<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number: 1-11156
NGC CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 94-3248415
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 LOUISIANA, SUITE 5800
HOUSTON, TEXAS 77002
(Address of principal executive offices)
(Zip Code)
(713) 507-6400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES x NO
----- ----
Number of shares outstanding of each of the issuer's classes of common stock, as
of the latest practicable date: Common stock, $.01 par value per share,
150,820,514 shares outstanding as of August 12, 1997.
Page 1 of 36
<PAGE>
NGC CORPORATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets:
June 30, 1997 and December 31, 1996.......................... 3
Condensed Consolidated Statements of Operations:
For the three months ended June 30, 1997 and 1996............ 4
Condensed Consolidated Statements of Operations:
For the six months ended June 30, 1997 and 1996.............. 5
Condensed Consolidated Statements of Cash Flows:
For the six months ended June 30, 1997 and 1996.............. 6
Notes to Condensed Consolidated Financial Statements.......... 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.......................... 20
PART II. OTHER INFORMATION
Item 1. Legal Proceedings............................................ 32
Item 2. Not Applicable............................................... --
Item 3. Not Applicable............................................... --
Item 4. Submission of Matters to a Vote of Security Holders.......... 33
Item 5. Not Applicable............................................... --
Item 6. Exhibits and Reports on Form 8-K............................. 34
</TABLE>
Page 2 of 36
<PAGE>
NGC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------------ --------------
(unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 102,112 $ 50,209
Accounts receivable, net 1,141,562 1,373,560
Accounts receivable, affiliates 98,547 144,825
Inventories 161,591 257,005
Assets held for sale 382,800 ---
Assets from risk management activities 102,062 98,433
Prepayments and other assets 74,712 12,689
------------ --------------
2,063,386 1,936,721
------------ --------------
PROPERTY, PLANT AND EQUIPMENT 1,842,844 1,819,811
Less: accumulated depreciation (173,022) (128,432)
------------ --------------
1,669,822 1,691,379
------------ --------------
OTHER ASSETS:
Investments in unconsolidated affiliates 503,051 181,688
Assets from risk management activities 184,010 171,528
Other assets 249,542 205,494
------------ --------------
$ 4,669,811 $ 4,186,810
============ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,065,645 $ 1,305,726
Accounts payable, affiliates 29,248 39,070
Accrued liabilities 159,537 117,777
Liabilities from risk management activities 92,432 86,414
------------ --------------
1,346,762 1,548,987
LONG-TERM DEBT 1,346,264 988,597
OTHER LIABILITIES:
Liabilities from risk management activities 143,890 127,725
Deferred income taxes 320,766 328,280
Other long-term liabilities 152,964 76,488
------------ --------------
3,310,646 3,070,077
------------ --------------
COMPANY OBLIGATED PREFERRED SECURITIES
OF SUBSIDIARY TRUST 200,000 ---
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 50,000,000
shares authorized:
8,000,000 shares designated as Series
A Participating Preferred Stock,
7,815,363 shares issued and outstanding
at June 30, 1997 and December 31, 1996 75,418 75,418
Common stock, $0.01 par value, 400,000,000
shares authorized:
151,257,423 shares issued and outstanding
at June 30, 1997 and
149,846,503 shares issued and outstanding
at December 31, 1996 1,512 1,498
Additional paid-in capital 906,998 896,432
Retained earnings 176,172 143,385
------------ --------------
1,160,100 1,116,733
Less: treasury stock, at cost: 59,900 shares
at June 30, 1997 (935) ---
------------ --------------
Total Stockholders' Equity 1,159,165 1,116,733
------------ --------------
$ 4,669,811 $ 4,186,810
============ ==============
</TABLE>
See notes to condensed consolidated financial statements.
Page 3 of 36
<PAGE>
NGC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
--------------------------------
1997 1996
---------- ----------
<S> <C> <C>
Revenues $2,684,339 $1,163,151
Cost of sales 2,586,572 1,111,156
---------- ----------
Operating margin 97,767 51,995
Depreciation and amortization 25,421 14,935
General and administrative expenses 37,592 18,337
---------- ----------
Operating income 34,754 18,723
Equity in earnings of unconsolidated
affiliates 13,417 8,148
Other income 11,481 973
Interest expense (13,236) (9,125)
Other expenses (1,316) (1,495)
Minority interest in income of a subsidiary (1,525) ---
---------- ----------
Income before income taxes 43,575 17,224
Income tax provision 11,447 3,386
---------- ----------
NET INCOME $ 32,128 $ 13,838
========== ==========
NET INCOME PER SHARE:
Net income $ 32,128 $ 13,838
Less: preferred stock dividends 97 ---
---------- ----------
Net income applicable to common $ 32,031 $ 13,838
stockholders ========== ==========
Net income per common and common
equivalent share $ 0.19 $ 0.12
========== ==========
Weighted average number of common and common
equivalent shares outstanding 167,127 120,050
========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
Page 4 of 36
<PAGE>
NGC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------------
1997 1996
------------ ------------
<S> <C> <C>
Revenues $5,956,419 $2,810,274
Cost of sales 5,791,305 2,668,197
---------- ----------
Operating margin 165,114 142,077
Depreciation and amortization 48,769 29,105
General and administrative expenses 65,791 40,613
---------- ----------
Operating income 50,554 72,359
Equity in earnings of unconsolidated
affiliates 26,803 12,658
Other income 17,067 2,594
Interest expense (27,860) (19,778)
Other expenses (17,035) (3,988)
Minority interest in income of a
subsidiary (1,525) ---
---------- ----------
Income before income taxes 48,004 63,845
Income tax provision 11,262 19,679
---------- ----------
NET INCOME $ 36,742 $ 44,166
========== ==========
NET INCOME PER SHARE:
Net income $ 36,742 $ 44,166
Less: preferred stock dividends 194 ---
---------- ----------
Net income applicable to common
stockholders $ 36,548 $ 44,166
========== ==========
Net income per common and common
equivalent share $ 0.22 $ 0.37
========== ==========
Weighted average number of common
and common equivalent shares
outstanding 166,820 119,355
========== ==========
</TABLE>
See notes to condensed consolidated financial statements
Page 5 of 36
<PAGE>
NGC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) (IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------------
1997 1996
----------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 36,742 $ 44,166
Items not affecting cash flows from operating
activities:
Depreciation and amortization 49,617 29,105
Equity in earnings of affiliates, net of
cash distributions (4,601) (12,546)
Risk management activities 5,655 2,969
Deferred income taxes (8,592) 17,944
Amortization of bond premium (3,333) (2,044)
Other (1,155) ---
Changes in assets and liabilities resulting
from operating activities:
Accounts receivable 400,559 79,708
Inventories 84,097 3,941
Prepayments and other assets (30,089) 4,066
Accounts payable (360,299) (79,275)
Accrued liabilities 375 1,083
Other, net (1,535) (2,416)
---------- ---------
Net cash provided by operating activities 167,441 86,701
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (83,078) (26,920)
Investment in unconsolidated affiliates, net (26,837) 4,389
Business acquisitions, net of cash acquired (715,589) ---
Proceeds from asset sales 154,063 ---
Other, net (3,195) 14,500
---------- ---------
Net cash used in investing activities (674,636) (8,031)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 1,119,000 608,000
Repayments of long-term borrowings (758,000) (648,000)
Proceeds from sale of capital stock, options
and warrants 4,009 858
Issuance of company obligated preferred
securities of subsidiary trust, net 198,044 ---
Dividends and other distributions (3,955) (3,381)
---------- ---------
Net cash provided by (used in) financing
activities 559,098 (42,523)
---------- ---------
Net change in cash and cash equivalents 51,903 36,147
Cash and cash equivalents, beginning of period 50,209 16,266
---------- ---------
Cash and cash equivalents, end of period $ 102,112 $ 52,413
========== =========
</TABLE>
See notes to condensed consolidated financial statements.
Page 6 of 36
<PAGE>
NGC CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1997 AND 1996
NOTE 1 -- ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions to interim financial reporting as
prescribed by the Securities and Exchange Commission ("SEC"). These interim
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the 1996 Annual Report to
Shareholders incorporated by reference into the Company's Annual Report on Form
10-K for the year ended December 31, 1996, filed with the SEC.
The financial statements include all material adjustments consisting only of
normal recurring adjustments which, in the opinion of management, were necessary
for a fair presentation of the results for the interim periods. Interim period
results are not necessarily indicative of the results for the full year. The
preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to develop
estimates and make assumptions that affect reported financial position and
results of operations and that impact the nature and extent of disclosure, if
any, of contingent assets and liabilities. Actual results could differ from
those estimates.
NOTE 2 -- ACQUISITIONS AND DISPOSITIONS
On June 30, 1997, NGC announced it had closed its acquisition of Destec Energy,
Inc. ("Destec"), an independent power producer, in a deal valued at $1.26
billion, or $21.65 per share of Destec common stock. Simultaneous with this
acquisition, NGC sold Destec's international facilities and operations to The
AES Corporation for $436 million, which is subject to adjustment. NGC financed
the transaction through cash on hand and advances on its credit facilities
provided by its existing commercial banks. The acquisition related debt is
expected to be retired from a combination of cash flows from operations, sales
of non-strategic domestic Destec assets, proceeds from issuance of new corporate
debt and a preferred stock issuance. In July and August 1997, the Company
consummated a sale of Destec's interest in Tiger Bay and a sale of certain oil,
gas and lignite reserves, respectively, and is currently actively negotiating
the sale of its interests in two additional power generating facilities.
Aggregate proceeds from these transactions is expected to approximate $382.8
million and such amount is classified in the accompanying balance sheet as
assets held for sale. These asset sales are part of the planned divestiture of
non-strategic domestic assets contemplated as an integral part of the Destec
acquisition. The Company is continuing to explore other opportunities to
monetize its investment in certain assets acquired from Destec if, and when, it
is determined that such divestitures are economically and strategically
appropriate.
The Destec acquisition was accounted for under the purchase method of
accounting. Accordingly, the purchase price of approximately $718 million,
inclusive of transaction costs and net of cash acquired, was allocated to the
Destec assets acquired and liabilities assumed based on their estimated fair
values as of June 30, 1997, the effective date of the acquisition for accounting
purposes. The results of operations of the acquired Destec assets will be
consolidated with NGC's existing operations beginning July 1, 1997. As described
previously, the Company is assessing opportunities to monetize its investment in
assets acquired from Destec. Further divestitures, if any, could impact the
purchase allocation contained in the accompanying balance sheet. In addition,
the Company is assessing its exposure to certain litigation and other potential
contingencies involving Destec. Consequently, the purchase price allocation as
presented herein is considered preliminary. The following table reflects certain
unaudited pro forma information for the periods presented as if the Destec
acquisition had occurred on January 1, 1996 (in thousands, except per share
data):
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------
1997 1996
----------- -----------
<S> <C> <C>
Pro forma revenues $6,076,246 $2,927,884
Pro forma net income $ 36,215 $ 46,349
Pro forma net income per
share $ 0.22 $ 0.39
</TABLE>
Page 7 of 36
<PAGE>
NGC CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1997 AND 1996
In June 1997, the Company and NOVA Corporation ("NOVA") completed the
restructuring of the companies' Canadian natural gas operations formerly
executed through Novagas Clearinghouse Ltd. ("NCL"), a joint venture between NGC
and NOVA. Pursuant to the agreements, NGC acquired NCL's natural gas marketing
business, excluding the natural gas aggregation business of Pan-Alberta Gas Ltd.
("Pan-Alberta"), from NCL and sold its aggregate 49.9 percent interest in NCL to
NOVA Gas International, a subsidiary of NOVA. NOVA assumed full ownership of
NCL's gathering and processing business and the operations of Pan-Alberta. The
restructuring included amendments to or termination of various agreements
between NCL, NGC, NOVA and certain affiliates of both NGC and NOVA. NGC realized
a gain on the sale of its interest in NCL of $7.8 million, which is classified
as other income in the accompanying condensed consolidated statements of
operations for the three- and six-month periods ended June 30, 1997. The
acquisition by NGC of NCL's marketing business was accounted for under the
purchase method of accounting. Accordingly, the purchase price of $4.0 million,
inclusive of transaction costs, was allocated to the assets acquired and
liabilities assumed based on their estimated fair values as of April 1, 1997,
the effective date of the acquisition for accounting purposes. NGC and NOVA will
pursue separate midstream asset businesses in Canada with NGC operating its
Canadian marketing and midstream asset businesses under the name NGC Canada,
Inc.
On August 31, 1996, NGC completed a strategic combination (the "Chevron
Combination") with Chevron U.S.A. Inc. and certain Chevron affiliates
("Chevron") pursuant to which Chevron contributed substantially all of its
midstream assets (the "Contribution"), including substantially all of the assets
comprising Warren Petroleum Company and Chevron's Natural Gas Business Unit and
an undivided interest in those assets that constitute the West Texas LPG
Pipeline, into Midstream Combination Corp. ("Midstream"), a Delaware corporation
formed for purposes of the transaction. NGC was merged with and into Midstream
immediately following the Contribution and Midstream was renamed NGC
Corporation. In exchange for the Contribution, Chevron received approximately
38.6 million shares of NGC common stock and approximately 7.8 million shares of
NGC Series A Participating Preferred Stock and NGC assumed approximately $283
million of indebtedness. Immediately following closing of the Chevron
Combination, NGC paid approximately $128 million to Chevron and funded such
payment under its Credit Agreement. The Chevron Combination was accounted for as
an acquisition of assets under the purchase method of accounting. The purchase
price of approximately $740 million, inclusive of assumed indebtedness and
transaction costs, was allocated to the assets acquired and liabilities assumed
based on their estimated fair values as of an effective date of September 1,
1996.
In connection with the Chevron Combination, NGC agreed with the Federal Trade
Commission to divest its ownership in one of three natural gas liquids
fractionation facilities and to relinquish operatorship at a second
fractionation facility. Effective December 1, 1996, the Company relinquished
its role as operator of the Gulf Coast Fractionator ("GCF") facility and on
January 1, 1997, the Company sold its interest in the Mont Belvieu I
fractionator.
NOTE 3 -- EARNINGS PER SHARE
Net income per share is based on the weighted average number of common stock
shares outstanding plus the common stock equivalents that would arise from
conversion of the Series A Participating Preferred Shares outstanding and the
exercise of outstanding options or warrants, when dilutive. Primary and fully
diluted earnings per share are the same for all periods presented.
On March 3, 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings Per Share". The new statement is effective for interim and
annual periods ending after December 15, 1997, and early adoption is not
permitted. On a pro forma basis, using the computational guidelines provided in
the statement, basic and diluted earnings per share for the three- and six-month
periods ended June 30, 1997 and 1996, would have been as follows:
Page 8 of 36
<PAGE>
NGC CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
------------------
1997 1996
-------- --------
<S> <C> <C>
Basic earnings per share $0.21 $0.12
Diluted earnings per share $0.19 $0.12
SIX MONTHS ENDED
JUNE 30,
----------------
1997 1996
----- -----
Basic earnings per share $0.23 $0.40
Diluted earnings per share $0.22 $0.32
</TABLE>
NOTE 4 -- INVENTORY
At March 31, 1997, the Company recognized a lower-of-cost-or-market writedown of
its NGL and crude oil inventories totaling $15.0 million on a pretax basis. In
addition, the Company recognized a pretax charge of $8.3 million resulting from
a hedge-related loss. The aggregate charge of $23.3 million is included in cost
of sales in the accompanying condensed consolidated statement of operations for
the six-month period ended June 30, 1997.
NOTE 5 -- UNCONSOLIDATED AFFILIATES
At June 30, 1997, NGC's investments in unconsolidated affiliates accounted for
by the equity method included: a 25 percent participating preferred stock
interest in Accord Energy Limited ("Accord"), a United Kingdom limited company;
an approximate 37 percent interest in Venice Gas Processing Company ("Venice");
a 38.75 percent partnership interest in GCF; an approximate 28 percent interest
in Avoca Natural Gas Storage ("Avoca"); a 25 percent interest in Midstream Barge
Company, L.L.C. ("BargeCo"); a 33.33 percent interest in Waskom Gas Processing
Company; a 49 percent partnership interest in West Texas LPG Pipeline, Limited
Partnership ("West Texas Partnership") and various partnership investments
acquired in the Destec acquisition. NGC's investments in BargeCo and the West
Texas Pipeline are a result of the Chevron Combination and NGC acquired its
interest in Venice effective November 1, 1996.
As part of the Destec acquisition, NGC acquired interests in fourteen
partnerships, each formed to build, own and operate cogeneration facilities.
The Company's interests in these partnerships range from eight to 50 percent.
Each partnership interest is accounted for under the equity method. Construction
of the cogeneration facilities by each of the partnerships was project financed
and the obligations of the partnerships are non-recourse to the Company.
The Company also has two cost-basis investments: Indeck North American Power
Fund, L.P. and Indeck North American Power Partners, L.P. Dividends from these
investments during the six-month period ended June 30, 1997 and 1996 totaled
$53,000 and $112,000, respectively.
At June 30, 1997, the aggregate unamortized excess of the Company's investment
over the aggregate equity in the underlying net assets of the affiliated
entities approximated $296 million. This amount is being amortized on the
straight-line method over the estimated economic service lives of the assets
operated by the unconsolidated affiliates. Summarized unaudited combined income
statement information for the unconsolidated affiliates accounted for by the
equity method is presented in the table below:
Page 9 of 36
<PAGE>
NGC CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------------------
1997 1996
------------------ -----------------
EQUITY EQUITY
TOTAL SHARE TOTAL SHARE
-------- -------- -------- -------
($US IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues (1) (2) (3) $96,951 $38,632 $12,451 $4,829
======= ======= ======= ======
Operating margin (1) (2) (3) $39,902 $16,038 $11,609 $4,633
======= ======= ======= ======
Net income (1) (2) (3) $31,536 $14,195 $ 2,142 $1,987
======= ======= ======= ======
</TABLE>
- -----------------------
(1) The financial data for both periods presented is exclusive of amounts
attributable to the Company's investment in Accord as such information was
unavailable for the current period. NGC's share of Accord earnings for the
six-months ended June 30, 1997, totaled $13.5 million. Total amounts for the
six-months ended June 30, 1996, attributable to Accord's revenues, operating
margin and net income approximated $285.5 million, $28.5 million and $19.4
million, respectively. NGC's interest in Accord during 1996 was 49 percent.
(2) The financial data for both periods presented is exclusive of amounts
attributable to the Company's investment in NCL as such information was not
comparable period-to-period as a result of the NCL reorganization. NGC sold
its interest in NCL effective April 1, 1997. NGC's share of NCL's loss for
the three months ended March 31, 1997, totaled $892,000. Total amounts for
the six-months ended June 30, 1996, attributable to NCL's revenues,
operating margin and net income approximated $723.5 million, $14.4 million
and $2.3 million, respectively. NGC's interest in NCL through March 31,
1997, was 49.9 percent.
(3) Amounts do not include any impact of the investments acquired in the Destec
acquisition. Equity earnings derived from these investments will accrue to
NGC commencing July 1, 1997.
In early 1997, British Gas completed a restructuring whereby Centrica plc
("Centrica") was demerged from British Gas and British Gas was renamed BG plc
("BG"). Centrica became the Company's joint venture partner in Accord. BG
holds the approximate 26 percent stake in NGC's common stock formerly held by
British Gas. On May 2, 1997, Centrica and the Company completed a restructuring
of Accord by converting certain common stock interests in Accord to
participating preferred stock interests as of an effective date of January 1,
1997. Centrica and the Company own 75 percent and 25 percent, respectively, of
the outstanding participating preferred stock shares of Accord. The
participating preferred stock has (a) the right to receive cumulative
dividends on a priority basis to other corporate distributions by Accord, and
(b) limited voting rights. In addition, Centrica has an option to purchase the
Company's participating preferred stock interest at any time after July 1, 2000,
at a formula based price, as defined in the agreement. As part of the
reorganization, Centrica will operate Accord while NGC obtained the right to
market natural gas, gas liquids and crude oil in the United Kingdom, which will
occur through its wholly owned subsidiary NGC UK Limited ("NGC UK"). In
addition, as part of the reorganization, NGC UK acquired Accord's existing crude
oil marketing business effective July 1, 1997, for approximately $1 million,
subject to definitive purchase cost adjustments. No gain or loss was recognized
as a result of this reorganization and NGC's investment in Accord continues to
be accounted for under the equity method.
On August 14, 1996, Avoca announced that construction on its gas storage
facility had been temporarily suspended pending resolution of certain technical
issues associated with the project's brine disposal capability. In April 1997,
the partners concluded that the economic returns from the project were likely
unacceptable to the Company based on the still-to-be-determined technical
feasibility. As a result, NGC established a $15 million pre-tax reserve during
the first quarter of 1997 representing the Company's estimated 28 percent share
of potential Avoca partner obligations, inclusive of the Company's net
investment in the partnership. Such reserve is reflected in other expenses in
the accompanying condensed consolidated statement of operations for the six-
month period ended June 30, 1997. On July 29, 1997, Avoca and its partners, JMC
Avoca, Inc., ET Avoca Company and NGC Storage, Inc. ("Storage"), a subsidiary of
NGC, each filed a petition for relief under Chapter 11 of the United States
Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. The
filing follows the decision by the Avoca partners to discontinue development of
the natural gas storage project. Storage's only asset is its investment in
Avoca and management believes that the bankruptcy petition will have no direct
or indirect impact on any other NGC business activity. While no assurances can
be given with respect to the adequacy of the Avoca reserve, management believes
that additional obligations of the Company, if any, will not have a material
adverse effect on the Company's financial position or results of operations.
Page 10 of 36
<PAGE>
NGC CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1997 AND 1996
NOTE 6 -- COMPANY OBLIGATED PREFERRED SECURITIES OF A SUBSIDIARY TRUST
During May 1997, NGC Corporation Capital Trust I ("Trust") issued, in a private
transaction, $200 million aggregate liquidation amount of 8.316 percent
Subordinated Capital Income Securities ("Securities") representing preferred
undivided beneficial interests in the assets of the Trust. The Trust invested
the proceeds from the issuance of the Securities in an equivalent amount of
8.316 percent Subordinated Debentures ("Subordinated Debentures") of the
Company. The sole assets of the Trust are the Subordinated Debentures. The
Securities are subject to mandatory redemption in whole but not in part on June
1, 2027, upon payment of the Subordinated Debentures at maturity, or in whole
but not in part at any time, contemporaneously with the optional prepayment of
the Subordinated Debentures, as allowed by the associated indenture. The
Subordinated Debentures are redeemable, at the option of the Company, in whole
at any time or in part from time to time, at formula-based redemption prices, as
defined in the indenture. The Subordinated Debentures represent unsecured
obligations of the Company and rank subordinate and junior in right of payment
to all Senior Indebtedness to the extent and in the manner set forth in the
associated indenture. The Company has irrevocably and unconditionally
guaranteed, on a subordinated basis, payment for the benefit of the holders of
the Securities the obligations of the Trust to the extent the Trust has funds
legally available for distribution to the holders of the Securities, as
described in the indenture ("Guarantee"). Distributions on the Securities are
payable each June 1 and December 1, coinciding with the interest payment due
dates on the Subordinated Debentures, commencing December 1, 1997. The periodic
distributions accruing at an annual rate of 8.316 percent of the aggregate
liquidation amount are recorded as minority interest in income of a subsidiary
in the Company's consolidated statement of operations. So long as no Debenture
Event of Default, as defined, has occurred and continues, the Company has the
right to defer the payment of interest on the Subordinated Debentures for any
Extension Period elected by the Company, which period cannot extend beyond 10
consecutive semi-annual periods, end on a date other than an Interest Payment
Date or extend beyond the Stated Maturity Date.
Pursuant to a Registration Rights Agreement among the Company, the Trust and the
initial investors in the Securities, the Company and the Trust agreed to file a
registration statement with the Securities and Exchange Commission within 150
days of the initial sale date, pursuant to which securities, subordinated
debentures and a guarantee having terms substantially identical to the
Securities, Subordinated Debentures and Guarantee would be offered in exchange
for the Securities, Subordinated Debentures and Guarantee. Such exchange offer
is intended to provide the initial investors with the ability to resell or
otherwise transfer their holdings without further compliance with the
registration and prospectus delivery provisions of the Securities Act. The
Trust and the Company do not intend to apply for a listing of the Securities on
any security exchange.
NOTE 7 -- COMMITMENTS AND CONTINGENCIES
On April 17, 1997, Pacific Gas and Electric Company ("PG&E") filed a lawsuit in
the Superior Court of the State of California, City and County of San Francisco,
against Destec Energy, Inc., Destec Holdings, Inc., Destec Operating Company and
San Joaquin CoGen, Inc., wholly owned direct and indirect subsidiaries of the
Company as well as against San Joaquin CoGen Limited (the "Partnership"), a
limited partnership in which the Company has a twenty-five percent interest. In
the lawsuit, PG&E asserts claims and alleges unspecified damages for fraud,
negligent misrepresentation, unfair business practices, breach of contract and
breach of the implied covenant of good faith and fair dealing. PG&E alleges
that due to the insufficient use of steam by the Partnership's steam host, the
Partnership did not qualify as a cogenerator pursuant to the California Public
Utilities Code ("CPUC") Section 218.5, and thus was not entitled under CPUC
Section 454.4 to the discount the Partnership received under gas transportation
agreements entered into between PG&E and the Partnership in 1989, 1991, 1993 and
1995. All of PG&E's claims in this suit arise out of the Partnership's alleged
failure to comply with CPUC Section 218.5. The defendants filed a response to
the lawsuit on May 15, 1997. The proceedings are at a preliminary stage and the
parties are currently in the process of initiating discovery. The Company's
subsidiaries intend to vigorously defend this action. NGC's management does not
expect the ultimate resolution of this lawsuit to have a material adverse effect
on the Company's financial position or results of operations.
Page 11 of 36
<PAGE>
NGC CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1997 AND 1996
On February 12, 1996, Apache Corporation ("Apache") requested arbitration to
resolve issues arising under a gas marketing contract ("Contract") with Natural
Gas Clearinghouse ("Clearinghouse"), a wholly owned subsidiary of the Company,
pursuant to the arbitration provisions of such Contract. On February 26, 1996,
Clearinghouse responded by denying Apache's claims and by alleging several
counterclaims of its own with respect to Apache's performance under the
Contract. In connection with the arbitration proceedings, on April 9, 1996,
Apache filed a lawsuit against Clearinghouse in the 55th Judicial District Court
of Harris County, Texas ("Court"). In that lawsuit, Apache alleged that
Clearinghouse was intentionally delaying the progress of the arbitration, and it
requested relief, pursuant to the Texas General Arbitration Act, in the form of
an order appointing a third arbitrator, compelling discovery and requiring
Clearinghouse to assign certain contracts allegedly belonging to Apache.
Clearinghouse filed a response to the lawsuit on May 6, 1996, asking that the
Court dismiss Apache's application for relief or abate the suit pending
resolution of all matters by the arbitration panel according to the terms of the
Contract. Clearinghouse also requested payment of all attorneys' fees and other
litigation expenses incurred in responding to and defending the lawsuit. The
hearing date has been postponed several times to allow the parties time to
complete discovery, most recently on July 18, 1997, when the hearing was delayed
until December 3, 1997. In the arbitration and again in the lawsuit, Apache
claims that it is entitled to actual damages in an undetermined amount in excess
of $8 million and punitive damages. Clearinghouse intends to vigorously defend
the Apache suit and arbitration. Based on review of the facts and through
consultation with outside counsel, NGC management believes the ultimate
resolution of the Apache suit will not have a material adverse effect on the
Company's financial position or results of operations, and that any payments
eventually made in connection with the arbitration and/or the lawsuit will be
substantially less than the amount claimed.
The Company assumed liability for various claims and litigation in connection
with the Chevron Combination, the Trident Combination, the Destec acquisition
and in connection with the acquisition of certain gas processing and gathering
facilities from Mesa Operating Limited Partnership. NGC believes, based on its
review of these matters and consultation with outside legal counsel, that the
ultimate resolution of such items will not have a material adverse effect on the
Company's financial position or results of operations. Further, the Company is
subject to various legal proceedings and claims which arise in the normal course
of business. In the opinion of management, the amount of ultimate liability
with respect to these actions will not have a material adverse effect the
financial position or results of operations of the Company.
NOTE 8 -- CAPITAL STOCK
Approximately 3.4 million employee stock options granted in May 1992 became
exercisable in May 1997 at an exercise price of $2.03. Further, grants made
during 1993 and 1994 will become exercisable during 1998 and 1999, respectively,
resulting in the potential exercise of an aggregate 8.5 million options during
that two-year period at exercise prices ranging from $2.03 to $5.66. Other
options currently granted under the Company's option plans will fully vest
periodically and become exercisable through the year 2002 at prices ranging from
$2.03 to $18.75. Grants made under the Company's option plans may be canceled
under certain circumstances as provided in the plans. While the Company cannot
predict the timing or the number of shares which may be issued upon the exercise
of option grants by individual employees, the Company is considering a variety
of alternatives to help assure an orderly distribution of shares which may
become available to the market.
In May 1997, the Board of Directors approved a stock repurchase program that
allows the Company to repurchase, from time to time, up to 1.6 million shares of
common stock in open market transactions. The timing and number of shares
ultimately repurchased will depend upon market conditions and consideration of
alternative investments. Pursuant to this program, the Company acquired 59,900
shares at a cost of $935,000 during the second quarter of 1997.
Page 12 of 36
<PAGE>
NGC CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1997 AND 1996
NOTE 9 -- SUPPLEMENTAL GUARANTOR INFORMATION
The 7.625 percent Senior Notes, due 2026 ("Senior Debentures") and the 6.75
percent Senior Notes, due 2005 ("Senior Notes") represent general unsecured
obligations of the Company and are fully and unconditionally guaranteed on a
joint and several basis by certain of the Company's wholly owned subsidiaries
(collectively the "Guarantors"), as defined in the associated indentures. The
wholly owned subsidiaries that have fully and unconditionally guaranteed, on a
joint and several basis, the Senior Debentures, are the same wholly owned
subsidiaries that have fully and unconditionally guaranteed, on a joint and
several basis, the Senior Notes. Such Guarantors are also guarantors under the
Credit Agreement and certain of the Guarantors guarantees pursuant to the Senior
Debentures, Senior Notes and Credit Agreement are subject to release under
certain circumstances. The Company also has direct and indirect subsidiaries
that are not guarantors of the Senior Debentures or the Senior Notes
(collectively "Non-guarantor Subsidiaries"). Set forth below are condensed
consolidating financial statements of NGC Corporation, the Guarantors and the
Non-guarantor Subsidiaries representing supplemental guarantor information.
CONDENSED CONSOLIDATING BALANCE SHEET
JUNE 30, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
NON-GUARANTOR
PARENT GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
---------- ----------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 482 $ 94,099 $ 7,531 $ --- $ 102,112
Accounts receivable 76,274 4,025,442 624,359 (3,485,966) 1,240,109
Inventories --- 116,694 44,897 --- 161,591
Assets held for sale --- --- 382,800 --- 382,800
Risk management activities --- 102,062 --- --- 102,062
Prepayments and other assets 7,943 35,083 31,686 --- 74,712
---------- ---------- ---------- ----------- ----------
84,699 4,373,380 1,091,273 (3,485,966) 2,063,386
---------- ---------- ---------- ----------- ----------
PROPERTY, PLANT AND EQUIPMENT, NET 9,022 1,536,944 123,856 --- 1,669,822
---------- ---------- ---------- ----------- ----------
OTHER ASSETS:
Investments in unconsolidated
affiliates 2,057,718 292,364 308,939 (2,155,970) 503,051
Risk management activities --- 184,010 --- --- 184,010
Other assets 259,746 209,384 57,557 (277,145) 249,542
---------- ---------- ---------- ----------- ----------
$2,411,185 $6,596,082 $1,581,625 $(5,919,081) $4,669,811
========== ========== ========== =========== ==========
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable $ 15,396 $4,065,868 $ 499,495 $(3,485,966) $1,094,793
Accrued liabilities 18,490 100,870 40,177 --- 159,537
Risk management activities --- 92,432 --- --- 92,432
---------- ---------- ---------- ----------- ----------
33,886 4,259,170 539,672 (3,485,966) 1,346,762
LONG-TERM DEBT 1,005,000 583,654 572,548 (814,938) 1,346,264
OTHER LIABILITIES:
Risk management activities --- 143,890 --- --- 143,890
Deferred income taxes 12,632 305,857 2,277 --- 320,766
Other long-term liabilities 502 33,153 119,309 --- 152,964
---------- ---------- ---------- ----------- ----------
1,052,020 5,325,724 1,233,806 (4,300,904) 3,310,646
---------- ---------- ---------- ----------- ----------
PREFERRED STOCK OF SUBSIDIARY TRUST 200,000 --- --- --- 200,000
EQUITY 1,159,165 1,270,358 347,819 (1,618,177) 1,159,165
---------- ---------- ---------- ----------- ----------
$2,411,185 $6,596,082 $1,581,625 $(5,919,081) $4,669,811
========== ========== ========== =========== ==========
</TABLE>
Page 13 of 36
<PAGE>
NGC CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1997 AND 1996
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
NON-GUARANTOR
PARENT GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
---------- ----------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ --- $ 48,685 $ 1,524 $ --- $ 50,209
Accounts receivable 337,984 3,205,987 316,191 (2,341,777) 1,518,385
Inventories --- 241,270 15,735 --- 257,005
Assets held for sale --- --- --- --- ---
Risk management activities --- 98,433 --- --- 98,433
Prepayments and other assets 2,793 6,511 3,385 --- 12,689
---------- ---------- ---------- ----------- ----------
340,777 3,600,886 336,835 (2,341,777) 1,936,721
---------- ---------- ---------- ----------- ----------
PROPERTY, PLANT AND EQUIPMENT, NET 6,023 1,624,207 61,149 --- 1,691,379
---------- ---------- ---------- ----------- ----------
OTHER ASSETS:
Investments in
unconsolidated affiliates 1,219,027 271,077 4,572 (1,312,988) 181,688
Risk management activities --- 171,528 --- --- 171,528
Other assets 250,262 180,434 51,943 (277,145) 205,494
---------- ---------- ---------- ----------- ----------
$1,816,089 $5,848,132 $ 454,499 $(3,931,910) $4,186,810
========== ========== ========== =========== ==========
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable $ 16,295 $3,398,025 $ 272,253 $(2,341,777) $1,344,796
Accrued liabilities 18,914 100,382 (1,519) --- 117,777
Risk management activities --- 86,414 --- --- 86,414
---------- ---------- ---------- ----------- ----------
35,209 3,584,821 270,734 (2,341,777) 1,548,987
LONG-TERM DEBT 644,000 586,962 34,780 (277,145) 988,597
OTHER LIABILITIES:
Risk management activities --- 127,725 --- --- 127,725
Deferred income taxes 20,147 305,856 2,277 --- 328,280
Other long-term liabilities --- 52,792 23,696 --- 76,488
---------- ---------- ---------- ----------- ----------
699,356 4,658,156 331,487 (2,618,922) 3,070,077
---------- ---------- ---------- ----------- ----------
PREFERRED STOCK OF SUBSIDIARY TRUST --- --- --- --- ---
EQUITY 1,116,733 1,189,976 123,012 (1,312,988) 1,116,733
---------- ---------- ---------- ----------- ----------
$1,816,089 $5,848,132 $ 454,499 $(3,931,910) $4,186,810
========== ========== ========== =========== ==========
</TABLE>
Page 14 of 36
<PAGE>
NGC CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1997 AND 1996
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR EACH OF THE THREE-MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
NON-GUARANTOR
PARENT GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
---------- ----------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
THREE-MONTHS ENDED JUNE 30, 1997:
Revenues $ --- $2,653,554 $298,841 $(268,056) $2,684,339
Cost of sales --- 2,561,162 293,466 (268,056) 2,586,572
------- ---------- -------- --------- ----------
OPERATING MARGIN --- 92,392 5,375 --- 97,767
Depreciation and amortization 531 23,910 980 --- 25,421
General and administrative expenses --- 34,791 2,801 --- 37,592
------- ---------- -------- --------- ----------
OPERATING INCOME (531) 33,691 1,594 --- 34,754
Equity earnings 48,999 18,796 589 (54,967) 13,417
Interest expense (3,331) (8,997) (908) --- (13,236)
Other income and (deductions), net (1,562) 10,162 40 --- 8,640
------- ---------- -------- --------- ----------
Income before income taxes 43,575 53,652 1,315 (54,967) 43,575
Income tax provision 11,447 19,851 487 (20,338) 11,447
------- ---------- -------- --------- ----------
NET INCOME (LOSS) $32,128 $ 33,801 $ 828 $ (34,629) $ 32,128
======= ========== ======== ========= ==========
THREE-MONTHS ENDED JUNE 30, 1996:
Revenues $ --- $1,168,837 $152,183 $(157,869) $1,163,151
Cost of sales --- 1,125,510 143,515 (157,869) 1,111,156
------- ---------- -------- --------- ----------
OPERATING MARGIN --- 43,327 8,668 --- 51,995
Depreciation and amortization 109 13,904 922 --- 14,935
General and administrative expenses --- 16,816 1,521 --- 18,337
------- ---------- -------- --------- ----------
OPERATING INCOME (109) 12,607 6,225 --- 18,723
Equity earnings 18,602 8,148 280 (18,882) 8,148
Interest expense (1,173) (7,289) (663) --- (9,125)
Other income and (deductions), net (206) (750) 434 --- (522)
------- ---------- -------- --------- ----------
Income before income taxes 17,114 12,716 6,276 (18,882) 17,224
Income tax provision 3,276 4,815 2,489 (7,194) 3,386
------- ---------- -------- --------- ----------
NET INCOME (LOSS) $13,838 $ 7,901 $ 3,787 $ (11,688) $ 13,838
======= ========== ======== ========= ==========
</TABLE>
Page 15 of 36
<PAGE>
NGC CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1997 AND 1996
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR EACH OF THE SIX-MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
NON-GUARANTOR
PARENT GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
---------- ----------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
SIX-MONTHS ENDED JUNE 30, 1997:
Revenues $ --- $5,984,731 $546,897 $(575,209) $5,956,419
Cost of sales --- 5,828,437 538,077 (575,209) 5,791,305
------- ---------- -------- --------- ----------
OPERATING MARGIN --- 156,294 8,820 --- 165,114
Depreciation and amortization 631 46,184 1,954 --- 48,769
General and administrative expenses --- 62,114 3,677 --- 65,791
------- ---------- -------- --------- ----------
OPERATING INCOME (631) 47,996 3,189 --- 50,554
Equity earnings 58,582 37,864 766 (70,409) 26,803
Interest expense (8,299) (18,257) (1,304) --- (27,860)
Other income and (deductions), net (1,648) 15,291 (15,136) --- (1,493)
------- ---------- -------- --------- ----------
Income before income taxes 48,004 82,894 (12,485) (70,409) 48,004
Income tax provision 11,262 30,671 (4,619) (26,052) 11,262
------- ---------- -------- --------- ----------
NET INCOME (LOSS) $36,742 $ 52,223 $ (7,866) $ (44,357) $ 36,742
======= ========== ======== ========= ==========
SIX-MONTHS ENDED JUNE 30, 1996:
Revenues $ --- $2,791,652 $312,162 $(293,540) $2,810,274
Cost of sales --- 2,670,033 291,704 (293,540) 2,668,197
------- ---------- -------- --------- ----------
OPERATING MARGIN --- 121,619 20,458 --- 142,077
Depreciation and amortization 206 27,172 1,727 --- 29,105
General and administrative expenses --- 37,840 2,773 --- 40,613
------- ---------- -------- --------- ----------
OPERATING INCOME (206) 56,607 15,958 --- 72,359
Equity earnings 67,976 12,658 434 (68,410) 12,658
Interest expense (3,668) (14,681) (1,429) --- (19,778)
Other income and (deductions),net (257) (962) (175) --- (1,394)
------- ---------- -------- --------- ----------
Income before income taxes 63,845 53,622 14,788 (68,410) 63,845
Income tax provision 19,679 19,840 5,472 (25,312) 19,679
------- ---------- -------- --------- ----------
NET INCOME (LOSS) $44,166 $ 33,782 $ 9,316 $ (43,098) $ 44,166
======= ========== ======== ========= ==========
</TABLE>
Page 16 of 36
<PAGE>
NGC CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1997 AND 1996
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
NON-GUARANTOR
PARENT GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
---------- ----------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Net income (loss) $ 36,742 $ 52,223 $ (7,866) $ (44,357) $ 36,742
Items not affecting cash flow from
operating activities:
Depreciation and
amortization 1,479 46,184 1,954 --- 49,617
Equity earnings, net of
distributions (58,582) (6,627) 2,026 58,582 (4,601)
Risk-management
activities --- 5,655 --- --- 5,655
Deferred taxes (8,592) --- --- --- (8,592)
Other 6,578 (14,663) 3,597 --- (4,488)
Changes in working capital, net 248,378 (94,470) (45,019) (14,246) 94,643
Other, net (2,582) (195) 1,221 21 (1,535)
---------- -------- -------- --------- ----------
Operating activities cash
flow 223,421 (11,893) (44,087) --- 167,441
---------- -------- -------- --------- ----------
Capital expenditures (1,900) (64,569) (16,609) --- (83,078)
Business acquisitions, net
of cash acquired (780,085) 2,147 62,349 --- (715,589)
Investment in affiliates --- (31,609) 4,772 --- (26,837)
Proceeds from asset sales --- 154,063 --- --- 154,063
Other, net (52) (2,725) (418) --- (3,195)
---------- -------- -------- --------- ----------
Investing activities cash
flow (782,037) 57,307 50,094 --- (674,636)
---------- -------- -------- --------- ----------
Proceeds from long-term
borrowings 1,119,000 --- --- --- 1,119,000
Repayments of long-term
borrowings (758,000) --- --- --- (758,000)
Proceeds from sales of
securities 202,053 --- --- --- 202,053
Dividends and other
distributions, net (3,955) --- --- --- (3,955)
---------- -------- -------- --------- ----------
Financing activities cash
flow 559,098 --- --- --- 559,098
---------- -------- -------- --------- ----------
Net change in cash and
equivalents 482 45,414 6,007 --- 51,903
Cash and equivalents,
beginning of
period --- 50,209 --- --- 50,209
---------- -------- -------- --------- ----------
Cash and equivalents, end
of period $ 482 $ 95,623 $ 6,007 $ --- $ 102,112
========== ======== ======== ========= ==========
</TABLE>
Page 17 of 36
<PAGE>
NGC CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1997 AND 1996
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
NON-GUARANTOR
PARENT GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
---------- ----------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Net income (loss) $ 44,166 $ 33,782 $ 9,316 $(43,098) $ 44,166
Items not affecting cash flow from
operating activities:
Depreciation and amortization 206 27,172 1,727 --- 29,105
Equity earnings, net of
distributions (67,976) (12,546) --- 67,976 (12,546)
Risk-management activities --- 2,969 --- --- 2,969
Deferred taxes 17,943 --- 1 --- 17,944
Other 3,255 (2,044) (3,255) --- (2,044)
Changes in working capital, net 46,460 (65,549) 53,551 (24,939) 9,523
Other, net (786) (2,934) 1,243 61 (2,416)
--------- -------- -------- -------- ---------
Operating activities cash flow 43,268 (19,150) 62,583 --- 86,701
--------- -------- -------- -------- ---------
Capital expenditures (263) (18,253) (8,404) --- (26,920)
Business acquisitions, net
of cash acquired --- --- --- --- ---
Investment in affiliates --- (22) 4,411 --- 4,389
Proceeds from asset sales --- --- --- --- ---
Other, net --- 13,900 600 --- 14,500
--------- -------- -------- -------- ---------
Investing activities cash flow (263) (4,375) (3,393) --- (8,031)
--------- -------- -------- -------- ---------
Proceeds from long-term borrowings 608,000 --- --- --- 608,000
Repayments of long-term borrowings (648,000) --- --- --- (648,000)
Proceeds from sales of securities 858 --- --- --- 858
Dividends and other distributions, net (3,825) 444 --- --- (3,381)
--------- -------- -------- -------- ---------
Financing activities cash flow (42,967) 444 --- --- (42,523)
--------- -------- -------- -------- ---------
Net change in cash and equivalents 38 (23,081) 59,190 --- 36,147
Cash and equivalents, beginning of
period 6 65,781 (49,521) --- 16,266
--------- -------- -------- -------- ---------
Cash and equivalents, end of period $ 44 $ 42,700 $ 9,669 $ --- $ 52,413
========= ======== ======== ======== =========
</TABLE>
NOTE 10 -- RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board issued Statement No 130,
"Reporting Comprehensive Income" ("Statement No. 130") and Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information"
("Statement No. 131").
Statement No. 130 established standards for reporting and display of
comprehensive income and its components in a full-set of general purpose
financial statements. Statement 130 requires that all items that are recognized
under accounting standards as components of comprehensive income, as defined, be
reported in a financial statement with the same prominence as other financial
statements and that disclosure be made of an amount representing total
comprehensive income for the period. The objective of Statement No. 130 is to
report a measure of all changes in equity of an enterprise that result from
transactions and other economic events of the period other than transactions
with owners. The new statement is effective for annual periods ending after
December 15, 1997, and comparative information for earlier years is to be
restated.
Page 18 of 36
<PAGE>
NGC CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1997 AND 1996
Statement No. 131 established standards for the way public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders. It also
established standards for related disclosures about products and services,
geographic areas, and major customers. Statement No. 131 supersedes or amends
existing authoritative literature governing segment reporting, reporting of
significant customers, reporting of geographic operations and reporting of
previously unconsolidated subsidiaries. The new statement is effective for
annual periods ending after December 15, 1997, and comparative information for
earlier years is to be restated. The Statement need not be applied to interim
financial statements in the initial year of its application. Early adoption of
the Statement is encouraged.
The Company is assessing the impact Statements No. 130 and No. 131 will have on
its financial disclosures, if any, and intends to adopt the provisions of such
statements within the timeframe and in accordance with the requirements provided
by each statement.
Page 19 of 36
<PAGE>
NGC CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1997 AND 1996
The following discussion and analysis should be read in conjunction with the
unaudited condensed consolidated financial statements of NGC Corporation
included elsewhere herein and with the Company's Annual Report to Shareholders
and Form 10-K for the year ended December 31, 1996.
GENERAL
Company Profile
NGC is a leading North American marketer of natural gas, natural gas liquids,
crude oil and power and is engaged in electric power generation and natural gas
gathering, processing and transportation through direct and indirect ownership
of cogeneration and other electric power producing facilities and ownership and
operation of natural gas processing plants, storage facilities and pipelines.
Acting in the role of a large-scale aggregator, processor, marketer and reliable
supplier of multiple energy products and services, NGC has evolved into a
reliable energy commodity and service provider.
From inception of operations in 1984 until 1990, Natural Gas Clearinghouse
("Clearinghouse") limited its activities primarily to natural gas marketing.
Starting in 1990, Clearinghouse began expanding its core business operations
through acquisitions and strategic alliances with certain of its shareholders
resulting in the formation of a midstream energy asset business and establishing
energy marketing operations in both Canada and the United Kingdom. Effective
March 1, 1995, Clearinghouse and Trident NGL Holding, Inc., a fully integrated
natural gas liquids company, merged and the combined entity was renamed NGC
Corporation. On August 31, 1996, NGC completed a strategic combination with
Chevron U.S.A. Inc. and certain Chevron affiliates (collectively "Chevron")
whereby substantially all of Chevron's midstream assets were merged with NGC
("Chevron Combination"). Finally, in June 1997, NGC acquired all of the
outstanding shares of Destec Energy, Inc. ("Destec"), a leading independent
power producer. By virtue of the growth of NGC's core businesses combined with
the synergies derived from the aforementioned transactions, NGC has established
itself as an industry leader providing quality, competitively priced energy
products and services to customers throughout North America and in the United
Kingdom.
NGC is a holding company that conducts principally all of its business through
its subsidiaries. Currently, the Company has two primary business segments: the
natural gas and power marketing segment ("Marketing") and the natural gas
liquids, crude oil and gas transmission segment ("Liquids").
Recent Developments
On June 30, 1997, NGC announced it had closed its acquisition of Destec Energy,
Inc. ("Destec"), one of the largest independent producers of electricity in the
world, in a deal valued at $1.26 billion, or $21.65 per share of Destec common
stock. Simultaneous with this acquisition, NGC sold Destec's international
facilities and operations to The AES Corporation for $436 million. In July and
August 1997, the Company consummated a sale of Destec's interest in Tiger Bay
and a sale of certain oil, gas and lignite reserves, respectively, and is
currently actively negotiating the sale of its interests in two additional power
generating facilities. Aggregate proceeds from these transactions is expected to
approximate $382.8 million and such amount is classified in the accompanying
balance sheet as assets held for sale. These asset sales are part of the planned
divestiture of non-strategic domestic assets contemplated as an integral part of
the Destec acquisition.
Destec is in the business of developing, operating and managing projects which
produce electricity, thermal energy and syngas. Its business strategy will
continue to be based on being the low-cost producer of electric power and will
actively expand and strengthen its position as a developer, operator and
marketer of power. Following the aforementioned asset dispositions, Destec will
have interests in fourteen partnerships, each formed to build, own and operate
electric power generating facilities, and will own and operate two cogeneration
plants and one coal gasification facility. The majority of the power generating
facilities owned directly or indirectly by Destec are cogeneration plants. The
combined gross capacity of these facilities is approximately 2,114 megawatts of
electricity and over 2.3 million pounds per hour of steam. Natural
Page 20 of 36
<PAGE>
NGC CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1997 AND 1996
synergies related to the acquisition include the integration of Destec's
electricity, thermal energy and natural gas marketing activities with NGC's
existing power marketing business, conducted through Electric Clearinghouse,
Inc. ("ECI"), and the introduction of Destec's customers to the variety of
dependable energy products and services provided by other NGC businesses. NGC
expects the expertise of Destec's personnel, displayed through proven knowledge
of power technology and engineering and experience in development, construction
and operation of power facilities, to provide a platform for expansion of its
power generating business worldwide.
On June 10, 1997, the Company announced that it and NICOR, Inc. had formed a
joint venture, NICOR Energy, L.L.C., to offer a variety of energy services to
industrial, commercial and residential customers in the Midwest. Natural gas,
electricity and related retail services will be marketed by the joint venture,
which will be headquartered in Chicago, Illinois.
In June 1997, the Company and NOVA Corporation ("NOVA") completed the
restructuring of the companies' Canadian natural gas operations formally
executed through Novagas Clearinghouse Ltd. ("NCL"), a joint venture between NGC
and NOVA. Pursuant to the agreements, NGC acquired NCL's natural gas marketing
business, excluding the natural gas aggregation business of Pan-Alberta Gas Ltd.
("Pan-Alberta"), from NCL and sold its aggregate 49.9 percent interest in NCL to
NOVA Gas International, a subsidiary of NOVA. NOVA assumed full ownership of
NCL's gathering and processing business and the operations of Pan-Alberta. NGC
and NOVA will pursue separate midstream asset businesses in Canada with NGC
operating its Canadian marketing and midstream asset businesses under the name
NGC Canada, Inc. ("NGC Canada"), a wholly owned subsidiary of NGC.
On May 1, 1997, NGC Canada and Consumersfirst, a subsidiary of IPL Energy,
signed an agreement-in-principle to market energy products and services to
Canadian industrial, commercial and residential customers through a retail
alliance. The venture, headquartered in Toronto, Canada, will initially supply
natural gas to its customers with the expectation of expanding to other
commodities and services currently marketed by NGC.
In early May 1997, Centrica and the Company completed a restructuring of Accord
Energy Limited ("Accord") by converting certain common stock interests in Accord
to participating preferred stock interests as of an effective date of January 1,
1997. Centrica and the Company own 75 percent and 25 percent, respectively, of
the outstanding participating preferred stock shares of Accord. As part of the
reorganization, Centrica will operate Accord while NGC obtained the right to
market natural gas, gas liquids and crude oil in the United Kingdom, which will
occur through its wholly owned subsidiary NGC UK Limited ("NGC UK"). In
addition, as part of the reorganization, NGC UK acquired Accord's existing crude
oil marketing business effective July 1, 1997.
Uncertainty of Forward-Looking Statements and Information
This quarterly report contains various forward-looking statements and
information that are based on management's beliefs as well as assumptions made
by and information currently available to management. When used in this
document, words such as "anticipate", "estimate", "project", "believes" and
"expect" are intended to identify forward-looking statements. Although the
Company believes the expectations reflected in such forward-looking statements
are reasonable, it can give no assurance that such expectations will prove to
have been correct. Such statements are subject to certain risks, uncertainties
and assumptions. Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results may vary
materially from those anticipated, estimated, projected or expected. Among the
key factors that may have a direct bearing on NGC's results of operations and
financial condition are: (i) competitive practices in the industries which NGC
competes, (ii) fluctuations in energy commodity prices which have not been
hedged or which are inconsistent with NGC's open position, if any, in its energy
marketing activities, (iii) environmental liabilities to which NGC may become
subject in the future which are not covered by indemnity or insurance, and (iv)
the impact of current and future laws and governmental regulations (particularly
environmental regulations) affecting the energy industry in general and NGC's
operations in particular.
Page 21 of 36
<PAGE>
NGC CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1997 AND 1996
Impact of Price Fluctuations
Marketing's operating margin, exclusive of risk management activities, is
relatively insensitive to commodity price fluctuations since most of this
segment's purchase and sales contracts do not contain fixed-price provisions.
Generally, the prices contained in these contracts are tied to a current or
index price and, therefore, adjust directionally with changes in overall market
conditions. Commodity price fluctuations can, however, have a significant impact
on the operating margin derived from the segment's risk management activities.
NGC generally attempts to balance its fixed-price physical and financial
purchase and sales contracts in terms of contract volumes, and the timing of
performance and delivery obligations. However, to the extent a net open
position exists, NGC is exposed to the risk that fluctuating market
prices may adversely impact its financial position or results of operations.
The net open position is actively managed, and the impact of a change in price
on the Company's financial condition at a point in time is not necessarily
indicative of the impact of price movements throughout the year.
Operating margins associated with the Liquids segment's natural gas gathering,
processing and fractionation activities are sensitive to changes in NGL prices
principally as a result of contractual terms under which products are sold by
these businesses. However, the Liquids segment's operating margin is relatively
insensitive to fluctuations in natural gas prices as a result of the mitigating
impact of fuel costs and residue gas sales. Commodity price fluctuations can
have a significant impact on the operating margins derived from the Liquids
segment's NGL and crude oil marketing businesses. In order to manage its
exposure to price risks in its Liquids' businesses, the Company, from time to
time, will enter into financial instrument contracts to hedge purchase and sale
commitments and/or inventories.
Fuel costs, principally natural gas, represent the primary variable cost
impacting margins of the power generating facilities acquired in the Destec
acquisition. Historically, operating margins at Destec's facilities have been
relatively insensitive to commodity price fluctuations since most of this
business's purchase and sales contracts contain variable power sales contract
features tied to a current or index natural gas price and, therefore, revenues
adjust directionally with changes in natural gas prices.
Seasonality
NGC's revenue and operating margin are subject to fluctuations during the year
primarily due to the impact certain seasonal factors have on sales volumes and
the prices of natural gas, NGLs and crude oil. Marketing's sales volumes and
operating margin are typically higher in the winter months than in the summer
months, reflecting increased demand due to greater heating requirements and,
typically, higher natural gas prices. Liquids is also subject to seasonal
factors; however, such factors typically have a greater impact on sales prices
than on sales volumes. NGL prices typically increase during the winter season
due to greater heating requirements. The Company's wholesale propane business
typically experiences higher volumes and prices in the fall and winter months
due to greater demand for crop-drying and space-heating requirements. The
Company's electricity generating facilities generally experience peak demand
during the summer cooling season.
Page 22 of 36
<PAGE>
NGC CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1997 AND 1996
RESULTS OF OPERATIONS
Provided below is a tabular presentation of certain domestic and international
financial and operating statistics for the Company's segments and subsegments
for the three- and six-month periods ended June 30, 1997 and 1996, respectively.
The financial and statistical information reflected in the accompanying
condensed consolidated statements of operations and in the following table do
not include any amounts attributable to the operations of Destec. The results of
operations of the acquired Destec assets will be consolidated with NGC's
existing operations beginning July 1, 1997, in accordance with the purchase
method of accounting.
<TABLE>
<CAPTION>
THREE-MONTHS SIX-MONTHS
------------------- ---------------------
1997 (1) 1996 1997 (1) 1996
--------- -------- ---------- ---------
<S> <C> <C> <C> <C>
($US IN THOUSANDS)
OPERATING MARGIN:
NATURAL GAS AND POWER MARKETING SEGMENT $ 43,502 $ 8,306 $ 63,030 $ 54,422
NATURAL GAS LIQUIDS, CRUDE OIL AND GAS TRANSMISSION
SEGMENT:
Natural Gas Processing - Field Plants 34,331 17,704 83,658 35,250
Natural Gas Processing - Straddle Plants 9,119 7,587 12,741 16,154
Fractionation (2) 5,444 3,787 11,526 5,859
Natural Gas Liquids Marketing 5 5,111 (16,330) 12,939
Crude Oil Marketing 470 4,834 (529) 7,298
Natural Gas Gathering and Transmission 4,740 4,387 8,894 9,608
Other 156 279 2,124 547
-------- ------- -------- --------
$ 97,767 $51,995 $165,114 $142,077
======== ======= ======== ========
OPERATING STATISTICS:
Natural Gas Marketing (Bcf/d)
U.S. Sales Volume (3) 6.2 3.1 6.2 3.5
Canadian Sales Volumes (4) 1.6 --- --- ---
United Kingdom Sales Volume (5) 0.1 --- 0.1 ---
Electric Power Marketing - Million
Megawatt Hours Sold 16.6 2.1 34.0 4.6
Natural Gas Liquids Processed -
Field Plants (MBbls/d - Gross) 83.8 45.1 82.1 43.7
Straddle Plants (MBbls/d - Gross) 46.9 33.0 47.6 26.8
Fractionation - Barrels Received for
Fractionation (MBbls/d) (2) 172.0 116.5 160.9 110.6
NGL Marketing - Sales Volumes (MBbls/d) 382.7 148.3 403.3 153.1
Crude Oil Marketing - Sales Volumes (MBbls/d) 176.4 103.5 164.2 102.8
- -------------------------------------------
</TABLE>
(1) The Chevron Combination was accounted for as an acquisition of assets
under the purchase method of accounting and the results of operations
attributed to the acquired assets are included in the Company's financial
statements and operating statistics effective September 1, 1996.
(2) Information excludes the Company's proportionate share of GCF's margin and
fractionation volumes.
(3) Includes 0.2 and 0.1 Bcf/d in inter-company gas sales for the three- and
six-month periods ended June 30, 1997 and 1996, respectively.
(4) Represents volumes sold by NGC Canada, Inc. for the three-month period
ended June 30, 1997. Volumes sold by NCL prior to the reorganization are
not comparable.
(5) Represents volumes sold by NGC UK Ltd. for the three- and six-month
periods ended June 30, 1997. Volumes sold by Accord prior to the
reorganization are not comparable.
THREE-MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
For the quarter ended June 30, 1997, NGC realized net income of $32.1 million,
or $0.19 per share, on revenues of $2.7 billion. This compares with net income
of $13.8 million, or $0.12 per share, on total revenue of $1.2 billion reported
in the second quarter of 1996. Current period results include an after-tax
benefit of $4.9 million, or $0.03 per share, related to the gain on sale of the
Company's interest in NCL, and certain adjustments to previous gas marketing
sales accruals and gas liquids purchase accruals.
Page 23 of 36
<PAGE>
NGC CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1997 AND 1996
Consolidated operating margin for the second quarter of 1997 totaled $97.8
million as compared to $52.0 million in the corresponding 1996 period reflecting
higher volumes and margins in the gas and power marketing segment, increased
volumes associated with the acquisition of Chevron's Natural Gas Business Unit
in September 1996, as well as the accrual adjustments previously mentioned.
Marketing contributed $43.5 million to the 1997 consolidated operating margin,
compared to $8.3 million reported a year ago; whereas, Liquids contributed an
aggregate $54.3 million to the consolidated operating margin or $10.6 million
more than the $43.7 million reported in 1996. Operating income totaled $34.8
million in the second quarter of 1997 compared with $18.7 million in the
comparable 1996 period, an increase of $16.1 million, reflecting the
aforementioned increase in consolidated operating margin offset by increases in
both depreciation and amortization and general and administrative expenses. The
increase in depreciation and amortization expense results principally from the
depreciable assets acquired in the Chevron Combination, which was effective
September 1, 1996, as well as the continued expansion of the Company's
depreciable asset base resulting from other acquisitions and capital projects
completed during the four quarters in the period ended June 30, 1997. The
incremental increase in general and administrative expenses period to period
principally result from the Chevron acquisition, the restructuring of the
Company's businesses in Canada and the United Kingdom, the expansion of ECI's
operations and the growth of Global Energy's operations.
NGC's quarterly results include the Company's equity share in the earnings of
its unconsolidated affiliates which contributed an aggregate $13.4 million to
second quarter 1997 pre-tax income compared to $8.1 million during the
comparable 1996 period. The increase in equity earnings of $5.3 million period
to period includes an aggregate $5.2 million attributed to the Company's
investments in the West Texas LPG Pipeline Partnership, acquired in the Chevron
Combination, and the Venice Gas Processing Company, a limited partnership formed
by NGC and Chevron effective November 1, 1996, offset by lower aggregate equity
earnings in 1997 as compared to 1996 from the Company's investments in Accord
and NCL. NGC restructured its investment in Accord effective January 1, 1997,
converting its 49 percent common stock interest in Accord to a 25 percent
participating preferred stock interest. Management expects equity earnings
accruing to the Company from its participating preferred stock interest to be
materially the same in the last half of 1997 as compared to amounts reported in
the second half of 1996. Effective April 1, 1997, the Company sold its 49.9
percent interest in NCL and, as a result, there were no equity earnings accruing
to the Company from this investment during the 1997 period.
Interest expense totaled $13.2 million for the quarter ended June 30, 1997,
compared with $9.1 million for the equivalent 1996 period. The increase of $4.1
million is attributed to higher average outstanding principal amounts in 1997
resulting primarily from debt assumed in and resulting from the Chevron
Combination and advances in June 1997 on the Company's credit facility to
finance the Destec acquisition. Additionally, principally as a result of
the effective rate of certain debt assumed in the Chevron Combination and the
impact of changes in market rates on the Company's variable rate indebtedness
period to period, the average effective interest rate accruing on the aggregate
of the outstanding indebtedness was higher during the 1997 period as compared to
the 1996 quarter.
Other income and expenses, net totaled $10.2 million in the quarter ended June
30, 1997. The 1997 amount includes the pre-tax gain attributed to the
aforementioned sale of the 49.9 percent interest in NCL. The remaining amounts
of other income and expense in both periods consist of interest income, minority
interests in consolidated subsidiaries and certain other non-recurring income
and expense items. During the period, the Company sold $200 million of 8.316
percent Company Obligated Preferred Securities of a Subsidiary Trust
("Securities") and the accumulated distributions attributable to these
Securities are accounted for as minority interest in income of a subsidiary in
the condensed consolidated statements of operations.
The Company reported an income tax provision of $11.4 million for the three-
month period ended June 30, 1997, representing an effective tax rate of 26
percent, compared to an income tax provision of $3.4 million and an effective
rate of 20 percent for the equivalent 1996 period. The difference between the
aforementioned effective rate and the statutory rate of 35 percent for the
three-month period ended June 30, 1997, results principally from permanent
differences attributable to amortization of certain intangibles, state income
taxes and the tax effect of the sale of the NCL interest. The difference between
the aforementioned effective rate and the statutory rate of 35 percent for the
three-month period ended June 30, 1996, results
Page 24 of 36
<PAGE>
NGC CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1997 AND 1996
principally from a refund received related to foreign taxes paid on dividends
received from Accord, permanent differences attributable to amortization of
certain intangibles, permanent differences arising from the effect of certain
foreign equity investments and state income taxes.
NATURAL GAS AND ELECTRIC POWER MARKETING
Marketing's operating margin for the three-month period ended June 30, 1997,
totaled $43.5 million compared with $8.3 million in the same 1996 period.
Included in the 1997 quarterly operating margin is a $22.5 million benefit
resulting from adjustments related to a reconciliation and true-up to actual
results of certain accruals made in prior periods for price and volumes. Total
natural gas volumes sold in North America, including Clearinghouse and NGC
Canada, Inc., increased to 7.8 billion cubic feet per day from 3.1 billion cubic
feet per day during last year's second quarter, principally as a result of the
Chevron Combination and the inclusion of volumes sold by NGC Canada, Inc.
Excluding the accrual to actual adjustments, average unit margins in North
America were approximately $0.03 per thousand cubic feet in each quarterly
period. ECI continued to improve its sales volumes dramatically, selling 16.6
million megawatt hours during the quarter, an increase of 14.5 million megawatt
hours period to period. ECI also improved its per unit margins period to period
principally as a result of an improved operating environment resulting from the
continued deregulation of the electric power industry.
Marketing's business strategy includes expansion of relationships with existing
LDCs and industrial customers as a means for expanding its customer base. The
segment continues to execute its strategy of not competing with LDCs and will
initiate additional retail programs through alliances with strategic partners.
The additional retail alliances will be patterned after the previously announced
NICOR alliance in Chicago, Illinois, and the Consumersfirst alliance in Toronto,
Canada. In addition, the segment expects to capitalize off the synergies
provided by the Destec acquisition in expanding sales efforts to industrials,
expanding and enhancing its Integrated Energy Management Services and expanding
its power generation asset base.
NATURAL GAS LIQUIDS, CRUDE OIL AND GAS TRANSMISSION
Liquids reported a second quarter 1997 operating margin of $54.3 million,
representing an increase of $10.6 million over operating margins reported in the
equivalent 1996 period. The increase in operating margin was principally the
result of higher production volumes from the Warren Petroleum gas processing
plants and improved profitability in the Company's fractionation operations,
offset by lower results from the NGL and crude oil marketing businesses.
Included in the 1997 quarterly NGL marketing results is a $4.2 million charge
representing an adjustment to actualize prior cost accruals.
Operationally, the segment's businesses reflected significantly improved volumes
period to period. Liquids production volumes increased 67 percent this quarter
to 130.7 thousand barrels per day from 78.1 thousand barrels per day in the
second quarter last year, principally as a result of the inclusion of the
processing facilities acquired in the Chevron Combination. NGL marketing volumes
sold increased from 148.3 thousand barrels per day in the 1996 quarter to 382.7
thousand barrels per day in 1997. Barrels received for fractionation increased
55.5 thousand barrels per day to 172.0 thousand barrels per day during the 1997
quarter. Crude oil volumes increased 70 percent period to period, from 103.5
thousand barrels a day in 1996 to 176.4 thousand barrels a day in 1997
principally as a result of the acquisition of Canada-based Wilmar Energy and the
expansion of the domestic base business.
The Liquids segment's business strategy is predicated on being a low cost
producer of energy products. The integration of the assets acquired in the
Trident and Chevron Combinations has resulted in improved capacity utilization
and enhanced operating performance. The segment continues to actively address
cost containment initiatives at existing facilities, pursue asset acquisitions
and/or construct assets, when it is considered economically and strategically
appropriate in order to align its operations with other commercial aspects of
NGC's business. In addition, the segment is pursuing acquisitions, strategic
alliances and/or joint ventures in order to capitalize on new gas production in
the Gulf of Mexico.
Page 25 of 36
<PAGE>
NGC CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1997 AND 1996
Internationally, the Company, principally through its wholly owned subsidiary
NGC Global Energy, Inc., will pursue economically viable near term strategic
opportunities. The intent of the strategy is to expand the multi-commodity
Energy Store concept in selected international locations and it is likely the
Company will leverage off foreign investments held by its major shareholders as
a means for initiating most of these near term projects.
SIX-MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
For the six-months ended June 30, 1997, NGC realized net income of $36.7
million, or $0.22 per share, on revenues of approximately $6 billion. This
compares with net income of $44.2 million, or $0.37 per share, on total revenue
of $2.8 billion reported in the same 1996 period. Current period results include
an aggregate after-tax charge related to certain special items of $13.8 million,
or $0.08 per share, attributed to the combination of lower-of-cost-or-market
writedowns of the Company's NGL liquids and crude oil inventories, a hedging-
related loss, recognition of a reserve related to the Company's investment in
Avoca Natural Gas Storage ("Avoca") and an adjustment to increase NGL
Marketing's cost of sales for a true-up to actual of prior accruals offset by
the gain on sale of the Mont Belvieu I fractionation facility, the gain on sale
of NGC's interest in NCL and an adjustment to reduce gas marketing's cost of
sales for a true-up to actual of prior accruals. Normalized earnings for the
1997 quarter, which exclude the aforementioned charges and gains, totaled $50.5
million, or $0.30 per share. Cash flow provided by operating activities
increased $80.7 million to $167.4 million during the 1997 period as compared to
the $86.7 million reported in the first six months of 1996.
Consolidated operating margin for the first six months of 1997 totaled $165.1
million, which is net of $18.1 million of pre-tax charges related to the
aforementioned special items, as compared to $142.1 million for the
corresponding 1996 period. Marketing contributed $63.0 million to the 1997
consolidated operating margin, compared to $54.4 million reported a year ago;
whereas, Liquids contributed an aggregate $102.1 million to the consolidated
operating margin or $14.4 million more than the $87.7 million reported in 1996.
Operating income totaled $50.6 million for the six-months ended June 30, 1997,
compared to $72.4 million in the comparable 1996 period. The decrease of $21.8
million reflects the aforementioned increase in consolidated operating margin,
which was more than offset by the aggregate increase in depreciation and
amortization and general and administrative expenses. The increases in
depreciation and amortization expense and general and administrative expenses
result principally from the same reasons and circumstances that impacted these
items during the three-months ended June 30, 1997, discussed previously.
NGC's results include the Company's equity share in the earnings of its
unconsolidated affiliates which contributed an aggregate $26.8 million to pre-
tax income during the 1997 period, more than doubling the $12.7 million reported
during the comparable 1996 period. The increase in equity earnings of $14.1
million period to period includes an aggregate $9.4 million attributed to the
Company's investments in the West Texas LPG Pipeline Partnership, acquired in
the Chevron Combination, and the Venice Gas Processing Company, a limited
partnership formed by NGC and Chevron effective November 1, 1996. In addition,
NGC's investment in its foreign joint venture affiliates, NCL and Accord,
combined to contribute $12.6 million to equity earnings during the 1997 period
as compared to $10.7 million during the 1996 period. As previously discussed,
NGC has reorganized its interest in Accord and sold its interest in NCL. NGC's
other equity investments contributed approximately $4.8 million to equity
earnings in 1997 compared to approximately $2 million during the same 1996
period.
Interest expense totaled $27.9 million for the six-month period ended June 30,
1997, compared to $19.8 million for the equivalent 1996 period. The increase of
$8.1 million is principally attributed to the debt assumed in and resulting from
the Chevron Combination and, to a lesser degree, higher average outstanding
principal amounts in 1997 as compared to 1996 resulting from advances on the
Company's credit facility related to the funding of the Destec acquisition.
Other income and expenses, net was immaterial to the six-month periods ended
June 30, 1997 and 1996, respectively. As discussed previously, the Company sold
$200 million of Securities during the period and the accumulated distributions
attributable to these Securities are reported as minority interest in income of
a subsidiary in the condensed consolidated statements of operations.
The Company reported an income tax provision of $11.3 million for the six-month
period ended June 30, 1997, representing an effective tax rate of 24 percent,
compared to an income tax provision of $19.7 million and an effective rate of 31
percent
Page 26 of 36
<PAGE>
NGC CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1997 AND 1996
for the equivalent 1996 period. Differences between the aforementioned effective
rates and the statutory rate of 35 percent for each of the six-month periods
ended June 30, 1997 and 1996, respectively, result principally from the same
factors impacting the effective rates for the three-month periods ended June 30,
1997 and 1996, previously discussed.
NATURAL GAS AND ELECTRIC POWER MARKETING
Marketing's operating margin for the six-month period ended June 30, 1997,
totaled $63.0 million compared with $54.4 million in the same 1996 period.
Included in the 1997 period operating margin is an $8.8 million benefit
resulting from adjustments related to a reconciliation and true-up to actual
results of certain accruals made in prior periods for price and volumes. Total
domestic natural gas volumes sold, increased to 6.2 billion cubic feet per day
from 3.5 billion cubic feet per day during the first half of last year,
principally as a result of the Chevron Combination. Gas marketing volumes for
the six-months ended June 30, 1997 and 1996, respectively, are exclusive of
Canadian marketing volumes as such data is not comparable period to period as a
result of the sale of the NCL interest. Excluding the accrual to actual
adjustments, average domestic unit margins approximate $0.05 per thousand cubic
feet during the 1997 period as compared to approximately $0.09 unit margins
during the 1996 period, which include the operating margin earned by the Company
during the extremely cold winter last year. ECI continued to improve its sales
volumes dramatically, selling 34.0 million megawatt hours during the first six
months of 1997, an increase of almost 30 million megawatt hours period to
period.
NATURAL GAS LIQUIDS, CRUDE OIL AND GAS TRANSMISSION
Liquids operating margin of $102.1 million for the 1997 period, reflects an
increase of $14.4 million over the same 1996 period. Included in the 1997
period are the charges related to the aforementioned inventory writedowns, the
hedge-related loss and the actualization of cost accruals totaling $26.9
million, on a pre-tax basis. The increase in operating margin was principally
the result of higher production volumes from the Warren Petroleum gas processing
plants and improved profitability in the Company's fractionation operations,
offset by lower results from the NGL and crude oil marketing businesses
principally as a result of the first quarter charges.
Operationally, the segment's businesses reflected significantly improved volumes
period to period principally as a result of the Chevron Combination. Aggregate
NGL processing volumes more than doubled period to period averaging 129.7
thousand gross barrels per day as compared to 70.5 thousand barrels per day in
1996. Barrels received for fractionation increased 50.3 thousand barrels per
day to 160.9 thousand barrels per day during the 1997 period. NGL marketing
volumes increased from 153.1 thousand barrels per day in the 1996 period to
403.3 thousand barrels per day in 1997 and crude oil sales volumes increased
61.4 thousand barrels per day period to period.
CAPITAL RESOURCES, LIQUIDITY AND FINANCIAL CONDITION
NGC has historically relied upon operating cash flow and borrowings under its
credit facilities for its liquidity and capital resource requirements. As a
result of the Company's continued positive operating results, combined with the
liquidity and flexibility provided by available funds under its credit
facilities, the Company believes it will be able to meet all foreseeable cash
requirements, including working capital, capital expenditures and debt service.
Operating Cash Flow
Cash flow from operating activities totaled $167.4 million during the first six
months of 1997, an improvement of $80.7 million over the amount reported in the
1996 period reflecting an improved working capital position offset by lower net
income. Significant items impacting reported cash flow from operations in the
1997 period as compared to the 1996 period include the inventory writedowns, the
Avoca reserve, gains on the sale of the Mont Belvieu I fractionator and the 49.9
percent interest in NCL and higher equity earnings, net of cash distributions
period to period. The improved working capital position reflects the
monetization of the winter marketing sales activities and the reduction of
discretionary inventory volumes during the period. Changes in other working
capital accounts, which include prepayments, other current assets and accrued
Page 27 of 36
<PAGE>
NGC CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1997 AND 1996
liabilities, reflect expenditures or recognition of liabilities for insurance
costs, certain deposits, salaries, taxes other than on income, certain deferred
revenue accounts and other similar items. Fluctuations in these accounts from
period to period reflect changes in facts or changes in the timing of payments
or recognition of liabilities and are not directly impacted by seasonal factors.
CAPITAL EXPENDITURES, COMMITMENTS AND DIVIDEND REQUIREMENTS
The Company's business strategy has been to grow horizontally across all sectors
of the midstream energy business segment through strategic acquisitions or
construction of core operating facilities in order to capture the significant
synergies which management believes exist among these types of assets and NGC's
natural gas, power and NGL marketing businesses.
Destec Acquisition
On June 30, 1997, NGC announced it had closed its acquisition of Destec in a
deal valued at $1.26 billion, or $21.65 per share of Destec common stock.
Simultaneous with this acquisition, NGC sold Destec's international facilities
and operations to The AES Corporation for $436 million. NGC's closing commitment
relative to this transaction approximated $718 million, including transaction
costs and net of Destec cash acquired at closing and the proceeds from the sale
of Destec's international facilities and operations to The AES Corporation. NGC
financed a majority of its closing commitment through an interim bank facility
arranged as a separate tranche to the existing NGC Corporation Credit Agreement
("Credit Agreement"). The interim financing agreement has a two year term and
financial covenants that are consistent with those contained in the Credit
Agreement. In July and August 1997, the Company consummated a sale of Destec's
interest in Tiger Bay and a sale of certain oil, gas and lignite reserves,
respectively, and is currently actively negotiating the sale of its interests in
two additional power generating facilities. Aggregate proceeds from these
transactions is expected to approximate $382.8 million. These asset sales are
part of the planned divestiture of non-strategic domestic assets contemplated as
an integral part of the Destec acquisition. Proceeds from the sale of these
assets will be used to reduce outstanding indebtedness under the Credit
Agreement. The Company is continuing to explore other opportunities to monetize
its investment in certain assets acquired from Destec if, and when, it is
determined that such divestitures are economically and strategically
appropriate.
Company Obligated Preferred Securities of a Subsidiary Trust
During May 1997, NGC Corporation Capital Trust I ("Trust") issued in a private
transaction $200 million aggregate liquidation amount of 8.316 percent
Subordinated Capital Income Securities ("Securities") representing preferred
undivided beneficial interests in the assets of the Trust. The Trust invested
the proceeds from the issuance of the Securities in an equivalent amount of
8.316 percent Subordinated Debentures ("Subordinated Debentures") of the
Company. The sole assets of the Trust are the Subordinated Debentures.
Proceeds from issuance of the Securities were used to reduce outstanding
principal under the Credit Agreement.
The Securities are subject to mandatory redemption in whole but not in part on
June 1, 2027, upon payment of the Subordinated Debentures at maturity or in
whole but not in part at any time, contemporaneously with the optional
prepayment of the Subordinated Debentures as allowed by the associated
indenture. The Subordinated Debentures are redeemable, at the option of the
Company, in whole at any time or in part from time to time, at formula-based
redemption prices, as defined. The Subordinated Debentures represent unsecured
obligations of the Company and rank subordinate and junior in right of payment
to all Senior Indebtedness to the extent and in the manner set forth in the
associated indenture. The Company has irrevocably and unconditionally
guaranteed, on a subordinated basis, payment for the benefit of the holders of
the Securities the obligations of the Trust as described in the indenture
("Guarantee"). Distributions on the Securities are payable each June 1 and
December 1, coinciding with the interest payment due dates on the Subordinated
Debentures, commencing December 1, 1997. The periodic distributions accruing at
an annual rate of 8.316 percent of the aggregate liquidation amount are recorded
as minority interest in income of a subsidiary in the Company's condensed
consolidated statements of operations. So long as no Debenture Event of Default,
as defined, has occurred and continues, the Company has the right to defer the
Page 28 of 36
<PAGE>
NGC CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1997 AND 1996
payment of interest on the Subordinated Debentures for any Extension Period
elected by the Company, which period cannot extend beyond 10 consecutive semi-
annual periods, end on a date other than an Interest Payment Date or extend
beyond the Stated Maturity Date.
Capital Expenditures and Investing Activities
During the six months of 1997, the Company spent $83.1 million, principally on
acquisitions of additional interests in gas processing facilities, pipelines and
other midstream assets, on capital improvements at existing facilities and on
capital additions at the Company's new headquarters. The Company also invested
$26.8 million in its unconsolidated affiliates, principally for amounts
committed to Venice. During the period, the Company divested itself of the Mont
Belvieu I fractionation facility pursuant to an agreement reached with the
Federal Trade Commission related to the Chevron Combination. Further, NGC sold
its 49.9 percent interest in NCL and acquired NCL's existing gas marketing
business, as part of the restructuring of that investment. Aggregate net
proceeds from the two dispositions approximated $154 million and NGC paid
approximately $4 million for NCL's gas marketing business. During the first six
months of 1996, the Company spent $26.9 million, principally for the acquisition
of LPG Services, Inc. and capital improvements at existing facilities. Also in
that period, the Company received a payment of $4.6 million from Avoca
representing a return of capital and a $14.5 million payment from a third party
representing partial payment for certain contracts related to a processing
facility.
Dividend Requirements and Stock Repurchases
NGC declares quarterly dividends on its outstanding common stock at the
discretion of its Board of Directors. The holders of the Series A Preferred
Stock are entitled to receive dividends or distributions equal per share in
amount and kind to any dividend or distribution payable on shares of the
Company's common stock, when and as the same are declared by the Company's Board
of Directors. During the six-month periods ended June 30, 1997 and 1996, the
Company paid approximately $4 million and $3.4 million in cash dividends,
respectively.
During the quarter ended June 30, 1997, the Company repurchased 59,900 shares of
its common stock in open market transactions at a cost of $935,000.
LIQUIDITY AND CAPITAL RESOURCES
Credit Agreement
On March 14, 1995, the Company entered into the Credit Agreement, which
established a five-year $550 million revolving credit facility. The revolving
facility provides for letters of credit and borrowings for working capital,
capital expenditures and general corporate purposes of up to $550 million in the
aggregate. The $550 million commitment under the revolving facility reduces by
$22.5 million each quarter beginning in June 1998 and continuing through
maturity. On June 27, 1997, the Credit Agreement was amended to provide, among
other things, for the establishment of a new two-year $400 million term loan
facility. Proceeds from the $400 million of borrowings under the term loan
facility were required to be used solely for the purpose of consummating the
Destec acquisition. The Credit Agreement contains certain financial covenants
which require the Company to meet certain financial position and performance
tests.
At June 30, 1997, aggregate principal outstanding under the Credit Agreement and
the interim bank facility totaled $680 million. Additionally, as of that date,
letters of credit outstanding under the Credit Agreement aggregated $22.0
million and unused borrowing capacity under the Credit Agreement approximated
$248 million. The average interest rate applicable to all borrowings under the
Credit Agreement approximated 6.02 percent at June 30, 1997.
Page 29 of 36
<PAGE>
NGC CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1997 AND 1996
Letter of Credit Agreement
On September 1, 1996, the Company entered into a new credit agreement (the
"Letter of Credit Agreement"), which established a 364-day, $300 million letter
of credit facility. The Letter of Credit Agreement provides for the issuance of
letters of credit in support of the Company's obligation to purchase
substantially all of the natural gas produced or controlled by Chevron in the
United States (except Alaska). The Letter of Credit Agreement contains certain
financial covenants which require the Company to meet certain financial position
and performance tests. In general, these financial covenants are identical to
those contained in the Credit Agreement. At June 30, 1997, amounts outstanding
under the Letter of Credit Agreement totaled $211 million.
Senior Notes and Shelf Registration
In October 1996, NGC sold $175 million of 7.625% 30-year Senior Notes due 2026
("Senior Debentures"). Interest on the Senior Debentures is payable semiannually
on April 15 and October 15 of each year. The Senior Debentures are redeemable,
at the option of the Company, in whole or in part from time to time, at a
formula based redemption price as defined in the associated indenture. On
December 15, 1995, the Company sold $150 million of 6.75% Senior Notes due 2005
("Senior Notes"). Interest on the Senior Notes is payable semiannually on June
15 and December 15 of each year. At June 30, 1997, the Company had $175 million
of available debt securities remaining under its $350 million shelf
registration.
The Senior Debentures and Senior Notes represent general unsecured obligations
of the Company and are fully and unconditionally guaranteed on a joint and
several basis by certain of the Company's wholly owned subsidiaries
(collectively the "Guarantors"), as defined in the associated indentures. The
wholly owned subsidiaries that have fully and unconditionally guaranteed, on a
joint and several basis, the Senior Debentures, are the same wholly owned
subsidiaries that have fully and unconditionally guaranteed, on a joint and
several basis, the Senior Notes. Such Guarantors are also guarantors under the
Credit Agreement and certain of the Guarantors guarantees pursuant to the Senior
Debentures, Senior Notes and Credit Agreement are subject to release under
certain circumstances. The Company also has direct and indirect subsidiaries
that are not guarantors of the Senior Debentures or the Senior Notes.
Chevron Note
As part of the Chevron Combination, NGC assumed approximately $155.4 million
payable to Chevron upon demand on or after August 31, 1998 (the "Chevron Note").
The Chevron Note bears interest at 7.95 percent per annum payable semiannually
in arrears each February and August. Should Chevron choose not to demand
payment of the Chevron Note then principal plus accrued interest is payable in
full on August 14, 2004. An unamortized premium balance of $2.8 million
associated with the Chevron Note is being amortized using the interest method,
resulting in an effective interest rate of 6.4 percent per annum.
Warren NGL, Inc. ("Warren", Formerly Trident NGL, Inc.) Notes
At June 30, 1997, Warren had outstanding $105 million principal amount of 10.25%
Subordinated Notes due 2003 (interest payable semi-annually in arrears each
April and October) and $65 million principal amount of 14% Senior Subordinated
Notes due 2001 (interest payable semi-annually in arrears each February and
August). Beginning in 1998, corresponding with the first call dates, the Company
may repurchase the Subordinated Notes and Senior Subordinated Notes at 104.5
percent and 107 percent of the principal amount, respectively, with such
reacquisition prices reducing as the notes mature. The indentures covering the
Subordinated Notes and Senior Subordinated Notes contain covenants that, among
other things, require Warren to meet certain financial tests; limit the amount
of investments, dividends and asset sales that can be made by Warren; and
restrict the ability of Warren and its subsidiaries to incur additional
indebtedness, create or permit liens and engage in certain transactions.
Although Warren's net assets at June 30, 1997, approximated $382 million,
management does not believe that the terms of the indentures materially restrict
the ability of Warren to transfer funds to the Company given that Warren is a
Subsidiary Guarantor combined with the level of advances made by NGC to Warren.
Page 30 of 36
<PAGE>
NGC CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1997 AND 1996
The unamortized premium balance associated with each of the Subordinated Notes
and Senior Subordinated Notes represents a fair value adjustment to the
aggregate principal balance of the notes recognized as part of the Trident
Combination. The unamortized premium balance of $12.6 million at June 30, 1997,
is being amortized using the interest method and results in effective interest
rates of 8.4 percent and 8.3 percent per annum on the Subordinated Notes and
Senior Subordinated Notes, respectively.
Page 31 of 36
<PAGE>
NGC CORPORATION
PART II. OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
On April 17, 1997, Pacific Gas and Electric Company ("PG&E") filed a lawsuit in
the Superior Court of the State of California, City and County of San Francisco,
against Destec Energy, Inc., Destec Holdings, Inc., Destec Operating Company and
San Joaquin CoGen, Inc., wholly owned direct and indirect subsidiaries of the
Company as well as against San Joaquin CoGen Limited (the "Partnership"), a
limited partnership in which the Company has a twenty-five percent interest. In
the lawsuit, PG&E asserts claims and alleges unspecified damages for fraud,
negligent misrepresentation, unfair business practices, breach of contract and
breach of the implied covenant of good faith and fair dealing. PG&E alleges
that due to the insufficient use of steam by the Partnership's steam host, the
Partnership did not qualify as a cogenerator pursuant to the California Public
Utilities Code ("CPUC") Section 218.5, and thus was not entitled under CPUC
Section 454.4 to the discount the Partnership received under gas transportation
agreements entered into between PG&E and the Partnership in 1989, 1991, 1993 and
1995. All of PG&E's claims in this suit arise out of the Partnership's alleged
failure to comply with CPUC Section 218.5. The defendants filed a response to
the lawsuit on May 15, 1997. The proceedings are at a preliminary stage and the
parties are currently in the process of initiating discovery. The Company's
subsidiaries intend to vigorously defend this action. NGC's management does not
expect the ultimate resolution of this lawsuit to have a material adverse effect
on the Company's financial position or results of operations.
On February 12, 1996, Apache Corporation ("Apache") requested arbitration to
resolve issues arising under a gas marketing contract ("Contract") with Natural
Gas Clearinghouse ("Clearinghouse"), a wholly owned subsidiary of the Company,
pursuant to the arbitration provisions of such Contract. On February 26, 1996,
Clearinghouse responded by denying Apache's claims and by alleging several
counterclaims of its own with respect to Apache's performance under the
Contract. In connection with the arbitration proceedings, on April 9, 1996,
Apache filed a lawsuit against Clearinghouse in the 55th Judicial District Court
of Harris County, Texas ("Court"). In that lawsuit, Apache alleged that
Clearinghouse was intentionally delaying the progress of the arbitration, and it
requested relief, pursuant to the Texas General Arbitration Act, in the form of
an order appointing a third arbitrator, compelling discovery and requiring
Clearinghouse to assign certain contracts allegedly belonging to Apache.
Clearinghouse filed a response to the lawsuit on May 6, 1996, asking that the
Court dismiss Apache's application for relief or abate the suit pending
resolution of all matters by the arbitration panel according to the terms of the
Contract. Clearinghouse also requested payment of all attorneys' fees and other
litigation expenses incurred in responding to and defending the lawsuit. The
hearing date has been postponed several times to allow the parties time to
complete discovery, most recently on July 18, 1997, when the hearing was delayed
until December 3, 1997. In the arbitration and again in the lawsuit, Apache
claims that it is entitled to actual damages in an undetermined amount in excess
of $8 million and punitive damages. Clearinghouse intends to vigorously defend
the Apache suit and arbitration. Based on review of the facts and through
consultation with outside counsel, NGC management believes the ultimate
resolution of the Apache suit will not have a material adverse effect on the
Company's financial position or results of operations, and that any payments
eventually made in connection with the arbitration and/or the lawsuit will be
substantially less than the amount claimed.
On October 11, 1996, Pan-Alberta Gas Ltd. ("Pan-Alberta") was named in a lawsuit
filed in Alberta, Canada, by a group of Canadian producers. The suit alleges
that, since 1992, Pan-Alberta has breached contractual, regulatory and fiduciary
obligations that resulted in the plaintiffs' being deprived of the best
available prices for their natural gas production. The suit asks for damages in
an amount to be determined at trial, punitive or exemplary damages of $5 million
(in Canadian dollars) and other costs. The plaintiffs' contend in the suit that
actual damages may exceed $50 million (in Canadian dollars). Pan-Alberta has
indicated their belief that the claims are without merit and the Company expects
Pan-Alberta to vigorously defend its position in the case. From the date the
lawsuit was filed through the effective date of the sale of its 49.9 percent
interest in NCL, NGC indirectly owned Pan-Alberta. As part of the
reorganization of NCL, NOVA assumed full ownership of the operations of Pan-
Alberta but did not indemnify NGC for this lawsuit. NGC is not currently a
party to this lawsuit and NGC's management does not believe that a claim could
be successfully asserted against it related to the lawsuit and does not expect
the lawsuit to have any effect on NGC's results of operations or financial
position.
The Company assumed liability for various claims and litigation in connection
with the Chevron Combination, the Trident Combination, the Destec acquisition
and in connection with the acquisition of certain gas processing and gathering
facilities from Mesa Operating Limited Partnership. NGC believes, based on its
review of these matters and consultation with outside legal counsel, that the
ultimate resolution of such items will not have a material adverse effect on the
Company's financial position or results of operations. Further, the Company is
subject to various legal proceedings and claims which
Page 32 of 36
<PAGE>
NGC CORPORATION
PART II. OTHER INFORMATION
arise in the normal course of business. In the opinion of management, the amount
of ultimate liability with respect to these actions will not have a material
adverse effect the financial position or results of operations of the Company.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The 1997 annual meeting (the "Annual Meeting") of the stockholders of NGC was
held on May 14, 1997. The purpose of the Annual Meeting was to consider and
vote upon the following proposals:
1. to elect thirteen directors to serve until the 1998 Annual Meeting of
Stockholders; and
2. to ratify the selection of Arthur Andersen L.L.P. as independent
auditors of the Company for the fiscal year ending December 31, 1997.
The Company's Board of Directors is comprised of thirteen members. At the Annual
Meeting, each of the following twelve individuals was re-elected to serve as a
director of the Company: C.L. Watson; Stephen J. Brandon; David R. Varney; P.
Nicholas Woollacott; C. Kent Jespersen; Jeffrey M. Lipton; Albert Terence Poole;
Daniel L. Dienstbier; and J. Otis Winters. Thomas M. Matthews was also elected
to serve his first term as a director of the Company at the Annual Meeting.
The following votes were cast with respect to the election of directors:
<TABLE>
<CAPTION>
NOMINEE FOR WITHHELD
------- --- --------
<S> <C> <C>
C.L. Watson 146,909,725 502,121
Thomas M. Matthews 146,913,812 498,034
Stephen J. Brandon 146,868,312 543,534
David R. Varney 143,585,728 3,826,118
P. Nicholas Woollacott 146,868,839 543,007
C. Kent Jespersen 146,915,239 496,607
Jeffrey M. Lipton 146,915,239 496,607
Albert Terence Poole 146,915,239 496,607
Darald W. Callahan 146,866,439 545,407
Donald L. Paul 146,868,739 543,107
Peter J. Robertson 146,866,439 545,407
Daniel L. Dienstbier 146,914,839 497,007
J. Otis Winters 146,913,180 498,666
</TABLE>
The following votes were cast with respect to the ratification of the selection
of Arthur Andersen L.L.P. as independent auditors of the Company for the fiscal
year ending December 31, 1997:
<TABLE>
<CAPTION>
<S> <C>
For: 147,347,426
Against/Withheld: 16,959
Abstentions: 47,461
Broker non-votes: 0
</TABLE>
Page 33 of 36
<PAGE>
NGC CORPORATION
PART II. OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following instruments and documents are included as exhibits to this
Form 10-Q.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <S>
2.1 Agreement and Plan of Merger by and among Destec
Energy, Inc., The Dow Chemical Company, NGC
Corporation and NGC Acquisition Corporation II dated
as of February 17, 1997. (1)
2.2 Asset Purchase Agreement by and between NGC
Corporation and The AES Corporation dated as of
February 17, 1997. (1)
2.3 First Amendment to Asset Purchase Agreement and the
related schedules dated as of June 29, 1997. (2)
2.4 Asset Purchase Agreement between Destec Energy, Inc.
and ECT EOCENE Enterprises, Inc. dated July 1, 1997.
(2)
4.1 NGC Corporation Guaranty dated as of June 27, 1997
(CoGen). (2)
4.2 NGC Corporation Guaranty dated as of June 27, 1997
(Wabash). (2)
4.3 Amended and Restated Credit Agreement dated as of
June 27, 1997, among NGC Corporation and The First
National Bank of Chicago, Individually and as Agent,
The Chase Manhattan Bank and NationsBank of Texas
N.A., Individually and as Co-Agents, and the Lenders
named therein. (2)
4.4 First Amendment to Letter of Credit Facility
Agreement dated as of April 23, 1997. (2)
+ 4.5 Subordinated Debenture Indenture between NGC
Corporation and The First National Bank of Chicago,
as Debenture Trustee, dated as of May 28, 1997.
+ 4.6 Amended and Restated Declaration of Trust among NGC
Corporation, Wilmington Trust Company, as Property
Trustee and Delaware Trustee, and the Administrative
Trustees named therein, dated as of May 28, 1997.
+ 4.7 Form of Capital Security certificate originally
issued by NGC Corporation Capital Trust I on April
24, 1997 (included as Exhibit A-1 of Exhibit 4.6).
+ 4.8 Form of certificate for Series A 8.316% Subordinated
Deferrable Interest Debenture due June 1, 2027
originally issued by NGC Corporation on May 28, 1997
(included as Exhibit A of Exhibit 4.5).
+ 4.9 Series A Capital Securities Guarantee executed by NGC
Corporation and The First National Bank of Chicago,
as Guarantee Trustee, dated as of May 28, 1997.
+ 4.10 Common Securities Guarantee of NGC Corporation dated
as of May 28, 1997.
</TABLE>
Page 34 of 36
<PAGE>
NGC CORPORATION
PART II. OTHER INFORMATION
<TABLE>
<CAPTION>
<C> <S>
+ 4.11 Registration Rights Agreement, dated as of May 28,
1997, among NGC Corporation, NGC Corporation Capital
Trust I, Lehman Brothers, Salomon Brothers Inc and
Smith Barney Inc.
- -----------------------------
</TABLE>
+ Filed herewith.
(1) Incorporated by reference to exhibits to the Annual Report on Form 10-K of
NGC Corporation for the Fiscal Year Ended December 31, 1996, Commission
File No. 1-11156.
(2) Incorporated by reference to exhibits to the Current Report on Form 8-K
of NGC Corporation, Commission File No. 1-11156, dated June 27, 1997.
(b) Current Reports on Form 8-K
The following reports on Form 8-K were filed by the Company during the
quarter-ended June 30, 1997:
Current Report on Form 8-K, Commission File No. 1-11156, dated June 27,
1997, relating to (i) the June 27, 1997, closing of the merger of Destec
Energy, Inc. ("Destec") with and into NGC Acquisition Corporation II (the
"Merger") contemplated by the Agreement and Plan of Merger, by and among
Destec, the Dow Chemical Company, NGC Corporation ("NGC") and NGC
Acquisition Corp. II; (ii) the June 30, 1997, closing of the transactions
contemplated by the Asset Purchase Agreement by and between NGC and The AES
Corporation ("AES") pursuant to which NGC sold Destec's international
facilities and operations to AES for $436 million; and (iii) the July 1,
1997, execution of a definitive agreement to sell certain oil, gas and
lignite reserves owned by Destec to ECT EOCENE Enterprises, Inc., an
indirect subsidiary of Enron Corp., for $149 million, subject to certain
adjustments.
Page 35 of 36
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned and thereunto duly authorized.
NGC CORPORATION
Date: August 14, 1997 By: /s/ JOHN U. CLARKE
---------------- -----------------------------------
John U. Clarke, Senior Vice President
and Chief Financial Officer (Principal
Financial Officer and Principal
Accounting Officer)
Page 36 of 36
<PAGE>
EXHIBIT 4.5
________________________________________________________________________________
NGC CORPORATION
______________________________
______________________________
SUBORDINATED DEBENTURE INDENTURE
Dated as of May 28, 1997
______________________________
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
______________________________
SUBORDINATED DEFERRABLE INTEREST DEBENTURES
_______________________________________________________________________________
<PAGE>
TIE-SHEET
of provisions of Trust Indenture Act of 1939 with Indenture dated as of May
28, 1997 between NGC Corporation and The First National Bank of Chicago,
Trustee:
ACT SECTION INDENTURE SECTION
<TABLE>
<CAPTION>
<S> <C>
310(a)(1)................................................... 6.09
(a)(2)................................................... 6.09
310(a)(3)................................................... N/A
(a)(4)................................................... N/A
310(a)(5)................................................... 6.09
310(b)................................................ 6.08, 6.10
310(c)...................................................... N/A
311(a) and (b).............................................. 6.13
311(c)............................................. 4.01, 4.02(a)
312(a)...................................................... 4.01
312(b) and (c).............................................. 4.02
313(a)...................................................... 4.04
313(b)(1)................................................... 4.04
313(b)(2)................................................... 4.04
313(c)...................................................... 4.04
313(d)...................................................... 4.04
314(a)...................................................... 4.03
314(b)...................................................... N/A
314(c)(1) and (2)........................................... 6.07
314(c)(3)................................................... N/A
314(d)...................................................... N/A
314(e)...................................................... 6.07
314(f)...................................................... N/A
315(a)(c) and (d)........................................... 6.01
315(b)...................................................... 5.08
315(e)...................................................... 5.09
316(a)(1)................................................... 5.07
316(a)(2)................................................... N/A
316(a) last sentence........................................ 7.04
316(b)...................................................... 9.02
317(a)...................................................... 5.05
317(b)...................................................... 6.05
318(a)...................................................... 13.08
- -------------------------------------
</TABLE>
THIS TIE-SHEET IS NOT PART OF THE INDENTURE AS EXECUTED.
<PAGE>
PAGE
----
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions................................................ 1
SECTION 1.02. Business Day Certificate................................... 11
SECTION 1.03. Form of Documents Delivered to Trustee..................... 11
ARTICLE II
SECURITIES
SECTION 2.01. Forms Generally............................................ 12
SECTION 2.02. Execution and Authentication............................... 12
SECTION 2.03. Form and Payment........................................... 13
SECTION 2.04. Legends.................................................... 13
SECTION 2.05. Global Security............................................ 14
SECTION 2.06. Interest................................................... 16
SECTION 2.07. Transfer and Exchange...................................... 17
SECTION 2.08. Replacement Securities..................................... 19
SECTION 2.09. Temporary Securities....................................... 20
SECTION 2.10. Cancellation............................................... 20
SECTION 2.11. Defaulted Interest......................................... 20
SECTION 2.12. CUSIP Numbers.............................................. 21
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.01. Payment of Principal, Premium and Interest................. 22
SECTION 3.02. Offices for Notices and Payments, etc...................... 22
SECTION 3.03. Appointments to Fill Vacancies in Trustee's Office......... 23
SECTION 3.04. Provision as to Paying Agent............................... 23
SECTION 3.05. Certificate to Trustee..................................... 24
SECTION 3.06. Compliance with Consolidation Provisions................... 24
SECTION 3.07. Limitation on Dividends.................................... 24
SECTION 3.08. Covenants as to NGC Corporation Capital Trust.............. 25
SECTION 3.09. Payment of Trust's Costs and Expenses...................... 25
SECTION 3.10. Payment Upon Resignation or Removal........................ 26
ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE
SECTION 4.01. Securityholders' Lists..................................... 26
SECTION 4.02. Preservation and Disclosure of Lists....................... 27
i
<PAGE>
PAGE
----
SECTION 4.03. Reports by Company........................................ 28
SECTION 4.04. Reports by the Trustee.................................... 29
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON
EVENT OF DEFAULT
SECTION 5.01. Events of Default.......................................... 30
SECTION 5.02. Payment of Securities on Default; Suit Therefor............ 32
SECTION 5.03. Application of Moneys Collected by Trustee................. 33
SECTION 5.04. Proceedings by Securityholders............................. 34
SECTION 5.05. Proceedings by Trustee..................................... 35
SECTION 5.06. Remedies Cumulative and Continuing......................... 35
SECTION 5.07. Direction of Proceedings and Waiver of Defaults
by Majority of Securityholders............................. 35
SECTION 5.08. Notice of Defaults......................................... 36
SECTION 5.09. Undertaking to Pay Costs................................... 37
SECTION 5.10. Waiver of Stay or Extension Laws........................... 37
ARTICLE VI
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Trustee..................... 37
SECTION 6.02. Reliance on Documents, Opinions, etc....................... 39
SECTION 6.03. No Responsibility for Recitals, etc........................ 40
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents, Transfer
Agents or Registrar May Own Securities..................... 40
SECTION 6.05. Moneys to be Held in Trust................................. 40
SECTION 6.06. Compensation and Expenses of Trustee....................... 41
SECTION 6.07. Officers' Certificate as Evidence.......................... 41
SECTION 6.08. Conflicting Interest of Trustee............................ 42
SECTION 6.09. Eligibility of Trustee..................................... 42
SECTION 6.10. Resignation or Removal of Trustee.......................... 42
SECTION 6.11. Acceptance by Successor Trustee............................ 44
SECTION 6.12. Succession by Merger, etc.................................. 44
SECTION 6.13. Limitation on Rights of Trustee as a Creditor.............. 45
SECTION 6.14. Authenticating Agents...................................... 45
ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Action by Securityholders.................................. 46
SECTION 7.02. Proof of Execution by Securityholders...................... 47
SECTION 7.03. Who Are Deemed Absolute Owners............................. 47
SECTION 7.04. Securities Owned by Company Deemed Not Outstanding......... 47
SECTION 7.05. Revocation of Consents; Future Holders Bound............... 48
ii
<PAGE>
PAGE
----
ARTICLE VIII
SECURITYHOLDERS' MEETINGS
SECTION 8.01. Purposes of Meetings...................................... 48
SECTION 8.02. Call of Meetings by Trustee............................... 49
SECTION 8.03. Call of Meetings by Company or Securityholders............ 49
SECTION 8.04. Qualifications for Voting................................. 49
SECTION 8.05. Regulations............................................... 49
SECTION 8.06. Voting.................................................... 50
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Without Consent of Securityholders........................ 51
SECTION 9.02. With Consent of Securityholders........................... 52
SECTION 9.03. Compliance with Trust Indenture Act; Effect
of Supplemental Indentures................................ 53
SECTION 9.04. Notation on Securities.................................... 53
SECTION 9.05. Evidence of Compliance of Supplemental Indenture
to be Furnished Trustee................................... 54
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 10.01. Company May Consolidate, etc., on Certain Terms........... 54
SECTION 10.02. Successor Corporation to be Substituted for Company....... 55
SECTION 10.03. Opinion of Counsel to be Given Trustee.................... 55
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.01. Discharge of Indenture.................................... 55
SECTION 11.02. Deposited Moneys and U.S. Government Obligations
to be Held in Trust by Trustee............................ 56
SECTION 11.03. Paying Agent to Repay Moneys Held......................... 56
SECTION 11.04. Return of Unclaimed Moneys................................ 57
SECTION 11.05. Defeasance Upon Deposit of Moneys or
U.S. Government Obligations............................... 57
ARTICLE XII
IMMUNITY OF INCORPORATORS,
STOCKHOLDERS,OFFICERS AND DIRECTORS
SECTION 12.01. Indenture and Securities Solely Corporate Obligations..... 58
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. Successors................................................ 59
SECTION 13.02. Official Acts by Successor Corporation.................... 59
iii
<PAGE>
PAGE
----
SECTION 13.03. Surrender of Company Powers............................... 59
SECTION 13.04. Addresses for Notices, etc................................ 59
SECTION 13.05. GOVERNING LAW............................................. 60
SECTION 13.06. Evidence of Compliance with Conditions Precedent.......... 60
SECTION 13.07. Business Days............................................. 60
SECTION 13.08. Trust Indenture Act to Control............................ 60
SECTION 13.09. Table of Contents, Headings, etc.......................... 61
SECTION 13.10. Execution in Counterparts................................. 61
SECTION 13.11. Separability.............................................. 61
SECTION 13.12. Assignment................................................ 61
SECTION 13.13. Acknowledgment of Rights.................................. 61
ARTICLE XIV
REDEMPTION OF SECURITIES
SECTION 14.01. Special Event Redemption.................................. 62
SECTION 14.02. Optional Redemption by Company............................ 62
SECTION 14.03. No Sinking Fund........................................... 63
SECTION 14.04. Notice of Redemption; Selection of Securities............. 63
SECTION 14.05. Payment of Securities Called for Redemption............... 64
ARTICLE XV
SUBORDINATION OF SECURITIES
SECTION 15.01. Agreement to Subordinate.................................. 64
SECTION 15.02. Default on Senior Indebtedness............................ 65
SECTION 15.03. Liquidation; Dissolution; Bankruptcy...................... 65
SECTION 15.04. Subrogation............................................... 67
SECTION 15.05. Trustee to Effectuate Subordination....................... 67
SECTION 15.06. Notice by the Company..................................... 67
SECTION 15.07. Rights of the Trustee; Holders of Senior Indebtedness..... 68
SECTION 15.08. Subordination May Not Be Impaired......................... 69
SECTION 15.09. Article Applicable to Paying Agents....................... 69
SECTION 15.10. Trust Moneys Not Subordinated............................. 70
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 16.01. Extension of Interest Payment Period...................... 70
SECTION 16.02. Notice of Extension....................................... 71
iv
<PAGE>
PAGE
____
Testimonium
Signatures
Acknowledgments
v
<PAGE>
THIS SUBORDINATED DEBENTURE INDENTURE, dated as of May 28, 1997,
between NGC Corporation, a Delaware corporation (hereinafter sometimes called
the "Company"), and The First National Bank of Chicago, a Delaware banking
corporation, as trustee (hereinafter sometimes called the "Trustee"),
W I T N E S S E T H :
In consideration of the premises, and the purchase of the Securities by the
holders thereof, the Company covenants and agrees with the Trustee for the equal
and proportionate benefit of the respective holders from time to time of the
Securities, as follows:
ARTICLE I
DEFINITIONS
-----------
SECTION 1.01. Definitions.
The terms defined in this Section 1.01 (except as herein otherwise
expressly provided or unless the context otherwise requires) for all purposes of
this Indenture shall have the respective meanings specified in this Section
1.01. All other terms used in this Indenture which are defined in the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), or which are by
reference therein defined in the Securities Act, shall (except as herein
otherwise expressly provided or unless the context otherwise requires) have the
meanings assigned to such terms in said Trust Indenture Act and in said
Securities Act as in force at the date of this Indenture as originally executed.
The following terms have the meanings given to them in the Declaration: (i)
Clearing Agency; (ii) Delaware Trustee; (iii) Property Trustee; (iv)
Administrative Trustees; (v) Series A Capital Securities; (vi) Series B Capital
Securities; (vii) Direct Action; (viii) Distributions; and (ix) Private Exchange
Capital Securities. All accounting terms used herein and not expressly defined
shall have the meanings assigned to such terms in accordance with generally
accepted accounting principles and the term "generally accepted accounting
principles" means such accounting principles as are generally accepted at the
time of any computation. The words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision. Headings are used for
convenience of reference only and do not affect interpretation. The singular
includes the plural and vice versa.
"Additional Sums" shall have the meaning set forth in Section 2.06(c).
"Adjusted Treasury Rate" means, with respect to any redemption date, the
rate per annum equal to (i) the yield, under the heading which represents the
average for the immediately prior week, appearing in the most recently published
statistical release designated "H.15(519)" or any successor publication which is
published weekly by the Federal Reserve and which establishes yields on actively
traded United States Treasury securities adjusted to constant maturity under the
caption "Treasury Constant Maturities," for the maturity date corresponding to
the Maturity Date (if no
<PAGE>
maturity date is within three months before or after the Maturity Date, yields
for the two published maturities most closely corresponding to the Maturity Date
shall be interpolated and the Adjusted Treasury Rate shall be interpolated or
extrapolated from such yields on a straight-line basis, rounding to the nearest
month) or (ii) if such release (or any successor release) is not published
during the week preceding the calculation date or does not contain such yields,
the rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date plus (i) 1.03% if such redemption date
occurs prior to June 1, 1998 and (ii) 0.50% in all other cases.
"Affiliate" shall have the meaning given to that term in Rule 405 under the
Securities Act or any successor rule thereunder.
"Authenticating Agent" shall mean any agent or agents of the Trustee which
at the time shall be appointed and acting pursuant to Section 6.14.
"Bankruptcy Law" shall mean Title 11, U.S. Code, or any similar federal or
state law for the relief of debtors.
"Board of Directors" shall mean either the Board of Directors of the
Company or any duly authorized committee of that board.
"Board Resolution" shall mean a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" shall mean, with respect to any series of Securities, any
day other than a Saturday or a Sunday or a day on which banking institutions in
Houston, Texas or Chicago, Illinois are authorized or required by law or
executive order to close.
"Capital Securities" shall mean the subordinated capital income securities
representing undivided beneficial interests in the assets of NGC Corporation
Capital Trust which rank pari passu with the Common Securities issued by NGC
Corporation Capital Trust; provided, however, that if an Event of Default has
occurred and is continuing, no payments in respect of Distributions on, or
payments upon liquidation, redemption or otherwise with respect to, the Common
Securities shall be made until the holders of the Capital Securities shall be
paid in full the Distributions and the liquidation, redemption and other
payments to which they are entitled. References to "Capital Securities" shall
include collectively any Series A Capital Securities, Series B Capital
Securities and Private Exchange Capital Securities.
"Capital Securities Guarantee" shall mean any guarantee that the Company
may enter into with The First National Bank of Chicago or other Persons that
operates directly or indirectly for the
2
<PAGE>
benefit of holders of Capital Securities of NGC Corporation Capital Trust and
shall include a Series A Capital Securities Guarantee and a Series B Capital
Securities Guarantee with respect to the Series A Capital Securities and the
Series B Capital Securities, respectively.
"Cedel" means Cedel, S.A.
"Commission" shall mean the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Securities" shall mean the common securities of the Trust
representing undivided beneficial interests in the assets of the Trust which
rank pari passu with Capital Securities issued by the Trust; provided, however,
that if an Event of Default has occurred and is continuing, no payments in
respect of Distributions on, or payments upon liquidation, redemption or
otherwise with respect to, the Common Securities shall be made until the holders
of the Capital Securities shall be paid in full the Distributions and the
liquidation, redemption and other payments to which they are entitled.
"Common Securities Guarantee" shall mean any guarantee that the Company may
enter into with any Person or Persons that operates directly or indirectly for
the benefit of holders of Common Securities of NGC Corporation Capital Trust.
"Common Stock" shall mean the Common Stock, par value $.01 per share, of
the Company or any other class of stock resulting from changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
"Company" shall mean NGC Corporation, a Delaware corporation, and, subject
to the provisions of Article X, shall include its successors and assigns.
"Company Request" or "Company Order" shall mean a written request or order
signed in the name of the Company by the Chairman of the Board, the Chief
Executive Officer, the President, a Vice Chairman of the Board or a Vice
President, and by its Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary, and delivered to the Trustee.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Reference Treasury Dealer as having a maturity comparable to the
remaining term of the Securities to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such Securities.
3
<PAGE>
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such business day, the average of
the Reference Treasury Dealer Quotations for such redemption date.
"Compounded Interest" shall have the meaning set forth in Section 16.01.
"Custodian" shall mean any receiver, trustee, assignee, liquidator, or
similar official under any Bankruptcy Law.
"Declaration" means the Amended and Restated Declaration of Trust of NGC
Corporation Capital Trust, dated as of May 28, 1997, as amended from time to
time.
"Default" means any event, act or condition that with notice or lapse of
time, or both, would constitute an Event of Default.
"Defaulted Interest" shall have the same meaning set forth in Section 2.11.
"Deferred Interest" shall have the meaning set forth in Section 16.01.
"Definitive Securities" shall mean those securities issued in fully
registered certificated form not otherwise in global form.
"Depositary" shall mean, with respect to Securities issuable in whole or in
part in the form of one or more Global Securities, The Depository Trust Company,
New York, New York, another clearing agency, or any successor registered as a
clearing agency under the Exchange Act or other applicable statute or
regulation, which, in each case, shall be designated by the Company pursuant to
Section 2.05(d).
"Dissolution Event" means the liquidation of NGC Corporation Capital Trust
pursuant to the Declaration, and the distribution of the Securities held by the
Property Trustee to the holders of the Trust Securities issued by NGC
Corporation Capital Trust pro rata in accordance with the Declaration.
"Event of Default" shall mean any event specified in Section 5.01,
continued for the period of time, if any, and after the giving of the notice, if
any, therein designated.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
4
<PAGE>
"Exchange Offer" means the offer that may be made pursuant to the
Registration Rights Agreement (i) by the Company to exchange Series B Securities
for Series A Securities and to exchange a Series B Capital Securities Guarantee
for a Series A Capital Securities Guarantee and (ii) by NGC Corporation Capital
Trust to exchange Series B Capital Securities for Series A Capital Securities.
"Extended Interest Payment Period" shall have the meaning set forth in
Section 16.01.
"Global Security" means, with respect to the Securities, a Security
executed by the Company and delivered by the Trustee to the Depositary or
pursuant to the Depositary's instruction, all in accordance with the Indenture,
which shall be registered in the name of the Depositary or its nominee.
"Indebtedness" shall mean (i) every obligation of the Company for money
borrowed; (ii) every obligation of the Company evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in connection
with the acquisition of property, assets or businesses; (iii) every
reimbursement obligation of the Company with respect to letters of credit,
bankers' acceptances or similar facilities issued for the account of the
Company; (iv) every obligation of the Company issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts payable or
accrued liabilities arising in the ordinary course of business); (v) every
capital lease obligation of the Company; (vi) all indebtedness of the Company
whether incurred on or prior to the date of the Indenture or thereafter
incurred, for claims in respect of derivative products, including interest rate,
foreign exchange rate and commodity forward contracts, options and swaps and
similar arrangements; and (vii) every obligation of the type referred to in
clauses (i) through (vi) of another Person and all dividends of another Person
the payment of which, in either case, the Company has guaranteed or is
responsible or liable, directly or indirectly, as obligor or otherwise.
"Indebtedness Ranking on a Parity with the Securities" shall mean (i)
Indebtedness, whether outstanding on the date of execution of this Indenture or
hereafter created, assumed or incurred, to the extent such indebtedness
specifically by its terms ranks equally with and not prior to the Securities in
the right of payment upon the happening of any dissolution or winding up or
liquidation or reorganization of the Company, and (ii) all other debt
securities, and guarantees in respect of those debt securities (including Other
Debentures and Other Guarantees), issued to any trust other than NGC Corporation
Capital Trust, or a trustee of such trust, partnership or other entity
affiliated with the Company that is a financing vehicle of the Company (a
"financing entity") in connection with the issuance by such financing entity of
equity securities that are similar to the Capital Securities or other securities
guaranteed by the Company. The securing of any Indebtedness, otherwise
constituting Indebtedness Ranking on a Parity with the Securities, shall not be
deemed to prevent such Indebtedness from constituting Indebtedness Ranking on a
Parity with the Securities.
5
<PAGE>
"Indebtedness Ranking Junior to the Securities" shall mean any
Indebtedness, whether outstanding on the date of execution of this Indenture or
hereafter created, assumed or incurred, to the extent such indebtedness
specifically by its terms ranks junior to and not equally with or prior to the
Securities (and any other Indebtedness Ranking on a Parity with the Securities)
in right of payment upon the happening of any dissolution or winding up or
liquidation or reorganization of the Company. The securing of any Indebtedness,
otherwise constituting Indebtedness Ranking Junior to the Securities, shall not
be deemed to prevent such Indebtedness from constituting Indebtedness Ranking
Junior to the Securities.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof, including, for
all purposes of this Indenture and any such supplemental indenture, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this instrument and any such supplemental indenture, respectively.
"Interest Payment Date" shall have the meaning set forth in Section
2.06(a).
"Investment Company Event" means the receipt by NGC Corporation Capital
Trust and the Company of an opinion of counsel experienced in such matters to
the effect that, as a result of the occurrence of a change in law or regulation
or a written change (including any announced prospective change) in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, which amendment or change is
effective or which pronouncement or decision is announced on or after May 22,
1997, there is more than an insubstantial risk that NGC Corporation Capital
Trust is or will be considered an "investment company" that is required to be
registered under the Investment Company Act of 1940, as amended (the "Investment
Company Act"), which change or prospective change becomes effective or would
become effective, as the case may be, on or after the date of the original
issuance of the Capital Securities.
"Liquidated Damages" shall have the meaning set forth in the Registration
Rights Agreement.
"Make-Whole Amount" shall be equal to the greater of (a) 100% of the
principal amount of the Securities or (b) the sum, as determined by the
Reference Treasury Dealer, of the present values of the remaining scheduled
payments of principal and interest on the Securities, discounted to the date of
redemption on a semi-annual basis (assuming a 360-day year consisting of twelve
30-day months) at the Adjusted Treasury Rate, plus, in each case, accrued and
unpaid interest thereon (including Additional Sums and Liquidated Damages, if
any), to the date of redemption.
"Maturity Date" shall mean June 1, 2027.
"Mortgage" shall mean and include any mortgage, pledge, lien, security
interest, conditional sale or other title retention agreement or other similar
encumbrance.
6
<PAGE>
"NGC Corporation Capital Trust" or the "Trust" shall mean NGC Corporation
Capital Trust I, a Delaware business trust created for the purpose of issuing
its undivided beneficial interests in connection with the issuance of Securities
under this Indenture.
"Non Book-Entry Capital Securities" shall have the meaning set forth in
Section 2.05(a)(ii).
"Officers" shall mean any of the Chairman, a Vice Chairman, the Chief
Executive Officer, the President, a Vice President, the Comptroller, the
Secretary or an Assistant Secretary of the Company.
"Officers' Certificate" shall mean a certificate signed on behalf of the
Company, by the Chairman of the Board, Chief Executive Officer, a Vice Chairman
of the Board, the President or a Vice President, and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company,
and delivered to the Trustee. Any Officers' Certificate delivered with respect
to compliance with a condition or a covenant provided for in this Indenture
shall include the statements specified to be so included by Section 13.06 of
this Indenture.
"Opinion of Counsel" shall mean a written opinion of counsel, who may be an
employee of the Company, and who shall be acceptable to the Trustee.
"Optional Redemption Price" means the greater of (i) 100% of the principal
amount of the Securities to be redeemed plus accrued and unpaid interest thereon
(including Additional Sums and Liquidated Damages, if any) to the date of
redemption and (ii) the sum of the present values of the remaining scheduled
payments of principal of the Securities to be redeemed and interest thereon
(including Additional Sums and Liquidated Damages, if any) discounted to the
date of redemption, on a semi-annual basis (assuming a 360-day year consisting
of twelve 30-day months), at the Treasury Rate plus 25 basis points plus accrued
and unpaid interest thereon to the date of redemption.
"Other Debentures" means all junior subordinated debentures issued by the
Company from time to time and sold to trusts to be established by the Company
(if any), in each case similar to the Trust.
"Other Guarantees" means all guarantees to be issued by the Company with
respect to capital securities (if any) and issued to other trusts to be
established by the Company (if any), in each case similar to the Trust.
The term "outstanding" when used with reference to Securities, shall,
subject to the provisions of Section 7.04, mean, as of any particular time, all
Securities authenticated and delivered by the Trustee or the Authenticating
Agent under this Indenture, except
7
<PAGE>
(a) Securities theretofore canceled by the Trustee or the Authenticating
Agent or delivered to the Trustee for cancellation;
(b) Securities, or portions thereof, for the payment or redemption of
which moneys in the necessary amount shall have been deposited in
trust with the Trustee or with any paying agent (other than the
Company) or shall have been set aside and segregated in trust by the
Company (if the Company shall act as its own paying agent); provided
that, if such Securities, or portions thereof, are to be redeemed
prior to maturity thereof, notice of such redemption shall have been
given as in Article XIV provided or provision satisfactory to the
Trustee shall have been made for giving such notice; and
(c) Securities which have been paid or in lieu of or in substitution for
which other Securities shall have been authenticated and delivered
pursuant to the terms of Section 2.08 unless proof satisfactory to
the Company and the Trustee is presented that any such Securities are
held by bona fide holders in due course.
"Person" shall mean any individual, corporation, estate, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt and as that evidenced by
such particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 2.08 in lieu of a lost, destroyed or
stolen Security shall be deemed to evidence the same debt as the lost, destroyed
or stolen Security.
"Principal Office of the Trustee", or other similar term, shall mean the
office of the Trustee, at which at any particular time its corporate trust
business shall be administered.
"Private Exchange" has the meaning set forth in the Registration Rights
Agreement.
"Private Exchange Securities" means the subordinated deferrable interest
debentures issued in a Private Exchange.
"Purchase Agreement" shall mean the Purchase Agreement dated May 22, 1997
among the Company, NGC Corporation Capital Trust and the initial purchasers
named therein.
"Property Trustee" shall have the same meaning as set forth in the
Declaration.
"Redemption Price" means when used with respect to any Security to be
redeemed, the price at which it is to be redeemed pursuant to this Indenture.
8
<PAGE>
"Reference Treasury Dealer" means Lehman Brothers Inc. and its successors;
provided however, that if Lehman Brothers Inc. shall cease to be a primary U.S.
Government securities dealer in New York City (a "Primary Treasury Dealer"), the
Company shall substitute therefor another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to the Reference
Treasury Dealer and any redemption date, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by the Reference Treasury Dealer at 5:00 p.m., New York
City time, on the third business day preceding such redemption date.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of May 28, 1997, by and among the Company, the Trust and the initial
purchasers named therein, as such agreement may be amended, modified or
supplemented from time to time.
"Regulation S" means Regulation S under the Securities Act, as such
regulation may be amended from time to time, or any similar rule or regulation
hereafter adjusted by the Commission.
"Responsible Officer" shall mean any officer of the Trustee with direct
responsibility for the administration of the Indenture and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge of and familiarity with the
particular subject.
"Restricted Global Security" means any Global Security or Securities
evidencing Securities that are to be traded pursuant to Rule 144A.
"Restricted Security" shall mean Securities that bear or are required to
bear the legends relating to transfer restrictions under the Securities Act set
forth in Exhibit A hereto.
"Rule 144A" means Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or under any similar rule or regulation hereafter
adopted by the Commission.
"Securities" means, collectively, the Series A Securities, the Series B
Securities and Private Exchange Securities.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securityholder", "holder of Securities", or other similar terms, shall
mean any Person in whose name at the time a particular Security is registered on
the register kept by the Company or the Trustee for that purpose in accordance
with the terms hereof.
9
<PAGE>
"Security Register" shall mean (i) prior to a Dissolution Event, the list
of holders provided to the Trustee pursuant to Section 4.01, and (ii) following
a Dissolution Event, any security register maintained by a security registrar
for the Securities appointed by the Company following the execution of a
supplemental indenture providing for transfer procedures as provided for in
Section 2.07(a).
"Senior Indebtedness" shall mean all Indebtedness, whether outstanding on
the date of execution of this Indenture or hereafter created, assumed or
incurred, except Indebtedness Ranking on a Parity with the Securities or
Indebtedness Ranking Junior to the Securities, and any deferrals, renewals or
extensions of such Senior Indebtedness.
"Series A Securities" means the Company's Series A 8.316% Subordinated
Deferrable Interest Debentures due June 1, 2027, as authenticated and issued
under this Indenture.
"Series B Securities" means the Company's Series B 8.316% Subordinated
Deferrable Interest Debentures due June 1, 2027, as authenticated and issued
under this Indenture.
"Special Event" means either an Investment Company Event or a Tax Event.
"Special Event Redemption Price" shall mean, with respect to any redemption
of the Securities following a Special Event, an amount in cash equal to the
Make-Whole Amount.
"Subsidiary" shall mean with respect to any Person, (i) any corporation at
least a majority of the outstanding voting stock of which is owned, directly or
indirectly, by such Person or by one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries, (ii) any general partnership, joint
venture or similar entity, at least a majority of whose outstanding partnership
or similar interests shall at the time be owned by such Person, or by one or
more of its Subsidiaries, or by such Person and one or more of its Subsidiaries
and (iii) any limited partnership of which such Person or any of its
Subsidiaries is a general partner. For the purposes of this definition, "voting
stock" means shares, interests, participations or other equivalents in the
equity interest (however designated) in such Person having ordinary voting power
for the election of a majority of the directors (or the equivalent) of such
Person, other than shares, interests, participations or other equivalents having
such power only by reason of the occurrence of a contingency.
"Tax Event" shall mean the receipt by NGC Corporation Capital Trust and the
Company of an opinion of counsel experienced in such matters to the effect that,
as a result of any amendment to, or change (including any announced prospective
change) in, the laws or any regulations thereunder of the United States or any
political subdivision or taxing authority thereof or therein or as a result of
any official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after May 22, 1997, there is
more than an insubstantial risk that (i) NGC Corporation Capital Trust is, or
will be within 90 days of the date of such opinion, subject to United States
Federal income tax with respect to income received or accrued on the Securities,
(ii) interest
10
<PAGE>
payable by the Company on the Securities is not, or within 90 days of the date
of such opinion, will not be, deductible by the Company, in whole or in part,
for United States Federal income tax purposes, or (iii) NGC Corporation Capital
Trust is, or will be within 90 days of the date of such opinion, subject to more
than a de minimis amount of other taxes, duties or other governmental charges.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Trust Indenture Act of 1939" shall mean the Trust Indenture Act of 1939 as
in force at the date of execution of this Indenture; provided, however, that, in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act of 1939" shall mean, to the extent required by any such amendment,
the Trust Indenture Act of 1939 as so amended.
"Trustee" shall mean the Person identified as "Trustee" in the first
paragraph hereof, and, subject to the provisions of Article VI hereof, shall
also include its successors and assigns as Trustee hereunder. The term
"Trustee" as used with respect to a particular series of the Securities shall
mean the trustee with respect to that series.
"Trust Securities" shall mean the Capital Securities and the Common
Securities, collectively.
"U.S. Government Obligations" shall mean securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case under
clauses (i) or (ii) are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank or trust
company as custodian with respect to any such U.S. Government Obligation or a
specific payment of interest on or principal of any such U.S. Government
Obligation held by such custodian for the account of the holder of a depository
receipt; provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of interest on or principal
of the U.S. Government Obligation evidenced by such depository receipt.
SECTION 1.02. Business Day Certificate.
On the date of execution and delivery of this Indenture (with respect to
the remainder of calendar year 1997) and thereafter, within 15 days prior to the
end of each calendar year while this Indenture remains in effect (with respect
to the succeeding calendar years), the Company shall
11
<PAGE>
deliver to the Trustee an Officers' Certificate specifying the days on which
banking institutions or trust companies in Wilmington, Delaware or Chicago,
Illinois are authorized or obligated by law or executive order to be closed.
SECTION 1.03. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
ARTICLE II
SECURITIES
----------
SECTION 2.01. Forms Generally.
The Securities and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A, the terms of which are incorporated in
and made a part of this Indenture. The Securities may have notations, legends
or endorsements required by law, stock exchange rule, agreements to which the
Company is subject or usage. Each Security shall be dated the date of its
authentication. The Securities shall be issued in denominations of $1,000 and
integral multiples thereof.
The Securities shall be redeemable as provided in Article XIV.
The Securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article XV.
12
<PAGE>
SECTION 2.02. Execution and Authentication.
The Securities shall be executed on behalf of the Company by its Chairman
of the Board, a Vice Chairman of the Board, its Chief Executive Officer, its
President or one of its Vice Presidents and attested by a Treasurer, Assistant
Treasurer, Secretary or an Assistant Secretary. The signature of any such
person on the Securities may be manual or facsimile. If an Officer whose
signature is on a Security no longer holds that office at the time the Security
is authenticated, the Security shall nevertheless be valid.
A Security shall not be valid until authenticated by the manual signature
of the Trustee. The signature of the Trustee shall be conclusive evidence that
the Security has been authenticated under this Indenture. The form of Trustee's
certificate of authentication to be borne by the Securities shall be
substantially as set forth in Exhibit A hereto.
The Trustee shall, upon a Company Order, authenticate for original issue up
to, and the aggregate principal amount of Securities outstanding at any time may
not exceed $206,200,000 aggregate principal amount of the Securities, except as
provided in Sections 2.07, 2.08, 2.09 and 14.05. The series of Securities to be
initially issued hereunder shall be the Series A Securities.
Each Security shall be dated the date of its authentication.
SECTION 2.03. Form and Payment.
Except as provided in Section 2.05, the Securities shall be issued in fully
registered certificated form without interest coupons. Principal of, premium,
if any, and interest on the Securities issued in certificated form will be
payable, the transfer of such Securities will be registrable and such Securities
will be exchangeable for Securities bearing identical terms and provisions at
the office or agency of the Company maintained for such purpose under Section
3.02; provided, however, that payment of interest with respect to Securities
(other than a Global Security) may be made at the option of the Company (i) by
check mailed to the holder at such address as shall appear in the Security
Register or (ii) by transfer to an account maintained by the Person entitled
thereto; provided that proper transfer instructions have been received in
writing by the relevant record date. Notwithstanding the foregoing, so long as
the holder of any Securities is the Property Trustee, the payment of the
principal of, premium, if any, and interest (including Compounded Interest and
Additional Sums, if any) and Liquidated Damages, if any, on such Securities held
by the Property Trustee will be made at such place and to such account as may be
designated by the Property Trustee.
SECTION 2.04. Legends.
13
<PAGE>
(a) Except as permitted by subsection (b) of this Section 2.04 or as
otherwise determined by the Company in accordance with applicable law, each
Security shall bear the applicable legends relating to restrictions on
transfer pursuant to the securities laws in substantially the form set
forth on Exhibit A hereto.
(b) In the event of an Exchange Offer, the Company shall issue and the
Trustee, upon Company Order, shall authenticate Series B Securities in
exchange for Series A Securities accepted for exchange in the Exchange
Offer (and, if required pursuant to the Registration Rights Agreement, the
Private Exchange Securities), which Series B Securities shall not bear the
legends required by subsection (a) above (other than the legend dealing
with the restriction referred to in Section 2.07(a)(ii) of this Indenture),
in each case unless the holder of such Series A Securities is either (A) a
broker dealer who purchased such Series A Securities directly from the
Company for resale pursuant to Rule 144A or any other available exemption
under the Securities Act, (B) a Person participating in the distribution of
the Series A Securities or (C) a Person who is an Affiliate of the Company.
(c) Upon any sale or transfer of any Restricted Security (including
any interest in a Global Security) (i) that is effected pursuant to an
effective registration statement under the Securities Act or (ii) in
connection with which the Trustee receives certificates and other
information (including an opinion of counsel, if requested) reasonably
acceptable to the Company and the Trustee to the effect that such Security
will no longer be subject to the resale restrictions under federal and
state securities laws, then (A) in the case of a Restricted Security in
definitive form, the Security Registrar or co-registrar shall permit the
holder thereof to exchange such Restricted Security for a security that
does not bear the legend (other than the legend dealing with the
restriction referred to in Section 2.07(a)(ii) of this Indenture), and
shall rescind any such restrictions on transfer and (B) in the case of
Restricted Securities represented by a Global Security, such Security shall
no longer be subject to the restrictions contained in the legend referenced
in Section 2.04(a) (but still subject to the other provisions hereof). In
addition, any Security (or security issued in exchange or substitution
therefor) as to which the restrictions on transfer described in the legend
referenced in Section 2.04(a) have expired by their terms, may, upon
surrender thereof (in accordance with the terms of this Indenture) together
with such certifications and other information (including an opinion of
counsel having substantial experience in practice under the Securities Act
and otherwise reasonably acceptable to the Company, addressed to the
Company and the Trustee and in a form acceptable to the Company, to the
effect that the transfer of such Restricted Security has been made in
compliance with Rule 144 or such successor provision) acceptable to the
Company and the Trustee as either of them may reasonably require, be
exchanged for a new Security or Securities of like tenor and aggregate
principal amount, which shall not bear the restrictive legends referenced
in Section 2.04(a).
SECTION 2.05. Global Security.
14
<PAGE>
(a) In connection with a Dissolution Event,
(i) if any Capital Securities are held in book-entry form, the
related Definitive Securities shall be presented to the Trustee (if an
arrangement with the Depositary has been maintained) by the Property
Trustee in exchange for one or more Global Securities (as may be
required pursuant to Section 2.07) in an aggregate principal amount
equal to the aggregate principal amount of all outstanding Securities,
to be registered in the name of the Depositary, or its nominee, and
delivered by the Trustee to the Depositary for crediting to the
accounts of its participants pursuant to the instructions of the
Administrative Trustees; the Company upon any such presentation
shall execute one or more Global Securities in such aggregate
principal amount and deliver the same to the Trustee for
authentication and delivery in accordance with this Indenture; and
payments on the Securities issued as a Global Security will be made to
the Depositary; and
(ii) if any Capital Securities are held in certificated form, the
related Definitive Securities may be presented to the Trustee by the
Property Trustee and any Capital Security certificate which represents
Capital Securities other than Capital Securities in book-entry form
("Non Book-Entry Capital Securities") will be deemed to represent
beneficial interests in Securities presented to the Trustee by the
Property Trustee having an aggregate principal amount equal to the
aggregate liquidation amount of the Non Book-Entry Capital Securities
until such Capital Security certificates are presented to the
Security Registrar for transfer or reissuance, at which time such
Capital Security certificates will be canceled and a Security,
registered in the name of the holder of the Capital Security
certificate or the transferee of the holder of such Capital Security
certificate, as the case may be, with an aggregate principal amount
equal to the aggregate liquidation amount of the Capital Security
certificate canceled, will be executed by the Company and delivered to
the Trustee for authentication and delivery in accordance with this
Indenture. Upon the issuance of such Securities, Securities with an
equivalent aggregate principal amount that were presented by the
Property Trustee to the Trustee will be canceled.
(b) The Global Securities shall represent the aggregate amount of
outstanding Securities from time to time endorsed thereon; provided, that
the aggregate amount of outstanding Securities represented thereby may
from time to time be reduced or increased, as appropriate, to reflect
exchanges and redemptions. Any endorsement of a Global Security to reflect
the amount of any increase or decrease in the amount of outstanding
Securities represented thereby shall be made by the Trustee, in accordance
with instructions given by the Company as required by this Section 2.05.
(c) The Global Securities may be transferred, in whole but not in
part, only to the Depositary, another nominee of the Depositary, or to a
successor Depositary selected or approved by the Company or to a nominee of
such successor Depositary.
15
<PAGE>
(d) If at any time the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary or the Depositary has ceased
to be a clearing agency registered under the Exchange Act or any applicable
statute or regulation, and a successor Depositary is not appointed by the
Company within 90 days after the Company receives such notice or becomes
aware of such condition, as the case may be, the Company will execute, and
the Trustee, upon receipt of a Company Order, will authenticate and make
available for delivery the Definitive Securities, in authorized
denominations, and in an aggregate principal amount equal to the principal
amount of the Global Security in exchange for such Global Security. If
there is an Event of Default, the Depositary shall have the right to
exchange the Global Securities for Definitive Securities. In addition, the
Company may at any time determine that the Securities shall no longer be
represented by a Global Security. In the event of such an Event of Default
or such a determination, the Company shall execute, and subject to Section
2.07, the Trustee, upon receipt of an Officers' Certificate evidencing such
determination by the Company and a Company Order, will authenticate and
make available for delivery the Definitive Securities, in authorized
denominations, and in an aggregate principal amount equal to the principal
amount of the Global Security in exchange for such Global Security. Upon
the exchange of the Global Security for such Definitive Securities, in
authorized denominations, the Global Security shall be canceled by the
Trustee. Such Definitive Securities issued in exchange for the Global
Security shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its direct
or indirect participants or otherwise, shall instruct the Trustee. The
Trustee shall deliver such Definitive Securities to the Depositary for
delivery to the Persons in whose names such Definitive Securities are so
registered.
SECTION 2.06. Interest.
(a) Each Security will bear interest at the rate of 8.316% per annum
(the "Coupon Rate") from the most recent date to which interest has been
paid or duly provided for or, if no interest has been paid or duly provided
for, from May 28, 1997, until the principal thereof becomes due and
payable, and at the Coupon Rate on any overdue principal (and premium, if
any) and (to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest, compounded semi-
annually, payable (subject to the provisions of Article XVI) semi-annually
in arrears on June 1 and December 1 of each year (each, an "Interest
Payment Date") commencing on December 1, 1997, to the Person in whose name
such Security or any predecessor Security is registered, at the close of
business on the regular record date for such interest installment, which
shall be the fifteenth day of the month immediately preceding the month in
which the relevant Interest Payment Date falls.
(b) Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months and, for any period of less than a full
calendar month, the number of days
16
<PAGE>
lapsed in such month. In the event that any Interest Payment Date falls on
a day that is not a Business Day, then payment of interest payable on such
date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay), except
that if such next succeeding Business Day falls in the next succeeding
calendar year, then such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on the
date such payment is otherwise required.
(c) During such time as the Property Trustee is the holder of any
Securities, the Company shall pay any additional amounts on the Securities
as may be necessary in order that the amount of Distributions then due and
payable by NGC Corporation Capital Trust on the outstanding Trust
Securities shall not be reduced as a result of any additional taxes, duties
and other governmental charges to which NGC Corporation Capital Trust has
become subject as a result of a Tax Event ("Additional Sums").
(d) Interest on any Security which is payable, and which is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to
the Person is whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the record date for
such interest installment.
SECTION 2.07. Transfer and Exchange.
(a) Transfer Restrictions. (i) The Series A Securities, and those
Series B Securities with respect to which any Person described in Section
2.04(b)(A), (B) or (C) is the beneficial owner, may not be transferred
except in compliance with the legends contained in Exhibit A unless
otherwise determined by the Company in accordance with applicable law.
Upon any distribution of the Securities following a Dissolution Event, the
Company and the Trustee shall enter into a supplemental indenture pursuant
to Section 9.01 to provide for the transfer restrictions and procedures
with respect to the Securities substantially similar to those contained in
the Declaration to the extent applicable in the circumstances existing at
such time.
(ii) The Securities will be issued and may be transferred only in
blocks having an aggregate principal amount of not less than $100,000.
Any such transfer of the Securities in a block having an aggregate
principal amount of less than $100,000 shall be deemed to be void and
of no legal effect whatsoever. Any such transferee shall be deemed
not to be a holder of such Securities for any purpose, including, but
not limited to the receipt of payments on such Securities, and such
transferee shall be deemed to have no interest whatsoever in such
Securities.
(b) General Provisions Relating to Transfers and Exchanges. To permit
registrations of transfers and exchanges, the Company shall execute and the
Trustee shall
17
<PAGE>
authenticate Definitive Securities and Global Securities in any authorized
denomination and of a like aggregate principal amount at the Security
Registrar's request. All Definitive Securities and Global Securities issued
upon any registration of transfer or exchange of Definitive Securities or
Global Securities shall be the valid obligations of the Company, evidencing
the same debt, and entitled to the same benefits under this Indenture, as
the Definitive Securities or Global Securities surrendered upon such
registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company or the Trustee) be duly endorsed
or be accompanied by a written instrument of transfer in a form that is
satisfactory to the Company and the Security Registrar duly executed by the
holder thereof or his attorney duly authorized in writing.
No service charge shall be made to a holder for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax or similar governmental charge payable in connection
therewith.
The Company shall not be required to (i) issue, register the transfer of or
exchange Securities during a period beginning at the opening of business 15 days
before the day of mailing of a notice of redemption or any notice of selection
of Securities for redemption under Article XIV hereof and ending at the close of
business on the day of such mailing; or (ii) register the transfer of or
exchange any Security so selected for redemption in whole or in part, except the
unredeemed portion of any Security being redeemed in part.
So long as the Securities are eligible for book-entry settlement with the
Depositary, or unless otherwise required by law, all Securities to be traded in
the PORTAL Market shall be represented by a Restricted Global Security
registered in the name of the Depositary or the nominee of the Depositary.
The transfer and exchange of beneficial interests in a Global Security,
which does not involve the issuance of a Definitive Security or the transfer of
an interest to another Global Security, shall be effected through the Depositary
(but not the Trustee) in accordance with the Indenture (including the
restrictions on transfers set forth herein) and the procedures of the Depositary
therefore. The Trustee will not have any responsibility for the transfer and
exchange of beneficial interests in such Global Security that does not involve
the issuance of a Definitive Security or the transfer of interests to another
Global Security.
Prior to due presentment for the registration of a transfer of any
Security, the Trustee, the Company and any agent of the Trustee or the Company
may deem and treat the Person in whose name any Security is registered as the
absolute owner of such Security for the purpose of receiving payment of
principal of and premium, if any, and interest on such Securities, neither the
Trustee, nor the Company nor any agent of the Trustee or the Company shall be
affected by notice to the contrary.
18
<PAGE>
(c) Exchange of Series A Securities for Series B Securities or Private
Exchange Securities. The Series A Securities may be exchanged for Series B
Securities pursuant to the terms of the Exchange Offer. In addition, the
Series A Securities may be exchanged in a Private Exchange for Private
Exchange Securities under the circumstances described in the Registration
Rights Agreement. The Trustee shall make such exchange as follows:
The Company shall present the Trustee with an Officers' Certificate
certifying the following:
(i) upon issuance of the Series B Securities or the Private
Exchange Securities, as the case may be, the transactions contemplated
by the Exchange Offer or the Private Exchange have been consummated;
and
(ii) the principal amount of Series A Securities properly
tendered in the Exchange Offer and the Private Exchange that are
represented by a Global Security and the principal amount of Series A
Securities properly tendered in the Exchange Offer and the Private
Exchange that are represented by Definitive Securities, the name of
each holder of such Definitive Securities, the principal amount
properly tendered in the Exchange Offer or Private Exchange, as the
case may be, by each such holder and the name and address to which
Definitive Securities for Series B Securities or the Private Exchange
Securities, as the case may be, shall be registered and sent for each
such holder.
The Trustee, upon receipt of (i) such Officers' Certificate, (ii) an
Opinion of Counsel (x) to the effect that the Series B Securities or the Private
Exchange Securities, as the case may be, have been registered under Section 5 of
the Securities Act and the Indenture has been qualified under the Trust
Indenture Act and (y) with respect to the matters set forth in Section 3(p) of
the Registration Rights Agreement and (iii) a Company Order, shall authenticate
(A) a Global Security representing Series B Securities and the Private Exchange
Securities, as the case may be, in aggregate principal amount equal to the
aggregate principal amount of Series A Securities represented by a Global
Security indicated in such Officers' Certificate as having been properly
tendered and (B) Definitive Securities representing Series B Securities and the
Private Exchange Securities, as the case may be, registered in the names of, and
in the principal amounts indicated in, such Officers' Certificate.
If the principal amount of the Global Security for the Series B Securities
or the Private Exchange Securities is less than the principal amount of the
Global Security for the Series A Securities, the Trustee shall make an
endorsement on such Global Security for Series A Securities indicating a
reduction in the principal amount represented thereby.
The Trustee shall deliver such Definitive Securities representing Series B
Securities to the holders thereof as indicated in such Officers' Certificate.
19
<PAGE>
SECTION 2.08. Replacement Securities.
If any mutilated Security is surrendered to the Trustee, or the Company and
the Trustee receive evidence to their satisfaction of the destruction, loss or
theft of any Security, the Company shall issue and the Trustee shall
authenticate a replacement Security if the Trustee's requirements for
replacements of Securities are met. An indemnity bond must be supplied by the
holder that is sufficient in the judgment of the Trustee and the Company to
protect the Company, the Trustee, any agent thereof or any authenticating agent
from any loss that any of them may suffer if a Security is replaced. The
Company or the Trustee may charge for its expenses in replacing a Security.
Every replacement Security is an obligation of the Company and shall be
entitled to all of the benefits of this Indenture equally and proportionately
with all other Securities duly issued hereunder.
SECTION 2.09. Temporary Securities.
Pending the preparation of Definitive Securities, the Company may execute,
and upon Company Order the Trustee shall authenticate and make available for
delivery, temporary Securities that are printed, lithographed, typewritten,
mimeographed or otherwise reproduced, in any authorized denomination,
substantially of the tenor of the Definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
conclusively evidenced by their execution of such Securities.
If temporary Securities are issued, the Company shall cause Definitive
Securities to be prepared without unreasonable delay. The Definitive Securities
shall be printed, lithographed or engraved, or provided by any combination
thereof, or in any other manner permitted by the rules and regulations of any
applicable securities exchange, all as determined by the officers executing such
Definitive Securities. After the preparation of Definitive Securities, the
temporary Securities shall be exchangeable for Definitive Securities upon
surrender of the temporary Securities at the office or agency maintained by the
Company for such purpose pursuant to Section 3.02 hereof, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Securities, the Company shall execute, and the Trustee shall authenticate and
make available for delivery, in exchange therefor the same aggregate principal
amount of Definitive Securities of authorized denominations. Until so
exchanged, the temporary Securities shall in all respects be entitled to the
same benefits under this Indenture as Definitive Securities.
SECTION 2.10. Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Trustee and no one else shall cancel all Securities
surrendered for registration of transfer, exchange, payment, replacement or
cancellation and shall retain or destroy canceled Securities in accordance
20
<PAGE>
with its normal practices (subject to the record retention requirement of the
Exchange Act) unless the Company directs them to be returned to it. The Company
may not issue new Securities to replace Securities that have been redeemed or
paid or that have been delivered to the Trustee for cancellation.
SECTION 2.11. Defaulted Interest.
Any interest on any Security that is payable, but is not punctually paid or
duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the holder on the relevant
regular record date by virtue of having been such holder; and such Defaulted
Interest shall be paid by the Company, at its election, as provided in clause
(a) or clause (b) below:
(a) The Company may make payment of any Defaulted Interest on
Securities to the Persons in whose names such Securities (or their
respective Predecessor Securities) are registered at the close of business
on a special record date for the payment of such Defaulted Interest, which
shall be fixed in the following manner: the Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each such Security and the date of the proposed payment, and at the same
time the Company shall deposit with the Trustee an amount of money equal to
the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such
deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this clause provided. Thereupon the Trustee
shall fix a special record date for the payment of such Defaulted Interest
which shall not be more than 15 nor less than 10 days prior to the date of
the proposed payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall promptly
notify the Company of such special record date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the special record date therefor to be mailed, first
class postage prepaid, to each Securityholder at his or her address as it
appears in the Security Register, not less than 10 days prior to such
special record date. Notice of the proposed payment of such Defaulted
Interest and the special record date therefor having been mailed as
aforesaid, such Defaulted Interest shall be paid to the Persons in whose
names such Securities (or their respective Predecessor Securities) are
registered on such special record date and shall be no longer payable
pursuant to the following clause (b).
(b) The Company may make payment of any Defaulted Interest on any
Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant
to this clause, such manner of payment shall be deemed practicable by the
Trustee.
21
<PAGE>
SECTION 2.12. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Securityholders; provided that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Trustee of any change in the CUSIP numbers.
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
-----------------------------------
SECTION 3.01. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of the holders of the
Securities that it will duly and punctually pay or cause to be paid the
principal of, premium, if any, and interest on the Securities at the place, at
the respective times and in the manner provided herein. The Company further
covenants to pay any and all amounts, including, without limitation, Additional
Sums, as may be required pursuant to Section 2.06(c), Liquidated Damages, if
any, on the dates and in the manner required under the Registration Rights
Agreement and Compounded Interest, as may be required pursuant to Section 16.01.
SECTION 3.02. Offices for Notices and Payments, etc.
So long as any of the Securities remain outstanding, the Company will
maintain in the Borough of Manhattan, The City of New York, an office or agency
where the Securities may be presented for payment, an office or agency where the
Securities may be presented for registration of transfer and for exchange as in
this Indenture provided and an office or agency where notices and demands to or
upon the Company in respect of the Securities or of this Indenture may be
served. The Company will give to the Trustee written notice of the location of
any such office or agency and of any change of location thereof. Until
otherwise designated from time to time by the Company in a notice to the
Trustee, any such office or agency for all of the above purposes shall be the
Principal Office of the Trustee. In case the Company shall fail to maintain any
such office or agency in the Borough of Manhattan, The City of New York, or
shall fail to give such notice of the location or of any change in the location
thereof, presentations and demands may be made and notices may be served at the
Principal Office of the Trustee.
In addition to any such office or agency, the Company may from time to time
designate one or more offices or agencies outside the Borough of Manhattan, The
City of New York, where the Securities may be presented for payment,
registration of transfer and for exchange in the manner
22
<PAGE>
provided in this Indenture, and the Company may from time to time rescind such
designation, as the Company may deem desirable or expedient; provided, however,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain any such office or agency in the Borough of
Manhattan, The City of New York, for the purposes above mentioned. The Company
will give to the Trustee prompt written notice of any such designation or
rescission thereof.
SECTION 3.03. Appointments to Fill Vacancies in Trustee's Office.
The Company, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner provided in Section 6.10, a Trustee, so
that there shall at all times be a Trustee hereunder.
SECTION 3.04. Provision as to Paying Agent.
(a) If the Company shall appoint a paying agent other than the Trustee
with respect to the Securities, it will cause such paying agent to execute
and deliver to the Trustee an instrument in which such agent shall agree
with the Trustee, subject to the provision of this Section 3.04,
(i) that it will hold all sums held by it as such agent for the
payment of the principal of and premium, if any, or interest on the
Securities (whether such sums have been paid to it by the Company or
by any other obligor on the Securities) in trust for the benefit of
the holders of the Securities and comply with all provisions of the
Trust Indenture Act applicable to it as paying agent; and
(ii) that it will give the Trustee notice of any failure by the
Company (or by any other obligor on the Securities) to make any
payment of the principal of and premium or interest (including
Additional Sums and Compounded Interest, if any) and Liquidated
Damages, if any, on the Securities when the same shall be due and
payable.
(b) If the Company shall act as its own paying agent, it will, on or
before each due date of the principal of and premium, if any, or interest
on the Securities, set aside, segregate and hold in trust for the benefit
of the holders of the Securities a sum sufficient to pay such principal,
premium or interest so becoming due and will notify the Trustee of any
failure to take such action and of any failure by the Company (or by any
other obligor under the Securities) to make any payment of the principal of
and premium, if any, or interest on the Securities when the same shall
become due and payable.
(c) Anything in this Section 3.04 to the contrary notwithstanding, the
Company may, at any time, for the purpose of obtaining a satisfaction and
discharge with respect to the
23
<PAGE>
Securities hereunder, or for any other reason, pay or cause to be paid to
the Trustee all sums held in trust for such Securities by the Trustee or
any paying agent hereunder, as required by this Section 3.04, such sums to
be held by the Trustee upon the trusts herein contained.
(d) Anything in this Section 3.04 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 3.04 is subject
to Sections 11.03 and 11.04.
SECTION 3.05. Certificate to Trustee.
The Company will deliver to the Trustee on or before 120 days after the end
of each fiscal year in each year, commencing with the first fiscal year ending
after the date hereof, so long as Securities are outstanding hereunder, an
Officers' Certificate, one of the signers of which shall be the principal
executive, principal financial or principal accounting officer of the Company,
stating that in the course of the performance by the signers of their duties as
officers of the Company they would normally have knowledge of any default by the
Company in the performance of any covenants contained herein, stating whether or
not they have knowledge of any such default and, if so, specifying each such
default of which the signers have knowledge and the nature thereof.
SECTION 3.06. Compliance with Consolidation Provisions.
The Company will not, while any of the Securities remain outstanding,
consolidate with, or merge into, or merge into itself, or sell or convey all or
substantially all of its property to any other Person unless the provisions of
Article X hereof are complied with.
SECTION 3.07. Limitation on Dividends.
The Company will not, and will not permit any subsidiary of the Company to,
(i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of the Company's
capital stock (which includes common and preferred stock) (other than (a)
dividends or distributions in shares of, or options, warrants or rights to
subscribe for or purchase shares of, Common Stock of the Company, (b) any
declaration of a dividend in connection with the implementation of a
shareholder's rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
as a result of a reclassification of the Company's capital stock or the exchange
or the conversion of one class or series of the Company's capital stock for
another class or series of the Company's capital stock, (d) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, and (e) purchases of Common Stock related to the
issuance of Common Stock or rights under any of the Company's benefit plans for
its directors, officers, employees or consultants or any of the Company's
dividend reinvestment plans), (ii) make any payment of principal, premium, if
any, or interest on or repay or repurchase or redeem any debt securities of the
Company (including Other Debentures) that rank pari passu with or junior in
right of payment to the Securities or (iii) make any
24
<PAGE>
guarantee payments with respect to any guarantee by the Company (other than
payments under the Capital Securities Guarantee) of the debt securities of any
Subsidiary of the Company (including Other Guarantees) if such guarantee ranks
pari passu or junior in right of payment to the Securities if at such time (1)
there shall have occurred any event of which the Company has actual knowledge
that (a) with the giving of notice or the lapse of time, or both, would
constitute an Event of Default and (b) in respect of which the Company shall not
have taken reasonable steps to cure, (2) an Event of Default hereunder shall
have occurred and be continuing, (3) if such Securities are held by the Property
Trustee, the Company shall be in default with respect to its payment obligations
under the Capital Securities Guarantee or (4) the Company shall have given
notice of its election of the exercise of its right to extend the interest
payment period pursuant to Section 16.01 and any such extension shall be
continuing.
SECTION 3.08. Covenants as to NGC Corporation Capital Trust
In the event Securities are issued to NGC Corporation Capital Trust or a
trustee of such trust in connection with the issuance of Trust Securities by NGC
Corporation Capital Trust, for so long as such Trust Securities remain
outstanding, the Company (i) will maintain 100% direct or indirect ownership of
the Common Securities of NGC Corporation Capital Trust; provided, however, that
any successor of the Company, permitted pursuant to Article X, may succeed to
the Company's ownership of such Common Securities, (ii) will use its reasonable
efforts to cause NGC Corporation Capital Trust (a) to remain a business trust,
except in connection with a distribution of Securities to the holders of Trust
Securities in liquidation of the Trust, the redemption of all of the Trust
Securities of NGC Corporation Capital Trust or certain mergers, consolidations
or amalgamations, each as permitted by the Declaration of NGC Corporation
Capital Trust, and (b) to otherwise continue to be treated as a grantor trust
and not an association taxable as a corporation for United States federal income
tax purposes and (iii) use its reasonable efforts to cause each holder of Trust
Securities to be treated as owning an undivided beneficial interest in the
Securities.
SECTION 3.09. Payment of Trust's Costs and Expenses.
In connection with the offering, sale and issuance of the Securities to NGC
Corporation Capital Trust and in connection with the sale of the Trust
Securities by NGC Corporation Capital Trust, the Company, in its capacity as
borrower with respect to the Securities, shall:
(a) pay all costs and expenses relating to the offering, sale and
issuance of the Securities, including commissions to the initial purchaser
payable pursuant to the Purchase Agreement, fees and expenses in connection
with any exchange offer, filing of a shelf registration statement or other
action to be taken pursuant to the Registration Rights Agreement and
compensation of the Trustee in accordance with the provisions of Section
6.06;
25
<PAGE>
(b) pay all costs and expenses of the Trust (including, but not
limited to, costs and expenses relating to the organization of NGC
Corporation Capital Trust, the offering, sale and issuance of the Trust
Securities (including commissions to the initial purchaser in connection
therewith), the fees and expenses of the Property Trustee and the Delaware
Trustee, the costs and expenses relating to the operation of NGC
Corporation Capital Trust, including without limitation, costs and expenses
of accountants, attorneys, statistical or bookkeeping services, expenses
for printing and engraving and computing or accounting equipment, paying
agent(s), registrar(s), transfer agent(s), duplicating, travel and
telephone and other telecommunications expenses and costs and expenses
incurred in connection with the acquisition, financing, and disposition of
assets of NGC Corporation Capital Trust;
(c) be primarily and fully liable for any indemnification obligations
arising with respect to the Declaration;
(d) pay any and all taxes, duties, assessments or governmental charges
of whatever nature (other than United States withholding taxes attributable
to NGC Corporation Capital Trust or its assets) imposed on the Trust by the
United States, or any other taxing authority, and all liabilities, costs
and expenses with respect to such taxes of the Trust; and
(e) pay all other fees, expenses, debts and obligations (other than in
respect of principal, interest and premium, if any, on the Trust
Securities) related to NGC Corporation Capital Trust.
The foregoing obligations of the Company are for the benefit of, and shall
be enforceable by, any person to whom any such debt, obligations, costs,
expenses and taxes are owed (each, a "Creditor") whether or not such Creditor
has received notice thereof. Any such Creditor may enforce such obligations of
the Company directly against the Company, and the Company irrevocably waives any
right or remedy to require that any such Creditor take any action against the
Trust or any person before proceeding against the Company. The Company shall
execute such additional agreements as may be necessary or desirable to give full
effect to the foregoing.
SECTION 3.10. Payment Upon Resignation or Removal.
Upon termination of this Indenture or the removal or resignation of the
Trustee, unless otherwise stated, the Company shall pay to the Trustee all
amounts accrued and owing to the date of such termination, removal or
resignation. Upon termination of the Declaration or the removal or resignation
of the Delaware Trustee or the Property Trustee, as the case may be, pursuant to
Section 5.7 of the Declaration, the Company shall pay to the Delaware Trustee or
the Property Trustee, as the case may be, all amounts accrued and owing to the
date of such termination, removal or resignation.
ARTICLE IV
26
<PAGE>
SECURITYHOLDERS' LISTS AND REPORTS BY THE
-----------------------------------------
COMPANY AND THE TRUSTEE
-----------------------
SECTION 4.01. Securityholders' Lists.
The Company covenants and agrees that it will furnish or cause to be
furnished to the Trustee:
(a) on a semi-annual basis on each regular record date for the
Securities, a list, in such form as the Trustee may reasonably require, of
the names and addresses of the Securityholders as of such record date; and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company, of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished, except that, no such lists need be furnished
so long as the Trustee is in possession thereof by reason of its acting as
Security registrar.
SECTION 4.02. Preservation and Disclosure of Lists.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the holders
of the Securities (1) contained in the most recent list furnished to it as
provided in Section 4.01 or (2) received by it in the capacity of
Securities registrar (if so acting) hereunder. The Trustee may destroy any
list furnished to it as provided in Section 4.01 upon receipt of a new list
so furnished.
(b) In case three or more holders of Securities (hereinafter referred
to as "applicants") apply in writing to the Trustee and furnish to the
Trustee reasonable proof that each such applicant has owned a Security for
a period of at least six months preceding the date of such application, and
such application states that the applicants desire to communicate with
other holders of Securities or with holders of all Securities with respect
to their rights under this Indenture and is accompanied by a copy of the
form of proxy or other communication which such applicants propose to
transmit, then the Trustee shall within five Business Days after the
receipt of such application, at its election, either:
(i) afford such applicants access to the information preserved at
the time by the Trustee in accordance with the provisions of
subsection (a) of this Section 4.02, or
(ii) inform such applicants as to the approximate number of
holders of all Securities, whose names and addresses appear in the
information preserved at the time by the Trustee in accordance with
the provisions of subsection (a) of this
27
<PAGE>
Section 4.02, and as to the approximate cost of mailing to such
Securityholders the form of proxy or other communication, if any,
specified in such application.
If the Trustee shall elect not to afford such applicants access
to such information, the Trustee shall, upon the written request of
such applicants, mail to each Securityholder whose name and address
appear in the information preserved at the time by the Trustee in
accordance with the provisions of subsection (a) of this Section 4.02
a copy of the form of proxy or other communication which is specified
in such request with reasonable promptness after a tender to the
Trustee of the material to be mailed and of payment, or provision for
the payment, of the reasonable expenses of mailing, unless within five
days after such tender, the Trustee shall mail to such applicants and
file with the Commission, together with a copy of the material to be
mailed, a written statement to the effect that, in the opinion of the
Trustee, such mailing would be contrary to the best interests of the
holders of Securities of such series or all Securities, as the case
may be, or would be in violation of applicable law. Such written
statement shall specify the basis of such opinion. If the Commission,
after opportunity for a hearing upon the objections specified in the
written statement so filed, shall enter an order refusing to sustain
any of such objections or if, after the entry of an order sustaining
one or more of such objections, the Commission shall find, after
notice and opportunity for hearing, that all the objections so
sustained have been met and shall enter an order so declaring, the
Trustee shall mail copies of such material to all such Securityholders
with reasonable promptness after the entry of such order and the
renewal of such tender; otherwise the Trustee shall be relieved of any
obligation or duty to such applicants respecting their application.
(c) Each and every holder of Securities, by receiving and holding
the same, agrees with the Company and the Trustee that neither the
Company nor the Trustee nor any paying agent shall be held accountable
by reason of the disclosure of any such information as to the names
and addresses of the holders of Securities in accordance with the
provisions of subsection (b) of this Section 4.02, regardless of the
source from which such information was derived, and that the Trustee
shall not be held accountable by reason of mailing any material
pursuant to a request made under said subsection (b).
SECTION 4.03. Reports by Company.
(a) The Company covenants and agrees to file with the Trustee, within
15 days after the date on which the Company is required to file the same
with the Commission, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the
foregoing as said Commission may from time to time by rules and regulations
prescribe) which the Company may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the
Company is not
28
<PAGE>
required to file information, documents or reports pursuant to either of
such sections, then to file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by the
Commission, such of the supplementary and periodic information, documents
and reports which may be required pursuant to Section 13 of the Exchange
Act in respect of a security listed and registered on a national securities
exchange as may be prescribed from time to time in such rules and
regulations.
(b) The Company covenants and agrees to file with the Trustee and the
Commission, in accordance with the rules and regulations prescribed from
time to time by said Commission, such additional information, documents and
reports with respect to compliance by the Company with the conditions and
covenants provided for in this Indenture as may be required from time to
time by such rules and regulations.
(c) The Company covenants and agrees to transmit by mail to all
holders of Securities, as the names and addresses of such holders appear
upon the Security Register, within 30 days after the filing thereof with
the Trustee, such summaries of any information, documents and reports
required to be filed by the Company pursuant to subsections (a) and (b) of
this Section 4.03 as may be required by rules and regulations prescribed
from time to time by the Commission.
(d) Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt of such shall
not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
(e) So long as is required for an offer or sale of the Securities to
qualify for an exemption under Rule 144A under the Securities Act, the
Company shall, upon request, provide the information required by clause
(d)(4) thereunder to each Securityholder and to each beneficial owner and
prospective purchaser of Securities identified by each Securityholder of
Restricted Securities, unless such information is furnished to the
Commission pursuant to Section 13 or 15(d) of the Exchange Act.
SECTION 4.04. Reports by the Trustee.
(a) The Trustee shall transmit to Securityholders such reports
concerning the Trustee and its actions under this Indenture as may be
required pursuant to the Trust Indenture Act at the times and in the manner
provided pursuant thereto. If required by Section 313(a) of the Trust
Indenture Act, the Trustee shall, within sixty days after each May 15
following the date of this Indenture, commencing May 15, 1998, deliver to
Securityholders a brief report, dated as of such May 15, which complies
with the provisions of such Section 313(a).
29
<PAGE>
(b) A copy of each such report shall, at the time of such transmission
to Securityholders, be filed by the Trustee with each stock exchange, if
any, upon which the Securities are listed, with the Commission and with the
Company. The Company will promptly notify the Trustee when the Securities
are listed on any stock exchange.
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.01. Events of Default.
"Event of Default", wherever used herein with respect to Securities, means
any one of the following events (whatever the reason for such Event of Default
and whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(a) default in the payment of any interest (including Compounded
Interest or Additional Sums, if any) or Liquidated Damages, if any, upon
any Security or any Other Debentures when it becomes due and payable, and
continuance of such default for a period of 30 days; provided, however,
that a valid extension of an interest payment period by the Company in
accordance with the terms hereof shall not constitute a default in the
payment of interest for this purpose; or
(b) default in the payment of all or any part of the principal of (or
premium, if any, on) any Security or any Other Debentures as and when the
same shall become due and payable either at maturity, upon redemption, by
declaration of acceleration of maturity or otherwise; or
(c) default in the performance, or breach, of any covenant or warranty
of the Company in this Indenture (other than a covenant or warranty a
default in whose performance or whose breach is elsewhere in this Section
specifically dealt with), and continuance of such default or breach for a
period of 90 days after there has been given, by registered or certified
mail, to the Company by the Trustee or to the Company and the Trustee by
the holders of at least 25% in aggregate principal amount of the
outstanding Securities a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(d) a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of the Company in an involuntary case under
any applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or appointing a receiver,
30
<PAGE>
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of the Company or for any substantial part of its property, or
ordering the winding-up or liquidation of its affairs and such decree or
order shall remain unstayed and in effect for a period of 90 consecutive
days; or
(e) the Company shall commence a voluntary case under any applicable
bankruptcy, insolvency, reorganization or other similar law now or
hereafter in effect, shall consent to the entry of an order for relief in
an involuntary case under any such law, or shall consent to the appointment
of or taking possession by a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or other similar official) of the Company or of
any substantial part of its property, or shall make any general assignment
for the benefit of creditors, or shall fail generally to pay its debts as
they become due.
If an Event of Default with respect to Securities at the time outstanding
occurs and is continuing, then in every such case the Trustee or the holders
of not less than 25% in aggregate principal amount of the Securities then
outstanding may declare the principal amount of all Securities to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee
if given by the holders of the outstanding Securities), and upon any such
declaration the same shall become immediately due and payable. Payment of
principal and interest (including any Compounded Interest and Additional Sums to
the extent permitted by applicable law) on such Securities shall remain
subordinated to the extent provided in Article XV notwithstanding that such
amount shall become immediately due and payable as herein provided. If an Event
of Default specified in Section 5.01(d) or (e) with respect to the Securities
occurs, the principal amount of all the Securities shall automatically, and
without any declaration or other action on the part of Trustee or any holder,
become immediately due and payable.
The foregoing provisions, however, are subject to the condition that if, at
any time after the principal of the Securities shall have been so declared due
and payable, and before any judgment or decree for the payment of the moneys due
shall have been obtained or entered as hereinafter provided, (i) the Company
shall pay or shall deposit with the Trustee a sum sufficient to pay (A) all
matured installments of interest (including Compounded Interest and Additional
Sums, if any) and Liquidated Damages, if any, upon all the Securities and the
principal of and premium, if any, on any and all Securities which shall have
become due otherwise than by acceleration (with interest upon such principal and
premium, if any, and, to the extent that payment of such interest is enforceable
under applicable law, on overdue installments of interest, at the same rate as
the rate of interest specified in the Securities to the date of such payment or
deposit) and (B) such amount as shall be sufficient to cover compensation due to
the Trustee and each predecessor Trustee, their respective agents, attorneys and
counsel, pursuant to Section 6.06, and (ii) any and all Events of Default under
the Indenture, other than the non-payment of the principal of the Securities
which shall have become due solely by such declaration of acceleration, shall
have been cured, waived or otherwise remedied as provided herein, then, in every
such case, the holders of a majority in aggregate principal amount of the
Securities then outstanding, by written notice to the Company and to the
Trustee, may rescind
31
<PAGE>
and annul such declaration and its consequences, but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent default
or shall impair any right consequent thereon.
In case the Trustee or any holder shall have proceeded to enforce any right
under this Indenture and such proceedings shall have been discontinued or
abandoned because of such rescission or annulment or for any other reason or
shall have been determined adversely to the Trustee or such holder, then and in
every such case the Company, the Trustee and the holders of the Securities shall
be restored respectively to their several positions and rights hereunder, and
all rights, remedies and powers of the Company, the Trustee and the holders of
the Securities shall continue as though no such proceeding had been taken.
SECTION 5.02. Payment of Securities on Default; Suit Therefor.
The Company covenants that (a) in case default shall be made in the payment
of any installment of interest (including Compounded Interest and Additional
Sums, if any) and Liquidated Damages, if any, upon any of the Securities as and
when the same shall become due and payable, and such default shall have
continued for a period of 30 days, or (b) in case default shall be made in the
payment of the principal of or premium, if any, on any of the Securities as and
when the same shall have become due and payable, whether at maturity of the
Securities or upon redemption or by declaration or otherwise, then, upon demand
of the Trustee, the Company will pay to the Trustee, for the benefit of the
holders of the Securities, the whole amount that then shall have become due and
payable on all such Securities for principal and premium, if any, or interest
(including Compounded Interest and Additional Sums, if any) and Liquidated
Damages, if any, or both, as the case may be, with interest upon the overdue
principal and premium, if any, and (to the extent that payment of such interest
is enforceable under applicable law and, if the Securities are held by NGC
Corporation Capital Trust or a trustee of such trust, without duplication of any
other amounts paid by NGC Corporation Capital Trust or a trustee in respect
thereof) upon the overdue installments of interest (including Compounded
Interest and Additional Sums, if any) and Liquidated Damages, if any, at the
rate borne by the Securities; and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including a
reasonable compensation to the Trustee, its agents, attorneys and counsel, and
any other amount due to the Trustee pursuant to Section 6.06.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or any other obligor on the
Securities and collect in the manner provided by law out of the property of the
Company or any other obligor on the Securities wherever situated the moneys
adjudged or decreed to be payable.
32
<PAGE>
In case there shall be pending proceedings for the bankruptcy or for the
reorganization of the Company or any other obligor on the Securities under Title
11, United States Code, or any other applicable law, or in case a receiver or
trustee shall have been appointed for the property of the Company or such other
obligor, or in the case of any other similar judicial proceedings relative to
the Company or other obligor upon the Securities, or to the creditors or
property of the Company or such other obligor, the Trustee, irrespective of
whether the principal of the Securities shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand pursuant to the provisions of this Section 5.02,
shall be entitled and empowered, by intervention in such proceedings or
otherwise, to file and prove a claim or claims for the whole amount of principal
premium, if any, and interest (including Compounded Interest and Additional
Sums, if any) and Liquidated Damages, if any, owing and unpaid in respect of the
Securities and, in case of any judicial proceedings, to file such proofs of
claim and other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for amounts due to the
Trustee pursuant to 6.06) and of the Securityholders allowed in such judicial
proceedings relative to the Company or any other obligor on the Securities, or
to the creditors or property of the Company or such other obligor, unless
prohibited by applicable law and regulations, to vote on behalf of the holders
of the Securities in any election of a trustee or a standby trustee in
arrangement, reorganization, liquidation or other bankruptcy or insolvency
proceedings or person performing similar functions in comparable proceedings,
and to collect and receive any moneys or other property payable or deliverable
on any such claims, and to distribute the same after the deduction of its
charges and expenses; and any receiver, assignee or trustee in bankruptcy or
reorganization is hereby authorized by each of the Securityholders to make such
payments to the Trustee, and, in the event that the Trustee shall consent to the
making of such payments directly to the Securityholders, to pay to the Trustee
such amounts as shall be sufficient to cover reasonable compensation to the
Trustee, each predecessor Trustee and their respective agents, attorneys and
counsel, and all other amounts due to the Trustee pursuant to Section 6.06.
Nothing herein contained shall be construed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Securityholder any
plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any holder thereof or to authorize the Trustee to
vote in respect of the claim of any Securityholder in any such proceeding.
All rights of action and of asserting claims under this Indenture, or under
any of the Securities, may be enforced by the Trustee without the possession of
any of the Securities, or the production thereof on any trial or other
proceeding relative thereto, and any such suit or proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall be for the ratable benefit of the holders of the
Securities.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the holders
of the Securities, and it shall not be necessary to make any holders of the
Securities parties to any such proceedings.
33
<PAGE>
SECTION 5.03. Application of Moneys Collected by Trustee.
Any moneys collected by the Trustee shall be applied in the order
following, at the date or dates fixed by the Trustee for the distribution of
such moneys, upon presentation of the Securities in respect of which moneys have
been collected, and stamping thereon the payment, if only partially paid, and
upon surrender thereof if fully paid:
First: To the payment of costs and expenses of collection applicable to
the Securities and all other amounts due to the Trustee under Section 6.06;
Second: To the payment of all Senior Indebtedness of the Company if and to
the extent required by Article XV;
Third: To the payment of the amounts then due and unpaid upon Securities
for principal of (and premium, if any) and interest (including Compounded
Interest and Additional Sums, if any) and Liquidated Damages, if any, on the
Securities, in respect of which or for the benefit of which money has been
collected, ratably, without preference of priority of any kind, according to the
amounts due on such Securities for principal (and premium, if any) and interest,
respectively; and
Fourth: To the Company.
SECTION 5.04. Proceedings by Securityholders.
No holder of any Security shall have any right by virtue of or by availing
of any provision of this Indenture to institute any suit, action or proceeding
in equity or at law upon or under or with respect to this Indenture or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
such holder previously shall have given to the Trustee written notice of an
Event of Default and of the continuance thereof with respect to the Securities
specifying such Event of Default, as hereinbefore provided, and unless also the
holders of not less than 25% in aggregate principal amount of the Securities
then outstanding shall have made written request upon the Trustee to institute
such action, suit or proceeding in its own name as Trustee hereunder and shall
have offered to the Trustee such reasonable indemnity as it may require against
the costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity shall have failed to institute any such action, suit or proceeding, it
being understood and intended, and being expressly covenanted by the taker and
holder of every Security with every other taker and holder and the Trustee, that
no one or more holders of Securities shall have any right in any manner whatever
by virtue of or by availing of any provision of this Indenture to affect,
disturb or prejudice the rights of any other holder of Securities, or to obtain
or seek to obtain priority over or preference to any other such holder, or to
enforce any right under this Indenture, except in the manner herein provided and
for the equal, ratable and common benefit of all holders of Securities.
34
<PAGE>
Notwithstanding any other provisions in this Indenture, however, the right
of any holder of any Security, which right is absolute and unconditional, to
receive payment of the principal of (premium, if any) and interest (including
Compounded Interest and Additional Sums, if any) and Liquidated Damages, if any,
on such Security, on or after the same shall have become due and payable, or to
institute suit for the enforcement of any such payment, shall not be impaired or
affected without the consent of such holder and by accepting a Security
hereunder it is expressly understood, intended and covenanted by the taker and
holder of every Security with every other such taker and holder and the Trustee,
that no one or more holders of Securities shall have any right in any manner
whatsoever by virtue or by availing of any provision of this Indenture to
affect, disturb or prejudice the rights of the holders of any other Securities,
or to obtain or seek to obtain priority over or preference to any other such
holder, or to enforce any right under this Indenture, except in the manner
herein provided and for the equal, ratable and common benefit of all holders of
Securities. For the protection and enforcement of the provisions of this
Section, each and every Securityholder and the Trustee shall be entitled to such
relief as can be given either at law or in equity.
The Company and the Trustee acknowledge that pursuant to the Declaration,
the holders of Capital Securities are entitled, in the circumstances and subject
to the limitations set forth therein, to commence a Direct Action with respect
to any Event of Default under this Indenture and the Securities.
SECTION 5.05. Proceedings by Trustee.
In case an Event of Default occurs with respect to Securities and is
continuing, the Trustee may in its discretion proceed to protect and enforce the
rights vested in it by this Indenture by such appropriate judicial proceedings
as the Trustee shall deem most effectual to protect and enforce any of such
rights, either by suit in equity or by action at law or by proceeding in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in this Indenture or in aid of the exercise of any power
granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.
SECTION 5.06. Remedies Cumulative and Continuing.
All powers and remedies given by this Article V to the Trustee or to the
Securityholders shall, to the extent permitted by law, be deemed cumulative and
not exclusive of any other powers and remedies available to the Trustee or the
holders of the Securities, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants and agreements contained in this
Indenture or otherwise established with respect to the Securities, and no delay
or omission of the Trustee or of any holder of any of the Securities to exercise
any right or power accruing upon any Event of Default occurring and continuing
as aforesaid shall impair any such right or power, or shall be construed to be a
waiver of any such default or an acquiescence therein; and, subject to the
35
<PAGE>
provisions of Section 5.04, every power and remedy given by this Article V or by
law to the Trustee or to the Securityholders may be exercised from time to time,
and as often as shall be deemed expedient, by the Trustee or by the
Securityholders.
SECTION 5.07. Direction of Proceedings and Waiver of Defaults by
Majority of Securityholders.
The holders of a majority in aggregate principal amount of the Securities
at the time outstanding shall have the right to direct the time, method, and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee; provided, however, that
such direction shall not be in conflict with any rule or law or with this
Indenture and, (subject to the provisions of Section 6.01) the Trustee shall
have the right to decline to follow any such direction if the Trustee shall
determine that the action so directed would be unjustly prejudicial to the
holders not taking part in such direction or if the Trustee being advised by
counsel determines that the action or proceeding so directed may not lawfully be
taken or if the Trustee in good faith by its board of directors or trustees,
executive committee, or a trust committee of directors or trustees and/or
Responsible Officers shall determine that the action or proceedings so directed
would involve the Trustee in personal liability. Prior to any declaration
accelerating the maturity of the Securities, the holders of a majority in
aggregate principal amount of the Securities at the time outstanding may on
behalf of the holders of all of the Securities waive any past default or Event
of Default and its consequences except a default (a) in the payment of principal
of or premium, if any, or interest (including Compounded Interest and Additional
Sums, if any) or Liquidated Damages, if any, on any of the Securities or (b) in
respect of covenants or provisions hereof which cannot be modified or amended
without the consent of the holder of each Security affected; provided, however,
that if the Securities are held by the Property Trustee, such waiver or
modification to such waiver shall not be effective until the holders of a
majority in aggregate liquidation amount of Trust Securities shall have
consented to such waiver or modification to such waiver; provided further, that
if the consent of the holder of each outstanding Security is required, such
waiver shall not be effective until each holder of the Trust Securities shall
have consented to such waiver. Upon any such waiver, the default covered
thereby shall be deemed to be cured for all purposes of this Indenture and the
Company, the Trustee and the holders of the Securities shall be restored to
their former positions and rights hereunder, respectively; but no such waiver
shall extend to any subsequent or other default or impair any right consequent
thereon. Whenever any default or Event of Default hereunder shall have been
waived as permitted by this Section 5.07, said default or Event of Default shall
for all purposes of the Securities and this Indenture be deemed to have been
cured and to be not continuing.
SECTION 5.08. Notice of Defaults.
(a) The Trustee shall, within 90 days after the occurrence of a
default with respect to the Securities known to a Responsible Officer of
the Trustee, mail to all Securityholders, as the names and addresses of
such holders appear upon the Security
36
<PAGE>
Register, notice of all defaults known to the Trustee, unless such defaults
shall have been cured before the giving of such notice (the term "defaults"
for the purpose of this Section 5.08 being hereby defined to be the events
specified in clauses (a), (b), (c), (d) and (e) of Section 5.01, not
including periods of grace, if any, provided for therein, and irrespective
of the giving of written notice specified in clause (c) of Section 5.01);
and provided that, except in the case of default in the payment of the
principal of or premium, if any, or interest (including Compounded Interest
or Additional Sums, if any) or Liquidated Damages, if any, on any of the
Securities, the Trustee shall be protected in withholding such notice if
and so long as the board of directors, the executive committee, or a trust
committee of directors and/or Responsible Officers of the Trustee in good
faith determines that the withholding of such notice is in the interests of
the Securityholders; and provided further, that in the case of any default
of the character specified in Section 5.01(c) no such notice to
Securityholders shall be given until at least 60 days after the occurrence
thereof but shall be given within 90 days after such occurrence.
(b) Within five Business Days after the occurrence of any Event of
Default actually known to the Trustee, the Trustee shall transmit notice of
such Event of Default to all Securityholders, unless such Event of Default
shall have been cured or waived.
SECTION 5.09. Undertaking to Pay Costs.
All parties to this Indenture agree, and each holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees and
expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant; but
the provisions of this Section 5.09 shall not apply to any suit instituted by
the Company or the Trustee; to any suit instituted by any Securityholder, or
group of Securityholders, holding in the aggregate more than 10% in aggregate
principal amount of the Securities outstanding; or to any suit instituted by
any Securityholder for the enforcement of the payment of the principal of (or
premium, if any) or interest (including Compounded Interest and Additional Sums,
if any) or Liquidated Damages, if any, on any Security against the Company on or
after the same shall have become due and payable.
SECTION 5.10. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully
37
<PAGE>
do so) hereby expressly waives all benefit or advantage of any such law and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
ARTICLE VI
CONCERNING THE TRUSTEE
----------------------
SECTION 6.01. Duties and Responsibilities of Trustee.
With respect to the holders of the Securities issued hereunder, the
Trustee, prior to the occurrence of an Event of Default and after the curing or
waiving of all Events of Default which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth in this
Indenture. In case an Event of Default has occurred (which has not been cured
or waived) the Trustee shall exercise such of the rights and powers vested in it
by this Indenture, and use the same degree of care and skill in their exercise,
as a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
No provision of this Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default and after the
curing or waiving of all Events of Default which may have occurred,
(i) the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Indenture and the Trust
Indenture Act, and the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set
forth in this Indenture or in the Trust Indenture Act, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to
the requirements of this Indenture; but, in the case of any such
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee
shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer or Officers, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts; and
38
<PAGE>
(c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith, in accordance with the
direction of the Securityholders pursuant to Section 5.07, relating to the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there is reasonable ground for believing that the
repayment of such funds or liability is not reasonably assured to it under the
terms of this Indenture or adequate indemnity against such risk is not
reasonably assured to it.
SECTION 6.02. Reliance on Documents, Opinions, etc.
Except as otherwise provided in Section 6.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond, note,
debenture or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Company mentioned
herein may be sufficiently evidenced by an Officers' Certificate (unless
other evidence in respect thereof be herein specifically prescribed); and
any Board Resolution may be evidenced to the Trustee by a copy thereof
certified by the Secretary or an Assistant Secretary of the Company;
(c) the Trustee may consult with counsel of its selection and any
advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered omitted by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders, pursuant to the provisions of this
Indenture, unless such Securityholders shall have offered to the Trustee
reasonable and sufficient security or indemnity against the costs, expenses
and liabilities which may be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or omitted by
it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture; nothing
contained herein shall, however, relieve the Trustee of the obligation,
upon the occurrence of an Event of Default (that has not been cured or
waived),
39
<PAGE>
to exercise such of the rights and powers vested in it by this Indenture,
and to use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of
his own affairs;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond, debenture, coupon or other paper or document, unless requested in
writing to do so by the holders of a majority in aggregate principal amount
of the outstanding Securities; provided, however, that if the payment
within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation
is, in the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Indenture, the Trustee may
require reasonable indemnity against such expense or liability as a
condition to so proceeding;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents
(including any Authenticating Agent) or attorneys, and the Trustee shall
not be responsible for any misconduct or negligence on the part of any such
agent or attorney appointed by it with due care;
(h) the Trustee shall not be charged with knowledge of any Default or
Event of Default with respect to the Securities unless (1) such default is
a default under Sections 5.01(a) (other than a default with respect to the
payment of Compounded Interest, Liquidated Damages or Additional Sums) and
5.01(b) of the Indenture, (2) a Responsible Officer shall have actual
knowledge of such Default or Event of Default or (3) written notice of such
Default or Event of Default shall have been given to the Trustee by the
Company or any other obligor on the Securities or by any holder of the
Securities; and
(i) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith, without negligence or willful misconduct and
believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Indenture.
SECTION 6.03. No Responsibility for Recitals, etc.
The recitals contained herein and in the Securities (except in the
certificate of authentication of the Trustee or the Authenticating Agent) shall
be taken as the statements of the Company and the Trustee and the Authenticating
Agent assume no responsibility for the correctness of the same. The Trustee and
the Authenticating Agent make no representations as to the validity or
sufficiency of this Indenture or of the Securities. The Trustee and the
Authenticating Agent shall not be accountable for the use or application by the
Company of any Securities or the proceeds of any Securities authenticated and
delivered by the Trustee or the Authenticating Agent in conformity with the
provisions of this Indenture.
40
<PAGE>
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents, Transfer
Agents or Registrar May Own Securities.
The Trustee or any Authenticating Agent or any paying agent or any transfer
agent or any Security registrar, in its individual or any other capacity, may
become the owner or pledgee of Securities with the same rights it would have if
it were not Trustee, Authenticating Agent, paying agent, transfer agent or
Security registrar.
SECTION 6.05. Moneys to be Held in Trust.
Subject to the provisions of Section 11.04, all moneys received by the
Trustee or any paying agent shall, until used or applied as herein provided, be
held in trust for the purpose for which they were received, but need not be
segregated from other funds except to the extent required by law. The Trustee
and any paying agent shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed in writing with the Company.
So long as no Event of Default shall have occurred and be continuing, all
interest allowed on any such moneys shall be paid from time to time upon the
written order of the Company, signed by the Chairman of the Board of Directors,
the President, a Vice President, the Treasurer or an Assistant Treasurer of the
Company.
SECTION 6.06. Compensation and Expenses of Trustee.
The Company, as issuer of Securities under this Indenture, covenants and
agrees to pay to the Trustee from time to time, and the Trustee shall be
entitled to, such compensation as shall be agreed to in writing between the
Company and the Trustee (which shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust), and the Company
will pay or reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Indenture (including the reasonable compensation
and the expenses and disbursements of its counsel and of all persons not
regularly in its employ) except any such expense, disbursement or advance as may
arise from its negligence or bad faith. The Company also covenants to indemnify
each of the Trustee or any predecessor Trustee (and its officers, agents,
directors and employees) for, and to hold it harmless against, any and all loss,
damage, claim, liability or expense including taxes (other than taxes based on
the income of the Trustee) incurred without negligence or bad faith on the part
of the Trustee and arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim of liability in the premises. The obligations of the
Company under this Section 6.06 to compensate and indemnify the Trustee and to
pay or reimburse the Trustee for expenses, disbursements and advances shall
constitute additional indebtedness hereunder. Such additional indebtedness
shall be secured by a lien prior to that of the Securities upon all property and
funds held or collected by the Trustee as such, except funds held in trust for
the benefit of the holders of particular Securities.
41
<PAGE>
When the Trustee incurs expenses or renders services in connection with an
Event of Default specified in Section 5.01(d) or Section 5.01(e), the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy, insolvency or
other similar law.
The provisions of this Section shall survive the resignation or removal of
the Trustee and the defeasance or other termination of this Indenture.
SECTION 6.07. Officers' Certificate as Evidence.
Except as otherwise provided in Sections 6.01 and 6.02, whenever in the
administration of the provisions of this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking or
omitting any action hereunder, such matter (unless other evidence in respect
thereof is herein specifically prescribed) may, in the absence of negligence or
bad faith on the part of the Trustee, be deemed to be conclusively proved and
established by an Officers' Certificate delivered to the Trustee, and such
certificate, in the absence of negligence or bad faith on the part of the
Trustee, shall be full warrant to the Trustee for any action taken or omitted by
it under the provisions of this Indenture upon the faith thereof.
SECTION 6.08. Conflicting Interest of Trustee.
If the Trustee has or shall acquire any "conflicting interest" within the
meaning of Section 310(b) of the Trust Indenture Act, the Trustee and the
Company shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act.
SECTION 6.09. Eligibility of Trustee.
The Trustee hereunder shall at all times be a corporation organized and
doing business under the laws of the United States of America or any state or
territory thereof or of the District of Columbia or a corporation or other
Person permitted to act as trustee by the Commission authorized under such laws
to exercise corporate trust powers, having a combined capital and surplus of at
least 50 million U.S. dollars ($50,000,000) and subject to supervision or
examination by federal, state, territorial, or District of Columbia authority.
If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 6.09 the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
The Company may not, nor may any Person directly or indirectly controlling,
controlled by, or under common control with the Company, serve as Trustee.
42
<PAGE>
In case at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section 6.09, the Trustee shall resign immediately
in the manner and with the effect specified in Section 6.10.
SECTION 6.10. Resignation or Removal of Trustee.
(a) The Trustee, or any trustee or trustees hereafter appointed, may
at any time resign by giving written notice of such resignation to the
Company and by mailing notice thereof to the holders of the Securities at
their addresses as they shall appear on the Security register. Upon
receiving such notice of resignation, the Company shall promptly appoint a
successor trustee or trustees by written instrument, in duplicate, one copy
of which instrument shall be delivered to the resigning Trustee and one
copy to the successor trustee. If no successor trustee shall have been so
appointed and have accepted appointment within 60 days after the mailing of
such notice of resignation to the affected Securityholders, the resigning
Trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee, or any Securityholder who has been a
bona fide holder of a Security for at least six months may, subject to the
provisions of Section 5.09, on behalf of himself and all others similarly
situated, petition any such court for the appointment of a successor
trustee. Such court may thereupon, after such notice, if any, as it may
deem proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with the provisions of
Section 6.08 after written request therefor by the Company or by any
Securityholder who has been a bona fide holder of a Security or
Securities for at least six months, or
(ii) the Trustee shall cease to be eligible in accordance with
the provisions of Section 6.09 and shall fail to resign after written
request therefor by the Company or by any such Securityholder, or
(iii) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of
its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then, in any
such case, the Company may remove the Trustee and appoint a successor
trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so removed and one copy
to the successor trustee, or, subject to the provisions of Section
5.09, any Securityholder who has been a bona fide holder of a Security
for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor trustee.
Such court may thereupon, after such
43
<PAGE>
notice, if any, as it may deem proper, remove the Trustee and appoint
a successor trustee.
(c) The holders of a majority in aggregate principal amount of the
Securities at the time outstanding may at any time remove the Trustee and
nominate a successor trustee, which shall be deemed appointed as successor
trustee unless within 10 days after such nomination the Company objects
thereto or if no successor trustee shall have been so appointed and shall
have accepted appointment within 30 days after such removal, in which case
the Trustee so removed or any Securityholder, upon the terms and conditions
and otherwise as in subsection (a) of this Section 6.10 provided, may
petition any court of competent jurisdiction for an appointment of a
successor trustee.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 6.10
shall become effective only upon acceptance of appointment by the successor
trustee as provided in Section 6.11.
SECTION 6.11. Acceptance by Successor Trustee.
Any successor trustee appointed as provided in Section 6.10 shall execute,
acknowledge and deliver to the Company and to its predecessor trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the retiring trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, duties and obligations of its predecessor hereunder,
with like effect as if originally named as trustee herein; but, nevertheless, on
the written request of the Company or of the successor trustee, the trustee
ceasing to act shall, upon payment of any amounts then due it pursuant to the
provisions of Section 6.06, execute and deliver an instrument transferring to
such successor trustee all the rights and powers of the trustee so ceasing to
act and shall duly assign, transfer and deliver to such successor trustee all
property and money held by such retiring trustee thereunder. Upon request of
any such successor trustee, the Company shall execute any and all instruments in
writing for more fully and certainly vesting in and confirming to such successor
trustee all such rights and powers. Any trustee ceasing to act shall,
nevertheless, retain a lien upon all property or funds held or collected by such
trustee to secure any amounts then due it pursuant to the provisions of Section
6.06.
No successor trustee shall accept appointment as provided in this Section
6.11 unless at the time of such acceptance such successor trustee shall be
qualified under the provisions of Section 6.08 and eligible under the provisions
of Section 6.09.
Upon acceptance of appointment by a successor trustee as provided in this
Section 6.11, the Company shall mail notice of the succession of such trustee
hereunder to the holders of Securities at their addresses as they shall appear
on the Security register. If the Company fails to mail such
44
<PAGE>
notice within 10 days after the acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Company.
SECTION 6.12. Succession by Merger, etc.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder without
the execution or filing of any paper or any further act on the part of any of
the parties hereto provided such corporations shall be otherwise qualified and
eligible under this Article.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any Securities shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor trustee; and in all such cases such certificates shall have the full
force which the Securities or this Indenture elsewhere provides that the
certificate of the Trustee shall have; provided, however, that the right to
adopt the certificate of authentication of any predecessor Trustee or
authenticate Securities in the name of any predecessor Trustee shall apply only
to its successor or successors by merger, conversion or consolidation.
SECTION 6.13. Limitation on Rights of Trustee as a Creditor.
The Trustee shall comply with Section 311(a) of the Trust Indenture Act,
excluding any creditor relationship described in Section 311(b) of the Trust
Indenture Act. A Trustee who has resigned or been removed shall be subject to
Section 311(a) of the Trust Indenture Act to the extent included therein.
SECTION 6.14. Authenticating Agents.
There may be one or more Authenticating Agents appointed by the Trustee
upon the request of the Company with power to act on its behalf and subject to
its direction in the authentication and delivery of Securities issued upon
exchange or transfer thereof as fully to all intents and purposes as though any
such Authenticating Agent had been expressly authorized to authenticate and
deliver Securities; provided, that the Trustee shall have no liability to the
Company for any acts or omissions of the Authenticating Agent with respect to
the authentication and delivery of Securities. Any such Authenticating Agent
shall at all times be a corporation organized and doing business under the laws
of the United States or of any state or territory thereof or of the District of
Columbia authorized under such laws to act as Authenticating Agent, having a
combined capital and surplus of at least $50,000,000 and being subject to
supervision or examination by federal, state, territorial or District
45
<PAGE>
of Columbia authority. If such corporation publishes reports of condition at
least annually pursuant to law or the requirements of such authority, then for
the purposes of this Section 6.14 the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect herein specified in this Section.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate trust business
of any Authenticating Agent, shall be the successor of such Authenticating Agent
hereunder, if such successor corporation is otherwise eligible under this
Section 6.14 without the execution or filing of any paper or any further act on
the part of the parties hereto or such Authenticating Agent.
Any Authenticating Agent may at any time resign by giving written notice of
resignation to the Trustee and to the Company. The Trustee may at any time
terminate the agency of any Authenticating Agent by giving written notice of
termination to such Authenticating Agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
any Authenticating Agent shall cease to be eligible under this Section 6.14, the
Trustee may, and upon the request of the Company shall, promptly appoint a
successor Authenticating Agent eligible under this Section 6.14, shall give
written notice of such appointment to the Company and shall mail notice of such
appointment to all Securityholders as the names and addresses of such holders
appear on the Security Register. Any successor Authenticating Agent upon
acceptance of its appointment hereunder shall become vested with all rights,
powers, duties and responsibilities of its predecessor hereunder, with like
effect as if originally named as Authenticating Agent herein.
The Company, as borrower, agrees to pay to any Authenticating Agent from
time to time reasonable compensation for its services. Any Authenticating Agent
shall have no responsibility or liability for any action taken by it as such in
accordance with the directions of the Trustee.
ARTICLE VII
CONCERNING THE SECURITYHOLDERS
------------------------------
SECTION 7.01. Action by Securityholders.
Whenever in this Indenture it is provided that the holders of a specified
percentage in aggregate principal amount of the Securities may take any action
(including the making of any demand or request, the giving of any notice,
consent or waiver or the taking of any other action) the fact that at the time
of taking any such action the holders of such specified percentage have joined
therein may be evidenced (a) by any instrument or any number of instruments of
similar tenor
46
<PAGE>
executed by such Securityholders in person or by agent or proxy appointed in
writing, or (b) by the record of such holders of Securities voting in favor
thereof at any meeting of such Securityholders duly called and held in
accordance with the provisions of Article VIII, or (c) by a combination of such
instrument or instruments and any such record of such a meeting of such
Securityholders.
If the Company shall solicit from the Securityholders any request, demand,
authorization, direction, notice, consent, waiver or other action, the Company
may, at its option, as evidenced by an Officers' Certificate, fix in advance a
record date for the determination of Securityholders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other
action, but the Company shall have no obligation to do so. If such a record
date is fixed, such request, demand, authorization, direction, notice, consent,
waiver or other action may be given before or after the record date, but only
the Securityholders of record at the close of business on the record date shall
be deemed to be Securityholders for the purposes of determining whether
Securityholders of the requisite proportion of outstanding Securities have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other action, and for that purpose the
outstanding Securities shall be computed as of the record date; provided,
however, that no such authorization, agreement or consent by such
Securityholders on the record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later than six
months after the record date.
SECTION 7.02. Proof of Execution by Securityholders.
Subject to the provisions of Section 6.01, 6.02 and 8.05, proof of the
execution of any instrument by a Securityholder or his agent or proxy shall be
sufficient if made in accordance with such reasonable rules and regulations as
may be prescribed by the Trustee or in such manner as shall be satisfactory to
the Trustee. The ownership of Securities shall be proved by the Security
Register or by a certificate of the Security registrar. The Trustee may require
such additional proof of any matter referred to in this Section as it shall deem
necessary.
The record of any Securityholders' meeting shall be proved in the manner
provided in Section 8.06.
SECTION 7.03. Who Are Deemed Absolute Owners.
Prior to due presentment for registration of transfer of any Security, the
Company, the Trustee, any Authenticating Agent, any paying agent, any transfer
agent and any Security registrar may deem the person in whose name such Security
shall be registered upon the Security Register to be, and may treat him as, the
absolute owner of such Security (whether or not such Security shall be overdue)
for the purpose of receiving payment of or on account of the principal of and
premium, if any, and (subject to Section 2.06) interest on such Security and for
all other purposes; and neither the Company nor the Trustee nor any
Authenticating Agent nor any paying agent nor any transfer agent nor any
Security registrar shall be affected by any notice to the contrary. All such
payments
47
<PAGE>
so made to any holder for the time being or upon his order shall be valid, and,
to the extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for moneys payable upon any such Security.
SECTION 7.04. Securities Owned by Company Deemed Not Outstanding.
In determining whether the holders of the requisite aggregate principal
amount of Securities have concurred in any direction, consent, notice or waiver
under this Indenture, Securities which are owned by the Company or any other
obligor on the Securities or any Affiliate of the Company (other than the Trust)
or any other obligor on the Securities shall be disregarded and deemed not to be
outstanding for the purpose of any such determination; provided that for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, consent or waiver, only Securities which a Responsible Officer
of the Trustee actually knows are so owned shall be so disregarded.
Securities so owned which have been pledged in good faith may be regarded as
outstanding for the purposes of this Section 7.04 if the pledgee shall establish
to the satisfaction of the Trustee the pledgee's right to vote such Securities
and that the pledgee is not the Company or any such other obligor or Affiliate
of the Company or any such other obligor. In the case of a dispute as to such
right, any decision by the Trustee taken upon the advice of counsel shall be
full protection to the Trustee.
SECTION 7.05. Revocation of Consents; Future Holders Bound.
At any time prior to (but not after) the evidencing to the Trustee, as
provided in Section 7.01, of the taking of any action by the holders of the
percentage in aggregate principal amount of the Securities specified in this
Indenture in connection with such action, any holder of a Security (or any
Security issued in whole or in part in exchange or substitution therefor),
subject to Section 7.01, the serial number of which is shown by the evidence to
be included in the Securities the holders of which have consented to such action
may, by filing written notice with the Trustee at its principal office and upon
proof of holding as provided in Section 7.02, revoke such action so far as
concerns such Security (or so far as concerns the principal amount represented
by any exchanged or substituted Security). Except as aforesaid any such action
taken by the holder of any Security shall be conclusive and binding upon such
holder and upon all future holders and owners of such Security, and of any
Security issued in exchange or substitution therefor, irrespective of whether or
not any notation in regard thereto is made upon such Security or any Security
issued in exchange or substitution therefor.
ARTICLE VIII
SECURITYHOLDERS' MEETINGS
-------------------------
SECTION 8.01. Purposes of Meetings.
48
<PAGE>
A meeting of Securityholders may be called at any time and from time to
time pursuant to the provisions of this Article VIII for any of the following
purposes:
(a) to give any notice to the Company or to the Trustee, or to give
any directions to the Trustee, or to consent to the waiving of any default
hereunder and its consequences, or to take any other action authorized to
be taken by Securityholders pursuant to any of the provisions of Article V;
(b) to remove the Trustee and nominate a successor trustee pursuant to
the provisions of Article VI;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 9.02; or
(d) to take any other action authorized to be taken by or on behalf of
the holders of any specified aggregate principal amount of such Securities
under any other provision of this Indenture or under applicable law.
SECTION 8.02. Call of Meetings by Trustee.
The Trustee may at any time call a meeting of Securityholders to take any
action specified in Section 8.01, to be held at such time and at such place in
the Borough of Manhattan, The City of New York, as the Trustee shall determine.
Notice of every meeting of the Securityholders, setting forth the time and the
place of such meeting and in general terms the action proposed to be taken at
such meeting, shall be mailed to holders of Securities at their addresses as
they shall appear on the Securities Register. Such notice shall be mailed not
less than 20 nor more than 180 days prior to the date fixed for the meeting.
SECTION 8.03. Call of Meetings by Company or Securityholders.
In case at any time the Company pursuant to a resolution of the Board of
Directors, or the holders of at least 10% in aggregate principal amount of the
Securities then outstanding, shall have requested the Trustee to call a meeting
of Securityholders, by written request setting forth in reasonable detail the
action proposed to be taken at the meeting, and the Trustee shall not have
mailed the notice of such meeting within 20 days after receipt of such request,
then the Company or such Securityholders may determine the time and the place in
said Borough of Manhattan for such meeting and may call such meeting to take any
action authorized in Section 8.01, by mailing notice thereof as provided in
Section 8.02.
SECTION 8.04. Qualifications for Voting.
49
<PAGE>
To be entitled to vote at any meeting of Securityholders a Person shall (a)
be a holder of one or more Securities or (b) a Person appointed by an instrument
in writing as proxy by a holder of one or more Securities. The only Persons who
shall be entitled to be present or to speak at any meeting of Securityholders
shall be the Persons entitled to vote at such meeting and their counsel and any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.
SECTION 8.05. Regulations.
Notwithstanding any other provisions of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any meeting of
Securityholders, in regard to proof of the holding of Securities and of the
appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Securityholders as provided in Section 8.03, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by majority vote of the meeting.
Subject to the provisions of Section 8.04, at any meeting each holder of
Securities or proxy therefor shall be entitled to one vote for each $1,000
principal amount of Securities held or represented by him; provided, however,
that no vote shall be cast or counted at any meeting in respect of any Security
challenged as not outstanding and ruled by the chairman of the meeting to be not
outstanding. The chairman of the meeting shall have no right to vote other than
by virtue of Securities held by him or instruments in writing as aforesaid duly
designating him as the person to vote on behalf of other Securityholders. Any
meeting of Securityholders duly called pursuant to the provisions of Section
8.02 or 8.03 may be adjourned from time to time by a majority of those present,
and the meeting may be held as so adjourned without further notice.
SECTION 8.06. Voting.
The vote upon any resolution submitted to any meeting of holders of
Securities shall be by written ballots on which shall be subscribed the
signatures of such holders or of their representatives by proxy and the serial
number or numbers of the Securities held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
triplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Securityholders shall be prepared by the
secretary of the meeting and there shall be attached to said record the original
reports of the inspectors of votes
50
<PAGE>
on any vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was mailed as provided in Section 8.02. The record
shall show the serial numbers of the Securities voting in favor of or against
any resolution. The record shall be signed and verified by the affidavits of the
permanent chairman and secretary of the meeting and one of the duplicates shall
be delivered to the Company and the other to the Trustee to be preserved by the
Trustee, the latter to have attached thereto the ballots voted at the meeting.
The holders of the Series A Capital Securities, the Series B Capital Securities
and the Private Exchange Securities shall vote for all purposes as a single
class.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
ARTICLE IX
SUPPLEMENTAL INDENTURES
-----------------------
SECTION 9.01. Without Consent of Securityholders.
The Company, when authorized by a Board Resolution, and the Trustee may
from time to time and at any time enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, without the consent of the
Securityholders, for one or more of the following purposes:
(a) to evidence the succession of another Person to the Company, or
successive successions, and the assumption by the successor Person of the
covenants, agreements and obligations of the Company herein and in the
Securities pursuant to Article X hereof;
(b) to add to the covenants of the Company such further covenants,
restrictions or conditions for the protection of the Securityholders as the
Board of Directors and the Trustee shall consider to be for the protection
of the Securityholders, and to make the occurrence, or the occurrence and
continuance, of a default in any of such additional covenants, restrictions
or conditions a default or an Event of Default permitting the enforcement
of all or any of the remedies provided in this Indenture as herein set
forth; provided, however, that in respect of any such additional covenant,
restriction or condition such amendment may provide for a particular period
of grace after default (which period may be shorter or longer than that
allowed in the case of other defaults) or may provide for an immediate
enforcement upon such default or may limit the remedies available to the
Trustee upon such default;
(c) to provide for the issuance under this Indenture of Securities in
coupon form (including Securities registrable as to principal only) and to
provide for exchangeability of such Securities with the Securities issued
hereunder in fully registered form and to make all appropriate changes for
such purpose;
51
<PAGE>
(d) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any
supplemental indenture, or to make such other provisions in regard to
matters or questions arising under this Indenture; provided that any such
action shall not materially adversely affect the interests of the holders
of the Securities;
(e) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities;
(f) to make provision for transfer procedures, certification, book-
entry provisions, the form of restricted securities legends, if any, to be
placed on Securities, and all other matters required pursuant to Section
2.07 or otherwise necessary, desirable or appropriate in connection with
the issuance of Securities to holders of Capital Securities in the event of
a distribution of Securities by NGC Corporation Capital Trust following a
Dissolution Event;
(g) to qualify or maintain qualification of this Indenture under the
Trust Indenture Act; or
(h) to make any change that does not adversely affect the rights of
any Securityholder in any material respect.
The Trustee is hereby authorized to join with the Company in the execution
of any supplemental indenture to effect such amendment, to make any further
appropriate agreements and stipulations which may be therein contained and to
accept the conveyance, transfer and assignment of any property thereunder, but
the Trustee shall not be obligated to, but may in its discretion, enter into any
such supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any amendment to the Indenture authorized by the provisions of this Section
9.01 may be executed by the Company and the Trustee without the consent of the
holders of any of the Securities at the time outstanding, notwithstanding any of
the provisions of Section 9.02.
SECTION 9.02. With Consent of Securityholders.
With the consent (evidenced as provided in Section 7.01) of the holders of
a majority in aggregate principal amount of the Securities at the time
outstanding, the Company, when authorized by a Board Resolution, and the Trustee
may from time to time and at any time enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the holders of the Securities; provided,
however, that no such amendment shall without the
52
<PAGE>
consent of the holders of each Security then outstanding and affected thereby
(i) change the Maturity Date of any Security, or reduce the rate of interest
(including Compounded Interest) or extend the time of payment of interest
thereon (except as contemplated by Article XVI), or reduce the principal amount
thereof or the amount of premium thereon, if any, or reduce any amount payable
on redemp tion thereof, or make the principal thereof or any interest or premium
thereon payable in any coin or currency other than that provided in the
Securities, or impair or affect the right of any Securityholder to institute
suit for payment thereof, (ii) modify the provisions of this Indenture with
respect to the subordination of the Securities in a manner adverse to the
holders, (iii) reduce the aforesaid percentage of Securities the holders of
which are required to consent to any such amend ment to the Indenture, or the
consent of whose holders is required for any waiver (of compliance with certain
provisions of this Indenture or certain defaults hereunder and their
consequences) provided for in this Indenture or (iv) modify any of the
provisions of the first paragraph of this Section 9.02, or the second sentence
of Section 5.07, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived without
the consent of the holder of each outstanding Security affected thereby;
provided, however, that if the Securities are held by NGC Corporation Capital
Trust, such amendment shall not be effective until the holders of a majority in
liquidation amount of Trust Securities shall have consented to such amendment;
provided, further, that if the consent of the holder of each outstanding
Security is required, such amendment shall not be effective until each holder of
the Trust Securities shall have consented to such amendment.
Upon the request of the Company accompanied by a copy of a resolution of
the Board of Directors certified by its Secretary or Assistant Secretary
authorizing the execution of any supplemental indenture affecting such
amendment, and upon the filing with the Trustee of evidence of the consent of
Securityholders as aforesaid, the Trustee shall join with the Company in the
execution of such supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Trustee
shall transmit by mail, first class postage prepaid, a notice, prepared by the
Company, setting forth in general terms the substance of such supplemental
indenture, to the Securityholders as their names and addresses appear upon the
Security Register. Any failure of the Trustee to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture.
It shall not be necessary for the consent of the Securityholders under this
Section 9.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
SECTION 9.03. Compliance with Trust Indenture Act; Effect of Supplemental
Indentures.
53
<PAGE>
Any supplemental indenture executed pursuant to the provisions of this
Article IX shall comply with the Trust Indenture Act. Upon the execution of any
supplemental indenture pursuant to the provisions of this Article IX, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company and the holders
of Securities shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
SECTION 9.04. Notation on Securities.
Securities authenticated and delivered after the execution of any
supplemental indenture affecting such series pursuant to the provisions of this
Article IX may bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company or the Trustee
shall so determine, new Securities so modified as to conform, in the opinion of
the Trustee and the Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may be prepared and executed by the
Company, authenticated by the Trustee or the Authenticating Agent and delivered
in exchange for the Securities then outstanding.
SECTION 9.05. Evidence of Compliance of Supplemental Indenture to be
Furnished Trustee.
The Trustee, subject to the provisions of Sections 6.01 and 6.02, may
receive, in addition to the document required by Section 13.06, an Officers'
Certificate and an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant hereto complies with the requirements
of this Article IX.
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
-------------------------------------------------
SECTION 10.01. Company May Consolidate, etc., on Certain Terms.
Nothing contained in this Indenture or in any of the Securities shall
prevent any consolidation or merger of the Company with or into any other Person
(whether or not affiliated with the Company, as the case may be), or successive
consolidations or mergers in which the Company or its successor or successors,
as the case may be, shall be a party or parties, or shall prevent any sale,
conveyance, transfer or lease of the property of the Company, or its successor
or successors as the case may be, as an entirety, or substantially as an
entirety, to any other Person (whether or not affili ated with the Company, or
its successor or successors, as the case may be) authorized to acquire
54
<PAGE>
and operate the same; provided, that (a) the Company is the surviving Person, or
the Person formed by or surviving any such consolidation or merger (if other
than the Company) or to which such sale, conveyance, transfer or lease of
property is made is a Person organized and existing under the laws of the United
States or any State thereof or the District of Columbia, and (b) upon any such
consolidation, merger, sale, conveyance, transfer or lease, the due and punctual
payment of the principal of (and premium, if any) and interest on the Securities
according to their tenor and the due and punctual performance and observance of
all the covenants and conditions of this Indenture to be kept or performed by
the Company shall be expressly assumed, by supplemental indenture (which shall
conform to the provisions of the Trust Indenture Act, as then in effect)
satisfactory in form to the Trustee executed and delivered to the Trustee by the
Person formed by such consolidation, or into which the Company shall have been
merged, or by the Person which shall have acquired such property, as the case
may be and (c) after giving effect to such consolidation, merger, sale,
conveyance, transfer or lease, no Default or Event of Default shall have
occurred and be continuing.
SECTION 10.02. Successor Corporation to be Substituted for Company.
In case of any such consolidation, merger, conveyance or transfer and upon
the assumption by the successor corporation, by supplemental indenture, executed
and delivered to the Trustee and satisfactory in form to the Trustee, of the due
and punctual payment of the principal of and premium, if any, and interest
(including any Additional Sums or Compounded Interest or Liquidated Damages) on
all of the Securities and the due and punctual performance and observance of all
of the covenants and conditions of this Indenture to be performed or observed by
the Company, such successor Person shall succeed to and be substituted for the
Company, with the same effect as if it had been named herein as the party of the
first part, and the Company thereupon shall be relieved of any further liability
or obligation hereunder or upon the Securities. Such successor Person thereupon
may cause to be signed, and may issue either in its own name or in the name of
NGC Corporation, any or all of the Securities issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee or the Authenticating Agent; and, upon the order of such successor
Person instead of the Company and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee or the Authenticating
Agent shall authenticate and deliver any Securities which previously shall have
been signed and delivered by the officers of the Company to the Trustee or the
Authenticating Agent for authentication, and any Securities which such successor
Person thereafter shall cause to be signed and delivered to the Trustee or the
Authenticating Agent for that purpose. All the Securities so issued shall in
all respects have the same legal rank and benefit under this Indenture as the
Securities theretofore or thereafter issued in accordance with the terms of this
Indenture as though all of such Indentures had been issued at the date of the
execution hereof.
SECTION 10.03. Opinion of Counsel to be Given Trustee.
The Trustee, subject to the provisions of Sections 6.01 and 6.02, may
receive an Opinion of Counsel as conclusive evidence that any consolidation,
merger, sale, conveyance, transfer or lease,
55
<PAGE>
and any assumption, permitted or required by the terms of this Article X
complies with the provisions of this Article X.
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
---------------------------------------
SECTION 11.01. Discharge of Indenture.
When (a) the Company shall deliver to the Trustee for cancellation all
Securities theretofore authenticated (other than any Securities which shall have
been destroyed, lost or stolen and which shall have been replaced as provided in
Section 2.08) and not theretofore canceled, or (b) all the Securities not
theretofore canceled or delivered to the Trustee for cancellation shall have
become due and payable, or are by their terms to become due and payable within
one year or are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption, and the
Company shall deposit with the Trustee, in trust, funds sufficient to pay on the
Maturity Date or upon redemption all of the Securities (other than any
Securities which shall have been destroyed, lost or stolen and which shall have
been replaced as provided in Section 2.08) not theretofore canceled or delivered
to the Trustee for cancellation, including principal and premium, if any, and
interest (including Compounded Interest and Additional Sums, if any) and
Liquidated Damages, if any, due or to become due to the Maturity Date or
redemption date, as the case may be, but excluding, however, the amount of any
moneys for the payment of principal of or premium, if any, or interest
(including Compounded Interest and Additional Sums, if any) or Liquidated
Damages, if any, on the Securities (1) theretofore repaid to the Company in
accordance with the provisions of Section 11.04, or (2) paid to any State or to
the District of Columbia pursuant to its unclaimed property or similar laws, and
if in either case the Company shall also pay or cause to be paid all other sums
payable hereunder by the Company, then this Indenture shall cease to be of
further effect except for the provisions of Sections 2.02, 2.07, 2.08, 3.01,
3.02, 3.04, 6.06, 6.10 and 11.04 hereof, which shall survive until such
Securities shall mature and be paid. Thereafter, Sections 6.06, 6.10 and 11.04
shall survive, and the Trustee, on demand of the Company accompanied by any
Officers' Certificate and an Opinion of Counsel and at the cost and expense of
the Company, shall execute proper instruments acknowledging satisfaction of and
discharging this Indenture, the Company, however, hereby agreeing to reimburse
the Trustee for any costs or expens es thereafter reasonably and properly
incurred by the Trustee in connection with this Indenture or the Securities.
SECTION 11.02. Deposited Moneys and U.S. Government Obligations to be
Held in Trust by Trustee.
Subject to the provisions of Section 11.04, all moneys and U.S. Government
Obligations deposited with the Trustee pursuant to Sections 11.01 or 11.05 shall
be held in trust and applied by it to the payment, either directly or through
any paying agent (including the Company if acting as
56
<PAGE>
its own paying agent), to the holders of the particular Securities for the
payment of which such moneys or U.S. Government Obligations have been deposited
with the Trustee, of all sums due and to become due thereon for principal,
premium, if any, and interest.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 11.05 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the holders of outstanding Securities.
SECTION 11.03. Paying Agent to Repay Moneys Held.
Upon the satisfaction and discharge of this Indenture all moneys then held
by any paying agent of the Securities (other than the Trustee) shall, upon
written demand of the Company, be repaid to it or paid to the Trustee, and
thereupon such paying agent shall be released from all further liability with
respect to such moneys.
SECTION 11.04. Return of Unclaimed Moneys.
Any moneys deposited with or paid to the Trustee or any paying agent for
payment of the principal of or premium, if any, or interest on Securities and
not applied but remaining unclaimed by the holders of Securities for two years
after the date upon which the principal of or premium, if any, or interest
(including Compounded Interest and Additional Sums, if any) or Liquidated
Damages, if any, on such Securities, as the case may be, shall have become due
and payable, shall be repaid to the Company by the Trustee or such paying agent
on written demand; and the holder of any of the Securities shall thereafter look
only to the Company for any payment which such holder may be entitled to collect
and all liability of the Trustee or such paying agent with respect to such
moneys shall thereupon cease.
SECTION 11.05. Defeasance Upon Deposit of Moneys or U.S. Government
Obligations.
The Company shall be deemed to have been Discharged (as defined below) from
its obligations with respect to the Securities on the 91st day after the
applicable conditions set forth below have been satisfied:
(a) the Company shall have deposited or caused to be deposited
irrevocably with the Trustee or the Defeasance Agent (as defined below) as
trust funds in trust, specifically pledged as security for, and dedicated
solely to, the benefit of the holders of the Securities (i) money in an
amount, or (ii) U.S. Government Obligations which through the payment of
interest and principal in respect thereof in accordance with their terms
will provide, not later than one day before the due date of any payment,
money in an amount, or (iii) a combination of (i) and (ii), sufficient, in
the opinion (with respect to (ii) and (iii)) of a nationally
57
<PAGE>
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee and the Defeasance Agent, if
any, to pay and discharge each installment of principal of and interest and
premium, if any, on the outstanding Securities on the dates such
installments of principal, interest or premium are due;
(b) if the Securities are then listed on any national securities
exchange, the Company shall have delivered to the Trustee and the
Defeasance Agent, if any, an Opinion of Counsel to the effect that the
exercise of the option under this Section 11.05 would not cause such
Securities to be delisted from such exchange;
(c) no Default or Event of Default with respect to the Securities
shall result from such deposit or shall have occurred and be continuing on
the date of such deposit; and
(d) the Company shall have delivered to the Trustee and the Defeasance
Agent, if any, an Opinion of Counsel to the effect that holders of the
Securities will not recognize income, gain or loss for United States
federal income tax purposes as a result of the exercise of the option under
this Section 11.05 and will be subject to United States federal income tax
on the same amount and in the same manner and at the same times as would
have been the case if such option had not been exercised, and such opinion
shall be based on a statute so providing or be accompanied by a private
letter ruling to that effect received from the United States Internal
Revenue Service or a revenue ruling pertaining to a comparable form of
transaction to that effect published by the United States Internal Revenue
Service.
"Discharged" means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by, and obligations under, the
Securities and to have satisfied all the obligations under this Indenture
relating to the Securities (and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging the same), except (A) the rights
of holders of Securities to receive, from the trust fund described in clause (1)
above, payment of the principal of and the interest and premium, if any, on the
Securities when such payments are due; (B) the Company's obligations with
respect to the Securities under Sections 2.07, 2.08, 5.02 and 11.04; and (C) the
rights, powers, trusts, duties and immunities of the Trustee hereunder.
"Defeasance Agent" means another financial institution which is eligible to
act as Trustee hereunder and which assumes all of the obligations of the Trustee
necessary to enable the Trustee to act hereunder. In the event such a
Defeasance Agent is appointed pursuant to this Section, the following conditions
shall apply:
(a) The Trustee shall have approval rights over the document
appointing such Defeasance Agent and the document setting forth such
Defeasance Agent's rights and responsibilities;
58
<PAGE>
(b) The Defeasance Agent shall provide verification to the Trustee
acknowledging receipt of sufficient money and/or U. S. Government
Obligations to meet the applicable conditions set forth in this Section
11.05.
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
----------------------------------------
OFFICERS AND DIRECTORS
----------------------
SECTION 12.01. Indenture and Securities Solely Corporate Obligations.
No recourse for the payment of the principal of or premium, if any, or
interest on any Security, or for any claim based thereon or otherwise in respect
thereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in this Indenture, or in any Security, or because of the creation of
any indebtedness represented thereby, shall be had against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company or of any successor Person to the Company, either directly or through
the Company or any successor Person to the Company, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise; it being expressly understood that all such liability is
hereby expressly waived and released as a condition of, and as a consideration
for, the execution of this Indenture and the issue of the Securities.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
------------------------
SECTION 13.01. Successors.
All the covenants, stipulations, promises and agreements in this Indenture
contained by the Company shall bind its successors and assigns whether so
expressed or not.
SECTION 13.02. Official Acts by Successor Corporation.
Any act or proceeding by any provision of this Indenture authorized or
required to be done or performed by any board, committee or officer of the
Company shall and may be done and performed with like force and effect by the
like board, committee or officer of any corporation that shall at the time be
the lawful sole successor of the Company.
SECTION 13.03. Surrender of Company Powers.
The Company by instrument in writing executed by authority of 2/3 (two-
thirds) of its Board of Directors and delivered to the Trustee may surrender any
of the powers reserved to the Company,
59
<PAGE>
and thereupon such power so surrendered shall terminate both as to the Company,
as the case may be, and as to any successor Person.
SECTION 13.04. Addresses for Notices, etc.
Any notice or demand which by any provision of this Indenture is required
or permitted to be given or served by the Trustee or by the holders of
Securities on the Company may be given or served by being deposited postage
prepaid by first class mail, registered or certified mail, overnight courier
service or conformed telecopy addressed (until another address is filed by the
Company with the Trustee for the purpose) to the Company at 1000 Louisiana,
Suite 5800, Houston, Texas 77002 Attention: Chief Financial Officer. Any
notice, direction, request or demand by any Securityholder to or upon the
Trustee shall be deemed to have been sufficiently given or made, for all
purposes, if given or made in writing at the office of the Trustee, Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890, Attention:
Corporate Trust Administration (unless another address is provided by the
Trustee to the Company for such purpose). Any notice or communication to a
Securityholder shall be mailed by first class mail to his or her address shown
on the register kept by the Security Registrar.
SECTION 13.05. GOVERNING LAW.
THIS INDENTURE AND EACH SECURITY SHALL BE DEEMED TO BE A CONTRACT MADE
UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE.
SECTION 13.06. Evidence of Compliance with Conditions Precedent.
Upon any application or request by the Company to the Trustee to take any
action under any of the provisions of this Indenture, the Company shall furnish
to the Trustee an Officers' Certificate stating that in the opinion of the
signers all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with and an Opinion of
Counsel stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.
Each certificate or opinion provided for in this Indenture and delivered to
the Trustee with respect to compliance with a condition or covenant provided for
in this Indenture (except certificates delivered pursuant to Section 3.05) shall
include (1) a statement that the Person making such certificate or opinion has
read such covenant or condition; (2) a brief statement as to the nature and
scope of the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; (3) a statement that, in the
opinion of such Person, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and (4) a statement as to whether
or not, in the opinion of such person, such condition or covenant has been
complied with.
60
<PAGE>
SECTION 13.07. Business Days.
In any case where the date of payment of principal of or premium, if any,
or interest on the Securities will not be a Business Day, the payment of such
principal of or premium, if any, or interest on the Securities need not be made
on such date but may be made on the next succeeding Business Day, with the same
force and effect as if made on the date of payment and no interest shall accrue
for the period from and after such date, except that if such next succeeding
Business Day falls in the next succeeding calendar year, then such payment shall
be made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date.
SECTION 13.08. Trust Indenture Act to Control.
If and to the extent that any provision of this Indenture limits, qualifies
or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the
Trust Indenture Act of 1939, such imposed duties shall control.
SECTION 13.09. Table of Contents, Headings, etc.
The table of contents and the titles and headings of the articles and
sections of this Indenture have been inserted for convenience of reference only,
are not to be considered a part hereof, and shall in no way modify or restrict
any of the terms or provisions hereof.
SECTION 13.10. Execution in Counterparts.
This Indenture may be executed in any number of counterparts, each of which
shall be an original, but such counterparts shall together constitute but one
and the same instrument.
SECTION 13.11. Separability.
In case any one or more of the provisions contained in this Indenture or in
the Securities shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Indenture or of the Securities,
but this Indenture and the Securities shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein or therein.
SECTION 13.12. Assignment.
The Company will have the right at all times to assign any of its
respective rights or obligations under this Indenture to a direct or indirect
wholly owned Subsidiary of the Company; provided that, in the event of any such
assignment, the Company will remain liable for all such obligations. Subject to
the foregoing, the Indenture is binding upon and inures to the benefit of the
61
<PAGE>
parties thereto and their respective successors and assigns. This Indenture may
not otherwise be assigned by the parties thereto.
SECTION 13.13. Acknowledgment of Rights.
The Company acknowledges that, with respect to any Securities held by NGC
Corporation Capital Trust or a trustee of such trust, if the Property Trustee of
such Trust fails to enforce its rights under this Indenture as the holder of the
Securities held as the assets of NGC Corporation Capital Trust any holder of
Capital Securities may, to the full extent permitted by law, institute legal
proceedings directly against the Company to enforce such Property Trustee's
rights under this Indenture without first instituting any legal proceedings
against such Property Trustee or any other person or entity. Notwithstanding
the foregoing, if an Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay principal of or
premium, if any, or interest on the Securities when due, the Company
acknowledges that a holder of Capital Securities may directly institute a
proceeding for enforcement of payment to such holder of the principal of or
premium, if any, or interest on the Securities having a principal amount equal
to the aggregate liquidation amount of the Capital Securities of such holder on
or after the respective due date specified in the Securities.
ARTICLE XIV
REDEMPTION OF SECURITIES
------------------------
SECTION 14.01. Special Event Redemption.
If, at any time, a Special Event has occurred and is continuing then,
notwithstanding Section 14.02(a), the Company shall have the right but not the
obligation, at any time within 90 days following the occurrence of such Special
Event, upon (i) not less than 45 days' written notice to the Trustee and (ii)
not less than 30 days' nor more than 60 days' written notice to the
Securityholders, to redeem the Securities, in whole (but not in part), at the
Special Event Redemption Price. Following a Special Event, if the Company wishes
to exercise its right of redemption pursuant to this Section 14.01, the Company
shall take such action as is necessary to promptly determine the Special Event
Redemption Price, including without limitation the appointment by the Company of
a Reference Treasury Dealer. The Company shall provide the Trustee with written
notice of the Special Event Redemption Price promptly after the calculation
thereof, which notice shall include any calculation made by the Reference
Treasury Dealer in connection with the determination of the Special Event
Redemption Price. The Special Event Redemption Price shall be paid prior to
12:00 noon, New York City time, on the date of such redemption or such earlier
time as the Company determines, provided that the Company shall deposit with the
Trustee an amount sufficient to pay the Special Event Redemption Price by 10:00
a.m., New York City time, on the date such Special Event Redemption Price is to
be paid.
SECTION 14.02. Optional Redemption by Company.
62
<PAGE>
Subject to the provisions of this Article XIV, the Company shall have the
right to redeem the Securities, in whole or in part, from time to time, at a
redemption price equal to the Optional Redemption Price.
If the Securities are only partially redeemed pursuant to this Section
14.02, the Securities to be redeemed shall be selected on a pro rata basis not
more than 60 days prior to the date fixed for redemption from the outstanding
Securities not previously called for redemption; provided, however, that with
respect to Securityholders that would be required to hold Securities with an
aggregate principal amount of less than $100,000 but more than an aggregate
principal amount of zero as a result of such pro rata redemption, the Company
shall redeem Securities of each such Securityholder so that after such
redemption such Securityholder shall hold Securities either with an aggregate
principal amount of at least $100,000 or such Securityholder no longer holds any
Securities and shall use such method (including, without limitation, by lot) as
the Company shall deem fair and appropriate; provided, further, that any such
proration may be made on the basis of the aggregate principal amount of
Securities held by each Securityholder and may be made by making such
adjustments as the Company deems fair and appropriate in order that only
Securities in denominations of $1,000 or integral multiples thereof shall be
redeemed. The Optional Redemption Price shall be paid prior to 12:00 noon, New
York City time, on the date of such redemption or at such earlier time as the
Company determines; provided that the Company shall deposit with the Trustee an
amount sufficient to pay the Optional Redemption Price by 10:00 a.m., New York
City time, on the date such Optional Redemption Price is to be paid.
SECTION 14.03. No Sinking Fund.
The Securities are not entitled to the benefit of any sinking fund.
SECTION 14.04. Notice of Redemption; Selection of Securities.
In case the Company shall desire to exercise the right to redeem all, or,
as the case may be, any part of the Securities in accordance with their terms,
it shall fix a date for redemption and shall mail a notice of such redemption at
least 30 and not more than 60 days prior to the date fixed for redemption to the
holders of Securities so to be redeemed as a whole or in part at their last
addresses as the same appear on the Security Register. Such mailing shall be by
first class mail. The notice if mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the holder
receives such notice. In any case, failure to give such notice by mail or any
defect in the notice to the holder of any Security designated for redemption as
a whole or in part shall not affect the validity of the proceedings for the
redemption of any other Security.
Each such notice of redemption shall specify the CUSIP number of the
Securities to be redeemed, the date fixed for redemption, the redemption price
at which the Securities are to be redeemed (or the method by which such
redemption price is to be calculated), the place or places of
63
<PAGE>
payment that payment will be made upon presentation and surrender of the
Securities, that interest accrued to the date fixed for redemption will be paid
as specified in said notice, and that on and after said date interest thereon or
on the portions thereof to be redeemed will cease to accrue. If less than all
the Securities are to be redeemed the notice of redemption shall specify the
numbers of the Securities to be redeemed. In case any Security is to be redeemed
in part only, the notice of redemption shall state the portion of the principal
amount thereof to be redeemed and shall state that on and after the date fixed
for redemption, upon surrender of such Security, a new Security or Securities in
principal amount equal to the unredeemed portion thereof will be issued.
By 10:00 a.m. New York City time on the redemption date specified in the
notice of redemption given as provided in this Section, the Company will deposit
with the Trustee or with one or more paying agents an amount of money sufficient
to redeem on the redemption date all the Securities so called for redemption at
the appropriate Redemption Price, together with accrued interest to the date
fixed for redemption.
The Company will give the Trustee notice not less than 45 days prior to the
redemption date as to the aggregate principal amount of Securities to be
redeemed and the Trustee shall select, in such manner as in its sole discretion
it shall deem appropriate and fair, the Securities or portions thereof (in
integral multiples of $1,000, except as otherwise set forth in the applicable
form of Security) to be redeemed.
SECTION 14.05. Payment of Securities Called for Redemption.
If notice of redemption has been given as provided in Section 14.04, the
Securities or portions of Securities with respect to which such notice has been
given shall become due and payable on the date and at the place or places stated
in such notice at the applicable Redemption Price, together with interest
accrued to the date fixed for redemption (subject to the rights of holders of
Securities on the close of business on a regular record date in respect of an
Interest Payment Date occurring on or prior to the redemption date), and on and
after said date (unless the Company shall default in the payment of such
Securities at the Redemption Price, together with interest accrued to said date)
interest (including Compounded Interest and Additional Sums, if any) and
Liquidated Damages, if any, on the Securities or portions of Securities so
called for redemption shall cease to accrue. On presentation and surrender of
such Securities at a place of payment specified in said notice, the said
Securities or the specified portions thereof shall be paid and redeemed by the
Company at the applicable Redemption Price, together with interest (including
Compounded Interest and Additional Sums, if any) and Liquidated Damages, if any,
accrued thereon to the date fixed for redemption (subject to the rights of
holders of Securities on the close of business on a regular record date in
respect of an Interest Payment Date occurring on or prior to the redemption
date).
Upon presentation of any Security redeemed in part only, the Company shall
execute and the Trustee shall authenticate and make available for delivery to
the holder thereof, at the expense of the Company, a new Security or Securities
of authorized denominations, in principal amount equal to the unredeemed portion
of the Security so presented.
64
<PAGE>
ARTICLE XV
SUBORDINATION OF SECURITIES
---------------------------
SECTION 15.01. Agreement to Subordinate.
The Company covenants and agrees, and each holder of Securities issued
hereunder likewise covenants and agrees, that the Securities shall be issued
subject to the provisions of this Article XV; and each holder of a Security,
whether upon original issue or upon transfer or assignment thereof, accepts and
agrees to be bound by such provisions.
The payment by the Company of the principal of, premium, if any, and
interest (including Compounded Interest and Additional Sums, if any) and
Liquidated Damages, if any, on all Securities issued hereunder shall, to the
extent and in the manner hereinafter set forth, be subordinated and junior in
right of payment to all Senior Indebtedness, whether outstanding at the date of
this Indenture or thereafter incurred.
No provision of this Article XV shall prevent the occurrence of any Default
or Event of Default hereunder.
SECTION 15.02. Default on Senior Indebtedness.
In the event and during the continuation of any default by the Company in
the payment of principal, premium, interest or any other payment due on any
Senior Indebtedness, or in the event that the maturity of any Senior
Indebtedness has been accelerated because of a default, then, in either case, no
payment shall be made by the Company with respect to the principal (including
redemption payments) of or premium, if any, or interest on the Securities until
such default shall have been cured or waived in writing or shall have ceased to
exist or such Senior Indebtedness shall have been discharged or paid in full.
In the event of the acceleration of the maturity of the Securities, then no
payment shall be made by the Company with respect to the principal (including
redemption payments) of or premium, if any, or interest on the Securities until
the holders of all Senior Indebtedness outstanding at the time of such
acceleration shall receive payment in full of such Senior Indebtedness
(including any amounts due upon acceleration).
In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee or any Securityholder when such payment is prohibited by
the preceding paragraphs of this Section 15.02, such payment shall be held in
trust for the benefit of, and shall be paid over or delivered to, the holders of
Senior Indebtedness or their respective representatives, or to the trustee
65
<PAGE>
or trustees under any indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests may appear.
SECTION 15.03. Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Company or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, to creditors
upon any dissolution or winding-up or liquidation or reorganization of the
Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all Senior Indebtedness of the Company shall
first be paid in full, or payment thereof provided for in money in accordance
with its terms, before any payment is made by the Company on account of the
principal (and premium, if any) or interest (including Compounded Interest and
Additional Sums, if any) and Liquidated Damages, if any, on the Securities; and
upon any such dissolution or winding-up or liquidation or reorganization, any
payment by the Company, or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to which the Securityholders
or the Trustee would be entitled to receive from the Company, except for the
provisions of this Article XV, shall be paid by the Company or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making such
payment or distribution, or by the Securityholders or by the Trustee under the
Indenture if received by them or it, directly to the holders of Senior
Indebtedness of the Company (pro rata to such holders on the basis of the
respective amounts of Senior Indebtedness held by such holders, as calculated by
the Company) or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing such
Senior Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay all such Senior Indebtedness in full, in
money in accordance with its terms, after giving effect to any concurrent
payment or distribution to or for the holders of such Senior Indebtedness,
before any payment or distribution is made to the Securityholders or to the
Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee or any Securityholder before all Senior Indebtedness is paid in full, or
provision is made for such payment in money in accordance with its terms, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, as their respective interests may appear, as calculated by
the Company, for application to the payment of all Senior Indebtedness remaining
unpaid to the extent necessary to pay all such Senior Indebtedness in full in
money in accordance with its terms, after giving effect to any concurrent
payment or distribution to or for the benefit of the holders of such Senior
Indebtedness.
For purposes of this Article XV only, the words "assets of the Company of
any kind or character, whether cash, property or securities" shall not be deemed
to include shares of stock of the
66
<PAGE>
Company as reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this Article
XV with respect to the Securities to the payment of Senior Indebtedness that may
at the time be outstanding; provided that (i) such Senior Indebtedness is
assumed by the new corporation, if any, resulting from any such reorganization
or readjustment, and (ii) the rights of the holders of such Senior Indebtedness
are not, without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of the Company with, or the merger of the
Company into, another Person or the liquidation or dissolution of the Company
following the sale, conveyance, transfer or lease of its property as an
entirety, or substantially as an entirety, to another Person upon the terms and
conditions provided for in Article X of this Indenture shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 15.03 if such other Person shall, as a part of such consolidation,
merger, sale, conveyance, transfer or lease, comply with the conditions stated
in Article X of this Indenture. Nothing in Section 15.02 or in this Section
15.03 shall apply to claims of, or payments to, the Trustee under or pursuant to
Section 6.06 of this Indenture.
Nothing contained in this Article XV or elsewhere in this Indenture or in
the Securities is in tended to or shall impair, as between the Company, its
creditors other than the holders of Senior Indebtedness of the Company, and the
holders of the Securities, the obligation of the Company, which is absolute and
unconditional, to pay to the holders of the Securities the principal of (and
premium, if any) and interest (including Compounded Interest and Additional
Sums, if any) and Liquidated Damages, if any, on the Securities as and when the
same shall become due and payable in accordance with their terms, or is intended
to or shall affect the relative rights of the holders of the Securities and
creditors of the Company, as the case may be, other than the holders of Senior
Indebtedness of the Company, as the case may be, nor shall anything herein or
therein prevent the occurrence of an Event of Default under Article V or prevent
the Trustee or the holder of any Security from exercising all remedies otherwise
permitted by applicable law upon the occurrence of a Default or an Event of
Default under the Indenture, subject to the rights, if any, under this Article
XV of the holders of such Senior Indebtedness in respect of cash, property or
securities of the Company, as the case may be, received upon the exercise of any
such remedy.
SECTION 15.04. Subrogation.
Subject to the payment in full of all Senior Indebtedness, the rights of
the Securityholders shall be subrogated to the rights of the holders of such
Senior Indebtedness to receive payments or distributions of cash, property or
securities of the Company, as the case may be, applicable to such Senior
Indebtedness until the principal of (and premium, if any) and interest on the
Securities shall be paid in full; and, for the purposes of such subrogation, no
payments or distributions to the holders of such Senior Indebtedness of any
cash, property or securities to which the Securityholders or the Trustee would
be entitled except for the provisions of this Article XV, and no payment over
pursuant to the provisions of this Article XV to or for the benefit of the
holders of such Senior Indebtedness by Securityholders or the Trustee, shall, as
between the Company, its creditors other than holders
67
<PAGE>
of Senior Indebtedness of the Company, and the holders of the Securities, be
deemed to be a payment by the Company to or on account of such Senior
Indebtedness. It is understood that the provisions of this Article XV are and
are intended solely for the purposes of defining the relative rights of the
holders of the Securities, on the one hand, and the holders of such Senior
Indebtedness on the other hand.
SECTION 15.05. Trustee to Effectuate Subordination.
Each Securityholder by such Securityholder's acceptance thereof authorizes
and directs the Trustee on such Securityholder's behalf to take such action as
may be necessary or appropriate to effectuate the subordination provided in this
Article XV and appoints the Trustee such Securityholder's attorney-in-fact for
any and all such purposes.
SECTION 15.06. Notice by the Company.
The Company shall give prompt written notice to a Responsible Officer of
the Trustee of any fact known to the Company that would prohibit the making of
any payment of monies to or by the Trustee in respect of the Securities pursuant
to the provisions of this Article XV. Notwithstanding the provisions of this
Article XV or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts that would prohibit the
making of any payment of monies to or by the Trustee in respect of the
Securities pursuant to the provisions of this Article XV, unless and until a
Responsible Officer of the Trustee shall have received written notice thereof
from the Company or a holder or holders of Senior Indebtedness or from any
trustee therefor; and before the receipt of any such written notice, the
Trustee, subject to the provisions of Article VI of this Indenture, shall be
entitled in all respects to assume that no such facts exist; provided, however,
that if the Trustee shall not have received the notice provided for in this
Section 15.06 at least two Business Days prior to the date upon which by the
terms hereof any money may become payable for any purpose (including, without
limitation, the payment of the principal of (or premium, if any) or interest
(including Compounded Interest and Additional Sums, if any) and Liquidated
Damages, if any, on any Security), then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to
receive such money and to apply the same to the purposes for which they were
received, and shall not be affected by any notice to the contrary that may be
received by it within two Business Days prior to such date.
The Trustee, subject to the provisions of Article VI of this Indenture,
shall be entitled to conclusively rely on the delivery to it of a written notice
by a Person representing himself to be a holder of Senior Indebtedness of the
Company (or a trustee on behalf of such holder), as the case may be, to
establish that such notice has been given by a holder of such Senior
Indebtedness or a trustee on behalf of any such holder or holders. In the event
that the Trustee determines in good faith that further evidence is required with
respect to the right of any Person as a holder of such Senior Indebtedness to
participate in any payment or distribution pursuant to this Article XV, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the
68
<PAGE>
amount of such Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article XV, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
Upon any payment or distribution of assets of the Company referred to in
this Article XV, the Trustee and the Securityholders shall be entitled to rely
upon any order or decree entered by any court of competent jurisdiction in which
such insolvency, bankruptcy, receivership, liquidation, reorganization,
dissolution, winding up or similar case or proceeding is pending, or a
certificate of the trustee in bankruptcy, liquidating trustee, custodian,
receiver, assignee for the benefit of creditors, agent or other person making
such payment or distribution, delivered to the Trustee or to the
Securityholders, for the purpose of ascertaining the persons entitled to
participate in such payment or distribution, the holders of Senior Indebtedness
and other indebtedness of the Company, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article XV.
SECTION 15.07. Rights of the Trustee; Holders of Senior Indebtedness.
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article XV in respect of any Senior Indebtedness at any time
held by it, to the same extent as any other holder of Senior Indebtedness, and
nothing in this Indenture shall deprive the Trustee of any of its rights as such
holder.
With respect to the holders of Senior Indebtedness of the Company, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article XV, and no implied
covenants or obligations with respect to the holders of such Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of such Senior Indebtedness and,
subject to the provisions of Article VI of this Indenture, the Trustee shall not
be liable to any holder of such Senior Indebtedness if it shall pay over or
deliver to Securityholders, the Company or any other Person money or assets to
which any holder of such Senior Indebtedness shall be entitled by virtue of this
Article XV or otherwise.
Nothing in this Article XV shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 6.06.
SECTION 15.08. Subordination May Not Be Impaired.
No right of any present or future holder of any Senior Indebtedness of the
Company to enforce subordination as herein provided shall at any time in any way
be prejudiced or impaired by any act or failure to act on the part of the
Company, as the case may be, or by any act or failure to
69
<PAGE>
act, in good faith, by any such holder, or by any noncompliance by the Company,
as the case may be, with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof that any such holder may have or otherwise
be charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness of the Company may, at any time and from time to
time, without the consent of or notice to the Trustee or the Securityholders,
without incurring responsibility to the Securityholders and without impairing or
releasing the subordination provided in this Article XV or the obligations
hereunder of the holders of the Securities to the holders of such Senior
Indebtedness, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, such
Senior Indebtedness, or otherwise amend or supplement in any manner such Senior
Indebtedness or any instrument evidencing the same or any agreement under which
such Senior Indebtedness is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing such
Senior Indebtedness; (iii) release any Person liable in any manner for the
collection of such Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company, as the case may be, and any other
Person.
SECTION 15.09. Article Applicable to Paying Agents.
In case at any time any paying agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article shall in such case (unless the context otherwise requires)
be construed as extending to and including such paying agent within its meaning
as fully for all intents and purposes as if such paying agent were named in this
Article in addition to or in place of the Trustee.
SECTION 15.10. Trust Moneys Not Subordinated.
Notwithstanding anything contained herein to the contrary, payments from
money or the proceeds of U.S. Government Obligations held in trust under Section
11.02 of this Indenture by the Trustee for the payment of principal of and
interest on the Securities shall not be subordinated to the prior payment of any
Senior Indebtedness or subject to the restrictions set forth in this Article XV,
and none of the Securityholders shall be obligated to pay over any such amount
to the Company or any holder of Senior Indebtedness of the Company or any other
creditor of the Company.
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD
------------------------------------
SECTION 16.01. Extension of Interest Payment Period.
So long as no Event of Default has occurred and is continuing, the Company
shall have the right, at any time and from time to time during the term of the
Securities, to defer payments of
70
<PAGE>
interest by extending the interest payment period of such Securities for a
period not exceeding 10 consecutive semi-annual periods, including the first
such semi-annual period during such extension period (the "Extended Interest
Payment Period"), during which Extended Interest Payment Period no interest
shall be due and payable; provided that no Extended Interest Payment Period
shall end on a date other than an Interest Payment Date or extend beyond the
Maturity Date. To the extent permitted by applicable law, interest, the payment
of which has been deferred because of the extension of the interest payment
period pursuant to this Section 16.01, will bear interest thereon at the Coupon
Rate compounded semi-annually for each semi-annual period of the Extended
Interest Payment Period ("Compounded Interest"). At the end of the Extended
Interest Payment Period, the Company shall pay all interest accrued and unpaid
on the Securities, including any Additional Sums and Compounded Interest
(together, "Deferred Interest") that shall be payable to the holders of the
Securities in whose names the Securities are registered in the Security Register
on the first record date preceding the end of the Extended Interest Payment
Period. Before the termination of any Extended Interest Payment Period, the
Company may further defer payments of interest by further extending such period;
provided that such period, together with all such previous and further
extensions within such Extended Interest Payment Period, shall not exceed 10
consecutive semi-annual periods, including the first such semi-annual period
during such Extended Interest Payment Period, end on a date other than an
Interest Payment Date or extend beyond the Maturity Date of the Securities. Upon
the termination of any Extended Interest Payment Period and the payment of all
Deferred Interest then due, the Company may commence a new Extended Interest
Payment Period, subject to the foregoing requirements. No interest shall be due
and payable during an Extended Interest Payment Period, except at the end
thereof, but the Company may prepay at any time all or any portion of the
interest accrued during an Extended Interest Payment Period.
SECTION 16.02. Notice of Extension.
(a) If the Property Trustee is the only registered holder of the
Securities at the time the Company selects an Extended Interest Payment
Period, the Company shall give written notice to the Administrative
Trustees, the Property Trustee and the Trustee of its selection of such
Extended Interest Payment Period five Business Days before the earlier of
(i) the next succeeding date on which Distributions on the Trust Securities
issued by NGC Corporation Capital Trust are payable, or (ii) the date the
Trust is required to give notice of the record date, or the date such
Distributions are payable, to any national securities exchange or to
holders of the Capital Securities issued by the Trust, but in any event at
least five Business Days before such record date.
(b) If the Property Trustee is not the only holder of the Securities
at the time the Company selects an Extended Interest Payment Period, the
Company shall give the holders of the Securities and the Trustee written
notice of its selection of such Extended Interest Payment Period at least
10 Business Days before the earlier of (i) the next succeeding Interest
Payment Date, or (ii) the date the Company is required to give notice of
the record or payment date of such interest payment to any national
securities exchange.
71
<PAGE>
(c) The semi-annual period in which any notice is given pursuant to
paragraphs (a) or (b) of this Section 16.02 shall be counted as one of the
10 semi-annual periods permitted in the maximum Extended Interest Payment
Period permitted under Section 16.01.
The First National Bank of Chicago hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions hereinabove set
forth.
72
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed by their respective officers thereunto duly authorized, as of
the day and year first above written.
NGC CORPORATION
By:
Name:
Title:
THE FIRST NATIONAL BANK OF
CHICAGO, as Trustee
By:
Name:
Title:
73
<PAGE>
EXHIBIT A
---------
(FORM OF FACE OF SECURITY)
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. EACH
PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF REPRESENTS,
ACKNOWLEDGES AND AGREES FOR THE BENEFIT OF THE COMPANY, THAT: IT HAS ACQUIRED A
"RESTRICTED SECURITY" WHICH HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE DATE
(THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER
OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR
ANY "AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF THIS SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT
TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1),
(2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT
A-1
<PAGE>
TO THE RIGHT OF THE COMPANY PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i)
PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO THE COMPANY,
AND (ii) PURSUANT TO CLAUSE (D) OR (E), TO REQUIRE THAT A CERTIFICATE OF
TRANSFER IN THE FORM APPEARING ON THE REVERSE OF THIS SECURITY IS COMPLETED AND
DELIVERED BY THE TRANSFEREE TO THE COMPANY. SUCH HOLDER FURTHER AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THE SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING
AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000 (100 SECURITIES). ANY
SUCH TRANSFER OF SECURITIES IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF
LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.
ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH SECURITIES FOR
ANY PURPOSE, INCLUDING BUT NOT LIMITED TO THE RECEIPT OF PRINCIPAL, PREMIUM (IF
ANY) OR INTEREST OF SUCH SECURITIES, AND SUCH TRANSFEREE SHALL BE DEEMED TO HAVE
NO INTEREST WHATSOEVER IN SUCH SECURITIES.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT OR OTHER
PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA") OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR
AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY SUCH
PLAN'S INVESTMENT IN THE ENTITY AND IS NOT PURCHASING OR HOLDING SUCH SECURITIES
ON BEHALF OF OR WITH "PLAN ASSETS" OR (ii) IT IS ELIGIBLE FOR THE EXEMPTIVE
RELIEF AVAILABLE UNDER PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14 WITH RESPECT TO
SUCH PURCHASE AND HOLDING.
A-2
<PAGE>
No._____________
NGC CORPORATION
SERIES A 8.316% SUBORDINATED DEFERRABLE INTEREST DEBENTURE
DUE JUNE 1, 2027
NGC Corporation, a Delaware corporation (the "Company", which term includes
any successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to The First National Bank of Chicago, as
Property Trustee for NGC Corporation Capital Trust I or registered assigns, the
principal sum of TWO HUNDRED SIX MILLION TWO HUNDRED THOUSAND DOLLARS
($206,200,000) on June 1, 2027 (the "Maturity Date"), unless previously
redeemed, and to pay interest on the outstanding principal amount hereof from
May 28, 1997, or from the most recent interest payment date (each such date, an
"Interest Payment Date") to which interest has been paid or duly provided for,
semi-annually (subject to deferral as set forth herein) in arrears on June 1 and
December 1 of each year, commencing December 1, 1997, at the rate of 8.316% per
annum until the principal hereof shall have become due and payable, and on any
overdue principal and premium, if any, and (without duplication and to the
extent that payment of such interest is enforceable under applicable law) on any
overdue installment of interest at the same rate per annum compounded semi-
annually. The amount of interest payable on any Interest Payment Date shall be
computed on the basis of a 360-day year of twelve 30-day months and, for any
period less than a full calendar month, the number of days elapsed in such
month. In the event that any date on which the principal of (or premium, if
any) or interest on this Security is payable is not a Business Day, then the
payment payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay), except that if such next succeeding Business Day falls in the next
calendar year, then such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on the date
such payment is otherwise required. Pursuant to the Indenture, in certain
circumstances the Company will be required to pay Additional Sums and
Compounded Interest (each as defined in the Indenture) with respect to this
Security. Pursuant to the Registration Rights Agreement, in certain limited
circumstances the Company will be required to pay Liquidated Damages (as defined
in the Registration Rights Agreement) with respect to this Security.
The interest installment so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in the Indenture, be paid to
the Person in whose name this Security (or one or more Predecessor Securities,
as defined in said Indenture) is registered at the close of business on the
regular record date for such interest installment, which shall be at the close
of business on the 15th day of the month preceding the month in which the
relevant interest payment date falls. Any such interest installment not
punctually paid or duly provided for shall forthwith cease to be payable to the
holders on such regular record date and may be paid to the Person in whose name
this Security (or one or more Predecessor Securities) is registered at the close
of business on a special record date to be fixed by the Trustee for the payment
of such defaulted
A-3
<PAGE>
interest, notice whereof shall be given to the holders of Securities not less
than 10 days prior to such special record date, or may be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in the Indenture.
The principal of (and premium, if any) and interest (including Compounded
Interest and Additional Sums, if any) and Liquidated Damages, if any, on this
Security shall be payable at the office or agency of the Trustee maintained for
that purpose in any coin or currency of the United States of America that at the
time of payment is legal tender for payment of public and private debts;
provided, however, that, payment of interest may be made at the option of the
Company by (i) check mailed to the holder at such address as shall appear in the
Security Register or (ii) by transfer to an account maintained by the Person
entitled thereto; provided that proper written transfer instructions have been
received by the relevant record date. Notwithstanding the foregoing, so long as
the Holder of this Security is the Property Trustee, the payment of the
principal of (and premium, if any) and interest (including Compounded Interest
and Additional Sums, if any) and Liquidated Damages, if any, on this Security
will be made at such place and to such account as may be designated by the
Property Trustee.
The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, subordinate and junior in right of payment to the prior payment
in full of all Senior Indebtedness, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his or her behalf to take such action as
may be necessary or appropriate to acknowledge or effectuate the subordination
so provided and (c) appoints the Trustee his or her attorney-in-fact for any and
all such purposes. Each holder hereof, by his or her acceptance hereof, hereby
waives all notice of the acceptance of the subordination provisions contained
herein and in the Indenture by each holder of Senior Indebtedness, whether now
outstanding or hereafter incurred, and waives reliance by each such holder upon
said provisions.
This Security shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.
The provisions of this Security are continued on the reverse side hereof
and such provisions shall for all purposes have the same effect as though fully
set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed and sealed.
Dated: May 28, 1997
A-4
<PAGE>
NGC CORPORATION
By: ____________________________
Name:
Title:
Attest:
By: _______________________
Name:
Title:
A-5
<PAGE>
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned
Indenture.
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By____________________
Authorized Signatory
A-6
<PAGE>
(FORM OF REVERSE OF SECURITY)
This Security is one of the Securities of the Company (herein sometimes
referred to as the "Securities"), specified in the Indenture, all issued or to
be issued under and pursuant to an Indenture, dated as of May 28, 1997 (the
"Indenture"), duly executed and delivered between the Company and The First
National Bank of Chicago, as Trustee (the "Trustee"), to which Indenture
reference is hereby made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the Company and
the holders of the Securities.
Upon the occurrence and continuation of a Special Event at any time, the
Company shall have the right, at any time within 90 days following the
occurrence of such Special Event, to redeem this Security in whole (but not in
part) at the Special Event Redemption Price. "Special Event Redemption Price"
shall mean, with respect to any redemption of the Securities following a Special
Event, an amount in cash equal to the Make-Whole Amount. The "Make-Whole
Amount" shall be equal to the greater of (a) 100% of the principal amount of the
Securities or (b) the sum, as determined by the Reference Treasury Dealer, of
the present values of the remaining scheduled payments of principal and interest
on the Securities, discounted to the date of redemption on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate, plus, in each case, accrued and unpaid interest thereon
(including Additional Sums and Liquidated Damages, if any) to the date of
redemption.
"Adjusted Treasury Rate" means, with respect to any redemption date, the
rate per annum equal to (i) the yield, under the heading which represents the
average for the immediately prior week, appearing in the most recently published
statistical release designated "H.15(519)" or any successor publication which is
published weekly by the Federal Reserve and which establishes yields on actively
traded United States Treasury securities adjusted to constant maturity under the
caption "Treasury Constant Maturities," for the maturity date corresponding to
the Maturity Date (if no maturity date is within three months before or after
the Maturity Date, yields for the two published maturities most closely
corresponding to the Maturity Date shall be interpolated and the Adjusted
Treasury Rate shall be interpolated or extrapolated from such yields on a
straight-line basis, rounding to the nearest month) or (ii) if such release (or
any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semiannual equivalent yield to maturity of the Comparable Treasury Issue,
assuming a price for the Comparable Treasury Issue (expressed as a percentage of
its principal amount) equal to the Comparable Treasury Price for such redemption
date plus (i) 1.03% if such redemption date occurs prior to June 1, 1998 and
(ii) 0.50% in all other cases.
In addition, the Company shall have the right to redeem this Security, in
whole or in part, at any time (an "Optional Redemption"), at a redemption price
(the "Optional Redemption Price") equal to the greater of (i) 100% of the
principal amount of the Securities to be so redeemed plus accrued and unpaid
interest thereon (including Additional Sums and Liquidated Damages, if any) to
the date of redemption and (ii) the sum of the present values of the remaining
scheduled payments of
A-7
<PAGE>
principal of the Securities to be so redeemed and interest thereon (including
Additional Sums and Liquidated Damages, if any) discounted to the date of
redemption, on a semi-annual basis (assuming a 360-day year consisting of twelve
30-day months), at the Treasury Rate (as defined herein) plus 25 basis points
plus accrued interest thereon to the date of redemption.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Reference Treasury Dealer as having a maturity comparable to the
remaining term of the Securities to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such Securities.
"Treasury Rate" means, with respect to any redemption date, the rate
per annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Comparable Treasury Price" means, with respect to any redemption
date, (i) the average of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) on the
third business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such business day, the average of
the Reference Treasury Dealer Quotations for such redemption date.
"Reference Treasury Dealer Quotations" means, with respect to the
Reference Treasury Dealer and any redemption date, the average, as determined by
the Debenture Trustee, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) quoted in
writing to the Debenture Trustee by the Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third business day preceding such redemption date.
"Reference Treasury Dealer" means Lehman Brothers Inc. and its
successors; provided however, that if Lehman Brothers Inc. shall cease to be a
primary U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer"), the Company shall substitute therefor another Primary Treasury Dealer.
The Optional Redemption Price or the Special Event Redemption Price, as the
case requires, shall be paid prior to 12:00 noon, New York City time, on the
date of such redemption or at such earlier time as the Company determines;
provided, that the Company shall deposit with the Trustee an amount sufficient
to pay the applicable Redemption Price by 10:00 a.m., New York City time, on the
date such Redemption Price is to be paid. Any redemption pursuant to this
paragraph will be
A-8
<PAGE>
made upon not less than 30 days nor more than 60 days notice. If the Securities
are only partially redeemed by the Company pursuant to an Optional Redemption,
the particular Securities to be redeemed shall be selected on a pro rata basis
not more than 60 days prior to the date fixed for redemption from the
outstanding Securities not previously called for redemption; provided, however,
that with respect to Securityholders that would be required to hold Securities
with an aggregate principal amount of less than $100,000 but more than an
aggregate principal amount of zero as a result of such pro rata redemption, the
Company shall redeem Securities of each such Securityholder so that after such
redemption such Securityholder shall hold Securities either with an aggregate
principal amount of at least $100,000 or such Securityholder no longer holds any
Securities and shall use such method (including, without limitation, by lot) as
the Company shall deem fair and appropriate; provided, further, that any such
proration may be made on the basis of the aggregate principal amount of
Securities held by each Securityholder thereof and may be made by making such
adjustments as the Company deems fair and appropriate in order that only
Securities in denominations of $1,000 or integral multiples thereof shall be
redeemed.
In the event of redemption of this Security in part only, a new Security or
Securities for the unredeemed portion hereof will be issued in the name of the
holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Securities may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions for satisfaction and discharge of the
entire indebtedness of this Security upon compliance by the Company with certain
conditions set forth in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of a majority in aggregate principal amount of
the Securities at the time outstanding, as defined in the Indenture, to execute
supplemental indentures for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Indenture or
of modifying in any manner the rights of the holders of the Securities;
provided, however, that no such supplemental indenture shall, without the
consent of each holder of Securities then outstanding and affected thereby, (i)
change the Maturity Date of any Securities, or reduce the principal amount
thereof, or reduce any amount payable on redemption thereof, or reduce the rate
or extend the time of payment of interest thereon (subject to Article XVI of the
Indenture), or make the principal of, or interest or premium on, the Securities
payable in any coin or currency other than U.S. dollars, or impair or affect the
right of any holder of Securities to institute suit for the payment thereof, or
(ii) reduce the aforesaid percentage of Securities, the holders of which are
required to consent to any such supplemental indenture. The Indenture also
contains provisions permitting the holders of a majority in aggregate principal
amount of the Securities at the time outstanding affected thereby, on behalf of
all of the holders of the Securities, to waive any past default in the
performance of any of
A-9
<PAGE>
the covenants contained in the Indenture, or established pursuant to the
Indenture, and its consequences, except a default in the payment of the
principal of or premium, if any, or interest on any of the Securities or a
default in respect of any covenant or provision under which the Indenture cannot
be modified or amended without the consent of each holder of Securities then
outstanding. Any such consent or waiver by the holder of this Security (unless
revoked as provided in the Indenture) shall be conclusive and binding upon such
Holder and upon all future holders and owners of this Security and of any
Security issued in exchange herefor or in place hereof (whether by registration
of transfer or otherwise), irrespective of whether or not any notation of such
consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest (including Compounded Interest and Additional Sums, if any) and
Liquidated Damages, if any, on this Security at the time and place and at the
rate and in the money herein prescribed.
So long as no Event of Default shall have occurred and be continuing, the
Company shall have the right, at any time and from time to time during the term
of the Securities, to defer payments of interest by extending the interest
payment period of such Securities for a period not exceeding 10 consecutive
semi-annual periods, including the first such semi-annual period during such
extension period, and not extending beyond the Maturity Date of the Securities
(an "Extended Interest Payment Period") or ending on a date other than an
Interest Payment Date, at the end of which period the Company shall pay all
interest then accrued and unpaid (together with interest thereon at the rate
specified for the Securities to the extent that payment of such interest is
enforceable under applicable law). Before the termination of any such Extended
Interest Payment Period, the Company may further defer payments of interest by
further extending such Extended Interest Payment Period; provided that such
Extended Interest Payment Period, together with all such previous and further
extensions within such Extended Interest Payment Period, (i) shall not exceed 10
consecutive semi-annual periods, including the first semi-annual period during
such Extended Interest Payment Period, (ii) shall not end on any date other than
an Interest Payment Date, and (iii) shall not extend beyond the Maturity Date of
the Securities. Upon the termination of any such Extended Interest Payment
Period and the payment of all accrued and unpaid interest and any additional
amounts then due, the Company may commence a new Extended Interest Payment
Period, subject to the foregoing requirements.
The Company has agreed that it will not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock (which includes common and
preferred stock) (other than (a) dividends or distributions in shares of, or
options, warrants or rights to subscribe for or purchase shares of, Common Stock
of the Company, (b) any declaration of a dividend in connection with the
implementation of a stockholder's rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (c) as a result of a reclassification of the
A-10
<PAGE>
Company's capital stock or the exchange or the conversion of one class or series
of the Company's capital stock, for another class or series of the Company's
capital stock, (d) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the exchange or conversion of such capital
stock or the security being exchanged or converted, and (e) purchases of Common
Stock related to the issuance of Common Stock or rights under any of the
Company's benefit plans for its directors, officers or employees or any of the
Company's dividend reinvestment plans) or (ii) make any payment of principal,
interest or premium, if any, on or repay or repurchase or redeem any debt
securities of the Company that rank pari passu with or junior in right of
payment to the Securities or (iii) make any guarantee payments with respect to
any guarantee (other than payments under the Capital Securities Guarantee) by
the Company of the debt securities of any Subsidiary of the Company if such
guarantee ranks pari passu or junior in right of payment to the Securities if at
such time (1) there shall have occurred any event of which the Company has
actual knowledge that (a) with the giving of notice or the lapse of time, or
both, would be, an Event of Default and (b) in respect of which the Company
shall not have taken reasonable steps to cure, (2) an Event of Default hereunder
shall have occurred and be continuing, (3) if the Securities are held by the
Property Trustee, the Company shall be in default with respect to its payment
obligations under the Capital Securities Guarantee or (4) the Company shall have
given notice of its election of the exercise of its right to extend the interest
payment period and any such extension shall be continuing.
Subject to the receipt by the Company of an opinion of counsel to the
effect that such distribution will not be a taxable event to holders of Capital
Securities, the Company will have the right at any time to liquidate the NGC
Corporation Capital Trust and cause the Securities to be distributed to the
holders of the Trust Securities in liquidation of the Trust.
The Securities are issuable only in registered form without coupons in
denominations of $1,000.00 and any integral multiple thereof. As provided in
the Indenture and subject to the transfer restrictions limitations as may be
contained herein and therein from time to time, this Security is transferable by
the holder hereof on the Security Register of the Company, upon surrender of
this Security for registration of transfer at the office or agency of the
Company in the City and State of New York accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company or the Trustee duly
executed by the holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities of authorized denominations and for the
same aggregate principal amount and series will be issued to the designated
transferee or transferees. No service charge will be made for any such
registration of transfer, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in relation
thereto.
Prior to due presentment for registration of transfer of this Security, the
Company, the Trustee, any authenticating agent, any paying agent, any transfer
agent and the registrar may deem and treat the holder hereof as the absolute
owner hereof (whether or not this Security shall be overdue and notwithstanding
any notice of ownership or writing hereon made by anyone other than the Security
Registrar) for the purpose of receiving payment of or on account of the
principal hereof
A-11
<PAGE>
and premium, if any, and (subject to the Indenture) interest due hereon and for
all other purposes, and neither the Company nor the Trustee nor any
authenticating agent nor any paying agent nor any transfer agent nor any
registrar shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or premium, if
any, or interest on this Security, or for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor Person, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
All terms used in this Security that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES SHALL BE DEEMED TO BE A CONTRACT MADE
UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
A-12
<PAGE>
EXHIBIT 4.6
================================================================================
AMENDED AND RESTATED DECLARATION
OF TRUST
NGC CORPORATION CAPITAL TRUST I
Dated as of May 28, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions................................................. 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application............................ 9
SECTION 2.2 Lists of Holders of Securities.............................. 9
SECTION 2.3 Reports by the Property Trustee............................. 9
SECTION 2.4 Periodic Reports to Property Trustee........................ 10
SECTION 2.5 Evidence of Compliance with Conditions Precedent............ 10
SECTION 2.6 Events of Default; Waiver................................... 10
SECTION 2.7 Event of Default; Notice.................................... 11
ARTICLE III
ORGANIZATION
SECTION 3.1 Name........................................................ 12
SECTION 3.2 Office...................................................... 12
SECTION 3.3 Purpose..................................................... 12
SECTION 3.4 Authority................................................... 13
SECTION 3.5 Title to Property of the Trust.............................. 13
SECTION 3.6 Powers and Duties of the Administrative Trustees............ 13
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees........ 16
SECTION 3.8 Powers and Duties of the Property Trustee................... 17
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee. 20
SECTION 3.10 Certain Rights of Property Trustee.......................... 21
SECTION 3.11 Delaware Trustee............................................ 23
SECTION 3.12 Execution of Documents...................................... 23
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities...... 24
SECTION 3.14 Duration of Trust........................................... 24
SECTION 3.15 Mergers..................................................... 24
SECTION 3.16 Property Trustee May File Proofs of Claim................... 26
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities..................... 27
SECTION 4.2 Responsibilities of the Sponsor............................. 27
SECTION 4.3 Right to Proceed............................................ 27
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees: Appointment of Co-Trustee............... 28
SECTION 5.2 Delaware Trustee............................................ 28
SECTION 5.3 Property Trustee; Eligibility............................... 29
-1-
<PAGE>
SECTION 5.4 Certain Qualifications of Administrative Trustees
and Delaware Trustee Generally.............................. 29
SECTION 5.5 Administrative Trustees..................................... 30
SECTION 5.6 Delaware Trustee............................................ 30
SECTION 5.7 Appointment, Removal and Resignation of Trustees............ 30
SECTION 5.8 Vacancies Among Trustees.................................... 32
SECTION 5.9 Effect of Vacancies......................................... 32
SECTION 5.10 Meetings.................................................... 32
SECTION 5.11 Delegation of Power......................................... 33
SECTION 5.12 Merger, Conversion, Consolidation or Succession
to Business................................................. 33
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions............................................... 33
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities..................... 34
SECTION 7.2 Execution and Authentication................................ 34
SECTION 7.3 Form and Dating............................................. 35
SECTION 7.4 Registrar, Paying Agent and Exchange Agent.................. 37
SECTION 7.5 Paying Agent to Hold Money in Trust......................... 37
SECTION 7.6 Replacement Securities...................................... 37
SECTION 7.7 Outstanding Capital Securities.............................. 38
SECTION 7.8 Capital Securities in Treasury.............................. 38
SECTION 7.9 Temporary Securities........................................ 38
SECTION 7.10 Cancellation................................................ 39
SECTION 7.11 CUSIP Numbers............................................... 39
ARTICLE VIII
DISSOLUTION OF TRUST
SECTION 8.1 Dissolution of Trust........................................ 40
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities...................................... 41
SECTION 9.2 Transfer Procedures and Restrictions........................ 41
SECTION 9.3 Deemed Security Holders..................................... 50
SECTION 9.4 Book Entry Interests........................................ 50
SECTION 9.5 Notices to Clearing Agency.................................. 51
SECTION 9.6 Appointment of Successor Clearing Agency.................... 51
ARTICLE X
LIMITATION OF LIABILITY
OFHOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.................................................... 51
SECTION 10.2 Exculpation.................................................. 52
SECTION 10.3 Fiduciary Duty............................................... 52
-2-
<PAGE>
SECTION 10.4 Indemnification.............................................. 53
SECTION 10.5 Outside Businesses........................................... 56
SECTION 10.6 Compensation; Fees........................................... 56
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.................................................. 57
SECTION 11.2 Certain Accounting Matters................................... 57
SECTION 11.3 Banking...................................................... 57
SECTION 11.4 Withholding.................................................. 58
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments................................................... 58
SECTION 12.2 Meetings of the Holders; Action by Written Consent........... 60
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee........... 61
SECTION 13.2 Representations and Warranties of Delaware Trustee........... 62
ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 Registration Rights Agreement................................ 62
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices...................................................... 63
SECTION 15.2 GOVERNING LAW................................................ 64
SECTION 15.3 Intention of the Parties..................................... 64
SECTION 15.4 Headings..................................................... 64
SECTION 15.5 Successors and Assigns....................................... 64
SECTION 15.6 Partial Enforceability....................................... 65
SECTION 15.7 Counterparts................................................. 65
SECTION 15.8 No Recourse.................................................. 65
-3-
<PAGE>
ANNEX I TERMS OF SECURITIES......................................... I-1
EXHIBIT A-1 FORM OF CAPITAL SECURITY CERTIFICATE........................ A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE......................... A2-1
EXHIBIT B SPECIMEN OF DEBENTURE....................................... B-1
EXHIBIT C PURCHASE AGREEMENT.......................................... C-1
EXHIBIT D REGISTRATION RIGHTS AGREEMENT............................... D-1
-4-
<PAGE>
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- -----------
310(a)........................................... 5.3
310(b)........................................... 5.3(c), 5.3( d)
311(a)........................................... 2.2(b)
311(b)........................................... 2.2(b)
312(a)........................................... 2.2(a)
312(b)........................................... 2.2(b)
313.............................................. 2.3
314(a)........................................... 2.4; 3.6(j)
314(c)........................................... 2.5
315(a)........................................... 3.9
315(b)........................................... 2.7(a)
315(c)........................................... 3.9(a)
315(d)........................................... 3.9(b)
316(a)........................................... 2.6
316(c)........................................... 3.6(e)
317(a)........................................... 3.8(e); 3.8(h)
317(b)........................................... 3.8(i); 7.5
- ---------------
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
-5-
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
NGC CORPORATION CAPITAL TRUST I
AMENDED AND RESTATED DECLARATION OF TRUST (this "Declaration") dated
and effective as of May 28, 1997, by the Trustees (as defined herein), the
Sponsor (as defined herein) and by the holders, from time to time, of undivided
beneficial interests in the Trust to be issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor established NGC Corporation
Capital Trust I (the "Trust"), a trust created under the Delaware Business Trust
Act pursuant to a Declaration of Trust dated as of May 20, 1997 (the "Original
Declaration"), and a Certificate of Trust filed with the Secretary of State of
the State of Delaware on May 20, 1997, for the sole purpose of issuing and
selling certain securities representing undivided beneficial interests in the
assets of the Trust and investing the proceeds thereof in certain Debentures of
the Debenture Issuer (each as hereinafter defined), and engaging in only those
other activities necessary, advisable or incidental thereto; and
WHEREAS, the parties hereto, by this Declaration, amend and restate
each and every term and provision of the Original Declaration;
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a statutory business trust under the Business Trust Act
and that this Declaration constitute the governing instrument of such business
trust, the Trustees declare that all assets contributed to the Trust will be
held in trust for the benefit of the holders, from time to time, of the
securities representing undivided beneficial interests in the assets of the
Trust issued hereunder, subject to the provisions of this Declaration, and the
parties hereto hereby amend and restate each and every term and provision of the
original Declaration as follows:
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
------------
Unless the context otherwise requires:
(a) capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this
Declaration" are to this Declaration as modified, supplemented or amended
from time to time;
<PAGE>
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration
or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Administrative Trustee" has the meaning set forth in Section 5.1(b)
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent, Registrar or Exchange Agent.
"Authorized Officer" of a Person means any other Person that is
authorized to legally bind such former Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate registered in the name of a Clearing Agency or its nominee,
ownership and transfers of which shall be maintained and made through book
entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a Saturday or a Sunday or a
day on which banking institutions in Chicago, Illinois or Houston, Texas are
authorized or required by law or executive order to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code (S) 3801 et seq., as it may be amended from time to time, or
any successor legislation.
"Capital Security Beneficial Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
"Capital Securities" means, collectively, the Series A Capital
Securities, the Series B Capital Securities, and the Private Exchange Capital
Securities.
"Capital Securities Guarantee" means, collectively, the Series A
Capital Securities Guarantee and the Series B Capital Securities Guarantee.
-2-
<PAGE>
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the Capital Securities and in whose name or in the name of a nominee of that
organization shall be registered a Global Certificate and which shall undertake
to effect book entry transfers and pledges of the Capital Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means the "Closing Date" under the Purchase
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation.
"Commission" means the United States Securities and Exchange
Commission as from time to time constituted, or if any time after the execution
of this Declaration such Commission is not existing and performing the duties
now assigned to it under applicable federal securities laws, then the body
performing such duties at such time.
"Common Securities" has the meaning specified in Section 7.1(a).
"Common Securities Guarantee" means the guarantee agreement dated as
of May 28, 1997 of the Sponsor in respect of the Common Securities.
"Common Securities Subscription Agreement" means the subscription
agreement dated as of May 28, 1997 of the Sponsor in respect of the Common
Securities.
"Company Indemnified Person" means (a) any Administrative Trustee;
(b) any Affiliate of any Administrative Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Administrative Trustee; or (d) any officer, employee or agent of the Trust or
its Affiliates.
"Corporate Trust Office" means the office of the Property Trustee at
which the corporate trust business of the Property Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Declaration is located at One First National Plaza, Suite
0126, Chicago, Illinois 60670.
"Covered Person" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means NGC Corporation, a Delaware corporation, or
any successor entity resulting from any consolidation, amalgamation, merger or
other business combination, in its capacity as issuer of the Debentures under
the Indenture.
-3-
<PAGE>
"Debenture Subscription Agreement" means the subscription agreement
dated as of May 28, 1997 of the Trust in respect of the Debentures.
"Debenture Trustee" means The First National Bank of Chicago, a
national banking association, as trustee under the Indenture until a successor
is appointed thereunder, and thereafter means such successor trustee.
"Debentures" means, collectively, the Series A Debentures and the
Series B Debentures.
"Default" means an event, act or condition that with notice or lapse
of time, or both, would constitute an Event of Default.
"Definitive Capital Securities" shall have the meaning set forth in
Section 7.3(c).
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Direct Action" shall have the meaning set forth in Section 3.8(e).
"Distribution" means a distribution payable to Holders in accordance
with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing
Agency.
"Event of Default" in respect of the Securities means an Event of
Default (as defined in the Indenture) that has occurred and is continuing in
respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Exchange Agent" has the meaning set forth in Section 7.4.
"Exchange Offer" means the offer that may be made pursuant to the
Registration Rights Agreement (i) by the Trust to exchange Series B Capital
Securities for Series A Capital Securities, (ii) by the Debenture Issuer to
exchange Series B Debentures for Series A Debentures and (iii) by the Guarantee
Trustee to exchange the Series B Capital Securities Guarantee for the Series A
Capital Securities Guarantee.
"Fiduciary Indemnified Person" has the meaning set forth in Section
10.4(b).
"Fiscal Year" has the meaning set forth in Section 11.1.
"Global Capital Security" has the meaning set forth in Section
7.3(a).
-4-
<PAGE>
"Holder" means a Person in whose name a Security is registered, such
Person being a beneficial owner within the meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of May 28, 1997, among the
Debenture Issuer and the Debenture Trustee, as amended from time to time.
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940,
as amended from time to time, or any successor legislation.
"Legal Action" has the meaning set forth in Section 3.6(g).
"List of Holders" has the meaning set forth in Section 2.2(a).
"Liquidated Damages" has the meaning set forth in the Registration
Rights Agreement.
"Liquidated Damages Agreement" means the Liquidated Damages
Agreement among NGC Corporation, the Trust and the Initial Purchasers named
therein dated May 28, 1997.
"Majority in liquidation amount" means, with respect to the Trust
Securities, except as provided in the terms of the Capital Securities or by the
Trust Indenture Act, Holder(s) of outstanding Trust Securities voting together
as a single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of more than 50% of the aggregate liquidation
amount of all outstanding Securities of the relevant class.
"Offering Memorandum" has the meaning set forth in Section
3.6(b)(i).
"Officers' Certificate" means, with respect to any Person, a
certificate signed by any of the Chairman of the Board, a Vice Chairman of the
Board, the Chief Executive Officer, the President or a Vice President and the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
such Person. Any Officers' Certificate delivered by the Trust shall be signed
by at least one Administrative Trustee. Any Officers' Certificate delivered
with respect to compliance with a condition or covenant provided for in this
Declaration shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
-5-
<PAGE>
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
an employee of the Sponsor, and who shall be acceptable to the Property Trustee.
"Paying Agent" has the meaning specified in Section 7.4.
"Payment Amount" has the meaning specified in Section 6.1.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"PORTAL" has the meaning set forth in Section 3.6(b)(iii).
"Private Exchange Capital Securities" means the capital securities
of the Trust issued in a Private Exchange (as defined in the Registration Rights
Agreement).
"Property Trustee" has the meaning set forth in Section 5.3(a).
"Property Trustee Account" has the meaning set forth in Section
3.8(c)(i).
"Purchase Agreement" means the Purchase Agreement for the initial
offering and sale of Capital Securities in the form of Exhibit C.
"QIBs" shall mean qualified institutional buyers as defined in Rule
144A.
"Quorum" means a majority of the Administrative Trustees or, if
there are only two Administrative Trustees, both of them.
"Registrar" has the meaning set forth in Section 7.4.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of May 28, 1997, by and among the Trust, the Debenture Issuer
and the initial purchasers named therein, as amended from time to time.
-6-
<PAGE>
"Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"Regulation S" means Regulation S under the Securities Act, as such
regulation may be amended from time to time, or any similar rule or regulation
hereafter adjusted by the Commission.
"Regulation S Global Capital Security" has the meaning set forth in
Section 7.3(a).
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means any officer within the Corporate Trust
Office of the Property Trustee with direct responsibility for the administration
of this Declaration and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject.
"Restricted Definitive Capital Securities" has the meaning set forth
in Section 7.3(c).
"Restricted Capital Security" means a Capital Security required by
Section 9.2 to contain a Restricted Securities Legend.
"Restricted Securities Legend" has the meaning set forth in Section
9.2(i).
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act, or any
successor rule or regulation.
"Rule 144" means Rule 144 under the Securities Act, as such rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission.
"Rule 144A" means Rule 144A under the Securities Act, as such rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission.
"Securities" or "Trust Securities" means the Common Securities and
the Capital Securities.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor legislation.
"Securities Guarantees" means the Common Securities Guarantee and
the Capital Securities Guarantee.
-7-
<PAGE>
"Series A Capital Securities" has the meaning specified in Section
7.1(a) and may be alternatively referred to as the 8.316% Subordinated Capital
Income Securities.
"Series A Capital Securities Guarantee" means the guarantee
agreement dated as of May 28, 1997, by the Sponsor in respect of the Series A
Capital Securities.
"Series A Debentures" means the Series A 8.316% Subordinated
Deferrable Interest Debentures due June 1, 2027 of the Debenture Issuer issued
pursuant to the Indenture.
"Series B Capital Securities" has the meaning specified in Section
7.1(a).
"Series B Capital Securities Guarantee" means the guarantee
agreement to be entered in connection with the Exchange Offer by the Sponsor in
respect of the Series B Capital Securities.
"Series B Debentures" means the Series B 8.316% Subordinated
Deferrable Interest Debentures due June 1, 2027 of the Debenture Issuer issued
pursuant to the Indenture.
"Special Event" has the meaning set forth in Section 4(c) of Annex I
hereto.
"Sponsor" means NGC Corporation, a Delaware corporation, or any
successor entity resulting from any merger, consolidation, amalgamation or other
business combination, in its capacity as sponsor of the Trust.
"Successor Entity" has the meaning set forth in Section 3.15(b)(i).
"Successor Property Trustee" has the meaning set forth in Section
3.8(f).
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"10% in liquidation amount" means, with respect to the Trust
Securities, except as provided in the terms of the Capital Securities or by the
Trust Indenture Act, Holder(s) of outstanding Trust Securities voting together
as a single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of 10% or more of the aggregate liquidation
amount of all outstanding Securities of the relevant class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue as a trustee in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as trustees in
-8-
<PAGE>
accordance with the provisions hereof, and references herein to a Trustee or the
Trustees shall refer to such Person or Persons solely in their capacity as
trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
"Unrestricted Global Capital Security" has the meaning set forth in
Section 9.2(b).
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
---------------------------------
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration in order for this
Declaration to be qualified under the Trust Indenture Act and shall, to the
extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by (S)(S) 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
-------------------------------
(a) Each of the Sponsor and the Administrative Trustees on behalf of
the Trust shall provide the Property Trustee, unless the Property Trustee is
Registrar for the Securities, (i) within 14 days after each record date for
payment of Distributions, a list, in such form as the Property Trustee may
reasonably require, of the names and addresses of the Holders ("List of
Holders") as of such record date, provided that neither the Sponsor nor the
Administrative Trustees on behalf of the Trust shall be obligated to provide
such List of Holders at any time that the List of Holders does not differ from
the most recent List of Holders given to the Property Trustee by the Sponsor and
the Administrative Trustees on behalf of the Trust, and (ii) at any other time,
within 30 days of receipt by the Trust of a written request for a List of
Holders as of a date no more than 14 days before such List of Holders is given
to the Property Trustee. The Property Trustee shall preserve, in as current a
form as is reasonably practicable, all information contained in Lists of Holders
given to it or which it receives in the capacity as Paying Agent (if acting in
such capacity),
-9-
<PAGE>
provided that the Property Trustee may destroy any List of Holders previously
given to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under
(S)(S) 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Property Trustee.
--------------------------------
Within 60 days after May 15 of each year, commencing May 15, 1998,
the Property Trustee shall provide to the Holders of the Capital Securities such
reports as are required by (S) 313 of the Trust Indenture Act, if any, in the
form and in the manner provided by (S) 313 of the Trust Indenture Act. The
Property Trustee shall also comply with the requirements of (S) 313(d) of the
Trust Indenture Act.
SECTION 2.4 Periodic Reports to Property Trustee.
-------------------------------------
Each of the Sponsor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such documents, reports and
information as are required by (S) 314 (if any) and the compliance certificate
required by (S) 314 of the Trust Indenture Act in the form, in the manner and at
the times required by (S) 314(a)(4) of the Trust Indenture Act, such compliance
certificate to be delivered annually on or before 120 days after the end of each
fiscal year of the Sponsor.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
-------------------------------------------------
Each of the Sponsor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such evidence of compliance with any
conditions precedent provided for in this Declaration that relate to any of the
matters set forth in (S) 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to (S) 314(c)(1) of the
Trust Indenture Act may be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver.
--------------------------
(a) The Holders of a Majority in liquidation amount of Capital
Securities may, by vote, on behalf of the Holders of all of the Capital
Securities, waive any past Event of Default in respect of the Capital Securities
and its consequences, provided that, if the underlying Event of Default under
the Indenture:
(i) is not waivable under the Indenture, the Event of Default under
the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority in
aggregate principal amount of the holders of the Debentures (a "Super
Majority") to be waived under the Indenture, the Event of Default under the
Declaration may only be waived by the vote of the Holders of at least the
proportion in aggregate liquidation amount of the Capital Securities
-10-
<PAGE>
that the relevant Super Majority represents of the aggregate principal
amount of the Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of (S)
316(a)(1)(B) of the Trust Indenture Act and such (S) 316(a)(1)(B) of the Trust
Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
default shall cease to exist, and any Event of Default with respect to the
Capital Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or an Event of Default with respect to the Capital
Securities or impair any right consequent thereon. Any waiver by the Holders of
the Capital Securities of an Event of Default with respect to the Capital
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote,
or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where the Holders of
the Common Securities are deemed to have waived such Event of Default under
the Declaration as provided below in this Section 2.6(b), the Event of
Default under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of a Super Majority to be waived,
except where the Holders of the Common Securities are deemed to have waived
such Event of Default under the Declaration as provided below in this
Section 2.6(b), the Event of Default under the Declaration may only be
waived by the vote of the Holders of at least the proportion in aggregate
liquidation amount of the Common Securities that the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding;
provided further, the Holders of Common Securities will be deemed to have waived
any such Event of Default and all Events of Default with respect to the Common
Securities and their consequences if all Events of Default with respect to the
Capital Securities have been cured, waived or otherwise eliminated, and until
such Events of Default have been so cured, waived or otherwise eliminated, the
Property Trustee will be deemed to be acting solely on behalf of the Holders of
the Capital Securities and only the Holders of the Capital Securities will have
the right to direct the Property Trustee in accordance with the terms of the
Securities. The foregoing provisions of this Section 2.6(b) shall be in lieu of
(S)(S) 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such (S)(S)
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust
Indenture Act. Subject to the foregoing provisions of this Section 2.6(b), upon
such waiver, any such default shall cease to exist and any Event of Default with
respect to the Common Securities arising therefrom shall be deemed to have
-11-
<PAGE>
been cured for every purpose of this Declaration, but no such waiver shall
extend to any subsequent or other default or Event of Default with respect to
the Common Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Property Trustee, at the direction of the Holders of the Capital Securities,
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu of
(S) 316(a)(1)(B) of the Trust Indenture Act and such (S) 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act.
SECTION 2.7 Event of Default; Notice.
-------------------------
(a) The Property Trustee shall, within 90 days after the occurrence
of a Default actually known to a Responsible Officer, transmit by mail, first
class postage prepaid, to the Holders, notices of all such Defaults with respect
to the Securities, unless such Defaults have been cured before the giving of
such notice; provided that, except for a Default in the payment of principal of
(or premium, if any) or interest (including Compounded Interest and Additional
Sums (as such terms are defined in the Indenture), if any) or Liquidated Damages
(as defined in the Registration Rights Agreement) on any of the Debentures, the
Property Trustee shall be protected in withholding such notice if and so long as
a Responsible Officer in good faith determines that the withholding of such
notice is in the interests of the Holders.
(b) The Property Trustee shall not be deemed to have knowledge of
any Default except:
(i) a Default under Sections 5.01(a) (other than the payment of
Compounded Interest, Additional Sums and Liquidated Damages) and 5.01(b) of
the Indenture; or
(ii) any Default as to which the Property Trustee shall have
received written notice or of which a Responsible Officer charged with the
administration of the Declaration shall have actual knowledge.
(c) Within five Business Days after the occurrence of any Event of
Default actually known to the Property Trustee, the Property Trustee shall
transmit notice of such Event of Default to the Holders of the Capital
Securities, the Administrative Trustees and the Sponsor, unless such Event of
Default shall have been cured or waived. The Sponsor and the Administrative
Trustees shall file annually with the Property Trustee a certification as to
whether or not they are in compliance with all the conditions and covenants
applicable to them under this Declaration.
-12-
<PAGE>
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
-----
The Trust is named "NGC Corporation Capital Trust I" as such name
may be modified from time to time by the Administrative Trustees following
written notice to the Delaware Trustee, the Property Trustee and the Holders.
The Trust's activities may be conducted under the name of the Trust or any other
name deemed advisable by the Administrative Trustees.
SECTION 3.2 Office.
-------
The address of the principal office of the Trust is c/o NGC
Corporation, 1000 Louisiana, Suite 5800, Houston, Texas 77002. On ten Business
Days written notice to the Delaware Trustee, the Property Trustee and the
Holders of Securities, the Administrative Trustees may designate another
principal office.
SECTION 3.3 Purpose.
--------
The exclusive purposes and functions of the Trust are (a) to issue
and sell Securities, (b) use the proceeds from the sale of the Securities to
acquire the Debentures, and (c) except as otherwise limited herein, to engage in
only those other activities necessary, advisable or incidental thereto. The
Trust shall not borrow money, issue debt or reinvest proceeds derived from
investments, mortgage or pledge any of its assets, or otherwise undertake (or
permit to be undertaken) any activity that would cause the Trust not to be
classified for United States federal income tax purposes as a grantor trust.
SECTION 3.4 Authority.
----------
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Administrative Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Administrative Trustees in accordance with their powers
shall constitute the act of and serve to bind the Trust and an action taken by
the Property Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the Trustees
acting on behalf of the Trust, no Person shall be required to inquire into the
authority of the Trustees to bind the Trust. Persons dealing with the Trust are
entitled to rely conclusively on the power and authority of the Trustees as set
forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
-------------------------------
Except as provided in Section 3.8 with respect to the Debentures and
the Property Trustee Account or as otherwise provided in this Declaration, legal
title to all assets of the Trust shall be vested in the Trust. The Holders
shall not have legal title to any part of the assets of the Trust, but shall
have an undivided beneficial interest in the assets of the Trust.
SECTION 3.6 Powers and Duties of the Administrative Trustees.
-------------------------------------------------
-13-
<PAGE>
The Administrative Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Securities in accordance with this
Declaration; provided, however, that except as contemplated in Section 7.1(a),
(i) the Trust may issue no more than one series of Capital Securities and no
more than one series of Common Securities, (ii) there shall be no interests in
the Trust other than the Securities, and (iii) the issuance of Securities shall
be limited to a simultaneous issuance of both Capital Securities and Common
Securities at the Closing Date;
(b) in connection with the issue and sale of the Capital Securities
and the consummation of the Exchange Offer to:
(i) prepare and execute, if necessary, an offering memorandum (the
"Offering Memorandum") in preliminary and final form prepared by the
Sponsor, in relation to the offering and sale of Series A Capital
Securities to qualified institutional buyers in reliance on Rule 144A under
the Securities Act and to institutional "accredited investors" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act), and outside
the United States to non-U.S. persons in offshore transactions in reliance
on Regulation S under the Securities Act, and to execute and file with the
Commission, at such time as determined by the Sponsor, any Registration
Statement, including any amendments thereto, as contemplated by the
Registration Rights Agreement;
(ii) execute and file any documents prepared by the Sponsor, or take
any acts as determined by the Sponsor to be necessary in order to qualify
or register all or part of the Capital Securities in any State in which the
Sponsor has determined to qualify or register such Capital Securities for
sale;
(ii) if deemed necessary or desirable by the Sponsor, execute and
file an application, prepared by the Sponsor, to permit the Capital
Securities to trade or be quoted or listed in or on the Private Offerings,
Resales and Trading through Automated Linkages ("PORTAL") Market or any
other securities exchange, quotation system or the Nasdaq Stock Market's
National Market;
(iv) execute and deliver letters, documents, or instruments with DTC
and other Clearing Agencies relating to the Capital Securities;
(v) if required, execute and file with the Commission a registration
statement on Form 8-A, including any amendments thereto, prepared by the
Sponsor, relating to the registration of the Capital Securities under
Section 12(b) of the Exchange Act;
(vi) execute and enter into the Purchase Agreement and the
Registration Rights Agreement providing for the sale and registration of
the Capital Securities; and
-14-
<PAGE>
(vii) execute and enter into the Liquidated Damages Agreement, the
Debenture Subscription Agreement and the Common Securities Subscription
Agreement;
(c) to acquire the Series A Debentures with the proceeds of the sale
of the Series A Capital Securities and the Common Securities and to exchange the
Series A Debentures for a like principal amount of Series B Debentures, pursuant
to the Exchange Offer; provided, however, that the Administrative Trustees shall
cause legal title to the Debentures to be held of record in the name of the
Property Trustee for the benefit of the Holders;
(d) to give the Sponsor and the Property Trustee prompt written notice
of the occurrence of a Special Event;
(e) to establish a record date with respect to all actions to be taken
hereunder that require a record date be established, including and with respect
to, for the purposes of (S) 316(c) of the Trust Indenture Act, Distributions,
voting rights, redemptions and exchanges, and to issue relevant notices to the
Holders of Capital Securities and Holders of Common Securities as to such
actions and applicable record dates;
(f) to take all actions and perform such duties as may be required of
the Administrative Trustees pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort to
legal action, or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee has
the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors, and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(j) to give the certificate required by (S) 314(a)(4) of the Trust
Indenture Act to the Property Trustee, which certificate may be executed by any
Administrative Trustee;
(k) to incur expenses that are necessary or incidental to carry out
any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, Registrar and
Exchange Agent for the Securities or to appoint a Paying Agent for the
Securities as provided in Section 7.4 except for such time as such power to
appoint a Paying Agent is vested in the Property Trustee;
-15-
<PAGE>
(m) to give prompt written notice to the Property Trustee and to
Holders of any notice received from the Debenture Issuer of its election to
defer payments of interest on the Debentures by extending the interest payment
period under the Indenture;
(n) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders or to enable the Trust
to effect the purposes for which the Trust was created;
(o) to take any action, not inconsistent with this Declaration or with
applicable law, that the Administrative Trustees determine in their discretion
to be necessary or desirable in carrying out the activities of the Trust as set
out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States federal
income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture Issuer for
United States federal income tax purposes;
(p) to take all action necessary to consummate the Exchange Offer or
otherwise cause the Capital Securities to be registered pursuant to an effective
registration statement in accordance with the provisions of the Registration
Rights Agreement;
(q) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to the
Trust to be duly prepared and filed by the Administrative Trustees, on behalf of
the Trust; and
(r) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing.
The Administrative Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Administrative Trustees shall not take
any action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Administrative Trustees shall have
none of the powers or the authority of the Property Trustee set forth in Section
3.8.
-16-
<PAGE>
The Administrative Trustees shall take all actions on behalf of the
Trust that are not specifically required by this Declaration to be taken by any
other Trustee.
Any expenses incurred by the Administrative Trustees pursuant to this
Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
----------------------------------------------------
(a) The Trust shall not, and the Trustees (including the Property
Trustee and the Delaware Trustee) shall cause the Trust not to, engage in any
activity other than as required or authorized by this Declaration. The Trust
shall not:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders pursuant to
the terms of this Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(v) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Securities in any way whatsoever, except
as otherwise expressly provided herein;
(vi) issue any securities or other evidences of beneficial ownership
of, or beneficial interest in, the Trust other than the Securities;
(vii) other than as provided in this Declaration or Annex I, (A)
direct the time, method and place of conducting any proceeding with respect
to any remedy available to the Debenture Trustee, or exercising any trust
or power conferred upon the Debenture Trustee with respect to the
Debentures, (B) waive any past default that is waivable under the
Indenture, or (C) exercise any right to rescind or annul any declaration
that the principal of all the Debentures shall be due and payable;
(viii) consent to any amendment, modification or termination of the
Indenture or the Debentures where such consent shall be required unless the
Trust shall have received an opinion of independent tax counsel experienced
in such matters to the effect that such amendment, modification or
termination will not cause more than an insubstantial risk that for United
States federal income tax purposes the Trust will not be classified as a
grantor trust;
-17-
<PAGE>
(ix) take or consent to any action that would result in the placement
of a lien, pledge, charge, mortgage or other encumbrance on any of the
Trust property;
(x) vary the investment (within the meaning of Treasury Regulation
Section 301.7701-4(c)) of the Trust or of the Holders of Securities; or
(xi) after the date hereof, enter into any contract or agreement
(other than any other depositary agreement or any agreement with any
securities exchange or automated quotation system) that does not expressly
provide that the Holders of Capital Securities, in their capacities as
such, have limited liability (in accordance with the provisions of the
Business Trust Act) for the liabilities and obligations of the Trust, which
express provision shall be in substantially the following form, "The
Holders of the Capital Securities, in their capacities as such, shall not
be personally liable for any liabilities or obligations of the Trust
arising out of this Agreement, and the parties hereto hereby agree that the
Holders of the Capital Securities, in their capacities as such, shall be
entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware."
SECTION 3.8 Powers and Duties of the Property Trustee.
-----------------------------------------
(a) The legal title to the Debentures shall be owned by and held of
record in the name of the Property Trustee in trust for the benefit of the Trust
and the Holders. The right, title and interest of the Property Trustee to the
Debentures shall vest automatically in each Person who may hereafter be
appointed as Property Trustee in accordance with Section 5.7. Such vesting and
cessation of title shall be effective whether or not conveyancing documents with
regard to the Debentures have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Administrative Trustees or to the Delaware
Trustee (if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Property Trustee Account") in the name of and under the
exclusive control of the Property Trustee on behalf of the Holders and,
upon the receipt of payments of funds made in respect of the Debentures
held by the Property Trustee, deposit such funds into the Property Trustee
Account and make payments or cause the Paying Agent to make payments to the
Holders from the Property Trustee Account in accordance with Section 6.1.
Funds in the Property Trustee Account shall be held uninvested until
disbursed in accordance with this Declaration. The Property Trustee Account
shall be an account that is maintained with a banking institution the
rating on whose long-term unsecured indebtedness by a "nationally
recognized statistical rating organization", as that term is defined for
purposes of Rule 436(g)(2) under the Securities Act, is at least investment
grade;
-18-
<PAGE>
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Trust Securities to the extent
the Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by the
Administrative Trustees in accordance with the terms of the Securities,
engage in such ministerial activities as shall be necessary or appropriate
to effect the distribution of the Debentures to Holders upon the occurrence
of certain events.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of the Securities.
(e) If an Event of Default has occurred and is continuing, then the
Holders of a Majority in liquidation amount of Capital Securities have the right
to direct the exercise of any trust or power conferred upon the Property Trustee
under this Declaration, including the right to direct the Property Trustee to
exercise the remedies available to it as holder of the Debentures and the
Capital Securities Guarantee. Subject to Section 3.9(a), the Property Trustee
shall take any Legal Action which arises out of or in connection with an Event
of Default of which a Responsible Officer has actual knowledge or the Property
Trustee's duties and obligations under this Declaration or the Trust Indenture
Act and if the Property Trustee shall have failed to take such Legal Action, the
Holders of the Capital Securities, to the fullest extent permitted by law, may
take such Legal Action, to the same extent as if such Holders of Capital
Securities held an aggregate principal amount of Debentures equal to the
aggregate liquidation amount of such Capital Securities, without first
proceeding against the Property Trustee or the Trust; provided, however, that if
an Event of Default has occurred and is continuing and such event is
attributable to the failure of the Debenture Issuer to pay the principal of or
premium, if any, or interest (including Compounded Interest and Additional Sums,
if any) or Liquidated Damages, if any, on the Debentures on the date such
principal, premium, if any, or interest (including Compounded Interest and
Additional Sums, if any) or Liquidated Damages, if any, is otherwise payable (or
in the case of redemption, on the redemption date), then a Holder of Capital
Securities may directly institute a proceeding for enforcement of payment to
such Holder of the principal of or premium, if any, or interest (including
Compounded Interest and Additional Sums, if any) or Liquidated Damages, if any,
on the Debentures having a principal amount equal to the aggregate liquidation
amount of the Capital Securities of such Holder (a "Direct Action") on or after
the respective due date specified in the Debentures. In connection with such
Direct Action, the rights of the Holders of the Common Securities will be
subrogated to the rights of such Holder of Capital Securities to the extent of
any payment made by the Debenture Issuer to such Holder of Capital Securities in
such Direct Action. Except as provided in the preceding sentences, the Holders
of Capital Securities will not be able to exercise directly any other remedy
available to the holders of the Debentures.
(f) The Property Trustee shall continue to serve as a Trustee until
either:
-19-
<PAGE>
(i) the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders pursuant to the terms of the
Securities; or
(ii) a successor Property Trustee has been appointed and has accepted
that appointment in accordance with Section 5.7 (a "Successor Property
Trustee").
(g) The Property Trustee shall have the legal power to exercise all of
the rights, powers and privileges of a holder of Debentures under the Indenture
and, if an Event of Default actually known to a Responsible Officer occurs and
is continuing, the Property Trustee shall, for the benefit of Holders, enforce
its rights as holder of the Debentures subject to the rights of the Holders
pursuant to the terms of such Securities.
(h) The Property Trustee shall be authorized to undertake any actions
set forth in (S) 317(a) of the Trust Indenture Act.
(i) For such time as the Property Trustee is the Paying Agent, the
Property Trustee may authorize one or more Persons to act as additional Paying
Agents and to pay Distributions, redemption payments or liquidation payments on
behalf of the Trust with respect to all Securities and any such Paying Agent
shall comply with (S) 317(b) of the Trust Indenture Act. Any such additional
Paying Agent may be removed by the Property Trustee at any time the Property
Trustee remains as Paying Agent and a successor Paying Agent or additional
Paying Agents may be (but are not required to be) appointed at any time by the
Property Trustee while the Property Trustee is so acting as Paying Agent.
(j) Subject to this Section 3.8, the Property Trustee shall have none
of the duties, liabilities, powers or the authority of the Administrative
Trustees set forth in Section 3.6.
Notwithstanding anything expressed or implied to the contrary in this
Declaration or any Annex or Exhibit hereto, (i) the Property Trustee must
exercise the powers set forth in this Section 3.8 in a manner that is consistent
with the purposes and functions of the Trust set out in Section 3.3, and (ii)
the Property Trustee shall not take any action that is inconsistent with the
purposes and functions of the Trust set out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee.
-----------------------------------------------------------
(a) The Property Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and in the Securities and no implied covenants shall be read
into this Declaration against the Property Trustee. In case an Event of Default
has occurred (that has not been cured or waived pursuant to Section 2.6) of
which a Responsible Officer has actual knowledge, the Property Trustee shall
exercise such of the rights and powers vested in it by this Declaration, and use
the same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
-20-
<PAGE>
(b) No provision of this Declaration shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Property Trustee shall be
determined solely by the express provisions of this Declaration and in
the Securities and the Property Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Declaration and in the Securities, and no implied
covenants or obligations shall be read into this Declaration or the
Securities against the Property Trustee; and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Property
Trustee and conforming to the requirements of this Declaration;
provided, however, that in the case of any such certificates or
opinions that by any provision hereof are specifically required to be
furnished to the Property Trustee, the Property Trustee shall be under
a duty to examine the same to determine whether or not they conform to
the requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall be
proved that the Property Trustee was negligent in ascertaining the
pertinent facts;
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of not less than a Majority in liquidation
amount of the Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee,
or exercising any trust or power conferred upon the Property Trustee under
this Declaration;
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Declaration or indemnity
reasonably satisfactory to the Property Trustee against such risk or
liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the custody,
safekeeping and physical preservation of the Debentures and the Property
Trustee Account shall be to deal with such property in a similar manner as
the Property Trustee deals with similar
-21-
<PAGE>
property for its own account, subject to the protections and limitations on
liability afforded to the Property Trustee under this Declaration and the
Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability for or with
respect to the value, genuineness, existence or sufficiency of the
Debentures or the payment of any taxes or assessments levied thereon or in
connection therewith;
(vii) the Property Trustee shall not be liable for any interest on
any money received by it except as it may otherwise agree in writing with
the Sponsor. Money held by the Property Trustee need not be segregated from
other funds held by it except in relation to the Property Trustee Account
maintained by the Property Trustee pursuant to Section 3.8(c)(i) and except
to the extent otherwise required by law; and
(viii) the Property Trustee shall not be responsible for monitoring
the compliance by the Administrative Trustees or the Sponsor with their
respective duties under this Declaration, nor shall the Property Trustee be
liable for any default or misconduct of the Administrative Trustees or the
Sponsor.
SECTION 3.10 Certain Rights of Property Trustee.
----------------------------------
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to
have been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Administrative
Trustees contemplated by this Declaration may be sufficiently evidenced by
an Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the
Property Trustee (unless other evidence is herein specifically prescribed)
may, in the absence of bad faith on its part, request and conclusively rely
upon an Officers' Certificate which, upon receipt of such request, shall be
promptly delivered by the Sponsor or the Administrative Trustees;
(iv) the Property Trustee shall have no duty to see to any recording,
filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel or other experts of
its selection and the advice or opinion of such counsel and experts with
respect to legal matters
-22-
<PAGE>
or advice within the scope of such experts' area of expertise shall be full
and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with
such advice or opinion, such counsel may be counsel to the Sponsor or any
of its Affiliates, and may include any of its employees. The Property
Trustee shall have the right at any time to seek instructions concerning
the administration of this Declaration from any court of competent
jurisdiction;
(vi) the Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Declaration at the request
or direction of any Holder, unless such Holder shall have provided to the
Property Trustee security and indemnity, reasonably satisfactory to the
Property Trustee, against the costs, expenses (including reasonable
attorneys' fees and expenses and the expenses of the Property Trustee's
agents, nominees or custodians) and liabilities that might be incurred by
it in complying with such request or direction, including such reasonable
advances as may be requested by the Property Trustee provided, that,
nothing contained in this Section 3.10(a)(vi) shall be taken to relieve the
Property Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by this
Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Property Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents, custodians, nominees or attorneys and the Property Trustee shall
not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder;
(ix) any action taken by the Property Trustee or its agents hereunder
shall bind the Trust and the Holders, and the signature of the Property
Trustee or its agents alone shall be sufficient and effective to perform
any such action and no third party shall be required to inquire as to the
authority of the Property Trustee to so act or as to its compliance with
any of the terms and provisions of this Declaration, both of which shall be
conclusively evidenced by the Property Trustee's or its agent's taking such
action;
(x) whenever in the administration of this Declaration the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the
Property Trustee (i) may request instructions from the Holders which
instructions may only be given by the Holders of the same proportion in
liquidation amount of the Securities as would be entitled to direct the
Property Trustee under the terms of the Securities in respect of such
remedy, right or action, (ii) may refrain from enforcing such remedy or
right or taking such other action until such instructions are
-23-
<PAGE>
received, and (iii) shall be protected in conclusively relying on or acting
in accordance with such instructions;
(xi) except as otherwise expressly provided by this Declaration, the
Property Trustee shall not be under any obligation to take any action that
is discretionary under the provisions of this Declaration; and
(xii) the Property Trustee shall not be liable for any action taken,
suffered, or omitted to be taken by it in good faith, without negligence,
and reasonably believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
----------------
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Trustees (except as required under the Business Trust Act) described in this
Declaration. Except as set forth in Section 5.2, the Delaware Trustee shall be
a Trustee for the sole and limited purpose of fulfilling the requirements of (S)
3807 of the Business Trust Act. In the event the Delaware Trustee shall at any
time be required to take any action or perform any duty hereunder, the Delaware
Trustee shall be entitled to the benefits of Section 3.9(b)(ii)-(viii) and
Section 3.10. No implied covenants or obligations shall be read into this
Declaration against the Delaware Trustee.
SECTION 3.12 Execution of Documents.
----------------------
Except as otherwise required by the Business Trust Act or this
Declaration, any Administrative Trustee or, if there is only one, such
Administrative Trustee is authorized to execute on behalf of the Trust any
documents that the Administrative Trustees have the power and authority to
execute pursuant to Section 3.6; provided that any Registration Statements
contemplated by the Registration Rights Agreement and referred to in Section
3.6(b)(i), including any amendments thereto, shall be signed by all of the
Administrative Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
------------------------------------------------------
The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness.
-24-
<PAGE>
The Trustees make no representations as to the value or condition of the
property of the Trust or any part thereof. The Trustees make no representations
as to the validity or sufficiency of this Declaration or the Securities.
SECTION 3.14 Duration of Trust.
-----------------
The Trust, unless dissolved pursuant to the provisions of Article VIII
hereof, shall have existence up to June 1, 2028.
SECTION 3.15 Mergers.
-------
(a) The Trust may not merge with or into, convert into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, except as described in
Section 3.15(b) and (c) of this Declaration and Section 3 of Annex I.
(b) The Trust may, at the request of the Sponsor, with the consent of
the Administrative Trustees or, if there are more than two, a majority of the
Administrative Trustees and without the consent of the Holders, the Delaware
Trustee or the Property Trustee, merge with or into, convert into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to, a trust organized as
such under the laws of any State; provided that:
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust under
the Securities and this Declaration; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Securities (the "Successor
Securities") so long as the Successor Securities rank the same as the
Securities rank with respect to Distributions and payments upon
liquidation, redemption and otherwise;
(ii) the Sponsor expressly appoints a trustee of the Successor Entity
that possesses the same powers and duties as the Property Trustee as the
holder of the Debentures;
(iii) the Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any national
securities exchange or with another organization on which the Capital
Securities are then listed or quoted, if any;
(iv) if the Capital Securities (including any Successor Securities)
are rated by any nationally recognized statistical rating organization
prior to such transaction, such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not
-25-
<PAGE>
cause the Capital Securities (including any Successor Securities), or if
the Debentures are so rated, the Debentures, to be downgraded by any
nationally recognized statistical rating organization;
(v) such merger, conversion, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the Holders (including the holders of any
Successor Securities) in any material respect (other than with respect to
any dilution of such Holders' interests in the new entity);
(vi) such Successor Entity has a purpose substantially identical to
that of the Trust;
(vii) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Sponsor has received an opinion of an
independent counsel to the Trust experienced in such matters to the effect
that:
(A) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the Holders (including the holders of
any Successor Securities) in any material respect (other than with
respect to any dilution of the Holders' interest in the new entity);
(B) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor the
Successor Entity will be required to register as an Investment
Company; and
(C) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Trust (or the
Successor Entity) will continue to be classified as a grantor trust
for United States federal income tax purposes.
(viii) the Sponsor or any permitted successor or assignee owns all of
the common securities of such Successor Entity and guarantees the
obligations of such Successor Entity under the Successor Securities at
least to the extent provided by the Capital Securities Guarantee and the
Common Securities Guarantee;
(ix) such Successor Entity expressly assumes all of the obligations
of the Trust with respect to the Trustee; and
(x) there shall have been furnished to the Property Trustee an
Officers' Certificate and an Opinion of Counsel, each to the effect that
all conditions precedent in this Declaration to such transaction have been
satisfied.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except with
the consent of Holders of 100% in liquidation amount of the Securities,
consolidate, amalgamate, merge
-26-
<PAGE>
with or into, convert into, or be replaced by, or convey, transfer or lease its
properties and assets as an entirety or substantially as an entirety to, any
other Person or permit any other Person to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Trust or the Successor Entity not
to be classified as a grantor trust for United States federal income tax
purposes or would cause the Holders of the Securities not to be treated as
owning an undivided interest in the Debentures.
SECTION 3.16 Property Trustee May File Proofs of Claim.
-----------------------------------------
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
similar judicial proceeding relative to the Trust or any other obligor upon the
Securities or the property of the Trust or of such other obligor or their
creditors, the Property Trustee (irrespective of whether any Distributions on
the Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Property Trustee shall
have made any demand on the Trust for the payment of any past due Distributions)
shall be entitled and empowered, to the fullest extent permitted by law, by
intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of any
Distributions owing and unpaid in respect of the Securities (or, if the
Securities are original issue discount Securities, such portion of the
liquidation amount as may be specified in the terms of such Securities) and to
file such other papers or documents as may be necessary or advisable in order to
have the claims of the Property Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel) and of the Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Property Trustee and, in the event the
Property Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Property Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel, and any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or compensation affecting the
Securities or the rights of any Holder thereof to authorize the Property Trustee
to vote in respect of the claim of any Holder in any such proceeding.
-27-
<PAGE>
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
---------------------------------------
At the Closing Date, the Sponsor will purchase all of the Common
Securities then issued by the Trust, in an amount equal to at least 3% of the
total capital of the Trust, at the same time as the Series A Capital Securities
are issued and sold.
SECTION 4.2 Responsibilities of the Sponsor.
-------------------------------
In connection with the issue and sale of the Capital Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare the Offering Memorandum and to prepare for filing by
the Trust with the Commission any Registration Statement, including any
amendments thereto, as contemplated by the Registration Rights Agreement;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Capital Securities and to do any
and all such acts, other than actions which must be taken by the Trust, and
advise the Trust of actions it must take, and prepare for execution and filing
any documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of any such
States;
(c) if deemed necessary or desirable by the Sponsor, to prepare for
filing by the Trust an application to permit the Capital Securities to trade or
be quoted or listed in or on the PORTAL market, or any other securities
exchange, quotation system or the Nasdaq Stock Market's National Market;
(d) if deemed necessary or desirable by the Sponsor, to prepare for
filing by the Trust with the Commission a registration statement on Form 8-A,
including any amendments thereto, relating to the registration of the Capital
Securities under Section 12(b) of the Exchange Act;
(e) to negotiate the terms of the Purchase Agreement and the
Registration Rights Agreement providing for the sale and registration of the
Capital Securities; and
(f) to negotiate the terms of the Liquidated Damages Agreement, the
Debenture Subscription Agreement and the Common Securities Agreement.
SECTION 4.3 Right to Proceed.
----------------
The Sponsor acknowledges the rights of the Holders of Capital
Securities, in the event that a failure of the Trust to pay Distributions on the
Capital Securities is attributable to the failure of the Company to pay interest
or principal on the Debentures, to institute a proceeding directly against the
Debenture Issuer for enforcement of its payment obligations on the Debentures.
-28-
<PAGE>
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees: Appointment of Co-Trustee.
---------------------------------------------
The number of Trustees initially shall be five (5), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees may
be increased or decreased by vote of the Holders of a Majority in liquidation
amount of the Common Securities voting as a class at a meeting of the Holders of
the Common Securities;
provided, however, that, the number of Trustees shall in no event be less than
two (2); provided further that (1) one Trustee shall satisfy the requirements of
the Delaware Trustee pursuant to Section 5.2; (2) there shall be at least one
Trustee who is an officer of the Sponsor (an "Administrative Trustee"); and (3)
one Trustee shall be the Property Trustee for so long as this Declaration is
required to qualify as an indenture under the Trust Indenture Act, and such
Trustee may also serve as Delaware Trustee if it meets the applicable
requirements. Notwithstanding the above, unless an Event of Default shall have
occurred and be continuing, at any time or times, for the purpose of meeting the
legal requirements of the Trust Indenture Act or of any jurisdiction in which
any part of the Trust's property may at the time be located, the Holders of a
Majority in liquidation amount of the Common Securities acting as a class at a
meeting of the Holders of the Common Securities, and the Administrative Trustees
shall have power to appoint one or more Persons either to act as a co-trustee,
jointly with the Property Trustee, of all or any part of the Trust's property,
or to act as separate trustee of any such property, in either case with such
powers as may be provided in the instrument of appointment, and to vest in such
Person or Persons in such capacity any property, title, right or power deemed
necessary or desirable, subject to the provisions of this Declaration. In case
an Event of Default has occurred and is continuing, the Property Trustee alone
shall have power to make any such appointment of a co-trustee.
SECTION 5.2 Delaware Trustee.
----------------
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place
of business in the State of Delaware, and otherwise meets the requirements of
applicable law,
-29-
<PAGE>
provided that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application.
SECTION 5.3 Property Trustee; Eligibility.
-----------------------------
(a) There shall at all times be one Trustee (the "Property Trustee")
which shall act as Property Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a Person organized and doing business under the laws of the
United States of America or any State or Territory thereof or of the
District of Columbia, or a Person permitted by the Commission to act as an
institutional trustee under the Trust Indenture Act, authorized under such
laws to exercise corporate trust powers, having a combined capital and
surplus of at least 50 million U.S. dollars ($50,000,000), and subject to
supervision or examination by Federal, State, Territorial or District of
Columbia authority. If such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then for the purposes of this
Section 5.3(a)(ii), the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published.
(b) If at any time the Property Trustee shall cease to be eligible to
so act under Section 5.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 5.7(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of (S) 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
obligor referred to in (S) 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of (S) 310(b) of the Trust Indenture Act.
(d) The Capital Securities Guarantee and the Indenture shall be deemed
to be specifically described in this Declaration for purposes of clause (i) of
the first proviso contained in (S) 310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be:
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, Illinois 60670-0126
Attention: Corporate Trust Services Division
SECTION 5.4 Certain Qualifications of Administrative Trustees and Delaware
--------------------------------------------------------------
Trustee Generally.
------------------
-30-
<PAGE>
Each Administrative Trustee and the Delaware Trustee (unless the
Property Trustee also acts as Delaware Trustee) shall be either a natural person
who is at least 21 years of age or a legal entity that shall act through one or
more Authorized Officers.
SECTION 5.5 Administrative Trustees.
-----------------------
The initial Administrative Trustees shall be:
John U. Clarke
Robert D. Doty
Robert T. Ray
(a) Except as expressly set forth in this Declaration and except if a
meeting of the Administrative Trustees is called with respect to any matter over
which the Administrative Trustees have power to act, any power of the
Administrative Trustees may be exercised by, or with the consent of, any one
such Administrative Trustee.
(b) An Administrative Trustee shall have the authority set forth in
Section 3.12 to execute on behalf of the Trust any documents which the
Administrative Trustees have the power and authority to cause the Trust to
execute pursuant to Section 3.6 provided that any Registration Statements
contemplated by the Registration Rights Agreement and referred to in Section
3.6(b)(i), including any amendments thereto, shall be signed by all of the
Administrative Trustees.
SECTION 5.6 Delaware Trustee.
----------------
The initial Delaware Trustee shall be:
First Chicago Delaware Inc.
300 King Street
Wilmington, Delaware 19801
Attention: Michael J. Majchrzak
SECTION 5.7 Appointment, Removal and Resignation of Trustees.
------------------------------------------------
(a) Subject to Section 5.7(b) of this Declaration and to Section 6(b)
of Annex I hereto, Trustees may be appointed or removed without cause at any
time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor;
(ii) unless an Event of Default shall have occurred and be continuing
after the issuance of any Securities, by vote of the Holders of a Majority
in liquidation amount of the Common Securities voting as a class at a
meeting of the Holders of the Common Securities; and
-31-
<PAGE>
(iii) if an Event of Default shall have occurred and be continuing
after the issuance of the Securities, with respect to the Property Trustee
or the Delaware Trustee, by vote of Holders of a Majority in liquidation
amount of the Capital Securities voting as a class at a meeting of Holders
of the Capital Securities.
(b) (i) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.7(a) until a Successor Property Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Property Trustee and delivered to the Administrative Trustees
and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed
in accordance with this Section 5.7(a) until a successor Trustee possessing
the qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware
Trustee and delivered to the Administrative Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided, however,
that:
(i) No such resignation of the Trustee that acts as the Property
Trustee shall be effective:
(A) until a Successor Property Trustee has been appointed and
has accepted such appointment by instrument executed by such Successor
Property Trustee and delivered to the Trust, the Sponsor and the
resigning Property Trustee; or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the Holders; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust, the Sponsor and the
resigning Delaware Trustee.
(d) The Holders of the Common Securities or, if an Event of Default
shall have occurred and be continuing after the issuance of the Securities, the
Holders of the Capital Securities shall use their best efforts to promptly
appoint a Successor Delaware Trustee or Successor Property Trustee, as the case
may be, if the Property Trustee or the Delaware Trustee delivers an instrument
of resignation in accordance with this Section 5.7.
-32-
<PAGE>
(e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
5.7 within 60 days after delivery of an instrument of resignation or removal,
the Property Trustee or Delaware Trustee resigning or being removed, as
applicable, may petition any court of competent jurisdiction for appointment of
a Successor Property Trustee or Successor Delaware Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper and
prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
(g) At the time of resignation or removal of the Property Trustee or
the Delaware Trustee, the Debenture Issuer shall pay to such Trustee any amounts
that may be owed to such Trustee pursuant to Section 10.4.
SECTION 5.8 Vacancies Among Trustees.
------------------------
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Administrative Trustees or, if
there are more than two, a majority of the Administrative Trustees shall be
conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with a Trustee appointed in accordance with Section 5.7.
SECTION 5.9 Effect of Vacancies.
-------------------
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not operate to dissolve, terminate or annul the Trust. Whenever a vacancy in
the number of Administrative Trustees shall occur, until such vacancy is filled
by the appointment of an Administrative Trustee in accordance with Section 5.7,
the Administrative Trustees in office, regardless of their number, shall have
all the powers granted to the Administrative Trustees and shall discharge all
the duties imposed upon the Administrative Trustees by this Declaration.
SECTION 5.10 Meetings.
--------
If there is more than one Administrative Trustee, meetings of the
Administrative Trustees shall be held from time to time upon the call of any
Administrative Trustee. Regular meetings of the Administrative Trustees may be
held at a time and place fixed by resolution of the Administrative Trustees.
Notice of any in-person meetings of the Administrative Trustees shall be hand
delivered or otherwise delivered in writing (including by facsimile, with a hard
copy by overnight courier) not less than 24 hours before such meeting. Notice
of any telephonic meetings of the Administrative Trustees or any committee
thereof shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24
-33-
<PAGE>
hours before a meeting. Notices shall contain a brief statement of the time,
place and anticipated purposes of the meeting. The presence (whether in person
or by telephone) of an Administrative Trustee at a meeting shall constitute a
waiver of notice of such meeting except where an Administrative Trustee attends
a meeting for the express purpose of objecting to the transaction of any
activity on the ground that the meeting has not been lawfully called or
convened. Unless provided otherwise in this Declaration, any action of the
Administrative Trustees may be taken at a meeting by vote of a majority of the
Administrative Trustees present (whether in person or by telephone) and eligible
to vote with respect to such matter, provided that a Quorum is present, or
without a meeting by the unanimous written consent of the Administrative
Trustees. In the event there is only one Administrative Trustee, any and all
action of such Administrative Trustee shall be evidenced by a written consent of
such Administrative Trustee.
SECTION 5.11 Delegation of Power.
-------------------
(a) Any Administrative Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21 his
or her power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and
(b) the Administrative Trustees shall have power to delegate from time
to time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Administrative Trustees or otherwise as the Administrative
Trustees may deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of the Trust, as set forth herein.
SECTION 5.12 Merger, Conversion, Consolidation or Succession to Business.
-----------------------------------------------------------
Any Person into which the Property Trustee or the Delaware Trustee or any
Administrative Trustee that is not a natural person, as the case may be, may be
merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Property
Trustee or the Delaware Trustee or the Administrative Trustees, as the case may
be, shall be a party, or any Person succeeding to all or substantially all the
corporate trust business of the Property Trustee or the Delaware Trustee or the
Administrative Trustees, as the case may be, shall be the successor of the
Property Trustee or the Delaware Trustee or the Administrative Trustees, as the
case may be, hereunder, provided such Person shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
-------------
-34-
<PAGE>
Holders shall receive Distributions in accordance with the applicable
terms of the relevant Holder's Securities. If and to the extent that the
Debenture Issuer makes a payment of interest (including Compounded Interest and
Additional Sums), premium and/or principal on the Debentures held by the
Property Trustee or Liquidated Damages or any other payments pursuant to the
Registration Rights Agreement or the Liquidated Damages Agreement with respect
to the Debentures held by the Property Trustee (the amount of any such payment
being a "Payment Amount"), the Property Trustee shall and is directed, to the
extent funds are available for that purpose, to make a distribution (a
"Distribution") of the Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
---------------------------------------
(a) The Administrative Trustees shall on behalf of the Trust issue one
class of subordinated capital income securities representing undivided
beneficial interests in the assets of the Trust having such terms as are set
forth in Annex I (the "Series A Capital Securities") and one class of common
securities representing undivided beneficial interests in the assets of the
Trust having such terms as are set forth in Annex I (the "Common Securities").
Annex I is hereby incorporated in and made a part of this Declaration. The
Administrative Trustees shall on behalf of the Trust issue one class of
subordinated capital income securities representing undivided beneficial
interests in the Trust having such terms as set forth in Annex I (the "Series B
Capital Securities") in exchange for the Series A Capital Securities accepted
for exchange in the Exchange Offer (and if required pursuant to the Registration
Rights Agreement, the Private Exchange Capital Securities), which Series B
Capital Securities shall not bear the legends required by Section 9.2(i) unless
the Holder of such Series A Capital Securities is either (A) a broker-dealer who
purchased such Series A Capital Securities directly from the Trust for resale
pursuant to Rule 144A or any other available exemption under the Securities Act,
(B) a Person participating in the distribution of the Series A Capital
Securities or (C) a Person who is an affiliate (as defined in Rule 144A) of the
Trust. The Trust shall issue no securities or other interests in the assets of
the Trust other than the Trust Securities.
(b) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(c) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable undivided beneficial interests in the assets of Trust.
(d) Every Person, by virtue of having become a Holder or a Capital
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration.
-35-
<PAGE>
(e) Holders of the Securities shall not have any preemptive or similar
rights.
SECTION 7.2 Execution and Authentication.
----------------------------
(a) The Securities shall be signed on behalf of the Trust by an
Administrative Trustee by manual or facsimile signature. In case any
Administrative Trustee of the Trust who shall have signed any of the Securities
shall cease to be such Administrative Trustee before the Securities so signed
shall be delivered by the Trust, such Securities nevertheless may be delivered
as though the person who signed such Securities had not ceased to be such
Administrative Trustee; and any Securities may be signed on behalf of the Trust
by such persons who, at the actual date of execution of such Security, shall be
the Administrative Trustees of the Trust, although at the date of the execution
and delivery of the Declaration any such person was not such an Administrative
Trustee.
(b) One Administrative Trustee shall sign the Capital Securities for
the Trust by manual or facsimile signature. Unless otherwise determined by the
Trust, such signature shall, in the case of Common Securities, be a manual
signature.
A Capital Security shall not be valid until authenticated by the
manual or facsimile signature of an authorized signatory of the Property
Trustee. The signature shall be conclusive evidence that the Capital Security
has been authenticated under this Declaration.
Upon a written order of the Trust signed by one Administrative
Trustee, the Property Trustee shall authenticate the Capital Securities for
original issue. The aggregate number of Capital Securities outstanding at any
time shall not exceed the number set forth in the Terms in Annex I hereto except
as provided in Section 7.6.
The Property Trustee may appoint an authenticating agent acceptable to
the Trust to authenticate Capital Securities. An authenticating agent may
authenticate Capital Securities whenever the Property Trustee may do so. Each
reference in this Declaration to authentication by the Property Trustee includes
authentication by such agent. An authenticating agent has the same rights as
the Property Trustee to deal with the Sponsor or an Affiliate.
SECTION 7.3 Form and Dating.
---------------
The Capital Securities and the Property Trustee's certificate of
authentication shall be substantially in the form of Exhibit A-1 and the Common
Securities shall be substantially in the form of Exhibit A-2, each of which is
hereby incorporated in and expressly made a part of this Declaration.
Certificates representing the Securities may be printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Administrative Trustees, as evidenced by their execution thereof. The
Securities may have letters, CUSIP or other numbers, notations or other marks of
identification or designation and such legends or endorsements required by law,
stock exchange rule, agreements to which the Trust is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Trust). The Trust at the direction of the Sponsor shall furnish any such
legend not contained in Exhibit A-1 to the Property
-36-
<PAGE>
Trustee in writing. Each Capital Security shall be dated the date of its
authentication. The terms and provisions of the Securities set forth in Annex I
and the forms of Securities set forth in Exhibits A-1 and A-2 are part of the
terms of this Declaration and to the extent applicable, the Property Trustee and
the Sponsor, by their execution and delivery of this Declaration, expressly
agree to such terms and provisions and to be bound thereby.
(a) Global Securities. Securities offered and sold to QIBs in
reliance on Rule 144A or offered and sold outside the United States to non-U.S.
persons in offshore transactions in reliance on Regulation S, as provided in the
Purchase Agreement, shall be issued in the form of one or more permanent global
Securities in definitive, fully registered form without distribution coupons
with the appropriate global legends and applicable Restricted Securities Legend
set forth in Exhibit A-1 hereto (respectively, a "Rule 144A Global Capital
Security" or "Regulation S Global Capital Security," each a "Global Capital
Security" and collectively, the "Global Capital Securities"), which shall be
deposited on behalf of the purchasers of the Capital Securities represented
thereby with the Property Trustee, as custodian for the Clearing Agency, and
registered in the name of the Clearing Agency or a nominee of the Clearing
Agency, duly executed by the Trust and authenticated by the Property Trustee as
hereinafter provided. The number of Capital Securities represented by the Rule
144A Global Capital Security and the Regulation S Global Capital Security may
from time to time be increased or decreased by adjustments made on the records
of the Property Trustee and the Clearing Agency or its nominee as hereinafter
provided.
(b) Book-Entry Provisions. This Section 7.3(b) shall apply only to
the Rule 144A Global Capital Security, the Regulation S Global Capital Security
and such other Capital Securities in global form as may be authorized by the
Trust to be deposited with or on behalf of the Clearing Agency.
The Trust shall execute and the Property Trustee shall, in accordance
with this Section 7.3, authenticate and make available for delivery initially
one or more Rule 144A Global Capital Securities and one or more Regulation S
Global Capital Securities that (i) shall be registered in the name of Cede & Co.
or other nominee of such Clearing Agency and (ii) shall be delivered by the
Trustee to such Clearing Agency or pursuant to such Clearing Agency's written
instructions or held by the Property Trustee as custodian for the Clearing
Agency.
Members of, or participants in, the Clearing Agency ("Participants")
shall have no rights under this Declaration with respect to any Rule 144A Global
Capital Security or any Regulation S Global Capital Security held on their
behalf by the Clearing Agency or by the Property Trustee as the custodian of the
Clearing Agency or under such Rule 144A Global Capital Security or any
Regulation S Global Capital Security, and the Clearing Agency may be treated by
the Trust, the Property Trustee and any agent of the Trust or the Property
Trustee as the absolute owner of such Rule 144A Global Capital Security or any
Regulation S Global Capital Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Trust, the
Property Trustee or any agent of the Trust or the Property Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Clearing Agency or impair, as between the Clearing Agency and its
Participants, the operation of customary practices of such Clearing
-37-
<PAGE>
Agency governing the exercise of the rights of a holder of a beneficial interest
in any Rule 144A Global Capital Security or any Regulation S Global Capital
Security.
(c) Definitive Capital Securities. Except as provided in Section 7.9
or 9.2(f)(i), owners of beneficial interests in a Rule 144A Global Capital
Security or any Regulation S Global Capital Security will not be entitled to
receive physical delivery of certificated Capital Securities ("Definitive
Capital Securities"). Purchasers of Securities (other than QIBs) who are
"accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act) will receive Capital Securities in the form of individual
certificates in definitive, fully registered form without distribution coupons
and with the Restricted Securities Legend set forth in Exhibit A-1 hereto
("Restricted Definitive Capital Securities"); provided, however, that upon
transfer of such Restricted Definitive Capital Securities to a QIB, such
Restricted Definitive Capital Securities will, unless the Rule 144A Global
Capital Security has previously been exchanged, be exchanged for an interest in
a Rule 144A Global Capital Security pursuant to the provisions of Section 9.2.
Restricted Definitive Capital Securities will bear the Restricted Securities
Legend set forth on Exhibit A-1 unless removed in accordance with this Section
7.3 or Section 9.2.
(d) Authorized Denominations. The Capital Securities are issuable
only in denominations of $1,000 and any integral multiple thereof.
SECTION 7.4 Registrar, Paying Agent and Exchange Agent.
------------------------------------------
The Trust shall maintain in the Borough of Manhattan, The City of New
York, (i) an office or agency where Capital Securities may be presented for
registration of transfer ("Registrar"), (ii) an office or agency where Capital
Securities may be presented for payment ("Paying Agent") and (iii) an office or
agency where Securities may be presented for exchange ("Exchange Agent"). The
Registrar shall keep a register of the Capital Securities and of their transfer.
The Trust may appoint the Registrar, the Paying Agent and the Exchange Agent and
may appoint one or more co-registrars, one or more additional paying agents and
one or more additional exchange agents in such other locations as it shall
determine. The term "Registrar" includes any additional registrar, "Paying
Agent" includes any additional paying agent and the term "Exchange Agent"
includes any additional exchange agent. The Trust may change any Paying Agent,
Registrar, co-registrar or Exchange Agent without prior notice to any Holder.
The Paying Agent shall be permitted to resign as Paying Agent upon 30 days'
written notice to the Administrative Trustees. The Trust shall notify the
Property Trustee of the name and address of any Agent not a party to this
Declaration. If the Trust fails to appoint or maintain another entity as
Registrar, Paying Agent or Exchange Agent, the Property Trustee shall act as
such. The Trust or any of its Affiliates may act as Paying Agent, Registrar, or
Exchange Agent. The Trust shall act as Paying Agent, Registrar, and Exchange
Agent for the Common Securities.
The Trust initially appoints the Property Trustee's New York Affiliate
as Registrar and Paying Agent for the Capital Securities.
SECTION 7.5 Paying Agent to Hold Money in Trust.
-----------------------------------
-38-
<PAGE>
The Trust shall require each Paying Agent other than the Property
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Property Trustee all money held by the Paying Agent
for the payment of liquidation amounts or Distributions, and will notify the
Property Trustee if there are insufficient funds for such purpose. While any
such insufficiency continues, the Property Trustee may require a Paying Agent to
pay all money held by it to the Property Trustee. The Trust at any time may
require a Paying Agent to pay all money held by it to the Property Trustee and
to account for any money disbursed by it. Upon payment over to the Property
Trustee, the Paying Agent (if other than the Trust or an Affiliate of the Trust)
shall have no further liability for the money. If the Trust or the Sponsor or
an Affiliate of the Trust or the Sponsor acts as Paying Agent, it shall
segregate and hold in a separate trust fund for the benefit of the Holders all
money held by it as Paying Agent.
SECTION 7.6 Replacement Securities.
----------------------
If a Holder claims that a Security owned by it has been lost,
destroyed or wrongfully taken or if such Security is mutilated and is
surrendered to the Trust or in the case of the Capital Securities to the
Property Trustee, the Trust shall issue and the Property Trustee shall, upon
written order of the Trust, authenticate a replacement Security if the Property
Trustee's and the Trust's requirements, as the case may be, are met. An
indemnity bond must be provided by the Holder which, in the judgment of the
Property Trustee, is sufficient to protect the Trustees, the Sponsor, the Trust
or any authenticating agent from any loss which any of them may suffer if a
Security is replaced. The Trust may charge such Holder for its expenses in
replacing a Security. Every replacement Security issued and authenticated in
accordance with this Section 7.6 shall represent an undivided beneficial
interest in the Trust.
SECTION 7.7 Outstanding Capital Securities.
------------------------------
The Capital Securities outstanding at any time are all the Capital
Securities authenticated by the Property Trustee except for those canceled by
it, those delivered to it for cancellation, and those described in this Section
as not outstanding.
If a Capital Security is replaced, paid or purchased pursuant to
Section 7.6 hereof, it ceases to be outstanding unless the Property Trustee
receives proof satisfactory to it that the replaced, paid or purchased Capital
Security is held by a bona fide purchaser.
If Capital Securities are considered paid in accordance with the terms
of this Declaration, they cease to be outstanding and Distributions on them
shall cease to accumulate.
A Capital Security does not cease to be outstanding because one of the
Trust, the Sponsor or an Affiliate of the Sponsor holds the Security.
SECTION 7.8 Capital Securities in Treasury.
------------------------------
-39-
<PAGE>
In determining whether the Holders of the required amount of
Securities have concurred in any direction, waiver or consent, Capital
Securities owned by the Trust, the Sponsor or an Affiliate of the Sponsor, as
the case may be, shall be disregarded and deemed not to be outstanding, except
that for the purposes of determining whether the Property Trustee shall be fully
protected in relying on any such direction, waiver or consent, only Securities
which a Responsible Officer of the Property Trustee actually knows are so owned
shall be so disregarded.
SECTION 7.9 Temporary Securities.
--------------------
(a) Until Definitive Capital Securities are ready for delivery, the
Trust may prepare and, in the case of the Capital Securities, the Property
Trustee shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of Definitive Capital Securities but may have
variations that the Trust considers appropriate for temporary Securities.
Without unreasonable delay, the Trust shall prepare and, in the case of the
Capital Securities, the Property Trustee shall authenticate Definitive Capital
Securities in exchange for temporary Securities.
(b) A Global Capital Security deposited with the Clearing Agency or
with the Property Trustee as custodian for the Clearing Agency pursuant to
Section 7.3 shall be transferred to the beneficial owners thereof in the form of
Definitive Capital Securities only if such transfer complies with Section 9.2
and (i) the Clearing Agency notifies the Sponsor that it is unwilling or unable
to continue as Clearing Agency for such Global Capital Security or if at any
time such Clearing Agency ceases to be a "clearing agency" registered under the
Exchange Act and a clearing agency is not appointed by the Sponsor within 90
days of such notice, (ii) a Default or an Event of Default has occurred and is
continuing or (iii) the Administrative Trustees, on behalf of the Trust at its
sole discretion elects to cause the issuance of Definitive Capital Securities.
(c) Any Global Capital Security that is transferable to the beneficial
owners thereof in the form of Definitive Capital Securities pursuant to this
Section 7.9 shall be surrendered by the Clearing Agency to the Property Trustee
located in the Borough of Manhattan, The City of New York, to be so transferred,
in whole or from time to time in part, without charge, and the Property Trustee
shall authenticate and make available for delivery, upon such transfer of each
portion of such Global Capital Security, an equal aggregate liquidation amount
of Securities of authorized denominations in the form of certificated Capital
Securities. Any portion of a Global Capital Security transferred pursuant to
this Section shall be registered in such names as the Clearing Agency shall
direct. Any Capital Security in the form of Definitive Capital Securities
delivered in exchange for an interest in the Global Capital Security shall,
except as otherwise provided by Sections 7.3 and 9.2, bear the Restricted
Securities Legend set forth in Exhibit A-1 hereto.
(d) Subject to the provisions of Section 7.9(c), the Holder of a
Global Capital Security may grant proxies and otherwise authorize any Person,
including Participants and Persons that may hold interests through Participants,
to take any action which such Holder is entitled to take under this Declaration
or the Securities.
-40-
<PAGE>
(e) In the event of the occurrence of any of the events specified in
Section 7.9(b), the Trust will promptly make available to the Property Trustee a
reasonable supply of certificated Capital Securities in fully registered form
without distribution coupons.
SECTION 7.10 Cancellation.
------------
The Trust at any time may deliver Capital Securities to the Property
Trustee for cancellation. The Registrar, Paying Agent and Exchange Agent shall
forward to the Property Trustee any Capital Securities surrendered to them for
registration of transfer, redemption, exchange or payment. The Property Trustee
shall promptly cancel all Capital Securities, surrendered for registration of
transfer, redemption, exchange, payment, replacement or cancellation and shall
dispose of canceled Capital Securities in accordance with its customary
procedures unless the Trust otherwise directs. The Trust may not issue new
Capital Securities to replace Capital Securities that it has paid or that have
been delivered to the Property Trustee for cancellation or that any Holder has
exchanged.
SECTION 7.11 CUSIP Numbers.
-------------
The Trust in issuing the Capital Securities may use "CUSIP" numbers
(if then generally in use), and, if so, the Property Trustee shall use "CUSIP"
numbers in notices of redemption as a convenience to Holders of Capital
Securities; provided that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Capital
Securities or as contained in any notice of a redemption and that reliance may
be placed only on the other identification numbers printed on the Capital
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Sponsor will promptly notify the Property Trustee
of any change in the CUSIP numbers.
ARTICLE VII
DISSOLUTION OF TRUST
SECTION 8.1 Dissolution of Trust.
--------------------
(a) The Trust shall automatically dissolve:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of dissolution or liquidation
or its equivalent with respect to the Sponsor; or the revocation of the
Sponsor's charter and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
(iii) following the distribution of a Like Amount of the Debentures
to the Holders, provided that, the Property Trustee has received written
notice from the Sponsor directing the Property Trustee to dissolve the
Trust (which direction is optional, and except
-41-
<PAGE>
as otherwise expressly provided below, within the discretion of the
Sponsor) and provided, further, that such direction and such distribution
is conditioned on the Administrative Trustees' receipt of an opinion of an
independent tax counsel experienced in such matters, which opinion may rely
on published rulings of the Internal Revenue Service, to the effect that
the Holders will not recognize any gain or loss for United States federal
income tax purposes as a result of the dissolution of the Trust and the
distribution of Debentures;
(iv) upon the entry of a decree of judicial dissolution of the Trust
by a court of competent jurisdiction;
(v) when all of the Securities shall have been called for redemption
and the amounts necessary for redemption thereof shall have been paid to
the Holders in accordance with the terms of the Securities; or
(vi) the expiration of the term of the Trust provided in Section
3.14.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a), after the winding up of the affairs of the Trust
is completed the Administrative Trustees shall execute and file a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
----------------------
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. To the fullest extent permitted by law, any
transfer or purported transfer of any Security not made in accordance with this
Declaration shall be null and void.
(b) The Administrative Trustees shall provide for the registration of
Capital Securities and of the transfer of Capital Securities, which will be
effected without charge but only upon payment (with such indemnity as the
Administrative Trustees may require) in respect of any tax or other governmental
charges that may be imposed in relation to it. Upon surrender for registration
of transfer of any Capital Securities, the Administrative Trustees shall cause
one or more new Capital Securities to be issued in the name of the designated
transferee or transferees. Every Capital Security surrendered for registration
of transfer shall be accompanied by a written instrument of transfer in form
satisfactory to the Administrative Trustees and the Registrar duly executed by
the Holder or such Holder's attorney duly authorized in writing. Each Capital
Security surrendered for
-42-
<PAGE>
registration of transfer shall be canceled by the Property Trustee. A transferee
of a Capital Security shall be entitled to the rights and subject to the
obligations of a Holder hereunder upon the receipt by such transferee of a
Capital Security. By acceptance of a Capital Security, each transferee shall be
deemed to have agreed to be bound by this Declaration.
(c) For so long as the Trust Securities remain outstanding, the
Sponsor will covenant (i) to directly or indirectly maintain 100% direct or
indirect ownership of the Common Securities; provided, however, that any
permitted successor of the Sponsor under the Indenture may succeed to the
Sponsor's ownership of such Common Securities, (ii) to use its reasonable
efforts to cause the Trust (x) to remain a business trust, except in connection
with the distribution of Debentures to the Holders of Trust Securities in
dissolution and liquidation of the Trust, the redemption of all of the Trust
Securities, or certain mergers, conversions, consolidations or amalgamations,
each as permitted by this Declaration, and (y) to otherwise continue to be
classified as a grantor trust for United States federal income tax purposes and
(iii) to use its reasonable efforts to cause each Holder of Trust Securities to
be treated as owning an undivided beneficial interest in the Debentures.
SECTION 9.2 Transfer Procedures and Restrictions.
------------------------------------
(a) General. Except as otherwise provided in Section 9.2(b), if
Capital Securities are issued upon the registration of transfer, exchange or
replacement of Capital Securities bearing the Restricted Securities Legend set
forth in Exhibit A-1 hereto, or if a request is made to remove such Restricted
Securities Legend on Capital Securities, the Capital Securities so issued shall
bear the Restricted Securities Legend, or the Restricted Securities Legend shall
not be removed, as the case may be, unless there is delivered to the Trust and
the Property Trustee such evidence satisfactory to the Sponsor, which shall
include an Opinion of Counsel, as may be reasonably required by the Sponsor,
that neither the legend nor the restrictions on transfer set forth therein are
required to ensure that transfers thereof are made pursuant to an exception from
the registration requirements of the Securities Act or, with respect to
Restricted Definitive Capital Securities, that such Securities are not
"restricted" within the meaning of Rule 144. Upon provision of such
satisfactory evidence, the Property Trustee, at the written direction of the
Trust, shall authenticate and deliver Capital Securities that do not bear the
legend.
(b) Transfers After Effectiveness of a Registration Statement. After
the effectiveness of a Registration Statement with respect to any Capital
Securities (including a shelf registration statement with respect to the resale
of the Private Exchange Capital Securities), all requirements pertaining to
legends on such Capital Securities will cease to apply (other than the legend
requiring that transfers of Capital Securities be made in blocks having an
aggregate liquidation amount of not less than $100,000), and beneficial
interests in a Capital Security in global form without legends will be available
to transferees of such Capital Securities, upon exchange of the transferring
Holder's Restricted Definitive Capital Security or directions to transfer such
Holder's beneficial interest in the Rule 144A Global Capital Security or the
Regulation S Global Capital Security as the case may be. No such transfer or
exchange of a Restricted Definitive Capital Security or of an interest in the
Rule 144A Global Capital Security or the Regulation S Global Capital
-43-
<PAGE>
Security shall be effective unless the transferor delivers to the Trust a
certificate in a form substantially similar to that attached hereto as the form
of "Assignment" in Exhibit A-1. Except as otherwise provided in Section 9.2(m),
after the effectiveness of a Registration Statement, the Trust shall issue and
the Property Trustee, upon a written order of the Trust signed by one
Administrative Trustee, shall authenticate a Capital Security in global form
without the Restricted Securities Legend (the "Unrestricted Global Capital
Security") for deposit with the Clearing Agency or its custodian to evidence
transfers of beneficial interests from the (i) Rule 144A Global Capital Security
or the Regulation S Global Capital Security and (ii) Restricted Definitive
Capital Securities.
(c) Transfer and Exchange of Definitive Capital Securities. When
Definitive Capital Securities are presented to the Registrar or co-Registrar.
(x) to register the transfer of such Definitive Capital Securities;
or
(y) to exchange such Definitive Capital Securities which became
mutilated, destroyed, defaced, stolen or lost, for an equal number of
Definitive Capital Securities,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Capital Securities surrendered for
registration of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Administrative Trustees and
the Registrar or co-registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing; and
(ii) in the case of Definitive Capital Securities that are Restricted
Definitive Capital Securities:
(A) if such Restricted Capital Securities are being delivered to
the Registrar by a Holder for registration in the name of such Holder,
without transfer, shall be accompanied by a certification from such Holder
to that effect; or
(B) if such Restricted Capital Securities are being transferred,
shall be accompanied by: (i) a certification from the transferor in a form
substantially similar to that attached hereto as the form of "Assignment"
in Exhibit A-1, and (ii) if the Trust or Registrar so requests, evidence
reasonably satisfactory to it as to the compliance with the restrictions
set forth in the Restricted Securities Legend.
(d) Restrictions on Transfer of a Definitive Capital Security for a
Beneficial Interest in a Global Capital Security. A Definitive Capital Security
may not be exchanged for a beneficial interest in a Global Capital Security
except upon satisfaction of the requirements set forth below. Upon receipt by
the Property Trustee of a Definitive Capital Security, duly endorsed or
accompanied by appropriate instruments of transfer, in form satisfactory to the
Property Trustee and the Administrative Trustees, together with:
-44-
<PAGE>
(i) if such Definitive Capital Security is a Restricted Capital
Security, a certification (in a form substantially similar to that attached
hereto as the form of "Assignment" in Exhibit A-1); and
(ii) whether or not such Definitive Capital Security is a Restricted
Capital Security, written instructions directing the Property Trustee to
make, or to direct the Clearing Agency to make, an adjustment on its books
and records with respect to the appropriate Global Capital Security to
reflect an increase in the number of the Capital Securities represented by
such Global Capital Security,
then the Property Trustee shall cancel such Definitive Capital Security and
cause, or direct the Clearing Agency to cause, the aggregate number of Capital
Securities represented by the appropriate Global Capital Security to be
increased accordingly. If no Global Capital Securities are then outstanding,
the Trust shall issue and the Property Trustee shall authenticate, upon written
order of any Administrative Trustee, an appropriate number of Capital Securities
in global form.
(e) Transfer and Exchange of Global Capital Securities. Subject to
Section 9.2(f), the transfer and exchange of Global Capital Securities or
beneficial interests therein shall be effected through the Clearing Agency, in
accordance with this Declaration (including applicable restrictions on transfer
set forth herein, if any) and the procedures of the Clearing Agency therefor.
(f) Transfer of a Beneficial Interest in a Global Capital Security for
a Definitive Capital Security.
(i) Any Person having a beneficial interest in a Global Capital
Security may upon request, but only upon 20 days' prior notice to the
Property Trustee, and if accompanied by the information specified below,
exchange such beneficial interest for a Definitive Capital Security
representing the same number of Capital Securities. Upon receipt by the
Property Trustee from the Clearing Agency or its nominee on behalf of any
Person having a beneficial interest in a Global Capital Security of written
instructions or such other form of instructions as is customary for the
Clearing Agency or the Person designated by the Clearing Agency as having
such a beneficial interest in a Restricted Capital Security and a
certification from the transferor (in a form substantially similar to that
attached hereto as the form of "Assignment" in Exhibit A-1), which may be
submitted by facsimile, then the Property Trustee will cause the aggregate
number of Capital Securities represented by Global Capital Securities to be
reduced on its books and records and, following such reduction, the Trust
will execute and the Property Trustee will authenticate and make available
for delivery to the transferee a Definitive Capital Security.
(ii) Definitive Capital Securities issued in exchange for a
beneficial interest in a Global Capital Security pursuant to this Section
9.2(f) shall be registered in such names and in such authorized
denominations as the Clearing Agency, pursuant to instructions from its
Clearing Agency Participants or otherwise, shall instruct the Property
Trustee in writing.
-45-
<PAGE>
The Property Trustee shall deliver such Capital Securities to the Persons
in whose names such Capital Securities are so registered in accordance with
such instructions of the Clearing Agency.
(g) Restrictions on Transfer and Exchange of Global Capital
Securities. Notwithstanding any other provisions of this Declaration (other than
the provisions set forth in subsection (h) of this Section 9.2 and subsection
(b) of Section 7.9), a Global Capital Security may not be transferred as a whole
except by the Clearing Agency to a nominee of the Clearing Agency or another
nominee of the Clearing Agency or by the Clearing Agency or any such nominee to
a successor Clearing Agency or a nominee of such successor Clearing Agency.
Prior to the expiration of the restricted period, as contemplated by
Regulation S, beneficial interests in the Regulation S Global Capital Security
may be exchanged for beneficial interests in the Rule 144A Global Capital
Security only if such exchange occurs in connection with a transfer of the
Capital Securities pursuant to Rule 144A and the transferor first delivers to
the Property Trustee a written certificate (in a form substantially similar to
that attached hereto as the "Form of Assignment" in Exhibit A-1) to the effect
that the Capital Securities are being transferred pursuant to and in compliance
with Rule 144A under the Securities Act.
(h) Authentication of Definitive Capital Securities. If at any time:
(i) there occurs a Default or an Event of Default which is continuing,
or
(ii) the Trust, in its sole discretion, notifies the Property Trustee
in writing that it elects to cause the issuance of Definitive Capital
Securities under this Declaration,
then an Administrative Trustee on behalf of the Trust will execute, and the
Property Trustee, upon receipt of a written order of the Trust signed by one
Administrative Trustee requesting the authentication and delivery of Definitive
Capital Securities to the Persons designated by the Trust, will authenticate and
make available for delivery Definitive Capital Securities, equal in number to
the number of Capital Securities represented by the Global Capital Securities,
in exchange for such Global Capital Securities.
(i) Legend.
(i) Except as permitted by the following paragraph (ii), each Capital
Security certificate evidencing the Global Capital Securities and the
Definitive Capital Securities (and all Capital Securities issued in
exchange therefor or substitution thereof) shall bear a legend (the
"Restricted Securities Legend") in substantially the following form:
THE CAPITAL SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY
STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS
CAPITAL SECURITY NOR
-46-
<PAGE>
ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY, PRIOR TO THE DATE
(THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE
LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH NGC
CORPORATION (THE "COMPANY") OR ANY "AFFILIATE" OF THE COMPANY WAS THE OWNER
OF THIS CAPITAL SECURITY (OR ANY PREDECESSOR OF THIS CAPITAL SECURITY) ONLY
(A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS THIS CAPITAL
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A,
(D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT,
(E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT
THAT IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH,
ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANY
OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
SECURITIES ACT, SUBJECT TO THE RIGHT OF THE TRUST AND THE COMPANY PRIOR TO
ANY SUCH OFFER, SALE OR
-47-
<PAGE>
TRANSFER (i) PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY
TO EACH OF THEM, AND (ii) PURSUANT TO CLAUSE (D) or (E) TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE REVERSE OF THIS
CAPITAL SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEREE TO THE TRUST.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT OR
OTHER PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED ("ERISA") OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED, OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY
REASON OF ANY SUCH PLAN'S INVESTMENT IN THE ENTITY AND IS NOT PURCHASING OR
HOLDING SUCH SECURITIES ON BEHALF OF OR WITH "PLAN ASSETS" OR (ii) IT IS
ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER PTCE 96-23, 95-60, 91-38,
90-1 or 84-14 WITH RESPECT TO SUCH PURCHASE AND HOLDING.
SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
CAPITAL SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND.
and in addition, in the case of the Regulation S Global Capital Security:
THIS CAPITAL SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND
MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS UNLESS REGISTERED UNDER THE SECURITIES
ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT IS AVAILABLE.
(ii) Upon any sale or transfer of a Restricted Capital Security
(including any Restricted Capital Security represented by a Global Capital
Security) pursuant to an effective registration statement under the
Securities Act or pursuant to Rule 144 under the Securities Act after such
registration statement ceases to be effective:
(A) in the case of any Restricted Capital Security that is a
Definitive Capital Security, the Registrar shall permit the Holder
thereof to exchange such
-48-
<PAGE>
Restricted Capital Security for a Definitive Capital Security that
does not bear the Restricted Securities Legend and rescind any
restriction on the transfer of such Restricted Capital Security; and
(B) in the case of any Restricted Capital Security that is
represented by a Global Capital Security, the Registrar shall permit
the Holder of such Global Capital Security to exchange such Global
Capital Security for another Global Capital Security that does not
bear the Restricted Securities Legend.
(iii) Each Capital Security certificate evidencing the Global Capital
Securities and the Definitive Capital Securities (and all Capital
Securities issued in exchange therefor or substitution thereof) also shall
bear a legend in substantially the following form:
THE CAPITAL SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS
HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 (100 CAPITAL
SECURITIES). ANY SUCH TRANSFER OF CAPITAL SECURITIES IN A BLOCK HAVING A
LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF
NO LEGAL EFFECT WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE
THE HOLDER OF SUCH CAPITAL SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT
LIMITED TO THE RECEIPT OF DISTRIBUTIONS OF SUCH CAPITAL SECURITIES, AND
SUCH TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH
CAPITAL SECURITIES.
(j) Cancellation or Adjustment of Global Capital Security. At such
time as all beneficial interests in a Global Capital Security have either
been exchanged for Definitive Capital Securities to the extent permitted by
this Declaration or redeemed, repurchased or canceled in accordance with
the terms of this Declaration, such Global Capital Security shall be
canceled by the Property Trustee. At any time prior to such cancellation,
if any beneficial interest in a Global Capital Security is exchanged for
Definitive Capital Securities, Capital Securities represented by such
Global Capital Security shall be reduced and an adjustment shall be made on
the books and records of the Clearing Agency and the Registrar, to reflect
such reduction.
(k) Obligations with Respect to Transfers and Exchanges of Capital
Securities.
(i) To permit registrations of transfers and exchanges, an
Administrative Trustee on behalf of the Trust shall execute and the
Property Trustee shall authenticate Definitive Capital Securities and
Global Capital Securities at the Registrar's or co-registrar's request in
accordance with the terms of this Declaration.
-49-
<PAGE>
(ii) Registrations of transfers or exchanges will be effected without
charge, but only upon payment (with such indemnity as the Trust or the
Sponsor may require) in respect of any tax or other governmental charge
that may be imposed in relation to it.
(iii) The Registrar or co-registrar shall not be required to register
the transfer of or exchange of (a) Capital Securities during a period
beginning at the opening of business 15 days before the day of mailing of a
notice of redemption or any notice of selection of Capital Securities for
redemption and ending at the close of business on the day of such mailing;
or (b) any Capital Security so selected for redemption in whole or in part,
except the unredeemed portion of any Capital Security being redeemed in
part.
(iv) Prior to the due presentation for registration of transfer of
any Capital Security, the Trust, the Property Trustee, the Paying Agent,
the Registrar or any co-registrar may deem and treat the Person in whose
name a Capital Security is registered as the absolute owner of such Capital
Security for the purpose of receiving Distributions on such Capital
Security (subject to Section 2(c) of Annex I) and for all other purposes
whatsoever, and none of the Trust, the Property Trustee, the Paying Agent,
the Registrar or any co-registrar shall be affected by notice to the
contrary.
(v) All Capital Securities issued upon any registration of transfer or
exchange pursuant to the terms of this Declaration shall evidence the same
security and shall be entitled to the same benefits under this Declaration
as the Capital Securities surrendered upon such registration of transfer or
exchange.
(l) No Obligation of the Property Trustee.
(i) The Property Trustee shall have no responsibility or obligation to
any beneficial owner of a Global Capital Security, a Participant in the
Clearing Agency or other Person with respect to the accuracy of the records
of the Clearing Agency or its nominee or of any Clearing Agency Participant
thereof, with respect to any ownership interest in the Capital Securities
or with respect to the delivery to any Clearing Agency Participant,
beneficial owner or other Person (other than the Clearing Agency) of any
notice (including any notice of redemption) or the payment of any amount,
under or with respect to such Capital Securities. All notices and
communications to be given to the Holders and all payments to be made to
Holders under the Capital Securities shall be given or made only to or upon
the order of the registered Holders (which shall be the Clearing Agency or
its nominee in the case of a Global Capital Security). The rights of
beneficial owners in any Global Capital Security shall be exercised only
through the Clearing Agency subject to the applicable rules and procedures
of the Clearing Agency. The Property Trustee may conclusively rely and
shall be fully protected in relying upon information furnished by the
Clearing Agency or any agent thereof with respect to its Clearing Agency
Participants and any beneficial owners.
-50-
<PAGE>
(ii) The Property Trustee and the Registrar shall have no obligation
or duty to monitor, determine or inquire as to compliance with any
restrictions on transfer imposed under this Declaration or under applicable
law with respect to any transfer of any interest in any Capital Security
(including any transfers between or among Clearing Agency Participants or
beneficial owners in any Global Capital Security) other than to require
delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by, the
terms of this Declaration, and to examine the same to determine substantial
compliance as to form with the express requirements hereof.
(m) Exchange of Series A Capital Securities for Series B Capital
Securities or Private Exchange Capital Securities. The Series A Capital
Securities may be exchanged for Series B Securities pursuant to the terms
of the Exchange Offer. In addition, the Series A Capital Securities may be
exchanged in a Private Exchange (as defined in the Registration Rights
Agreement) for Private Exchange Capital Securities under the circumstances
described in the Registration Rights Agreement. The Property Trustee shall
make the exchange as follows:
The Sponsor shall present the Property Trustee with an Officers'
Certificate certifying the following:
(A) upon issuance of the Series B Capital Securities or the Private
Exchange Capital Securities, as the case may be, the transactions
contemplated by the Exchange Offer or the Private Exchange (as
defined in the Registration Rights Agreement) have been
consummated; and
(B) the number of Series A Capital Securities properly tendered in
the Exchange Offer and the Private Exchange that are represented
by a Global Capital Security and the number of Series A Capital
Securities properly tendered in the Exchange Offer and the
Private Exchange that are represented by Definitive Capital
Securities, the name of each Holder of such Definitive Capital
Securities, the liquidation amount of Capital Securities properly
tendered in the Exchange Offer or the Private Exchange, as the
case may be, by each such Holder and the name and address to
which Definitive Capital Securities for Series B Capital
Securities or Private Exchange Capital Securities, as the case
may be, shall be registered and sent for each such Holder.
The Property Trustee, upon receipt of (i) such Officers' Certificate
and (ii) an Opinion of Counsel (x) to the effect that the Series B Capital
Securities or Private Exchange Capital Securities, as the case may be, have been
registered under Section 5 of the Securities Act and the Indenture has been
qualified under the Trust Indenture Act and (y) with respect to the matters set
forth in Section 3(p) of the Registration Rights Agreement, shall authenticate
(A) a Global Capital
-51-
<PAGE>
Security representing Series B Capital Securities or Private Exchange Capital
Securities, as the case may be, in aggregate liquidation amount equal to the
aggregate liquidation amount of Series A Capital Securities represented by a
Global Capital Security indicated in such Officers' Certificate as having been
properly tendered and (B) Definitive Capital Securities representing Series B
Capital Securities registered in the names of, and in the liquidation amounts
indicated in such Officers' Certificate.
If, upon consummation of the Exchange Offer or the Private Exchange,
less than all the outstanding Series A Capital Securities shall have been
properly tendered and not withdrawn, the Property Trustee shall make an
endorsement on the Global Capital Security representing Series A Capital
Securities indicating the reduction in the number and aggregate liquidation
amount represented thereby as a result of the Exchange Offer or the Private
Exchange, as the case may be.
The Trust shall deliver such Definitive Capital Securities
representing Series B Capital Securities or the Private Exchange Capital
Securities, as the case may be, to the Holders thereof as indicated in such
Officers' Certificate.
(n) Minimum Transfers. Capital Securities may only be transferred in
minimum blocks of $100,000 aggregate liquidation amount. Any transfer of
Capital Securities in a block having an aggregate liquidation amount of less
than $100,000 shall be deemed to be void and of no legal effect whatsoever. Any
such transferee shall be deemed not to be a Holder of such Capital Securities
for any purpose, including, but not limited to, the receipt of Distributions on
such Capital Securities, and such transferee shall be deemed to have no interest
whatsoever in such Capital Securities.
SECTION 9.3 Deemed Security Holders.
-----------------------
The Trustees may treat the Person in whose name any Security shall be
registered on the books and records of the Trust as the sole owner of such
Security for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Security on the part of any Person, whether
or not the Trust shall have actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
--------------------
Global Capital Securities shall initially be registered on the books
and records of the Trust in the name of Cede & Co., the nominee of the Clearing
Agency, and no Capital Security Beneficial Owner will receive a definitive
Capital Security Certificate representing such Capital Security Beneficial
Owner's interests in such Global Capital Securities, except as provided in
Section 9.2 and Section 7.9. Unless and until definitive, fully registered
Capital Securities certificates have been issued to the Capital Security
Beneficial Owners pursuant to Section 9.2 and Section 7.9:
(a) the provisions of this Section 9.4 shall be in full force and
effect;
-52-
<PAGE>
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the payment
of Distributions on the Global Capital Securities and receiving approvals,
votes or consents hereunder) as the Holder of the Capital Securities and
the sole holder of the Global Certificates and shall have no obligation to
the Capital Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict
with any other provisions of this Declaration, the provisions of this
Section 9.4 shall control; and
(d) the rights of the Capital Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Capital Security Beneficial
Owners and the Clearing Agency and/or the Clearing Agency Participants and
the Clearing Agency receive and transmit payments of Distributions on the
Global Certificates to such Clearing Agency Participants, provided, that
solely for the purposes of determining whether the Holders of the requisite
amount of Capital Securities have voted on any matter provided for in this
Declaration, so long as Definitive Capital Security certificates have not
been issued, the Trustees may conclusively rely on, and shall be protected
in relying on, any written instrument (including a proxy) delivered to the
Trustees by the Clearing Agency setting forth the Capital Security
Beneficial Owners' votes or assigning the right to vote on any matter to
any other Persons either in whole or in part. DTC will make book entry
transfers among the Clearing Agency Participants.
SECTION 9.5 Notices to Clearing Agency.
--------------------------
Whenever a notice or other communication to the Capital Security
Holders is required under this Declaration, the Trustees shall give all such
notices and communications specified herein to be given to the Holders of Global
Capital Securities to the Clearing Agency, and shall have no notice obligations
to the Capital Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
----------------------------------------
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Capital Securities, the Administrative
Trustees may, in their sole discretion, appoint a successor Clearing Agency with
respect to such Capital Securities.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
---------
(a) Except as expressly set forth in this Declaration, the Securities
Guarantees and the terms of the Securities, the Sponsor shall not be:
-53-
<PAGE>
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders which shall be made
solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder any deficit upon
dissolution or termination of the Trust or otherwise.
(b) The Debenture Issuer shall be liable for all of the debts and
obligations of the Trust (other than in respect of the payment of principal,
interest and premium, if any, on the Securities) to the extent not satisfied out
of the Trust's assets.
(c) Pursuant to (S) 3803(a) of the Business Trust Act, the Holders
shall be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware.
SECTION 10.2 Exculpation.
-----------
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Trust or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's gross negligence or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which Distributions to
Holders might properly be paid.
SECTION 10.3 Fiduciary Duty.
--------------
(a) To the extent that, at law or in equity, an Indemnified Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions
of this Declaration, to the extent that they restrict the duties and liabilities
of an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the
-54-
<PAGE>
Property Trustee under the Trust Indenture Act), are agreed by the parties
hereto to replace such other duties and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between any
Covered Person and any Indemnified Person; or
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act in a manner
that is, or provides terms that are, fair and reasonable to the Trust or
any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted or
required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and factors
as it desires, including its own interests, and shall have no duty or
obligation to give any consideration to any interest of or factors
affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration.
SECTION 10.4 Indemnification.
---------------
(a) (i) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Trust) by
reason of the fact that he is or was a Company Indemnified Person against
expenses (including attorneys' fees and expenses), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or
proceeding, had no
-55-
<PAGE>
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the Company Indemnified Person did not act in
good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Trust to procure a judgment in its
favor by reason of the fact that he is or was a Company Indemnified Person
against expenses (including attorneys' fees and expenses) actually and
reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Trust and
except that no such indemnification shall be made in respect of any claim,
issue or matter as to which such Company Indemnified Person shall have been
adjudged to be liable to the Trust unless and only to the extent that the
Court of Chancery of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such Person is
fairly and reasonably entitled to indemnity for such expenses which such
Court of Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action
without prejudice or the settlement of an action without admission of
liability) in defense of any action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 10.4(a), or in defense of any
claim, issue or matter therein, he shall be indemnified, to the full extent
permitted by law, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(a) (unless ordered by a court) shall be made by the Debenture
Issuer only as authorized in the specific case upon a determination that
indemnification of the Company Indemnified Person is proper in the
circumstances because he has met the applicable standard of conduct set
forth in paragraphs (i) and (ii). Such determination shall be made (1) by
the Administrative Trustees by a majority vote of a Quorum consisting of
such Administrative Trustees who were not parties to such action, suit or
proceeding, (2) if such a Quorum is not obtainable, or, even if obtainable,
if a Quorum of disinterested Administrative Trustees so directs, by
independent legal counsel in a written opinion, or (3) by the Common
Security Holder of the Trust.
(v) Expenses (including attorneys' fees and expenses) incurred by a
Company Indemnified Person in defending a civil, criminal, administrative
or investigative action, suit or proceeding referred to in paragraphs (i)
and (ii) of this Section 10.4(a) shall, to the fullest extent permitted by
law, be paid by the Debenture Issuer in advance of the final disposition
-56-
<PAGE>
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such Company Indemnified Person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Debenture Issuer as authorized in this Section 10.4(a). Notwithstanding the
foregoing, no advance shall be made by the Debenture Issuer if a
determination is reasonably and promptly made (i) by the Administrative
Trustees by a majority vote of a Quorum of disinterested Administrative
Trustees, (ii) if such a Quorum is not obtainable, or, even if obtainable,
if a Quorum of disinterested Administrative Trustees so directs, by
independent legal counsel in a written opinion or (iii) the Common Security
Holder of the Trust, that, based upon the facts known to the Administrative
Trustees, counsel or the Common Security Holder at the time such
determination is made, such Company Indemnified Person acted in bad faith
or in a manner that such Person did not believe to be in or not opposed to
the best interests of the Trust, or, with respect to any criminal
proceeding, that such Company Indemnified Person believed or had reasonable
cause to believe his conduct was unlawful. In no event shall any advance be
made in instances where the Administrative Trustees, independent legal
counsel or Common Security Holder reasonably determine that such Person
deliberately breached his duty to the Trust or its Common or Capital
Security Holders.
(vi) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 10.4(a) shall not
be deemed exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled under any
agreement, vote of stockholders or disinterested directors of the Debenture
Issuer or Capital Security Holders of the Trust or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office. All rights to indemnification under this Section
10.4(a) shall be deemed to be provided by a contract between the Debenture
Issuer and each Company Indemnified Person who serves in such capacity at
any time while this Section 10.4(a) is in effect. Any repeal or
modification of this Section 10.4(a) shall not affect any rights or
obligations then existing.
(vii) The Debenture Issuer or the Trust may purchase and maintain
insurance on behalf of any Person who is or was a Company Indemnified
Person against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or not the
Debenture Issuer would have the power to indemnify him against such
liability under the provisions of this Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to "the
Trust" shall include, in addition to the resulting or surviving entity, any
constituent entity (including any constituent of a constituent) absorbed in
a consolidation or merger, so that any person who is or was a director,
trustee, officer or employee of such constituent entity, or is or was
serving at the request of such constituent entity as a director, trustee,
officer, employee or agent of another entity, shall stand in the same
position under the provisions of this Section 10.4(a) with respect to the
resulting or surviving entity as he would have with respect to such
constituent entity if its separate existence had continued.
-57-
<PAGE>
(ix) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 10.4(a) shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a
Company Indemnified Person and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(b) The Debenture Issuer agrees to indemnify the (i) Property Trustee,
(ii) the Delaware Trustee, (iii) any Affiliate of the Property Trustee or the
Delaware Trustee, and (iv) any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or agents of the
Property Trustee or the Delaware Trustee (each of the Persons in (i) through
(iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold
each Fiduciary Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense including taxes (other than taxes based on the income
of such Fiduciary Indemnified Person) incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
expenses (including reasonable legal fees and expenses) of defending itself
against or investigating any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder. The provisions of this
Section 10.4(b) shall survive the resignation or removal of the Property Trustee
or the Delaware Trustee and the satisfaction and discharge of this Declaration.
(c) The Debenture Trustee agrees to pay the Property Trustee and the
Delaware Trustee, from time to time, such compensation for all services rendered
by the Property Trustee and the Delaware Trustee hereunder as may be mutually
agreed upon in writing by the Sponsor and the Property Trustee or the Delaware
Trustee, as the case may be, and, except as otherwise expressly provided herein,
to reimburse the Property Trustee and the Delaware Trustee upon its or their
request for all reasonable expenses, disbursements and advances incurred or made
by the Property Trustee or the Delaware Trustee, as the case may be, in
accordance with the provisions of this Declaration, except any such expense,
disbursement or advance as may be attributable to its or their negligence or bad
faith.
SECTION 10.5 Outside Businesses.
------------------
Any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee (subject to Section 5.3(c)) may engage in or possess an interest in
other business ventures of any nature or description, independently or with
others, similar or dissimilar to the business of the Trust, and the Trust and
the Holders shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
of any such venture, even if competitive with the business of the Trust, shall
not be deemed wrongful or improper. No Covered Person, the Sponsor, the
Delaware Trustee, or the Property Trustee shall be obligated to present any
particular investment or other opportunity to the Trust even if such opportunity
is of a character that, if presented to the Trust, could be taken by the Trust,
and any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee shall have the right to take for its own account (individually or as a
partner or fiduciary) or to recommend to others any such particular investment
or other opportunity. Any Covered Person, the Delaware Trustee and the Property
Trustee may engage or be interested in any financial or other transaction with
the Sponsor or any
-58-
<PAGE>
Affiliate of the Sponsor, or may act as depositary for, trustee or agent for, or
act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.
SECTION 10.6 Compensation; Fees.
------------------
The Debenture Issuer agrees:
(a) to pay to the Trustees from time to time such compensation for all
services rendered by them hereunder as the parties shall agree in writing from
time to time (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust); and
(b) except as otherwise expressly provided herein, to reimburse the
Trustees upon request for all reasonable expenses, disbursements and advances
incurred or made by the Trustees in accordance with any provision of this
Declaration (including the reasonable compensation and the expenses and
disbursements of their respective agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith.
The provisions of this Section 10.6 shall survive the dissolution of
the Trust and the termination of this Declaration and the removal or resignation
of any Trustee.
No Trustee may claim any lien or charge on any property of the Trust
as a result of any amount due pursuant to this Section 10.6.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
-----------
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
--------------------------
(a) At all times during the existence of the Trust, the Administrative
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The books of account and the records of the Trust shall
be examined by and reported upon as of the end of each Fiscal Year of the Trust
by a firm of independent certified public accountants selected by the
Administrative Trustees.
-59-
<PAGE>
(b) The Administrative Trustees shall cause to be duly prepared and
delivered to each of the Holders, any annual United States federal income tax
information statement, required by the Code, containing such information with
regard to the Securities held by each Holder as is required by the Code and the
Treasury Regulations. Notwithstanding any right under the Code to deliver any
such statement at a later date, the Administrative Trustees shall endeavor to
deliver all such information statements within 30 days after the end of each
Fiscal Year of the Trust.
(c) The Administrative Trustees shall cause to be duly prepared and
filed with the appropriate taxing authority, an annual United States federal
income tax return, on a Form 1041 or such other form required by United States
federal income tax law, and any other annual income tax returns required to be
filed by the Administrative Trustees on behalf of the Trust with any state or
local taxing authority.
SECTION 11.3 Banking.
-------
The Trust may maintain one or more bank accounts in the name and for
the sole benefit of the Trust; provided, however, that all payments of funds in
respect of the Debentures held by the Property Trustee shall be made directly to
the Property Trustee Account and no other funds of the Trust shall be deposited
in the Property Trustee Account. The sole signatories for such accounts shall
be designated by the Administrative Trustees; provided, however, that the
Property Trustee shall designate the signatories for the Property Trustee
Account.
SECTION 11.4 Withholding.
-----------
The Trust and the Administrative Trustees shall comply with all
withholding requirements under United States federal, state and local law. The
Trust shall request, and the Holders shall provide to the Trust, such forms or
certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably be
requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations. The Administrative Trustees shall file
required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Trust is required to withhold and pay over any amounts to any authority with
respect to Distributions or allocations to any Holder, the amount withheld shall
be deemed to be a Distribution in the amount of the withholding to the Holder.
In the event of any claimed over withholding, Holders shall be limited to an
action against the applicable jurisdiction. If the amount required to be
withheld was not withheld from actual Distributions made, the Trust may reduce
subsequent Distributions by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
----------
-60-
<PAGE>
(a) Except as otherwise provided in this Declaration (including
Section 7 of the Annex I hereto) or by any applicable terms of the Securities,
this Declaration may only be amended by a written instrument approved and
executed by the Administrative Trustees (or if there are more than two
Administrative Trustees a majority of the Administrative Trustees); and
(i) if the amendment affects the rights, powers, duties, obligations
or immunities of the Property Trustee, also by the Property Trustee; and
(ii) if the amendment affects the rights, powers, duties, obligations
or immunities of the Delaware Trustee, also by the Delaware Trustee.
(b) No amendment shall be made, and any such purported amendment shall
be void and ineffective:
(i) unless the Property Trustee shall have first received:
(A) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Securities); and
(B) an Opinion of Counsel (who may be counsel to the Sponsor or
the Trust) that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Securities) and
that all conditions precedent, if any, in this Declaration to the
execution and delivery of such amendment have been satisfied,
provided, however, that the Property Trustee shall not be required to sign any
such amendment which affects the rights, powers, duties, obligations or
immunities of the Property Trustee; and
(ii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be classified for
purposes of United States federal income taxation as a grantor trust;
(B) reduce or otherwise adversely affect the powers of the
Property Trustee in contravention of the Trust Indenture Act; or
(C) cause the Trust to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(c) At such time after the Trust has issued any Securities that remain
outstanding, any amendment that would adversely affect the rights, privileges or
preferences of any
-61-
<PAGE>
Holder may be effected only with such additional requirements as may be set
forth in the terms of such Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be amended without
the consent of all of the Holders;
(e) Article Four shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities; and
(f) The rights of the holders of the Common Securities under Article
Five to increase or decrease the number of, and appoint and remove Trustees
shall not be amended without the consent of the Holders of a Majority in
liquidation amount of the Common Securities; and
(g) Notwithstanding Section 12.1(c), this Declaration may be amended
without the consent of the Holders to:
(i) cure any ambiguity, correct or supplement any provision in this
Declaration that may be inconsistent with any other provision of this
Declaration or to make any other provisions with respect to matters or
questions arising under this Declaration which shall not be inconsistent
with the other provisions of the Declaration;
(ii) to modify, eliminate or add to any provisions of the Declaration
to such extent as shall be necessary to ensure that the Trust will be
classified for United States federal income tax purposes as a grantor trust
at all times that any Securities are outstanding or to ensure that the
Trust will not be required to register as an Investment Company under the
Investment Company Act; and
(iii) pursuant to Section 5.7 hereof, to evidence the acceptance of
the appointment of a successor Trustee or to fill a vacancy created by an
increase in the number of Administrative Trustees;
provided, however, that in each case such action shall not adversely affect in
any material respect the interests of the Holders, and any amendments of this
Declaration shall become effective when notice thereof is given to the Holders.
SECTION 12.2 Meetings of the Holders; Action by Written Consent.
--------------------------------------------------
(a) Meetings of the Holders of any class of Securities may be called
at any time by the Administrative Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading. The Administrative Trustees
shall call a meeting of the Holders of such class if directed to do so by the
Holders of at least 10% in liquidation amount of such class of Securities. Such
direction shall be given by delivering to the Administrative Trustees one or
more notices in writing stating that the signing Holders wish to call a meeting
and indicating
-62-
<PAGE>
the general or specific purpose for which the meeting is to be called. Any
Holders calling a meeting shall specify in writing the Security Certificates
held by the Holders exercising the right to call a meeting and only those
Securities specified shall be counted for purposes of determining whether the
required percentage set forth in the second sentence of this paragraph has been
met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders:
(i) notice of any such meeting shall be given to all the Holders
having a right to vote thereat at least seven days and not more than 60
days before the date of such meeting. Whenever a vote, consent or approval
of the Holders is permitted or required under this Declaration or the rules
of any stock exchange on which the Capital Securities are listed or
admitted for trading, such vote, consent or approval may be given at a
meeting of the Holders. Any action that may be taken at a meeting of the
Holders may be taken without a meeting if a consent in writing setting
forth the action so taken is signed by the Holders owning not less than the
minimum amount of Securities in liquidation amount that would be necessary
to authorize or take such action at a meeting at which all Holders having a
right to vote thereon were present and voting. Prompt notice of the taking
of action without a meeting shall be given to the Holders entitled to vote
who have not consented in writing. The Administrative Trustees may specify
that any written ballot submitted to the Security Holder for the purpose of
taking any action without a meeting shall be returned to the Trust within
the time specified by the Administrative Trustees;
(ii) each Holder may authorize any Person to act for it by proxy on
all matters in which a Holder is entitled to participate, including waiving
notice of any meeting, or voting or participating at a meeting. No proxy
shall be valid after the expiration of 11 months from the date thereof
unless otherwise provided in the proxy. Every proxy shall be revocable at
the pleasure of the Holder executing it. Except as otherwise provided
herein, all matters relating to the giving, voting or validity of proxies
shall be governed by the General Corporation Law of the State of Delaware
relating to proxies, and judicial interpretations thereunder, as if the
Trust were a Delaware corporation and the Holders were stockholders of a
Delaware corporation;
(iii) each meeting of the Holders shall be conducted by the
Administrative Trustees or by such other Person that the Administrative
Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the terms of
the Securities, the Trust Indenture Act or the listing rules of any stock
exchange on which the Capital Securities are then listed or trading,
otherwise provides, the Administrative Trustees, in their sole discretion,
shall establish all other provisions relating to meetings of Holders,
including notice of the time, place or purpose of any meeting at which any
matter is to be voted on by any Holders, waiver of any such notice, action
by consent without a meeting, the establishment of a record date, quorum
requirements, voting in person or by proxy or any other matter with respect
to the exercise of any such right to vote.
-63-
<PAGE>
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee.
--------------------------------------------------
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) The Property Trustee is a Delaware banking corporation, a national
banking association or a bank or trust company organized under the laws of any
State of the United States or the District of Columbia, in any case with trust
powers and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, this Declaration;
(b) The execution, delivery and performance by the Property Trustee of
this Declaration has been duly authorized by all necessary corporate action on
the part of the Property Trustee. This Declaration has been duly executed and
delivered by the Property Trustee and constitutes a legal, valid and binding
obligation of the Property Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in equity
or at law);
(c) The execution, delivery and performance of this Declaration by the
Property Trustee does not conflict with or constitute a breach of the charter or
by-laws of the Property Trustee;
(d) No consent, approval or authorization of, or registration with or
notice to, any applicable state or federal banking authority is required for the
execution, delivery or performance by the Property Trustee of this Declaration;
and
(e) The Property Trustee satisfies the requirements set forth in
Section 5.3(a).
SECTION 13.2 Representations and Warranties of Delaware Trustee.
--------------------------------------------------
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
-64-
<PAGE>
(a) The Delaware Trustee is duly organized, validly existing and in
good standing under the laws of the State of Delaware, with corporate power and
authority to execute and deliver, and to carry out and perform its obligations
under the terms of, this Declaration;
(b) The execution, delivery and performance by the Delaware Trustee of
this Declaration has been duly authorized by all necessary corporate action on
the part of the Delaware Trustee. This Declaration has been duly executed and
delivered by the Delaware Trustee and constitutes a legal, valid and binding
obligation of the Delaware Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in equity
or at law);
(c) No consent, approval or authorization of, or registration with or
notice to, any federal banking authority is required for the execution, delivery
or performance by the Delaware Trustee of this Declaration; and
(d) The Delaware Trustee is a natural person who is a resident of the
State of Delaware or, if not a natural person, an entity which has its principal
place of business in the State of Delaware and is a Person that satisfies for
the Trust section 3807(a) of the Business Trust Act.
ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 Registration Rights Agreement.
-----------------------------
The Holders of the Capital Securities, the Debentures and the Capital
Securities Guarantee are entitled to the benefits of a Registration Rights
Agreement. In certain limited circumstances set forth in the Registration
Rights Agreement, the Debenture Issuer shall be required to pay Liquidated
Damages with respect to the Debentures and the Trust shall be required to pay
Additional Distributions on the Capital Securities. Unless otherwise stated,
the term "Distribution", as used in this Declaration, includes such Liquidated
Damages.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices.
-------
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by first class mail, overnight courier service or confirmed telecopy, as
follows:
-65-
<PAGE>
(a) if given to the Trust, in care of the Administrative Trustees at
the Trust's mailing address set forth below (or such other address as the Trust
may give notice of to the Property Trustee, the Delaware Trustee and the
Holders):
NGC Corporation Capital Trust I
c/o NGC Corporation
1000 Louisiana, Suite 5800
Houston, Texas 77002
Attention: John U. Clarke
Administrative Trustee
Telecopy: (713) 767-8322
(b) if given to the Delaware Trustee, at the mailing address set forth
below (or such other address as Delaware Trustee may give notice of to the
Holders):
First Chicago Delaware Inc.
300 King Street
Wilmington, Delaware 19801
Attention: Michael J. Majchrzak
(c) if given to the Property Trustee, at the Property Trustee's
mailing address set forth below (or such other address as the Property Trustee
may give notice of to the Holders):
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, Illinois 60670-0126
Attention: Corporate Trust Services Division
Telecopy: (312) 407-1708
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give notice to the Property Trustee and the Trust):
NGC Corporation
1000 Louisiana
Houston, Texas 77002
Attention: Kenneth E. Randolph
Telecopy: (713) 507-6808
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
-66-
<PAGE>
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 15.2 GOVERNING LAW.
-------------
THIS DECLARATION AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND THE HOLDERS OF THE SECURITIES SHALL BE GOVERNED BY AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.
SECTION 15.3 Intention of the Parties.
------------------------
It is the intention of the parties hereto that the Trust be classified
for United States federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted to further this intention of
the parties.
SECTION 15.4 Headings.
--------
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
SECTION 15.5 Successors and Assigns.
----------------------
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 15.6 Partial Enforceability.
----------------------
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 15.7 Counterparts.
------------
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though
-67-
<PAGE>
one, and they shall have the same force and effect as though all of the signers
had signed a single signature page.
SECTION 15.8 No Recourse.
-----------
The Trust's obligations hereunder are intended to be the obligations of the
Trust and no recourse for the payment of Distributions (including Additional
Distributions, if applicable) on, and the Redemption Price of, Securities, as
applicable, or for any claim upon the Securities or otherwise in respect
thereof, shall be had against any Holder of Capital Securities or any Affiliate
of a Holder of Capital Securities, solely by reason of such Person being a
Holder of Capital Securities or an Affiliate of a Holder of Capital Securities,
it being understood that the Holders of Capital Securities, solely by reason of
being a Holder of Capital Securities, have limited liability (in accordance with
the provisions of the Business Trust Act) for the liabilities and obligations of
the Trust. Nothing contained in this Section 15.8 shall be construed to limit
the exercise or enforcement, in accordance with the terms of this Declaration,
the Capital Securities Guarantee, the Common Securities Guarantee and the
Indenture, of rights and remedies against the Trust or the Sponsor.
-68-
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
------------------------------------------
John U. Clarke, as Administrative Trustee
------------------------------------------
Robert D. Doty, as Administrative Trustee
------------------------------------------
Robert T. Ray, as Administrative Trustee
FIRST CHICAGO DELAWARE INC.
as Delaware Trustee
By:
------------------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
as Property Trustee
By:
--------------------------------------
Name:
Title:
NGC CORPORATION
as Sponsor and Debenture Issuer
By:
--------------------------------------
Name:
Title:
-69-
<PAGE>
ANNEX I
TERMS OF
SERIES A/SERIES B/PRIVATE EXCHANGE
8.316% SUBORDINATED CAPITAL INCOME SECURITIES
8.316% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of May 28, 1997 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Securities are set out below (each
capitalized term used but not defined herein has the meaning set forth in the
Declaration or, if not defined in such Declaration, as defined in the Offering
Memorandum referred to below in Section 2(c) of this Annex I):
1. Designation and Number.
----------------------
(a) Capital Securities. 200,000 Series A Capital Securities of the
Trust and 200,000 Series B Capital Securities of the Trust, and 200,000 Private
Exchange Capital Securities, with an aggregate liquidation amount at any time
outstanding with respect to the assets of the Trust of Two hundred million
dollars ($200,000,000), and each with a liquidation amount with respect to the
assets of the Trust of $1,000 per security, are hereby designated for the
purposes of identification only as "Series A 8.316% Subordinated Capital Income
Securities," and "Series B 8.316% Subordinated Capital Income Securities," and
"8.316% Private Exchange Subordinated Capital Income Securities," respectively
(collectively, the "Capital Securities"). The certificates evidencing the
Capital Securities shall be substantially in the form of Exhibit A-1 to the
Declaration, with such changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice or to conform to the rules
of any exchange or quotation system on or in which the Capital Securities are
listed, traded or quoted.
(b) Common Securities. 6,200 Common Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of Six
million two hundred thousand dollars ($6,200,000) and a liquidation amount with
respect to the assets of the Trust of $1,000 per security, are hereby designated
for the purposes of identification only as "8.316% Common Securities" (the
"Common Securities"). The certificates evidencing the Common Securities shall
be substantially in the form of Exhibit A-2 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice.
2. Distributions.
-------------
(a) Distributions payable on each Security will be fixed at a rate per
annum of 8.316% (the "Coupon Rate") of the liquidation amount of $1,000 per
Security (the "Liquidation Amount"), such rate being the rate of interest
payable on the Debentures to be held by the Property
-1-
<PAGE>
Trustee. Distributions in arrears for more than one semiannual period will bear
additional distributions thereon compounded semiannually at the Coupon Rate (to
the extent permitted by applicable law). Pursuant to the Registration Rights
Agreement, in certain limited circumstances the Debenture Issuer will be
required to pay Liquidated Damages (as defined in the Registration Rights
Agreement) with respect to the Debentures. The term "Distributions", as used
herein, includes distributions of any such Liquidated Damages payable unless
otherwise stated. A Distribution is payable only to the extent that payments are
made in respect of the Debentures held by the Property Trustee and to the extent
the Property Trustee has funds on hand legally available therefor.
(b) Distributions on the Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or
duly provided for or, if no Distributions have been paid or duly provided for,
from May 28, 1997, and will be payable semiannually in arrears on June 1 and
December 1 of each year, commencing on December 1, 1997 (each, a "Distribution
Date"), except as otherwise described below. Distributions will be computed on
the basis of a 360-day year consisting of twelve 30-day months and, for any
period less than a full calendar month, on the basis of the actual number of
days elapsed in such month. As long as no Event of Default has occurred and is
continuing under the Indenture, the Debenture Issuer has the right under the
Indenture to defer payments of interest by extending the interest payment period
at any time and from time to time on the Debentures for a period not exceeding
10 consecutive semiannual periods, including the first such semiannual period
during such period (each an "Extension Period"), during which Extension Period
no interest shall be due and payable on the Debentures, provided that no
Extension Period shall end on a date other than an Interest Payment Date for the
Debentures or extend beyond the Maturity Date of the Debentures. As a
consequence of such deferral, Distributions will also be deferred. Despite such
deferral, Distributions will continue to accumulate with additional
Distributions thereon (to the extent permitted by applicable law but not at a
rate greater than the rate at which interest is then accruing on the Debentures)
at the Coupon Rate compounded semiannually during any such Extension Period.
Prior to the termination of any such Extension Period, the Debenture Issuer may
further defer payments of interest by further extending such Extension Period;
provided that such Extension Period, together with all such previous and further
extensions within such Extension Period, may not exceed 10 consecutive
semiannual periods, including the first semiannual period during such Extension
Period, end on a date other than an Interest Payment Date or extend beyond the
Maturity Date of the Debentures. Payments of accumulated Distributions will be
payable to Holders as they appear on the books and records of the Trust on the
first record date after the end of the Extension Period. Upon the termination
of any Extension Period and the payment of all amounts then due, the Debenture
Issuer may commence a new Extension Period, subject to the above requirements.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the close of
business on the 15th day of the month preceding the month in which the relevant
Distribution Date occurs, which Distribution Dates correspond to the interest
payment dates on the Debentures. Subject to any applicable laws and regulations
and the provisions of the Declaration, each such payment in respect of the
Global Capital Securities will be made as described under the heading
"Description of Capital Securities -- Form,
-2-
<PAGE>
Denomination, Book-Entry Procedures and Transfer" in the Offering Memorandum
dated May 22, 1997, of the Debenture Issuer and the Trust relating to the
Securities and the Debentures. Payments in respect of Capital Securities held in
certificated form will be made by check mailed to the Holder entitled thereto.
The relevant record dates for the Common Securities shall be the same as the
record dates for the Capital Securities. Distributions payable on any Securities
that are not punctually paid on any Distribution Date, as a result of the
Debenture Issuer having failed to make a payment under the Debentures, will
cease to be payable to the Holder on the relevant record date, and such
defaulted Distribution will instead be payable to the Person in whose name such
Securities are registered on the special record date or other specified date
determined in accordance with the Indenture. If any date on which Distributions
are payable on the Securities is not a Business Day, then payment of the
Distribution payable on such date will be made on the next succeeding day that
is a Business Day (and without any interest or other payment in respect of any
such delay), except that if such next succeeding Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day with the same force and effect as if made on the date
such payment was originally payable.
(d) In the event that there is any money or other property held by or
for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders.
3. Liquidation Distribution Upon Dissolution.
-----------------------------------------
In the event of any dissolution of the Trust or the Sponsor otherwise
gives notice of its election to dissolve the Trust pursuant to Section
8.1(a)(iii) of the Declaration, the Trust shall be liquidated by the
Administrative Trustees as expeditiously as the Administrative Trustees
determine to be possible by distributing, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, to the Holders a Like
Amount (as defined below) of the Debentures, unless such distribution is
determined by the Property Trustee not to be practicable, in which event such
Holders will be entitled to receive Pro Rata out of the assets of the Trust
legally available for distribution to Holders, after satisfaction of liabilities
to creditors of the Trust as provided by applicable law, an amount equal to the
aggregate of the liquidation amount of $1,000 per Security plus accumulated and
unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution").
"Like Amount" means (i) with respect to a redemption of the
Securities, Securities having a Liquidation Amount equal to the principal amount
of Debentures to be paid in accordance with their terms and (ii) with respect to
a distribution of Debentures upon the liquidation of the Trust, Debentures
having a principal amount equal to the Liquidation Amount of the Securities of
the Holder to whom such Debentures are distributed.
If, upon any such liquidation, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets on hand legally
available to pay in full the aggregate Liquidation Distribution, then the
amounts payable directly by the Trust on the Securities shall be paid on a Pro
Rata basis.
-3-
<PAGE>
4. Redemption and Distribution.
---------------------------
(a) Upon the repayment of the Debentures in whole or in part, at
maturity or upon early redemption, the proceeds from such repayment shall be
simultaneously applied by the Property Trustee (subject to the Property Trustee
having received written notice no later than 45 days prior to such repayment) to
redeem a Like Amount of the Securities at a redemption price equal to (i) in the
case of the repayment of the Debentures at maturity, the Maturity Redemption
Price (as defined below), (ii) in the case of the optional redemption of the
Debentures upon the occurrence and continuation of a Special Event, the Special
Event Redemption Price (as defined below) and (iii) in the case of the optional
redemption of the Debentures in whole or in part at any time other than upon the
occurrence and continuation of a Special Event, the Optional Redemption Price
(as defined below). The Maturity Redemption Price, the Special Event Redemption
Price and the Optional Redemption Price are referred to collectively as the
"Redemption Price". Holders will be given not less than 30 nor more than 60
days' notice of such redemption.
(b) (i) The "Maturity Redemption Price", with respect to a
redemption of Securities, shall mean an amount equal to the principal of and
accrued and unpaid interest on the Debentures as of the maturity date thereof.
(ii) In the case of an optional redemption, if fewer than all the
outstanding Securities are to be so redeemed, the Securities to be redeemed will
be determined as described in Section 4(f)(ii) below.
The Debenture Issuer shall have the right (subject to the conditions
in the Indenture) to elect to redeem the Debentures in whole at any time or in
part from time to time, upon not less than 30 days' and not more than 60 days'
notice, at a prepayment price (the "Optional Prepayment Price") equal to the
greater of (i) 100% of the principal amount of the Debentures to be so prepaid
plus accrued and unpaid interest thereon (including Additional Sums and
Liquidated Damages, if any) to the date of prepayment and (ii) the sum of the
present values of the remaining scheduled payments of principal of the
Debentures to be so prepaid and interest thereon (including Additional Sums and
Liquidated Damages, if any) discounted to the date of prepayment, on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months),
at the Treasury Rate (as defined herein) plus 25 basis points plus accrued
interest thereon to the date of prepayment.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Reference Treasury Dealer as having a maturity comparable to the
remaining term of the Debentures to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such Debentures.
"Treasury Rate" means, with respect to any prepayment date, the rate
per annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming
-4-
<PAGE>
a price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such prepayment
date.
"Comparable Treasury Price" means, with respect to any prepayment
date, (i) the average of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) on the
third business day preceding such prepayment date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such business day, the average of
the Reference Treasury Dealer Quotations for such prepayment date.
"Reference Treasury Dealer Quotations" means, with respect to the
Reference Treasury Dealer and any prepayment date, the average, as determined by
the Debenture Trustee, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) quoted in
writing to the Debenture Trustee by the Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third business day preceding such prepayment date.
"Reference Treasury Dealer" means Lehman Brothers Inc. and its
successors; provided however, that if Lehman Brothers Inc. shall cease to be a
primary U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer"), the Company shall substitute therefor another Primary Treasury Dealer.
Upon such a prepayment of the Debentures, the proceeds from such
prepayment shall be applied by the Property Trustee to redeem a Like Amount of
the Securities, upon not less than 30 nor more than 60 days' notice of a date of
redemption to the holders of the Securities at a redemption price which shall be
equal to the Optional Prepayment Price in respect of the Debentures.
(c) If at any time an Investment Company Event or a Tax Event (each as
defined below, and each a "Special Event") occurs, the Debenture Issuer shall
have the right (subject to the conditions set forth in the Indenture) at any
time upon not less than 30 nor more than 60 days' notice, to redeem the
Debentures in whole, but not in part, within the 90 days following the
occurrence of such Special Event (the "90 Day Period"), and, simultaneous with
such redemption, to cause a Like Amount of the Securities to be redeemed by the
Trust at the Special Event Redemption Price on a Pro Rata basis.
"Investment Company Event" means the receipt by the Sponsor and the
Trust of an Opinion of Counsel from counsel experienced in such matters to the
effect that, as a result of the occurrence of a change in law or regulation or a
written change (including any announced prospective change) in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, which amendment or change is effective or which
pronouncement or decision is announced on or after May 22, 1997, there is more
than an insubstantial risk that the Trust is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act of 1940, as amended (the "Investment Company
-5-
<PAGE>
Act"), which change or prospective change becomes effective or would become
effective, as the case may be, on or after the date of the issuance of the
Capital Securities.
"Tax Event" shall occur upon receipt by the Sponsor and the Trust of
an Opinion of Counsel from counsel experienced in such matters to the effect
that, as a result of any amendment to, or change (including any announced
prospective change) in, the laws or any regulations thereunder of the United
States or any political subdivision or taxing authority thereof or therein, or
as a result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement or decision is announced on or after May 22,
1997, there is more than an insubstantial risk that (i) the Trust is, or will be
within 90 days of the date of such opinion, subject to United States federal
income tax with respect to income received or accrued on the Debentures, (ii)
interest payable by the Debenture Issuer on the Debentures is not, or within 90
days of the date of such opinion, will not be, deductible by the Debenture
Issuer, in whole or in part, for United States federal income tax purposes, or
(iii) the Trust is, or will be within 90 days of the date of such opinion,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges.
The "Make-Whole Amount" shall be equal to the greater of (a) 100% of
the principal amount of the Debentures or (b) the sum, as determined by the
Reference Treasury Dealer, of the present values of the remaining scheduled
payments of principal and interest on the Debentures, discounted to the date of
prepayment on a semiannual basis (assuming a 360-day year consisting of twelve
30-day months) at the Adjusted Treasury Rate, plus, in each case, accrued and
unpaid interest thereon (including Additional Sums and Liquidated Damages, if
any) to the date of prepayment.
"Adjusted Treasury Rate" means, with respect to any prepayment date,
the rate per annum equal to (i) the yield, under the heading which represents
the average for the immediately prior week, appearing in the most recently
published statistical release designated "H.15(519)" or any successor
publication which is published weekly by the Federal Reserve and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities," for the
maturity date corresponding to June 1, 2027 (the "Stated Maturity Date") (if no
maturity date is within three months before or after the Stated Maturity Date,
yields for the two published maturities most closely corresponding to the Stated
Maturity Date shall be interpolated and the Adjusted Treasury Rate shall be
interpolated or extrapolated from such yields on a straight-line basis, rounding
to the nearest month) or (ii) if such release (or any successor release) is not
published during the week preceding the calculation date or does not contain
such yields, the rate per annum equal to the semiannual equivalent yield to
maturity of the Comparable Treasury Issue, assuming a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such prepayment date plus (i) 1.03% if such
prepayment date occurs prior to June 1, 1998 and (ii) 0.50% in all other cases.
"Special Event Redemption Price" shall mean, with respect to a
redemption of Securities, a price equal to the Make-Whole Amount.
-6-
<PAGE>
(d) On and from the date fixed by the Administrative Trustees for any
distribution of Debentures and liquidation of the Trust: (i) the Securities
will no longer be deemed to be outstanding, (ii) the Clearing Agency or its
nominee (or any successor Clearing Agency or its nominee), as the Holder of the
Capital Securities, will receive a registered global certificate or certificates
representing the Debentures to be delivered upon such distribution and any
certificates representing Securities not held by the Clearing Agency or its
nominee (or any successor Clearing Agency or its nominee) will be deemed to
represent beneficial interests in a Like Amount of Debentures until such
certificates are presented to the Debenture Issuer or its agent for transfer or
reissue.
(e) The Trust may not redeem fewer than all the outstanding Securities
unless all accumulated and unpaid Distributions have been paid on all Securities
for all semiannual Distribution periods terminating on or before the date of
redemption.
(f) The procedure with respect to redemptions or distributions of
Securities shall be as follows:
(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder to be redeemed
or exchanged not fewer than 30 nor more than 60 days before the date fixed
for redemption or exchange thereof which, in the case of a redemption, will
be the date fixed for redemption of the Debentures. For purposes of the
calculation of the date of redemption or exchange and the dates on which
notices are given pursuant to this Section 4(f)(i), a Redemption/
Distribution Notice shall be deemed to be given on the day such notice is
first mailed by first-class mail, postage prepaid, to Holders. Each
Redemption/Distribution Notice shall be addressed to the Holders at the
address of each such Holder appearing in the books and records of the
Trust. No defect in the Redemption/Distribution Notice or in the mailing
of either thereof with respect to any Holder shall affect the validity of
the redemption or exchange proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Securities are
to be redeemed, the particular Securities to be redeemed shall be selected
on a Pro Rata basis (based upon Liquidation Amounts) not more than 60 days
prior to the date fixed for redemption from the outstanding Capital
Securities not previously called for redemption, provided, however, that
with respect to Holders that would be required to hold less than 100 but
more than zero Securities as a result of such pro rata redemption, the
Trust shall redeem Securities of each such Holder so that after such
redemption such Holder shall hold either 100 Securities or such Holder no
longer holds any Securities and shall use such method (including, without
limitation, by lot) as the Trust shall deem fair and appropriate, provided,
further, that any such proration may be made on the basis of the aggregate
Liquidation Amount of Securities held by each Holder thereof and may be
made by making such adjustments as the Trust deems fair and appropriate in
order that only Securities in denominations of $1,000 or integral multiples
thereof shall be redeemed. In respect of Capital Securities registered in
the name of and held of record by the Clearing Agency or its nominee (or
any successor Clearing
-7-
<PAGE>
Agency or its nominee) or any nominee, the distribution of the proceeds of
such redemption will be made to the Clearing Agency and disbursed by such
Clearing Agency in accordance with the procedures applied by such agency or
nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, (which notice will be irrevocable), then
(A) with respect to Capital Securities issued in book-entry form, by 12:00
noon, New York City time, on the redemption date, provided that the
Debenture Issuer has paid the Property Trustee a sufficient amount of cash
in connection with the related redemption or maturity of the Debentures by
10:00 a.m., New York City time, on the maturity date or the date of
redemption, as the case requires, the Property Trustee will deposit
irrevocably with the Clearing Agency or its nominee (or successor Clearing
Agency or its nominee) funds sufficient to pay the applicable Redemption
Price with respect to such Capital Securities and will give the Clearing
Agency irrevocable instructions and authority to pay the Redemption Price
to the relevant Clearing Agency Participants, and (B) with respect to
Capital Securities issued in certificated form and Common Securities,
provided that the Debenture Issuer has paid the Property Trustee a
sufficient amount of cash in connection with the related redemption or
maturity of the Debentures, the Property Trustee will pay the relevant
Redemption Price to the Holders by check mailed to the address of the
relevant Holder appearing on the books and records of the Trust on the
redemption date. If a Redemption/Distribution Notice shall have been given
and funds deposited as required, if applicable, then immediately prior to
the close of business on the date of such deposit, or on the redemption
date, as applicable, Distributions will cease to accumulate on the
Securities so called for redemption and all rights of Holders so called for
redemption will cease, except the right of the Holders of such Securities
to receive the Redemption Price, but without interest on such Redemption
Price, and such Securities shall cease to be outstanding.
(iv) Payment of accumulated and unpaid Distributions on the
Redemption Date of the Securities will be subject to the rights of Holders
on the close of business on a regular record date in respect of a
Distribution Date occurring on or prior to such Redemption Date.
Neither the Administrative Trustees nor the Trust shall be required to
register or cause to be registered the transfer of (i) any Securities beginning
on the opening of business 15 days before the day of mailing of a notice of
redemption and ending at the close of business on the day of such mailing or
(ii) any Securities selected for redemption except the unredeemed portion of any
Security being redeemed. If any date fixed for redemption of Securities is not
a Business Day, then payment of the Redemption Price payable on such date will
be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
next succeeding Business Day falls in the next calendar year, such payment shall
be made on the immediately preceding Business Day, with the same force and
effect as if made on such date fixed for redemption. If payment of the
Redemption Price in respect of any Securities is improperly withheld or refused
and not paid either by the Property Trustee or by the Sponsor as guarantor
pursuant to the relevant Securities Guarantee, Distributions on such Securities
will continue to accumulate from the original redemption date to the actual date
of payment, in which
-8-
<PAGE>
case the actual payment date will be considered the date fixed for redemption
for purposes of calculating the Redemption Price.
(v) Redemption/Distribution Notices shall be sent by the Property
Trustee on behalf of the Trust to (A) in respect of the Capital Securities,
the Clearing Agency or its nominee (or any successor Clearing Agency or its
nominee) if the Global Certificates have been issued or, if Definitive
Capital Security Certificates have been issued, to the Holder thereof, and
(B) in respect of the Common Securities to the Holder thereof.
(vi) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws and banking laws),
provided the acquiror is not the Holder of the Common Securities or the
obligor under the Indenture, the Sponsor or any of its subsidiaries may at
any time and from time to time purchase outstanding Capital Securities by
tender, in the open market or by private agreement.
5. Voting Rights - Capital Securities.
----------------------------------
(a) Except as provided under Sections 5(b), 6(b) and 7 and as
otherwise required by law and the Declaration, the Holders of the Capital
Securities will have no voting rights.
(b) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 5.07 of
the Indenture, (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Debentures or (iv) consent
to any amendment, modification or termination of the Indenture or the
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a majority in liquidation amount
of all outstanding Capital Securities; provided, however, that where a consent
under the Indenture would require the consent of each holder of Debentures
affected thereby, no such consent shall be given by the Property Trustee without
the prior approval of each Holder of the Capital Securities. The Trustees shall
not revoke any action previously authorized or approved by a vote of the Holders
of the Capital Securities except by subsequent vote of such Holders. Subject to
Section 2.7 of the Declaration, the Property Trustee shall notify each Holder of
Capital Securities of any notice of default with respect to the Debentures. In
addition to obtaining the foregoing approvals of such Holders of the Capital
Securities, prior to taking any of the foregoing actions, the Trustees shall
obtain an opinion of counsel experienced in such matters to the effect that the
Trust will not be classified as an association taxable as a corporation for
United States federal income tax purposes on account of such action.
If an Event of Default under the Declaration has occurred and is
continuing, then the Holders of a Majority in liquidation amount of Capital
Securities have the right to direct the exercise of any trust or power conferred
upon the Property Trustee under this Declaration, including the right to direct
the Property Trustee to exercise the remedies available to it as holder of the
Debentures and the Capital Securities Guarantee. If an Event of Default under
the Declaration has occurred and is
-9-
<PAGE>
continuing and such event is attributable to the failure of the Debenture Issuer
to pay principal of or premium, if any, or interest on the Debentures on the due
date (or in the case of redemption, on the redemption date), then a Holder of
Capital Securities may directly institute a proceeding for enforcement of
payment to such Holder of the principal of or premium, if any, or interest on a
Like Amount of Debentures (a "Direct Action") on or after the respective due
date specified in the Debentures. In connection with such Direct Action, the
rights of the Common Securities Holder will be subrogated to the rights of such
Holder of Capital Securities to the extent of any payment made by the Debenture
Issuer to such Holder of Capital Securities in such Direct Action. In addition,
if the Property Trustee fails to take legal action for an Event of Default of
which the Trustee has knowledge, the Holders of the Capital Securities may, to
the fullest extent permitted by law, take such legal action, to the same extent
as if such Holders of Capital Securities held a Like Amount of Debentures,
without first proceeding against the Property Trustee or the Trust.
Any approval or direction of Holders of Capital Securities may be
given at a separate meeting of Holders of Capital Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Property Trustee will cause a notice of any
meeting at which Holders of Capital Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Capital Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Capital Securities will be
required for the Trust to redeem and cancel Capital Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
Notwithstanding that Holders of Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Capital Securities that are owned by the Sponsor or any Affiliate of the Sponsor
shall not be entitled to vote or consent and shall, for purposes of such vote or
consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
---------------------------------
(a) Except as provided under Sections 6(b), 6(c), and 7 as otherwise
required by law and the Declaration, the Holders of the Common Securities will
have no voting rights.
(b) Unless an Event of Default shall have occurred and be continuing,
any Trustee may be removed at any time by the holder of the Common Securities.
If an Event of Default has occurred and is continuing, the Property Trustee and
the Delaware Trustee may be removed at such time by the holders of a Majority in
liquidation amount of the outstanding Capital Securities. In no event will the
holders of the Capital Securities have the right to vote to appoint, remove or
replace, or increase or decrease the number of, the Administrative Trustees,
which voting rights are vested exclusively in the Sponsor as the holder of the
Common Securities. No resignation or
-10-
<PAGE>
removal of a Trustee and no appointment of a successor trustee shall be
effective until the acceptance of appointment by the successor trustee in
accordance with the provisions of the Declaration.
(c) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 5.07 of
the Indenture, (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Debentures or (iv) consent
to any amendment, modification or termination of the Indenture or the
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a Majority in liquidation amount
of all outstanding Common Securities; provided, however, that where a consent
under the Indenture would require the consent of each holder of Debentures
affected thereby, no such consent shall be given by the Property Trustee without
the prior approval of each Holder of the Common Securities. The Trustees shall
not revoke any action previously authorized or approved by a vote of the Holders
of the Common Securities except by subsequent vote of such Holders. Subject to
Section 2.7 of the Declaration, the Property Trustee shall notify each Holder of
Common Securities of any notice of default with respect to the Debentures. In
addition to obtaining the foregoing approvals of such Holders of the Common
Securities, prior to taking any of the foregoing actions, the Trustees shall
obtain an opinion of counsel experienced in such matters to the effect that the
Trust will not be classified as an association taxable as a corporation for
United States federal income tax purposes on account of such action.
If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay principal of or premium, if any, or interest on the Debentures on the due
date (or in the case of redemption, on the redemption date), then a Holder of
Common Securities may institute a Direct Action for enforcement of payment to
such Holder of the principal of or premium, if any, or interest on a Like Amount
of Debentures on or after the respective due date specified in the Debentures.
In connection with such Direct Action, the rights of the Common Securities
Holder will be subordinated to the rights of such Holder of Capital Securities
to the extent of any payment made by the Debenture Issuer to such Holder of
Common Securities in such Direct Action. Except as provided in the second
preceding sentence, the Holders of Common Securities will not be able to
exercise directly any other remedy available to the holders of the Debentures.
Any approval or direction of Holders of Common Securities may be given
at a separate meeting of Holders of Common Securities convened for such purpose,
at a meeting of all of the Holders of Securities in the Trust or pursuant to
written consent. The Administrative Trustees will cause a notice of any meeting
at which Holders of Common Securities are entitled to vote, or of any matter
upon which action by written consent of such Holders is to be taken, to be
mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
-11-
<PAGE>
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
7. Amendments to Declaration.
-------------------------
In addition to the requirements set out in Section 12.1 of the
Declaration, the Declaration may be amended from time to time by the Sponsor,
the Property Trustee and the Administrative Trustees, without the consent of the
Holders (i) to cure any ambiguity, correct or supplement any provisions in the
Declaration that may be inconsistent with any other provisions, or to make any
other provisions with respect to matters or questions arising under the
Declaration which shall not be inconsistent with the other provisions of the
Declaration, or (ii) to modify, eliminate or add to any provisions of the
Declaration to such extent as shall be necessary to ensure that the Trust will
be classified for United States federal income tax purposes as a grantor trust
at all times that any Securities are outstanding or to ensure that the Trust
will not be required to register as an "Investment Company" under the Investment
Company Act; provided, however, that in each case such action shall not
adversely affect in any material respect the interests of any Holder. Any
amendments of the Declaration pursuant to the immediately preceding sentence
shall become effective when notice thereof is given to the Holders. Under the
circumstances referred to in Section 12.1(c) of the Declaration, the Declaration
also may be amended by the Trustees and the Sponsor with (i) the consent of
Holders representing a Majority in liquidation amount of all outstanding
Securities, and (ii) receipt by the Trustees of an Opinion of Counsel to the
effect that such amendment or the exercise of any power granted to the Trustees
in accordance with such amendment will not affect the Trust's status as a
grantor trust for United States federal income tax purposes or the Trust's
exemption from status as an Investment Company under the Investment Company Act,
provided that, without the consent of each Holder of Trust Securities, the
Declaration may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution required to be made in respect of the Trust Securities as of a
specified date or (ii) restrict the right of a holder of Trust Securities to
institute suit for the enforcement of any such payment on or after such date.
8. Pro Rata.
--------
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
according to the aggregate liquidation amount of the Securities held by the
relevant Holder in relation to the aggregate liquidation amount of all
Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the Capital
Securities pro rata according to the aggregate liquidation amount of Capital
Securities held by the relevant Holder relative to the aggregate liquidation
amount of all Capital Securities outstanding, and only after satisfaction of all
amounts owed to the Holders of the Capital Securities, to each Holder of Common
Securities pro rata according to the aggregate liquidation amount of Common
Securities held by the relevant Holder relative to the aggregate
-12-
<PAGE>
liquidation amount of all Common Securities outstanding. In any such proration,
the Trust may make such adjustments as may be appropriate in order that only
securities in authorized denominations shall be redeemed (subject to the minimum
block requirements of Section 9.2(n) of the Declaration).
9. Ranking.
-------
The Capital Securities rank pari passu with the Common Securities and
payment thereon shall be made Pro Rata with the Common Securities, except that,
if an Event of Default under the Declaration occurs and is continuing, no
payments in respect of Distributions on, or payments upon liquidation,
redemption or otherwise with respect to, the Common Securities shall be made
until the Holders of the Capital Securities shall be paid in full the
Distributions, Redemption Price, Liquidation Distribution and other payments to
which they are entitled at such time.
10. Acceptance of Securities Guarantee and Indenture.
------------------------------------------------
Each Holder of Capital Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Capital Securities Guarantee
and the Common Securities Guarantee, respectively, including the subordination
provisions therein and to the provisions of the Indenture.
11. No Preemptive Rights.
--------------------
The Holders shall have no preemptive or similar rights to subscribe
for any additional securities.
12. Miscellaneous.
-------------
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Capital
Securities Guarantee, the Common Securities Guarantee (as may be appropriate)
and the Indenture (including any supplemental indenture) to a Holder without
charge upon written request to the Sponsor at its principal place of business.
-13-
<PAGE>
EXHIBIT A-1
FORM OF SUBORDINATED CAPITAL INCOME SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
[IF THIS CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY, INSERT: THIS
CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY WITHIN THE MEANING OF THE
DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "CLEARING AGENCY") OR A NOMINEE OF THE CLEARING
AGENCY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE CLEARING AGENCY OR ITS NOMINEE ONLY IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS
CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL SECURITY AS A WHOLE BY
THE CLEARING AGENCY TO A NOMINEE OF THE CLEARING AGENCY OR BY A NOMINEE OF THE
CLEARING AGENCY TO THE CLEARING AGENCY OR ANOTHER NOMINEE OF THE CLEARING
AGENCY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
[IF THIS CAPITAL SECURITY IS A RESTRICTED CAPITAL SECURITY, INSERT:
THE CAPITAL SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS CAPITAL
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAWS.]
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO
-1-
<PAGE>
YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON
WHICH NGC CORPORATION (THE "COMPANY") OR ANY "AFFILIATE" OF THE COMPANY WAS THE
OWNER OF THIS CAPITAL SECURITY (OR ANY PREDECESSOR OF THIS CAPITAL SECURITY)
ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS THIS CAPITAL
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND
SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7)
OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS CAPITAL SECURITY FOR
ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED
INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE
IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F)
PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
UNDER THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE TRUST AND THE COMPANY
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D), (E) OR (F)
TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) PURSUANT TO CLAUSE (D) OR
(E), TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE
REVERSE OF THIS CAPITAL SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEREE TO
THE TRUST.
[IF THIS CAPITAL SECURITY IS A REGULATION S GLOBAL SECURITY, INSERT:
THIS CAPITAL SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND MAY
NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS UNLESS REGISTERED UNDER THE SECURITIES ACT OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS
AVAILABLE.]
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF ALSO
AGREES, REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT OR
OTHER PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA") OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED, OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF
ANY SUCH PLAN'S INVESTMENT IN THE ENTITY AND IS NOT PURCHASING OR HOLDING SUCH
SECURITIES ON BEHALF OF OR WITH "PLAN ASSETS" OR (ii) IT IS ELIGIBLE FOR THE
-2-
<PAGE>
EXEMPTIVE RELIEF AVAILABLE UNDER PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 WITH
RESPECT TO SUCH PURCHASE AND HOLDING.
THE CAPITAL SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN
BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 (100 CAPITAL
SECURITIES). ANY SUCH TRANSFER OF CAPITAL SECURITIES IN A BLOCK HAVING A
LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO
LEGAL EFFECT WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE THE
HOLDER OF SUCH CAPITAL SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT LIMITED TO
THE RECEIPT OF DISTRIBUTIONS OF SUCH CAPITAL SECURITIES, AND SUCH TRANSFEREE
SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH CAPITAL SECURITIES.
SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THIS CAPITAL SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND.
-3-
<PAGE>
Number of Series A Aggregate Liquidation
Capital Securities Amount: _____________
___________________ CUSIP NO. ___________
Certificate Evidencing Subordinated Capital Income Securities
of
NGC Corporation Capital Trust I
Series ___ 8.316% Subordinated Capital Income Securities
(liquidation amount $1,000 per Capital Security)
NGC Corporation Capital Trust I, a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of [$_________ in
aggregate liquidation amount of Capital Securities of the Trust]/1/ [the
aggregate liquidation amount of Capital Securities of the Trust specified in
Schedule A hereto]/2/ representing undivided beneficial interests in the assets
of the Trust designated the Series __ 8.316% Capital Securities (liquidation
amount $1,000 per Capital Security) (the "Capital Securities"). Subject to the
Declaration (as defined below), the Capital Securities are transferable on the
books and records of the Trust, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form for transfer.
The designation, rights, privileges, restrictions, preferences and other terms
and provisions of the Capital Securities represented hereby are issued and shall
in all respects be subject to the provisions of the Amended and Restated
Declaration of Trust of the Trust dated as of May 28, 1997, as the same may be
amended from time to time (the "Declaration"), including the designation of the
terms of the Capital Securities as set forth in Annex I to the Declaration.
Capitalized terms used but not defined herein shall have the meaning given them
in the Declaration. The Sponsor will provide a copy of the Declaration, the
Capital Securities Guarantee, the Common Securities Guarantee (as may be
appropriate), and the Indenture (including any supplemental indenture) to a
Holder without charge upon written request to the Trust at its principal place
of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Capital Securities Guarantee to the extent provided therein.
- ----------------------------
/1/ Insert in Definitive Capital Securities only.
/2/ Insert in Global Capital Securities only.
-4-
<PAGE>
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Capital Securities
as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has duly executed this certificate.
Dated:
NGC CORPORATION CAPITAL TRUST I
By:________________________________
Name:
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the within-
mentioned Declaration.
The First National Bank of Chicago,
as Property Trustee
By:_________________________
Authorized Signatory
-5-
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed at a rate
per annum of 8.316% (the "Coupon Rate") of the liquidation amount of $1,000 per
Capital Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee. Distributions in arrears for more than one
semiannual period will bear interest thereon compounded semiannually at the
Coupon Rate (to the extent permitted by applicable law). Pursuant to the
Registration Rights Agreement, in certain limited circumstances the Debenture
Issuer will be required to pay Liquidated Damages (as defined in the
Registration Rights Agreement) with respect to the Debentures. The term
"Distributions", as used herein, includes distributions of any such Liquidated
Damages payable unless otherwise stated. A Distribution is payable only to the
extent that payments are made in respect of the Debentures held by the Property
Trustee and to the extent the Property Trustee has funds on hand legally
available therefor.
Distributions on the Capital Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or
duly provided for or, if no Distributions have been paid or duly provided for,
from May 28, 1997, and will be payable semiannually in arrears, on June 1 and
December 1 of each year, commencing on December 1, 1997, except as otherwise
described below. Distributions will be computed on the basis of a 360-day year
consisting of twelve 30-day months and, for any period less than a full calendar
month, on the basis of the actual number of days elapsed in such month. As long
as no Event of Default has occurred and is continuing under the Indenture, the
Debenture Issuer has the right under the Indenture to defer payments of interest
by extending the interest payment period at any time and from time to time on
the Debentures for a period not exceeding 10 consecutive calendar semiannual
periods, including the first such semiannual period during such period (each an
"Extension Period"), during which Extension Period no interest shall be due and
payable on the Debentures, provided that no Extension Period shall end on a date
other than an Interest Payment Date for the Debentures or extend beyond the
Maturity Date of the Debentures. As a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, Distributions will
continue to accumulate with additional Distributions thereon (to the extent
permitted by applicable law but not at a rate greater than the rate at which
interest is then accruing on the Debentures) at the Coupon Rate compounded
semiannually during any such Extension Period. Prior to the termination of any
such Extension Period, the Debenture Issuer may further defer payments of
interest by further extending such Extension Period; provided that such
Extension Period, together with all such previous and further extensions within
such Extension Period, may not exceed 10 consecutive semiannual periods,
including the first semiannual period during such Extension Period, end on a
date other than an Interest Payment Date for the Debentures or extend beyond the
Maturity Date of the Debentures. Payments of accumulated Distributions will be
payable to Holders as they appear on the books and records of the Trust on the
first record date after the end of the Extension Period. Upon the termination
of any Extension Period and the payment of all amounts then due, the Debenture
Issuer may commence a new Extension Period, subject to the above requirements.
-6-
<PAGE>
The Property Trustee may, at the direction of the Sponsor, at any time
dissolve the Trust and, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law, cause the Debentures to be distributed to
the holders of the Securities in liquidation of the Trust or, simultaneous with
any redemption of the Debentures, cause a Like Amount of the Securities to be
redeemed by the Trust.
The Capital Securities shall be redeemable as provided in the
Declaration.
-7-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital Security
Certificate to:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Insert assignee's social security or tax identification number)
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
_________________________________________________________________
_________________________________________________________________
___________________________________________________________ agent to transfer
this Capital Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Capital Security
Certificate)
Signature Guarantee***
- -------------------------
*** Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities and Exchange Act of 1934, as amended.
-8-
<PAGE>
[Include the following if the Capital Security bears a Restricted Capital
Securities Legend -
In connection with any transfer of any of the Capital Securities evidenced by
this certificate, the undersigned confirms that such Capital Securities are
being:
CHECK ONE BOX BELOW
<TABLE>
<CAPTION>
<S> <C> <C>
(1) [ ] exchanged for the undersigned's own account without transfer;
or
(2) [ ] transferred pursuant to and in compliance with Rule 144A
under the Securities Act of 1933, as amended; or
(3) [ ] transferred to a non-U.S. person pursuant to an offshore
transaction in compliance with Rule 904 of Regulation S under
the Securities Act of 1933, as amended; or
(4) [ ] transferred to an institutional "accredited investor" within
the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule
501 under the Securities Act of 1933, as amended, that is
acquiring the Capital Securities for its own account, or for
the account of such an institutional "accredited investor",
for investment purposes and not with a view to, or for offer
or sale in connection with, any distribution in violation of
the Securities Act of 1933, as amended; or
(5) [ ] transferred pursuant to and in compliance with Rule 144 under
the Securities Act of 1933, as amended;
(6) [ ] transferred pursuant to another available exemption from the
registration requirements of the
Securities Act of 1933, as amended; or
(7) [ ] transferred pursuant to an effective registration statement
under the Securities Act of 1933, as amended.
</TABLE>
Unless one of the boxes is checked, the Registrar will refuse to register any of
the Capital Securities evidenced by this certificate in the name of any Person
other than the registered Holder thereof; provided, however, that if box (3),
(4), (5) or (6) is checked, the Registrar may require, prior to registering any
such transfer of the Capital Securities, such legal opinions, certifications and
other information as the Trust has reasonably requested to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act of 1933, as
amended; provided, further, that (i) if box (2) is checked, the transferee must
also certify in the form attached hereto that it is a "qualified institutional
buyer" as defined in Rule 144A or (ii) if box (3) or (4) is checked, the
transferee must also provide to the Registrar a Transferee Letter of
Representation in the form attached to the Offering Memorandum of the Trust,
dated May 22, 1997.
___________________________
Signature]
-9-
<PAGE>
Schedule A*
The initial number of Capital Securities evidenced by the Certificate to
which this Schedule is attached is _______ (having an aggregate liquidation
amount of $______). The notations in the following table evidence decreases and
increases in the number of Capital Securities evidenced by such Certificate.
<TABLE>
<CAPTION>
Decrease in Number Increase in Number Number of Capital
of Capital Securities of Capital Securities Securities Remaining Notation by Registrar
After Such Decrease
or Increase
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
</TABLE>
__________________________
* Append to Global Capital Securities only.
-10-
<PAGE>
CERTIFICATE OF QUALIFIED INSTITUTIONAL BUYER
The undersigned transferee of Capital Securities hereby certifies that (i)
the undersigned is a "qualified institutional buyer" (a "QIB") as defined in
Rule 144A ("Rule 144A") promulgated under the Securities Act of 1933, as amended
(the "Securities Act"), (ii) the undersigned is aware that the transfer of the
Capital Securities to the undersigned is being made in reliance on Rule 144A,
(iii) the undersigned is acquiring the Capital Securities for its own account or
for the account of another QIB over which the undersigned exercises its sole
investment discretion, (iv) the undersigned acknowledges that it has received
such information regarding NGC Corporation as the undersigned has requested
pursuant to Rule 144A or has determined not to request such information and (v)
the undersigned is aware that the transferor is relying upon the undersigned's
foregoing representations in order to claim the exemption from registration
provided by Rule 144A.
The undersigned also understands and acknowledges that the Capital
Securities have not been registered under the Securities Act or any other
applicable securities law, are being offered for resale in transactions not
requiring registration under the Securities Act and may not be offered, sold,
pledged or otherwise transferred except in compliance with the registration
requirements of the Securities Act or any other applicable securities laws,
pursuant to an exemption therefrom or in a transaction not subject thereto and,
in each case, in compliance with the terms of the Capital Securities and the
terms of the Amended and Restated Declaration of Trust of NGC Corporation
Capital Trust I, dated as of May 28, 1997, as the same may be amended from time
to time.
_________________________
Signature
-11-
<PAGE>
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW. NEITHER THIS COMMON SECURITY NOR ANY INTEREST
OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
A2-1
<PAGE>
Number of Common Securities Aggregate Liquidation
_________________________ Amount: ____________
Certificate Number
CS-____________
Certificate Evidencing Common Securities
of
NGC Corporation Capital Trust I
8.316% Common Securities
(liquidation amount $1,000 per Common Security)
NGC Corporation Capital Trust I, a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
______________________ (the "Holder") is the registered owner of __________
common securities of the Trust representing undivided beneficial interests in
the assets of the Trust designated the 8.316% Common Securities (liquidation
amount $1,000 per Common Security) (the "Common Securities"). Subject to the
limitations in Section 9.1(c) of the Declaration (as defined below), the Common
Securities are transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities represented hereby are issued and shall in all respects be subject to
the provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of May 28, 1997, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Common Securities
as set forth in Annex I to the Declaration. Capitalized terms used but not
defined herein shall have the meaning given them in the Declaration. The
Sponsor will provide a copy of the Declaration, the Common Securities Guarantee,
the Capital Securities Guarantee (as may be appropriate) and the Indenture
(including any supplemental indenture) to a Holder without charge upon written
request to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Common Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Common Securities as
evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this ___
day of __________, ____.
A2-2
<PAGE>
NGC Corporation Capital Trust I
By:________________________________
Name:
Administrative Trustee
A2-3
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a rate
per annum of 8.316% (the "Coupon Rate") of the liquidation amount of $1,000 per
Common Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee. Distributions in arrears for more than one
semiannual period will bear interest thereon compounded semiannually at the
Coupon Rate (to the extent permitted by applicable law). Pursuant to the
Registration Rights Agreement, in certain limited circumstances the Debenture
Issuer will be required to pay Liquidated Damages (as defined in the
Registration Rights Agreement) with respect to the Debentures. The term
"Distributions", as used herein, includes distributions of any such Liquidated
Damages payable unless otherwise stated. A Distribution is payable only to the
extent that payments are made in respect of the Debentures held by the Property
Trustee and to the extent the Property Trustee has funds available therefor.
Distributions on the Common Securities will be cumulative, will accrue
from the most recent date to which Distributions have been paid or duly provided
for or, if no Distributions have been paid or duly provided for, from May 28,
1997, and will be payable semiannually in arrears, on June 1 and December 1 of
each year, commencing on December 1, 1997, except as otherwise described below.
Distributions will be computed on the basis of a 360-day year consisting of
twelve 30-day months and, for any period less than a full calendar month, on the
basis of the actual number of days elapsed in such month. As long as no Event
of Default has occurred and is continuing under the Indenture, the Debenture
Issuer has the right under the Indenture to defer payments of interest by
extending the interest payment period at any time and from time to time on the
Debentures for a period not exceeding 10 consecutive calendar semiannual
periods, including the first such semiannual period during such period (each an
"Extension Period"), during which Extension Period no interest shall be due and
payable on the Debentures, provided that no Extension Period shall end on a date
other than an Interest Payment Date for the Debentures or extend beyond the
Maturity Date of the Debentures. As a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, Distributions will
continue to accumulate with additional Distributions thereon (to the extent
permitted by applicable law but not at a rate greater than the rate at which
interest is then accruing on the Debentures) at the Coupon Rate compounded
semiannually during any such Extension Period. Prior to the termination of any
such Extension Period, the Debenture Issuer may further defer payments of
interest by further extending such Extension Period; provided that such
Extension Period, together with all such previous and further extensions within
such Extension Period, may not exceed 10 consecutive semiannual periods,
including the first semiannual period during such Extension Period, or end on a
date other than an Interest Payment Date for the Debentures or extend beyond the
Maturity Date of the Debentures. Payments of accrued Distributions will be
payable to Holders as they appear on the books and records of the Trust on the
first record date after the end of the Extension Period. Upon the termination
of any Extension Period and the payment of all amounts then due, the Debenture
Issuer may commence a new Extension Period, subject to the above requirements.
The Property Trustee may, at the direction of the Sponsor, at any time
dissolve the Trust and, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law, cause
A2-4
<PAGE>
the Debentures to be distributed to the holders to the Securities in liquidation
of the Trust or, simultaneous with any redemption of the Debentures, cause a
Like Amount of the Securities to be redeemed by the Trust.
Under certain circumstances, the right of the holders of the Common
Securities shall be subordinate to the rights of the holders of the Capital
Securities (as defined in the Declaration), as provided in the Declaration.
The Common Securities shall be redeemable as provided in the
Declaration.
A2-5
<PAGE>
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Insert assignee's social security or tax identification number)
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
_________________________________________________________________
_________________________________________________________________
___________________________________________________________ agent to transfer
this Common Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
A2-6
<PAGE>
In connection with any transfer of any of the Common Securities evidenced by
this certificate, the undersigned confirms that such Common Securities are
being:
CHECK ONE BOX BELOW
<TABLE>
<CAPTION>
<S> <C> <C>
(1) [ ] exchanged for the undersigned's own account without
transfer; or
(2) [ ] transferred pursuant to and in compliance with Rule 144A
under the Securities Act of 1933, as amended; or
(3) [ ] transferred to a non-U.S. person pursuant to an offshore
transaction in compliance with Rule 904 of Regulation S
under the Securities Act of 1933, as amended; or
(4) [ ] transferred to an institutional "accredited investor" within
the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule
501 under the Securities Act of 1933, as amended, that is
acquiring the Common Securities for its own account, or for
the account of such an institutional "accredited investor",
for investment purposes and not with a view to, or for offer
or sale in connection with, any distribution in violation of
the Securities Act of 1933, as amended; or
(5) [ ] transferred pursuant to and in compliance with Rule 144
under the Securities Act of 1933, as amended;
(6) [ ] transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933, as
amended; or
(7) [ ] transferred pursuant to an effective registration statement,
under the Securities Act of 1933, as amended.
</TABLE>
Unless one of the boxes is checked, the Registrar will refuse to register any of
the Common Securities evidenced by this certificate in the name of any Person
other than the registered Holder thereof; provided, however, that if box (3),
(4), (5) or (6) is checked, the Registrar may require, prior to registering any
such transfer of the Common Securities, such legal opinions, certifications and
other information as the Trust has reasonably requested to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act of 1933, as
amended; provided, further, that (i) if box (2) is checked, the transferee must
also certify in the form attached hereto that it is a "qualified institutional
buyer" as defined in Rule 144A or (ii) if box (3) or (4) is checked, the
transferee must also provide to the Registrar a Transferee Letter of
Representation in the form attached to the Offering Memorandum of the Trust,
dated May 22, 1997 (as modified to reflect the transfer of Common Securities).
________________________
Signature
A2-7
<PAGE>
CERTIFICATE OF QUALIFIED INSTITUTIONAL BUYER
The undersigned transferee of Common Securities hereby certifies that (i)
the undersigned is a "qualified institutional buyer" (a "QIB") as defined in
Rule 144A ("Rule 144A") promulgated under the Securities Act of 1933, as amended
(the Securities Act), (ii) the undersigned is aware that the transfer of the
Common Securities to the undersigned is being made in reliance on Rule 144A and
(iii) the undersigned is acquiring the Common Securities for its own account or
for the account of another QIB over which the undersigned exercises its sole
investment discretion.
The undersigned also understands and acknowledges that the Common
Securities have not been registered under the Securities Act or any other
applicable securities law, are being offered for resale in transactions not
requiring registration under the Securities Act and may not be offered, sold,
pledged or otherwise transferred except in compliance with the registration
requirements of the Securities Act or any other applicable securities laws,
pursuant to an exemption therefrom or in a transaction not subject thereto and,
in each case, in compliance with the terms of the Common Securities and the
terms of the Amended and Restated Declaration of Trust of NGC Corporation
Capital Trust I, dated as of May 28, 1997, as the same may be amended from time
to time.
__________________________
Signature
A2-8
<PAGE>
EXHIBIT B
SPECIMEN OF DEBENTURE
-B-1-
<PAGE>
EXHIBIT C
PURCHASE AGREEMENT
-C-1-
<PAGE>
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
VEHOU05:50445.1
-D-1-
<PAGE>
EXHIBIT 4.9
====================================
SERIES A CAPITAL SECURITIES GUARANTEE AGREEMENT
NGC CORPORATION
Dated as of May 28, 1997
====================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation................................ 2
ARTICLE II TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.............................. 6
SECTION 2.2 Lists of Holders of Securities................................ 6
SECTION 2.3 Reports by the Capital Securities Guarantee Trustee........... 6
SECTION 2.4 Periodic Reports to Capital Securities Guarantee Trustee...... 7
SECTION 2.5 Evidence of Compliance with Conditions Precedent.............. 7
SECTION 2.6 Events of Default; Waiver..................................... 7
SECTION 2.7 Event of Default; Notice...................................... 7
SECTION 2.8 Conflicting Interests......................................... 8
SECTION 2.9 Capital Securities Guarantee Trustee May File
Proofs of Claim............................................... 8
ARTICLE III
POWERS, DUTIES AND RIGHTS OFCAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Securities Guarantee
Trustee....................................................... 8
SECTION 3.2 Certain Rights of Capital Securities Guarantee Trustee........ 10
SECTION 3.3 Not Responsible for Recitals or Issuance of Series A Capital
Securities Guarantee.......................................... 12
ARTICLE IV CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Capital Securities Guarantee Trustee; Eligibility............ 12
SECTION 4.2 Appointment, Removal and Resignation of Capital Securities
Guarantee Trustee............................................ 13
ARTICLE V GUARANTEE
SECTION 5.1 Guarantee..................................................... 14
SECTION 5.2 Waiver of Notice and Demand................................... 14
SECTION 5.3 Obligations Not Affected...................................... 14
SECTION 5.4 Rights of Holders............................................. 15
SECTION 5.5 Guarantee of Payment.......................................... 16
SECTION 5.6 Subrogation................................................... 16
SECTION 5.7 Independent Obligations....................................... 16
ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions.................................... 17
SECTION 6.2 Ranking....................................................... 18
i
<PAGE>
ARTICLE VII TERMINATION
SECTION 7.1 Termination................................................... 18
ARTICLE VIII INDEMNIFICATION
SECTION 8.1 Exculpation................................................... 18
SECTION 8.2 Indemnification............................................... 19
ARTICLE IX MISCELLANEOUS
SECTION 9.1 Successors and Assigns........................................ 19
SECTION 9.2 Amendments.................................................... 19
SECTION 9.3 Notices....................................................... 20
SECTION 9.4 Exchange Offer................................................ 21
SECTION 9.5 Benefit....................................................... 21
SECTION 9.6 GOVERNING LAW................................................. 21
SECTION 9.7 Limited Liability............................................. 21
ii
<PAGE>
SERIES A CAPITAL
SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Series A Capital Securities
Guarantee"), dated as of May 28, 1997, is executed and delivered by NGC
Corporation, a Delaware corporation (the "Guarantor"), and The First National
Bank of Chicago, a national banking association as trustee (the "Capital
Securities Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Series A Capital Securities (as defined herein)
of NGC Corporation Capital Trust I, a Delaware statutory business trust (the
"Issuer").
WHEREAS, pursuant to the Declaration (as defined herein) the Issuer is
issuing on the date hereof $200,000,000 aggregate liquidation amount of its
Series A 8.316% Capital Securities (collectively the "Series A Capital
Securities") and, in connection with an Exchange Offer (as defined in the
Declaration), liquidation amount $1,000 per Capital Security, has agreed to
execute and deliver the Series B Capital Securities Guarantee (as defined in the
Declaration) for the benefit of holders of the Series B Capital Securities (as
defined in the Declaration).
WHEREAS, as incentive for the Holders to purchase the Series A Capital
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Series A Capital Securities Guarantee, to pay to
the Holders the Guarantee Payments (as defined below) and to make certain other
payments on the terms and conditions set forth herein.
WHEREAS, the Guarantor is executing and delivering a guarantee
agreement (the "Common Securities Guarantee"), with substantially identical
terms to this Series A Capital Securities Guarantee, for the benefit of the
holders of the Common Securities (as defined herein), except that if an Event of
Default (as defined in the Declaration) has occurred and is continuing, the
rights of holders of the Common Securities to receive Guarantee Payments under
the Common Securities Guarantee are subordinated, to the extent and in the
manner set forth in the Common Securities Guarantee, to the rights of holders of
Series A Capital Securities and the Series B Capital Securities to receive
Guarantee Payments under this Series A Capital Securities Guarantee and the
Series B Capital Securities Guarantee, as the case may be.
NOW, THEREFORE, in consideration of the purchase by each Holder, which
purchase the Guarantor hereby acknowledges shall benefit the Guarantor, the
Guarantor executes and delivers this Series A Capital Securities Guarantee for
the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
<PAGE>
In this Series A Capital Securities Guarantee, unless the context
otherwise requires:
(1) capitalized terms used in this Series A Capital Securities
Guarantee but not defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
(2) terms defined in the Declaration as at the date of execution of
this Series A Capital Securities Guarantee have the same meaning when used
in this Series A Capital Securities Guarantee unless otherwise defined in
this Series A Capital Securities Guarantee;
(3) a term defined anywhere in this Series A Capital Securities
Guarantee has the same meaning throughout;
(4) all references to "the Series A Capital Securities Guarantee" or
"this Series A Capital Securities Guarantee" are to this Series A Capital
Securities Guarantee as modified, supplemented or amended from time to
time;
(5) all references in this Series A Capital Securities Guarantee to
Articles and Sections are to Articles and Sections of this Series A Capital
Securities Guarantee, unless otherwise specified;
(6) a term defined in the Trust Indenture Act has the same meaning
when used in this Series A Capital Securities Guarantee, unless otherwise
defined in this Series A Capital Securities Guarantee or unless the context
otherwise requires; and
(7) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" means any day other than a Saturday or a Sunday, or a
day on which banking institutions in Chicago, Illinois or Houston, Texas are
authorized or required by law or executive order to close.
"Capital Securities Guarantee Trustee" means The First National Bank
of Chicago, a national banking association, until a Successor Capital Securities
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Series A Capital Securities Guarantee and thereafter means
each such Successor Capital Securities Guarantee Trustee.
2
<PAGE>
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the Capital Securities
Guarantee Trustee at which the corporate trust business of the Capital
Securities Guarantee Trustee shall, at any particular time, be principally
administered, which office at the date of execution of this Agreement is located
at One First National Plaza, Suite 0126, Chicago, Illinois 60670.
"Covered Person" means any Holder or beneficial owner of Series A
Capital Securities.
"Debentures" means the series of subordinated debt securities of the
Guarantor designated the Series A 8.316% Subordinated Deferrable Interest
Debentures due June 1, 2027 held by the Property Trustee (as defined in the
Declaration) of the Issuer.
"Declaration" means the Amended and Restated Declaration of Trust,
dated as of May 28, 1997 as amended, modified or supplemented from time to time,
among the trustees of the Issuer named therein, the Guarantor, as sponsor, and
the holders from time to time of undivided beneficial ownership interests in the
assets of the Issuer.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Series A Capital Securities Guarantee,
provided, however, that with respect to a default other than a default in
payment of any Guarantee Payment, the Guarantor shall have received notice of
such default and shall not have cured such default within 60 days after receipt
of such notice.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Series A Capital Securities, to the
extent not paid or made by the Issuer: (i) any accumulated and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Series A Capital Securities to the extent the Issuer has funds on hand
legally available therefor at such time, (ii) the redemption price, including
all accumulated and unpaid Distributions to the date of redemption (the
"Redemption Price") to the extent the Issuer has funds on hand legally available
therefor at such time, with respect to any Series A Capital Securities called
for redemption by the Issuer, and (iii) upon a voluntary or involuntary
dissolution, winding-up or liquidation of the Issuer (other than in connection
with the distribution of Debentures to the Holders in exchange for Series A
Capital Securities as provided in the Declaration), the lesser of (a) the
aggregate of the liquidation amount and all accumulated and unpaid Distributions
on the Series A Capital Securities to the date of payment, to the extent the
Issuer has funds on hand legally available therefor, and (b) the amount of
assets of the Issuer remaining available for distribution to Holders in
liquidation of the Issuer after satisfaction of liabilities to creditors of the
Issuer as required by applicable law. If an Event of Default has occurred and
is continuing, no Guarantee Payments under the Common Securities Guarantee with
respect to the Common Securities or any guarantee payment
3
<PAGE>
under any Other Common Securities Guarantees shall be made until the Holders
shall be paid in full the Guarantee Payments to which they are entitled under
this Series A Capital Securities Guarantee.
"Holder" shall mean any holder, as registered on the books and records
of the Issuer, of any Series A Capital Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Series A Capital
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Person known to a Responsible Officer of
the Capital Securities Guarantee Trustee to be an Affiliate of the Guarantor and
provided further, that in determining whether the Holders of the requisite
liquidation amount of Series A Capital Securities have voted on any matter
provided for in the Guarantee, then for the purpose of such determination only
(and not for any other purposes hereunder), if the Series A Capital Securities
remain in the form of one or more Global Certificates (as defined in the
Declaration), the term "Holders" shall mean the holder of the Global Certificate
acting at the direction of the Capital Security Beneficial Owners (as defined in
the Declaration).
"Indemnified Person" means the Capital Securities Guarantee Trustee,
any Affiliate of the Capital Securities Guarantee Trustee, or any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Capital Securities Guarantee Trustee.
"Indenture" means the Indenture dated as of May 28, 1997, among the
Guarantor (the "Debenture Issuer") and The First National Bank of Chicago, as
trustee (the "Indenture Trustee"), and any indenture supplemental thereto,
pursuant to which the Debentures are to be issued to the Property Trustee (as
defined in the Declaration) of the Issuer.
"Indenture Event of Default" shall mean any event specified in
Section 5.01 of the Indenture.
"Majority in liquidation amount of the Series A Capital Securities"
means, except as provided by the Declaration or by the Trust Indenture Act, a
vote by Holder(s) of more than 50% of the aggregate liquidation amount of all
outstanding Series A Capital Securities voting separately as a class. In
determining whether the Holders of the requisite amount of the Series A Capital
Securities have voted, Series A Capital Securities which are owned by the
Guarantor or any Affiliate of the Guarantor shall be disregarded for the purpose
of any such determination period.
"Officers' Certificate" means, with respect to the Guarantor, a
certificate signed by any of the Chairman of the Board, a Vice Chairman of the
Board, the Chief Executive Officer, the President or a Vice President and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
the Guarantor. Any Officers' Certificate delivered with respect to compliance
with a condition or covenant provided for in this Series A Capital Securities
Guarantee (other than pursuant to Section 314(d)(4) of the Trust Indenture Act)
shall include:
4
<PAGE>
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer on behalf of such Person in
rendering the Officers' Certificates.
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Other Common Securities Guarantees" shall have the same meaning as
"Other Guarantees" as defined in the Common Securities Guarantee.
"Other Debentures" means all junior subordinated debentures issued by
the Guarantor from time to time and sold to trusts to be established by the
Guarantor (if any), in each case similar to the Issuer.
"Other Guarantees" means all guarantees to be issued by the Guarantor
with respect to capital securities (if any) similar to the Series A Capital
Securities issued by other trusts to be established by the Guarantor (if any),
in each case similar to the Issuer.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of May 28, 1997, by and among the Guarantor, the Issuer and
the initial purchasers named therein as such agreement may be amended, modified
or supplemented from time to time.
"Responsible Officer" means, with respect to the Capital Securities
Guarantee Trustee, any officer within the Corporate Trust Office of the Capital
Securities Guarantee Trustee with direct responsibility for the administration
of this Series A Capital Securities Guarantee and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.
"Successor Capital Securities Guarantee Trustee" means a successor
Capital Securities Guarantee Trustee possessing the qualifications to act as
Capital Securities Guarantee Trustee under Section 4.1.
5
<PAGE>
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
"Trust Securities" means the Common Securities and the Series A
Capital Securities and Series B Capital Securities, collectively.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Series A Capital Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Series A Capital Securities Guarantee and shall, to the extent applicable, be
governed by such provisions; and
(b) if and to the extent that any provision of this Series A
Capital Securities Guarantee limits, qualifies or conflicts with the duties
imposed by Section 310 to 317, inclusive, of the Trust Indenture Act, such
imposed duties shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Capital Securities Guarantee
Trustee (unless the Capital Securities Guarantee Trustee is otherwise the
registrar of the Capital Securities) with a list, in such form as the Capital
Securities Guarantee Trustee may reasonably require, of the names and addresses
of the Holders ("List of Holders") as of such date, (i) within one Business Day
after May 15 and November 15 of each year, and (ii) at any other time within 30
days of receipt by the Guarantor of a written request for a List of Holders as
of a date no more than 14 days before such List of Holders is given to the
Capital Securities Guarantee Trustee, provided, that the Guarantor shall not be
obligated to provide such List of Holders at any time that the Guarantor
certifies in writing to the Capital Securities Guarantee Trustee that the List
of Holders does not differ from the most recent List of Holders given to the
Capital Securities Guarantee Trustee by the Guarantor. The Capital Securities
Guarantee Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Capital Securities Guarantee Trustee shall comply with
its obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
6
<PAGE>
SECTION 2.3 Reports by the Capital Securities Guarantee Trustee
Within 60 days after May 15 of each year, commencing May 15,
1998, the Capital Securities Guarantee Trustee shall provide to the Holders such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Capital Securities Guarantee Trustee shall also comply with the other
requirements of Section 313 of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Capital Securities Guarantee Trustee
The Guarantor shall provide to the Capital Securities Guarantee
Trustee such documents, reports and information as required by Section 314 (if
any) and the compliance certificate required by Section 314 of the Trust
Indenture Act in the form, in the manner and at the times required by Section
314 of the Trust Indenture Act; provided that such compliance certificate shall
be delivered on or before 120 days after the end of each fiscal year of the
Guarantor. Delivery of such reports, information and documents to the Capital
Securities Guarantee Trustee is for informational purposes only and the Capital
Securities Guarantee Trustee's receipt of such shall not constitute constructive
notice of any information contained therein or determinable from information
contained therein, including the Guarantor's compliance with any of its
covenants hereunder (as to which the Capital Securities Guarantee Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Capital Securities Guarantee
Trustee such evidence of compliance with any conditions precedent, if any,
provided for in this Series A Capital Securities Guarantee that relate to any of
the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Series A
Capital Securities may, by vote, on behalf of all Holders, waive any past Event
of Default and its consequences. Upon such waiver, any such Event of Default
shall cease to exist, and any Event of Default arising therefrom shall be deemed
to have been cured, for every purpose of this Series A Capital Securities
Guarantee, but no such waiver shall extend to any subsequent or other default or
Event of Default or impair any right consequent thereon.
SECTION 2.7 Event of Default; Notice
(a) The Capital Securities Guarantee Trustee shall, within 90
days after the occurrence of an Event of Default with respect to this Capital
Securities Guarantee actually known to a Responsible Officer, mail by first
class postage prepaid, to all Holders, notices of all such Events
7
<PAGE>
of Default, unless such defaults have been cured before the giving of such
notice, provided, that, except in the case of default in the payment of any
Guarantee Payment, the Capital Securities Guarantee Trustee shall be protected
in withholding such notice if and so long as the board of directors, the
executive committee, or a trust committee of directors and/or a Responsible
Officer in good faith determines that the withholding of such notice is in the
interests of the Holders.
(b) The Capital Securities Guarantee Trustee shall not be deemed
to have knowledge of any Event of Default unless the Capital Securities
Guarantee Trustee shall have received written notice from the Guarantor, or a
Responsible Officer charged with the administration of this Series A Capital
Securities Guarantee shall have obtained actual knowledge, of such Event of
Default.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described in
this Series A Capital Securities Guarantee for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.
SECTION 2.9 Capital Securities Guarantee Trustee May File Proofs of Claim
Upon the occurrence of an Event of Default, the Capital Securities
Guarantee Trustee is hereby authorized to (a) recover judgment, in its own name
and as trustee of an express trust, against the Guarantor for the whole amount
of any Guarantee, payments remaining unpaid and (b) file such proofs of claim
and other papers or documents as may be necessary or advisable in order to have
its claims and those of the Holders of the Series A Capital Securities allowed
in any judicial procedures relative to the Guarantor, its creditors or its
property.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Securities Guarantee Trustee
(a) This Series A Capital Securities Guarantee shall be held by
the Capital Securities Guarantee Trustee for the benefit of the Holders, and the
Capital Securities Guarantee Trustee shall not transfer this Series A Capital
Securities Guarantee to any Person except a Holder exercising his or her rights
pursuant to Section 5.4(b) or to a Successor Capital Securities Guarantee
Trustee on acceptance by such Successor Capital Securities Guarantee Trustee of
its appointment to act as Successor Capital Securities Guarantee Trustee. The
right, title and interest of the Capital Securities Guarantee Trustee shall
automatically vest in any Successor Capital Securities Guarantee Trustee, and
such vesting and succession of title shall be effective whether or not
conveyancing
8
<PAGE>
documents have been executed and delivered pursuant to the appointment of such
Successor Capital Securities Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible
Officer has occurred and is continuing, the Capital Securities Guarantee Trustee
shall enforce this Series A Capital Securities Guarantee for the benefit of the
Holders.
(c) The Capital Securities Guarantee Trustee, before the
occurrence of any Event of Default and after the curing of all Events of Default
that may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Series A Capital Securities Guarantee, and no
implied covenants shall be read into this Series A Capital Securities Guarantee
against the Series A Capital Securities Guarantee Trustee. In case an Event of
Default has occurred (that has not been cured or waived pursuant to Section 2.6)
and is actually known to a Responsible Officer, the Capital Securities Guarantee
Trustee shall exercise such of the rights and powers vested in it by this Series
A Capital Securities Guarantee, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Series A Capital Securities Guarantee
shall be construed to relieve the Capital Securities Guarantee Trustee from
liability for its own negligent action, its own negligent failure to act, or its
own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Capital Securities
Guarantee Trustee shall be determined solely by the express
provisions of this Series A Capital Securities Guarantee, and the
Capital Securities Guarantee Trustee shall not be liable except
for the performance of such duties and obligations as are
specifically set forth in this Series A Capital Securities
Guarantee, and no implied covenants or obligations shall be read
into this Series A Capital Securities Guarantee against the
Capital Securities Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Capital
Securities Guarantee Trustee, the Capital Securities Guarantee
Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Capital Securities
Guarantee Trustee and conforming to the requirements of this
Series A Capital Securities Guarantee; but in the case of any such
certificates or opinions that by any provision hereof are
specifically required to be furnished to the Capital Securities
Guarantee Trustee, the Capital Securities Guarantee Trustee shall
be under a duty to examine the same to
9
<PAGE>
determine whether or not they conform to the requirements of this
Series A Capital Securities Guarantee;
(ii) the Capital Securities Guarantee Trustee shall not be liable
for any error of judgment made in good faith by a Responsible Officer,
unless it shall be proved that the Capital Securities Guarantee Trustee was
negligent in ascertaining the pertinent facts upon which such judgment was
made;
(iii) the Capital Securities Guarantee Trustee shall not be liable
with respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of a Majority in
liquidation amount of the Series A Capital Securities relating to the time,
method and place of conducting any proceeding for any remedy available to
the Capital Securities Guarantee Trustee, or exercising any trust or power
conferred upon the Capital Securities Guarantee Trustee under this Series A
Capital Securities Guarantee; and
(iv) no provision of this Series A Capital Securities Guarantee
shall require the Capital Securities Guarantee Trustee to expend or risk
its own funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its rights or
powers, if the Capital Securities Guarantee Trustee shall have reasonable
grounds for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Series A Capital
Securities Guarantee or indemnity, reasonably satisfactory to the Capital
Securities Guarantee Trustee, against such risk or liability is not
reasonably assured to it.
SECTION 3.2 Certain Rights of Capital Securities Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Capital Securities Guarantee Trustee may conclusively
rely, and shall be fully protected in acting or refraining from acting,
upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be
genuine and to have been signed, sent or presented by the proper party or
parties.
(ii) Any direction or act of the Guarantor contemplated by this
Series A Capital Securities Guarantee may be sufficiently evidenced by an
Officers' Certificate.
(iii) Whenever, in the administration of this Series A Capital
Securities Guarantee, the Capital Securities Guarantee Trustee shall deem
it desirable that a matter be proved or established before taking,
suffering or omitting any action hereunder, the Capital Securities
Guarantee Trustee (unless other evidence is herein specifically prescribed)
may, in the
10
<PAGE>
absence of bad faith on its part, request and conclusively rely upon an
Officers' Certificate which, upon receipt of such request, shall be
promptly delivered by the Guarantor.
(iv) The Capital Securities Guarantee Trustee shall have no duty
to see to any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
(v) The Capital Securities Guarantee Trustee may consult with
counsel of its selection, and the advice or opinion of such counsel with
respect to legal matters shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or opinion. Such
counsel may be counsel to the Guarantor or any of its Affiliates and may
include any of its employees. The Capital Securities Guarantee Trustee
shall have the right at any time to seek instructions concerning the
administration of this Series A Capital Securities Guarantee from any court
of competent jurisdiction.
(vi) The Capital Securities Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Series A Capital Securities Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Capital Securities
Guarantee Trustee such security and indemnity, reasonably satisfactory to
the Capital Securities Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the Capital
Securities Guarantee Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the
Capital Securities Guarantee Trustee; provided that, nothing contained in
this Section 3.2(a)(vi) shall be taken to relieve the Capital Securities
Guarantee Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by this Series A
Capital Securities Guarantee.
(vii) The Capital Securities Guarantee Trustee shall not be bound
to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document, but the Capital Securities
Guarantee Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit.
(viii) The Capital Securities Guarantee Trustee may execute any of
the trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, nominees, custodians or attorneys, and
the Capital Securities Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder.
11
<PAGE>
(ix) Any action taken by the Capital Securities Guarantee Trustee
or its agents hereunder shall bind the Holders, and the signature of the
Capital Securities Guarantee Trustee or its agents alone shall be
sufficient and effective to perform any such action. No third party shall
be required to inquire as to the authority of the Capital Securities
Guarantee Trustee to so act or as to its compliance with any of the terms
and provisions of this Series A Capital Securities Guarantee, both of which
shall be conclusively evidenced by the Capital Securities Guarantee
Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Series A Capital
Securities Guarantee the Capital Securities Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy or
right or taking any other action hereunder, the Capital Securities
Guarantee Trustee (i) may request instructions from the Holders of a
Majority in liquidation amount of the Series A Capital Securities, (ii) may
refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be protected in
conclusively relying on or acting in accordance with such instructions.
(xi) The Capital Securities Guarantee Trustee shall not be liable
for any action taken, suffered, or omitted to be taken by it in good faith,
without negligence, and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Series
A Capital Securities Guarantee.
(b) No provision of this Series A Capital Securities Guarantee
shall be deemed to impose any duty or obligation on the Capital Securities
Guarantee Trustee to perform any act or acts or exercise any right, power, duty
or obligation conferred or imposed on it in any jurisdiction in which it shall
be illegal, or in which the Capital Securities Guarantee Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Capital Securities Guarantee
Trustee shall be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of Series A Capital
Securities Guarantee
The recitals contained in this Series A Capital Securities
Guarantee shall be taken as the statements of the Guarantor, and the Capital
Securities Guarantee Trustee does not assume any responsibility for their
correctness. The Capital Securities Guarantee Trustee makes no representation as
to the validity or sufficiency of this Series A Capital Securities Guarantee.
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Capital Securities Guarantee Trustee; Eligibility
12
<PAGE>
(a) There shall at all times be a Capital Securities Guarantee
Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws
of the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least 50 million
U.S. dollars ($50,000,000), and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of the supervising or examining authority
referred to above, then, for the purposes of this Section 4.1(a)(ii), the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published.
(b) If at any time the Capital Securities Guarantee Trustee
shall cease to be eligible to so act under Section 4.1(a), the Capital
Securities Guarantee Trustee shall immediately resign in the manner and with the
effect set out in Section 4.2(c).
(c) If the Capital Securities Guarantee Trustee has or shall
acquire any "conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Capital Securities Guarantee Trustee and Guarantor
shall in all respects comply with the provisions of Section 310(b) of the Trust
Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of Capital Securities
Guarantee Trustee
(a) Subject to Section 4.2(b), the Capital Securities Guarantee
Trustee may be appointed or removed without cause at any time by the Guarantor
except during an Event of Default.
(b) The Capital Securities Guarantee Trustee shall not be
removed in accordance with Section 4.2(a) until a Successor Capital Securities
Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Capital Securities Guarantee
Trustee and delivered to the Guarantor.
(c) The Capital Securities Guarantee Trustee shall hold office
until a Successor Capital Securities Guarantee Trustee shall have been appointed
or until its removal or resignation. The Capital Securities Guarantee Trustee
may resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Capital Securities Guarantee Trustee and
delivered to the Guarantor, which resignation shall not take effect until a
Successor Capital Securities Guarantee Trustee has been appointed and has
accepted such appointment by
13
<PAGE>
instrument in writing executed by such Successor Capital Securities Guarantee
Trustee and delivered to the Guarantor and the resigning Capital Securities
Guarantee Trustee.
(d) If no Successor Capital Securities Guarantee Trustee shall
have been appointed and accepted appointment as provided in this Section 4.2
within 60 days after delivery of an instrument of removal or resignation, the
Capital Securities Guarantee Trustee resigning or being removed may petition any
court of competent jurisdiction for appointment of a Successor Capital
Securities Guarantee Trustee. Such court may thereupon, after prescribing such
notice, if any, as it may deem proper, appoint a Successor Capital Securities
Guarantee Trustee.
(e) No Capital Securities Guarantee Trustee shall be liable for
the acts or omissions to act of any Successor Capital Securities Guarantee
Trustee.
(f) Upon termination of this Series A Capital Securities
Guarantee or removal or resignation of the Capital Securities Guarantee Trustee
pursuant to this Section 4.2, the Guarantor shall pay to the Capital Securities
Guarantee Trustee all amounts due to the Capital Securities Guarantee Trustee
accrued to the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Series A
Capital Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands. Notwithstanding anything to the contrary herein, the
Guarantor retains all of its rights under the Indenture to extend the interest
payment period on the Subordinated Debentures and the Guarantor shall not be
obligated hereunder to make any Guarantee Payment during any extended Interest
Payment Period (as defined in the Indenture) with respect to the Distributions
(as defined in the Declaration) on the Series A Capital Securities.
14
<PAGE>
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Series A Capital Securities Guarantee shall be absolute and
unconditional and shall remain in full force and effect until the entire
liquidation amount of all outstanding Series A Capital Securities shall have
been paid and such obligation shall in no way be affected or impaired by reason
of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of
the performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relat ing to the Series A Capital Securities to be
performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Series A Capital Securities or the
extension of time for the performance of any other obligation under, arising out
of, or in connection with, the Series A Capital Securities (other than an
extension of time for payment of Distributions, Redemption Price, Liquidation
Distribution or other sum payable that results from the extension of any
interest payment period on the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the
part of the Property Trustee or the Holders to enforce, assert or exercise any
right, privilege, power or remedy conferred on the Property Trustee or the
Holders pursuant to the terms of the Series A Capital Securities, or any action
on the part of the Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale
of any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Issuer or any of the
assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Series A
Capital Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred;
(g) the consummation of the Exchange Offer; or
(h) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor with
respect to the Guarantee Payments shall be absolute and unconditional under any
and all circumstances.
15
<PAGE>
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of the
Series A Capital Securities have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Capital Securities
Guarantee Trustee in respect of this Series A Capital Securities Guarantee or
exercising any trust or power conferred upon the Capital Securities Guarantee
Trustee under this Series A Capital Securities Guarantee.
(b) If the Capital Securities Guarantee Trustee fails to enforce
such Series A Capital Securities Guarantee, any Holder may institute a legal
proceeding directly against the Guarantor to enforce its rights under this
Series A Capital Securities Guarantee, without first instituting a legal
proceeding against the Issuer, the Capital Securities Guarantee Trustee or any
other person or entity. Notwithstanding the foregoing, if the Guarantor has
failed to make a Guarantee Payment, a Holder may directly institute a proceeding
in such Holder's own name against the Guarantor for enforcement of the Capital
Securities Guarantee for such payment. The Guarantor waives any right or remedy
to require that any action be brought first against the Issuer or any other
person or entity before proceeding directly against the Guarantor.
SECTION 5.5 Guarantee of Payment
This Series A Capital Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders against the Issuer in respect of any amounts paid to such Holders by the
Guarantor under this Series A Capital Securities Guarantee; provided, however,
that the Guarantor shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any right that it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Series A Capital
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Series A Capital Securities Guarantee. If any amount
shall be paid to the Guarantor in violation of the preceding sentence, the
Guarantor agrees to hold such amount in trust for the Holders and to pay over
such amount to the Holders.
16
<PAGE>
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Series A
Capital Securities, and that the Guarantor shall be liable as principal and as
debtor hereunder to make Guarantee Payments pursuant to the terms of this Series
A Capital Securities Guarantee notwithstanding the occurrence of any event
referred to in subsections (a) through (h), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Series A Capital Securities remain outstanding, the
Guarantor shall not, and shall not permit any subsidiary of the Guarantor to,
(i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of the Guarantor's
capital stock (which includes common and preferred stock)(other than (a)
dividends or distributions in shares of, or options, warrants, rights to
subscribe for or purchase shares of, common stock of the Guarantor, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
as a result of a reclassification of the Guarantor's capital stock or the
exchange or the conversion of one class or series of the Guarantor's capital
stock for another class or series of the Guarantor's capital stock, (d) the
purchase of fractional interests in shares of the Guarantor's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, and (e) purchases of the Guarantor's
common stock related to the issuance of the Guarantor's common stock or rights
under any of the Guarantor's benefit plans for its directors, officers,
employees or any of the Guarantor's dividend reinvestment plans), (ii) make any
payment of principal of, or premium, if any, or interest on or repay, repurchase
or redeem any debt securities of the Guarantor (including any Other Debentures)
that rank pari passu with or junior in right of payment to the Debentures or
(iii) make any guarantee payments with respect to any guarantee (other than
payments under the Series A Capital Securities Guarantee or the Series B Capital
Securities Guarantee) by the Guarantor of the debt securities of any subsidiary
of the Guarantor (including Other Guarantees) if such guarantee ranks pari passu
with or junior in right of payment to the Debentures if at such time (1) there
shall have occurred any event of which the Guarantor has actual knowledge that
(a) with the giving of notice or the lapse of time, or both, would constitute an
Indenture Event of Default and (b) in respect of which the Guarantor shall not
have taken reasonable steps to cure, (2) an Indenture Event of Default shall
have occurred and be continuing, (3) if such Debentures are held by the Property
Trustee, the Guarantor shall be in default with respect to its payment of any
obligations under this Series A Capital Securities Guarantee or (4) the
Guarantor shall have given notice of its election of the exercise of its right
to extend the interest payment period pursuant to Section 16.01 of the Indenture
or such extension period, or any such extension shall have commenced and be
continuing.
17
<PAGE>
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing under the Declaration, the rights of the holders of the Common
Securities to receive Guarantee Payments under the Common Securities Guarantee
or any Other Common Securities Guarantee shall be subordinated to the rights of
the holders of the Series A Capital Securities, the Series B Capital Securities
or the Private Exchange Capital Securities to receive payments of all amounts
due and owing to such holders under this Series A Capital Securities Guarantee,
any guarantee relating to the Series B Capital Securities or the Private
Exchange Capital Securities or any Other Guarantee.
SECTION 6.2 Ranking
This Series A Capital Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to Senior Indebtedness (as defined in the Indenture), to the
same extent and in the same manner that the Debentures are subordinated to
Senior Indebtedness pursuant to the Indenture, (ii) pari passu with the
Debentures, the Other Debentures, the Series B Capital Securities Guarantee, the
Common Securities Guarantee and any Other Guarantee and any Other Common
Securities Guarantee, and (iii) senior to the Guarantor's capital stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Series A Capital Securities Guarantee shall terminate and be
of no further force and effect (i) upon full payment of the Redemption Price (as
defined in the Declaration) of all Series A Capital Securities, (ii) upon
liquidation of the Issuer, the full payment of the amounts payable in accordance
with the Declaration or the distribution of the Debentures to the Holders and
the holders of the Common Securities or (iii) upon exchange of all the Series A
Capital Securities for the Series B Capital Securities in the Exchange Offer and
the execution and delivery of the Series B Capital Securities Guarantee.
Notwithstanding the foregoing, this Series A Capital Securities Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder must restore payment of any sums paid under the Series A Capital
Securities or under this Series A Capital Securities Guarantee.
ARTICLE VII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason
18
<PAGE>
of any act or omission performed or omitted by such Indemnified Person in good
faith in accordance with this Series A Capital Securities Guarantee and in a
manner that such Indemnified Person reasonably believed to be within the scope
of the authority conferred on such Indemnified Person by this Series A Capital
Securities Guarantee or by law, except that an Indemnified Person shall be
liable for any such loss, damage or claim incurred by reason of such Indemnified
Person's negligence or willful misconduct with respect to such acts or
omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders might properly be paid.
SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and
to hold each Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The provisions in this
Section 8.2 shall survive the termination of this Series A Capital Securities
Guarantee or the resignation or removal of the Capital Securities Guarantee
Trustee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Series A Capital
Securities Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not materially
adversely affect the rights of Holders (in which case no consent of Holders will
be required), this Series A Capital Securities Guarantee may only be amended
with the prior approval of the Holders of a Majority in liquidation amount of
the Series A Capital Securities (including the stated amount that would be paid
on
19
<PAGE>
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined). The provisions of
the Declaration with respect to consents to amendments thereof (whether at a
meeting or otherwise) shall apply to the giving of such approval.
SECTION 9.3 Notices
All notices provided for in this Series A Capital Securities
Guarantee shall be in writing, duly signed by the party giving such notice, and
shall be delivered, telecopied or mailed by first class mail, as follows:
(a) If given to the Issuer, in care of the Administrative
Trustee at the mailing address set forth below (or such other address as the
Issuer may give notice of to the Holders and the Capital Securities Guarantee
Trustee):
NGC Corporation Capital Trust I
c/o NGC Corporation
1000 Louisiana, Suite 5800
Houston, TX 77002
Attention: John U. Clarke
Administrative Trustee
Telecopy: (713) 767-8322
(b) If given to the Capital Securities Guarantee Trustee, at the
Capital Securities Guarantee Trustee's mailing address set forth below (or such
other address as the Capital Securities Guarantee Trustee may give notice of to
the Holders and the Issuer):
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, Illinois 60670-0126
Attention: Corporate Trust Services Division
Telecopy: (312) 407-1708
(c) If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may give notice
of to the Holders and the Capital Securities Guarantee Trustee):
NGC Corporation
1000 Louisiana, Suite 5800
Houston, TX 77002
Attention: Kenneth E. Randolph
Telecopy: (713) 507-6808
20
<PAGE>
(d) If given to any Holder, at the address set forth on the
books and records of the Issuer.
All such notices shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.4 Exchange Offer
In the event an Exchange Offer Registration Statement (as defined
in the Registration Rights Agreement) becomes effective and the Issuer issues
any Series B Capital Securities in the Exchange Offer, the Guarantor will enter
into a new capital securities guarantee agreement, in substantially the same
form as this Series A Capital Securities Guarantee, with respect to the Series B
Capital Securities.
SECTION 9.5 Benefit
This Series A Capital Securities Guarantee is solely for the
benefit of the Holders and, subject to Section 3.1(a), is not separately
transferable from the Series A Capital Securities.
SECTION 9.6 GOVERNING LAW
THIS SERIES A CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 9.7 Limited Liability.
The Holders of the Series A Capital Securities, in their
capacities as such, shall not be personally liable for any liabilities or
obligations of the Guarantor arising out of this Series A Capital Securities
Guarantee, and the parties hereby agree that the Holders of the Series A Capital
Securities, in their capacities as such, shall be entitled to the same
limitation of personal liability extended to the stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware.
THIS SERIES A CAPITAL SECURITIES GUARANTEE is executed as of the
day and year first above written.
21
<PAGE>
NGC CORPORATION, as Guarantor
By: ________________________________
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
as Capital Securities Guarantee
Trustee
By: ________________________________
Name:
Title:
22
<PAGE>
EXHIBIT 4.10
====================================
COMMON SECURITIES GUARANTEE AGREEMENT
NGC CORPORATION
Dated as of May 28, 1997
====================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation................................ 1
ARTICLE II GUARANTEE
SECTION 2.1 Guarantee..................................................... 3
SECTION 2.2 Waiver of Notice and Demand................................... 3
SECTION 2.3 Obligations Not Affected...................................... 3
SECTION 2.4 Rights of Holders............................................. 4
SECTION 2.5 Guarantee of Payment.......................................... 4
SECTION 2.6 Subrogation................................................... 4
SECTION 2.7 Independent Obligations....................................... 5
ARTICLE III LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1 Limitation of Transactions.................................... 5
SECTION 3.2 Ranking....................................................... 6
ARTICLE IV TERMINATION
SECTION 4.1 Termination................................................... 6
ARTICLE V MISCELLANEOUS
SECTION 5.1 Successors and Assigns........................................ 6
SECTION 5.2 Amendments.................................................... 7
SECTION 5.3 Notices....................................................... 7
SECTION 5.4 Benefit....................................................... 8
SECTION 5.5 GOVERNING LAW................................................. 8
<PAGE>
COMMON SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Common Securities Guarantee"), dated as
of May 28, 1997, is executed and delivered by NGC Corporation, a Delaware
corporation (the "Guarantor"), for the benefit of the Holders (as defined
herein) from time to time of the Common Securities (as defined herein) of NGC
Corporation Capital Trust I, a Delaware business trust (the "Issuer").
WHEREAS, pursuant to the Declaration, the Issuer is issuing on the
date hereof $6,200,000 aggregate liquidation amount of its 8.316% Common
Securities (the "Common Securities"), liquidation amount $1,000 per Common
Security;
WHEREAS, as incentive for the Holders to purchase the Common
Securities, the Guarantor desires to irrevocably and unconditionally agree, to
the extent set forth in this Common Securities Guarantee, to pay to the Holders
the Guarantee Payments (as defined herein) and to make certain other payments on
the terms and conditions set forth herein; and
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Series A Capital Securities Guarantee") for the benefit of the
holders of the Series A Capital Securities (as defined in the Declaration) and
upon consummation of the Exchange Offer (as defined in the Declaration) will
execute and deliver a guarantee agreement (the "Series B Capital Securities
Guarantee") for the benefit of the holders of the Series B Capital Securities
(as defined in the Declaration), each in substantially identical terms to this
Common Securities Guarantee, except that if an Event of Default (as defined in
the Declaration) has occurred and is continuing, the rights of Holders to
receive Guarantee Payments under this Common Securities Guarantee are
subordinated to the rights of holders of Capital Securities to receive Guarantee
Payments under the Series A Capital Securities Guarantee and the Series B
Capital Securities Guarantee, as the case may be.
NOW, THEREFORE, in consideration of the purchase by each Holder, which
pur chase the Guarantor hereby acknowledges shall benefit the Guarantor, the
Guarantor executes and delivers this Common Securities Guarantee for the benefit
of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Common Securities Guarantee, unless the context otherwise
requires:
(1) capitalized terms used in this Common Securities Guarantee
but not defined in the preamble above have the respective meanings assigned to
them in this Section 1.1;
1
<PAGE>
(2) terms defined in the Declaration as at the date of execution
of this Common Securities Guarantee have the same meaning when used in this
Common Securities Guarantee unless otherwise defined in this Common Securities
Guarantee;
(3) a term defined anywhere in this Common Securities Guarantee
has the same meaning throughout;
(4) all references to "the Common Securities Guarantee" or "this
Common Securities Guarantee" are to this Common Securities Guarantee as
modified, supplemented or amended from time to time;
(5) all references in this Common Securities Guarantee to
Articles and Sections are to Articles and Sections of this Common Securities
Guarantee unless otherwise specified; and
(6) a reference to the singular includes the plural and vice
versa.
"Declaration" means the Amended and Restated Declaration of Trust,
dated as of May 28, 1997 as amended, modified or supplemented from time to time,
among the trustees of the Issuer named therein, the Guarantor, as sponsor, and
the holders from time to time of undivided beneficial ownership interests in the
assets of the Issuer.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Common Securities, to
the extent not paid or made by the Issuer: (i) any accumulated and unpaid
Distributions that are required to be paid on such Common Securities to the
extent the Issuer has funds on hand legally available therefor at such time,
(ii) the redemption price, including all accumulated and unpaid Distributions to
the date of redemption (the "Redemption Price") to the extent the Issuer has
funds on hand legally available therefor at such time, with respect to any
Common Securities called for redemption by the Issuer, and (iii) upon a
voluntary or involuntary dissolution, winding-up or liquidation of the Issuer
(other than in connection with the distribution of Debentures to the Holders in
exchange for Common Securities as provided in the Declaration), the lesser of
(a) the aggregate of the liquidation amount and all accumulated and unpaid
Distributions on the Common Securities to the date of payment, to the extent the
Issuer has funds on hand legally available therefor, and (b) the amount of
assets of the Issuer remaining available for distribution to Holders in
liquidation of the Issuer after satisfaction of liabilities of creditors of the
Issuer as required by applicable law (in either case, the "Liquidation
Distribution"). If an Event of Default has occurred and is continuing, no
Guarantee Payments with respect to the Common Securities shall be made until
holders of Capital Securities shall be paid in full the Guarantee Payments to
which they are entitled under the Series A Capital Securities Guarantee and the
Series B Capital Securities Guarantee.
"Holder" means any holder, as registered on the books and records
of the Issuer, of any Common Securities.
2
<PAGE>
"Other Guarantees" means all guarantees to be issued by the
Guarantor with respect to common securities (if any) similar to the Common
Securities issued by other trusts to be established by the Guarantor (if any),
in each case similar to the Issuer.
ARTICLE II
GUARANTEE
SECTION 2.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim which the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 2.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Common
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 2.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Common Securities Guarantee shall be absolute and unconditional and
shall remain in full force and effect until the entire liquidation amount of all
outstanding Common Securities shall have been paid and such obligation shall in
no way be affected or impaired by reason of the happening from time to time of
any of the following:
(1) the release or waiver, by operation of law or otherwise, of
the performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Common Securities to
be performed or observed by the Issuer;
(2) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Common
Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Common
Securities (other than an extension of time for payment of Distributions,
Redemption Price, Liquidation Distribution
3
<PAGE>
or other sum payable that results from the extension of any interest
payment period on the Debentures permitted by the Indenture);
(3) any failure, omission, delay or lack of diligence on the part
of the Property Trustee or the Holders to enforce, assert or exercise any
right, privilege, power or remedy conferred on the Property Trustee or the
Holders pursuant to the terms of the Common Securities, or any action on
the part of the Issuer granting indulgence or extension of any kind;
(4) the voluntary or involuntary liquidation, dissolution, sale
of any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Issuer
or any of the assets of the Issuer;
(5) any invalidity of, or defect or deficiency in, the Common
Securities;
(6) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(7) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 2.3 that the obligations of the Guarantor
with respect to the Guarantee Payments shall be absolute and unconditional
under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain consent
of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 2.4 Rights of Holders
The Guarantor expressly acknowledges that any Holder may institute
a legal pro ceeding directly against the Guarantor to enforce its rights under
this Common Securities Guarantee, without first instituting a legal proceeding
against the Issuer or any other Person.
SECTION 2.5 Guarantee of Payment
This Common Securities Guarantee creates a guarantee of payment
and not of collection.
SECTION 2.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders against the Issuer in respect of any amounts paid to such Holders by the
Guarantor under this Common Secu rities Guarantee; provided, however, that
the Guarantor shall not (except to the extent required by
4
<PAGE>
mandatory provisions of law) be entitled to enforce or exercise any rights which
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Common Securities
Guarantee, if, at the time of any such payment, any amounts are due and unpaid
under this Common Securities Guarantee. If any amount shall be paid to the
Guarantor in violation of the preceding sentence, the Guarantor agrees to hold
such amount in trust for the Holders and to pay over such amount to the Holders.
SECTION 2.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Common
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Common
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 2.3 hereof.
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1 Limitation of Transactions
So long as any Common Securities remain outstanding, the
Guarantor will not, and will not permit any subsidiary of the Guarantor to, (i)
declare or pay any dividends or distributions on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any of the Guarantor's capital
stock (which includes common stock and preferred stock) (other than (a)
dividends or distributions in shares of, or options, warrants or rights to
subscribe for or purchase shares of, common stock of the Guarantor, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
as a result of a reclassification of the Guarantor's capital stock or the
exchange or the conversion of one class or series of the Guarantor's capital
stock for another class or series of the Guarantor's capital stock, (d) the
purchase of fractional interests in shares of the Guarantor's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or ex changed, and (e) purchases of common stock
related to the issuance of common stock or rights under any of the Guarantor's
benefit plans for its directors, officers or employees or any of the Guarantor's
dividend reinvestment plans), (ii) make any payment of principal of, or premium,
if any, or interest on or repay, repurchase or redeem any debt securities of the
Guarantor (including Other Debentures) that rank pari passu with or junior in
right of payment to the Debentures or (iii) make any guarantee payments with
respect to any guarantee (other than the Series A Capital Securities Guarantee
and the Series B Capital Securities Guarantee) by the Guarantor of the debt
securities of any subsidiary of the Guarantor (including under Other Guarantees)
if such guarantee ranks pari passu with or junior in right of payment to the
Debentures if at such time (1) there shall have occurred any event of which the
Guarantor has actual knowledge that (a) with the giving of notice or the lapse
of time,
5
<PAGE>
or both, would constitute an Event of Default and (b) in respect of which the
Guarantor shall not have taken reasonable steps to cure, (2) an Event of Default
shall have occurred and be continuing, (3) if such Debentures are held by the
Property Trustee, the Guarantor shall be in default with respect to its payment
of any obligations under the Series A Capital Securities Guarantee or the Series
B Capital Securities Guarantee or (4) the Guarantor shall have given notice of
its election of the exercise of its right to extend the interest payment period
pursuant to Section 16.01 of the Indenture and any such extension shall be
continuing.
Notwithstanding the foregoing, if an Event of Default has
occurred and is continuing under the Declaration, the rights of the holders of
the Common Securities to receive Guarantee Payments under the Common Securities
Guarantee or any Other Common Securities Guarantee shall be subordinated to the
rights of the holders of the Series A Capital Securities, the Series B Capital
Securities and the Private Exchange Capital Securities to receive payments of
all amounts due and owing to such holders under the Series A Capital Securities
Guarantee, any guarantee relating to the Series B Capital Securities or the
Private Exchange Capital Securities or any guarantee relating to any securities
similar to the Capital Securities issued by other Trusts to be established by
the Guarantor, in each case similar to the Issuer.
SECTION 3.2 Ranking
This Common Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to Senior Indebtedness (as defined in the Indenture), to the same extent
and in the same manner that the Debentures are subordinated to Senior
Indebtedness pursuant to the Indenture, (ii) pari passu with the Debentures, the
Other Debentures and with any Other Guarantee, the Series A Capital Securities
Guarantee and the Series B Capital Securities Guarantee, and (iii) senior to the
Guarantor's capital stock.
ARTICLE IV
TERMINATION
SECTION 4.1 Termination
This Common Securities Guarantee shall terminate and be of no
further force and effect (i) upon full payment of the Redemption Price of all
Common Securities, (ii) upon the distribution of all of the Debentures to all
the Holders and the holders of the Capital Securities or (iii) upon full payment
of the amounts payable in accordance with the Declaration upon liquidation of
the Issuer. Notwithstanding the foregoing, this Common Securities Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder must restore payment of any sums paid under the Common
Securities or under this Common Securities Guarantee.
6
<PAGE>
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Successors and Assigns
All guarantees and agreements contained in this Common Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
then outstanding.
SECTION 5.2 Amendments
Except with respect to any changes which do not adversely affect
the rights of Holders (in which case no consent of Holders will be required),
this Common Securities Guarantee may only be amended with the prior approval of
the Holders of at least a majority in liquidation amount of all the outstanding
Common Securities. The provisions of Section 12.2 of the Declaration with
respect to meetings of holders of the Securities apply to the giving of such
approval.
SECTION 5.3 Notices
All notices provided for in this Common Securities Guarantee shall
be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by registered or certified mail, as follows:
(1) if given to the Issuer, in care of the Administrative Trustee
at the Issuer's mailing address set forth below (or such other address as
the Issuer may give notice of to the Holders):
NGC Corporation Capital Trust I
c/o NGC Corporation
1000 Louisiana, Suite 5800
Houston, TX 77002
Attention: John U. Clarke
Administrative Trustee
Telecopy: (713) 767-8322
(2) if given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of
to the Holders):
NGC Corporation
1000 Louisiana, Suite 5800
Houston, TX 77002
Attention: Kenneth E. Randolph
Telecopy: (713) 507-6808
7
<PAGE>
(3) if given to any Holder, at the address set forth on the books
and records of the Issuer.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 5.4 Benefit
This Common Securities Guarantee is solely for the benefit of the
Holders and is not separately transferable from the Common Securities.
SECTION 5 GOVERNING LAW
THIS COMMON SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
THIS COMMON SECURITIES GUARANTEE is executed as of the day and
year first above written.
NGC CORPORATION
By: __
Name:
Title:
8
<PAGE>
EXHIBIT 4.11
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated May 28, 1997
among
NGC CORPORATION
NGC CORPORATION CAPITAL TRUST I
and
LEHMAN BROTHERS INC.
SALOMON BROTHERS INC
and
SMITH BARNEY INC.
as Initial Purchasers
================================================================================
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of May 28, 1997, among NGC CORPORATION, a Delaware corporation
(the "Company"), NGC CORPORATION CAPITAL TRUST I, a business trust created under
the laws of the State of Delaware (the "Trust"), and LEHMAN BROTHERS INC.,
SALOMON BROTHERS INC and SMITH BARNEY INC. (the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement, dated
May 22, 1997 (the "Purchase Agreement"), among the Company, as issuer of the
Series A 8.316% Subordinated Deferrable Interest Debentures due June 1, 2027
(the Subordinated Debentures"), the Trust and the Initial Purchasers, which
provides for, among other things, the sale by the Trust to the Initial
Purchasers of 200,000 of the Trust's Series A 8.316% Subordinated Capital Income
Securities, liquidation amount $1,000 per Capital Security (the "Capital
Securities"), the proceeds of which will be used by the Trust to purchase
Subordinated Debentures. The Capital Securities, together with the Subordinated
Debentures and the Company's guarantee of the Capital Securities (the "Capital
Securities Guarantee"), are collectively referred to as the "Securities". In
order to induce the Initial Purchasers to enter into the Purchase Agreement, the
Company and the Trust have agreed to provide to the Initial Purchasers and its
direct and indirect transferees the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a condition to the
closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the following
capitalized defined terms shall have the following meanings:
"Additional Distributions" shall have the meaning set forth in
Section 2(e)hereof.
"Advice" shall have the meaning set forth in the last paragraph of
Section 3 hereof.
"Applicable Period" shall have the meaning set forth in Section 3(w)
hereof.
"Business Day" means any day other than a Saturday, a Sunday, or a day on
which banking institutions in Chicago, Illinois or Houston, Texas are authorized
or required by law or executive order to close.
"Closing Date" shall mean the Closing Date as defined in the Purchase
Agreement.
"Company" shall have the meaning set forth in the preamble to this
Agreement and also includes the Company's successors and permitted assigns.
"Consummate" the Exchange Offer shall be deemed "Consummated" for purposes
of this Agreement upon the occurrence of (i) the filing and effectiveness under
the Securities Act of the Exchange Offer Registration Statement relating to the
Exchange Securities to be issued in the
-1-
<PAGE>
Exchange Offer, (ii) the maintenance of such Registration Statement continuously
effective and the keeping of the Exchange Offer open for a period not less than
the minimum period required pursuant to Section 2(a)(iii) hereof, and (iii) the
delivery by the Company and the Trust of the Exchange Securities in the same
aggregate liquidation amount and principal amount as the aggregate liquidation
amount and principal amount, as the case may be, of Securities that were
tendered by Holders thereof pursuant to the Exchange Offer.
"Declaration" or "Declaration of Trust" shall mean the Amended and Restated
Declaration of Trust, dated as of May 28, 1997, by the trustees named therein
and the Company, as sponsor.
"Depositary" shall mean The Depository Trust Company, or any other
depositary appointed by the Trust; provided, however, that such depositary must
have an address in the Borough of Manhattan, in The City of New York.
"Effectiveness Period" shall have the meaning set forth in Section 2(b)
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
"Exchange Offer" shall mean the offer by the Company and the Trust to the
Holders to exchange all of the Registrable Securities (other than Private
Exchange Securities) for a like principal amount of Exchange Securities pursuant
to Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the
Securities Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another appropriate
form), and all amendments and supplements to such registration statement, in
each case including the Prospectus contained therein, all exhibits thereto and
all material incorporated by reference therein.
"Exchange Period" shall have the meaning set forth in Section 2(a) hereof.
"Exchange Securities" shall mean (i) with respect to the Subordinated
Debentures, the Series B 8.316% Subordinated Deferrable Interest Debentures due
June 1, 2027 (the "Exchange Debentures") of the Company containing terms
substantially identical to the Subordinated Debentures (except that they will
not contain terms with respect to the transfer restrictions under the Securities
Act (other than requiring minimum transfers thereof to be in blocks of $100,000
aggregate principal amount), and will not provide for any Liquidated Damages
thereon), (ii) with respect to the Capital Securities, the Trust's Series B
8.316% Subordinated Capital Income Securities, liquidation amount $1,000 per
Capital Security (the "Exchange Capital Securities"), which will have terms
substantially identical to the Capital Securities (except they will not contain
terms with respect to transfer restrictions under the Securities Act (other than
requiring minimum transfers thereof to be in blocks of $100,000 aggregate
liquidation amount), and will not provide for any Additional Distributions
thereon), and (iii) with respect to the Capital Securities Guarantee, the
Company's
-2-
<PAGE>
guarantee (the "Exchange Capital Securities Guarantee") of the Exchange Capital
Securities which will have terms substantially identical to the Capital
Securities Guarantee.
"Holders" shall mean the Initial Purchasers, for so long as they own any
Registrable Securities, and each of their respective successors, assigns and
direct and indirect transferees who become registered owners of Registrable
Securities under the Indenture or Declaration of Trust.
"Indenture" shall mean the Indenture relating to the Subordinated
Debentures and the Exchange Debentures, dated as of May 28, 1997, between the
Company, as issuer, and First National Bank of Chicago, as trustee, as the same
may be amended from time to time in accordance with the terms thereof.
"Initial Purchasers" shall have the meaning set forth in the preamble to
this Agreement.
"Inspectors" shall have the meaning set forth in Section 3(n) hereof.
"Issue Date" shall mean May 28, 1997, the date of original issuance of the
Securities.
"Liquidated Damages" shall have the meaning set forth in Section 2(e)
hereof.
"Majority Holders" shall mean the Holders of a majority of the aggregate
liquidation amount of outstanding Capital Securities.
"Participating Broker-Dealer" shall have the meaning set forth in
Section 3(w) hereof.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, limited liability company, or a government or
agency or political subdivision thereof.
"Private Exchange" shall have the meaning set forth in Section 2(a) hereof.
"Private Exchange Securities" shall have the meaning set forth in
Section 2(a) hereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
therein.
"Purchase Agreement" shall have the meaning set forth in the preamble to
this Agreement.
"Records" shall have the meaning set forth in Section 3(n) hereof.
"Registrable Securities" shall mean the Securities and, if issued, the
Private Exchange Securities; provided, however, that Securities or Private
Exchange Securities, as the case may be, shall cease to be Registrable
Securities when (i) a Registration Statement with respect to such
-3-
<PAGE>
Securities or Private Exchange Securities for the exchange or resale thereof, as
the case may be, shall have been declared effective under the Securities Act and
such Securities or Private Exchange Securities, as the case may be, shall have
been disposed of pursuant to such Registration Statement, (ii) such Securities
or Private Exchange Securities, as the case may be, shall have been sold to the
public pursuant to Rule 144(k) (or any similar provision then in force, but not
Rule 144A) under the Securities Act or are eligible to be sold without
restriction as contemplated by Rule 144(k), (iii) such Securities or Private
Exchange Securities, as the case may be, shall have ceased to be outstanding or
(iv) with respect to the Securities, such Securities shall have been exchanged
for Exchange Securities upon consummation of the Exchange Offer and are
thereafter freely tradeable by the holder thereof (other than an affiliate of
the Company).
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company or the Trust with this Agreement,
including, without limitation: (i) all SEC or National Association of
Securities Dealers, Inc. (the "NASD") registration and filing fees, including,
if applicable, the fees and expenses of any "qualified independent underwriter"
(and its counsel) that is required to be retained by any Holder of Registrable
Securities in accordance with the rules and regulations of the NASD, (ii) all
fees and expenses incurred in connection with compliance with state securities
or blue sky laws (including reasonable fees and disbursements of one counsel for
any underwriters or Holders in connection with blue sky qualification of any of
the Exchange Securities or Registrable Securities) and compliance with the rules
of the NASD, (iii) all expenses of any Persons in preparing or assisting in
preparing, word processing, printing and distributing any Registration
Statement, any Prospectus and any amendments or supplements thereto, and in
preparing or assisting in preparing, printing and distributing any underwriting
agreements, securities sales agreements and other documents relating to the
performance of and compliance with this Agreement, (iv) all rating agency fees,
(v) the fees and disbursements of counsel for the Company and the Trust and of
the independent certified public accountants of the Company, including the
expenses of any "cold comfort" letters required by or incident to such
performance and compliance, (vi) the fees and expenses of the Trustees, and any
exchange agent or custodian, (vii) all fees and expenses incurred in connection
with the listing, if any, of any of the Exchange Securities or the Registrable
Securities on any securities exchange or exchanges or on any securities
quotation system, and (viii) the reasonable fees and expenses of any special
experts retained by the Company or the Trust in connection with any Registration
Statement.
"Registration Statement" shall mean any registration statement of the
Company and the Trust which covers any of the Exchange Securities or Registrable
Securities pursuant to the provisions of this Agreement, and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Rule 144(k) Period" shall mean the period of two years (or such shorter
period as may hereafter be referred to in Rule 144(k) under the Securities Act
(or similar successor rule)) commencing on the Issue Date.
"SEC" shall mean the Securities and Exchange Commission.
-4-
<PAGE>
"Securities" shall have the meaning set forth in the preamble to this
Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.
"Shelf Registration" shall mean a registration effected pursuant to
Section 2(b) hereof.
"Shelf Registration Event" shall have the meaning set forth in Section 2(b)
hereof.
"Shelf Registration Event Date" shall have the meaning set forth in
Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration statement
of the Company and the Trust pursuant to the provisions of Section 2(b) hereof
which covers all of the Registrable Securities or all of the Private Exchange
Securities, as the case may be, on an appropriate form under Rule 415 under the
Securities Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement, including post-
effective amendments, in each case including the Prospectus contained therein,
all exhibits thereto and all material incorporated by reference therein.
"TIA" shall have the meaning set forth in Section 3(k) hereof.
"Trustees" shall mean any and all trustees with respect to (i) the Capital
Securities under the Declaration, (ii) the Subordinated Debentures under the
Indenture and (iii) the Capital Securities Guarantee.
2. Registration Under the Securities Act.
(a) Exchange Offer. Except as set forth in Section 2(b) below, the
Company and the Trust shall, for the benefit of the Holders, use their
reasonable best efforts to (i) cause to be filed with the SEC within 150 days
after the Issue Date an Exchange Offer Registration Statement relating to the
Exchange Offer, (ii) cause such Exchange Offer Registration Statement to be
declared effective under the Securities Act by the SEC not later than the date
which is 180 days after the Issue Date, and (iii) keep such Exchange Offer
Registration Statement effective for not less than 30 calendar days (or longer
if required by applicable law) after the date notice of the Exchange Offer is
mailed to the Holders. Upon the effectiveness of the Exchange Offer
Registration Statement, the Company and the Trust shall promptly commence the
Exchange Offer, it being the objective of such Exchange Offer to enable each
Holder eligible and electing to exchange Registrable Securities for a like
principal amount of Exchange Debentures or a like liquidation amount of Exchange
Capital Securities, together with the Exchange Guarantee, as applicable
(assuming that such Holder is not an affiliate of the Company within the meaning
of Rule 405 under the Securities Act and is not a broker-dealer tendering
Registrable Securities acquired directly from the Company for its own account,
acquires the Exchange Securities in the ordinary course of such Holder's
business and has no arrangements or understandings with any Person to
participate in the Exchange Offer for the purpose of distributing the Exchange
Securities) to transfer such Exchange Securities from and after their receipt
without any limitations or restrictions under the Securities Act and under state
securities or blue sky laws (other than requiring minimum transfers in blocks
having an aggregate principal
-5-
<PAGE>
or liquidation amount, as the case may be, of $100,000). The Company and the
Trust shall use their reasonable best efforts to cause the Exchange Offer to be
Consummated on the earliest practicable date after the Exchange Offer
Registration Statement has become effective.
In connection with the Exchange Offer, the Company and the Trust
shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter of
transmittal and related documents;
(ii) keep the Exchange Offer open for acceptance for a period of not less
than 30 days after the date notice thereof is mailed to the Holders (or longer
if required by applicable law) (such period referred to herein as the "Exchange
Period");
(iii) utilize the services of the Depositary for the Exchange Offer;
(iv) permit Holders to withdraw tendered Securities at any time prior to
the close of business, New York time, on the last Business Day of the Exchange
Period, by sending to the institution specified in the notice, a telegram,
telex, facsimile transmission or letter setting forth the name of such Holder,
the liquidation amount or principal amount of Securities delivered for exchange,
and a statement that such Holder is withdrawing his election to have such
Securities exchanged;
(v) notify each Holder that any Security not tendered by such Holder in
the Exchange Offer will remain outstanding and continue to accrue interest or
accumulate distributions, as the case may be, but will not retain any rights
under this Agreement (except in the case of the Initial Purchasers and
Participating Broker-Dealers as provided herein); and
(vi) otherwise comply with all applicable laws relating to the Exchange
Offer.
If any of the Initial Purchasers determine upon advice of their
outside counsel that they are not eligible to participate in the Exchange Offer
with respect to the exchange of Securities constituting any portion of an unsold
allotment in the initial distribution, as soon as practicable upon receipt by
the Company and the Trust of a written request from such Initial Purchaser, the
Company and the Trust, as applicable, shall issue and deliver to such Initial
Purchaser in exchange (the "Private Exchange") for the Securities held by such
Initial Purchaser, a like liquidation amount of Capital Securities of the Trust
or, in the event the Trust is liquidated and Subordinated Debentures are
distributed, a like principal amount of the Subordinated Debentures of the
Company, together with the Exchange Guarantee, in each case that are identical
(except that such securities may bear a customary legend with respect to
restrictions on transfer pursuant to the Securities Act) to the Exchange
Securities (the "Private Exchange Securities") and which are issued pursuant to
the Indenture, the Declaration or the Guarantee (which provides that the
Exchange Securities will not be subject to the transfer restrictions set forth
in the Indenture or the Declaration, as applicable (other than requiring minimum
transfers thereof to be in blocks of $100,000 aggregate principal amount or
liquidation amount, as the case may be), and that the Exchange Securities, the
Private Exchange Securities and the Securities will vote and consent together on
all matters as one class and that none of the Exchange Securities, the Private
Exchange Securities or the Securities will have the right to
-6-
<PAGE>
vote or consent as a separate class on any matter). The Private Exchange
Securities shall be of the same series as the Exchange Securities and the
Company and the Trust will seek to cause the CUSIP Service Bureau to issue the
same CUSIP Numbers for the Private Exchange Securities as for the Exchange
Securities issued pursuant to the Exchange Offer. If requested by the Company,
the Initial Purchasers will, within a reasonable time in advance of the
Company's filing of an Exchange Offer Registration Statement hereunder, advise
the Company as to the number of Registrable Securities held by it which
constitute an unsold allotment in the initial distribution.
As soon as practicable after the close of the Exchange Offer and, if
applicable, the Private Exchange, the Company and the Trust, as the case
requires, shall:
(i) accept for exchange all Securities or portions thereof tendered and
not validly withdrawn pursuant to the Exchange Offer or the Private Exchange;
(ii) deliver, or cause to be delivered, to the applicable Trustee for
cancellation all Securities or portions thereof so accepted for exchange by the
Company; and
(iii) issue, and cause the applicable Trustee under the Indenture, the
Declaration or the Guarantee, as applicable, to promptly authenticate and
deliver to each Holder, new Exchange Securities or Private Exchange Securities,
as applicable, equal in principal amount to the principal amount of the
Subordinated Debentures or equal in liquidation amount to the liquidation amount
of the Capital Securities (together with the guarantee thereof) as are
surrendered by such Holder.
Distributions on each Exchange Capital Security and interest on each
Exchange Debenture and Private Exchange Security issued pursuant to the Exchange
Offer and in the Private Exchange will accrue from the last date on which a
distribution or interest was paid on the Capital Security or the Subordinated
Debenture surrendered in exchange therefor or, if no distribution or interest
has been paid on such Capital Security or Subordinated Debenture, from the Issue
Date. To the extent not prohibited by any law or applicable interpretations of
the staff of the SEC, the Company and the Trust shall use their reasonable best
efforts to complete the Exchange Offer as provided above, and shall comply with
the applicable requirements of the Securities Act, the Exchange Act and other
applicable laws in connection with the Exchange Offer. The Exchange Offer shall
not be subject to any conditions, other than that the Exchange Offer does not
violate applicable law or any applicable interpretation of the staff of the SEC.
Each Holder of Registrable Securities (other than Participating Broker-Dealers)
who wishes to exchange such Registrable Securities for Exchange Securities in
the Exchange Offer will be required to represent that (i) it is not an affiliate
of the Trust or the Company, (ii) the Exchange Securities to be received by it
were acquired in the ordinary course of its business and (iii) at the time of
the Exchange Offer, it has no arrangement with any person to participate in the
distribution (within the meaning of the Securities Act) of the Exchange Capital
Securities. Each Participating Broker-Dealer shall be required to make such
representations as, in the reasonable judgment of the Company and the Trust, may
be necessary under applicable SEC rules, regulations or interpretations or
customary in connection with similar exchange offers. Each Holder (including
Participating Broker-Dealers) shall be required to make such other
representations as may be reasonably necessary under applicable SEC rules,
regulations or interpretations to render the use of Form S-4 or another
appropriate form under the Securities Act
-7-
<PAGE>
available and will be required to agree to comply with their agreements and
covenants set forth in this Agreement. The Company and the Trust shall inform
the Initial Purchaser, after consultation with the applicable Trustees, of the
names and addresses of the Holders to whom the Exchange Offer is made, and the
Initial Purchasers shall have the right to contact such Holders and otherwise
facilitate the tender of Registrable Securities in the Exchange Offer.
Prior to effectiveness of the Exchange Offer Registration Statement,
the Company and the Trust shall, if requested by the staff of the SEC, provide a
supplemental letter to the SEC (i) stating that the Company and the Trust are
registering the Exchange Offer in reliance on the position of the SEC enunciated
in Exxon Capital Holdings Corporation (available May 13, 1988) and Morgan
Stanley and Co., Inc. (available June 5, 1991) and (ii) including a
representation that the Company and the Trust have not entered into any
arrangement or understanding with any Person to distribute the Exchange
Securities and that, to the best of the Company's and the Trust's information
and belief, each Holder participating in the Exchange Offer is acquiring the
Exchange Securities in its ordinary course of business and has no arrangement or
understanding with any Person to participate in the distribution of the Exchange
Securities received in the Exchange Offer.
If in the reasonable opinion of counsel to the Company and the Trust
there is a question as to whether the Exchange Offer is permitted by applicable
law, the Company and the Trust hereby agree to seek a no-action letter or other
favorable decision from the SEC allowing the Company and the Trust to consummate
the Exchange Offer. The Company and the Trust hereby agree to pursue the
issuance of such a decision to the SEC staff level, but shall not be required to
take commercially unreasonable action to effect a change of SEC policy. The
Company and the Trust hereby agree, however, to (i) participate in telephonic
conferences with the SEC and the staff of the SEC, (ii) deliver to the staff of
the SEC an analysis prepared by counsel to the Company setting forth the legal
bases, if any, upon which such counsel has concluded that the Exchange Offer
should be permitted and (iii) diligently pursue a resolution (which need not be
favorable) by the staff of the SEC of such submission.
Upon Consummation of the Exchange Offer in accordance with this
Section 2(a), the provisions of this Agreement shall continue to apply, mutatis
mutandis, solely with respect to Registrable Securities that are Private
Exchange Securities and Exchange Securities held by Participating Broker-
Dealers, and the Company and the Trust shall have no further obligation to
register the Registrable Securities (other than Private Exchange Securities)
held by any Holder (other than an Initial Purchaser or a Participating Broker-
Dealer) pursuant to Section 2(b) of this Agreement.
(b) Shelf Registration. In the event that (i) the Company, the Trust
or the Majority Holders reasonably determine, after conferring with counsel,
that the Exchange Offer Registration provided in Section 2(a) above is not
available under applicable laws and regulations and currently prevailing
interpretations of the staff of the SEC, (ii) the Company shall determine in
good faith that there is a reasonable likelihood that, or that a material
uncertainty exists as to whether, consummation of the Exchange Offer would
result in (x) the Trust becoming subject to United States federal income tax
with respect to income received or accrued on the Subordinated Debentures or the
Exchange Debentures (collectively, the "Debentures"), (y) interest payable by
the
-8-
<PAGE>
Company on the Debentures not being deductible by the Company, in whole or
in part, for United States federal income tax purposes or (z) the Trust becoming
subject to more than a de minimus amount of other taxes, duties or governmental
charges, (iii) the Exchange Offer Registration Statement is not declared
effective within 180 days of the Issue Date or (iv) upon the request of the
Initial Purchasers with respect to any Registrable Securities held by them, if
such Initial Purchasers are not permitted, in the opinion of Baker & Botts,
L.L.P., pursuant to applicable law or applicable interpretations of the staff of
the SEC, to participate in the Exchange Offer and thereby receive securities
that are freely tradeable without restriction under the Securities Act and
applicable blue sky or state securities laws (any of the events specified in
(i)-(iv) being a "Shelf Registration Event" and the date of occurrence thereof,
the "Shelf Registration Event Date"), then in addition to or in lieu of
conducting the Exchange Offer contemplated by Section 2(a), as the case may be,
the Company and the Trust shall promptly deliver to the Holders and the Delaware
Trustee (as defined in the Declaration) written notice thereof and shall use
their reasonable best efforts to cause to be filed as promptly as practicable
after such Shelf Registration Event Date, as the case may be, and, in any event,
within 45 days after such Shelf Registration Event Date (provided that in no
event shall such date be earlier than 75 days after the Issue Date), a Shelf
Registration Statement providing for the sale by the Holders of all of the
Registrable Securities, and shall use its reasonable best efforts to have such
Shelf Registration Statement declared effective by the SEC as soon as
practicable. No Holder of Registrable Securities shall be entitled to include
any of its Registrable Securities in any Shelf Registration pursuant to this
Agreement unless and until such Holder agrees in writing to be bound by all of
the provisions of this Agreement applicable to such Holder and furnishes to the
Company and the Trust in writing, within 15 days after receipt of a request
therefor, such information as the Company and the Trust may, after conferring
with counsel with regard to information relating to Holders that would be
required by the SEC to be included in such Shelf Registration Statement or
Prospectus included therein, reasonably request for inclusion in any Shelf
Registration Statement or Prospectus included therein. Each Holder as to which
any Shelf Registration is being effected agrees to furnish to the Company and
the Trust all information with respect to such Holder necessary to make the
information previously furnished to the Company by such Holder not materially
misleading.
The Company and the Trust agree to use their reasonable best efforts
to keep the Shelf Registration Statement continuously effective and usable for
resales for (a) the Rule 144(k) Period in the case of a Shelf Registration
Statement filed pursuant to Section 2(b)(i), (ii) or (iii) or (b) 180 days in
the case of a Shelf Registration Statement filed pursuant to Section 2(b)(iv)
(subject in each case to extension pursuant to the last paragraph of Section 3
hereof), or for such shorter period which will terminate when all of the
Registrable Securities covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement or cease to be outstanding
(the "Effectiveness Period"). The Company and the Trust shall not permit any
securities other than Registrable Securities to be included in the Shelf
Registration. The Company and the Trust will, in the event a Shelf Registration
Statement is declared effective, provide to each Holder a reasonable number of
copies of the Prospectus which is a part of the Shelf Registration Statement and
notify each such Holder when the Shelf Registration has become effective. The
Company and the Trust further agree, if necessary, to supplement or amend the
Shelf Registration Statement, if required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Shelf Registration Statement or by the Securities Act or by any other rules and
regulations
-9-
<PAGE>
thereunder for shelf registrations, and the Company and the Trust agree to
furnish to the Holders of Registrable Securities copies of any such supplement
or amendment promptly after its being used or filed with the SEC.
(c) Expenses. The Company, as issuer of the Subordinated Debentures,
shall pay all Registration Expenses in connection with any Registration
Statement filed pursuant to Section 2(a) and/or 2(b) hereof and will reimburse
the Initial Purchasers for the reasonable fees and disbursements of Baker &
Botts, L.L.P., counsel for the Initial Purchasers, incurred in connection with
the Exchange Offer and, if applicable, the Private Exchange, or any one other
counsel designated in writing by the Majority Holders to act as counsel for the
Holders of the Registrable Securities in connection with a Shelf Registration
Statement, which other counsel shall be reasonably satisfactory to the Company.
Except as provided herein, each Holder shall pay all expenses of its counsel and
any of its other advisors or experts, underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Securities pursuant to the Shelf Registration Statement.
(d) Effective Registration Statement. An Exchange Offer Registration
Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement
pursuant to Section 2(b) hereof will not be deemed to have become effective
unless it has been declared effective by the SEC; provided, however, that if,
after it has been declared effective, the offering of Registrable Securities
pursuant to such Exchange Offer Registration Statement or Shelf Registration
Statement is interfered with by any stop order, injunction or other order or
requirement of the SEC or any other governmental agency or court, such
Registration Statement will be deemed not to have been effective during the
period of such interference, until the offering of Registrable Securities
pursuant to such Registration Statement may legally resume. The Company and the
Trust will be deemed not to have used their reasonable best efforts to cause the
Exchange Offer Registration Statement or the Shelf Registration Statement, as
the case may be, to become, or to remain, effective during the requisite period
if either of them voluntarily takes any action that would result in any such
Registration Statement not being declared effective or that would result in the
Holders of Registrable Securities covered thereby not being able to exchange or
offer and sell such Registrable Securities during that period unless such action
is required by applicable laws and regulations or currently prevailing
interpretations of the staff of the SEC.
(e) Liquidated Damages. In the event that (i) (A) neither the
Exchange Offer Registration Statement nor a Shelf Registration Statement is
filed with the SEC on or prior to the 150th day after the Issue Date or (B)
notwithstanding that the Company and the Trust have consummated or will
consummate an Exchange Offer, the Company and the Trust are required to file a
Shelf Registration Statement and the Shelf Registration Statement is not filed
on or prior to the 45th day after the Shelf Registration Event Date in respect
of a Shelf Registration Event attributable to any of the events set forth in
Sections 2(b)(i), (ii) and (iii) (provided that in no event shall such date be
earlier than 75 days after the Issue Date), then commencing on the day after the
applicable required filing date, liquidated damages ("Liquidated Damages") shall
accrue on the principal amount of the Subordinated Debentures, and additional
distributions ("Additional Distributions") shall accumulate on the liquidation
amount of the Trust Securities (as such term is defined in the Declaration),
each at a rate of .25% per annum; or
-10-
<PAGE>
(ii) (A) neither the Exchange Offer Registration Statement nor a Shelf
Registration Statement is declared effective by the SEC on or prior to the 180th
day after the Issue Date (in the case of an Exchange Offer Registration
Statement) or on or prior to the later of (x) the 30th day after the date such
Shelf Registration Statement was required to be filed and (y) the 180th date
after the Issue Date (in the case of a Shelf Registration Statement in respect
of a Shelf Registration Event attributable to any of the events set forth in
Sections 2(b)(i), (ii) and (iii)), or (B) notwithstanding that the Company and
the Trust have consummated or will consummate an Exchange Offer, the Company and
the Trust are required to file a Shelf Registration Statement and such Shelf
Registration Statement is not declared effective by the Commission on or prior
to the 30th day after the date such Shelf Registration Statement was required to
be filed, then, commencing on the 181st day after the Issue Date (in the case of
an Exchange Offer Registration Statement) or the later of (A) the 31st day after
the date such Shelf Registration Statement was required to be filed and (B) the
181st day after the Issue Date (in the case of a Shelf Registration Statement in
respect of a Shelf Registration Event attributable to any of the events set
forth in Sections 2(b)(i), (ii) and (iii)), Liquidated Damages shall accrue on
the principal amount of the Subordinated Debentures, and Additional
Distributions shall accumulate on the liquidation amount of the Trust
Securities, each at a rate of .25% per annum; or
(iii) (A) the Trust has not exchanged Exchange Capital Securities or
the Company has not exchanged Exchange Guarantees or Exchange Subordinated
Debentures for all Capital Securities, Guarantees or Subordinated Debentures, as
the case may be, validly tendered, in accordance with the terms of the Exchange
Offer on or prior to the 45th day after the date on which the Exchange Offer
Registration Statement was declared effective or (B) if applicable, the Shelf
Registration Statement in respect of a Shelf Registration Event attributable to
any of the events set forth in Sections 2(b)(i), (ii) and (iii) has been
declared effective and such Shelf Registration Statement ceases to be effective
or usable for resales (whether as a result of an event contemplated by Section
3(e) or otherwise) at any time prior to the expiration of the Rule 144(k) Period
(other than after such time as all Securities have been disposed of thereunder
or otherwise cease to be Registrable Securities), then Liquidated Damages shall
accrue on the principal amount of Subordinated Debentures, and Additional
Distributions shall accumulate on the liquidation amount of the Trust
Securities, each at a rate of .25% per annum commencing on (x) the 46th day
after such effective date, in the case of (A) above, or (y) the day such Shelf
Registration Statement ceases to be effective or usable for resales in the case
of (B) above;
Provided, however, that neither the Liquidated Damages rate on the
Subordinated Debentures, nor the Additional Distribution rate on the liquidation
amount of the Trust Securities, may exceed in the aggregate .25% per annum;
provided, further, however, that (1) upon the filing of the Exchange Offer
Registration Statement or a Shelf Registration Statement (in the case of clause
(i) above), (2) upon the effectiveness of the Exchange Offer Registration
Statement or a Shelf Registration Statement (in the case of clause (ii) above),
(3) upon the exchange of Exchange Capital Securities, Exchange Guarantees and
Exchange Debentures for all Capital Securities, Guarantees and Subordinated
Debentures tendered (in the case of clause (iii)(A) above), or at such time as
the Shelf Registration Statement which had ceased to remain effective or usable
for resales again becomes effective and usable for resales (in the case of
clause (iii)(B) above), or (4) in any case, at such time
-11-
<PAGE>
as there are no longer any outstanding Registrable Securities, Liquidated
Damages on the principal amount of the Subordinated Debentures and Additional
Distributions on the liquidation amount of the Trust Securities as a result of
such clause (or the relevant subclause thereof) shall cease to accrue and
accumulate.
Any amounts of Liquidated Damages and Additional Distributions due pursuant
to Section 2(e)(i), (ii) or (iii) above will be payable in cash on the next
succeeding June 1 and December 1, as the case may be, to Holders on the relevant
record dates for the payment of interest and distributions pursuant to the
Indenture and the Declaration, respectively.
(f) Specific Enforcement. Without limiting the remedies available to
the Holders, the Company and the Trust acknowledge that any failure by the
Company or the Trust to comply with its obligations under Section 2(a) and
Section 2(b) hereof may result in material irreparable injury to the Initial
Purchasers or any Holder for which there is no adequate remedy at law, that it
would not be possible to measure damages for such injuries precisely and that,
in the event of any such failure, the Initial Purchasers or any Holder may
obtain such relief as may be required to specifically enforce the Company's and
the Trust's obligations under Section 2(a) and Section 2(b) hereof.
(g) Distribution of Subordinated Debentures. Notwithstanding any
other provisions of this Agreement, in the event that Subordinated Debentures
are distributed to Holders of Capital Securities in liquidation of the Trust
pursuant to the Declaration, (i) all references in this Section 2 and in Section
3 to Securities, Registrable Securities and Exchange Securities shall not
include the Capital Securities and Capital Securities Guarantee or Exchange
Capital Securities and Exchange Capital Securities Guarantee issued or to be
issued in exchange therefor in the Exchange Offer and (ii) all requirements for
action to be taken by the Trust in this Section 2 and in Section 3 shall cease
to apply and all requirements for action to be taken by the Company in this
Section 2 and in Section 3 shall apply to the Subordinated Debentures and
Exchange Debentures issued or to be issued in exchange therefor in the Exchange
Offer.
3. Registration Procedures. In connection with the obligations of
the Company and the Trust with respect to the Registration Statements pursuant
to Sections 2(a) and 2(b) hereof, each of the Company and the Trust shall:
(a) use their reasonable best efforts to prepare and file with the SEC
a Registration Statement or Registration Statements as prescribed by
Sections 2(a) and 2(b) hereof within the relevant time period specified in
Section 2 hereof on the appropriate form under the Securities Act, which
form (i) shall be selected by the Company and the Trust, (ii) shall, in the
case of a Shelf Registration, be available for the sale of the Registrable
Securities by the selling Holders thereof and, in the case of an Exchange
Offer, be available for the exchange of Registrable Securities, and (iii)
shall comply as to form in all material respects with the requirements of
the applicable form and include all financial statements required by the
SEC to be filed therewith; and use its best efforts to cause such
Registration Statement to become effective and remain effective (and, in
the case of a Shelf Registration Statement, usable for resales) in
accordance with Section 2 hereof; provided, however, that if (1) such
-12-
<PAGE>
filing is pursuant to Section 2(b), or (2) a Prospectus contained in an
Exchange Offer Registration Statement filed pursuant to Section 2(a) is
required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Securities, before filing any
Registration Statement or Prospectus or any amendments or supplements
thereto, the Company and the Trust shall furnish to and afford the Holders
of the Registrable Securities (in the case of a Shelf Registration) or each
such Participating Broker-Dealer, as the case may be, covered by such
Registration Statement, their counsel and the managing underwriters, if
any, a reasonable opportunity to review copies of all such documents
proposed to be filed. The Company and the Trust shall not file any
Registration Statement or Prospectus or any amendments or supplements
thereto in respect of which the Holders must be afforded an opportunity to
review prior to the filing of such documents if the Majority Holders or
such Participating Broker-Dealer, as the case may be, their counsel or the
managing underwriters, if any, shall reasonably object;
(b) use their reasonable best efforts to prepare and file with the SEC
such amendments and post-effective amendments to each Registration
Statement as may be necessary to keep such Registration Statement effective
for the Effectiveness Period or the Applicable Period, as the case may be;
and cause each Prospectus to be supplemented, if so determined by the
Company or the Trust or requested by the SEC, by any required prospectus
supplement and as so supplemented to be filed pursuant to Rule 424 (or any
similar provision then in force) under the Securities Act, and comply with
the provisions of the Securities Act, the Exchange Act and the rules and
regulations promulgated thereunder applicable to it with respect to the
disposition of all securities covered by each Registration Statement during
the Effectiveness Period or the Applicable Period, as the case may be, in
accordance with the intended method or methods of distribution by the
selling Holders thereof described in this Agreement (including sales by any
Participating Broker-Dealer);
(c) in the case of a Shelf Registration, (i) notify each Holder of
Registrable Securities included in the Shelf Registration Statement, at
least five Business Days prior to filing, that a Shelf Registration
Statement with respect to the Registrable Securities is being filed and
advising such Holder that the distribution of Registrable Securities will
be made in accordance with the method selected by the Majority Holders; and
(ii) furnish to each Holder of Registrable Securities included in the Shelf
Registration Statement and to each underwriter of an underwritten offering
of Registrable Securities, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder or underwriter
may reasonably request, in order to facilitate the public sale or other
disposition of the Registrable Securities; and (iii) consent to the use of
the Prospectus or any amendment or supplement thereto by each of the
selling Holders of Registrable Securities included in the Shelf
Registration Statement in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any amendment or
supplement thereto;
(d) use its reasonable best efforts to register or qualify the
Registrable Securities and the Exchange Securities under all applicable
state securities or blue sky laws of such jurisdictions by the time the
applicable Registration Statement is declared effective by the
-13-
<PAGE>
SEC as any Holder of Registrable Securities covered by a Registration
Statement and each underwriter of an underwritten offering of Registrable
Securities shall reasonably request in writing in advance of such date of
effectiveness, and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Holder and underwriter to
consummate the disposition in each such jurisdiction of such Registrable
Securities owned by such Holder; provided, however, that the Company and
the Trust shall not be required to (i) qualify as a foreign corporation or
as a dealer in securities in any jurisdiction where it would not otherwise
be required to qualify but for this Section 3(d), (ii) file any general
consent to service of process in any jurisdiction where it would not
otherwise be subject to such service of process or (iii) subject itself to
taxation in any such jurisdiction if it is not then so subject;
(e) (1) in the case of a Shelf Registration or (2) if Participating
Broker-Dealers from whom the Company or the Trust has received prior
written notice that they will be utilizing the Prospectus contained in the
Exchange Offer Registration Statement as provided in Section 3(t) hereof
are seeking to sell Exchange Securities and are required to deliver
Prospectuses, notify each Holder of Registrable Securities, or such
Participating Broker-Dealers, as the case may be, their counsel and the
managing underwriters, if any, promptly and promptly confirm such notice in
writing (i) when a Registration Statement has become effective and when any
post-effective amendments and supplements thereto become effective, (ii) of
any request by the SEC or any state securities authority for amendments and
supplements to a Registration Statement or Prospectus or for additional
information after the Registration Statement has become effective, (iii) of
the issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of a Registration Statement or the
qualification of the Registrable Securities or the Exchange Securities to
be offered or sold by any Participating Broker-Dealer in any jurisdiction
described in paragraph 3(d) hereof or the initiation of any proceedings for
that purpose, (iv) in the case of a Shelf Registration, if, between the
effective date of a Registration Statement and the closing of any sale of
Registrable Securities covered thereby, the representations and warranties
of the Company and the Trust contained in any purchase agreement,
securities sales agreement or other similar agreement, if any cease to be
true and correct in all material respects, (v) of the happening of any
event or the failure of any event to occur or the discovery of any facts or
otherwise, during the Effectiveness Period, which makes any statement made
in such Registration Statement or the related Prospectus untrue in any
material respect or which causes such Registration Statement or Prospectus
to omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, and (vi) the Company and the Trust's reasonable determination
that a post-effective amendment to the Registration Statement would be
appropriate;
(f) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible moment;
(g) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities included within the coverage of such Shelf
Registration Statement, without charge, one conformed copy of each
Registration Statement relating to such Shelf Registration and
-14-
<PAGE>
any post-effective amendment thereto (without documents incorporated
therein by reference or exhibits thereto, unless requested);
(h) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Securities to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and
not bearing any restrictive legends (other than with respect to
restrictions requiring minimum transfers in blocks having an aggregate
principal or liquidation amount, as the case may be, of $100,000) and in
such denominations (consistent with the provisions of the Indenture and the
Declaration) and registered in such names as the selling Holders or the
underwriters may reasonably request at least two Business Days prior to the
closing of any sale of Registrable Securities pursuant to such Shelf
Registration Statement;
(i) in the case of a Shelf Registration or an Exchange Offer
Registration, upon the occurrence of any circumstance contemplated by
Section 3(e)(ii), 3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, use its reasonable
best efforts to prepare a supplement or post-effective amendment to such
Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable
Securities, such Prospectus will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and to notify each Holder to suspend use of the
Prospectus as promptly as practicable after the occurrence of such an
event, and each Holder hereby agrees to suspend use of the Prospectus until
the Company has amended or supplemented the Prospectus to correct such
misstatement or omission;
(j) obtain a CUSIP number for all Exchange Capital Securities and the
Capital Securities (and if the Trust has made a distribution of the
Subordinated Debentures to the Holders of the Capital Securities, the
Subordinated Debentures or the Exchange Debentures), as the case may be,
not later than the effective date of a Registration Statement, and provide
the Trustee with printed certificates for the Exchange Securities or the
Registrable Securities, as the case may be, in a form eligible for deposit
with the Depositary;
(k) cause the Indenture, the Declaration, the Guarantee and the
Exchange Guarantee to be qualified under the Trust Indenture Act of 1939
(the "TIA") in connection with the registration of the Exchange Securities
or Registrable Securities, as the case may be, and effect such changes to
such documents as may be required for them to be so qualified in accordance
with the terms of the TIA and execute, and use its reasonable best efforts
to cause the relevant trustee to execute, all documents as may be required
to effect such changes, and all other forms and documents required to be
filed with the SEC to enable such documents to be so qualified in a timely
manner;
(l) in the case of a Shelf Registration, enter into such agreements
(including underwriting agreements) as are customary in underwritten
offerings and take all such other appropriate actions in connection
therewith as are reasonably requested by the Holders of at
-15-
<PAGE>
least 25% in aggregate principal or liquidation amount, as the case may be,
of the Registrable Securities in order to expedite or facilitate the
registration or the disposition of the Registrable Securities; provided,
that the Company and the Trust shall not be required to enter into any such
agreement more than twice with respect to all of the Registrable Securities
and may delay entering into such an agreement until the consummation of any
underwritten public offering which the Company shall have undertaken;
(m) in the case of a Shelf Registration, whether or not an
underwriting agreement is entered into and whether or not the registration
is an underwritten registration, if requested by (x) the Initial
Purchasers, in the case where such Initial Purchasers hold Securities
acquired as part of their initial distribution or (y) Holders of at least
25% in aggregate principal or liquidation amount, as the case may be, of
the Registrable Securities covered thereby: (i) make such representations
and warranties to Holders of the Registrable Securities and the
underwriters (if any) with respect to the business of the Trust, the
Company and its subsidiaries as then conducted and the Registration
Statement, Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, as are customarily made by
issuers of debt securities to underwriters in underwritten offerings, and
confirm the same if and when requested; (ii) obtain opinions of counsel to
the Company and the Trust upon the effectiveness of such registration
statement and, in the case of an underwritten offering, updates thereof
(which may be in the form of a reliance letter) in form and substance
reasonably satisfactory to the managing underwriters (if any) and the
Holders of a majority in principal amount of the Registrable Securities
being sold, addressed to each selling Holder and the underwriters (if any)
covering the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably
requested by such underwriters (it being agreed that the matters to be
covered by such opinion may be subject to customary qualifications and
exceptions); (iii) obtain "cold comfort" letters upon the effectiveness of
such registration statement and, in the case of an underwritten offering,
updates thereof in form and substance reasonably satisfactory to the
managing underwriters from the independent certified public accountants of
the Company and the Trust (and, if necessary, any other independent
certified public accountants of any subsidiary of the Company and the Trust
or of any business acquired by the Company and the Trust for which
financial statements and financial data are, or are required to be,
included in the Registration Statement), addressed to each of the
underwriters, such letters to be in customary form and covering matters of
the type customarily covered in "cold comfort" letters in connection with
underwritten offerings and such other matters as reasonably requested by
such underwriters in accordance with Statement on Auditing Standards No.
72; (iv) deliver such documents and certificates as may be reasonably
requested and as are customarily delivered in similar offerings; and (v) if
an underwriting agreement is entered into, provide indemnification pursuant
to indemnification provisions and procedures no less favorable than those
set forth in Section 4 hereof (or such other provisions and procedures
acceptable to Holders of a majority in aggregate principal amount or
liquidation amount, as the case may be, of Registrable Securities covered
by such Registration Statement and the managing underwriters and agents)
with respect to all parties to be indemnified pursuant to said Section
(including, without limitation, such underwriters
-16-
<PAGE>
and selling Holders). The above shall be done at each closing under such
underwriting agreement, or as and to the extent required thereunder;
(n) if (1) a Shelf Registration is filed pursuant to Section 2(b) or
(2) a Prospectus contained in an Exchange Offer Registration Statement
filed pursuant to Section 2(a) is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Securities during the Applicable Period, make reasonably available
for inspection by any selling Holder of such Registrable Securities or
Participating Broker-Dealer, as applicable, who certifies to the Company
and the Trust that it has a current intention to sell Registrable
Securities pursuant to the Shelf Registration, any underwriter
participating in any such disposition of Registrable Securities, if any,
and any attorney, accountant or other agent retained by any such selling
Holder or each such Participating Broker-Dealer, as the case may be, or
underwriter (collectively, the "Inspectors"), at the offices where normally
kept, during the Company's normal business hours, all financial and other
records, pertinent corporate documents and properties of the Trust, the
Company and its subsidiaries (collectively, the "Records") as shall be
reasonably necessary to enable them to exercise any applicable due
diligence responsibilities, and cause the officers, directors and employees
of the Trust, the Company and its subsidiaries to supply all relevant
information, in each case reasonably requested by any such Inspector in
connection with such Registration Statement. Records which the Company and
the Trust determine, in good faith, to be confidential and any records
which it notifies the Inspectors are confidential shall not be disclosed by
the Inspectors unless (i) the disclosure of such Records is necessary to
avoid or correct a material misstatement or omission in such Registration
Statement, (ii) subject to the last sentence of this Section 3(n), the
release of such Records is ordered pursuant to a subpoena or other order
from a court of competent jurisdiction or is necessary in connection with
any action, suit or proceeding or (iii) the information in such Records has
been made generally available to the public (other than by an Inspector or
a selling Holder in breach of its obligations hereunder). Each selling
Holder of such Registrable Securities and each such Participating Broker-
Dealer will be required to agree in writing that information obtained by it
as a result of such inspections shall be deemed confidential and shall not
be used by it as the basis for any market transactions in the securities of
the Trust or the Company unless and until such is made generally available
to the public through no fault of an Inspector or a selling Holder. Each
selling Holder of such Registrable Securities and each such Participating
Broker-Dealer will be required to further agree in writing that it will,
upon learning that disclosure of such Records is sought in a court of
competent jurisdiction or in connection with any action, suit or
proceeding, give notice to the Company and allow the Company at its expense
to undertake appropriate action to prevent disclosure of the Records deemed
confidential;
(o) comply in all material respects with all applicable rules and
regulations of the SEC so long as any provision of this Agreement shall be
applicable and make generally available to its security holders earning
statements satisfying the provisions of Section ll(a) of the Securities Act
and Rule 158 thereunder (or any similar rule promulgated under the
Securities Act) no later than 45 days after the end of any 12-month period
(or 90 days after the end of any 12-month period if such period is a fiscal
year) (i) commencing at the end of
-17-
<PAGE>
any fiscal quarter in which Registrable Securities are sold to underwriters
in a firm commitment or best efforts underwritten offering and (ii) if not
sold to underwriters in such an offering, commencing on the first day of
the first fiscal quarter of the Company after the effective date of a
Registration Statement, which statements shall cover said 12-month periods;
(p) upon consummation of an Exchange Offer or a Private Exchange, if
requested by a Trustee, obtain an opinion of counsel to the Company
addressed to the Trustee for the benefit of all Holders of Registrable
Securities participating in the Exchange Offer or the Private Exchange, as
the case may be, to the effect that (i) the Company and the Trust, as the
case requires, has duly authorized, executed and delivered the Exchange
Securities and Private Exchange Securities, and (ii) each of the Exchange
Securities or the Private Exchange Securities, as the case may be,
constitutes a legal, valid and binding obligation of the Company or the
Trust, as the case requires, enforceable against the Company or the Trust,
as the case requires, in accordance with its respective terms (in each
case, with customary exceptions);
(q) if an Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Securities by Holders to the Company or
the Trust, as applicable (or to such other Person as directed by the
Company or the Trust, respectively), in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be, the
Company or the Trust, as applicable, shall mark, or cause to be marked, on
such Registrable Securities delivered by such Holders that such Registrable
Securities are being canceled in exchange for the Exchange Securities or
the Private Exchange Securities, as the case may be; in no event shall such
Registrable Securities be marked as paid or otherwise satisfied;
(r) cooperate with each seller of Registrable Securities covered by
any Registration Statement and each underwriter, if any, participating in
the disposition of such Registrable Securities and their respective counsel
in connection with any filings required to be made with the NASD;
(s) use its reasonable best efforts to take all other steps necessary
to effect the registration of the Registrable Securities covered by a
Registration Statement contemplated hereby;
(t) (A) in the case of an Exchange Offer, furnish one firm of legal
counsel for the Initial Purchasers and (B) in the case of a Shelf
Registration, furnish one firm of legal counsel for the Holders of
Registrable Securities covered thereby copies of any request received by or
on behalf of the Company or the Trust, from the SEC or any state securities
authority for amendments or supplements to the relevant Registration
Statement and Prospectus or for additional information;
(u) in the case of a Shelf Registration and if requested by the
managing underwriters, if any, or the Holders of a majority in aggregate
principal amount of the Registrable Securities subject to the Shelf
Registration Statement, (i) as soon as practicable
-18-
<PAGE>
incorporate in a prospectus supplement or post-effective amendment such
information or revisions to information therein relating to such
Underwriters or selling Holders as the managing underwriters, if any, or
such Holders or their counsel reasonably request to be included or made
therein, (ii) make all required filings of such prospectus supplement or
such post-effective amendment as soon as practicable after the Company and
the Trust have received notification of the matters to be incorporated in
such prospectus supplement or post-effective amendment and (iii) supplement
or make amendments to such Shelf Registration Statement;
(v) use their reasonable best efforts to cause the Exchange
Securities, if applicable, to be rated with not more than two rating
agencies selected by the Company, if so requested by the Majority Holders
or by the managing underwriters of an underwritten offering of Registrable
Securities, if any, unless the Exchange Securities or the Registrable
Securities, as the case may be, are already so rated or unless the Company
has obtained such ratings for its long-term debt securities generally; and
(w) in the case of the Exchange Offer Registration Statement (i)
include in the Exchange Offer Registration Statement a section entitled
"Plan of Distribution," which section shall be reasonably acceptable to the
Initial Purchasers or another representative of the Participating Broker-
Dealers, and which shall contain a summary statement of the positions taken
or policies made by the staff of the SEC with respect to the potential
"underwriter" status of any broker-dealer (a "Participating Broker-Dealer")
that holds Registrable Securities acquired for its own account as a result
of market-making activities or other trading activities and that will be
the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of
Exchange Securities to be received by such broker-dealer in the Exchange
Offer, whether such positions or policies have been publicly disseminated
by the staff of the SEC or such positions or policies, in the reasonable
judgment of the Initial Purchasers or such other representative, represent
the prevailing views of the staff of the SEC, including a statement that
any such Participating Broker-Dealer who receives Exchange Securities for
Registrable Securities pursuant to the Exchange Offer may be deemed a
statutory underwriter and must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such
Exchange Securities, (ii) furnish to each Participating Broker-Dealer who
has delivered to the Company the notice referred to in Section 3(e),
without charge, as many copies of each Prospectus included in the Exchange
Offer Registration Statement, including any preliminary prospectus, and any
amendment or supplement thereto, as such Participating Broker-Dealer may
reasonably request (each of the Company and the Trust hereby consents to
the use of the Prospectus forming part of the Exchange Offer Registration
Statement or any amendment or supplement thereto by any Person subject to
the prospectus delivery requirements of the Securities Act, including all
Participating Broker-Dealers, in connection with the sale or transfer of
the Exchange Securities covered by the Prospectus or any amendment or
supplement thereto), (iii) use its reasonable best efforts to keep the
Exchange Offer Registration Statement effective and to amend and supplement
the Prospectus contained therein in order to permit such Prospectus to be
lawfully delivered by all Persons subject to the prospectus delivery
requirements of the Securities Act for such period of time as such Persons
must comply with such requirements
-19-
<PAGE>
under the Securities Act and applicable rules and regulations in order to
resell the Exchange Securities; provided, however, that such period shall
not be required to exceed 90 days (or such longer period if extended
pursuant to the last sentence of Section 3 hereof) (the "Applicable
Period"), and (iv) include in the transmittal
letter or similar documentation to be executed by an exchange offeree in
order to participate in the Exchange Offer (x) the following provision:
"If the exchange offeree is a broker-dealer holding Registrable
Securities acquired for its own account as a result of market-making
activities or other trading activities, it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any
resale of Exchange Securities received in respect of such Registrable
Securities pursuant to the Exchange Offer";
and (y) a statement to the effect that by a broker-dealer making the
acknowledgment described in clause (x) and by delivering a Prospectus in
connection with the exchange of Registrable Securities, the broker-dealer
will not be deemed to admit that it is an underwriter within the meaning of
the Securities Act.
The Company or the Trust may require each seller of Registrable
Securities as to which any registration is being effected to furnish to the
Company or the Trust, as applicable, such information regarding such seller as
may be required by the staff of the SEC to be included in a Registration
Statement. The Company or the Trust may exclude from such registration the
Regis trable Securities of any seller who fails to furnish such information
within a reasonable time after receiving such request. The Company shall have
no obligation to register under the Securities Act the Registrable Securities of
a seller who so fails to furnish such information.
In the case of a Shelf Registration Statement, or if Participating
Broker-Dealers who have notified the Company and the Trust that they will be
utilizing the Prospectus contained in the Exchange Offer Registration Statement
as provided in Section 3(w) hereof are seeking to sell Exchange Securities and
are required to deliver Prospectuses, each Holder agrees that, upon receipt of
any notice from the Company or the Trust of the happening of any event of the
kind described in Section 3(e)(ii), 3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, such
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to a Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(i) hereof or until
it is advised in writing (the "Advice") by the Company and the Trust that the
use of the applicable Prospectus may be resumed, and, if so directed by the
Company and the Trust, such Holder will deliver to the Company or the Trust (at
the Company's or the Trust's expense, as the case requires) all copies in such
Holder's possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Securities or Exchange
Securities, as the case may be, current at the time of receipt of such notice.
If the Company or the Trust shall give any such notice to suspend the
disposition of Registrable Securities or Exchange Securities, as the case may
be, pursuant to a Registration Statement, the Company and the Trust shall use
their reasonable best efforts to file and have declared effective (if an
amendment) as soon as practicable an amendment or supplement to the Registration
Statement and shall extend the period during which
-20-
<PAGE>
such Registration Statement is required to be maintained effective and usable
for resales pursuant to this Agreement by the number of days in the period from
and including the date of the giving of such notice to and including the date
when the Company and the Trust shall have made available to the Holders (x)
copies of the supplemented or amended Prospectus necessary to resume such
dispositions or (y) the Advice.
4. Indemnification and Contribution. (a) In connection with any
Registration Statement, the Company and the Trust shall, jointly and severally,
indemnify and hold harmless each Initial Purchaser, each Holder, each
underwriter who participates in an offering of the Registrable Securities, each
Participating Broker-Dealer, each Person, if any, who controls any of such
parties within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act and each of their respective directors, officers, employees and
agents, as follows:
(i) from and against any and all loss, liability, claim, damage and
expense whatsoever, joint or several, as incurred, arising out of any
untrue statement or alleged untrue statement of a material fact contained
in any Registration Statement (or any amendment thereto) covering
Registrable Securities or Exchange Securities, including all documents
incorporated therein by reference, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) from and against any and all loss, liability, claim, damage and
expense whatsoever, joint or several, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or any investigation
or proceeding by any court or governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue statement
or omission, or any such alleged untrue statement or omission, if such
settlement is effected with the prior written consent of the Company; and
(iii) from and against any and all expenses whatsoever, as incurred
(including reasonable fees and disbursements of counsel chosen by such
Holder, such Participating Broker-Dealer, or any underwriter (except to the
extent otherwise expressly provided in Section 4(c) hereof)), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any court or governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under
subparagraph (i) or (ii) of this Section 4(a);
provided, however, that (x) this indemnity does not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished in writing to the
Company or the Trust by such Holder, such Participating Broker-Dealer or any
underwriter with respect to such Holder, Participating Broker-Dealer or any
underwriter, as the case may be, expressly
-21-
<PAGE>
for use in a Registration Statement (or any amendment thereto) or any Prospectus
(or any amendment or supplement thereto) and (y) the Company and the Trust shall
not be liable to any such Holder, Participating Broker Dealer, any underwriter
or controlling person, with respect to any untrue statement or alleged untrue
statement or omission or alleged omission in any preliminary Prospectus to the
extent that any such loss, liability, claim, damage or expense of any Holder,
Participating Broker-Dealer, any underwriter or controlling person results from
the fact that such Holder, any underwriter or Participating Broker-Dealer sold
Securities to a person to whom there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the final Prospectus as then
amended or supplemented if the Company had previously furnished copies thereof
to such Holder, underwriter or Participating Broker-Dealer and the loss,
liability, claim, damage or expense of such Holder, underwriter, Participating
Broker-Dealer or controlling person results from an untrue statement or omission
of a material fact contained in the preliminary Prospectus which was corrected
in the final Prospectus. Any amounts advanced by the Company or the Trust to an
indemnified party pursuant to this Section 4 as a result of such losses shall be
returned to the Company or the Trust if it shall be finally determined by such a
court in a judgment not subject to appeal or final review that such indemnified
party was not entitled to indemnification by the Company or the Trust.
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Company, the Trust, any underwriter and the other selling
Holders and each of their respective directors, officers (including each officer
of the Company and the Trust who signed the Registration Statement), employees
and agents and each Person, if any, who controls the Company, the Trust, any
underwriter or any other selling Holder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
loss, liability, claim, damage and expense whatsoever described in the indemnity
contained in Section 4(a) hereof, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in a
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company or the Trust by such selling Holder with
respect to such Holder expressly for use in such Registration Statement (or any
amendment thereto), or any such Prospectus (or any amendment or supplement
thereto); provided, however, that, in the case of a Shelf Registration
Statement, no such Holder shall be liable for any claims hereunder in excess of
the amount of net proceeds received by such Holder from the sale of Registrable
Securities pursuant to such Shelf Registration Statement.
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, enclosing a copy of all papers properly
served on such indemnified party, but failure to so notify an indemnifying party
shall not relieve such indemnifying party from any liability which it may have
under this Section 4, except to the extent that it is materially prejudiced by
such failure. An indemnifying party may participate at its own expense in the
defense of such action, or, if it so elects within a reasonable time after
receipt of such notice, assume the defense of any suit brought to enforce any
such claim; but if it so elects to assume the defense, such defense shall be
conducted by counsel chosen by it and approved by the indemnified party or
parties, which approval shall not be unreasonably withheld. In the event that
an indemnifying party elects to assume the defense of any such suit and retain
such counsel, the indemnified party or parties shall bear the fees and expenses
-22-
<PAGE>
of any additional counsel thereafter retained by such indemnified party or
parties; provided, however, that the indemnified party or parties shall have the
right to employ counsel (in addition to local counsel) to represent the
indemnified party or parties who may be subject to liability arising out of any
action in respect of which indemnity may be sought against the indemnifying
party if, in the reasonable judgment of counsel for the indemnified party or
parties, there may be legal defenses available to such indemnified party or
parties which are different from or in addition to those available to the
indemnifying party, in which event the fees and expenses of appropriate separate
counsel shall be borne by the indemnifying party. In no event shall the
indemnifying parties be liable for the fees and expenses of more than one
counsel (in addition to local counsel), separate from its own counsel, for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 4 (whether or not the indemnified parties are
actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional written release in form and substance
satisfactory to the indemnified parties of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
(d) In order to provide for just and equitable contribution in
circumstances under which any of the indemnity provisions set forth in this
Section 4 is for any reason held to be unavail able to the indemnified parties
although applicable in accordance with its terms, the Company, the Trust and the
Holders shall contribute to the aggregate losses, liabilities, claims, damages
and expenses of the nature contemplated by such indemnity agreement incurred by
the Company, the Trust and the Holders, as incurred; provided, that no Person
guilty of fraudulent misrepresentation (within the meaning of Section ll(f) of
the 1933 Act) shall be entitled to contribution from any Person that was not
guilty of such fraudulent misrepresentation. As between the Company, the Trust
and the Holders, such parties shall contribute to such aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement in such proportion as shall be appropriate to reflect the
relative fault of the Company and the Trust, on the one hand, and the Holders,
on the other hand, with respect to the statements or omissions which resulted in
such loss, liability, claim, damage or expense, or action in respect thereof, as
well as any other relevant equitable considerations. The relative fault of the
Company and the Trust, on the one hand, and of the Holders, on the other hand,
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or the
Trust, on the one hand, or by or on behalf of the Holders, on the other hand,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company, the
Trust and the Holders of the Registrable Securities agree that it would not be
just and equitable if contribution pursuant to this Section 4 were to be
determined by pro rata allocation or by any other method of allocation that does
not take into account the relevant equitable considerations. For purposes of
this Section 4, each affiliate of a Holder, and each director, officer,
employee, agent and Person, if any, who controls a Holder or such affiliate
within the meaning of Section 15 of the
-23-
<PAGE>
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as such Holder, and each director of each of the Company or the
Trust, each officer of each of the Company or the Trust who signed the
Registration Statement, and each Person, if any, who controls each of the
Company and the Trust within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution as
each of the Company or the Trust.
5. Participation in an Underwritten Registration. No Holder may
participate in an underwritten registration hereunder unless such Holder (a)
agrees to sell such Holder's Registrable Securities on the basis provided in the
underwriting arrangement approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all reasonable questionnaires,
powers of attorney, indemnities, underwriting agreements, lock-up letters and
other documents reasonably required under the terms of such underwriting
arrangements.
6. Selection of Underwriters. The Holders of Registrable Securities
covered by the Shelf Registration Statement who desire to do so may sell the
securities covered by such Shelf Registration in an underwritten offering,
subject to the provisions of Section 3(1) hereof. In any such underwritten
offering, the underwriter or underwriters and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount or liquidation amount, as applicable, of the
Registrable Securities included in such offering; provided, however, that such
underwriters and managers must be reasonably satisfactory to the Company and the
Trust.
7. Miscellaneous.
(a) Rule 144 and Rule 144A. For so long as the Company or the Trust
is subject to the reporting requirements of Section 13 or 15 of the Exchange Act
and any Registrable Securities remain outstanding, each of the Company and the
Trust, as the case may be, will use its reasonable best efforts to file the
reports required to be filed by it under the Securities Act and Section 13(a) or
15(d) of the Exchange Act and the rules and regulations adopted by the SEC
thereunder, provided, that if it ceases to be so required to file such reports,
it will, upon the request of any Holder of Registrable Securities (a) make
publicly available such information as is necessary to permit sales of its
securities pursuant to Rule 144 under the Securities Act, (b) deliver such
information to a prospective purchaser as is necessary to permit sales of its
securities pursuant to Rule 144A under the Securities Act, and (c) take such
further action that is reasonable in the circumstances, in each case, to the
extent required from time to time to enable such Holder to sell its Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (i) Rule 144 under the Securities Act, as such
rule may be amended from time to time, (ii) Rule 144A under the Securities Act,
as such rule may be amended from time to time, or (iii) any similar rules or
regulations hereafter adopted by the SEC. Upon the request of any Holder of
Registrable Securities, the Company and the Trust will deliver to such Holder a
written statement as to whether it has complied with such requirements.
(b) No Inconsistent Agreements. The Company or the Trust has not
entered into nor will the Company or the Trust on or after the date of this
Agreement enter into any agreement which is inconsistent with the rights granted
to the Holders of Registrable Securities in this
-24-
<PAGE>
Agreement or otherwise conflicts with the provisions hereof. The rights granted
to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's or the
Trust's other issued and outstanding securities under any such agreements.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company and the Trust have obtained the written
consent of Holders of at least a majority in aggregate principal amount of the
outstanding Registrable Securities affected by such amendment, modification,
supplement, waiver or departure; provided, that no amendment, modification or
supplement or waiver or consent to the departure with respect to the provisions
of Section 4 hereof shall be effective as against any Holder of Registrable
Securities unless consented to in writing by such Holder of Registrable
Securities. Notwithstanding the foregoing sentence, (i) this Agreement may be
amended, without the consent of any Holder of Registrable Securities, by written
agreement signed by the Company, the Trust and the Initial Purchasers, to cure
any ambiguity, correct or supplement any provision of this Agreement that may be
inconsistent with any other provision of this Agreement or to make any other
provisions with respect to matters or questions arising under this Agreement
which shall not be inconsistent with other provisions of this Agreement, (ii)
this Agreement may be amended, modified or supplemented, and waivers and
consents to departures from the provisions hereof may be given, by written
agreement signed by the Company, the Trust and the Initial Purchasers to the
extent that any such amendment, modification, supplement, waiver or consent is,
in their reasonable judgment, necessary or appropriate to comply with applicable
law (including any interpretation of the staff of the SEC) or any change therein
and (iii) to the extent any provision of this Agreement relates to the Initial
Purchasers, such provision may be amended, modified or supplemented, and waivers
or consents to departures from such provisions may be given, by written
agreement signed by the Initial Purchasers, the Company and the Trust. Each
Holder of any Registrable Securities then outstanding shall be bound by any
amendment or waiver effected pursuant to this Section 7(c), whether or not any
notice, writing or marking indicating such amendment or waiver appears on such
Registrable Securities or is delivered to such Holder.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, telex, telecopier, or any courier guaranteeing overnight delivery
(i) if to a Holder, at the most current address given by such Holder to the
Company or the Trust by means of a notice given in accordance with the
provisions of this Section 7(d), which address initially is, with respect to the
Initial Purchasers, the address set forth in the Purchase Agreement; and (ii) if
to the Company or the Trust, initially at the Company's address set forth in the
Purchase Agreement and thereafter at such other address, notice of which is
given in accordance with the provisions of this Section 7(d).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next Business Day, if timely delivered to an air courier guaranteeing
overnight delivery.
-25-
<PAGE>
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the Person giving the same to the Trustee, at the
address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors, assigns and transferees of the Initial
Purchasers, including, without limitation, and without the need for an express
assignment, subsequent Holders; provided, however, that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Purchase Agreement or the Indenture.
If any transferee of any Holder shall acquire Registrable Securities, in any
manner, whether by operation of law or otherwise, such Registrable Securities
shall be held subject to all of the terms of this Agreement, and by taking and
holding such Registrable Securities, such Person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement and such Person shall be entitled to receive the benefits hereof.
(f) Entire Agreement. This Agreement, the other writings referred to
herein (including the Declaration, the Capital Securities Guarantee and the
Indenture) and the Liquidated Damages Agreement among the parties hereto of even
date contain the entire understandings among the parties with respect to its
subject matter. This Agreement supersedes all prior agreements and
understandings among the parties with respect to its subject matter.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN MADE
IN THE STATE OF NEW YORK. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT,
AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) Securities Held by the Company, the Trust or its Affiliates.
Whenever the consent or approval of the Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by the
Company, the Trust or its affiliates (as such term is defined in Rule 405 under
the Securities Act) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.
-26-
<PAGE>
(l) Limitation of Liability. The Holders of the Capital
Securities, in their capacities as such, shall not be personally liable for any
liabilities or obligations of the Trust arising out of this Agreement, and the
parties hereto hereby agree that the Holders of the Capital Securities, in their
capacities as such, shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
-27-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
NGC CORPORATION
By:__________________________________
Name:________________________________
Title:_________________________________
NGC CORPORATION CAPITAL TRUST I
By:__________________________________
Name:________________________________
Title: Administrative Trustee
LEHMAN BROTHERS INC.
SALOMON BROTHERS INC
SMITH BARNEY INC.
By: LEHMAN BROTHERS INC.
By:___________________________________
Name:________________________________
Title:_________________________________
-28-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> JUN-30-1997 DEC-31-1996
<PERIOD-START> APR-01-1997 JAN-01-1997
<PERIOD-END> JUN-30-1997 JUN-30-1997
<CASH> 102,112 50,209
<SECURITIES> 0 0
<RECEIVABLES> 1,240,109 1,518,385
<ALLOWANCES> 0 0
<INVENTORY> 161,591 257,005
<CURRENT-ASSETS> 2,063,386 1,936,721
<PP&E> 1,842,844 1,819,811
<DEPRECIATION> (173,022) (128,432)
<TOTAL-ASSETS> 4,669,811 4,186,810
<CURRENT-LIABILITIES> (1,346,762) (1,548,987)
<BONDS> 0 0
(200,000) 0
(75,418) 75,418
<COMMON> (1,512) (1,498)
<OTHER-SE> (1,083,170) (1,039,817)
<TOTAL-LIABILITY-AND-EQUITY> (4,669,811) (4,186,810)
<SALES> (2,684,339) (5,956,419)
<TOTAL-REVENUES> (2,684,339) (5,956,419)
<CGS> 2,586,572 5,791,305
<TOTAL-COSTS> 2,586,572 5,791,305
<OTHER-EXPENSES> 1,316 17,035
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 13,236 27,860
<INCOME-PRETAX> (43,575) (48,004)
<INCOME-TAX> 11,447 11,262
<INCOME-CONTINUING> (32,128) (36,742)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (32,128) (36,742)
<EPS-PRIMARY> 0.19 0.22
<EPS-DILUTED> 0.19 0.22
</TABLE>
