other than
production of the reserves in the ordinary course of business and
intervening product price fluctuations described in the Prospectus,
the Company is not aware of any facts or circumstances that would
result in a material adverse change in the reserves or the present
value of future net cash flows therefrom as described in the
Prospectus. Estimates of such reserves and present values comply in
all material respects with the applicable requirements of Regulation
S-X and Industry Guide 2 under the 1933 Act.
(r) Neither the Company nor any of its subsidiaries is
required to be registered under the Investment Company Act of 1940, as
amended (the "1940 Act").
(s) The Company has complied and will comply with the
provisions of Florida H.B. 1771, codified as Section 517.075 of the
Florida Statutes, 1987, as amended, and all regulations promulgated
thereunder relating to issuers doing business in Cuba.
(t) Except as described in the Registration Statement,
(1) neither the Company nor any of its subsidiaries is in violation of
any local or foreign laws or regulations relating to pollution or
protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws
and regulations relating to the release or threatened release of
chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products (collectively,
"Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling
of Hazardous Materials (collectively, "Environmental Laws"), except
such violations as would not, singly or in the aggregate, have a
material adverse effect on the condition, financial or otherwise, or
the results of operations, business affairs or business prospects of
the Company and its subsidiaries considered as one enterprise, and (2)
to the best of the Company's knowledge, there are no events or
circumstances that could reasonably be expected to be the basis of an
order for clean-up or remediation, or an action, suit or proceeding by
any private party or governmental body or agency, against or affecting
the Company or any of its subsidiaries relating to any Hazardous
Materials or the violation of any Environmental Laws, which, singly or
in the aggregate, could reasonably be expected to have a material
adverse effect on the
- 8 -
<PAGE> 12
condition, financial or otherwise, or the results of operations,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise.
Any certificate signed by any director or officer of the Company and
delivered to the Representatives or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company as to the matters covered
thereby.
SECTION 2. Purchase and Sale.
(a) The several commitments of the Underwriters to purchase the
Offered Securities pursuant to this Agreement shall be deemed to have been made
on the basis of the representations and warranties herein contained and shall
be subject to the terms and conditions herein and therein set forth. Offered
Securities which are subject to Delayed Delivery Contracts are herein sometimes
referred to as "Delayed Delivery Offered Securities" and Offered Securities
which are not subject to Delayed Delivery Contracts are herein sometimes
referred to as "Immediate Delivery Offered Securities".
(b) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company may grant, if so provided in the Terms Agreement, an option to the
Underwriters named in the Terms Agreement, severally and not jointly, to
purchase up to the principal amount of Option Securities set forth therein at
the same price per security (plus, except as otherwise provided in the Terms
Agreement, interest, if any, accrued and unpaid from the Closing Time until the
applicable Date of Delivery), as is applicable to the Offered Securities. Such
option, if granted, will expire 30 days after the date of the Terms Agreement,
and may be exercised in whole or in part from time to time only for the purpose
of covering over-allotments which may be made in connection with the offering
and distribution of the Offered Securities upon notice by the Representatives
to the Company setting forth the principal amount of Option Securities as to
which the several Underwriters are then exercising the option and the time and
date of payment and delivery for such Option Securities. Any such time and
date of delivery (a "Date of Delivery") shall be determined by the
Representatives, but shall not be later than seven full business days and not
earlier than two full business days after the exercise of said option, nor in
any event prior to the Closing Time, as hereinafter defined, unless otherwise
agreed upon by the Representatives and the Company. If the option is exercised
as to all or any portion of the Option Securities, each of the Underwriters,
acting severally and not jointly, will purchase the proportion of the total
principal amount of Option Securities then being purchased that the principal
amount of Immediate Delivery Offered Securities each such Underwriter has
agreed to purchase, as set forth in the Terms Agreement, bears to the total
principal amount of Immediate Delivery Offered Securities, subject to such
adjustments as the Representatives in their discretion shall make to eliminate
any sales or purchases in less than authorized denominations.
(c) Payment of the purchase price for, and delivery of, the
Immediate Delivery Offered Securities to be purchased by the Underwriters shall
be made at the place set forth in the Terms Agreement, or at such other place
as shall be agreed upon by the Representatives and the Company, on the third
business day (unless postponed in accordance with the provisions of Section 10)
following the date of the Terms Agreement or such other time as shall be agreed
- 9 -
<PAGE> 13
upon by the Underwriters and the Company (such time and date being referred to
as the "Closing Time"). Except as specified in the Terms Agreement, payment
shall be made to the Company by wire transfer in same day funds to the account
of the Company specified in the Terms Agreement against delivery to the
Underwriters for the respective accounts of the Underwriters of the Immediate
Delivery Offered Securities to be purchased by them (unless the Offered
Securities are issuable only in the form of one or more global instruments
registered in the name of a depository or a nominee of a depository, in which
event the Underwriters' interest in such global instrument shall be noted in a
manner satisfactory to the Underwriters and their counsel). In addition, in
the event that any or all of the Option Securities are purchased by the
Underwriters, payment of the purchase price for, and delivery of certificates
representing, such Option Securities shall be made at such place as shall be
agreed upon by the Representatives and the Company, on each Date of Delivery as
agreed by the Representatives and the Company. The Immediate Delivery Offered
Securities shall be in such denominations and registered in such names as the
Underwriters may request in writing at least two business days prior to the
Closing Time or relevant Date of Delivery, as the case may be. The Immediate
Delivery Offered Securities, which if agreed by the Representatives may be in
temporary form, will be made available for examination and packaging by the
Representatives on or before the first business day prior to the Closing Time
or relevant Date of Delivery, as the case may be.
(d) If authorized by the Terms Agreement, the Underwriters named
therein may solicit offers to purchase Offered Securities from the Company
pursuant to delayed delivery contracts ("Delayed Delivery Contracts")
substantially in the form of Exhibit B hereto, with such changes therein as the
Company may approve. As compensation for arranging Delayed Delivery Contracts,
the Company will pay to the Representatives at the Closing Time, for the
account of the Underwriters, a fee equal to that percentage of the aggregate
principal amount of Delayed Delivery Offered Securities for which Delayed
Delivery Contracts are made at the Closing Time as is specified in the Terms
Agreement. Any Delayed Delivery Contracts are to be with institutional
investors of the types set forth in the Prospectus Supplement. At the Closing
Time the Company will enter into Delayed Delivery Contracts (for not less than
the minimum principal amount of Delayed Delivery Offered Securities per Delayed
Delivery Contract specified in the Terms Agreement) with all purchasers
proposed by the Underwriters and previously approved by the Company as provided
below, but not for an aggregate principal amount of Offered Securities in
excess of that specified in the Terms Agreement. The Underwriters will not
have any responsibility for the validity or performance of Delayed Delivery
Contracts.
(e) The Representatives are to submit to the Company, at least two
business days prior to the Closing Time, the names of any institutional
investors with which it is proposed that the Company will enter into Delayed
Delivery Contracts and the principal amount of Delayed Delivery Offered
Securities to be purchased by each of them, and the names of the institutions
with which the making of Delayed Delivery Contracts is approved by the Company
and the principal amount of Delayed Delivery Offered Securities to be covered
by each such Delayed Delivery Contract.
(f) The principal amount of Offered Securities agreed to be
purchased by the respective Underwriters pursuant to this Agreement shall be
reduced by the principal amount of Delayed Delivery Offered Securities covered
by Delayed Delivery Contracts, as to each
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<PAGE> 14
Underwriter as set forth in a written notice delivered by the Underwriters to
the Company; provided, however, that the total principal amount of Immediate
Delivery Offered Securities to be purchased by all Underwriters shall be the
total amount of the Offered Securities covered by this Agreement, less the
total principal amount of Delayed Delivery Offered Securities covered by
Delayed Delivery Contracts.
SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) Immediately following the execution of the Terms
Agreement, the Company will prepare a Prospectus Supplement in form
approved by the Representatives setting forth the principal amount of
Offered Securities and their terms not otherwise specified in the
Indenture, if applicable, the names of the Underwriters and the
principal amount of the Offered Securities which each severally has
agreed to purchase, the names of the Underwriters, the price at which
the Offered Securities are to be purchased by the Underwriters from
the Company, the initial public offering price, the selling concession
and reallowance, if any, any delayed delivery arrangements, and such
other information as the Representatives and the Company deem
appropriate in connection with the offering of the Offered Securities.
The Company will promptly transmit copies of the Prospectus Supplement
to the Commission for filing pursuant to Rule 424 of the 1933 Act
Regulations and will furnish to the Underwriters named therein as many
copies of the Prospectus (including the Prospectus Supplement) as the
Representatives shall reasonably request.
(b) If at any time when the Prospectus is required by the
1933 Act to be delivered in connection with sales of the Offered
Securities any event shall occur or condition exist as a result of
which it is necessary, in the opinion of counsel for the Underwriters
or counsel for the Company, to amend or supplement the Prospectus in
order that the Prospectus will not include an untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein not misleading in the light of the
circumstances existing at the time the Prospectus is delivered to a
purchaser, or if it shall be necessary, in the opinion of either such
counsel, to amend or supplement the Registration Statement or the
Prospectus in order to comply with the requirements of the 1933 Act or
the 1933 Act Regulations, the Company will promptly amend the
Registration Statement and the Prospectus, whether by filing documents
pursuant to the 1934 Act or the 1933 Act or otherwise, as may be
necessary to correct such untrue statement or omission or to make the
Registration Statement and the Prospectus comply with such
requirements.
(c) The Company will make generally available to its security
holders as soon as practicable, but not later than 90 days after the
close of the period covered thereby, an earnings statement (in form
complying with the provisions of Rule 158 of the 1933 Act Regulations)
covering each twelve month period beginning, in each case, not later
than the first day of the Company's fiscal quarter next following the
"effective date" (as defined in such Rule 158) of the Registration
Statement with respect to each sale of Offered Securities.
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<PAGE> 15
(d) While the Prospectus is required by the 1933 Act to be
delivered in connection with sales of the Offered Securities, the
Company will give the Representatives notice of its intention to file
any additional registration statement with respect to the registration
of additional Debt Securities, any amendment to the Registration
Statement or any amendment or supplement to the Prospectus, whether
pursuant to the 1934 Act, the 1933 Act or otherwise; will furnish the
Underwriters with copies of any such amendment or supplement or other
documents proposed to be filed a reasonable time in advance of such
proposed filing or use, as the case may be; and will not file any such
amendment or supplement or other documents in a form to which the
Representatives or counsel to the Underwriters reasonably object.
(e) While the Prospectus is required by the 1933 Act to be
delivered in connection with sales of the Offered Securities, the
Company will notify the Representatives immediately, and promptly
confirm the notice in writing, of (i) the effectiveness of any
amendment to the Registration Statement, (ii) the transmittal to the
Commission for filing of any supplement to the Prospectus or any
document to be filed pursuant to the 1934 Act which will be
incorporated by reference into the Registration Statement or the
Prospectus, (iii) the receipt of any comments from the Commission with
respect to the Registration Statement, the Prospectus or the
Prospectus Supplement, (iv) any request by the Commission for any
amendment to the Registration Statement, or any amendment or
supplement to the Prospectus or for additional information, (v) the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose and (vi) any change in the rating
assigned by any nationally recognized statistical rating organization
to any debt securities of the Company or the public announcement by
any nationally recognized statistical rating organization that it has
under surveillance or review, with possible negative implications, its
rating of any debt securities of the Company. The Company will make
every reasonable effort to prevent the issuance of any stop order and,
if any stop order is issued, to obtain the lifting thereof at the
earliest possible moment.
(f) The Company will deliver to each Underwriter one
conformed copy of the Registration Statement (as originally filed) and
of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein and documents incorporated by
reference in the Prospectus) and will also deliver to the
Representatives as many conformed copies of the Registration Statement
as originally filed and of each amendment thereto (without exhibits)
as the Representatives may reasonably request. While the Prospectus
is required by the 1933 Act to be delivered in connection with sales
of the Offered Securities, the Company will furnish to the
Representatives as many copies of the Prospectus (including the
Prospectus Supplement) as the Representatives reasonably request.
(g) The Company will endeavor, in cooperation with the
Underwriters, to qualify the Offered Securities for offering and sale
under the applicable securities laws of such states and other
jurisdictions of the United States as the Underwriters may designate,
and will maintain such qualifications in effect for as long as may be
required for the
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<PAGE> 16
distribution of the Offered Securities; provided, however, that the
Company shall not be obligated to file any general consent to service
of process or to qualify as a foreign corporation in any jurisdiction
in which it is not so qualified. The Company will file such
statements and reports as may be required by the laws of each
jurisdiction in which the Offered Securities have been qualified as
above provided. The Company will promptly advise the Representatives
of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Offered Securities for sale in
any such state or jurisdiction or the initiating or threatening of any
proceeding for such purpose.
(h) The Company, during the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act in
connection with sales of the Offered Securities, will file all
documents required to be filed with the Commission pursuant to
Sections 13, 14 or 15(d) of the 1934 Act within the time periods
prescribed by the 1934 Act and the 1934 Act Regulations.
(i) If specified in the Terms Agreement, between the date of
the Terms Agreement and the completion of the distribution of the
Offered Securities or the Closing Time, whichever is later, or such
other time as is specified in the Terms Agreement, the Company will
not, without the prior written consent of the Representatives, offer
or sell, grant any option for the sale of, or enter into any agreement
to sell, any debt securities of the Company substantially similar to
the Offered Securities (other than the Offered Securities that are to
be sold pursuant to such agreement or commercial paper in the ordinary
course of business).
SECTION 4. Conditions of Underwriters' Obligations. The obligations
of the Underwriters to purchase Offered Securities pursuant to this Agreement
are subject to the accuracy of the representations and warranties on the part
of the Company herein contained, to the accuracy of the statements which the
Company's officers made in any certificate furnished pursuant to the provisions
hereof, to the performance by the Company of all of its covenants and other
obligations hereunder and under the Terms Agreement, and to the following
further conditions:
(a) At the Closing Time, no stop order suspending the
effectiveness of the Registration Statement shall have been issued
under the 1933 Act or proceedings therefor initiated or threatened by
the Commission.
(b) At the Closing Time, the Representatives shall have
received:
(1) The favorable opinion, dated as of the Closing
Time, of Woodard, Hall & Primm, P.C., counsel to the Company, to the
effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware.
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<PAGE> 17
(ii) This Agreement and the applicable Delayed
Delivery Contracts, if any, have been duly authorized,
executed and delivered by the Company.
(iii) The Indenture has been duly authorized,
executed and delivered by the Company and (assuming the
Indenture has been duly authorized, executed and delivered by
the Trustee) constitutes a legal, valid and binding agreement
of the Company, enforceable in accordance with its terms,
except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating
to or affecting enforcement of creditors' rights generally or
by general equity principles, and further as enforcement
thereof may be limited by (1) requirements that a claim with
respect to any Offered Securities denominated other than in
U.S. dollars (or a foreign currency or composite currency
judgment in respect of such claim) be converted into U.S.
dollars at a rate of exchange prevailing on a date determined
pursuant to applicable law or (2) governmental authority to
limit, delay or prohibit the making of payments outside the
United States.
(iv) The Offered Securities, in the form(s) certified
by the Company as of the Closing Time, have been duly
authorized for issuance, offer and sale pursuant to this
Agreement and, when issued, authenticated and delivered
pursuant to the provisions of this Agreement, any Delayed
Delivery Contract and the Indenture against payment of the
consideration therefor, will constitute valid and legally
binding obligations of the Company, enforceable in accordance
with their terms, except as enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other
laws relating to or affecting enforcement of creditors' rights
generally or by general equity principles, and except further
as enforcement thereof may be limited by (1) requirements that
a claim with respect to any Debt Securities denominated other
than in U.S. dollars (or a foreign currency or composite
currency judgment in respect of such claim) be converted into
U.S. dollars at a rate of exchange prevailing on a date
determined pursuant to applicable law or (2) governmental
authority to limit, delay or prohibit the making of payments
outside the United States; and each holder of Offered
Securities will be entitled to the benefits of the Indenture.
(v) The Offered Securities and the Indenture conform
in all material respects to the statements relating thereto in
the Prospectus; and the statements in the Prospectus under the
captions "Description of Notes" and "Description of Debt
Securities", insofar as they purport to summarize certain
provisions of documents specifically referred to therein, are
accurate summaries of such provisions.
(vi) The Indenture has been duly qualified under the
1939 Act.
(vii) The Registration Statement has been declared
effective by the Commission under the 1933 Act and, to the
best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been
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<PAGE> 18
issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission.
(viii) The Registration Statement and the Prospectus
(except for financial statements and engineering reports and
other financial or engineering data, and except for those
parts of the Registration Statement that constitute the Form
T-1, as to which such counsel need not express any opinion),
as of their respective effective or issue dates, appeared on
their face to be appropriately responsive to the requirements
of the 1933 Act and the 1933 Act Regulations.
(ix) The information contained in the Prospectus
under the caption "Certain United States Federal Income Tax
Considerations", to the extent that such information
constitutes matters of law, summaries of legal matters or
legal conclusions, has been reviewed by such counsel and is
correct.
In rendering such opinion, counsel for the Company may rely as
to matters of fact upon the representations of officers of the Company
contained in any certificate delivered to such counsel and
certificates of public officials, which certificates shall be attached
to or delivered with such opinion. Such opinion shall be limited to
the General Corporation Law of the State of Delaware, the laws of the
State of Texas and the laws of the United States of America.
(2) The favorable opinion of Zurab S.
Kobiashvili, General Counsel of the Company, to the effect that:
(i) The Company has the corporate power and authority
to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and
perform its obligations under this Agreement and the Delayed
Delivery Contracts, if any.
(ii) To the best knowledge and information of such
counsel, the Company is duly qualified as a foreign
corporation to transact business and is in good standing in
the State of Texas and in each other jurisdiction in which
such qualification is required, except where the failure to so
qualify and be in good standing would not have a material
adverse effect on the condition,financial or otherwise, or
the results of operations, business affairs or business
prospects of the Company and its subsidiaries considered as
one enterprise.
(iii) Each Significant Subsidiary has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease
and operate its properties and conduct its business as
described in the Prospectus, and, to the best of such
counsel's knowledge and information, is duly qualified as a
foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is
required, except where the failure to so qualify and be in
good standing would not have a material adverse effect on the
condition,
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<PAGE> 19
financial or otherwise, or the results of operations,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise; and all of the
issued and outstanding capital stock of each Significant
Subsidiary has been duly authorized and validly issued, is
fully paid and non-assessable, and is owned by the Company,
directly or indirectly, free and clear of any mortgage,
pledge, lien, encumbrance, claim or equity (except as
described in the Prospectus).
(iv) Each document filed pursuant to the 1934 Act and
incorporated by reference in the Prospectus (except for
financial statements, supporting schedules and other financial
or statistical information as to which no opinion need be
rendered) appeared on its face to be appropriately responsive
when so filed to the requirements of the 1934 Act and the 1934
Act Regulations.
(v) Neither the Company nor any of its subsidiaries
is required to be registered under the 1940 Act.
(vi) No consent, approval, authorization, order or
decree of any court or governmental authority or agency is
required that has not been obtained in connection with the
consummation by the Company of the transactions contemplated
by this Agreement, any Delayed Delivery Contract or the
Indenture, except such as have been obtained or rendered, as
the case may be, or as may be required under the 1933 Act, the
1933 Act Regulations, the 1934 Act, the 1934 Act Regulations
or state securities laws; and the execution and delivery of
this Agreement, the Delayed Delivery Contract, if applicable,
and the Indenture and the consummation of the transactions
contemplated herein and therein have been duly authorized by
all necessary corporate action of the Company and, to the best
knowledge and information of such counsel, will not conflict
with or constitute a breach of, or default under, or result in
the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its
subsidiaries pursuant to, any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which the
Company or any of its subsidiaries is a party or by which it
or any of them may be bound or to which any of the property or
assets of the Company or any such subsidiary is subject, nor
will such action result in any violation of the provisions of
the charter or by-laws of the Company or any applicable law,
administrative regulation or, to the best knowledge and
information of such counsel, administrative or court order or
decree.
(vii) Neither the Company nor any of its Significant
Subsidiaries is in violation of its charter or by-laws.
(viii) To the best knowledge and information of such
counsel, neither the Company nor any of its subsidiaries is in
violation of any law, ordinance, governmental rule or
regulation or court decree to which it may be subject or has
failed to obtain any license, permit, franchise or other
governmental authorization
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<PAGE> 20
necessary to the ownership of its property or to the conduct
of its business, which violation or failure would materially
adversely affect the condition, financial or otherwise, or the
results of operations, business affairs or business prospects
of the Company and its subsidiaries considered as one
enterprise; and, to the best knowledge and information of such
counsel, the Company and its subsidiaries own or possess or
have obtained all governmental licenses, permits, consents,
orders, approvals and other authorizations necessary to lease
or own their respective properties and to carry on their
respective businesses as presently conducted, except where the
failure to obtain such authorizations would not have a
material adverse effect on the condition, financial or
otherwise, or the results of operations, business affairs or
business prospects of the Company and its subsidiaries
considered as one enterprise.
(ix) To the best of such counsel's knowledge and
information, there is no action, suit or proceeding before or
by any court or governmental agency or body, domestic or
foreign, now pending, or threatened against or affecting, the
Company or any of its subsidiaries, which would be reasonably
expected to result in any material adverse change in the
condition, financial or otherwise, or in the results of
operations, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, or
would materially and adversely affect the properties or assets
thereof or would materially and adversely affect the
consummation of this Agreement, the Delayed Delivery
Contracts, if applicable, or the Indenture or any transaction
contemplated hereby or thereby.
(x) To the best of such counsel's knowledge and
information, there are no contracts or other documents
required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those
described or referred to therein or filed or incorporated by
reference as exhibits thereto, the descriptions thereof or
references thereto are correct in all material respects, and,
to the best of such counsel's knowledge and information, no
default exists in the due performance or observance of any
material obligation, agreement, covenant or conditions
contained in any contract, or other documents so described,
referred to, filed or incorporated by reference where the
consequences of such default would have a material adverse
effect on the condition, financial or otherwise, or the
results of operations, business affairs or business prospects
of the Company and its subsidiaries considered as one
enterprise.
In rendering such opinion, Zurab S. Kobiashvili may
rely as to matters of fact upon the representations of officers of the
Company contained in any certificate delivered to such counsel and
certificates of public officials, which certificates shall be attached
to or delivered with such opinion. Such opinion shall be limited to
the General Corporation Law of the State of Delaware, the laws of the
State of Texas and the laws of the United States of America.
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<PAGE> 21
(3) The favorable opinion, dated as of the
Closing Time, of _____________________, counsel for the Underwriters,
with respect to the matters set forth in clauses (i) to (viii),
inclusive, of subsection (b)(1) of this Section.
(4) In giving their opinions required by
subsection (b)(1), (b)(2) and (b)(3), respectively, of this Section 5,
Woodard, Hall & Primm, P.C., Zurab S. Kobiashvili and _______________
shall each additionally state that in the course of the preparation of
the Registration Statement and the Prospectus such counsel has
considered the information set forth therein in light of the matters
required to be set forth therein, and has participated in conferences
with officers and representatives of the Company including its
independent public accountants, during the course of which the
contents of the Registration Statement and the Prospectus and related
matters were discussed. Such counsel need not independently check the
accuracy or completeness of, or otherwise verify, and accordingly need
not pass upon, and accordingly need not assume responsibility for, the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus and such counsel may, in good
faith, rely as materiality upon the judgment of officers and
representatives of the Company. Such counsel shall additionally state
that, however, as a result of such consideration and participation,
nothing has come to such counsel's attention which causes such counsel
to believe that the Registration Statement, at the time it became
effective (or, if an amendment to the Registration Statement or an
Annual Report on Form 10-K has been filed by the Company with the
Commission subsequent to the effectiveness of the Registration
Statement, then at the time such amendment became effective or at the
time of the most recent such filing, as the case may be) or at the
date of this Agreement or at the Closing Time, 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 not misleading or that the Prospectus, at
the date hereof (included or) includes an 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 (it being
understood that such counsel need express no opinion with respect to
the financial statements and engineering reports and other financial
or engineering data contained in the Registration Statement (including
the Prospectus) or those parts of the Registration Statement which
constitute the Form T-1).
(c) At the Closing Time, there shall not have been, since
the date of the Terms Agreement or since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the results of operations, business affairs or
business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of
business, and the Representatives shall have received a certificate of
the Chief Executive Officer, President or a Vice President and the
Treasurer, the Assistant Treasurer, the principal financial officer or
principal accounting officer of the Company, dated as of the Closing
Time, to the effect that (i) there has been no such material adverse
change with respect to the Company and its subsidiaries, (ii) the
representations and warranties of the Company contained in Section 1
are true and
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<PAGE> 22
correct as of the Closing Time, (iii) the Company has performed or
complied with all agreements and satisfied all conditions on its part
to be performed or satisfied at or prior to the date of such
certificate and (iv) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been initiated or threatened by the Commission. As used
in this Section 4(c), the term "Prospectus" means the Prospectus in
the form first provided to the applicable Underwriter or Underwriters
for use in confirming sales of the Offered Securities.
(d)(1) On the date of the Terms Agreement, the Underwriters
shall have received a letter from Arthur Andersen, LLP, dated as of
the date hereof and in form and substance satisfactory to the
Underwriters, to the effect that:
(i) They are independent accountants with respect to the
Company and its subsidiaries within the meaning of the 1933
Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations.
(ii) It is their opinion that the consolidated financial
statements and supporting schedule(s) included or incorporated
by reference in the Registration Statement and the Prospectus
and audited by them and covered by their opinions therein
comply in form in all material respects with the applicable
accounting requirements of the 1933 Act, the 1933 Act
Regulations, the 1934 Act and the 1934 Act Regulations.
(iii) They have performed specified procedures, not
constituting an audit, including a reading of the latest
available interim financial statements of the Company and its
indicated subsidiaries, a reading of the minute books of the
Company and such subsidiaries since the end of the most recent
fiscal year with respect to which an audit report has been
issued, inquiries of and discussions with certain officials of
the Company and such subsidiaries responsible for financial
and accounting matters with respect to the unaudited
consolidated financial statements included or incorporated by
reference in the Registration Statement and the Prospectus and
the latest available interim unaudited financial statements of
the Company and its subsidiaries, and such other inquiries and
procedures as may be specified in such letter, and on the
basis of such inquiries and procedures, nothing came to their
attention that caused them to believe that: (A) any material
modifications should be made to the unaudited consolidated
financial statements of the Company and its subsidiaries
included or incorporated by reference in the Registration
Statement and the Prospectus for them to be in conformity with
generally accepted accounting principles in the United States,
(B) the unaudited consolidated financial statements of the
Company and its subsidiaries included or incorporated by
reference in the Registration Statement and the Prospectus do
not comply as to form in all material respects with the
applicable accounting requirements of the 1934 Act and the
1934 Act Regulations or (C) at a specified date not more than
three days prior to the date of such letter, there was any
change in the consolidated capital stock, any increase in
consolidated long-term debt or any decrease in the
consolidated net current assets or consolidated net
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<PAGE> 23
assets of the Company and its subsidiaries, in each case as
compared with the amounts shown on the most recent
consolidated balance sheet of the Company and its subsidiaries
included or incorporated by reference in the Registration
Statement and the Prospectus or, during the period from the
date of such balance sheet to a specified date not more than
three days prior to the date of such letter, there were any
decreases, as compared with the corresponding period in the
preceding year, in consolidated revenues or in the total or
per-share amounts of income before extraordinary items or of
net income of the Company and its subsidiaries, except in all
instances for changes, increases or decreases that the
Registration Statement and the Prospectus disclose have
occurred or may occur or except for such exceptions enumerated
in such letter as shall have been agreed to by the
Underwriters and the Company.
(iv) They have performed specified procedures, not
constituting an audit, set forth in their letter, based upon
which nothing came to their attention that caused them to
believe that the unaudited pro forma consolidated condensed
financial statements, if any, included or incorporated by
reference in the Registration Statement or the Prospectus do
not comply as to form in all material respects with the
applicable accounting requirements of Rule 11-02 of Regulation
S-X and that the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of those
statements.
(v) In addition to the audit referred to in their
opinions and the limited procedures referred to in clauses
(iii) and (iv) above, they have carried out certain specified
procedures, not constituting an audit, with respect to certain
amounts, percentages and financial information which are
included or incorporated by reference in the Registration
Statement and the Prospectus and which are specified by the
Underwriters, and have found such amounts, percentages and
financial information to be in agreement with the relevant
accounting, financial and other records of the Company and its
subsidiaries identified in such letter.
(2) At the Closing Time, the Underwriters shall have
received from Arthur Andersen, LLP, a letter, dated as of the
Closing Time, to the effect that they reaffirm the statements
made in the letter furnished pursuant to subsection (d)(1) of
this Section, except that the specified date referred to shall
be a date not more than three days prior to the Closing Time.
(e) At the Closing Time, counsel for the Underwriters shall
have been furnished with such documents and opinions as they may
reasonably require for the purpose of enabling them to pass upon the
issuance and sale of the Offered Securities as herein contemplated and
related proceedings or in order to evidence the accuracy and
completeness of any of the representations and warranties, or the
fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company in connection with the issuance and
sale of the Offered Securities as herein and in the Terms Agreement
contemplated shall be satisfactory in form and substance to the
Representatives.
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<PAGE> 24
(f) In the event that the Terms Agreement provides for Option
Securities and the Underwriters exercise their option pursuant to
Section 2(b) hereof to purchase all or any portion of the Option
Securities, the representations and warranties of the Company contained
herein and the statements in any certificates furnished by the Company
hereunder shall be true and correct as of each Date of Delivery, and
the Underwriters shall have received:
(1) Unless the Date of Delivery is the Closing Time, a
certificate, dated such Date of Delivery, of the Chief Executive
Officer, President or a Vice President and the Treasurer, the Assistant
Treasurer, the principal financial officer or principal accounting
officer of the Company, in their capacities as such, confirming that
the certificate delivered at the Closing Time pursuant to Section 4(c)
hereof remains true and correct as of such Date of Delivery.
(2) The favorable opinion of Woodard, Hall & Primm,
P.C., counsel for the Company, and Zurab S. Kobiashvili, General
Counsel for the Company, in form and substance satisfactory to counsel
for the Underwriters, dated such Date of Delivery, relating to the
Option Securities and otherwise substantially to the same effect as the
opinions required by subsections (1) and (2) of Section 4(b) hereof.
(3) The favorable opinion of _________________,
counsel for the Underwriters, dated such Date of Delivery, relating to
the Option Securities and otherwise to the same effect as the opinion
required by subsection (3) to Section 4(b) hereof.
(4) Unless the Date of Delivery is the Closing Time, a
letter from Arthur Andersen, LLP, in form and substance satisfactory to
the Underwriters and dated such Date of Delivery, substantially the
same in scope and substance as the letter furnished to the Underwriters
at the Closing Time pursuant to Section 4(d) hereof, except that the
"specified date" in the letter shall be a date not more than three days
prior to such Date of Delivery.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Representatives by notice to the Company at any time at or
prior to the Closing Time, and such termination shall be without liability of
any party to any other party except as provided in Section 5.
SECTION 5. Payment of Expenses. The Company will pay all expenses
incident to the performance of its obligations under this Agreement, including:
(a) the preparation and filing of the Registration
Statement and all amendments thereto and the Prospectus and any
amendments or supplements thereto;
(b) the preparation, filing and reproduction of this
Agreement and the Delayed Delivery Contract(s), if applicable;
- 21 -
<PAGE> 25
(c) the preparation, printing, issuance and delivery of
the Offered Securities, including any fees and expenses relating to
the eligibility and issuance of Offered Securities in book-entry form;
(d) the fees and disbursements of the Company's
accountants and counsel, of the Trustee and its counsel, and of any
calculation agent or exchange rate agent;
(e) except as otherwise provided in the Terms Agreement,
the reasonable fees and disbursements of counsel to the Underwriters;
(f) the qualification of the Offered Securities under
state securities laws in accordance with the provisions of Section
3(k) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection therewith
and in connection with the preparation of any Blue Sky or Legal
Investment Survey;
(g) the printing and delivery to the Underwriters in
quantities as hereinabove stated of copies of the Registration
Statement and any amendments thereto, and of the Prospectus and any
amendments or supplements thereto, and the delivery by the
Underwriters of the Prospectus and any amendments or supplements
thereto in connection with solicitations or confirmations of sales of
the Offered Securities;
(h) the preparation, reproducing and delivery to the
Underwriters of copies of the Indenture and all amendments,
supplements and modifications thereto;
(i) any fees charged by nationally recognized statistical
rating organizations for the rating of the Offered Securities;
(j) the fees and expenses incurred in connection with any
listing of Offered Securities on a securities exchange;
(k) the fees and expenses incurred with respect to any
filing with the National Association of Securities Dealers, Inc.;
(l) any out-of-pocket expenses of the Underwriters
incurred with the approval of the Company; and
(m) the cost of providing any CUSIP or other
identification numbers for the Offered Securities.
If this Agreement is terminated by the Underwriters in accordance with
the provisions of Section 9, the Company shall reimburse the Underwriters for
all of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Underwriters.
SECTION 6. Indemnification. (a) The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act as follows:
- 22 -
<PAGE> 26
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including
information deemed to be part of the Registration Statement pursuant
to Rule 430A(b) of the 1933 Act Regulations, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, unless such
untrue statement or omission or such alleged untrue statement or
omission was made in reliance upon and in conformity with written
information furnished to the Company by an Underwriter expressly for
use in the Registration Statement (or any amendment thereto) or such
preliminary prospectus or the Prospectus (or any amendment or
supplement thereto);
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission; provided that such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and expenses of counsel chosen by such Underwriter),
reasonably incurred in investigating, preparing or defending against
any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based
upon any such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent (x) the Company is required to do
so under Section 6(c) below and (y) that any such expense is not paid
under (i) or (ii) above.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, each of its officers who signed
the Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) of this Section, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto) or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such
Underwriter expressly for use in the Registration Statement (or any amendment
thereto) or any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto).
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be
- 23 -
<PAGE> 27
sought hereunder, but failure to so notify an indemnifying party shall not
relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. An indemnifying party may participate at its own
expense in the defense of such action. If it so elects within a reasonable
time after receipt of such notice, an indemnifying party, jointly with any
other indemnifying parties receiving such notice, may assume the defense of
such action with counsel chosen by it and approved by the indemnified parties
defendant in such action, except to the extent such indemnified parties retain
separate counsel (the "Separate Counsel") with respect to legal defenses
available to them that are different from or in addition to those available to
such indemnifying party and such defenses are in conflict with the interests of
the indemnifying parties. If an indemnifying party assumes the defense of such
action, the indemnifying parties shall not be liable for any fees and expenses
of counsel for the indemnified parties incurred thereafter in connection with
such action. In no event shall the indemnified parties be liable for the
reasonable fees and expenses of more than the Separate Counsel (in addition to
any local counsel) separate from their own counsel for all indemnified parties
in connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances.
(d) For purposes of this Section 6, all references to the Registration
Statement, any preliminary prospectus or the Prospectus, or any amendment or
supplement to any of the foregoing, shall be deemed to include, without
limitation, any electronically transmitted copies thereof, including, without
limitation, any copies filed with the Commission pursuant to EDGAR.
SECTION 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company and the
Underwriters shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by said indemnity agreement
incurred by the Company and one or more of the Underwriters in such proportions
that the Underwriters are responsible for that portion represented by the
percentage that the underwriting discount appearing on the cover page of the
Prospectus bears to the initial public offering price appearing thereon and the
Company is responsible for the balance; provided, however, that no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contributions from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section,
each person, if any, who controls an underwriter within the meaning of Section
15 of the 1933 Act shall have the same rights to contribution as such
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act shall have the same
rights to contribution as the Company.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company submitted pursuant
hereto or thereto shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or
controlling person of an Underwriter, or by or on behalf of the Company, and
shall survive each delivery of and payment for any Offered Securities.
- 24 -
<PAGE> 28
SECTION 9. Termination.
(a) The Representatives may terminate this Agreement immediately upon
notice to the Company, at any time at or prior to the Closing Time if (i) there
has been, since the date of the Terms Agreement or since the respective dates
as of which information is given in the Registration Statement, any material
adverse change in the condition, financial or otherwise, or in the results of
operations, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) there shall have occurred any material
adverse change in the financial markets in the United States or any outbreak or
escalation of hostilities or other national or international calamity or crisis
the effect of which is such as to make it, in the judgment of the
Representatives, impracticable to market the Offered Securities or enforce
contracts for the sale of the Offered Securities, or (iii) trading in any
securities of the Company has been suspended by the Commission or a national
securities exchange, or if trading generally on either the American Stock
Exchange or the New York Stock Exchange shall have been suspended, or minimum
or maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by either of said exchanges or by order of the
Commission or any other governmental authority, or if a banking moratorium
shall have been declared by either Federal, New York or Texas authorities or if
a banking moratorium shall have been declared by the relevant authorities in
the country or countries of origin of any foreign currency or currencies in
which the Offered Securities are denominated or payable, or (iv) the rating
assigned by any nationally recognized statistical rating organization to any
debt securities of the Company as of the date of the Terms Agreement shall have
been lowered since that date or if any such rating organization shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any debt securities of the Company, or (v)
there shall have come to the attention of the Representatives any facts that
would cause them to reasonably believe that the Prospectus, at the time it was
required to be delivered to a purchaser of the Offered Securities, included an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in light of the
circumstances existing at the time of such delivery, not misleading. As used
in this Section 9, the term "Prospectus" means the Prospectus in the form first
provided to the applicable Underwriter or Underwriters for use in confirming
sales of the related Offered Securities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party, except
to the extent provided in Section 5. Notwithstanding any such termination, (i)
the covenants set forth in Section 3(b), (d), and (e) with respect to any
offering of Offered Securities shall remain in effect so long as any
Underwriter owns any such Offered Securities purchased from the Company
pursuant to this Agreement and during the period when the Prospectus is
required to be delivered in connection with sales of the Offered Securities and
(ii) the covenants set forth in Section 3(c), (g), (h) and, if applicable, (i),
the provisions of Section 5, the indemnity agreement set forth in Section 6,
the contribution provisions set forth in Section 7 and the provisions of
Sections 8, 11, 12 and 13 shall remain in effect.
- 25 -
<PAGE> 29
SECTION 10. Default. If one or more of the Underwriters shall fail
at the Closing Time or a Date of Delivery to purchase the Immediate Delivery
Offered Securities which it or they are obligated to purchase under this
Agreement (the "Defaulted Securities"), then the Representatives shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but
not less than all, of the Defaulted Securities in such amounts as may be agreed
upon and upon the terms herein set forth. If, however, during such 24 hours
the Representatives shall not have completed such arrangements for the purchase
of all of the Defaulted Securities, then:
(a) if the amount of Defaulted Securities does not exceed
10% of the amount of Immediate Delivery Offered Securities to be
purchased on such date, each of the non-defaulting Underwriters shall
be obligated, severally and not jointly, to purchase the full amount
thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
(b) if the amount of Defaulted Securities exceeds 10% of
the number of Immediate Delivery Offered Securities to be purchased on
such date, this Agreement or, with respect to any Date of Delivery
which occurs after the Closing Time, the obligation of the
Underwriters to purchase and of the Company to sell the Option
Securities to be purchased and sold on such Date of Delivery shall
terminate without liability on the part of any non-defaulting
Underwriter.
No action taken pursuant to this Section 10 shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement or, in the case of a Date of Delivery which is
after the Closing Time, which does not result in a termination of the
obligation of the Underwriters to purchase and the Company to sell the relevant
Option Securities, as the case may be, either the Representatives or the
Company shall have the right to postpone the Closing Time or the relevant Date
of Delivery, as the case may be, for a period not exceeding seven days in order
to effect any required changes in the Registration Statement or the Prospectus
or in any other documents or arrangements. As used herein, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 10.
- 26 -
<PAGE> 30
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing, either delivered by hand, by mail or by telex, telecopier
or telegram, and any such notice shall be effective when received at the
address specified in this Section 11. Notices to the Underwriters shall be
directed as provided in the Terms Agreement. Notices to the Company shall be
directed to Apache Corporation, 2000 Post Oak Boulevard, Suite 100, Houston,
Texas 77056-4400, Attention: Treasurer, with a copy to: Mr. Ralph K. Miller,
Jr., Woodard, Hall & Primm, P.C., 7100 Texas Commerce Tower, Houston, Texas
77002. Any party to this Agreement may from time to time designate another
address to receive notice pursuant to this Agreement by notice duly given in
accordance with the terms of this Section 11.
SECTION 12. Parties. This Agreement shall inure to the benefit of
and be binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
parties hereto and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or
in respect of this Agreement or any provision herein contained. This Agreement
and all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the parties hereto and their respective successors and
said controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation.
No purchaser of Offered Securities from any Underwriter shall be deemed to be a
successor by reason merely of such purchase.
SECTION 13. Governing Law. This Agreement and all the rights and
obligations of the parties hereto shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed in such State.
SECTION 14. Counterparts. Any Terms Agreement may be executed in one
or more counterparts and, if executed in more than one counterpart, the
executed counterparts thereof shall constitute a single instrument.
- 27 -
<PAGE> 31
EXHIBIT A
TERMS AGREEMENT
, 1996
Apache Corporation
2000 Post Oak Boulevard, Suite 100
Houston, Texas 77056-4400
Dear Sirs:
The undersigned underwriters (the "Underwriters") understand that
Apache Corporation (the "Company") proposes to issue and sell $
aggregate principal amount of its debt securities (the "Offered Securities").
Subject to the terms and conditions set forth herein or incorporated by
reference herein, the Underwriters offer to purchase, severally and not
jointly, the principal amount of Offered Securities set forth below opposite
their respective names at of the principal amount thereof
together with accrued interest thereon from
, 1996 to the Closing Time:
Principal
Amount of
Underwriter Debt Securities
---------------------
Total $
=====================
The Offered Securities shall have the following terms:
Principal amount:
Form:
Denomination:
<PAGE> 32
Date of maturity:
Interest rate, rates or formula
(or method of calculation
of interest accrual):
Date from which interest accrues:
Interest payment dates, if any:
Initial price to public:
Closing Time:
Place of delivery:
Company account for wire
transfer of payment:
Redemption provisions, if any:
Lock-up pursuant to Section 3(i)
of the Basic Terms, as defined
below: [yes] [no]
Securities Exchanges, if any, on
which application will be made
to list the Offered Securities:
Delayed Delivery Contracts: [authorized] [not authorized]
Delivery date:
Expiration date:
Compensation to Underwriters:
Minimum contract:
Maximum aggregate principal amount:
Other terms, if any:
All the provisions contained in "Apache Corporation-Debt
Securities--Underwriting Agreement Basic Terms" (the "Basic Terms"), to be
filed as an exhibit to the Registration Statement relating to the Offered
Securities and attached hereto as Annex A, are herein incorporated by reference
in their entirety and shall be deemed to be a part of this Terms Agreement to
the same extent as if such provisions had been set forth in full herein. Terms
defined in such document are used herein as therein defined.
Any notice by the Company to the Underwriters pursuant to this Terms
Agreement shall be sufficient if given in accordance with Section 11 of the
Basic Terms addressed to: [insert name and address of the lead manager or
manager or, if only one underwriter is a party hereto, of such firm] which
shall, for all purposes of this Agreement, be the "Representatives".
A-2
<PAGE> 33
Very truly yours,
REPRESENTATIVES
By:
----------------------------------
[Acting for themselves and as
Representatives
of the Underwriters]
By:
----------------------------------
( )
Accepted:
APACHE CORPORATION
By:
---------------------------------
Name:
Title:
A-3
<PAGE> 34
EXHIBIT B
APACHE CORPORATION
[Title of Offered Securities]
DELAYED DELIVERY CONTRACT
Apache Corporation
2000 Post Oak Boulevard, Suite 100
Houston, Texas 77056-4400
Attention:
Dear Sirs:
The undersigned hereby agrees to purchase from Apache Corporation (the
"Company"), and the Company agrees to sell to the undersigned on ____________,
19__ (the "Delivery Date"), $_____________ principal amount of the Company's
__% Offered Securities due ___________ __, 19__ (the "Offered Securities"),
offered by the Company's Prospectus dated _________ __, 19__, as supplemented
by its Prospectus Supplement dated __________ __, 19__, receipt of which is
hereby acknowledged, at a purchase price of _____% of the principal amount
thereof, plus accrued interest from __________, ______, to the Delivery Date,
and on the further terms and conditions set forth in this contract.
Payment for the securities which the undersigned has agreed to purchase on the
Delivery Date shall be made to the Company or its order by wire transfer in
immediately available funds on the Delivery Date, upon delivery to the
undersigned of the Offered Securities to be purchased by the undersigned in
definitive or global form and in such denominations and registered in such
names as the undersigned may designate by written or telegraphic communication
addressed to the Company not less than three full business days prior to the
Delivery Date.
The obligation of the undersigned to take delivery of and make payment for
Offered Securities on the Delivery Date shall be subject only to the conditions
that (1) the purchase of Offered Securities to be made by the undersigned shall
not on the Delivery Date be prohibited under the laws of the jurisdiction to
which the undersigned is subject and (2) the Company, on or before ___________,
____, shall have sold to the Underwriters of the Offered Securities (the
"Underwriters") such principal amount of the Offered Securities as is to be
sold to them pursuant to the Terms Agreement dated ____________, ____ between
the Company and the Underwriters. The obligation of the undersigned to take
delivery of and make payment for Offered Securities shall not be affected by
the failure of any purchaser to take delivery of and make payment for Offered
Securities pursuant to other contracts similar to this contract. The
undersigned represents and warrants to the Underwriters that its investment in
the Offered Securities is not, as of the date hereof, prohibited under the laws
of any jurisdiction to which the undersigned is subject and which govern such
investment.
B-1
<PAGE> 35
Promptly after completion of the sale to the Underwriters, the Company will
mail or deliver to the undersigned at its address set forth below notice to
such effect, accompanied by a copy of the opinion of counsel for the Company
delivered to the Underwriters in connection therewith.
By the execution hereof, the undersigned represents and warrants to
the Company that all necessary corporate action for the due execution and
delivery of this contract and the payment for and purchase of the Offered
Securities has been taken by it and no further authorization or approval of any
governmental or other regulatory authority is required for such execution,
delivery, payment or purchase, and that, upon acceptance hereof by the Company
and mailing or delivery of a copy as provided below, this contract will
constitute a valid and binding agreement of the undersigned in accordance with
its terms.
This contract will inure to the benefit of and be binding upon the
parties hereto and their respective successors, but will not be assignable by
either party hereto without the written consent of the other.
It is understood that the Company will not accept Delayed Delivery
Contracts for an aggregate principal amount of Offered Securities in excess of
$__________ and that the acceptance of any Delayed Delivery Contract is in the
Company's sole discretion and, without limiting the foregoing, need not be on a
first come first-served basis. If this contract is acceptable to the Company,
it is requested that the Company sign the form of acceptance on a copy hereof
and mail or deliver a signed copy hereof to the undersigned at its address set
forth below. This will become a binding contract between the Company and the
undersigned when such copy is so mailed or delivered.
B-2
<PAGE> 36
This Agreement shall be governed by the laws of the State New York
applicable to agreements made and performed in said State.
Yours very truly,
------------------------------
(Name of Purchaser)
By
----------------------------
(Title)
------------------------------
------------------------------
(Address)
Accepted as of the date
first above written.
Apache Corporation
By:
----------------------
PURCHASER -- PLEASE COMPLETE AT TIME OF SIGNING
The name and telephone number of the representative of the Purchaser
with whom details of delivery on the Delivery Date shall be discussed is as
follows: (Please print.)
Telephone No.
Name
- ---- (Including Area Code)
---------------------
B-3
<PAGE> 1
EXHIBIT 4.2
FORM OF DEBT SECURITIES
(NOTE)
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (THE "DEPOSITORY") TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY), 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.
REGISTERED PRINCIPAL AMOUNT
No: $
CUSIP:
Apache Corporation
% NOTE DUE
APACHE CORPORATION, a corporation duly organized and existing under
the laws of the State of Delaware (the "Company", which term includes any
successor corporation under the Indenture hereinafter referred to), for value
received hereby promises to pay to CEDE & CO., or registered assigns, the
principal sum of
Dollars on , ("Stated Maturity") and to pay interest
thereon from , or from the most recent date in respect of
which interest has been paid or duly provided for, on and
of each year (each, an "Interest Payment Date"), commencing
, , and at Stated Maturity or upon such other date on
which the principal of this Note becomes due and payable, whether by
declaration of acceleration or otherwise, and including any Change in Control
Purchase Date ("Maturity"), at the rate of % per annum, until the
principal hereof is paid or duly made available for payment. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment Date
will, as provided in the Indenture referred to below, be paid to the Person in
whose name this Note (or one or more Predecessor Securities) is registered as
of the close of business on the last day of or , as the case may
be (whether or not a Business Day), next preceding such Interest Payment Date
(each such date, a "Regular Record Date"). Any such interest which is payable,
but is not punctually paid or duly provided for on any Interest Payment Date
shall forthwith cease to be payable to the Holder on such Regular Record Date,
and shall be paid to the Person in whose name this Note (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 the Holder of this Note not less than
10 days prior to such Special Record Date, or may be paid in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Notes may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in the Indenture.
Payment of the principal of and interest on this Note will be made at
the office or agency maintained for that purpose in the Borough of Manhattan,
The City of New York, in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts; provided, however, that payment of interest may be made at the option of
the Company by check mailed to the Person in whose name this Note is registered
at the close of business on the related Record Date; provided further, that,
notwithstanding anything else contained herein, if this Note is a Global
Security and is held in book-entry form through the facilities of the
Depository, payments on this Note will be made to the Depository or its nominee
in accordance with the arrangements then in effect between the Trustee and the
Depository.
Reference is hereby made to the further provisions of this Note set
forth on the succeeding pages hereof, which further provisions shall for all
purposes have the same effect as if set forth herein.
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein,
referred to in the within mentioned Indenture.
The Chase Manhattan Bank, as Trustee
By:
------------------------------------
Authorized Officer
<PAGE> 2
APACHE CORPORATION
% NOTE DUE
This Note is one of a duly authorized issue of Securities of the
Company issued under an Indenture, dated as of February 15, 1996 (the
"Indenture"), between the Company and The Chase Manhattan Bank, as trustee and
successor to Chemical Bank (the "Trustee", which term includes any successor
trustee under the Indenture), designated as the % Notes due (the
"Notes"). Reference is made to the Indenture for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Notes and of the terms upon
which the Notes are, and are to be, authenticated and delivered. All terms
used in this Note which are not defined herein and which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
The Indenture and this Note shall be governed by and construed in
accordance with the laws of the State of New York.
The Indenture provides for the defeasance of the Notes and certain
covenants in certain circumstances.
This Note is unsecured as to payment of principal and interest, and
ranks pari passu with all other unsecured unsubordinated indebtedness of the
Company.
Interest payments on this Note will include interest accrued to but
excluding the applicable Interest Payment Date or Maturity hereof, as the case
may be. Interest payments for this Note shall be computed and paid on the
basis of a 360-day year of twelve 30-day months.
In the case where the applicable Interest Payment Date or Maturity
with respect hereto, as the case may be, does not fall on a Business Day,
payment of principal or interest otherwise payable on such day need not be made
on such day, but may be made on the next succeeding Business Day with the same
force and effect as if made on the Interest Payment Date or at Maturity and no
interest shall accrue with respect to such payment for the period from and
after the Interest Payment Date or such Maturity, as the case may be, to the
date of payment.
The Notes are not redeemable prior to Maturity and will not be subject
to any sinking fund and, except as provided in the Indenture, will not be
repayable prior to their Stated Maturity.
If any Event of Default with respect to the Notes shall occur and be
continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
As set forth in, and subject to the provisions of, the Indenture, no
Holder of any Note will have any right to institute any proceeding with respect
to the Indenture or for any remedy thereunder, unless (i) such Holder shall
have previously given to the Trustee written notice of a continuing Event of
Default with respect to the Notes, (ii) the Holders of not less than 25% in
principal amount of the Outstanding Notes shall have made written request, and
offered reasonable indemnity, to the Trustee to institute such proceeding as
trustee, (iii) the Trustee shall have failed to institute such proceeding
within 60 days after receipt of such written request and (iv) the Trustee shall
not have received from the Holders of a majority in principal amount of the
Outstanding Notes a direction inconsistent with such request within such 60 day
period; provided, however, that such limitations do not apply to a suit
instituted by the Holder hereof for the enforcement of payment of the principal
of and premium, if any, or any interest on this Note on or after the respective
due dates expressed herein or to require the purchase of its Notes by the
Company upon the occurrence of a Change in Control in accordance with 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
thereunder 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
aggregate principal amount of such Securities then 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
thereunder at the time Outstanding, on behalf of the Holders of all Securities
of such series, to waive compliance by the Company with certain restrictive
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note
shall be conclusive and binding upon such Holder and upon all future Holders of
any Note issued upon the registration of transfer hereof or in exchange for or
in lieu hereof, whether or not notation of such consent or waiver is made upon
this Note.
2
<PAGE> 3
No reference to the Indenture and no provision of this Note or of the
Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any interest on this
Note at the times, places and rate, and in the coin or currency, herein
prescribed.
The Notes are issuable only in fully registered form in denominations
of $100,000 and integral multiples of $1,000 in excess thereof. As provided
in the Indenture and subject to certain limitations therein set forth, this
Note is exchangeable for a like aggregate principal amount of Notes of this
series and of like tenor of any authorized denomination, as requested by the
Holder surrendering the same. As provided in the Indenture and subject to
certain limitations therein set forth, the transfer of this Note is registrable
in the Security Register, upon surrender of this Note for registration of
transfer at the office or agency of the Company in any place where the
principal of and any interest on this Note are payable or at such other offices
or agencies as the Company may designate, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to, the Company and the
Security Registrar or any transfer agent duly executed by the registered owner
hereof or his attorney duly authorized in writing, and thereupon one or more
new Notes of this series and of like tenor, of authorized denominations and for
the same aggregate principal amount and Stated Maturity will be issued to the
designated transferee or transferees.
Subject to the terms and conditions of the Indenture, if any Change in
Control occurs prior to the Stated Maturity of this Note, the Company shall, at
the option of the Holders, purchase all Securities for which a Change in
Control Purchase Notice shall have been delivered as provided in the Indenture
and not withdrawn, by a date which shall be 35 Business Days after the
occurrence of such Change in Control, at a Change in Control Purchase Price
equal to 100% of the principal amount plus accrued interest to the Change in
Control Purchase Date, which Change in Control Purchase Price shall be paid in
cash.
Holders have the right to withdraw any Change in Control Purchase
Notice by delivering to the paying agent a written notice of withdrawal in
accordance with the provisions of the Indenture.
If cash sufficient to pay the Change in Control Purchase Price of all
Securities or portions thereof to be purchased on the Change in Control
Purchase Date is deposited with the Trustee on the Change in Control Purchase
Date, interest shall cease to accrue on such Securities (or portions thereof)
and on and after the Change in Control Purchase Date the Holders thereof shall
have no other rights as such (other than the right to receive the Change in
Control Purchase Price upon surrender of such Securities).
Subject to the terms of the Indenture, prior to due presentment of
this Note 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 Note is
registered as the owner hereof for all purposes, whether or not this Note is
overdue, and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
No service charge shall be made for any registration of transfer or
exchange of this Note, but, subject to certain limitations set forth in the
Indenture, the Company may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith.
This Note shall not be valid or become obligatory for any purpose
until the Trustee's Certificate of Authentication hereon shall have been
executed by the Trustee.
3
<PAGE> 4
IN WITNESS WHEREOF, APACHE CORPORATION has caused this instrument to be
duly executed under its corporate seal.
APACHE CORPORATION
[SEAL] BY
------------------------------
Name: Matthew W. Dundrea
Title: Treasurer
Attest:
BY
-------------------------------------
Name: Cheri L. Peper
Title: Corporate Secretary
Date:
4
<PAGE> 5
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
- --------------------------------------------------------------------------------
Please insert Social Security or other identifying number of assignee
- --------------------------------------------------------------------------------
(please print or type name and address of assignee)
the within Security and all rights thereunder and does hereby irrevocably
constitute and appoint the aforesaid assignee attorney to transfer the within
Security on the books kept for registration thereof, with full power of
substitution in the premises.
Dated:
----------------------------- --------------------------------
In the presence of:
- --------------------------------------------------------------------------------
NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Security in every particular, without
alteration or enlargement or any change whatever. When assignment is made by a
guardian, trustee, executor or administrator, an officer of a corporation, or
anyone in a representative capacity, proof of his authority to act must
accompany the Security. The signature must be guaranteed by an Institution
which is a member of one of the following recognized signature Guarantee
Programs: (i) The Securities Transfer Agent Medallion Program (STAMP); (ii)
The New York Stock Exchange Medallion Program (MNSP); (iii) The Stock Exchange
Medallion Program (SEMP); or (iv) in such other guarantee program acceptable to
the Trustee.
5
<PAGE> 1
[Apache Letterhead]
EXHIBIT 5.1
September 24, 1996
Apache Corporation
2000 Post Oak Blvd, Suite 100
Houston, Texas 77056-4400
Ladies and Gentlemen:
I am General Counsel to Apache Corporation, a Delaware corporation
(the "Company"), and am rendering this opinion in my capacity as such in
connection with the proposed offering from time to time of up to an aggregate
$300,000,000 principal amount of the Company's senior unsecured debt securities
(the "Debt Securities") described in the Registration Statement on Form S-3 (the
"Registration Statement"). The Debt Securities are to be issued in one or more
series pursuant to an Indenture between the Company and The Chase Manhattan Bank
(successor to Chemical Bank), Trustee.
In connection therewith, I have examined the Registration Statement
covering the Debt Securities which is to be filed with the Securities and
Exchange Commission, originals or copies certified or otherwise identified to
my satisfaction of the Restated Certificate of Incorporation of the Company and
the Bylaws of the Company, each as amended to date, the corporate proceedings
with respect to the offering of the Debt Securities and such other documents
and instruments as I have deemed necessary or appropriate for the expression of
the opinions contained herein.
I have assumed the authenticity and completeness of all records,
certificates and other instruments submitted to me as originals, the conformity
to original documents of all records, certificates and other instruments
submitted to me as copies, the authenticity and completeness of originals of
those records, certificates and other instruments submitted to me as copies and
the correctness of all statements of fact contained in all records,
certificates and other instruments that I have examined.
Based on the foregoing, and having regard for such legal considerations
as I have deemed relevant, I am of the opinion that the Debt Securities have
been duly authorized and when duly executed by the proper officers of the
Company, authenticated and delivered by the Trustee in accordance with the
Indenture, and issued and delivered, against payment of the consideration
therefor, will constitute valid and legally binding obligations of the Company,
enforceable in accordance with their terms, except as enforcement thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting enforcement of creditors' rights generally or by
general equity principles, and except further as enforcement thereof may be
limited by (1) requirements that a claim with respect to any Debt Securities
denominated other than in U.S. dollars (or a foreign currency or composite
currency judgment in respect of such claim) be converted into U.S. dollars at a
rate of exchange prevailing on a date determined pursuant to applicable law or
(2) governmental authority to limit, delay or prohibit the making of payments
outside the United States.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of my name under the caption "Legal
Matters" in the prospectus included as part of the Registration Statement.
Very truly yours,
/s/ Z. S. Kobiashvili
<PAGE> 1
[Letterhead of Woodard, Hall & Primm, P.C.]
Exhibit 8.1
September 24, 1996
Apache Corporation
2000 Post Oak Boulevard
Suite 100
Houston, Texas 77056-4400
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel for Apache Corporation, a Delaware
corporation (the "Company"), in connection with the Company's Registration
Statement on Form S-3 (the "Registration Statement") relating to the
registration under the Securities Act of 1933, as amended, of up to an
aggregate $300,000,000 principal amount of the Company's debt securities (the
"Debt Securities"). The Debt Securities are to be issued from time to time in
one or more series pursuant to an Indenture between the Company and The Chase
Manhattan Bank, as trustee and successor to Chemical Bank. The terms of the
Debt Securities, which are set forth in the Registration Statement, are
incorporated herein by reference.
Based upon the terms of the Debt Securities, as set forth in the
Registration Statement, we hereby confirm that the discussion set forth in the
Registration Statement under the caption "Certain United States Federal Income
Tax Considerations," except as otherwise stated therein, constitute our opinion
as to the material federal income tax considerations of the acquisition,
holding and disposition of the Debt Securities.
Pursuant to the provisions of Rule 436(a) promulgated by the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, we hereby consent to the filing of this letter as an exhibit to the
Registration Statement.
Very truly yours,
/s/ WOODARD, HALL & PRIMM, P.C.
<PAGE> 1
EXHIBIT 12.1
APACHE CORPORATION
STATEMENT OF COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
30, YEAR ENDED DECEMBER 31,
--------------------- ---------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
-------- -------- --------- --------- -------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS
Pretax income (loss) from
continuing operations(1)....... $ 65,288 $ 10,793 $ 33,143 $ 66,234 $ 62,067 $ (5,759) $ (57,482)
Add: Fixed charges excluding
capitalized interest........... 33,709 39,303 77,220 39,008 34,355 43,603 41,889
------- ------- -------- -------- ------- ------- --------
Adjusted earnings................ $ 98,997 $ 50,096 $ 110,363 $ 105,242 $ 96,422 $ 37,844 $ (15,593)
======= ======= ======== ======== ======= ======= ========
FIXED CHARGES
Interest expense including
capitalized interest(2)........ $ 41,990 $ 43,609 $ 88,057 $ 37,838 $ 34,205 $ 45,731 $ 48,117
Amortization of debt expense..... 2,329 2,373 4,665 3,987 3,896 3,888 2,052
Interest component of lease
rental expenditures(3)......... 1,929 1,756 3,539 3,217 2,533 2,980 2,373
------- ------- -------- -------- ------- ------- --------
$ 46,248 $ 47,738 $ 96,261 $ 45,042 $ 40,634 $ 52,599 $ 52,542
======= ======= ======== ======== ======= ======= ========
Ratio of earnings to fixed
charges.......................... 2.14 1.05 1.15 2.34 2.37 0.72(4) --(4)
======= ======= ======== ======== ======= ======= ========
</TABLE>
- ---------------
(1) Undistributed income of less-than-50% owned affiliates is excluded.
(2) Apache has guaranteed and is contingently liable for certain debt. This
debt, primarily associated with partnership operations, totaled $7.3 million
at December 31, 1995 and $2.6 million at June 30, 1996. The interest rate
was 6.5% and 6.25%, respectively, at December 31, 1995 and June 30, 1996.
Fixed charges, relating to debt for which Apache is contingently liable,
have not been included in the fixed charges for any of the periods shown
above, based on the financial position of the partnerships and their ability
to service the debt.
(3) Represents the portion of rental expense assumed to be attributable to
interest factors of related rental obligations determined at interest rates
appropriate for the period during which the rental obligations were
incurred. Approximately 32% to 34% applies for all periods presented.
(4) Earnings were inadequate to cover fixed charges by $68.1 million for 1991
and by $14.8 million for 1992 due to write downs of the carrying value of
the U.S. and Canadian oil and gas properties of DEK Energy Company
("DEKALB"), formerly known as DEKALB Energy Company, and losses incurred on
the divestiture of DEKALB's U.S. oil and gas properties.
<PAGE> 1
Exhibit 23.1
CONSENT OF ARTHUR ANDERSEN LLP
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated February 27, 1996
on the audited consolidated financial statements of Apache Corporation and
subsidiaries included in the Apache Corporation Annual Report on Form 10-K for
the year ended December 31, 1995, and to all references to our Firm included in
this registration statement.
/s/ Arthur Andersen LLP
-----------------------
ARTHUR ANDERSEN LLP
Houston, Texas
September 24, 1996
<PAGE> 1
Exhibit 23.2
CONSENT OF ARTHUR ANDERSEN LLP
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated February 23, 1996
on the audited consolidated financial statements of The Phoenix Resource
Companies, Inc. and subsidiaries included in The Phoenix Resource Companies,
Inc. Annual Report on Form 10-K for the year ended December 31, 1995 and to
all references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
-----------------------
ARTHUR ANDERSEN LLP
Oklahoma City, Oklahoma
September 24, 1996
<PAGE> 1
Exhibit 23.3
CONSENT OF COOPERS & LYBRAND
We hereby consent to the incorporation by reference in this registration
statement of our report dated February 13, 1995 on the audits of the
consolidated financial statements of DEKALB Energy Company as of December 31,
1994 and 1993 and for the years ended December 31, 1994 and 1993; and to all
references to our Firm included in this registration statement.
/s/ COOPERS & LYBRAND
Coopers & Lybrand
Chartered Accountants
Calgary, Alberta, Canada
September 24, 1996
<PAGE> 1
[Ryder Scott Company Letterhead]
Exhibit 23.4
Consent of Ryder Scott Company Petroleum Engineers
As independent petroleum engineers, we hereby consent to the incorporation by
reference in this registration statement of our Firm's review of the proved oil
and gas reserve quantities of Apache Corporation as of January 1, 1996, and to
all references to our Firm's name and review included in this registration
statement.
/s/ Ryder Scott Company
/s/ Petroleum Engineers
RYDER SCOTT COMPANY
PETROLEUM ENGINEERS
Houston, Texas
September 24, 1996
<PAGE> 1
[Netherland, Sewell & Associates, Inc. Letterhead]
Exhibit 23.5
Consent of Independent Petroleum Engineers and Geologists
We hereby consent to the incorporation by reference in this registration
statement of our Firm's report on the proved oil and gas reserve quantities of
Aquila Energy Resources Corporation as of December 31, 1994, and to all
references to our Firm's name and report included in this registration
statement.
Netherland, Sewell & Associates, Inc.
By: /s/ Frederic D. Sewell
-----------------------------------
Frederic D. Sewell
President
Dallas, Texas
September 24, 1996
<PAGE> 1
Exhibit 25.1
---------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ____
-------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
</TABLE>
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
----------------------------------------------------------
APACHE CORPORATION
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 41-0747868
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
ONE POST OAK CENTRAL
2000 POST OAK BOULEVARD, SUITE 100
HOUSTON, TEXAS 77056-4400
(Address of principal executive offices) (Zip Code)
</TABLE>
-------------------------------------------
DEBT SECURITIES
(Title of the indenture securities)
-------------------------------------------
<PAGE> 2
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of
Amendment dated February 17, 1969, August 31, 1977, December 31, 1980,
September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see
Exhibit 1 to Form T-1 filed in connection with Registration Statement
No. 333-06249, which is incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to
Commence Business (see Exhibit 2 to Form T-1 filed in connection with
Registration Statement No. 33-50010, which is incorporated by reference. On
July 14, 1996, in connection with the merger of Chemical Bank and The Chase
Manhattan Bank (National Association), Chemical Bank, the surviving
corporation, was renamed The Chase Manhattan Bank.)
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank.)
7. A copy of the latest report of condition of the Trustee,
published pursuant to law or the requirements of its supervising or examining
authority. (On July 14, 1996, in connection with the merger of Chemical Bank
and The Chase Manhattan Bank (National Association), Chemical Bank, the
surviving corporation, was renamed The Chase Manhattan Bank.)
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York and State of New York, on the 19TH day
of SEPTEMBER, 1996.
THE CHASE MANHATTAN BANK
By/s/ Andrew M. Deck
---------------------------------------
Andrew M. Deck
Trust Officer
- 3 -
<PAGE> 4
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
Chemical Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business June 30, 1996, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS In Millions
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ................................. $ 4,167
Interest-bearing balances ......................... 5,094
Securities: ..........................................
Held to maturity securities............................ 3,367
Available for sale securities.......................... 27,786
Federal Funds sold and securities purchased under
agreements to resell in domestic offices of the
bank and of its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds sold ................................ 7,204
Securities purchased under agreements to resell ... 136
Loans and lease financing receivables:
Loans and leases, net of unearned income $67,215
Less: Allowance for loan and lease losses 1,768
Less: Allocated transfer risk reserve ... 75
------
Loans and leases, net of unearned income,
allowance, and reserve ............................ 65,372
Trading Assets ........................................ 28,610
Premises and fixed assets (including capitalized
leases)............................................ 1,326
Other real estate owned ............................... 26
Investments in unconsolidated subsidiaries and
associated companies............................... 68
Customer's liability to this bank on acceptances
outstanding ....................................... 995
Intangible assets ..................................... 309
Other assets .......................................... 6,993
--------
TOTAL ASSETS .......................................... $151,453
</TABLE> ========
- 4 -
<PAGE> 5
LIABILITIES
<TABLE>
<S> <C>
Deposits
In domestic offices ................................ $46,917
Noninterest-bearing .........................$16,282
Interest-bearing .............................29,846
------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's .................................... 31,577
Noninterest-bearing .........................$ 199
Interest-bearing ............................ 30,634
------
Federal funds purchased and securities sold under agree-
ments to repurchase in domestic offices of the bank and
of its Edge and Agreement subsidiaries, and in IBF's
Federal funds purchased ............................ 12,155
Securities sold under agreements to repurchase ..... 8,536
Demand notes issued to the U.S. Treasury .............. 1,000
Trading liabilities ................................... 20,914
Other Borrowed money:
With remaining maturity of one year or less ........ 10,018
With remaining maturity of more than one year ...... 192
Mortgage indebtedness and obligations under capitalized
leases ............................................. 12
Bank's liability on acceptances executed and outstanding 1,001
Subordinated notes and debentures ..................... 3,411
Other liabilities ..................................... 8,091
TOTAL LIABILITIES ..................................... 143,824
-------
EQUITY CAPITAL
Common stock .......................................... 620
Surplus ............................................... 4,664
Undivided profits and capital reserves ................ 2,970
Net unrealized holding gains (Losses)
on available-for-sale securities ...................... (633)
Cumulative foreign currency translation adjustments ... 8
TOTAL EQUITY CAPITAL .................................. 7,629
--------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED
STOCK AND EQUITY CAPITAL .......................... $151,453
========
</TABLE>
I, Joseph L. Sclafani, S.V.P. & Controller of the
above-named bank, do hereby declare that this Report of
Condition has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true to the best of my knowledge and
belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness
of this Report of Condition and declare that it has been
examined by us, and to the best of our knowledge and
belief has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true and correct.
WALTER V. SHIPLEY )
EDWARD D. MILLER )DIRECTORS
THOMAS G. LABRECQUE )
- 5 -
