<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934
WILLIAMS HOLDINGS OF DELAWARE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 73-1455707
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
ONE WILLIAMS CENTER, TULSA, OKLAHOMA 74172
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 918-588-2000
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
------------------- ------------------------------
None None
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $1.00 PAR VALUE
(TITLE OF CLASS)
The registrant meets the conditions set forth in General Instruction
J(1)(a) and (b) of Form 10-K. To the extent that the items in Form 10 are
identical to items in Form 10-K, this registration statement on Form 10 has been
generally prepared with the reduced disclosure format specified in Instruction J
to Form 10-K.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
WILLIAMS HOLDINGS OF DELAWARE, INC.
FORM 10
ITEM 1. BUSINESS
(A) GENERAL DEVELOPMENT OF BUSINESS
Williams Holdings of Delaware, Inc. (the "Company"), was incorporated under
the laws of the State of Delaware in July 1994. The principal executive offices
of the Company are located at One Williams Center, Tulsa, Oklahoma 74172
(telephone (918) 588-2000). Unless the context otherwise requires, references to
the Company herein include subsidiaries of the Company. The Company is a
wholly-owned subsidiary of The Williams Companies, Inc. ("Williams").
Except as noted below, virtually all of the Company's assets have been
transferred to the Company by Williams since January 1, 1995, and were
previously operated by subsidiaries of Williams. Williams acquired Williams Pipe
Line Company in 1966. Williams acquired the original gathering, processing and
production properties operated by Williams Field Services Company in 1983.
Williams acquired the original equipment business of Williams Telecommunications
Systems, Inc. in 1991. Other assets transferred to the Company by Williams have
also been operated by Williams' subsidiaries for various periods of time, as
described herein. The consolidated financial statements of the Company provided
herein include such subsidiaries for the periods presented.
On January 18, 1995, Williams acquired 60 percent of Transco Energy Company
("Transco"), in a cash tender offer. The remaining 40 percent of Transco's stock
was acquired through a merger, effective May 1, 1995. Also effective May 1,
1995, Williams transferred to the Company certain natural gas gathering,
processing and marketing assets, as well as certain other assets, previously
owned by Transco. The consolidated financial statements of the Company and the
financial and operating information for the six months ended June 30, 1995,
included in Item 1, include the results of operations for these assets from
January 18, 1995. Transco's combined financial statements for the transferred
assets for 1994 are included separately herein. Unaudited pro forma financial
statements for the Company for 1994 and the six months ended June 30, 1995,
reflecting the acquisition of the Transco assets are also included herein.
The Company is in the process of selling or liquidating certain assets
received from Transco. The largest of these assets, Transco Coal Company, was
sold in June 1995 for $65 million in cash and up to $23 million in preferred
stock of the purchaser. Sales of the remaining noncore companies or assets are
not expected to result in material proceeds to the Company.
In the third quarter of 1994, the Company entered into an agreement to sell
its telecommunications network services operations. On January 5, 1995, the
Company closed the transaction. The gain from the sale was reported as
discontinued operations in the 1995 first quarter financial statements. See Note
2 of Audited Notes to Consolidated Financial Statements of the Company.
(B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
See Item 13 -- Financial Statements and Supplemental Data.
(C) NARRATIVE DESCRIPTION OF BUSINESS
The Company, through subsidiaries, is engaged in natural gas gathering,
processing and production, the transportation of petroleum products, marketing
of natural gas and natural gas liquids and provides a variety of other products
and services to the energy industry. The Company's telecommunications
subsidiaries offer data, voice and video-related products and services and
customer premise equipment nationwide. The Company also has certain other equity
investments.
Substantially all of the Company's operations are conducted through
subsidiaries. Williams performs management, legal, financial, tax, consultative,
administrative and other services for its subsidiaries. The Company's principal
sources of cash will be from external financings, dividends and advances from
its
1
<PAGE> 3
subsidiaries, advances from Williams, investments, and interest payments from
subsidiaries and Williams on cash advances. The amount of dividends available to
the Company from subsidiaries largely depends on each subsidiary's earnings and
capital requirements. Certain subsidiaries' debt instruments with outside
lenders limit the amount of dividend payments and advances to the Company. See
Note 11 of Notes to the Company's Audited Consolidated Financial Statements.
ENERGY
WILLIAMS FIELD SERVICES GROUP, INC. (WILLIAMS FIELD SERVICES)
Williams Field Services, through subsidiaries, owns and/or operates both
regulated and nonregulated natural gas gathering and processing facilities and
owns and operates natural gas leasehold properties. In 1994 and 1993, gathering
and processing activities represented 89 percent and 88 percent, respectively,
of Williams Field Services' operating profit. Natural gas production represented
the balance.
In 1994, Williams Field Services increased the capacity of its Manzanares
coal seam gas gathering systems in northwestern New Mexico to 750 MMcf* of gas
per day. Expansions to be completed in 1995 will increase the capacity of the
Manzanares system to over 1 Bcf of gas per day. A 120 MMcf of gas per day
processing plant in the Wamsutter field of south-central Wyoming began
operations in early 1994 and plans are underway to double the capacity by the
fourth quarter of 1995. Also in 1994, Williams Field Services completed the
construction and acquisition of a 74 MMcf of gas per day processing complex in
the Texas Panhandle.
GATHERING AND PROCESSING
Williams Field Services, through subsidiaries, owns and operates natural
gas gathering and processing facilities located in the San Juan Basin in
northwestern New Mexico and southwestern Colorado, southwestern Wyoming, and the
Rocky Mountains of Utah and Colorado. Williams Field Services, through
subsidiaries, also operates natural gas gathering and processing facilities
located in the Texas Panhandle and the Hugoton Basin in northwest Oklahoma and
southwest Kansas which are owned by Williams Natural Gas, an affiliated company,
but which are the subject of applications for orders permitting abandonment so
the facilities can be transferred to Williams Field Services. Gathering services
provided include the gathering of gas and the treating of coal seam gas. The
operating information below includes operations attributed to the facilities
when they were owned and operated by affiliated entities but do not include
operations for facilities currently owned by Williams Natural Gas but operated
by Williams Field Services.
Customers and Operations. Williams Field Services' facilities consist of
approximately 4,000 miles of gathering pipelines, three gas treating plants and
ten gas processing plants (one of which is 13 percent owned and one of which is
66 percent owned) which have an aggregate daily inlet capacity of 2.3 Bcf of
gas. Gathering and processing customers have direct access to interstate
pipelines, including affiliated pipelines, which provide access to multiple
markets.
During 1994, Williams Field Services gathered natural gas for 117
customers. The two largest gathering customers accounted for approximately 27
percent and 13 percent, respectively, of total gathered volumes. During 1994,
natural gas was processed for a total of 108 customers. The three largest
customers accounted for approximately 22 percent, 14 percent and 12 percent,
respectively, of total processed volumes. No other customer accounted for more
than 10 percent of gathered or processed volumes. Williams Field Services'
gathering and processing agreements with large customers are generally long-term
agreements with various expiration dates. These long-term agreements account for
the majority of the gas gathered and processed by Williams Field Services.
- ---------------
* The term "Mcf " means thousand cubic feet, "MMcf " means million cubic feet
and "Bcf " means billion cubic feet. All volumes of natural gas are stated at
a pressure base of 14.73 pounds per square inch absolute at 60 degrees
Fahrenheit. The term "MMBtu" means one million British Thermal Units and
"TBtu" means one trillion British Thermal Units.
2
<PAGE> 4
Liquids extracted at the processing plants are ethane, propane, butane and
natural gasoline. Liquid products retained by Williams Field Services are
marketed by an affiliate for a fee. During 1994, liquid products were sold to a
total of 20 customers under short-term contracts. The three largest customers
accounted for approximately 33 percent, 13 percent and 10 percent, respectively,
of total liquid products volumes sold. No other customer accounted for more than
10 percent of volumes sold.
Operating Statistics. The following table summarizes gathering, processing
and natural gas liquid volumes for the periods indicated:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Gas volumes (TBtu, except where noted):
Gathering............................................. 679 588 471
Processing............................................ 392 323 * 283 *
Natural gas liquid sales (millions of gallons)........ 281 295 278
</TABLE>
- ---------------
* Restated to exclude treating volumes.
PRODUCTION
Williams Field Services, through a subsidiary, owns and operates producing
gas leasehold properties in the San Juan Basin.
Gas Reserves. As of December 31, 1994, 1993 and 1992, Williams Field
Services had proved developed natural gas reserves of 269 Bcf, 229 Bcf and 352
Bcf, respectively, and proved undeveloped reserves of 220 Bcf, 319 Bcf and 287
Bcf, respectively. As discussed below, Williams Field Services conveyed gas
reserves to the Williams Coal Seam Gas Royalty Trust in 1993. No major discovery
or other favorable or adverse event has caused a significant change in estimated
gas reserves since year end.
Customers and Operations. As of December 31, 1994, the gross and net
developed leasehold acres owned by Williams Field Services totaled 228,863 and
98,716, respectively, and the gross and net undeveloped acres owned were 29,369
and 13,669, respectively. As of such date, Williams Field Services owned
interests in 2,682 gross producing wells (369 net) on its leasehold lands. The
following table summarizes drilling activity for the periods indicated:
<TABLE>
<CAPTION>
DEVELOPMENT
---------------
COMPLETED GROSS NET
DURING WELLS WELLS
----------- ----- -----
<S> <C> <C>
1994........................................................ 66 19
1993........................................................ 39 5
1992........................................................ 95 11
</TABLE>
The majority of Williams Field Services' gas production is currently being
sold in the spot market at market prices. Total net production sold during 1994,
1993 and 1992 was 22.6 TBtu, 16.3 TBtu and 23.4 TBtu, respectively. The average
production costs per MMBtu of gas produced were $.14, $.17 and $.17 in 1994,
1993 and 1992, respectively. The average sales price per MMBtu was $1.21, $1.44
and $1.14, respectively, for the same periods.
In 1993, Williams Field Services conveyed a net profits interest in certain
of its properties to the Williams Coal Seam Gas Royalty Trust. Trust Units were
subsequently sold to the public by Williams in an underwritten public offering.
The Company holds 3,568,791 Trust Units representing 36.8 percent of outstanding
Units. Substantially all of the production attributable to the properties
conveyed to the Trust was from the Fruitland coal formation and constituted coal
seam gas. Proved developed coal seam gas reserves at December 31, 1994,
attributed to the properties conveyed were 162 Bcf. Production information
reported herein includes Williams Field Services' interest in such Units.
3
<PAGE> 5
RECENT EVENTS
Effective May 1, 1995, Williams transferred to the Company the operation of
certain production area transmission assets and certain gathering and processing
assets which Williams had acquired as of such date from Transco.
The production area transmission assets consist of approximately 3,500
miles of pipeline located in gas producing areas offshore and onshore in Texas
and Louisiana which are currently classified by the Federal Energy Regulatory
Commission ("FERC") as interstate transmission lines. The gathering assets
consist of nonjurisdictional and intrastate gas gathering lines located offshore
and onshore in Texas. Such facilities consist of approximately 28 miles of
gathering pipelines. The Company has identified certain facilities as noncore
assets it intends to dispose of during 1995.
The processing assets consist of two natural gas processing facilities. The
first is a 50 percent joint ownership interest in a processing facility with a
500 MMcf per day capacity located in southwestern Louisiana and the second is a
50 percent partnership interest in a 60 MMcf per day cryogenic extraction
facility located in south Texas.
In June 1995, Williams Field Services acquired the natural gas gathering
and processing assets of Public Service Company of New Mexico located in the San
Juan and Permian basins of New Mexico for $154 million. Williams Field Services
subsequently sold the southeastern New Mexico portion of the acquired assets for
$14.2 million. The assets retained consist of approximately 1,500 miles of
gathering pipelines and three gas processing plants which have an aggregate
daily inlet capacity of 300 MMcf of gas.
REGULATORY MATTERS
Historically, an issue has existed as to whether FERC has authority under
the Natural Gas Act to regulate gathering and processing prices and services.
During 1994, after reviewing its legal authority in a Public Comment Proceeding,
FERC determined that while it retains some regulatory jurisdiction over
gathering and processing performed by interstate pipelines, pipeline affiliated
gathering and processing companies are outside its authority under the Natural
Gas Act. Orders issued in 1994 which implement FERC's conclusion that it lacks
jurisdiction have been appealed to the United States Court of Appeals for the
District of Columbia Circuit. Williams Field Services cannot predict the
ultimate outcome of these proceedings.
As a result of these FERC decisions, several of the individual states in
which Williams Field Services operates may consider whether to impose regulatory
requirements on gathering companies. No state in which Williams Field Services
operates currently regulates gathering or processing rates or services.
COMPETITION
Williams Field Services competes for gathering and processing business with
interstate and intrastate pipelines, producers and independent gatherers and
processors. Numerous factors impact any given customer's choice of a gathering
or processing services provider, including rate, term, timeliness of well
connections, pressure obligations and the willingness of the provider to process
for either a fee or for liquids taken in-kind.
OWNERSHIP OF PROPERTY
Williams Field Services' gathering and processing facilities are owned in
fee. Gathering systems are constructed and maintained pursuant to rights-of-way,
easements, permits, licenses and consents on and across properties owned by
others. The compressor stations and gas processing and treating facilities are
located in whole or in part on lands owned by Williams Field Services or on
sites held under leases or permits issued or approved by public authorities.
4
<PAGE> 6
ENVIRONMENTAL MATTERS
Williams Field Services is subject to various federal, state and local laws
and regulations relating to environmental quality control. Management believes
that Williams Field Services' operations are in substantial compliance with
existing environmental legal requirements.
WILLIAMS ENERGY SERVICES COMPANY (WESCO)
WESCO, through subsidiaries, offers a full range of products and services
to energy markets throughout North America. WESCO's core business includes
natural gas marketing and trading activities, energy-related risk management
products and services and computer-based information products. WESCO was
incorporated in 1993.
NATURAL GAS MARKETING
WESCO includes certain natural gas marketing operations formerly conducted
by Transco as well as third party marketing activities managed by an affiliate.
WESCO markets natural gas throughout North America, primarily serving local
distribution company markets in the eastern and midwestern United States. The
Operating Statistics presented below represent only previously existing Williams
financial trading services coupled with third party marketing sales that
occurred at an affiliate and do not include operations previously conducted by
Transco.
WESCO serves a customer base of approximately 800 companies across its
natural gas marketing operations, with the majority of revenues derived from
sales to approximately 75 local distribution companies under long-term contracts
extending through the year 2002 with variable volume commitments. The balance of
revenues arises from sales to end users under one- to two-year renewable terms,
coupled with sales to other gas marketers and traders occurring under spot, or
short-term agreements. No single customer accounts for more than 10 percent of
natural gas sales volumes. WESCO's gas marketing activities are conducted on
both interstate and intrastate pipelines, with most sales activity coordinated
with transportation along pipeline systems owned by Williams.
FINANCIAL TRADING SERVICES
WESCO offers financial instruments and derivatives to producers and
consumers of energy as well as to financial entities participating in energy
price-risk management. WESCO also enters into energy-related financial
instruments to hedge against market price fluctuations associated with inventory
positions as well as natural gas sales and purchase commitments. The customer
base for these activities is comprised of other gas marketing companies,
energy-based entities and brokerages trading in energy commodities.
INFORMATION PRODUCTS
WESCO markets various computer-based trading and trader-match services
including Chalkboard, an electronic trader-match system for buyers and sellers
of liquid fuels, crude oil and refined products; Streamline, a physical cash
forward gas trading system located at five major U.S. hubs; and Capacity
Central, a natural gas pipeline capacity information system. These products are
utilized primarily by a customer base of approximately 181 energy-based
companies under short term service commitments. The information products
architecture was developed in 1993 and introduced to the marketplace in 1994.
These activities have not been profitable to date as costs of establishing
marketing liquidity and product usage still outpace the returns from this
developing market. Development efforts are also underway for a computer-based
electricity trader-match system.
OPERATING STATISTICS (DOLLARS IN MILLIONS, VOLUMES IN TBTU)
<TABLE>
<CAPTION>
1994 1993 1992
----- ----- -----
<S> <C> <C> <C>
Operating profit (loss).......................... $ .5 $ 7.9 $(2.6)
Natural gas sales volumes (physical)............. 145.3 151.5 223.9
</TABLE>
5
<PAGE> 7
PRODUCER SERVICES
WESCO entered into a $100 million production payment credit facility in
August 1995, enabling joint participation with producers in oil and gas reserve
acquisitions, development and monetization. In addition, the available
production volumes outside of the facility are marketed by WESCO. An initial
transaction for $3.3 million has been consummated under the facility since its
establishment.
REGULATORY MATTERS
Management believes that WESCO's natural gas marketing activities are
conducted in substantial compliance with the marketing affiliate rules of FERC
Order 497.
COMPETITION
WESCO's gas marketing operations are in direct competition with large
independent gas marketers, marketing affiliates of regulated pipelines and
natural gas producers. The financial trading business competes with other
energy-based companies offering similar services as well as certain brokerage
houses. This level of competition contributes to a business environment of
constant pricing and margin pressure.
OWNERSHIP OF PROPERTY
The primary assets of WESCO are its employees and related technological
support. Costs to develop the information products and certain marketing and
trading systems have been capitalized.
ENVIRONMENTAL MATTERS
WESCO is subject to federal, state and local laws and regulations relating
to the environmental aspects of its business. Management believes that WESCO is
in substantial compliance with existing environmental legal requirements for its
business.
WILLIAMS PIPE LINE COMPANY (WILLIAMS PIPE LINE)
Williams Pipe Line operates a petroleum products pipeline system which
covers an eleven-state area extending from Oklahoma in the south to North Dakota
and Minnesota in the north and Illinois in the east. The system is operated as a
common carrier offering transportation and terminalling services on a
nondiscriminatory basis under published tariffs. The system transports crude oil
and products, including gasolines, distillates, aviation fuels and LP-gases.
On September 30, 1994, Williams Pipe Line acquired 114 miles of pipeline in
Kansas, Missouri and Illinois from ARCO Pipe Line Company. In a related
transaction, Williams Pipe Line added a new offline delivery connection to serve
markets in northern Missouri and southern Iowa.
SHIPPERS AND PIPELINE SYSTEM
At December 31, 1994, the system traversed approximately 7,000 miles of
right-of-way and included over 9,200 miles of pipeline in various sizes up to 16
inches in diameter. The system includes 81 pumping stations, 23 million barrels
of storage capacity and 47 delivery terminals. The terminals are equipped to
deliver refined products into tank trucks and tank cars. The maximum number of
barrels which the system can transport per day depends upon the operating
balance achieved at a given time between various segments of the system. Since
the balance is dependent upon the mix of products to be shipped and the demand
levels at the various delivery points, the exact capacity of the system cannot
be stated.
6
<PAGE> 8
The operating statistics set forth below relate to the system's operations
for the periods indicated:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Shipments (thousands of barrels):
Refined products:
Gasolines........................................ 120,682 109,841 92,643
Distillates...................................... 61,129 51,508 45,920
Aviation fuels................................... 9,523 11,123 11,180
LP-Gases............................................ 10,849 9,778 11,362
Crude oil........................................... 1,062 3,388 4,481
------- ------- -------
Total shipments............................. 203,245 185,638 165,586
======= ======= =======
Daily average (thousands of barrels)................ 557 509 454
Average haul (miles)................................ 284 279 295
Barrel miles (millions)............................. 57,631 51,821 48,825
Revenues (millions):
Transportation...................................... $ 168.0 $ 153.0 $ 137.7
Nontransportation................................... 41.7 26.3 10.8
------- ------- -------
Total revenues.............................. $ 209.7 $ 179.3 $ 148.5
======= ======= =======
Average transportation revenue per barrel........... $.83 $.82 $.83
</TABLE>
On December 1, 1993, Williams Pipe Line acquired a 300-mile pipeline, two
loading terminals and related storage from Sun Pipe Line Company. The pipeline
connects to Williams Pipe Line's systems in Oklahoma and adds a portion of
Arkansas to its market. Volumes originating on this system accounted for
approximately 10 percent of the shipments and transportation revenues in 1994.
In 1994, 75 shippers transported volumes through the system. The seven
largest shippers accounted for 55 percent of transportation revenues. The
highest revenue-producing shipper accounted for approximately 11 percent of
transportation revenues in 1994. Nontransportation activities accounted for 20
percent of total revenues in 1994. The increase in nontransportation revenues is
primarily due to expanded gas liquids and fractionator operations.
As of December 31, 1994, Williams Pipe Line was directly connected to, and
received products from, 11 operating refineries reported to have an aggregate
crude oil refining capacity of approximately 888,000 barrels per day. Eight of
these refineries are located in Kansas and Oklahoma, two in Minnesota and one in
Wisconsin. The system also received products through connecting pipelines from
other refineries located in Illinois, Indiana, Kansas, Louisiana, Montana, North
Dakota, Oklahoma and Texas. Crude oil is received through connections in Kansas
and Oklahoma. The refineries, which are connected directly or indirectly to the
system, have access to a broad range of crude oil producing areas, including
foreign sources. LP-gases are transported from gas producing and storage areas
in central Kansas through connecting pipelines in Iowa, Kansas, Missouri and
Illinois. In addition to making deliveries to company-owned terminals, the
system delivers products to third-party terminals and connecting pipelines.
The refining industry continues to be affected by environmental regulations
and changing crude supply patterns. The industry's response to environmental
regulations and changing supply patterns will directly affect volumes and
products shipped on the Williams Pipe Line system. EPA regulations, driven by
the Clean Air Act, require refiners to change the composition of fuel
manufactured. A pipeline's ability to respond to the effects of regulation and
changing supply patterns will determine its ability to maintain and capture new
market shares. Williams Pipe Line has successfully responded to changes in
diesel fuel composition and product supply and has adapted to new gasoline
additive requirements. Reformulated gasoline regulations have not yet
significantly affected Williams Pipe Line. Williams Pipe Line will continue to
position itself to respond to changing regulations and supply patterns, but it
is not possible to predict how future changes in the marketplace will affect
Williams Pipe Line's market areas.
7
<PAGE> 9
REGULATORY MATTERS
General. Williams Pipe Line, as an interstate common carrier pipeline, is
subject to the provisions and regulations of the Interstate Commerce Act. Under
this Act, Williams Pipe Line is required, among other things, to establish just,
reasonable and nondiscriminatory rates, to file its tariffs with FERC, to keep
its records and accounts pursuant to the Uniform System of Accounts for Oil
Pipeline Companies, to make annual reports to FERC and to submit to examination
of its records by the audit staff of FERC. Authority to regulate rates, shipping
rules and other practices and to prescribe depreciation rates for common carrier
pipelines is exercised by FERC. The Department of Transportation, as authorized
by the 1992 Pipeline Safety Reauthorization Act, is the oversight authority for
interstate liquids pipelines. Williams Pipe Line is also subject to the
provisions of various state laws which are applicable to intrastate pipelines.
Rate Proceeding. On December 31, 1989, a rate cap, which resulted from a
settlement with several shippers, effectively freezing Williams Pipe Line's
rates for the previous five years, expired. Williams Pipe Line filed a revised
tariff on January 16, 1990, with FERC and the state commissions. The tariff set
an average increase in rates of 11 percent and established volume incentives and
proportional rate discounts. Certain shippers on the Williams Pipe Line system
and a competing pipeline carrier filed protests with FERC alleging that the
revised rates are not just and reasonable and are unlawfully discriminatory. As
a result of these protests, FERC suspended the effective date of the tariff for
seven months (until September 16, 1990), at which time it became effective,
subject to refund. The revised intrastate tariffs filed with state commissions
were voluntarily withdrawn and refiled to be effective at the same time as the
interstate tariff.
Williams Pipe Line elected to bifurcate this proceeding in accordance with
the then-current FERC policy. Phase I of the FERC's bifurcated proceeding
provides a carrier the opportunity to justify its rates and rate structure by
demonstrating that its markets are workably competitive. Any issues unresolved
in Phase I will require cost justification in Phase II. FERC hearings in Phase I
were held before an administrative law judge in the summer of 1991. The judge's
decision, issued January 24, 1992, ruled solely on market power issues and
certain discrimination claims. This initial decision concluded that Williams
Pipe Line had sustained its burden of proof in demonstrating that it "lacks
significant market power" and is "workably competitive" in 22 of 32 of its
markets and that the alleged discrimination was justified by competitive
conditions. On July 27, 1994, FERC issued a Phase I decision, Order 391. The
Commission, while citing considerable agreement with the theoretical concepts
employed by the administrative law judge, reversed his initial decision
regarding the competitive nature of nine specific markets, thus finding that
Williams Pipe Line had sustained its burden of proof in showing that it is
workably competitive in 13 of 32 markets under investigation. In response to
this order, Williams Pipe Line filed a motion to stay Phase II along with a
request for reconsideration of nine markets on August 29, 1994. On September 28,
1994, FERC issued a tolling order granting Williams Pipe Line's request for
rehearing but denying its motion to stay the Phase II proceedings. On June 6,
1995, FERC issued its rehearing decision of the Phase I order. This order found
an additional seven markets to be workably competitive. This brings the total
number of Williams Pipe Line competitive markets to twenty. A shipper has
appealed this decision to the United States Court of Appeals for the District of
Columbia Circuit. Williams Pipe Line filed its direct evidence in Phase II on
January 23, 1995, with hearings to begin in December 1995. The current
procedural schedule forecasts an initial decision in Phase II in the first half
of 1996. While Williams Pipe Line cannot predict the final outcome of these
proceedings, it believes its revised tariffs will ultimately be found lawful.
In June 1993, FERC ruled that Williams Pipe Line must file tariffs and cost
justification for transaction charges that are collected for certain bookkeeping
services, Product Transfer Orders and Product Authorizations. Williams Pipe Line
had previously considered these charges as nonjurisdictional. In order to comply
with the ruling, Williams Pipe Line immediately filed tariffs establishing these
charges in its tariff. Williams Pipe Line filed a request for rehearing on July
23, 1993. The FERC, on September 21, 1995, issued an Order on Rehearing,
reversing its previous decision. The FERC has now ruled that Williams Pipe
Line's Product Transfer Orders and Product Authorization charges are not
jurisdictional, do not require cost justification and need not be filed in
Williams Pipe Line's tariffs. Moreover, FERC now recognizes that "transportation
services are completed at the time the petroleum products enter the terminal."
This decision is subject to rehearing and judicial review.
8
<PAGE> 10
On October 22, 1993, FERC issued a new rule making and two companion
Notices of Inquiry intended to establish "simplified and generally applicable
rate making" as well as procedural streamlining as mandated by the Energy Policy
Act of 1992. On July 27, 1994, FERC issued a final rule establishing a
"simplified and generally applicable rate making" methodology as mandated by the
Energy Policy Act of 1992. FERC has attempted to streamline the rate making
process via generic rules and a rate cap mechanism, or index, based on the
annual Producer Price Index for Finished Goods less one percentage point
("PPI-1"). The final rule, which became effective January 1, 1995, requires
pipelines to use indexing as their primary rate making methodology in markets
not determined to be workably competitive. The Association of Oil Pipelines has
filed an appeal of this order in the Court of Appeals for the District of
Columbia Circuit citing, among other things, the inadequacy of the PPI-1 index.
Williams Pipe Line has intervened in this proceeding.
On October 28, 1994, FERC released two additional rule makings. The first
established procedures for seeking "market-based" rates. The second sets forth
procedures for cost justifying rate increases which exceed the PPI-1 index and
establishes several changes in existing accounting and reporting requirements.
COMPETITION
Williams Pipe Line operates without the protection of a federal certificate
of public convenience and necessity that might preclude other entrants from
providing like service in its area of operations. Further, Williams Pipe Line
must plan, operate and compete without the operating stability inherent in a
broad base of contractually obligated or owner-controlled usage. Since Williams
Pipe Line is a common carrier, its shippers need only meet the requirements set
forth in its published tariffs in order to avail themselves of the
transportation services offered by Williams Pipe Line.
Competition exists from other pipelines, refineries, barge traffic,
railroads and tank trucks. Competition is affected by trades of products or
crude oil between refineries which have access to the system and by trades among
brokers, traders and others who control products. Such trades can result in the
diversion from the Williams Pipe Line system of volume which might otherwise be
transported on the system. Shorter, lower revenue hauls may also result from
such trades. Williams Pipe Line also is exposed to interfuel competition whereby
an energy form shipped by a liquids pipeline, such as heating fuel, is replaced
by a form not transported by a liquids pipeline, such as electricity or natural
gas. While Williams Pipe Line faces competition from a variety of sources
throughout its marketing areas, the principal competition is other pipelines. A
number of pipeline systems, competing on a broad range of price and service
levels, provide transportation service to various areas served by the system.
The possible construction of additional competing products or crude oil
pipelines, conversions of crude oil or natural gas pipelines to products
transportation, changes in refining capacity, refinery closings, changes in the
availability of crude oil to refineries located in its marketing area, or
conservation and conversion efforts by fuel consumers may adversely affect the
volumes available for transportation by Williams Pipe Line.
OWNERSHIP OF PROPERTY
Williams Pipe Line's system is owned in fee. However, a substantial portion
of the system is operated, constructed and maintained pursuant to rights-of-way,
easements, permits, licenses or consents on and across properties owned by
others. The terminals, pump stations and all other facilities of the system are
located on lands owned in fee or on lands held under long-term leases, permits
or contracts. Management believes that the system is in such a condition and
maintained in such a manner that it is adequate and sufficient for the conduct
of business.
ENVIRONMENTAL MATTERS
Williams Pipe Line's operations are subject to various federal, state and
local laws and regulations relating to environmental quality control. Management
believes that Williams Pipe Line's operations are in substantial compliance with
existing environmental legal requirements.
Williams Pipe Line has been named by the EPA as a potentially responsible
party as defined in Section 107(a) of the Comprehensive Environmental Response,
Compensation, and Liability Act, for a site in
9
<PAGE> 11
Sioux Falls, South Dakota. This site was placed on the National Priorities List
in July 1990. In April 1991, Williams Pipe Line and the EPA executed an
administrative consent order under which Williams Pipe Line agreed to conduct a
remedial investigation and feasibility study for this site. The EPA issued its
"No Action" Record of Decision in 1994 concluding that there were no significant
hazards associated with the site subject to two additional years of monitoring
for arsenic in certain existing monitoring wells.
WILLIAMS ENERGY VENTURES, INC. (WILLIAMS ENERGY VENTURES)
Another subsidiary of the Company, Williams Energy Ventures, is combined
for financial reporting purposes with Williams Pipe Line. Williams Energy
Ventures is engaged in the manufacturing and marketing of petroleum products and
oxygenates. Williams Energy Ventures also owns an approximate 70 percent
interest in a 25 million gallon per year ethanol plant in Nebraska scheduled for
completion in the fourth quarter of 1995. Williams Energy Ventures will operate
the facility and market the fuel ethanol output. In addition, on August 1, 1995,
Williams Energy Ventures purchased Pekin Energy Company in Pekin, Illinois for
$167 million. The Pekin Energy facility produces 100 million gallons annually of
fuel-grade and industrial ethanol and various coproducts.
TELECOMMUNICATIONS
WILLIAMS TELECOMMUNICATIONS SYSTEMS, INC. (WILTEL)
WilTel provides data, voice and video communications products and services
to a wide variety of customers nationally. WilTel is strategically positioned in
the marketplace with more than 100 sales and service locations throughout the
United States, over 2,700 employees and over 1,300 stocked service vehicles.
WilTel employs more than 1,300 technicians and more than 400 sales
representatives and sales support personnel to serve an estimated 30,000
commercial, governmental and institutional customers. WilTel's customer base
ranges from Fortune 500 corporations and the Federal Government to small
privately-owned entities.
WilTel offers its customers a full array of network interconnect products
including digital key systems (generally designed for voice applications with
fewer than 100 lines), private branch exchange (PBX) systems (generally designed
for voice applications with greater than 100 lines), voice processing systems,
interactive voice response systems, automatic call distribution applications,
call accounting systems, network monitoring and management systems, desktop
video, routers, channel banks, intelligent hubs and cabling for all voice and
data applications. WilTel's services also include the design, configuration and
installation of voice and data networks and the management of customers'
telecommunications operations and facilities. In addition, WilTel possesses
multicustomer service capabilities, including three specialized functions that
provide customers with on-line order entry and trouble reporting services,
advanced technical assistance and training. Other service capabilities include
Local Area Network and PBX remote monitoring and toll fraud detection.
In 1994, WilTel derived approximately 67 percent of its revenues from its
existing customer base and approximately 33 percent from the sale of new
telecommunications systems. The distribution of revenues for the periods
indicated are shown in the following table:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
REVENUES:
New System Sales....................................... 33% 39% 41%
System Modifications................................... 36% 30% 28%
Maintenance............................................ 24% 23% 25%
Other.................................................. 7% 8% 6%
</TABLE>
The 1994 decrease in the percentage of revenue derived from the sale of new
telecommunications systems was attributed to the March 1994, acquisition of
BellSouth's customer premise equipment sales and service operations in 29 states
outside of BellSouth's local operating region in the nine southeastern most
states, and
10
<PAGE> 12
the October 1994, acquisition of Jackson Voice Data, a New York City-based
customer premise equipment company. The acquired companies generated the vast
majority of their revenue from their existing customer bases. The acquisition of
these businesses has allowed WilTel to capitalize on its existing
infrastructure, strengthen its national market presence and geographic customer
density and has provided more diversity in product offerings.
Although the percentage of revenue attributable to new system sales
continues to decline relative to total revenue, year end revenue backlog
continues to increase. Estimated year end revenue backlog balances, comprised of
new system sales and major system upgrades, were as follows: $92 million in
1994, $52 million in 1993 and $39 million in 1992.
The total number of ports maintained and served by WilTel at the end of
1994 increased to 4.1 million. The bulk of the increase from prior years is
attributable to the acquisitions of the BellSouth and Jackson Voice Data
customer bases. The two acquisitions contributed in excess of 1.0 million ports
to the total WilTel count. A port is defined as an electronic address resident
in a customer's PBX or key system that supports a station, trunk or data port.
The year end port counts were as follows: 4.1 million in 1994, 2.7 million in
1993 and 2.6 million in 1992.
WilTel's three largest suppliers accounted for 91 percent of equipment sold
in 1994. A single manufacturer supplied 80 percent of all equipment sold. In
this case, WilTel is the largest distributor of certain of this company's
products. About 70 percent of WilTel's active customer base consists of this
manufacturer's products. The distribution agreement with this supplier is
scheduled to expire in 1997. This agreement is expected to be renewed upon
expiration. Management believes there is minimal risk as to the availability of
product from suppliers.
Competition
WilTel has many competitors ranging from AT&T and the Regional Bell
Operating Companies to small individually owned companies which sell and service
customer premise equipment. Competitors include companies that sell equipment
that is comparable or identical to that sold by WilTel.
Regulatory Matters
WilTel is subject to Federal Communications Commission rules governing the
connection of equipment to telephone networks. A subsidiary of WilTel is subject
to FCC regulations as a common carrier and as a microwave licensee.
THE WILTECH GROUP, INC. (WILTECH)
WilTech, through subsidiaries, seeks to develop growth opportunities in the
telecommunications and technology industries. WilTech currently conducts its
business through two principal operating subsidiaries, Vyvx, Inc. and Williams
Knowledge Systems, Inc.
VYVX, INC. (VYVX)
Vyvx offers switched fiber-optic television transmission services
nationwide. It provides switched, broadcast-quality, fiber-optic television
transmission services as an alternative to satellite and microwave television
transmissions. Vyvx primarily provides backhaul transmission of news and other
programming between two or more customer locations. For example, the Vyvx
network is used for the broadcast coverage of major professional sporting
events. Vyvx's customers include all of the major broadcast and cable networks.
Vyvx also provides videoconferencing/business television services.
11
<PAGE> 13
WILLIAMS KNOWLEDGE SYSTEMS, INC. (WILLIAMS KNOWLEDGE SYSTEMS)
Williams Knowledge Systems provides computer-based operator training
primarily to the energy industry. Williams Knowledge Systems has licensing
agreements with over 150 customers in the oil and gas pipeline, terminal and
trucking industries.
------------------------
The Company has approximately 5,733 full-time employees, of whom
approximately 753 are represented by unions and covered by collective bargaining
agreements. The Company considers its relations with its
employees to be good.
(D) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
The Company has no significant foreign operations.
ITEM 2. FINANCIAL INFORMATION
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF THE COMPANY
The following selected income statement data for the years 1994, 1993 and
1992 and balance sheet data for 1994 and 1993 have been derived from the
Company's audited consolidated financial statements appearing elsewhere herein.
The selected income statement data for the six-month periods ended June 30, 1995
and 1994 and the balance sheet data for June 30, 1995, have been derived from
the Company's unaudited consolidated financial statements appearing elsewhere
herein. The selected income statement data for the years 1991 and 1990 and
balance sheet data for 1992, 1991 and 1990 have been derived from the Company's
consolidated financial statements not appearing elsewhere herein. The selected
historical consolidated financial data shown below should be read in conjunction
with the consolidated financial statements of the Company and related notes and
the audit report appearing elsewhere herein.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
------------------- ------------------------------------------------------------
1995(2) 1994 1994 1993 1992 1991 1990
-------- ------ -------- -------- -------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:(1)
Total revenues............ $1,047.9 $584.0 $1,264.3 $1,221.0 $1,283.2 $ 929.8 $ 705.8
Income from continuing
operations.............. 100.1(6) 76.3(3) 125.5(3) 152.3(4) 46.9(5) 20.7 23.5
Income from discontinued
operations.............. 1,005.7 28.3 94.0 46.4 25.2 40.3 41.1
Net income................ 1,105.8 98.5 213.4 198.7 83.2 61.0 64.6
BALANCE SHEET DATA:(1)
Property, plant and
equipment -- net........ 1,897.6 1,585.1 2,151.1 2,157.3 1,651.8 1,532.2
Total assets.............. 3,993.4 3,440.1 2,989.4 2,869.9 2,316.2 2,089.0
Long-term debt............ 124.2 507.0 229.4 337.1 375.9 518.4
Stockholder's equity...... 2,143.4 1,739.9 1,818.0 1,614.6 1,262.0 943.2
RATIO OF EARNINGS TO FIXED
CHARGES(7).............. 3.41 6.71 14.10 2.86 1.60 2.47
</TABLE>
- ---------------
(1) In the third quarter of 1994, the Company signed a definitive agreement to
enter into the sale of its network services operations (the "WNS Sale"). On
January 5, 1995, the Company consummated the transaction and the gain from
the sale was reported as discontinued operations in the 1995 first quarter
consolidated financial statements. The selected historical consolidated
financial data has been prepared to present operating results of the
operations sold in the WNS Sale as discontinued operations. Prior period
balance sheets have not been restated. For additional information see Note 2
of the Notes to Audited Consolidated Financial Statements of the Company
appearing elsewhere herein.
(2) On January 18, 1995, Williams acquired 60 percent of the outstanding common
stock of Transco Energy Company (Transco) in a cash tender offer. On May 1,
1995, the remaining 40 percent of Transco
12
<PAGE> 14
outstanding common stock was acquired through a merger, which involved the
exchange of the remaining Transco common stock for approximately 10.4
million shares of Williams common stock. Williams then contributed the stock
of all of Transco and Transco's subsidiaries, except for subsidiaries
holding the interstate natural gas pipelines, to the Company. The
consolidated financial statements as of and for the six months ended June
30, 1995, reflect this contribution from Williams effective January 18,
1995.
(3) Includes a pretax gain on sales of assets of $22.7 million. See Note 4 of
the Notes to Audited Consolidated Financial Statements of the Company
appearing elsewhere herein.
(4) Includes a pretax gain on sales of assets of $97.5 million. See Note 4 of
the Notes to Audited Consolidated Financial Statements of the Company
appearing elsewhere herein.
(5) Includes a pretax gain on sales of assets of $14.6 million. See Note 4 of
the Notes to Audited Consolidated Financial Statements of the Company
appearing elsewhere herein.
(6) Includes a pretax loss on sales of investments of $12.6 million. See Note 4
of the Notes to Unaudited Consolidated Financial Statements of the Company
for the six months ended June 30, 1995, appearing elsewhere herein.
(7) For the purpose of this ratio (i) earnings consist of income from continuing
operations before fixed charges and income taxes for the Company, its
majority owned subsidiaries and its proportionate share of 50 percent-owned
companies, less undistributed earnings of less than 50 percent-owned
companies; and (ii) fixed charges consist of interest and debt expense on
all indebtedness (without reduction of interest capitalized) and that
portion of rental payments on operating leases estimated to represent an
interest factor, plus the pretax effect of preferred dividends of
subsidiaries. The ratio of earnings to fixed charges is higher in the years
1993 and 1994 as compared to the other years presented primarily because of
gains on sales of assets and higher operating profit.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995 VS. SIX MONTHS ENDED JUNE 30, 1994
Williams Field Services' revenues increased $40 million due in part to a 13
percent increase in gathering volumes increasing revenues by $10 million. In
addition, higher natural gas and liquids sales volumes, partially offset by
lower average prices, increased revenues by $13 million and $6 million,
respectively. Costs and operating expenses and selling, general and
administrative expenses increased $26.6 million and $10.9 million, respectively,
primarily resulting from increased natural gas and liquids volumes and expanded
facilities. Operating profit increased $2.8 million primarily resulting from
increases in liquids volumes and margins of $4 million and gathering activities
of $13 million. Partially offsetting these are increases in operating and
maintenance expenses, depreciation and selling, general and administrative
expenses from expanded facilities. Operating profit in 1994 was favorably
affected by an adjustment to operating taxes of $4 million.
Williams Energy Services' revenues increased $349.4 million, primarily from
the addition of Transco's gas marketing operations. Natural gas sales were 245.1
TBtu's in 1995 compared to 70.4 TBtu's in 1994. Costs and expenses increased
$328 million due primarily to Transco's gas marketing operations. Operating
profit increased $21.4 million, as Transco's gas marketing operations
contributed $13.5 million and the first quarter 1995 income recognition from
mark-to-market valuation of long-term natural gas supply contracts added $21
million. Partially offsetting the increases were the costs from supporting
information technology and business development of $1.8 million, reduced profits
from refined-products trading activities of $5 million, in addition to
nonrecurring costs associated with merging Transco's marketing operations.
Included in 1994 operating profit was a $2.3 million favorable
contract-reformation settlement.
Williams Pipe Line's revenues increased by $3 million primarily as a result
of increases in transportation and nontransportation revenue of $3.3 million and
$11.4 million, respectively, substantially offset by a decrease of $11.6 million
due primarily to Williams Energy Ventures and the discontinuance of certain
petroleum-product services due to adverse market conditions. A slightly higher
average transportation rate, resulting from a December 1994 tariff increase, was
partially offset by shorter haul movements. Shipments, while 3 percent higher
than 1994, were reduced by the November 1994 Minneapolis rack fire and
unfavorable weather conditions in the first and second quarters of 1995. Costs
and expenses were $1.2 million higher due primarily
13
<PAGE> 15
to higher costs of $5.1 million related to nontransportation revenue, largely
offset by Williams Energy Ventures' discontinuance of certain petroleum-product
services. Operating profit increased $1.8 million primarily from both higher
transportation and nontransportation revenue, partially offset by higher costs
and operating expenses of $8.3 million. Results from Williams Energy Ventures'
petroleum ventures declined $2.5 million due to lower refined-product sales
margins and increased costs from business development. Results in 1994
benefitted from a $2.8 million insurance settlement. Williams Energy Ventures is
developing two nonregulated facilities expected to be additive to earnings
during the last half of 1995.
Williams Telecommunications Systems' revenues increased $72.1 million due
primarily to new systems and new system enhancements and acquisitions of
BellSouth Communication Systems, on March 31, 1994, and Jackson Voice Data
completed in October 1994. The increases in costs of sales of $57.4 million and
selling, general and administrative expenses of $7.4 million primarily reflects
the increased sales activity from the acquisitions. Operating profit increased
$7.5 million due primarily to the increase in sales activity resulting from the
1994 acquisitions.
Interest accrued increased $24.3 million due primarily to the approximately
$770 million of Transco outstanding debt assumed as a result of the Transco
acquisition. Effective May 1, 1995, all debt resulting from the Transco
acquisition was assumed by Williams. Interest capitalized increased due
primarily to increased capital expenditures for gathering and processing
facilities. Investing income increased $38 million due primarily to interest
earned from the parent, Williams, on the invested portion of the cash proceeds
from the sale of WilTel's network services operations combined with an $11
million increase in the dividend from Texasgulf Inc. and dividends received on
Williams common stock held by Williams Holdings. The 1995 loss on sales of
investments results from the sale of the 15 percent interest in Texasgulf Inc.
(see Note 4 of Notes to Unaudited Consolidated Financial Statements for
additional information). The 1994 gain on sales of investments results from the
sale of 3,461,500 limited partner common units in Northern Border Partners, L.P.
Other income (expense) -- net in 1995 includes approximately $5 million of
dividends on Transco preferred stock and minority interest common stockholders.
Other income (expense) -- net in 1994 includes a credit of $4.8 million from the
reversal of previously accrued liabilities associated with certain Williams Coal
Seam Gas Royalty Trust contingencies which expired. Also included in 1994 is
approximately $4 million of expense related to the adoption of Statement of
Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits," which related to postemployment benefits being paid to
employees of companies previously sold.
The effective income tax rate in 1995 is significantly less than the
federal statutory rate due primarily to the previously unrecognized tax benefits
associated with the investment in Texasgulf Inc. and income tax credits from
coal seam gas production, partially offset by state income taxes and dividends
on subsidiary stock. The effective income tax rate in 1994 is less than the
federal statutory rate as the effects of income tax credits from coal seam gas
production and a favorable prior year state income tax adjustment are partially
offset by state income taxes.
The 1994 extraordinary loss results from the early extinguishment of debt
(see Note 7 of Notes to Unaudited Consolidated Financial Statements for
additional information).
FINANCIAL CONDITION AND LIQUIDITY
LIQUIDITY
During June 1995, the Company became party to an $800 million bank-credit
facility entered into by its parent, Williams. Under this agreement, the Company
has access to $600 million of financing. Prior to this facility, the Company's
liquidity came primarily from Williams. All excess cash was transferred to
Williams and cash requirements to finance working capital, investments and
capital expenditures were obtained from Williams either through capital
contributions or note agreements. The Company and its subsidiaries had amounts
receivable from Williams totalling $1.1 billion, including $360 million of
parent company debentures (see Note 4 of Notes to Unaudited Consolidated
Financial Statements for additional information), at June 30, 1995, compared to
amounts due to Williams of $390 million and $46 million at December 31, 1994 and
June 30, 1994, respectively. The Company and its subsidiaries had amounts
receivable from Williams of
14
<PAGE> 16
$56 million at December 31, 1993 and $76 million due to Williams at December 31,
1992. At June 30, 1995, the Company's parent, Williams, had access to $1.1
billion of liquidity representing the unborrowed portion of its $800 million
bank-credit facility plus cash-equivalent investments. This compares with
liquidity of $495 million at December 31, 1994, and $500 million at June 30,
1994. The increase in 1995 is due to the remaining cash proceeds from the sale
of the Company's network services operations and a $200 million increase in the
capacity of the bank-credit facility (see Note 9 of Notes to Unaudited
Consolidated Financial Statements for additional information). Williams had
access to $639 million of liquidity at December 31, 1993 and $780 million at
December 31, 1992. Following the negotiation of this bank-credit facility, the
Company is no longer dependent upon its parent for financing.
Terms of certain borrowing agreements limit transfer of funds to the
Company from its subsidiaries. The restrictions have not impeded, nor are they
expected to impede, the Company's ability to meet its cash requirements in the
future.
The Company had a net working-capital deficit of $638 million at June 30,
1995, including income taxes payable of $580 million resulting primarily from
the sale of WilTel's network services operations. The Company had a net
working-capital of $523 million at December 31, 1994, including net assets of
discontinued operations of $744 million, compared with a $39 million net
working-capital deficit at December 31, 1993. Subsequent to December 31, 1994,
$398 million of bank notes payable were repaid from proceeds of the sale of
WilTel's network services operations. The Company manages its borrowings to keep
cash and cash equivalents at a minimum.
In 1995 capital expenditures are estimated to be approximately $500
million. During 1995, the Company expects to finance capital expenditures,
investments and working-capital requirements through the use of the remaining
network services operations sale proceeds, the bank-credit facility, advances
from its parent or debt offerings.
FINANCING ACTIVITIES
The consolidated long-term debt to long-term debt-plus-equity ratio
decreased to 5.5 percent at June 30, 1995, from 22.6 percent at December 31,
1994. The decrease is due to an increase in stockholder's equity resulting from
net income and capital contributions from its parent and a decrease in long-term
debt due affiliates resulting from cash proceeds from the sale of WilTel's
network services operations.
Net assets held for sale at June 30, 1995 include certain Transco
businesses which the Company intends to sell within one year (see Note 3 of
Notes to Unaudited Consolidated Financial Statements for additional
information). Notes payable decreased reflecting their repayment from the
proceeds of the sale of the Company's network services operations. Accrued
liabilities increased due primarily to the income tax and other liabilities
associated with the sale of the Company's network services operations in
addition to the acquisition of Transco. The increases in receivables, other
noncurrent assets and deferred charges, payables and deferred income and other
liabilities primarily reflect the acquisition of Transco.
OTHER
On May 1, 1995, Williams completed the acquisition of Transco. Following
the merger, Williams contributed the stock of Transco and all of Transco's
subsidiaries, except for its subsidiaries holding regulated interstate natural
gas pipelines, to Williams Holdings (see Note 3 of Notes to Unaudited
Consolidated Financial Statements for additional information).
In April 1995, the Company sold its 15 percent interest in Texasgulf Inc.
for approximately $124 million in cash (see Note 4 of Notes to Unaudited
Consolidated Financial Statements for additional information).
On June 30, 1995, the Company acquired the Public Service Company of New
Mexico's natural gas gathering and processing assets in the San Juan and Permian
Basins for $154 million. The acquired natural gas gathering, treating and
processing assets in the Permian Basin (representing approximately 10 percent of
the acquired assets) were then sold to GPM Gas Corporation the same day.
15
<PAGE> 17
Williams Field Services continues to pursue development of a commercial
underground coal gasification venture in South-central Wyoming. Design and
construction costs of a demonstration project capitalized through June 30, 1995
are approximately $21 million. The future viability of this venture will be
determined after completion and analysis of development activities currently in
process.
SUBSEQUENT EVENT
In August, a subsidiary of the Company purchased Pekin Energy Company, the
nation's second largest ethanol producer, for $167 million in cash.
During October 1995, Williams Holdings offered for sale in the public
market its remaining investment of $41.8 million in Williams common stock.
RESULTS OF OPERATIONS
1994 VS. 1993
Williams Field Services' revenues decreased $50 million, due primarily to
lower natural gas sales, which decreased revenues by $71 million, as a result of
the March 1993 sale of Williams' intrastate natural gas pipeline system and
related marketing operations in Louisiana. Liquids volumes ($4 million) and
prices ($5 million) and average processing prices ($7 million) also decreased,
but were more than offset by increased gathering ($21 million) and processing
($8 million) volumes of 16 percent and 21 percent, respectively. Costs and
operating expenses decreased $69 million, due primarily to lower natural gas
purchases of $68 million and the effects of a favorable adjustment of an accrual
related to operating taxes, partially offset by higher operations, maintenance
and depreciation expenses at expanded gathering facilities. Operating profit
increased $17.6 million, due primarily to higher gathering ($21 million) and
processing ($8 million) volumes and a favorable operating taxes adjustment ($5
million), partially offset by lower per-unit liquids margins ($5 million), lower
average processing prices ($7 million) and higher operations, maintenance and
depreciation expenses associated with expanded facilities.
Williams Energy Services' revenues decreased $97 million, due primarily to
lower natural gas sales volumes and prices ($45 million), lower refined product
trading margins and the effect of reporting these trading activities on a "net
margin" basis effective July 1, 1993 ($45 million). Costs and operating expenses
decreased due to lower natural gas purchase volumes and prices ($46 million) and
the effect of reporting refined product trading activities on a "net margin"
basis ($43 million), partially offset by the cost of developing long-term energy
industry businesses. General and administrative expenses increased, reflecting
the costs of establishing appropriate administrative and project support groups
to serve growing business activities. Operating profit was $.5 million in 1994
compared to $7.9 million in 1993. Price-risk management services' results
continued to be profitable but were lower by $6 million in 1994 than 1993
because of reduced gasoline and distillate margins and the effect of location
pricing differentials in refined products trading activities, partially offset
by an improvement in natural gas trading margins reflecting increased volumes.
Costs to develop long-term energy industry opportunities also adversely affected
operating profit. Results from natural gas marketing activities increased by $2
million in 1994 compared to 1993.
Williams Pipe Line's shipments increased 9 percent, due primarily to new
volumes resulting from the December 1993 acquisition of a pipeline system in
southern Oklahoma. Revenues increased $130 million, due primarily to higher
shipments and increased gas liquids and fractionator operations ($30 million)
and newly established petroleum services activities ($106 million). The slightly
higher average transportation rate resulted primarily from longer hauls into the
northern region and overall increases in tariff rates, effective December 1,
1994 and June 1, 1993, partially offset by lower rates on shorter haul movements
from new business. Costs and operating expenses increased $125 million, due
primarily to gas liquids and fractionator operations, additional operating
expenses, newly established petroleum services activities ($104 million) and the
cost of developing long-term energy industry businesses. Operating profit
increased $4.8 million, reflecting increased shipments ($15 million) and a
favorable insurance settlement, partially offset by higher operating and
maintenance expenses. Operating profit also includes $9 million of costs from
developing long-term
16
<PAGE> 18
energy industry investment opportunities. Included in 1994's other income -- net
is approximately $5 million of costs for evaluating and determining whether to
build an oil refinery near Phoenix.
Williams Telecommunications Systems' revenues increased $94 million, due in
large part to the March 31, 1994, acquisition of BellSouth's customer equipment
sales and service operations in 29 states, as evidenced by a 52 percent increase
in the number of ports. Costs and operating expenses and selling, general and
administrative expenses increased 31 percent and 20 percent, respectively, due
to the increase in volume of equipment sales and services. Operating profit
increased to $18.9 million in 1994 from $9.5 million in 1993 primarily resulting
from higher sales volumes, partially offset by an increase in selling, general
and administrative expenses. Margins were level between 1994 and 1993, while
selling, general and administrative expenses as a percent of revenue decreased
in 1994 compared to 1993.
Interest accrued increased 74 percent primarily because of significantly
higher levels of intercompany debt and higher average external borrowing levels,
partially offset by lower effective interest rates. Investing income decreased
due primarily to lower equity earnings for Apco Argentina Inc. and the sale of a
portion of the interest in Northern Border Partners, L.P., partially offset by
dividends on Williams' common stock (see Note 3 of Notes to Audited Consolidated
Financial Statements for additional information). The 1994 gain on sales of
assets results from the sale of 3,461,500 limited partner common units in
Northern Border Partners, L.P. The gain on sales of assets in 1993 results from
the sale of 6.1 million units in the Williams Coal Seam Gas Royalty Trust and
the sale of the intrastate natural gas pipeline system and other related assets
in Louisiana (see Note 4 of Notes to Audited Consolidated Financial Statements
for additional information).
The decrease in the provision for income taxes on continuing operations is
primarily a result of lower pretax income and the $9 million cumulative effect
in 1993 of the 1 percent increase in the federal income tax rate. The effective
income tax rate in 1994 is lower than the statutory rate, primarily because of
income tax credits from coal seam gas production, partially offset by state
income taxes. The effective income tax rate in 1993 is higher than the statutory
rate, primarily because of the effect of the federal income tax rate increase
and state income taxes, partially offset by income tax credits from coal seam
gas production (see Note 5 of Notes to Audited Consolidated Financial Statements
for additional information).
The network services operations of the Company have been presented in the
Consolidated Financial Statements of the Company as discontinued operations (see
Note 2 of Notes to Audited Consolidated Financial Statements for additional
information). Income from discontinued operations more than doubled to $94
million. The increase reflects a 93 percent increase in switched services
minutes and a 24 percent increase in private line billable circuits. These
increases more than offset a major carrier's removal of traffic from WilTel's
system to the carrier's expanded network. Income was also impacted by a decrease
in interest accrued, due to the early extinguishment of network services'
long-term debt. The effective income tax rate for both 1994 and 1993 is greater
than the federal statutory rate, due to the effect of state income taxes.
The extraordinary credit (loss) results from early extinguishment of debt
(see Note 6 of Notes to Audited Consolidated Financial Statements for additional
information).
1993 VS. 1992
Williams Field Services' revenues decreased $11 million, due primarily to
lower natural gas sales ($202 million), offset by increased revenues from
gathering ($99 million), liquids products ($73 million) and processing
activities ($21 million). Gathering volumes increased 293 percent, natural gas
liquids volumes increased 355 percent and processing volumes increased 111
percent when compared with volumes from the prior year. The lower natural gas
sales volumes were due to the March 1993 sale of Williams' intrastate natural
gas pipeline system and related marketing operations in Louisiana. The increased
gathering, processing and natural gas liquids volumes were primarily due to the
transfer of the gathering and processing operations from Northwest Pipeline
Corporation, another wholly-owned subsidiary of Williams, on December 31, 1992.
Including the transferred operations in 1992 for comparative purposes,
gathering, natural gas liquids and processing volumes increased 25 percent, 11
percent and 21 percent, respectively. Costs and operating expenses decreased by
$64 million, due primarily to lower natural gas purchases of $189 million,
partially offset by higher gas costs associated with the liquids extraction
process ($31 million), increased operating and
17
<PAGE> 19
maintenance expenses at expanded gathering and processing facilities and
expenses from transferred gathering and processing operations ($96 million).
Operating profit increased $52.6 million, due primarily to the transfer of
gathering and processing operations, increased volumes at expanded facilities,
partially offset by decreased gas sales volumes, lower liquids margins and
increased operating costs from expanded facilities.
Williams Energy Services' revenues decreased approximately $135 million,
due to lower natural gas sales volumes of $128 million and to reporting refined
product trading activities on a "net margin" basis effective July 1, 1993.
Increased natural gas sales prices favorably impacted revenues by $34 million.
Costs and operating expenses decreased $146 million due to lower natural gas
purchases of $98 million and the change in reporting trading activities.
Selling, general and administrative expenses increased from costs associated
with establishing this company's operations, pursuing new business development
and equipping the company to pursue a growing range of financial and
information-based opportunities in the energy industry. Operating profit
increased $10.5 million as improved results from price-risk management
activities ($5 million) and improved natural gas sales margins ($3 million) more
than offset the expense associated with the development and marketing of new
information-based products. Improved results in price-risk management activities
relate to increases in marketing of commodities and derivatives products, in
addition to increased refined product trading volumes. Operating profit in 1993
also includes a favorable settlement of a marketing contract.
Williams Pipe Line's revenues increased $32 million, due primarily to 12
percent ($17 million) higher shipments, increased other revenues primarily
related to gas liquids, fractionator operations and newly established petroleum
services, partially offset by a slightly lower transportation rate per barrel.
The lower average transportation rate per barrel reflects a 5 percent decrease
in the length of the average haul, partially offset by increased tariff rates
for portions of both 1992 and 1993. Costs and operating expenses increased $18
million, due primarily to gas liquids, fractionator operations and newly
established petroleum services. Operating profit increased $14.2 million
primarily as a result of higher shipments and lower general and administrative
expenses. During the fourth quarter, Williams Pipe Line completed the
acquisition of a 300-mile pipeline that connects with the southern portion of
its system in Oklahoma. The additional pipeline will provide more direct access
to key refining areas and open new markets.
Williams Telecommunications Systems' revenues increased $32 million, due
primarily to higher equipment sales and services. Costs and operating expenses
increased 9 percent, due primarily to the increased volume of equipment sales
and services. Selling, general and administrative expenses decreased 9 percent
as 1992 was negatively impacted by the costs associated with restructuring this
business. Operating profit increased to $9.5 million in 1993, compared with an
operating loss of $9.8 million in 1992 due to increased margins and volumes and
a decrease in selling, general and administrative expenses.
Interest accrued decreased 27 percent primarily because of lower average
external borrowing levels and lower levels of intercompany debt. Interest
capitalized increased primarily because of increased capital expenditures on
gathering and processing facilities. The gain on sales of assets in 1993 results
from the sale of 6.1 million units in the Williams Coal Seam Gas Royalty Trust
and the sale of the intrastate natural gas pipeline system and other related
assets in Louisiana. The 1992 gain on sales of assets results from the sale of a
tract of land in Florida that had been retained from the assets of Agrico
Chemical Company, which was sold in 1987 (see Note 4 of Notes to Audited
Consolidated Financial Statements for additional information).
The increase in the provision for income taxes is primarily a result of
higher pre-tax income and the $9 million cumulative effect of the 1 percent
increase in the federal income tax rate. The effective income tax rate in 1993
is higher than the statutory rate, primarily because of the effect of the
federal income tax rate increase and state income taxes, partially offset by
income tax credits from coal-seam gas production. The effective income tax rate
in 1992 is lower than the statutory rate, primarily because of income tax
credits from coal-seam gas production, partially offset by state income taxes
(see Note 5 of Notes to Audited Consolidated Financial Statements for additional
information).
Income from discontinued operations related to the Company's network
services operations increased 84 percent to $46.4 million in 1993 (see Note 2 of
Notes to Audited Consolidated Financial Statements for additional information).
The increase is due primarily to a 122 percent increase in switched services
minutes, a 32 percent increase in private line billable circuits and lower
provisions for bad debt expense, partially offset by
18
<PAGE> 20
a decrease in the weighted average price per circuit. The effective income tax
rate for both 1993 and 1992 is greater than the federal statutory rate due to
the effect of state income taxes.
FINANCIAL CONDITION AND LIQUIDITY
OPERATING ACTIVITIES
Cash provided (used) by continuing operating activities was: 1994 -- $125
million; 1993 -- ($21) million; and 1992 -- $70 million. Accounts receivable
increased because of expanded activities of Williams Energy Services and
acquisitions made by Williams Telecommunications Systems, partially offset by
the reclassification of the Company's network services receivables to net assets
of discontinued operations (see Note 2 of Notes to Audited Consolidated
Financial Statements for additional information). Accounts payable and accrued
liabilities also declined as a result of the network services reclassification.
Net cash provided by discontinued operations was: 1994 -- $169 million;
1993 -- $163 million; 1992 -- $113 million. The increases during the periods
reflect improved operating results.
FINANCING ACTIVITIES
Net cash provided (used) by financing activities was: 1994 -- $428 million;
1993 -- ($162) million; 1992 -- ($11) million. Long-term debt principal payments
during 1994, 1993 and 1992 were $142 million, $34 million and $90 million,
respectively.
During 1994, the Company purchased approximately 13.4 million shares of
Williams common stock on the open market for $395 million. Substantially all of
the purchases were financed with a $400 million short-term credit agreement.
Subsequent to December 31, 1994, the outstanding amounts under the credit
agreement were repaid from the proceeds of the sale of the Company's network
services operations, and the credit agreement was terminated.
Long-term debt at December 31, 1994, was $507 million, compared with $229
million at December 31, 1993, and $337 million at December 31, 1992. The
consolidated long-term debt to debt-plus-equity ratio was 22.6 percent at year
end, compared with 11.2 percent and 17.3 percent at December 31, 1993 and 1992,
respectively. If short-term notes payable and long-term debt due within one year
are included in the calculations, these ratios would be 34.5 percent, 12.7
percent and 18.8 percent, respectively.
The Company received capital contributions from Williams of $73 million,
$75 million and $50 million in 1994, 1993 and 1992, respectively, and paid
dividends to Williams of $336 million and $71 million in 1994 and 1993,
respectively.
INVESTING ACTIVITIES
Net cash provided (used) by investing activities was: 1994 -- ($718)
million; 1993 -- $25 million; 1992 -- ($167) million. Capital expenditures for
discontinued operations were $143 million in 1994; $101 million in 1993; and $60
million in 1992 primarily to expand and enhance the Company's network.
Expenditures in all years include the expansion of various gathering and
processing facilities, and expenditures in 1993 also include the expansion of
product pipeline facilities. Estimated capital expenditures for 1995 are
approximately $500 million, primarily to expand gathering and processing
facilities, develop an underground coal gasification project in Wyoming and
acquire certain gathering and processing assets in New Mexico.
During 1994, limited partner units in Northern Border Partners, L.P. were
sold for $80 million. During 1993, 6.1 million units in the Williams Coal Seam
Gas Royalty Trust were sold for $113 million. In addition, an intrastate natural
gas pipeline system and other related assets in Louisiana were sold for $170
million (see Note 4 of Notes to Audited Consolidated Financial Statements for
additional information).
19
<PAGE> 21
EFFECTS OF INFLATION
The Company has experienced increased costs in recent years due to the
effects of inflation. However, approximately one-half of the Company's property,
plant and equipment has been purchased in the last six years, a period of
relatively low inflation.
OTHER
The Company is a participant in certain environmental activities in various
stages involving assessment studies, cleanup operations and/or remedial
processes. The sites are being monitored by Williams, other potentially
responsible parties, the U.S. Environmental Protection Agency (EPA), or other
governmental authorities in a coordinated effort. In addition, the Company
maintains an active monitoring program for its continued remediation and cleanup
of certain sites connected with its refined products pipeline activities. The
Company has both joint and several liability in some of these activities and
sole responsibility in others. Current estimates of the most likely costs of
such cleanup activities, after payments by other parties, are approximately $6
million, all of which is accrued at December 31, 1994. The Company will fund
these costs from operations and/or available bank-credit facilities. The actual
costs incurred will depend on the final amount, type and extent of contamination
discovered at these sites, the final cleanup standards mandated by the EPA or
other governmental authorities, and other factors. See Note 7 of Notes to
Audited Consolidated Financial Statements for the effects of a new accounting
standard on post-employment benefits; Note 12 of Notes to Audited Consolidated
Financial Statements for fair value and off-balance-sheet risk of financial
instruments; and Note 15 of Notes to Audited Consolidated Financial Statements
for contingencies.
SUBSEQUENT EVENTS
Subsequent to December 31, 1994, the Company completed the sale of the
Company's network services operations for $2.5 billion in cash. The after-tax
gain of $1 billion was recorded in the first quarter of 1995 (see Note 2 of
Notes to Audited Consolidated Financial Statements for additional information).
Net proceeds from the sale were used to reduce the Company bank debt previously
incurred to purchase Williams common stock in the open market, with the
remainder going to its parent. Williams used these proceeds to acquire 60
percent of Transco's outstanding common stock on January 18, 1995 for $430.5
million, retire certain Transco borrowings and preferred stock, to reduce
certain bank debt and finance a portion of the 1995 capital expenditures
program.
On May 1, 1995, Williams completed the acquisition of Transco. Following
the merger, Williams contributed the stock of Transco and all of Transco's
subsidiaries, except for its subsidiaries holding regulated interstate natural
gas pipelines, to the Company.
ITEM 3. PROPERTIES.
See Item 1(c) for a description of properties.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Not applicable.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.
Not applicable.
ITEM 6. EXECUTIVE COMPENSATION.
Not applicable.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Not applicable.
20
<PAGE> 22
ITEM 8. LEGAL PROCEEDINGS.
Other than as described under Item I. -- Business in Note 15 to the
Company's Consolidated Financial Statements included elsewhere herein and in
Note D to the Transco Energy Company -- Contributed Assets Combined Financial
Statements included elsewhere herein, there are no material pending legal
proceedings. The Company is subject to ordinary routine litigation incidental to
its business.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
There is no market for the Company's common stock. All outstanding shares
of the Company's common stock are owned by Williams.
ITEM 10. RECENT SALE OF UNREGISTERED SECURITIES.
The Company has not sold any of its securities, registered or unregistered,
since its incorporation, other than the original subscription for common stock
by Williams.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
DESCRIPTION OF COMMON STOCK
The Company is authorized to issue 1,000 shares of Common Stock, $1.00 par
value per share. As of September 1, 1995, all 1,000 shares of Common Stock were
issued and outstanding and were held by Williams. Holders of Common Stock are
entitled to dividends only as may be declared by the Board of Directors of the
Company.
Common stockholders are entitled to one vote for each share held and have
no preemptive or subscription rights upon the issuance of additional shares of
the Company's Common Stock. Upon liquidation or dissolution of the Company, the
holders of Common Stock are entitled to share ratably in the assets of the
Company available for distribution after provision for creditors and holders of
preferred stock, if any. All of the issued and outstanding Common Stock is duly
authorized, validly issued, fully paid and will not be subject to further calls
or assessments.
ITEM 12. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Company, a Delaware corporation, is empowered by Section 145 of the
General Corporation Law of the State of Delaware, subject to the procedures and
limitations stated therein, to indemnify any person against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by them in connection with any threatened, pending or
completed action, suit or proceeding in which such person is made party by
reason of their being or having been a director, officer, employee or agent of
the Company. The statute provides that indemnification pursuant to its
provisions is not exclusive of other rights of indemnification to which a person
may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors, or otherwise. The By-laws of the Company provide for
indemnification by the Company of its directors and officers to the fullest
extent permitted by the General Corporation Law of the State of Delaware. In
addition, Williams has entered into indemnity agreements with its directors and
certain officers, including certain directors and officers of the Company,
providing for, among other things, the indemnification of and the advancing of
expenses to such individuals to the fullest extent permitted by law, and to the
extent insurance is maintained, for the continued coverage of such individuals.
Policies of insurance are maintained by Williams under which the directors
and officers of the Company are insured, within the limits and subject to the
limitations of the policies, against certain expenses in connection with the
defense of actions, suits or proceedings, and certain liabilities which might be
imposed as a result of such actions, suits or proceedings, to which they are
parties by reason of being or having been such directors or officers.
21
<PAGE> 23
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX
<TABLE>
<CAPTION>
DESCRIPTION PAGE
- -------------------------------------------------------------------------------------- ----
<S> <C>
WILLIAMS HOLDINGS OF DELAWARE, INC. UNAUDITED PRO FORMA FINANCIAL STATEMENTS.......... 23
Unaudited Pro Forma Combined Statement of Income for the Year Ended December 31,
1994............................................................................. 24
Notes to Unaudited Pro Forma Combined Statement of Income for the Year Ended
December 31, 1994................................................................ 25
Unaudited Pro Forma Statement of Income for the Six Months Ended June 30, 1995...... 26
Notes to Unaudited Pro Forma Statement of Income for the Six Months Ended June 30,
1995............................................................................. 27
WILLIAMS HOLDINGS OF DELAWARE, INC. UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
Unaudited Consolidated Statement of Income for the Six Months Ended
June 30, 1995 and 1994........................................................... 28
Unaudited Consolidated Balance Sheet at June 30, 1995 and December 31, 1994......... 29
Unaudited Consolidated Statement of Cash Flows for the Six Months Ended
June 30, 1995 and 1994........................................................... 30
Notes to Unaudited Consolidated Financial Statements -- June 30, 1995 and 1994...... 31
WILLIAMS HOLDINGS OF DELAWARE, INC. AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Auditors...................................................... 37
Consolidated Statement of Income for the Years Ended December 31, 1994, 1993 and
1992............................................................................. 38
Consolidated Balance Sheet at December 31, 1994 and 1993............................ 39
Consolidated Statement of Stockholder's Equity for the Years Ended
December 31, 1994, 1993 and 1992................................................. 40
Consolidated Statement of Cash Flows for the Year Ended December 31, 1994, 1993 and
1992............................................................................. 41
Notes to Audited Consolidated Financial Statements.................................. 42
Unaudited Quarterly Financial Data.................................................. 59
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS COMBINED FINANCIAL STATEMENTS*
Report of Independent Public Accountants............................................ 60
Combined Balance Sheet at December 31, 1994......................................... 61
Combined Statement of Operations for the Year Ended December 31, 1994............... 63
Combined Statement of Cash Flows for the Year Ended December 31, 1994............... 64
Combined Statement of Common Stockholders' Deficit for the Year Ended December 31,
1994............................................................................. 65
Schedule of Segment Information for the Year Ended December 31, 1994................ 66
Notes to Combined Financial Statements.............................................. 67
</TABLE>
- ---------------
* These financial statements are presented in accordance with Rule 3-05 of
Regulation S-X.
22
<PAGE> 24
WILLIAMS HOLDINGS OF DELAWARE, INC.
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
UNAUDITED PRO FORMA STATEMENTS OF INCOME
The Unaudited Pro Forma Statements of Income are prepared for the year
ended December 31, 1994 and the six months ended June 30, 1995, and illustrate
the effects of Williams' acquisition of Transco as it relates to the Transco
entities contributed by Williams to Williams Holdings, including the capital
contributions that Williams made to Transco, as if they had occurred at the
beginning of each period. During 1995, Williams made capital contributions to
Transco sufficient to eliminate intercompany debt owed to affiliates, short-term
borrowing facilities, interest rate swaps, all external debt and all preferred
stock.
The Unaudited Pro Forma Statements of Income should be read in conjunction
with the historical financial statements of Williams Holdings and Transco Energy
Company -- Contributed Assets, which are included herein, and the Notes to the
Unaudited Pro Forma Statements of Income. The pro forma adjustments are based on
certain preliminary purchase price allocations, while final allocations will be
based on further evaluations and may differ from those shown below. However,
management of Williams Holdings believes that the assumptions provide a
reasonable basis for presenting the significant effects of the acquisition of
Transco and the capital contributions from Williams to Transco and that the pro
forma adjustments give appropriate effect to those assumptions and are properly
applied in the pro forma financial information. The Unaudited Pro Forma
Statements of Income are not intended to be indicative of actual operating
results had the transactions occurred as of the dates indicated above, nor do
they purport to indicate operating results which may be attained in the future.
23
<PAGE> 25
WILLIAMS HOLDINGS OF DELAWARE, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1994
(MILLIONS)
<TABLE>
<CAPTION>
TRANSCO ENERGY
COMPANY -- PRO FORMA
WILLIAMS CONTRIBUTED ------------------------
HOLDINGS ASSETS ADJUSTMENTS COMBINED
--------- -------------- ----------- --------
<S> <C> <C> <C> <C>
Revenues..................................... $ 1,264 $1,293 $(219)(1) $2,338
Costs and expenses........................... 1,082 1,388 (284)(1) 2,179
(7)(2)
------ ------ ----- ------
Operating profit (loss)...................... 182 (95) 72 159
Allocated parent company expenses............ (20) -- (20)
Interest accrued -- net...................... (21) (125) 125(3) (21)
Investing income............................. 15 9 (4)(3) 20
Gain on sales of assets...................... 23 -- 23
------ ------ ----- ------
Income (loss) from continuing operations
before income taxes........................ 179 (211) 193(5) 161
Provision (credit) for income taxes.......... 53 (80) 28(1) 52
51(4)
------ ------ ----- ------
Income (loss) from continuing operations..... 126 (131) 114 109
Preferred stock dividends.................... -- 23 (23)(3) --
------ ------ ----- ------
Income (loss) from continuing operations
after preferred stock dividends............ $ 126 $ (154) $ 137 $ 109
====== ====== ===== ======
</TABLE>
See the accompanying Notes to Unaudited Pro Forma Combined Statement of Income.
24
<PAGE> 26
WILLIAMS HOLDINGS OF DELAWARE, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1994
The adjustments to the Unaudited Pro Forma Combined Statement of Income do
not give effect to any costs directly associated with the acquisition of Transco
that might be incurred within the next twelve months. The pro forma financial
data also do not give effect to any potential cost savings and synergies that
could result from the acquisition of Transco.
1. These adjustments eliminate historical results of operations for Transco
operations which the Company intends to sell within one year from the January
18, 1995 acquisition of Transco. Earnings or losses from operations that
Williams Holdings intends to sell are not reported in the Williams Holdings'
Consolidated Statement of Income, included herein, during the holding period.
Therefore, their results of operations have been excluded from the Pro Forma
Combined Statement of Income consistent with the assumption that the
acquisition of Transco occurred at the beginning of the period.
2. This adjustment represents the reduction of costs as a result of recording a
liability at the acquisition date for unfavorable natural gas marketing
contracts.
3. Prior to contributing Transco and its subsidiaries, other than its
subsidiaries holding natural gas pipelines, to the Company and during 1995,
Williams made capital contributions to Transco sufficient to eliminate
intercompany debt owed to affiliates, short-term borrowing facilities,
interest rate swaps, all external debt and all preferred stock. This
adjustment eliminates interest expense and debt costs, investing income and
preferred stock dividends related to these items.
4. This adjustment records the income tax effects of the pro forma adjustments
at a 40 percent tax rate.
5. The following is a summary of the adjustments to income from continuing
operations before income taxes (in millions):
<TABLE>
<S> <C>
Eliminate losses from Transco operations to be sold................... $ 65
Reduce expenses from unfavorable contracts............................ 7
Eliminate interest expense and investing income....................... 121
----
$193
====
</TABLE>
For the year ended December 31, 1994, Transco's costs and expenses include
a charge of $45 million from the write-down of capitalized costs in excess of
the ceiling limitation from a nonoperating interest in certain coalbed methane
properties, asset write-downs of $18 million and a charge of $4 million for a
litigation settlement. These charges are included in the pro forma adjustments
related to Transco operations to be sold.
25
<PAGE> 27
WILLIAMS HOLDINGS OF DELAWARE, INC.
UNAUDITED PRO FORMA STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 1995
(MILLIONS)
<TABLE>
<CAPTION>
PRO FORMA
WILLIAMS ------------------------
HOLDINGS ADJUSTMENTS ADJUSTED
-------- ----------- --------
<S> <C> <C> <C>
Revenues..................................................... $1,048 $48 (1) $1,096
Costs and expenses........................................... 923 45 (1) 968
------ --- ------
Operating profit............................................. 125 3 128
Allocated parent company expenses............................ (8) (8)
Interest accrued -- net...................................... (29) (6)(1) (2)
33 (2)
Investing income............................................. 47 9 (2) 56
Loss on sales of investments................................. (12) (12)
Other income(expense) -- net................................. (8) (1)(1) (2)
7 (2)
------ --- ------
Income from continuing operations before income taxes........ 115 45 (4) 160
Provision for income taxes................................... 15 (1)(1) 31
17 (3)
------ --- ------
Income from continuing operations............................ $ 100 $29 $ 129
====== === ======
</TABLE>
See the accompanying Notes to Unaudited Pro Forma Statement of Income.
26
<PAGE> 28
WILLIAMS HOLDINGS OF DELAWARE, INC.
NOTES TO UNAUDITED PRO FORMA STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 1995
The adjustments to the Unaudited Pro Forma Statement of Income do not give
effect to any costs directly associated with the acquisition of Transco that
might be incurred within the next twelve months. The Unaudited Pro Forma
Statement of Income excludes $2 million of executive severance and termination
benefit costs directly associated with the acquisition of Transco. The pro forma
financial data also do not give effect to any potential cost savings and
synergies that could result from the acquisition of Transco.
1. These adjustments combine the results of operations of Williams Holdings and
Transco as if the acquisition of Transco occurred on January 1, 1994.
2. Prior to contributing Transco and its subsidiaries, other than the natural
gas pipelines, to the Company and during 1995, Williams made capital
contributions to Transco sufficient to eliminate intercompany debt owed to
affiliates, short-term borrowing facilities, interest rate swaps, all
external debt and all preferred stock. This adjustment eliminates interest
expense and debt costs and preferred stock dividends related to these items.
3. This adjustment records the income tax effects of the pro forma adjustments
at a 40 percent tax rate.
4. The following is a summary of the adjustments to income from continuing
operations before income taxes (in millions):
<TABLE>
<S> <C>
Effect of purchase occurring January 1, 1994........................... $(4)
Eliminate interest expense and preferred stock dividends............... 49
---
$45
===
</TABLE>
27
<PAGE> 29
WILLIAMS HOLDINGS OF DELAWARE, INC
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------
1995 1994
-------- ------
(MILLIONS)
<S> <C> <C>
Revenues (Note 10):
Williams Field Services Group.......................................... $ 199.6 $159.6
Williams Energy Services............................................... 489.3 139.9
Williams Pipe Line..................................................... 133.5 130.5
Williams Telecommunications Systems.................................... 243.5 171.4
Other.................................................................. 28.6 8.3
Intercompany eliminations.............................................. (46.6) (25.7)
-------- ------
Total revenues................................................. 1,047.9 584.0
-------- ------
Profit-center costs and expenses (Note 10):
Costs and operating expenses........................................... 820.2 428.0
Selling, general and administrative expenses........................... 105.0 67.2
Other (income) expense -- net.......................................... (2.6) (3.0)
-------- ------
Total profit-center costs and expenses......................... 922.6 492.2
-------- ------
Operating profit (loss):
Williams Field Services Group.......................................... 60.4 57.6
Williams Energy Services............................................... 25.3 3.9
Williams Pipe Line..................................................... 30.5 28.7
Williams Telecommunications Systems.................................... 14.0 6.5
Other.................................................................. (4.9) (4.9)
-------- ------
Total operating profit......................................... 125.3 91.8
Allocated parent company expenses........................................ (7.8) (10.1)
Interest accrued (Note 10)............................................... (32.9) (8.6)
Interest capitalized..................................................... 4.1 2.7
Investing income (Note 10)............................................... 46.9 8.9
Gain (loss) on sales of investments (Note 4)............................. (12.6) 22.7
Other income (expense) -- net............................................ (8.0) .8
-------- ------
Income from continuing operations before income taxes.................... 115.0 108.2
Provision (credit) for income taxes (Note 5)............................. 14.9 31.9
-------- ------
Income from continuing operations........................................ 100.1 76.3
Income from discontinued operations (Note 6)............................. 1,005.7 28.3
-------- ------
Income before extraordinary loss......................................... 1,105.8 104.6
Extraordinary loss (Note 7).............................................. -- (6.1)
-------- ------
Net income............................................................... $1,105.8 $ 98.5
======== ======
</TABLE>
See accompanying notes.
28
<PAGE> 30
WILLIAMS HOLDINGS OF DELAWARE, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
-------- ------------
(MILLIONS)
<S> <C> <C>
Current assets:
Cash and cash equivalents.......................................... $ 25.4 $ 17.9
Receivables:
Trade........................................................... 376.5 305.6
Affiliates...................................................... 43.6 2.4
Inventories........................................................ 85.8 84.6
Net assets held for sale (Notes 3 and 6)........................... 36.5 743.6
Deferred income taxes -- affiliates................................ 94.9 33.3
Other.............................................................. 52.3 43.7
-------- --------
Total current assets.......................................... 715.0 1,231.1
Due from affiliates.................................................. 752.6 --
Investments:
Parent company debentures (Note 4)................................. 392.9 --
Other.............................................................. 119.4 536.0
Property, plant and equipment, at cost............................... 2,465.0 2,113.5
Less accumulated depreciation and depletion.......................... (567.4) (528.4)
-------- --------
1,897.6 1,585.1
Other assets and deferred charges.................................... 148.8 87.9
-------- --------
Total assets.................................................. $4,026.3 $3,440.1
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Notes payable...................................................... $ -- $ 398.2
Accounts payable:
Trade........................................................... 176.2 145.7
Affiliates...................................................... 316.1 3.5
Accrued liabilities (Note 8)....................................... 848.1 147.4
Long-term debt due within one year (Note 9)........................ 12.9 13.0
-------- --------
Total current liabilities..................................... 1,353.3 707.8
Long-term debt (Note 9):
Affiliates......................................................... 1.0 389.9
Other.............................................................. 123.2 117.1
Deferred income taxes -- affiliates.................................. 164.8 356.2
Deferred income and other liabilities................................ 240.6 129.2
Contingent liabilities and commitments (Note 11)
Stockholder's equity:
Common stock, $1 par value, 1,000 shares authorized and
outstanding..................................................... -- --
Capital in excess of par value..................................... 1,780.4 1,531.4
Retained earnings.................................................. 339.4 244.3
Net unrealized gain (loss) on non-current marketable securities.... 23.6 (35.8)
-------- --------
Total stockholder's equity.................................... 2,143.4 1,739.9
-------- --------
Total liabilities and stockholder's equity.................... $4,026.3 $3,440.1
======== ========
</TABLE>
See accompanying notes.
29
<PAGE> 31
WILLIAMS HOLDINGS OF DELAWARE, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------
1995 1994
--------- -------
(MILLIONS)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income........................................................... $ 1,105.8 $ 98.5
Adjustments to reconcile to cash provided from operations:
Discontinued operations........................................... (1,005.7) (28.3)
Extraordinary loss................................................ -- 6.1
Depreciation and depletion........................................ 43.4 36.8
Provision for deferred income taxes............................... 29.3 .5
(Gain) loss on sale of investments................................ 12.6 (22.7)
Changes in receivables............................................ 36.0 (26.1)
Changes in inventories............................................ 1.6 (19.3)
Changes in other current assets................................... (2.1) --
Changes in accounts payable....................................... (40.9) 2.0
Changes in accrued liabilities.................................... (32.9) 6.6
Changes in balances with affiliates............................... (90.7) (5.4)
Other, including changes in non-current assets and liabilities.... (38.8) 2.5
--------- -------
Net cash provided by continuing operations...................... 17.6 51.2
Net cash provided by discontinued operations.................... -- 112.1
--------- -------
Net cash provided by operating activities....................... 17.6 163.3
--------- -------
FINANCING ACTIVITIES:
Payments of notes payable............................................ (398.2) --
Payments of long-term debt........................................... (388.0) (130.0)
Proceeds from long-term debt......................................... 15.5 --
Dividends paid to parent............................................. (1,010.7) (63.3)
Changes in parent company advances................................... (474.5) 102.7
Capital contributions from parent.................................... 797.4 2.2
Subsidiary preferred stock redemptions............................... (144.0) --
Other -- net......................................................... 7.8 --
--------- -------
Net cash used by financing activities........................... (1,594.7) (88.4)
--------- -------
INVESTING ACTIVITIES:
Property, plant and equipment:
Capital expenditures:
Continuing operations........................................... (175.4) (68.7)
Discontinued operations......................................... -- (50.5)
Proceeds from sales............................................... 14.5 1.7
Changes in accounts payable and accrued liabilities............... (1.5) 11.7
Acquisition of businesses, net of cash acquired...................... (154.1) (45.2)
Proceeds from sale of businesses..................................... 2,570.4 --
Income tax and other payments related to discontinued operations..... (214.6) --
Proceeds from sales of investments................................... 123.7 80.6
Changes in advances to parent company................................ (573.6) --
Other -- net......................................................... (4.8) (2.3)
--------- -------
Net cash provided (used) by investing activities................ 1,584.6 (72.7)
--------- -------
Increase in cash and cash equivalents........................... 7.5 2.2
Cash and cash equivalents at beginning of period....................... 17.9 13.5
--------- -------
Cash and cash equivalents at end of period............................. $ 25.4 $ 15.7
========= =======
</TABLE>
See accompanying notes.
30
<PAGE> 32
WILLIAMS HOLDINGS OF DELAWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. GENERAL
Williams Holdings of Delaware, Inc. (Williams Holdings) is a wholly-owned
subsidiary of The Williams Companies, Inc. (Williams). The accompanying interim
consolidated financial statements of Williams Holdings do not include all notes
in annual financial statements and therefore should be read in conjunction with
the annual financial statements and notes thereto for Williams Holdings
presented herein. The accompanying unaudited financial statements have not been
audited by independent auditors but include all adjustments which, in the
opinion of Williams Holdings' management, are normal recurring and are necessary
to present fairly its financial position at June 30, 1995 and results of
operations and cash flows for the six months ended June 30, 1995 and 1994. The
1995 after-tax gain from the sale of the Company's network services operations
and its related 1994 results are presented as discontinued operations (See Note
6). On January 18, 1995, The Williams Companies, Inc. (Williams) acquired 60
percent of Transco Energy Company's (Transco) outstanding common stock and on
May 1, 1995 acquired the remaining 40 percent of Transco's outstanding common
stock (See Note 3).
NOTE 2. ORGANIZATION AND BASIS OF PRESENTATION
On May 1, 1995, Transco dividended to Williams all of Transco's interests
in two Transco subsidiaries, Transcontinental Gas Pipe Line Corporation (TGPL)
and Texas Gas Transmission Corporation (TXG). Also effective May 1, 1995,
Williams made a capital contribution of its interest in Transco and Transco's
subsidiaries, except TGPL and TXG, to Williams Holdings.
Revenues and operating profit amounts for the six months ended June 30,
1995 include the operating results of the Transco entities contributed to
Williams Holdings since the January 18, 1995 acquisition (See Note 3). Transco's
gas gathering operations (except those related operations of TGPL and TXG) are
included as part of Williams Field Services Group, and Transco's gas marketing
operations are included as a part of Williams Energy Services.
NOTE 3. TRANSCO ACQUISITION
On January 18, 1995, Williams acquired 60 percent of Transco's outstanding
common stock in a cash tender offer for $430.5 million. Williams acquired the
remaining 40 percent of Transco's outstanding common stock on May 1, 1995
through a merger in which the remaining Transco common stock was exchanged for
approximately 10.4 million shares of Williams common stock valued at $334
million. The acquisition is accounted for as a purchase. The results of
operations of the Transco entities contributed to Williams Holdings beginning
January 18, 1995 are included 100 percent in Williams Holdings' Consolidated
Statement of Income for the six months ended June 30, 1995 due to the losses
from these entities. A preliminary allocation of the purchase price was assigned
to the assets and liabilities of the Transco entities contributed to Williams
Holdings based on their estimated fair values.
Williams Holdings has sold a significant portion of Transco's coal
operations and coalbed methane properties and intends to sell, within one year,
other Transco assets including certain pipeline and gathering operations and
other assets, all of which are recorded at estimated net realizable value in net
assets held for sale. Estimated results of operations and changes in the
carrying amount of these businesses during the holding period are reflected in
the purchase price and are not material.
Williams made capital contributions during 1995 of approximately $612
million to Transco primarily to retire and/or terminate certain Transco
borrowings, $4.75 preferred stock and interest-rate swaps and to advance funds
to TGPL and TXG to terminate sale of receivables facilities. Effective on the
May 1, 1995 merger, Transco's $3.50 preferred stock was exchanged for Williams'
$3.50 preferred stock, Williams assumed all Transco external debt, except TGPL
and TXG debt, and assumed all amounts payable by Transco to
31
<PAGE> 33
WILLIAMS HOLDINGS OF DELAWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
TGPL and TXG. These transactions totalled approximately $1.1 billion and were
capital contributions by Williams to Williams Holdings.
The following unaudited pro forma information combines the results of
operations of Williams Holdings and the Transco entities contributed to Williams
Holdings as if the purchase occurred on January 1, 1994.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------
1995 1994
-------- --------
UNAUDITED
(MILLIONS, EXCEPT
PER-SHARE AMOUNTS)
<S> <C> <C>
Revenues................................................ $1,096.2 $1,206.4
Income from continuing operations....................... 129.0 77.6
Income before extraordinary loss........................ 1,134.7 105.9
Net income.............................................. 1,134.7 99.8
</TABLE>
Pro forma financial information is not necessarily indicative of results of
operations that would have occurred if the acquisition had occurred on January
1, 1994 or of future results of operations of the combined companies.
NOTE 4. INVESTMENTS
In the second quarter of 1995, Williams Holdings sold its 15 percent
interest in Texasgulf Inc. for approximately $124 million in cash, which
resulted in a second quarter after-tax gain of approximately $16 million because
of previously unrecognized tax benefits included in the provision (credit) for
income taxes.
In April 1995, Williams Holdings exchanged 12.2 million shares of Williams
common stock carried at its fair value of $385.4 million for Williams
convertible debentures having a fair value of $360 million. The convertible
debentures bear interest at 6 percent, mature in 2005 and are convertible into
9.3 million shares of Williams common stock at $38.58 per share. Williams
Holdings also received warrants to purchase 7.5 million shares of Williams
common stock at $46.67 per share for which no value was assigned. During October
1995, Williams offered for sale in the public market Williams Holdings'
remaining investment of $41.8 million in Williams common stock.
In the second quarter of 1994, 3,461,500 limited partner common units were
sold in Northern Border Partners, L.P. Net proceeds from the sale were
approximately $80 million and the sale resulted in a pre-tax gain of $22.7
million. As a result of the sale, Williams Holdings' original 12.25 percent
interest in the Northern Border partnerships has been reduced to 3.2 percent.
32
<PAGE> 34
WILLIAMS HOLDINGS OF DELAWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
NOTE 5. PROVISION FOR INCOME TAXES
The provision (credit) for income taxes from continuing operations
includes:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------
1995 1994
------ -----
(MILLIONS)
<S> <C> <C>
Current:
Federal............................................................ $(20.2) $24.8
State.............................................................. 5.8 6.6
------ -----
(14.4) 31.4
------ -----
Deferred:
Federal............................................................ 31.8 2.3
State.............................................................. (2.5) (1.8)
------ -----
29.3 .5
------ -----
Total provision (credit)........................................... $ 14.9 $31.9
====== =====
</TABLE>
The effective income tax rate in 1995 is less than the federal statutory
rate due primarily to the previously unrecognized tax benefits related to the
sale of Texasgulf Inc. (See Note 4) and income tax credits from coal-seam gas
production, partially offset by the effects of state income taxes and dividends
on subsidiary stock.
The effective income tax rate in 1994 is less than the federal statutory
rate as the effect of state income taxes is more than offset by the effects of
income tax credits from coal-seam gas production and a favorable prior-year
state income tax adjustment.
Cash payments to Williams and certain taxing authorities for income taxes
for the six months ended June 30, 1995 and 1994 are $192 million and $54
million, respectively.
NOTE 6. DISCONTINUED OPERATIONS
On January 5, 1995, the Company's network services operations were sold to
LDDS Communications, Inc. (LDDS) for $2.5 billion in cash. The sale yielded a
gain of $1 billion (net of income taxes of approximately $724 million) which is
reported as income from discontinued operations. Prior-period operating results
for WilTel's network services operations were restated and are reported as
discontinued operations. The assets and liabilities that were transferred to
LDDS in the sale of the network services operations are included in net assets
held for sale at December 31, 1994. Under the terms of the agreement, Williams
Holdings retained Williams Telecommunications Systems, Inc., a national
telecommunications equipment supplier and service company, and Vyvx, Inc., which
operates a national video network specializing in broadcast television
applications.
NOTE 7. EXTRAORDINARY LOSS
The 1994 extraordinary loss results from early extinguishment of debt. A
subsidiary of Williams Holdings paid approximately $137 million to redeem higher
interest rate debt for a $6.1 million after-tax loss (net of $3.9 million
benefit for income taxes).
33
<PAGE> 35
WILLIAMS HOLDINGS OF DELAWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
NOTE 8. ACCRUED LIABILITIES
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
-------- ------------
(MILLIONS)
<S> <C> <C>
Income taxes payable................................... $580.0 $ 2.8
Employee costs......................................... 43.7 26.2
Taxes other than income taxes.......................... 20.0 29.1
Other.................................................. 204.4 89.3
------ ------
$848.1 $147.4
====== ======
</TABLE>
NOTE 9. LONG-TERM DEBT
Long-term debt consists of the following amounts:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE JUNE 30, DECEMBER 31,
INTEREST RATE* 1995 1994
---------------- -------- ------------
(MILLIONS)
<S> <C> <C> <C>
Revolving credit loans -- Williams..... -- $ -- $389.9
Affiliates............................. -- 1.0 --
------ ------
1.0 389.9
Williams Pipe Line
Notes, 8.95% and 9.78%, payable
through 2001......................... 9.3 $120.0 $120.0
Other, payable through 1999............ 8.2 16.1 10.1
------ ------
136.1 130.1
Current portion of long-term debt...... (12.9) (13.0)
------ ------
$123.2 $117.1
====== ======
</TABLE>
- ---------------
* At June 30, 1995.
During first quarter 1995, Williams replaced its $600 million credit
agreement, which was scheduled to terminate in December 1995, with a new $800
million agreement. Under the new credit agreement Williams Holdings' and
Williams Pipe Line's maximum borrowing availability, subject to borrowings by
other affiliated companies, is $600 million and $100 million, respectively.
Williams Holdings and Williams Pipe Line had no borrowings under this facility
at June 30, 1995. The amount available under the facility at June 30, 1995 was
$770 million. Interest rates vary with current market conditions.
Cash payments for interest (net of amounts capitalized) for the six months
ended June 30, 1995 and 1994 are $49 million and $18 million, respectively,
including payments to Williams and affiliates of $25 million and $8 million,
respectively.
NOTE 10. RELATED PARTY TRANSACTIONS
Williams Holdings and its subsidiaries maintain credit agreements with
Williams for both advances from and advances to Williams depending on the cash
position of the subsidiary. Investing income includes $19.8 million for the six
months ended June 30, 1995 from advances with affiliates, while interest
accrued-net includes $1.8 million for the six months ended June 30, 1994.
Williams Holdings' subsidiaries have transactions primarily with the
following affiliates: Williams Natural Gas, Northwest Pipeline, Transcontinental
Gas Pipe Line Corporation and Texas Gas Transmission Corporation. Revenues
include transactions with affiliates of $42.1 million and $.2 million for the
six months
34
<PAGE> 36
WILLIAMS HOLDINGS OF DELAWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
ended June 30, 1995 and 1994, respectively. Costs and operating expenses include
transactions with affiliates of $92.9 million and $10.7 million for the six
months ended June 30, 1995 and 1994, respectively.
NOTE 11. CONTINGENT LIABILITIES AND COMMITMENTS
Rate and regulatory matters
Williams Pipe Line has various regulatory proceedings pending. As a result
of rulings in certain of these proceedings, a portion of its revenues has been
collected subject to refund. Such revenues were $142 million at June 30, 1995.
In an order issued on May 31, 1995, the FERC found that 20 of 32 of Williams
Pipe Line's markets are workably competitive. This order has been appealed to
the United States Court of Appeals for the D.C. Circuit. As a result of this
order and price rulings in other cases, Williams Pipe Line does not expect that
the amount of any refunds ordered would be significant. Accordingly, no portion
of these revenues has been reserved for refund.
Environmental matters
Certain Williams Holdings' subsidiaries have been named as potentially
responsible parties (PRP) at various Superfund waste disposal sites. In
addition, these subsidiaries have incurred or are alleged to have incurred
various other hazardous materials removal or remediation obligations under
environmental laws. Although no assurance can be given, Williams Holdings does
not believe that these obligations or the PRP status of these subsidiaries will
have a material adverse effect on its financial position, results of operations
or net cash flows.
Other legal matters
On December 31, 1991, the Southern Ute Indian Tribe (the Tribe) filed a
lawsuit against Williams Production Company, a wholly owned subsidiary of
Williams Holdings, and other gas producers in the San Juan Basin area, alleging
that certain coal strata was reserved by the United States for the benefit of
the Tribe and that the extraction of coal-seam gas from the coal strata was
wrongful. The Tribe seeks compensation for the value of the coal-seam gas. The
Tribe also seeks an order transferring to the Tribe ownership of all of the
defendants' equipment and facilities utilized in the extraction of the coal-seam
gas. On September 13, 1994, the court granted summary judgment in favor of the
defendants. The Tribe sought a certification of an interlocutory appeal from the
court which was denied. Nevertheless, the Tribe has lodged an interlocutory
appeal with the U.S. Court of Appeals for the Tenth Circuit. Williams Production
agreed to indemnify the Williams Coal Seam Gas Royalty Trust (Trust) against any
losses that may arise in respect of certain properties subject to the lawsuit.
In addition, if the Tribe is successful in showing that Williams Production has
no rights in the coal-seam gas, Williams Production has agreed to pay to the
Trust for distribution to then-current unitholders, an amount representing a
return of a portion of the original purchase price paid for the units. While
Williams Holdings believes that such a payment is not probable, it has reserved
a portion of the proceeds from the sale of the units in the Trust.
On December 21, 1994, Williams Natural Gas Company, an affiliated company,
received a civil investigative demand from the Antitrust Division of the
Department of Justice concerning certain gathering activities of Williams
Natural Gas and other companies, including Williams Field Services Group, Inc.,
a wholly-owned subsidiary of Williams Holdings. A response was filed and
Williams Natural Gas has been informed that the investigation has been closed.
Relative to a certain Agreement and Plan of Merger, dated December 12,
1994, among Williams Holdings' parent, a subsidiary of Williams Holdings' parent
and Transco Energy Company (Transco), seven class action lawsuits were filed on
December 12, 1994, and later, in the Chancery Court of Delaware,
35
<PAGE> 37
WILLIAMS HOLDINGS OF DELAWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
challenging the transaction and alleging a breach of fiduciary duties by
Transco's directors. In six of the lawsuits, Williams was named as a party
defendant, the plaintiffs alleging that Williams aided and abetted the alleged
breach of duty. On January 6, 1995, the parties to all of the lawsuits entered
into an agreement in principle and on January 9, 1995, a stipulation and
agreement of compromise, settlement and release was executed subject to approval
of the Court. On May 11, 1995, the settlement was approved by the Court.
In October 1990, Dakota Gasification Company (Dakota), the owner of the
Great Plains Coal Gasification Plant (Plant), filed suit in the U.S. district
court in North Dakota against Transcontinental Gas Pipe Line and three other
pipeline companies alleging that the pipeline companies had not complied with
their respective obligations under certain gas purchase and gas transportation
contracts. On September 8, 1992, Dakota and the Department of Justice on behalf
of the Department of Energy filed an amended complaint adding as defendants in
the suit, Transco, Transco Coal Gas Company and all of the other partners in the
partnership that originally constructed the Plant and each of the parent
companies of these entities. Dakota and the Department of Justice sought
declaratory and injunctive relief and the recovery of damages, alleging that the
four pipeline defendants underpaid for gas, collectively, as of June 30, 1992,
by more than $232 million plus interest and for additional damages for
transportation services and costs and expenses including attorneys' fees. On
March 30, 1994, the parties executed definitive agreements which would settle
the litigation subject to final non-appealable regulatory approvals. The
settlement is also subject to a FERC ruling that Transcontinental Gas Pipe
Line's existing authority to recover in rates certain costs related to the
purchase and transportation of gas produced by Dakota will pertain to gas
purchase and transportation costs Transcontinental Gas Pipe Line will pay Dakota
under the terms of the settlement. On October 18, 1994, the FERC issued an order
consolidating Transcontinental Gas Pipe Line's petition with petitions pending
relative to two of the other three pipeline companies (the third pipeline having
entered into a settlement) and setting the matter for hearing before an
administrative law judge. The hearing commenced on June 20, and ended on July
14, 1995. In the event that the necessary regulatory approvals are not obtained,
Transcontinental Gas Pipe Line, Transco and Transco Coal Gas Company intend to
vigorously defend the suit.
In connection with agreements to resolve take-or-pay and other contract
claims and to amend gas purchase contracts, Transcontinental Gas Pipe Line and
Texas Gas have each entered into certain settlements which may require the
indemnification by Transcontinental Gas Pipe Line or Texas Gas of certain claims
for additional royalties which the producers may be required to pay as a result
of such settlements. In October 1992, the U.S. Court of Appeals for the Fifth
Circuit and the Louisiana Supreme Court, with respect to the same issue under
Louisiana law, determined that royalties are due on take-or-pay payments under
the royalty clauses of the specific mineral leases reviewed by the courts. As a
result of these and related developments, Transcontinental Gas Pipe Line and
Texas Gas have been named as defendants in, respectively, six and two lawsuits
in which damages aggregated in excess of $133 million. Transco Energy Company
and Transco Gas Supply Company have also been named as defendants in certain of
these lawsuits. On July 17, 1995, a judge in a Texas state court granted a
motion by Transcontinental Gas Pipe Line for partial summary judgment, rejecting
a major portion of the plaintiff's claims in one of these lawsuits. Producers
may receive other demands which could result in additional claims against
Transcontinental Gas Pipe Line and Texas Gas pursuant to the indemnification
provisions in their respective settlements. Indemnification for royalties will
depend on, among other things, the specific lease provisions between the
producer and the lessor and the terms of the settlement between the producer and
either Transcontinental Gas Pipe Line or Texas Gas. Texas Gas may file to
recover 75 percent of any such amounts it may be required to pay pursuant to
indemnities for royalties under the provisions of Order 528.
On November 14, 1994, Continental Energy Associates Limited Partnership
(the Partnership) filed a voluntary petition under Chapter 11 of the Bankruptcy
Code with the U.S. Bankruptcy Court, Middle District of Pennsylvania. The
Partnership owns a cogeneration facility in Hazleton, Pennsylvania (the
Facility). Hazleton Fuel Management Company (HFMC), a subsidiary of Williams
Holdings, formerly supplied
36
<PAGE> 38
WILLIAMS HOLDINGS OF DELAWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
natural gas and fuel oil to the Facility. As of June 30, 1995, it had current
outstanding receivables from the Partnership of approximately $19 million, for
which HFMC has established a reserve of $18 million. The construction of the
Facility was funded by several banks that have a security interest in all of the
Partnership's assets. HFMC has asserted to the Bankruptcy Court that payment of
its receivables is superior to the lien of the banks and intends to vigorously
pursue the collection of such amounts. HFMC has also filed suit against the lead
bank with respect to this and other matters, including the alleged tortious
interference with HFMC's contractual relations with the Partnership and other
parties. On March 21, 1995, the Bankruptcy Court approved the rejection of the
gas supply contract between the Partnership and HFMC. HFMC has in turn asserted
force majeure under a contract with a producer under which HFMC purchased
natural gas for the Facility.
In addition to the foregoing, various other proceedings are pending against
Williams Holdings or its subsidiaries incidental to their operations.
Summary
While no assurances may be given, Williams Holdings does not believe that
the ultimate resolution of the foregoing matters, taken as a whole and after
consideration of amounts accrued, insurance coverage or other indemnification
arrangements, will have a materially adverse effect upon Williams Holdings'
future financial position, results of operations or cash flow requirements.
NOTE 12. SUBSEQUENT EVENT
In August, a subsidiary of Williams Holdings purchased Pekin Energy
Company, the nation's second largest ethanol producer, for $167 million in cash.
37
<PAGE> 39
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Williams Holdings of Delaware, Inc.
We have audited the accompanying consolidated balance sheet of Williams
Holdings of Delaware, Inc. as of December 31, 1994 and 1993, and the related
consolidated statements of income, stockholder's equity, and cash flows for each
of the three years in the period ended December 31, 1994. Our audits also
included the financial statement schedule listed in the Index at Item 15. These
financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Williams Holdings of Delaware, Inc. at December 31, 1994 and 1993, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 1994, in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
ERNST & YOUNG LLP
Tulsa, Oklahoma
July 14, 1995
38
<PAGE> 40
WILLIAMS HOLDINGS OF DELAWARE, INC.
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1994 1993 1992
-------- -------- --------
(MILLIONS)
<S> <C> <C> <C>
Revenues (Note 13):
Williams Field Services Group.............................. $ 336.4 $ 386.5 $ 397.7
Williams Energy Services................................... 263.7 360.8 496.2
Williams Pipe Line......................................... 310.7 180.5 148.5
Williams Telecommunications Systems........................ 396.6 302.8 271.1
Other...................................................... 20.0 13.5 9.5
Intercompany eliminations (Note 14)........................ (63.1) (23.1) (39.8)
-------- -------- --------
Total revenues..................................... 1,264.3 1,221.0 1,283.2
-------- -------- --------
Profit-center costs and expenses (Note 13):
Costs and operating expenses............................... 939.4 951.8 1,114.9
Selling, general and administrative expenses............... 142.7 121.8 114.7
Other income -- net........................................ -- (4.8) (.6)
-------- -------- --------
Total profit-center costs and expenses............. 1,082.1 1,068.8 1,229.0
-------- -------- --------
Operating profit (loss):
Williams Field Services Group.............................. 122.2 104.6 52.0
Williams Energy Services................................... .5 7.9 (2.6)
Williams Pipe Line......................................... 52.0 47.2 33.0
Williams Telecommunications Systems........................ 18.9 9.5 (9.8)
Other...................................................... (11.4) (17.0) (18.4)
-------- -------- --------
Total operating profit............................. 182.2 152.2 54.2
Allocated parent company expenses (Note 13).................. (20.0) (17.7) (17.3)
Interest accrued (Note 13)................................... (25.8) (14.8) (20.3)
Interest capitalized......................................... 4.7 5.4 2.9
Investing income (Note 3).................................... 15.0 22.6 21.1
Gain on sales of assets (Note 4)............................. 22.7 97.5 14.6
Other income (expense) -- net................................ .3 (.3) (2.1)
-------- -------- --------
Income from continuing operations before income taxes........ 179.1 244.9 53.1
Provision for income taxes (Note 5).......................... 53.6 92.6 6.2
-------- -------- --------
Income from continuing operations............................ 125.5 152.3 46.9
Income from discontinued operations (Note 2)................. 94.0 46.4 25.2
-------- -------- --------
Income before extraordinary credit (loss).................... 219.5 198.7 72.1
Extraordinary credit (loss) (Note 6)......................... (6.1) -- 11.1
-------- -------- --------
Net income................................................... $ 213.4 $ 198.7 $ 83.2
======== ======== ========
</TABLE>
See accompanying notes.
39
<PAGE> 41
WILLIAMS HOLDINGS OF DELAWARE, INC.
CONSOLIDATED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1994 1993
-------- --------
(MILLIONS)
<S> <C> <C>
Current assets:
Cash and cash equivalents............................................. $ 17.9 $ 13.5
Receivables:
Trade less allowance of $7.2 million ($9.4 million in 1993)........ 305.6 273.2
Affiliates (Note 13)............................................... 2.4 1.1
Inventories (Note 8).................................................. 84.6 73.7
Net assets of discontinued operations (Note 2)........................ 743.6 --
Deferred income taxes -- affiliates (Note 5).......................... 33.3 21.7
Other................................................................. 43.7 22.2
-------- --------
Total current assets.......................................... 1,231.1 405.4
Due from affiliates (Note 13)........................................... -- 56.4
Investments (Note 3).................................................... 536.0 257.8
Property, plant and equipment -- net (Note 9)........................... 1,585.1 2,151.1
Other assets and deferred charges....................................... 87.9 118.7
-------- --------
Total assets.................................................. $3,440.1 $2,989.4
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Notes payable (Note 11)............................................... $ 398.2 $ --
Accounts payable:
Trade (Note 10).................................................... 145.7 214.6
Affiliates (Note 13)............................................... 3.5 1.8
Accrued liabilities (Note 10)......................................... 147.4 193.7
Long-term debt due within one year (Note 11).......................... 13.0 34.0
-------- --------
Total current liabilities..................................... 707.8 444.1
Long-term debt (Note 11):
Affiliates............................................................ 389.9 --
Other................................................................. 117.1 229.4
Deferred income taxes -- affiliates (Note 5)............................ 356.2 356.7
Deferred income and other liabilities................................... 129.2 141.2
Contingent liabilities and commitments (Note 15)
Stockholder's equity:
Common stock, $1 par value, 1,000 shares authorized and outstanding... -- --
Capital in excess of par value........................................ 1,531.4 1,450.8
Retained earnings (Note 11)........................................... 244.3 367.2
Net unrealized loss on noncurrent marketable equity securities (Note
3)................................................................. (35.8) --
-------- --------
Total stockholder's equity.................................... 1,739.9 1,818.0
-------- --------
Total liabilities and stockholder's equity.................... $3,440.1 $2,989.4
======== ========
</TABLE>
See accompanying notes.
40
<PAGE> 42
WILLIAMS HOLDINGS OF DELAWARE, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
CAPITAL IN NET
COMMON EXCESS OF RETAINED UNREALIZED
STOCK PAR VALUE EARNINGS LOSS TOTAL
-------- ---------- --------- ---------- --------
(MILLIONS)
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1991..................... $ -- $1,105.8 $ 156.3 $ -- $1,262.1
Net income -- 1992............................. -- -- 83.2 -- 83.2
Capital contributions --
Cash......................................... -- 50.0 -- -- 50.0
Transfer of subsidiary from parent........... -- 219.3 -- -- 219.3
-------- -------- ------- ------- --------
Balance, December 31, 1992..................... -- 1,375.1 239.5 -- 1,614.6
Net income -- 1993............................. -- -- 198.7 -- 198.7
Cash dividends................................. -- -- (71.0) -- (71.0)
Capital contributions --
Cash......................................... -- 75.3 -- -- 75.3
Other........................................ -- .4 -- -- .4
-------- -------- ------- ------- --------
Balance, December 31, 1993..................... -- 1,450.8 367.2 -- 1,818.0
Net income -- 1994............................. -- -- 213.4 -- 213.4
Dividends --
Cash......................................... -- -- (335.8) -- (335.8)
Other........................................ -- -- (.5) -- (.5)
Contributions --
Cash......................................... -- 73.4 -- -- 73.4
Other........................................ -- 7.2 -- -- 7.2
Net unrealized loss on noncurrent marketable
equity securities............................ -- -- -- (35.8) (35.8)
-------- -------- ------- ------- --------
Balance, December 31, 1994..................... $ -- $1,531.4 $ 244.3 $(35.8) $1,739.9
======== ======== ======= ======= ========
</TABLE>
See accompanying notes.
41
<PAGE> 43
WILLIAMS HOLDINGS OF DELAWARE, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1994 1993 1992
------- ------- -------
(MILLIONS)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income.................................................. $ 213.4 $ 198.7 $ 83.2
Adjustments to reconcile to cash provided from operations:
Discontinued operations.................................. (94.0) (46.4) (25.2)
Extraordinary (credit) loss.............................. 6.1 -- (11.1)
Depreciation and depletion............................... 80.0 70.0 51.0
Provision (credit) for deferred income taxes............. 15.4 .6 (15.9)
(Gain) loss on sales of property, plant and equipment.... .6 (100.9) (15.1)
Gain on sale of investment............................... (22.7) -- --
Changes in receivables sold.............................. -- (74.7) 29.6
Changes in receivables................................... (72.3) 4.6 (66.8)
Changes in inventories................................... (3.3) (5.2) (6.8)
Changes in other current assets.......................... (31.5) (14.0) (5.0)
Changes in accounts payable.............................. 22.1 (39.5) 49.0
Changes in accrued liabilities........................... (.3) (11.3) 11.8
Other, including changes in non-current assets and
liabilities............................................ 11.5 (2.7) (8.4)
------- ------- -------
Net cash provided (used) by continuing operations...... 125.0 (20.8) 70.3
Net cash provided by discontinued operations........... 169.4 162.6 112.7
------- ------- -------
Net cash provided by operating activities.............. 294.4 141.8 183.0
------- ------- -------
FINANCING ACTIVITIES:
Proceeds from notes payable................................. 398.2 -- --
Proceeds from long-term debt................................ -- -- 2.0
Payments of long-term debt:
Continuing operations.................................... (13.7) (11.7) (44.6)
Discontinued operations.................................. (128.0) (22.6) (45.1)
Capital contributions from parent........................... 73.4 75.3 50.0
Changes in parent company advances.......................... 433.6 (132.1) 23.6
Dividends paid to parent.................................... (335.8) (71.0) --
Other -- net................................................ -- -- 3.6
------- ------- -------
Net cash provided (used) by financing activities....... 427.7 (162.1) (10.5)
------- ------- -------
INVESTING ACTIVITIES:
Property, plant and equipment:
Capital expenditures:
Continuing operations.................................. (223.5) (190.3) (123.4)
Discontinued operations................................ (142.8) (100.8) (59.6)
Proceeds from sales...................................... 3.3 293.6 22.4
Changes in accounts payable and accrued liabilities...... 18.0 17.2 2.5
Purchase of investments..................................... (398.1) -- (8.8)
Acquisition of businesses................................... (56.5) -- --
Proceeds from sale of investments........................... 80.6 8.8 --
Other -- net................................................ 1.3 (3.5) (.2)
------- ------- -------
Net cash provided (used) by investing activities....... (717.7) 25.0 (167.1)
------- ------- -------
Increase in cash and cash equivalents.................. 4.4 4.7 5.4
Cash and cash equivalents at beginning of year................ 13.5 8.8 3.4
------- ------- -------
Cash and cash equivalents at end of year...................... $ 17.9 $ 13.5 $ 8.8
======= ======= =======
</TABLE>
See accompanying notes.
42
<PAGE> 44
WILLIAMS HOLDINGS OF DELAWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and basis of presentation
Williams Holdings of Delaware, Inc. (Williams Holdings) is a wholly-owned
subsidiary of The Williams Companies, Inc. (Williams). Williams has made capital
contributions based on historical carrying amounts to Williams Holdings of its
ownership interests in all subsidiaries, excluding its interstate natural gas
pipelines and related subsidiaries, effective April 1, 1995. The consolidated
financial statements of Williams Holdings include the subsidiaries contributed
by Williams for all periods presented.
Principles of consolidation
The consolidated financial statements include the accounts of Williams
Holdings and majority-owned subsidiaries. Companies in which Williams Holdings
and its subsidiaries own 20 percent to 50 percent of the voting common stock, or
otherwise exercise sufficient influence over operating and financial policies of
the company, are accounted for under the equity method.
Cash and cash equivalents
Cash and cash equivalents include demand and time deposits, certificates of
deposit and other marketable securities with maturities of three months or less
when acquired.
Inventory valuation
Inventories are stated at cost, which is not in excess of market, except
for those held by Williams Energy Services (see Commodity price-risk management
activities accounting policy). Williams Pipe Line's inventories of petroleum
products are principally determined using average cost. The cost of materials
and supplies inventories is determined principally using the first-in, first-out
method by Williams Telecommunications Systems and the average-cost method by
other subsidiaries.
Investments
Williams Holdings' investment in common stock of Williams is classified as
"available for sale" and is recorded at current market value with unrealized
gains and losses reported net of income taxes as a component of stockholder's
equity. Average cost is used to determine realized gains and losses. Williams
Holdings' investment in Texasgulf Inc. is at cost.
Property, plant and equipment
Property, plant and equipment is recorded at cost. Depreciation is provided
primarily on the straight-line method over estimated useful lives. Gains or
losses from the ordinary sale or retirement of property, plant and equipment for
Williams Pipe Line are credited or charged to accumulated depreciation; other
gains or losses are recorded in net income.
Revenue recognition
Revenues generally are recorded when services have been performed or
products have been delivered. Williams Pipe Line bills customers when products
are shipped and defers the estimated revenues for shipments in transit.
Commodity price-risk management activities
Williams Energy Services enters into energy-related financial instruments
(primarily futures contracts, options contracts and swap agreements) to hedge
against market price fluctuations of certain refined products
43
<PAGE> 45
WILLIAMS HOLDINGS OF DELAWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
inventories and natural gas sales and purchase commitments. Gains and losses on
these hedge contracts are recognized in income when the related hedged item is
recognized.
Williams Energy Services also uses energy-related financial instruments
(forward contracts, futures contracts, options contracts and swap agreements)
and physical inventory to provide price-risk management services to its
customers. These investments are valued at market and are primarily recorded in
other current assets and other accrued liabilities in the Consolidated Balance
Sheet. The resulting change in unrealized market gains and losses is recognized
in income currently and is recorded as revenues in the Consolidated Statement of
Income. Such market values reflect management's best estimate of market prices
considering various factors including closing exchange and over-the-counter
quotations, the terms of the contract, credit considerations, time value and
volatility factors underlying the positions.
Capitalization of interest
Williams Holdings capitalizes interest on major projects during
construction. Interest is capitalized on borrowed funds at rates that
approximate the average interest rate on related debt.
Income taxes
Williams Holdings and subsidiaries are included in Williams' consolidated
federal income tax return. The provision for income taxes is computed on a
separate company basis for Williams Holdings. Payments are made under the same
timing and minimum amount requirements as if the payments were being made
directly to the taxing authorities. Deferred income taxes are computed using the
liability method and are provided on all temporary differences between the
financial basis and the tax basis of Williams Holdings' assets and liabilities.
NOTE 2 -- DISCONTINUED OPERATIONS
In August 1994, a definitive agreement was signed to sell the Company's
network services operations to LDDS Communications, Inc. (LDDS) for $2.5 billion
in cash. The sale closed January 5, 1995, yielding an after-tax gain of
approximately $1 billion, which was recorded in the first quarter of 1995. Under
the terms of the agreement, Williams Holdings retained Williams
Telecommunications Systems, Inc., a national telecommunications equipment
supplier and service company, and Vyvx, Inc., which operates a national video
network specializing in broadcast television applications. The Consolidated
Financial Statements have been prepared to present operating results of network
services as discontinued operations, with prior-period operating results
restated.
Summarized operating results of discontinued operations are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(MILLIONS)
<S> <C> <C> <C>
Revenues......................................... $921.8 $663.8 $494.2
Operating profit................................. 163.1 97.0 58.6
Provision for income taxes....................... 60.9 32.2 16.2
Income from discontinued operations.............. 94.0 46.4 25.2
</TABLE>
The assets and liabilities that were transferred to LDDS in the sale of the
network services operations are presented in the Consolidated Balance Sheet on a
net basis at December 31, 1994. Net assets consist of current assets ($86.5
million), net property, plant and equipment ($797.8 million), other assets and
deferred charges ($144.3 million), less current liabilities ($218.3 million) and
deferred income and other liabilities ($66.7 million).
44
<PAGE> 46
WILLIAMS HOLDINGS OF DELAWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 3 -- INVESTING ACTIVITIES
<TABLE>
<CAPTION>
1994 1993
------ ------
(MILLIONS)
<S> <C> <C>
Investments:
Williams common stock.................................... $336.3 $ --
Texasgulf Inc. (15%)..................................... 150.0 150.0
Northern Border Pipeline partnerships (3.2% in 1994 and
12.25% in 1993)* (Note 4)............................. 20.0 78.6
Other*................................................... 29.7 29.2
------ ------
$536.0 $257.8
====== ======
</TABLE>
- ---------------
* Accounted for on the equity method.
During April 1995, the 15 percent interest in Texasgulf Inc. was sold for
approximately $124 million in cash, which resulted in a second quarter after-tax
gain of approximately $16 million because of previously unrecognized tax
benefits included in the provision for income taxes.
At December 31, 1994, the investment in common stock of Williams had a cost
basis of $395 million, a gross unrealized loss of $59 million and a net
unrealized loss of $36 million. Subsequent to December 31, 1994, the value of
the investment changed such that the unrealized loss was eliminated.
At December 31, 1994, other investments carried at $30 million have a
market value of $73 million.
Investing income from continuing operations:
<TABLE>
<CAPTION>
1994 1993 1992
----- ----- -----
(MILLIONS)
<S> <C> <C> <C>
Interest.......................................... $ 1.0 $ 1.1 $ .9
Dividends......................................... 6.6 5.6 5.3
Equity earnings................................... 7.4 15.9 14.9
----- ----- -----
$15.0 $22.6 $21.1
===== ===== =====
</TABLE>
Dividends and distributions received from companies carried on an equity
basis were $11 million in 1994; $14 million in 1993; and $10 million in 1992.
NOTE 4 -- SALES OF ASSETS
In 1994, 3,461,500 limited partner common units were sold in Northern
Border Partners, L.P. Net proceeds from the sale were approximately $80 million
and the sale resulted in a pre-tax gain of $22.7 million. As a result of the
sale, Williams Holdings' original 12.25 percent interest in Northern Border
partnerships has been reduced to 3.2 percent.
In a 1993 public offering, 6.1 million units were sold in the Williams Coal
Seam Gas Royalty Trust (Trust), which resulted in net proceeds of $113 million
and a pre-tax gain of $51.6 million. The Trust owns defined net profits
interests in the developed coal-seam properties in the San Juan Basin of New
Mexico and Colorado, which were conveyed to the Trust by Williams Production
Company. Ownership of an additional 3.6 million units remains with Williams
Holdings.
In March 1993, the intrastate natural gas pipeline system and other related
assets in Louisiana were sold for $170 million in cash, resulting in a pre-tax
gain of $45.9 million.
The 1992 gain of $14.6 million resulted from the sale of a tract of land in
Florida that had been retained from the assets of Agrico Chemical Company, which
was sold several years ago.
45
<PAGE> 47
WILLIAMS HOLDINGS OF DELAWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 5 -- PROVISION FOR INCOME TAXES
The provision (credit) for income taxes from continuing operations
includes:
<TABLE>
<CAPTION>
1994 1993 1992
----- ----- ------
(MILLIONS)
<S> <C> <C> <C>
Current:
Federal.......................................... $28.9 $70.5 $ 17.7
State............................................ 9.3 21.5 4.4
----- ----- ------
38.2 92.0 22.1
----- ----- ------
Deferred:
Federal.......................................... 14.0 7.4 (14.7)
State............................................ 1.4 (6.8) (1.2)
----- ----- ------
15.4 .6 (15.9)
----- ----- ------
Total provision.................................... $53.6 $92.6 $ 6.2
===== ===== ======
</TABLE>
The 1993 provision for income taxes includes the effect of a 1 percent
increase in the federal income tax rate, which was made retroactive to January
1, 1993. The effect of adopting Statement of Financial Accounting Standards
(FAS) No. 109, "Accounting for Income Taxes," was not material. Williams
Holdings previously accounted for deferred income taxes under FAS No. 96.
Reconciliations from the provision for income taxes attributable to
continuing operations at the statutory rate to the provision for income taxes
are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ -----
(MILLIONS)
<S> <C> <C> <C>
Provision at statutory rate....................... $ 62.7 $ 85.7 $18.1
Increases (reductions) in taxes resulting from:
Increase in statutory tax rate on beginning of
year deferred tax balances................... -- 9.0 --
Dividends received deduction.................... (1.1) (1.4) (4.3)
State income taxes.............................. 6.9 9.6 2.1
Income tax credits.............................. (14.3) (10.0) (9.5)
Other -- net.................................... (.6) (.3) (.2)
------ ------ -----
Provision for income taxes........................ $ 53.6 $ 92.6 $ 6.2
====== ====== =====
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial purposes
and the amounts used for income tax purposes.
46
<PAGE> 48
WILLIAMS HOLDINGS OF DELAWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Significant components of deferred tax liabilities and assets as of
December 31 are as follows:
<TABLE>
<CAPTION>
1994 1993
------ ------
(MILLIONS)
<S> <C> <C>
Deferred tax liabilities:
Property, plant and equipment............................ $427.0 $405.3
Investments.............................................. 34.0 80.5
Other.................................................... 22.6 13.6
------ ------
Total deferred tax liabilities...................... 483.6 499.4
------ ------
Deferred tax assets:
Deferred revenues........................................ 38.9 46.9
Investments.............................................. 76.8 80.2
Regulatory liabilities................................... 8.4 9.4
Accrued liabilities...................................... 30.1 26.1
State deferred taxes..................................... 10.8 10.5
Minimum tax credits...................................... -- 4.8
Other.................................................... 27.7 20.2
------ ------
Total deferred tax assets........................... 192.7 198.1
Valuation allowance for deferred tax assets......... 32.0 33.7
------ ------
Net deferred tax assets............................. 160.7 164.4
------ ------
Net deferred tax liabilities............................... $322.9 $335.0
====== ======
</TABLE>
The valuation allowance for deferred tax assets decreased $1.7 million and
$.7 million during 1994 and 1993, respectively.
Cash payments to Williams and certain state taxing authorities for income
taxes are as follows: 1994 -- $108 million; 1993 -- $117 million; and
1992 -- $38 million.
NOTE 6 -- EXTRAORDINARY CREDIT (LOSS)
The extraordinary items in 1994 and 1992 result from early extinguishment
of debt. During 1994, a subsidiary of Williams Holdings paid approximately $137
million to redeem higher interest rate debt for a $6.1 million net loss (net of
a $3.9 million benefit for income taxes). In 1992, a subsidiary of Williams
Holdings paid approximately $34 million to redeem debt resulting in an $11.1
million gain.
NOTE 7 -- EMPLOYEE BENEFIT PLANS
Pensions
Williams Holdings is included in Williams' non-contributory defined-benefit
pension plans covering the majority of employees. Williams Pipe Line has a
separate plan for its union employees. Benefits are based on years of service
and average final compensation. Pension costs are funded to satisfy minimum
requirements prescribed by the Employee Retirement Income Security Act of 1974.
Net pension expense related to Williams Holdings participation in the
Williams' plan was as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
(MILLIONS)
<S> <C> <C> <C>
Continuing operations.................................. $1.3 $ .5 $ .9
Discontinued operations................................ 4.6 2.7 2.3
---- ---- ----
$5.9 $3.2 $3.2
==== ==== ====
</TABLE>
47
<PAGE> 49
WILLIAMS HOLDINGS OF DELAWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Net pension expense for the Williams Pipe Line plan consists of the
following:
<TABLE>
<CAPTION>
1994 1993 1992
----- ----- -----
(MILLIONS)
<S> <C> <C> <C>
Service cost for benefits earned during the year.... $ .5 $ .4 $ .4
Interest cost on projected benefit obligation....... 1.1 1.1 1.0
Actual return on plan assets........................ .7 (1.6) (1.1)
Amortization and deferrals.......................... (2.2) .1 (.3)
----- ----- -----
Net pension expense................................. $ .1 $ -- $ --
===== ===== =====
</TABLE>
The following table presents the funded status of the Williams Pipe Line
plan:
<TABLE>
<CAPTION>
1994 1993
----- -----
(MILLIONS)
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits............................................ $11.2 $12.1
Non-vested benefits........................................ .3 .3
----- -----
Accumulated benefit obligation............................. 11.5 12.4
Effect of projected salary increases....................... 2.5 3.5
----- -----
Projected benefit obligation............................... 14.0 15.9
Assets at market value....................................... 14.6 16.0
----- -----
Assets in excess of projected benefit obligation............. .6 .1
Unrecognized net loss........................................ 2.4 2.4
Unrecognized prior-service cost.............................. .8 .9
Unrecognized transition asset................................ (.9) (1.1)
----- -----
Pension asset................................................ $ 2.9 $ 2.3
===== =====
</TABLE>
For the Williams Pipe Line plan, the discount rate used to measure the
present value of benefit obligations is 8 1/2 percent (7 1/4 percent in 1993);
the assumed rate of increase in future compensation levels is 5 percent; and the
expected long-term rate of return on assets is 10 percent. Plan assets consist
primarily of commingled funds and assets held in a master trust. The master
trust is comprised primarily of domestic and foreign common and preferred
stocks, corporate bonds, United States government securities and commercial
paper.
Williams Holdings has retained all liabilities and obligations of the
Company's network services operations' plan participants up to the date of sale
(see Note 2).
Postretirement benefits other than pensions
Williams Holdings is included in Williams' health care plan that provides
defined postretirement medical benefits to retired employees who were employed
full time, hired prior to January 1, 1992, have worked five years, attained age
55 while in service with Williams and are a participant in the Williams' pension
plans.
Net postretirement benefit expense related to Williams Holdings
participation in the Williams' plan was as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
(MILLIONS)
<S> <C> <C> <C>
Continuing operations.................................. $5.5 $5.6 $3.6
Discontinued operations................................ 1.6 1.5 1.0
---- ---- ----
$7.1 $7.1 $4.6
==== ==== ====
</TABLE>
48
<PAGE> 50
WILLIAMS HOLDINGS OF DELAWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Effective January 1, 1993, Williams Holdings prospectively adopted FAS No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions."
Application of the standard reduced 1993 net income by approximately $2 million.
Other
Williams Holdings is included in Williams' defined-contribution plans
covering substantially all employees. Williams Holdings contributions are
invested primarily in Williams common stock and are based on employees'
compensation and, in part, match employee contributions. Williams Holdings'
contributions to these plans were $10 million in 1994, $8 million in 1993 and $7
million in 1992. Contributions to these plans made by discontinued operations
were $3 million in 1994 and 1993, and $2 million in 1992.
Effective January 1, 1994, Williams Holdings adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits," which requires the accrual of benefits provided to former or inactive
employees after employment but before retirement. Adoption of the standard
reduced 1994 net income by approximately $2 million and is not reported as a
change in accounting principle due to immateriality.
During November 1994, Williams Holdings entered into a deferred share
agreement (the Agreement) in connection with the sale of the Company's network
services operations. Under the terms of the Agreement, Williams Holdings will
distribute up to approximately 2.6 million shares of Williams common stock to
key employees over various periods through 1998. During 1994, the initial stock
distribution of 273,095 shares was made.
NOTE 8 -- INVENTORIES
<TABLE>
<CAPTION>
1994 1993
----- -----
(MILLIONS)
<S> <C> <C>
Natural gas in underground storage........................... $ 1.5 $ --
Petroleum products:
Williams Pipe Line......................................... 15.5 13.0
Williams Energy Services................................... 22.2 19.3
Other...................................................... 3.6 5.7
Materials and supplies:
Williams Telecommunications Systems........................ 28.6 22.6
Other...................................................... 13.2 13.1
----- -----
$84.6 $73.7
===== =====
</TABLE>
49
<PAGE> 51
WILLIAMS HOLDINGS OF DELAWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 9 -- PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
1994 1993
-------- --------
(MILLIONS)
<S> <C> <C>
Cost:
Williams Field Services Group......................... $1,173.3 $1,020.2
Williams Pipe Line.................................... 809.6 754.8
Williams Energy Services.............................. 4.1 3.7
Williams Telecommunications Systems................... 32.1 25.3
Discontinued operations (Note 2)...................... -- 1,052.8
Other................................................. 94.4 52.9
-------- --------
2,113.5 2,909.7
Accumulated depreciation................................ (528.4) (758.6)
-------- --------
$1,585.1 $2,151.1
======== ========
</TABLE>
Commitments for construction and acquisition of property, plant and
equipment are approximately $49 million at December 31, 1994.
NOTE 10 -- ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Under Williams' cash-management system, certain subsidiaries' cash accounts
reflect credit balances to the extent checks written have not been presented for
payment. The amounts of these credit balances included in accounts payable are
$31 million at December 31, 1994, and $44 million at December 31, 1993.
<TABLE>
<CAPTION>
1994 1993
------ ------
(MILLIONS)
<S> <C> <C>
Accrued liabilities:
Employee costs........................................... $ 26.2 $ 25.2
Deferred revenue......................................... 24.5 54.8
Income taxes payable..................................... 2.8 6.5
Taxes other than income taxes............................ 29.1 28.8
Other.................................................... 64.8 78.4
------ ------
$147.4 $193.7
====== ======
</TABLE>
NOTE 11 -- LONG-TERM DEBT, LEASES AND BANKING ARRANGEMENTS
Notes payable
During 1994, Williams Holdings entered into a $400 million short-term
credit agreement to finance the purchase of Williams common stock. Notes payable
totaling $398 million were outstanding under this agreement at December 31,
1994. These notes were repaid in January 1995.
The weighted average interest rate on the $398 million outstanding
short-term borrowings at December 31, 1994, was 6.79 percent. There were no
short-term borrowings outstanding at December 31, 1993.
50
<PAGE> 52
WILLIAMS HOLDINGS OF DELAWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Long-term debt
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
INTEREST
RATE* 1994 1993
-------- ------ ------
(MILLIONS)
<S> <C> <C> <C>
Company
Revolving credit loans -- Williams (Note 13).......... $389.9 $ --
====== ======
Williams Pipe Line
Notes, 8.95% and 9.78%, payable through 2001.......... 9.3 $120.0 $130.0
Williams Field Services Group
Other, payable through 1999........................... 8.0 5.7 --
Williams Telecommunications Systems
Other................................................. 7.9 4.4 5.9
Discontinued operations (Note 2)
Notes at 9.61% and 9.81%.............................. -- -- 127.5
------ ------
130.1 263.4
Current portion of long-term debt....................... (13.0) (34.0)
------ ------
$117.1 $229.4
====== ======
</TABLE>
- ---------------
* At December 31, 1994.
Williams Holdings (effective June 15, 1995) and Williams Pipe Line
participate in Williams' $800 million credit agreement. Williams Holdings and
Williams Pipe Line's maximum borrowing availability, subject to borrowings by
other affiliated companies, is $600 million and $100 million, respectively.
Williams Pipe Line had no borrowings under this facility at December 31, 1994.
Interest rates vary with current market conditions. The amount available under
the facility at December 31, 1994 was $495 million. The agreement terminates in
2000.
Terms of borrowings require maintenance of certain financial ratios, limit
the sale or encumbrance of assets and limit the amount of additional borrowings.
Terms of certain subsidiaries' borrowing arrangements limit the transfer of
funds to Williams Holdings. At December 31, 1994, approximately $200 million of
net assets of consolidated subsidiaries was restricted. Undistributed earnings
of companies and partnerships accounted for under the equity method of $14
million are included in Williams Holdings' consolidated retained earnings at
December 31, 1994.
Aggregate minimum maturities and sinking-fund requirements, excluding lease
payments, for each of the next five years are as follows:
<TABLE>
<CAPTION>
(MILLIONS)
----------
<S> <C>
1995.............................................. $ 12
1996.............................................. 12
1997.............................................. 12
1998.............................................. 12
1999.............................................. 10
</TABLE>
The aggregate minimum maturities and sinking-fund requirements exclude the
revolving credit loans due Williams as the date of repayment is uncertain (see
Note 13).
Cash payments for interest (net of amounts capitalized) related to
continuing operations are as follows: 1994 -- $28 million; 1993 -- $19 million;
and 1992 -- $21 million, including payments to Williams of $17 million, $11
million and $7 million, respectively. Cash payments for interest (net of amounts
capitalized)
51
<PAGE> 53
WILLIAMS HOLDINGS OF DELAWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
related to discontinued operations are as follows: 1994 -- $9 million;
1993 -- $16 million; and 1992 -- $18 million, including payments to Williams of
$3 million in 1994.
Leases
Future minimum annual rentals under non-cancelable operating leases are as
follows:
<TABLE>
<CAPTION>
OFFICE SPACE-
AFFILIATES OTHER TOTAL
------------- ----- -----
(MILLIONS)
<S> <C> <C> <C>
1995............................................. $ 4 $13 $17
1996............................................. 4 9 13
1997............................................. 4 7 11
1998............................................. 3 4 7
1999............................................. 3 2 5
Thereafter....................................... 36 3 39
--- --- ---
Total minimum annual rentals..................... $54 $38 $92
=== === ===
</TABLE>
Total rent expense from continuing operations was $16 million in 1994, $10
million in 1993, and $11 million in 1992, including $4 million, $2 million and
$2 million in 1994, 1993 and 1992, respectively, paid to Williams and
affiliates. Total rent expense from discontinued operations was $72 million in
1994, $61 million in 1993 and $50 million in 1992, including $2 million in 1994,
1993 and 1992 paid to Williams.
NOTE 12 -- FINANCIAL INSTRUMENTS
Fair-value methods
The following methods and assumptions were used by Williams Holdings in
estimating its fair-value disclosures for financial instruments:
Cash and cash equivalents and notes payable: The carrying amounts
reported in the balance sheet approximate fair value due to the short-term
maturity of these instruments.
Notes receivable: For those notes with interest rates approximating
market or maturities of less than three years, fair value is estimated to
approximate historically recorded amounts. For those notes with maturities
beyond three years and fixed interest rates, fair value is calculated using
discounted cash flow analysis based on current market rates.
Investment in Williams common stock: The fair value of Williams
Holdings' investment is based on quoted market prices.
Revolving credit loans -- Williams: The loans bear interest rates
approximating market, therefore, fair value is estimated to approximate
historically recorded amounts.
Long-term debt: The fair value of Williams Holdings' long-term debt,
all private, is valued based on the prices of similar securities with
similar terms and credit ratings. Williams Holdings used the expertise of
an outside investment banking firm to estimate the fair value of long-term
debt.
Energy-related futures, swaps and options: Fair value reflects
management's best estimate of market prices considering various factors
including closing exchange and over-the-counter quotations, the terms of
the contract, credit considerations, time value and volatility factors
underlying the positions.
52
<PAGE> 54
WILLIAMS HOLDINGS OF DELAWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Carrying amounts and fair values of Williams Holdings' financial instruments
<TABLE>
<CAPTION>
1994 1993
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
ASSET (LIABILITY) AMOUNT VALUE AMOUNT VALUE
-------- ------- -------- -------
(MILLIONS)
<S> <C> <C> <C> <C>
Cash and cash equivalents................... $ 17.9 $ 17.9 $ 13.5 $ 13.5
Notes receivable............................ 6.2 6.0 9.5 9.8
Investment in Williams common stock......... 336.3 336.3 -- --
Notes payable............................... (398.2) (398.2) -- --
Revolving credit loans -- Williams.......... (389.9) (389.9) 56.4 56.4
Long-term debt, including current portion... (127.9) (132.1) (260.1) (279.6)
Energy-related trading:
Futures................................... (2.0) (2.0) 2.0 2.0
Swaps and options:
Assets................................. 22.7 22.7 7.0 7.0
Liabilities............................ (13.8) (13.8) (6.3) (6.3)
Energy-related hedging:
Futures................................... (3.3) (3.3) (.9) (.9)
Swaps and options:
Assets................................. .3...... .3 -- --
Liabilities............................ (5.2) (5.2) -- --
</TABLE>
The above asset and liability amounts for energy-related hedging represent
unrealized gains or losses and do not include the related deferred amounts.
The 1994 average fair value of the energy-related trading futures contracts
is a liability of $1.5 million. The 1994 average fair value of the trading swaps
and options assets and liabilities are $9.2 million and $7 million,
respectively.
Williams Holdings has recorded liabilities of $10 million and $20 million
at December 31, 1994 and 1993, respectively, for certain guarantees that qualify
as financial instruments. It is not practicable to estimate the fair value of
these guarantees because of their unusual nature and unique characteristics.
Off-balance-sheet credit and market risk
Williams Holdings is a participant in numerous transactions and
arrangements that involve financial instruments that have off-balance-sheet risk
of accounting loss. It is not practicable to estimate the fair value of these
off-balance-sheet financial instruments because of their unusual nature and
unique characteristics.
Williams Holdings sold, with limited recourse, certain receivables. The
aggregate limit under receivables facilities in which Williams Holdings
participated was $80 million at December 31, 1994 and $35 million at December
31, 1993 (all related to discontinued operations). Williams Holdings received
$45 million of additional net proceeds in 1994, none in 1993 and $123 million in
1992. At December 31, 1994 and 1993, $80 million and $35 million (all related to
discontinued operations) of such receivables had been sold, respectively. Under
a different arrangement, one of Williams Holdings' subsidiaries sold $18 million
of receivables with limited recourse in 1992. Williams Holdings has no risk of
credit loss because amounts outstanding relate to discontinued operations (see
Note 2).
In connection with the sale of units in the Williams Coal Seam Gas Royalty
Trust (Trust), Williams Holdings indemnified the Trust against losses from
certain litigation (see Note 15), guaranteed certain minimum ownership interests
based on natural gas reserve volumes through 1993 only and guaranteed
53
<PAGE> 55
WILLIAMS HOLDINGS OF DELAWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
minimum gas prices through 1997. At December 31, 1994 and 1993, Williams
Holdings has a recorded liability of $10 million and $15 million, respectively,
for these items, representing the maximum amounts for the first two guarantees
and an estimate of the gas price exposure based on historical operating trends
and an assessment of market conditions. While Williams Holdings' maximum
exposure from this guarantee exceeds amounts accrued, it is not practicable to
determine such amount because of the unique aspects of the guarantee.
In connection with the sale of the Company's network services operations,
Williams has been indemnified by LDDS against any losses related to retained
guarantees of $200 million for lease rental obligations. LDDS is negotiating
with the guaranteed parties to remove Williams as guarantor. Williams Holdings
could be impacted if Williams has to perform under the guarantee.
Williams Holdings has issued other guarantees and letters of credit with
off-balance-sheet risk that total approximately $5 million and $7 million at
December 31, 1994 and 1993, respectively. Williams Holdings believes it will not
have to perform under these agreements because the likelihood of default by the
primary party is remote and/or because of certain indemnifications received from
other third parties.
Commodity price-risk management services
Williams Energy Services provides price-risk management services associated
with the energy industry to its customers. These services are provided through a
variety of financial instruments, including forward contracts, futures
contracts, options contracts and swap agreements. See Note 1 for a description
of the accounting for these trading activities. The net gain for 1994 from all
trading activities was $14.2 million and is reported as revenues in the
Consolidated Statement of Income.
Williams Energy Services manages risk from financial instruments by making
various logistical commitments which manage profit margins through offsetting
financial instruments. As a result, price movements can result in losses on
certain contracts offset by gains on others.
Williams Energy Services takes an active role in managing and controlling
market and counterparty risks and has established formal control procedures
which are reviewed on an ongoing basis. Williams Energy Services attempts to
minimize credit-risk exposure to trading counterparties and brokers through
formal credit policies and monitoring procedures. In the normal course of
business, collateral is not required for financial instruments with credit risk.
54
<PAGE> 56
WILLIAMS HOLDINGS OF DELAWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The notional quantities and average prices for natural gas related swap
agreements, options contracts and futures contracts at December 31, 1994, are as
follows:
<TABLE>
<CAPTION>
PAYOR RECEIVER
----- --------
<S> <C> <C>
Trading:
Fixed-price swaps:
Quantities (TBtu)............................................... 86.0 100.9
Average price (per MMBtu)....................................... $2.01 $ 1.86
Location differential swaps:
Quantities (TBtu)............................................... 85.0 136.3
Average price (per MMBtu)....................................... $1.42 $ 1.43
Options:
Quantities (TBtu)............................................... 15.1 17.9
Average strike price (per MMBtu)................................ $1.91 $ 2.19
Futures:
Quantities (TBtu)............................................... 80.3 60.7
Average price (per MMBtu)....................................... $1.91 $ 1.92
Hedging:
Fixed-price swaps:
Quantities (TBtu)............................................... 28.4 4.1
Average price (per MMBtu)....................................... $2.21 $ 2.16
Options:
Quantities (TBtu)............................................... 5.5 3.7
Average strike price (per MMBtu)................................ $2.07 $ 2.05
Futures:
Quantities (TBtu)............................................... 21.3 3.1
Average price (per MMBtu)....................................... $1.90 $ 1.91
</TABLE>
At December 31, 1993, Williams Energy Services was the payor and receiver
under natural gas fixed-price swap agreements having notional quantities of 44.1
TBtu and 43.9 TBtu, respectively. Average prices are $2.24 and $2.18,
respectively. In addition, Williams Energy Services was the payor and receiver
under location differential variable-priced swap agreements having notional
quantities of 26.3 TBtu and 38.8 TBtu, respectively, at December 31, 1993. The
average price under these agreements was $1.77.
The swap agreements call for Williams Energy Services to make payments to
(or receive payments from) counterparties based upon the differential between a
fixed and variable price or variable prices for different locations. The
variable prices are generally based on either industry pricing publications or
exchange quotations. Williams Energy Services buys and sells options contracts
which give the buyer the right to exercise the options and receive the
difference between a predetermined strike price and a market price at the date
of exercise. The market prices used for natural-gas-related contracts are
generally exchange quotations. Williams Energy Services also enters into futures
contracts which are commitments to either purchase or sell a commodity at a
future date for a specified price and are generally settled in cash, but may be
settled through delivery of the underlying commodity. The market prices for
futures contracts are based on exchange quotations. The swap agreements extend
for various periods through 2000; option contracts and futures contracts extend
for various periods through 1996. Average prices are based on weighted averages
for contracts outstanding at December 31, 1994 and 1993. Average prices for
location differential swaps incorporate forward prices based on the appropriate
index.
Williams Energy Services enters into energy-related financial instruments
to hedge against market price fluctuations of certain refined products
inventories and natural gas sales and purchase commitments. Net deferred losses
at December 31, 1994, on anticipated sales and purchase commitments were $9
million. It is
55
<PAGE> 57
WILLIAMS HOLDINGS OF DELAWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
expected that substantially all of these deferred amounts will be recognized in
income during 1995. See Note 1 for a description of the accounting for these
hedging activities.
Concentration of credit risk
Williams Holdings' cash equivalents consist of high quality securities
placed with various major financial institutions with high credit ratings.
Williams Holdings' investment policy limits the company's credit exposure to any
one financial institution.
At December 31, 1994 and 1993, approximately 44 percent and 56 percent,
respectively, of receivables are for telecommunications, approximately 30
percent and 32 percent, respectively, of receivables are for the sale of natural
gas and related products or services and approximately 23 percent and 7 percent,
respectively, of receivables are for petroleum products and related services.
Natural gas customers include pipelines, distribution companies, producers, gas
marketers and industrial users primarily located in the western and central
United States. Telecommunications customers include numerous corporations.
Petroleum products customers include refiners and marketers primarily in the
central United States. As a general policy, collateral is not required for
receivables, but customers' financial conditions and credit worthiness are
evaluated regularly.
NOTE 13 -- RELATED PARTY TRANSACTIONS
Williams charges its subsidiaries, including Williams Holdings and its
subsidiaries, for certain corporate general and administrative expenses which
are directly traceable or allocable to the subsidiaries and other general
corporate expenses utilizing a combination of revenues, property at cost and
payroll for the allocation base. Details of such charges for continuing
operations are as follows:
<TABLE>
<CAPTION>
(MILLIONS)
------------------------
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Direct costs.................................................. $ 11.2 $ 8.2 $ 6.5
Allocated general corporate expense........................... 20.0 17.7 17.3
Interest accrued -- net....................................... 8.2 .2 3.4
</TABLE>
The majority of the above costs, except for interest accrued, are reflected
in selling, general and administrative expenses.
Direct costs charged to discontinued operations were $7 million, $7 million
and $6 million for 1994, 1993 and 1992, respectively.
Williams Holdings and its subsidiaries maintained credit agreements with
Williams for both advances from and advances to Williams depending on the cash
position of each subsidiary. Amounts outstanding are payable on demand, however,
any amounts outstanding have been classified as long-term inasmuch as there has
been no expectation for Williams or the subsidiaries to demand payment in the
next year. The agreements do not require commitment fees. Interest is payable
monthly and rates vary with market conditions. The interest rates were 6.69
percent and 6 percent at December 31, 1994 and 1993, respectively. At December
31, 1994, Williams Telecommunications Systems' borrowings under the credit
agreement are limited to $175 million and Williams Pipe Line's are limited to
$100 million.
Williams Holdings' subsidiaries have transactions primarily with the
following affiliates: Williams Natural Gas and Northwest Pipeline. Revenues
include $4 million, $35 million and $28 million for 1994, 1993 and 1992,
respectively, of transactions with affiliates, primarily natural gas sales.
Costs and operating expenses include $18 million, $9 million and $14 million for
1994, 1993 and 1992, respectively, of transactions with affiliates, primarily
transportation costs. Transactions with affiliates are at prices that generally
apply to unaffiliated parties.
56
<PAGE> 58
WILLIAMS HOLDINGS OF DELAWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 14 -- OTHER FINANCIAL INFORMATION
Intercompany revenues (at prices that generally apply to sales to
unaffiliated parties) are as follows:
<TABLE>
<CAPTION>
(MILLIONS)
------------------------
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Williams Field Services Group......................................... $ 30.0 $ 14.3 $ 19.5
Williams Pipe Line.................................................... 16.7 1.4 --
Williams Energy Services.............................................. 16.3 7.3 20.2
Other................................................................. .1 .1 .1
----- ----- -----
$ 63.1 $ 23.1 $ 39.8
===== ===== =====
</TABLE>
Information for business segments is as follows:
<TABLE>
<CAPTION>
(MILLIONS)
------------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Identifiable assets at December 31:
Williams Field Services Group................................ $1,017.2 $ 942.0 $ 958.2
Williams Pipe Line........................................... 678.4 586.0 533.5
Williams Energy Services..................................... 96.4 84.7 62.6
Williams Telecommunications Systems.......................... 251.0 165.5 155.9
Investments.................................................. 536.0 257.8 264.8
Other........................................................ 117.5 58.2 45.1
Discontinued operations...................................... 743.6 895.2 849.8
-------- -------- --------
Consolidated......................................... $3,440.1 $2,989.4 $2,869.9
======== ======== ========
Additions to property, plant and equipment:
Williams Field Services Group................................ $ 158.0 $ 110.8 $ 86.0
Williams Pipe Line........................................... 46.6 62.9 26.9
Williams Energy Services..................................... 3.5 1.1 .2
Williams Telecommunications Systems.......................... 4.9 1.9 5.0
Other........................................................ 10.5 13.6 5.3
-------- -------- --------
Consolidated......................................... $ 223.5 $ 190.3 $ 123.4
======= ======= =======
Depreciation and depletion:
Williams Field Services Group................................ $ 41.8 $ 37.9 $ 21.7
Williams Pipe Line........................................... 22.4 21.4 21.2
Williams Energy Services..................................... .5 .5 .4
Williams Telecommunications Systems.......................... 5.3 4.7 3.7
Other........................................................ 10.0 5.5 4.0
-------- -------- --------
Consolidated......................................... $ 80.0 $ 70.0 $ 51.0
======= ======= =======
</TABLE>
- ---------------
NOTE 15 -- CONTINGENT LIABILITIES AND COMMITMENTS
Rate and regulatory matters
Williams Pipe Line has various regulatory proceedings pending. As a result
of rulings in certain of these proceedings, a portion of its revenues has been
collected subject to refund. Such revenues were $111 million at December 31,
1994. In an order issued on May 31, 1995 the FERC found that 20 of 32 of
Williams Pipe Line markets are workably competitive. This order has been
appealed to the United States Court of Appeals for the D.C. Circuit. As a result
of this order and prior rulings in other cases, Williams Pipe Line does not
expect that
57
<PAGE> 59
WILLIAMS HOLDINGS OF DELAWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
the amount of any refunds ordered would be significant. Accordingly, no portion
of these revenues has been reserved for refund.
Environmental matters
Certain Williams Holdings' subsidiaries have been named as potentially
responsible parties (PRP) at various Superfund waste disposal sites. In
addition, these subsidiaries have incurred or are alleged to have incurred
various other hazardous materials removal or remediation obligations under
environmental laws. Although no assurances can be given, Williams Holdings does
not believe that these obligations or the PRP status of these subsidiaries will
have a material adverse effect on its financial position, results of operations
or net cash flows.
Other legal matters
On December 31, 1991, the Southern Ute Indian Tribe (the Tribe) filed a
lawsuit against Williams Production Company, a wholly owned subsidiary of
Williams Holdings, and other gas producers in the San Juan Basin area, alleging
that certain coal strata was reserved by the United States for the benefit of
the Tribe and that the extraction of coal-seam gas from the coal strata was
wrongful. The Tribe seeks compensation for the value of the coal-seam gas. The
Tribe also seeks an order transferring to the Tribe ownership of all of the
defendants' equipment and facilities utilized in the extraction of the coal-seam
gas. On September 13, 1994, the court granted summary judgment in favor of the
defendants. The Tribe sought a certification of an interlocutory appeal from the
court which was denied. Nevertheless, the Tribe has lodged an interlocutory
appeal with the U.S. Court of Appeals for the Tenth Circuit. Williams Production
agreed to indemnify the Williams Coal Seam Gas Royalty Trust (Trust) against any
losses that may arise in respect of certain properties subject to the lawsuit.
In addition, if the Tribe is successful in showing that Williams Production has
no rights in the coal-seam gas, Williams Production has agreed to pay to the
Trust for distribution to then-current unitholders, an amount representing a
return of a portion of the original purchase price paid for the units. While
Williams Holdings believes that such a payment is not probable, it has reserved
a portion of the proceeds from the sale of the units in the Trust.
On December 21, 1994, Williams Natural Gas Company, an affiliated company,
received a civil investigative demand from the Antitrust Division of the
Department of Justice concerning certain gathering activities of Williams
Natural Gas and other companies, including Williams Field Services Group, Inc.,
a wholly-owned subsidiary of Williams Holdings. A response was filed and
Williams Natural Gas has been informed that the investigation has been closed.
Relative to a certain Agreement and Plan of Merger, dated December 12,
1994, among Williams, a subsidiary of Williams and Transco Energy Company
(Transco), seven class action lawsuits were filed on December 12, 1994, and
later, in the Chancery Court of Delaware, challenging the transaction and
alleging a breach of fiduciary duties by Transco's directors. In six of the
lawsuits, Williams was named as a party defendant, the plaintiffs alleging that
Williams aided and abetted the alleged breach of duty. On January 6, 1995, the
parties to all of the lawsuits entered into an agreement in principle and on
January 9, 1995, a stipulation and agreement of compromise, settlement and
release was executed subject to approval of the Court. On May 11, 1995, the
settlement was approved by the Court.
In addition to the foregoing, various other proceedings are pending against
Williams Holdings or its subsidiaries incidental to their operations.
Summary
While no assurances may be given, Williams Holdings does not believe that
the ultimate resolution of the foregoing matters, taken as a whole and after
consideration of amounts accrued, insurance coverage or other
58
<PAGE> 60
WILLIAMS HOLDINGS OF DELAWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
indemnification arrangements, will have a materially adverse effect upon
Williams Holdings' future financial position, results of operations or cash flow
requirements.
NOTE 16 -- TRANSCO AND OTHER ACQUISITIONS
Subsequent to December 31, 1994, Williams acquired all of Transco's
outstanding common stock.
Transco was engaged primarily in the natural gas pipeline and natural gas
marketing businesses. Effective May 1, 1995: (1) Transco dividended to Williams
all of Transco's interests in its subsidiaries which operated interstate natural
gas pipelines and (2) Williams made a capital contribution of the outstanding
common stock of Transco and Transco's remaining subsidiaries to Williams
Holdings. Williams Holdings plans to sell certain other Transco operations, such
as coal mining and coalbed methane extraction in 1995. The acquisition will be
accounted for as a purchase in 1995.
Williams Field Services Group purchased from Public Service Company of New
Mexico in June 1995 its natural gas gathering and processing assets in the San
Juan and Permian Basins of New Mexico for approximately $154 million.
In August, a subsidiary of Williams Holdings purchased Pekin Energy
Company, the nation's second largest ethanol producer, for $167 million in cash.
59
<PAGE> 61
WILLIAMS HOLDINGS OF DELAWARE, INC.
QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data are as follows:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
<S> <C> <C> <C> <C>
1994
Revenues................................................... $ 272.8 $ 311.2 $ 333.1 $ 347.2
Costs and operating expenses............................... 234.0 258.2 290.2 299.7
Income before extraordinary loss........................... 39.8 64.8 48.1 66.8
Net income................................................. 39.8 58.7 48.1 66.8
1993
Revenues................................................... $ 374.0 $ 295.4 $ 272.2 $ 279.4
Costs and operating expenses............................... 330.6 253.3 234.8 250.1
Net income................................................. 91.3 44.2 26.5 36.7
</TABLE>
Second-quarter 1994 includes a $23 million gain from the sale of assets
(see Note 4 of Notes to Consolidated Financial Statements). Fourth-quarter 1994
includes $5 million of costs for evaluating and determining whether to build an
oil refinery. Fourth-quarter 1994 discontinued operations includes favorable
adjustments of approximately $15 million relating to bad debt recoveries and
accrual reversals.
First-quarter 1993 includes gains totaling $95 million from the sales of
assets (see Note 4 of Notes to Consolidated Financial Statements). Third-quarter
1993 net income was reduced $9 million related to the cumulative effect of the 1
percent increase in the federal income tax rate. Fourth-quarter 1993 includes an
$11 million favorable settlement involving processing revenues from prior
periods. Fourth-quarter 1993 discontinued operations includes favorable
adjustments of approximately $6 million relating to bad debt recoveries and
accrual reversals.
60
<PAGE> 62
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Transco Energy Company:
We have audited the accompanying combined balance sheet of Transco Energy
Company -- Contributed Assets (a Delaware corporation and effective May 1, 1995,
a wholly-owned subsidiary of Williams Holdings of Delaware, Inc.) as described
in Note A, as of December 31, 1994, and the related combined statements of
operations, cash flows and common stockholders' deficit for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
As further discussed in Notes A and C, the combined financial statements
have been prepared on the historical-cost basis of accounting and do not reflect
any allocation of the purchase price to the Company's assets that was recorded
in 1995 by The Williams Companies, Inc. (Williams) as a result of its
acquisition of Transco Energy Company (Transco). Transco's business strategy
contemplated continued operation of a number of assets which Williams has stated
are non-core assets which Williams has sold or stated its intention to dispose
of during 1995. In connection with the allocation of the total purchase price of
Transco, such non-core assets will be recorded by Williams at their estimated
fair value which is below the historical cost basis of such assets recorded by
Transco.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Transco Energy
Company-Contributed Assets, as described in Note A, as of December 31, 1994, and
the results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Houston, Texas
February 20, 1995 (except with respect
to the matters discussed in Notes A and C,
as to which the date is July 25, 1995)
61
<PAGE> 63
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
COMBINED BALANCE SHEET
DECEMBER 31, 1994
(NOTES A, B AND M)
(THOUSANDS OF DOLLARS)
ASSETS
<TABLE>
<S> <C>
Current Assets:
Cash and temporary cash investments............................................. $ 29,830
Receivables --
Trade, net (Note B).......................................................... 98,320
Affiliates................................................................... 27,717
Advances to Affiliates (Note O).............................................. 1,768
Other........................................................................ 9,267
Transportation and exchange gas receivable --
Affiliates................................................................... 1,337
Other........................................................................ 7,606
Inventories --
Gas in storage, at LIFO...................................................... 6,107
Coal, at average cost........................................................ 7,261
Materials, supplies and other, at average cost............................... 7,381
Deferred income tax benefits (Note J)........................................... 4,578
Other........................................................................... 11,782
--------
Total current assets.................................................... 212,954
--------
Investments, at cost plus equity in undistributed earnings (Note K)............... 18,602
--------
Property, Plant and Equipment, at cost:
Natural gas gathering and liquids separation and fractionation plant............ 212,974
Less -- Accumulated depreciation and amortization............................... 35,036
--------
Natural gas gathering and liquids separation and fractionation plant, net....... 177,938
--------
Coal properties................................................................... 413,951
Less -- Accumulated depreciation, depletion and amortization.................... 152,686
--------
Coal properties, net............................................................ 261,265
--------
Other property, plant and equipment............................................... 10,646
Less -- Accumulated depreciation and amortization............................... 4,921
--------
Other property, plant and equipment, net........................................ 5,725
--------
Total property, plant and equipment, net................................ 444,928
--------
Other Assets:
Nonoperating interest in coalbed methane properties, net (Note L)............... 86,334
Deferred income tax benefits (Note J)........................................... 59,319
Notes receivable (Note K)....................................................... 13,000
Other........................................................................... 25,021
--------
Total other assets...................................................... 183,674
--------
$860,158
========
</TABLE>
The accompanying notes and schedule of segment information are an
integral part of these combined financial statements.
62
<PAGE> 64
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
COMBINED BALANCE SHEET
DECEMBER 31, 1994
(NOTES A, B AND M)
(THOUSANDS OF DOLLARS)
LIABILITIES AND STOCKHOLDERS' DEFICIT
<TABLE>
<S> <C>
Current Liabilities:
Short-term debt (Note F)...................................................... $ 27,000
Current maturities of long-term debt (Note F)................................. 150,102
Payables --
Trade...................................................................... 88,170
Affiliates................................................................. 28,906
Advances from affiliates (Note O).......................................... 143,936
Other...................................................................... 30,602
Transportation and exchange gas payable --
Affiliates................................................................. 17,375
Other...................................................................... 1,399
Accrued liabilities --
Federal income taxes....................................................... 10,594
Other taxes................................................................ 9,688
Interest................................................................... 28,422
Employee benefits (Note I)................................................. 24,664
Other...................................................................... 14,970
Other......................................................................... 16,738
-----------
Total current liabilities............................................. 592,566
-----------
Advances From Affiliates (Note O)............................................... 124,000
-----------
Long-Term Debt, less current maturities (Note F)................................ 894,896
-----------
Other Liabilities and Deferred Credits:
Accrued pension cost (Note I)................................................. 12,496
Payables to affiliates........................................................ 981
Other......................................................................... 35,898
-----------
Total other liabilities and deferred credits.......................... 49,375
-----------
Commitments and Contingencies (Notes D, E and F)
Convertible Preferred Stock -- non-redeemable (Note G).......................... 273,995
Less -- Issue expense......................................................... 8,673
-----------
265,322
-----------
Common Stockholders' Deficit:
Common stock $0.50 par value: authorized 150,000,000 shares; 41,431,419 shares
issued and outstanding..................................................... 20,716
Premium on capital stock and other paid-in capital............................ 507,448
Accumulated deficit........................................................... (1,584,473)
Less -- Treasury stock, at cost, 514,444 shares............................... 7,695
Restricted stock, 87,689 shares (Note H) --
Deferred compensation.................................................... 1,997
-----------
Total common stockholders' deficit.................................... (1,066,001)
-----------
$ 860,158
===========
</TABLE>
The accompanying notes and schedule of segment information are an
integral part of these combined financial statements.
63
<PAGE> 65
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
(NOTES A AND B)
(THOUSANDS OF DOLLARS)
<TABLE>
<S> <C>
Operating Revenues:
Natural gas sales and transportation........................................... $1,019,874
Coal sales..................................................................... 215,089
Other sales.................................................................... 58,227
----------
Total operating revenues............................................... 1,293,190
----------
Operating Costs and Expenses:
Cost of natural gas sales...................................................... 898,484
Cost of natural gas transportation............................................. 113,546
Cost of coal sales............................................................. 182,099
Cost of other sales............................................................ 24,532
Operation and maintenance...................................................... 2,331
Administrative and general..................................................... 43,833
Depreciation, depletion and amortization....................................... 30,431
Taxes -- other than income taxes............................................... 5,725
Provision for costs in excess of ceiling limitation (Note L)................... 45,000
Provision for asset impairments (Notes D, K and M)............................. 41,055
----------
Total operating costs and expenses..................................... 1,387,036
----------
Operating Loss................................................................... (93,846)
----------
Other (Income) and Other Deductions:
Interest expense:
Affiliates.................................................................. 16,544
Other....................................................................... 104,831
Interest income................................................................ (5,283)
Equity in earnings of unconsolidated affiliates (Note K)....................... (3,415)
Miscellaneous other (income) and deductions, net............................... 4,072
----------
Total other (income) and other deductions.............................. 116,749
----------
Loss Before Income Taxes......................................................... (210,595)
Benefit of Income Taxes (Note J)................................................. (79,217)
----------
Net Loss......................................................................... (131,378)
Dividends on Convertible Preferred Stock......................................... 22,904
----------
Common Stock Equity in Net Loss.................................................. $ (154,282)
==========
</TABLE>
The accompanying notes and schedule of segment information are an
integral part of these combined financial statements.
64
<PAGE> 66
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
COMBINED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1994
(NOTES A AND B)
(THOUSANDS OF DOLLARS)
<TABLE>
<S> <C>
Cash flows used in operating activities:
Net Loss....................................................................... $(131,378)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, depletion and amortization.................................... 34,269
Deferred income taxes (Note J).............................................. (27,768)
Equity in earnings of unconsolidated affiliates (Note K).................... (3,415)
Dividends and distributions from unconsolidated affiliates.................. 4,952
Tran$tock compensation expense (Note I)..................................... (76)
Provision for costs in excess of ceiling limitation (Note L)................ 45,000
Provision for asset impairments (Notes D, K and M).......................... 41,055
Changes in operating assets and liabilities:
Receivables............................................................... 11,753
Inventories............................................................... 5,326
Payables.................................................................. (31,492)
Transportation and exchange gas payable, net.............................. (16,650)
Accrued liabilities....................................................... 14,973
Other, net................................................................ 6,875
--------
Net cash used in operating activities.................................. (46,576)
--------
Cash flows used in financing activities (Notes F, G and H):
Repayment of advances from affiliates.......................................... (41,238)
Retirement of long-term debt................................................... (9,479)
Net increase in short-term debt................................................ 27,000
Dividends on common stock...................................................... (24,634)
Dividends on preferred stock................................................... (22,831)
Other, net..................................................................... (3,072)
--------
Net cash used in financing activities..................................... (74,254)
--------
Cash flows used in investing activities:
Property, plant and equipment and investment in unconsolidated affiliates...... (14,838)
Net proceeds from sales of assets.............................................. 9,282
Acquisition of companies....................................................... (12,500)
Other, net..................................................................... 6,614
--------
Net cash used in investing activities..................................... (11,442)
--------
Net decrease in cash and temporary cash investments............................ (132,272)
Cash and temporary cash investments at beginning of period..................... 162,102
--------
Cash and temporary cash investments at end of period........................... $ 29,830
========
Supplemental disclosures of cash flow information:
Cash paid (received) during the year for:
Interest (net of amount capitalized)........................................ $ 99,582
Income tax refunds, net..................................................... (37,321)
</TABLE>
The accompanying notes and schedule of segment information are an
integral part of these combined financial statements.
65
<PAGE> 67
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
COMBINED STATEMENT OF COMMON STOCKHOLDERS' DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 1994
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
SHARES AMOUNT
------ ----------
<S> <C> <C>
Common Stock:
Balance at beginning of period....................................... 41,387 $ 20,693
Issued under restricted stock plan................................ 44 23
------ -----------
Balance at end of period............................................. 41,431 20,716
======
-----------
Premium on Capital Stock and Other Paid-In Capital:
Balance at beginning of period....................................... 511,797
Redemption of 9.25% preferred stock............................... (1,140)
Challenger litigation settlement.................................. 7,108
Tran$tock market value adjustment................................. (11,570)
Issued under restricted stock plan................................ 771
Other............................................................. 482
-----------
Balance at end of period............................................. 507,448
-----------
Accumulated Deficit:
Balance at beginning of period....................................... (1,405,738)
Net loss.......................................................... (131,378)
Dividends on common stock at $0.60 per share...................... (24,453)
Dividends on convertible preferred stock at required amounts...... (22,904)
-----------
Balance at end of period............................................. (1,584,473)
-----------
Less Treasury Stock:
Balance at beginning of period....................................... 15 207
Forfeitures from restricted stock plan............................ 12 177
Issued under restricted stock plan................................ (28) (403)
Issued under stock option plan.................................... (15) (219)
Challenger litigation settlement.................................. 482 7,108
Other purchases and sales......................................... 48 825
------ -----------
Balance at end of period............................................. 514 7,695
======
-----------
Less Common Stock Held by Tran$tock:
Deferred compensation
Balance at beginning of period.................................... 317 14,395
Compensation expense............................................ (317) (2,825)
Market value adjustment......................................... -- (11,570)
------ -----------
Balance at end of period.......................................... -- --
======
-----------
Receivable from Tran$tock
Balance at beginning of period.................................... 207 9,383
Repayment....................................................... (207) (9,383)
------ -----------
Balance at end of period.......................................... -- --
======
-----------
Less Restricted Stock:
Deferred compensation
Balance at beginning of period.................................... 92 1,775
Awarded, earned or forfeited, net............................... 19 1,539
Compensation expense and market value adjustment................ (23) (1,317)
------ -----------
Balance at end of period.......................................... 88 1,997
======
-----------
Total Common Stockholders' Deficit..................................... $(1,066,001)
===========
</TABLE>
The accompanying notes and schedule of segment information are an
integral part of these combined financial statements.
66
<PAGE> 68
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
SCHEDULE OF SEGMENT INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1994
(NOTES A AND B)
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
GAS GAS
DESCRIPTION MARKETING COAL GATHERING OTHER ELIMINATIONS CONSOLIDATED
- ------------------------------------------------ --------- -------- --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Unaffiliated companies........................ $ 950,419 $215,089 $ 7,442 $ 25,423 $ -- $1,198,373
Affiliated companies.......................... 107,837 -- 173 66 (13,259) 94,817
--------- -------- --------- -------- ------------ ------------
Total revenues.......................... 1,058,256 215,089 7,615 25,489 (13,259) 1,293,190
--------- -------- --------- -------- ------------ ------------
Operating Costs and Expenses:
Cost of sales and transportation.............. 1,023,579 182,099 1,186 25,056 (13,259) 1,218,661
Depreciation, depletion and amortization...... 1,589 23,845 3,911 1,086 -- 30,431
Provision for asset impairments............... 18,394 -- 3,520 19,141 -- 41,055
Provision for costs in excess of ceiling
limitation.................................. -- -- -- 45,000 -- 45,000
Other operating costs and expenses............ 25,431 9,092 4,244 13,122 -- 51,889
--------- -------- --------- -------- ------------ ------------
Total operating costs and expenses...... 1,068,993 215,036 12,861 103,405 (13,259) 1,387,036
--------- -------- --------- -------- ------------ ------------
Operating Income (Loss)......................... $ (10,737) $ 53 $ (5,246) $(77,916) $ -- $ (93,846)
========= ======== ========= ======== =========== ===========
Equity in Earnings (Loss) of Unconsolidated
Affiliates.................................... $ (646) $ -- $ 414 $ 3,647 $ -- $ 3,415
========= ======== ========= ======== =========== ===========
Assets:
Identifiable assets at year-end............... $ 138,956 $299,363 $161,599 $177,836 $ -- $ 777,754
========= ======== ========= ======== ===========
Equity in net assets of unconsolidated
affiliates.................................. $ 11,296 $ -- $ 5,730 $ 1,576 $ -- 18,602
========= ======== ========= ======== ===========
Other corporate assets........................ 63,802
------------
Total Assets............................ $ 860,158
===========
Capital Expenditures, Acquisition of Companies
and Investment in Unconsolidated Affiliates... $ 910 $ 12,946 $ 37 $ 13,445 $ -- $ 27,338
========= ======== ========= ======== =========== ===========
</TABLE>
The accompanying notes to combined financial statements are an integral part of
this schedule.
67
<PAGE> 69
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS
A. ORGANIZATION AND CONTROL
BASIS OF PRESENTATION
Upon completion of The Williams Companies, Inc.'s (Williams) acquisition of
Transco Energy Company and subsidiaries (Transco), as discussed below, Transco
dividended Transcontinental Gas Pipe Line Corporation (TGPL) and Texas Gas
Transmission Corporation (Texas Gas) to Williams and Williams contributed the
remaining Transco operations (Transco's Contributed Assets) to Williams Holdings
of Delaware, Inc., a wholly-owned subsidiary of Williams. Transco's Contributed
Assets' operations primarily consist of natural gas and liquids marketing,
natural gas gathering and processing, coal mining and marketing and Transco's
coalbed methane investment. Certain of these assets are non-core assets which
Williams has sold or stated its intention to dispose of during 1995 (see Note
C). These combined financial statements represent the financial position,
results of operations and cash flows of Transco's Contributed Assets. As used
herein, the terms "Transco's Contributed Assets" or the "Company" refer to the
Transco assets contributed by Williams to Williams Holdings of Delaware.
Transco's Contributed Assets' combined financial statements have been
prepared on the historical cost basis and do not reflect any allocation of the
purchase price to the Company's assets that was recorded in 1995 by Williams as
a result of the acquisition discussed below.
WILLIAMS ACQUISITION OF TRANSCO ENERGY COMPANY
On December 12, 1994, Transco and Williams announced that they had entered
into a merger agreement (Merger Agreement) pursuant to which Williams agreed to
commence a cash tender offer to acquire up to 24.6 million shares, or
approximately 60%, of the outstanding shares of Transco common stock for $17.50
per share and common stock purchase right. The cash offer was then followed by a
stock merger (Merger) in which each share of Transco common stock not purchased
in the tender offer was exchanged for 0.625 share of Williams common stock and
0.3125 attached Williams preferred stock purchase right. Pursuant to the Merger
Agreement, on January 18, 1995, Williams accepted for payment 24.6 million
shares of Transco common stock for $17.50 per share. Also pursuant to the Merger
Agreement, shortly before Williams' acceptance for payment, all of the common
stock purchase rights attached to the Transco common shares were redeemed by
Transco for $0.05 per right (see Note H). The remainder of the outstanding
shares of Transco common stock were converted to Williams common stock on May 1,
1995, the effective date of the Merger.
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF COMBINATION
The combined financial statements include the accounts of Transco's
Contributed Assets. Intercompany sales are at market prices and all significant
intercompany accounts and transactions have been eliminated. The equity method
of accounting is used for investments in affiliates in which 50% or less of the
voting interest is owned.
DEPRECIATION, DEPLETION AND AMORTIZATION
Natural gas gathering and liquids separation and fractionation plant.
Depreciation of natural gas gathering facilities is based on the
units-of-production method over the estimated life of the reserves associated
with the facility or at straight-line rates over a 20 to 38-year life.
Depreciation of liquids separation and fractionation plant is primarily based on
the straight-line method over a 16 to 22-year life.
Coal properties. Mineral rights often are acquired through royalty
payments. Royalty payments representing prepayments recoupable against future
production are included in other assets in the accompanying Combined Balance
Sheet, with amounts expected to be recouped within one year classified as a
current asset.
68
<PAGE> 70
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
As mining occurs on these leases, the prepayment is amortized and included in
the cost of coal mined. Amounts determined to be nonrecoupable are charged to
expense.
Cost of coal lease rights, including costs related to the purchase of the
coal properties by Transco and mine development costs, are capitalized and
amortized by the units-of-production method over the estimated recoverable
reserves. Coal production machinery and equipment are depreciated principally by
the straight-line method over a three to five-year life.
Coalbed methane properties. As described in Note L, Transco's Contributed
Assets have an investment in a nonoperating interest in certain coalbed methane
properties. The properties are operated by TECO Coalbed Methane, Inc. (TECO).
All future development costs will be borne by TECO. Transco's Contributed
Assets' remaining investment will be amortized using the future gross revenue
method based on future revenues to be received through Transco's Contributed
Assets' nonoperating interest in the underlying proved coalbed methane
properties.
INCOME TAXES
Tax policy. Transco and its wholly-owned subsidiaries, including TGPL and
Texas Gas, file a consolidated federal income tax return. It is Transco's policy
to charge or credit each subsidiary with an amount equivalent to its federal
income tax expense or benefit computed as if each subsidiary had a separate
return, but including benefits from each subsidiary's losses and tax credits
that may be utilized only on a consolidated basis.
Accounting for income taxes. Transco's Contributed Assets use the liability
method of accounting for deferred taxes, which requires, among other things,
adjustments to the existing deferred tax balances for changes in tax rates,
whereby such balances will more closely approximate the actual taxes to be paid.
REVENUE RECOGNITION
The Company's subsidiaries recognize revenues for the sale of their
respective commodities in the period of delivery.
ALLOWANCES FOR DOUBTFUL RECEIVABLES
Due to its customer base, Transco's Contributed Assets have not
historically experienced recurring credit losses in connection with its
receivables. As a result, receivables determined to be uncollectible are
reserved or written off in the period of such determination. At December 31,
1994, Transco's Contributed Assets' allowance for doubtful accounts was $22.3
million, of which $17.2 million were receivables from Continental Energy
Associates Limited Partnership as discussed in Note D.
CASH FLOWS FROM OPERATING ACTIVITIES
Transco's Contributed Assets use the indirect method to report cash flows
from operating activities, which requires adjustments to net income to reconcile
to net cash flows provided by operating activities. The Company includes
short-term, highly-liquid investments that have a maturity of three months or
less as cash equivalents.
RESTRICTED DEPOSITS
At December 31, 1994, the Company had approximately $4 million of
restricted deposits that are included in the accompanying Combined Balance Sheet
in other current assets. These restricted deposits serve as collateral for
various standby letters of credit, regulatory trusts and legal proceedings.
69
<PAGE> 71
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
GAS IN STORAGE
The Company utilizes the last-in, first-out (LIFO) method of accounting for
inventory gas in storage. The current replacement cost of the inventory gas in
storage at December 31, 1994 was $6.1 million.
GAS IMBALANCES
The Company's gas marketing subsidiaries transport gas on various pipeline
systems, including TGPL and Texas Gas, which may deliver different quantities of
gas on behalf of the Company than the quantities of gas received from the
Company. These transactions result in gas transportation and exchange imbalance
receivables and payables which are recovered or repaid in cash or through the
receipt or delivery of gas in the future and are recorded in the accompanying
Combined Balance Sheet. Imbalances have become of greater significance to the
pipeline and gas marketing industries generally, since the implementation of
open access transportation by the FERC in 1985, as a result of the substantial
increase in the number of shippers on pipeline systems. Settlement of imbalances
requires agreement between the pipelines and shippers as to allocations of
volumes to specific transportation contracts and timing of delivery of gas based
on operational conditions. All imbalances have been classified as current assets
or current liabilities at December 31, 1994.
DERIVATIVE FINANCIAL INSTRUMENTS
The Company has been a party to interest rate swap agreements to manage
interest rate risks and is a party to various futures contracts and option and
commodity price swap agreements used to manage price volatility in its natural
gas and natural gas liquids marketing activities. See Note M for a discussion of
the Company's accounting policy for the recognition of gains and losses in
connection with these financial instruments.
C. SUBSEQUENT EVENT -- ACTIONS BY WILLIAMS SUBSEQUENT TO CONSUMMATION OF THE
MERGER
Transco's business strategy contemplated the continued operation of a
number of assets which Williams has identified as non-core assets. As a result
of Williams' business strategy, Williams has sold a significant portion of the
Company's coal operations and the Company's interests in the coalbed methane
properties and intends to sell during 1995 other operations of Transco's
Contributed Assets including certain gathering operations and other assets. In
connection with the allocation of the total purchase price of Transco, such non-
core assets were recorded by Williams at their estimated fair value, which is
below the historical cost basis of such assets recorded by Transco.
In connection with the merger, Williams made capital contributions to the
Company of approximately $1.7 billion that were primarily related to the
retirement of debt and preferred stock, termination of interest-rate swap
agreements, transfer of the Company's remaining debt (including all advances
payable to TGPL and Texas Gas) to Williams and the exchange of the Company's
$3.50 preferred stock for Williams $3.50 preferred stock (see Notes F and G.)
D. LEGAL PROCEEDINGS
Dakota Gasification litigation. In October 1990, Dakota Gasification
Company (Dakota), the owner of the Great Plains Coal Gasification Plant (Plant),
filed suit in the United States District Court in North Dakota against TGPL and
three other pipeline companies alleging that TGPL and the other pipeline
companies had not complied with their respective obligations under certain gas
purchase and gas transportation contracts. Specifically at issue is the proper
price to be paid by TGPL and the other pipelines for synthetic gas since August
1989, the proper rate to be charged by Dakota for transportation through the
Great Plains
70
<PAGE> 72
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
pipeline since October 1987, and the proper quantity of synthetic gas required
to be taken-or-paid for by TGPL and the other pipelines.
On September 8, 1992, Dakota and the United States Department of Justice on
behalf of the Department of Energy (DOJ) filed a Third Amended Complaint in the
U.S. District Court in North Dakota naming as defendants in the suit, in
addition to TGPL and the other pipelines, Transco and Transco Coal Gas Company,
the subsidiary of Transco that was the partner in Great Plains Gasification
Associates (Partnership), the partnership that originally constructed the Plant.
In addition, Dakota and DOJ named as defendants all of the other partners in the
Partnership and each of the parent companies of these entities. In the Third
Amended Complaint, Dakota and DOJ charged: (i) the pipeline defendants with
breach of contract for failure to pay for volumes of gas tendered but not taken,
for underpayment for gas purchased and for failure to pay for transportation
services; (ii) all defendants with breach of representations and warranties,
misrepresentation and breach of an implied covenant of good faith and fair
dealing; and (iii) all parent company defendants and the affiliated partner
defendants of each of the pipeline defendants with intentional interference with
contractual relations. Dakota and DOJ are seeking declaratory and injunctive
relief; the recovery of damages, alleging that the four pipeline defendants have
underpaid for gas, collectively, as of June 30, 1992, by more than $232 million
plus interest and for additional damages for transportation services; and costs
and expenses, including attorneys' fees. On October 30, 1992, Dakota invoiced
TGPL $70.5 million for "all synthetic gas costs" Dakota claims are due from
TGPL. Because the proper gas price under TGPL's gas purchase contract with
Dakota is derived from a formula involving the weighted average prices paid for
certain natural gas purchased by TGPL, and is further the average of each of
such prices calculated for each of the four pipeline purchasers, it is not
feasible at this time for TGPL to determine if it, in fact, has underpaid for
gas.
On March 30, 1994, the parties executed definitive agreements which would
settle the litigation subject to final non-appealable regulatory approvals. The
settlement is also subject to a FERC ruling that TGPL's existing authority to
recover in rates certain costs related to the purchase and transportation of gas
produced by Dakota will pertain to gas purchase and transportation costs TGPL
will pay Dakota under the terms of the settlement. On June 23, 1994, TGPL filed
a petition with the FERC seeking approval of the settlement provisions and the
contract amendment including pass-through of all costs to TGPL's customers. On
October 18, 1994, the FERC issued an order consolidating TGPL's petition with
the petitions filed by the other three pipeline companies and setting the matter
for hearing before an ALJ. The hearing will be limited to the issues of (i)
whether the revised agreements are prudent, and (ii) the level of Dakota costs
to be recovered in the proceeding. The FERC directed the ALJ to issue an initial
decision by December 31, 1995 in order that final FERC approval may take place
by December 31, 1996. On November 7, 1994, the ALJ convened a prehearing
conference and adopted a procedural schedule to govern the hearing. Under that
procedural schedule, the hearing is scheduled to commence on June 20, 1995. In
the event that the necessary regulatory approvals are not obtained, TGPL,
Transco and Transco Coal Gas Company intend to vigorously defend the suit.
Although no assurances can be given, TGPL and Transco believe that TGPL has
substantially complied with its obligation under the contracts with Dakota and
that Transco and Transco Coal Gas Company have not breached representations,
warranties or implied covenants and have not intentionally interfered with the
parties' contractual relations. Although no assurances can be given, Transco
does not believe that the ultimate resolution of this litigation, whether
settled or not, will have a material adverse effect on the Company's financial
position, results of operations or net cash flows.
Royalty claims. In connection with TGPL's renegotiations with producers to
resolve take-or-pay and other contract claims and to amend gas purchase
contracts, TGPL has entered into certain settlements which may require the
indemnification by TGPL of certain claims for additional royalties which the
producers may be required to pay as a result of such settlements. In October
1992, the United States Court of Appeals for the Fifth Circuit (Fifth Circuit
Court) and the Louisiana Supreme Court, with respect to the same litigation in
71
<PAGE> 73
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
applying Louisiana law, determined that royalties are due on take-or-pay
payments under the royalty clauses of the specific mineral leases reviewed by
the courts. Thereafter, the State Mineral Board of Louisiana passed a resolution
directing the state's lessees to pay to the state royalties on gas contract
settlement payments. As a result of these and related developments, TGPL has
been made aware of demands on producers for additional royalties and such
producers may receive other demands which could result in claims against TGPL
pursuant to the indemnification provisions in its settlements. Indemnification
for royalties will depend on, among other things, the specific lease provisions
between the producer and the lessor and the terms of the settlement between the
producer and TGPL.
In October 1991, a lawsuit was filed in the 32nd Judicial District Court
for the Parish of Terrebonne, State of Louisiana (Betty Duplantis Brown, et al
vs. Mobil Oil Exploration and Producing U.S. Inc., et al (Duplantis)), in which
royalty owners alleged that they were third party beneficiaries of the original
gas purchase contract between TGPL and the producers and that the settlement
agreement entered into between TGPL and such producers is not valid without the
royalty owners' consent. Additionally, in a separate lawsuit consolidated with
the Duplantis lawsuit, allegations were made that Transco Exploration Company
(TXC) and TXP Operating Company (TXPO) and other defendant-producers were
entitled to make claims for breach of gas purchase contracts but failed to
either make claims or receive compensation for such breaches. On October 6,
1994, all parties in the Duplantis lawsuit, including TXC and TXPO, reached a
settlement in principle, which closed on January 20, 1995. TXC and TXPO paid, in
total, approximately $2.5 million, which represents TXC and TXPO's portion of an
$8.4 million settlement to be paid by all of the defendant-producers. The
settlement also released TGPL from any liability to the plaintiffs and the
defendant-producers.
In December 1992, a lawsuit was filed in the United States District Court
for the Southern District of Texas (Vaquillas Ranch Company, Ltd., et al vs.
Texaco Exploration and Production, Inc. (Vaquillas Ranch)) in which royalty
owners have made allegations against the producer for breach of express
obligations under the leases; breach of the covenant to reasonably market gas;
breach of the covenant to reasonably develop; breach of the covenant to protect
against drainage; and failure to deal in good faith. In August 1993, a lawsuit
was filed in the United States District Court for the Southern District of Texas
(Floyd C. Billings, et al vs. Texaco Exploration and Production Inc., et al
(Billings)), in which the royalty owners' claims are virtually identical to the
ones made in the Vaquillas Ranch lawsuit. However, the royalty owners did not
claim that the producer breached any covenant to develop or protect against
drainage. In addition, in the Billings lawsuit the royalty owners have sued the
parent and an affiliate of the producer and TGPL for allegedly conspiring to
tortuously interfere with their lease. The producer defendants in each of the
Billings and Vaquillas Ranch lawsuits have cross-claimed against TGPL. While the
two complaints do not specify monetary damages, the royalty owners have verbally
alleged that their claims against the producers could approximate $100 million.
Both of the Vaquillas Ranch and the Billings lawsuits have been remanded to
state court. No trial dates have been set.
On July 5, 1994, the plaintiffs in the Vaquillas Ranch lawsuit filed a
separate lawsuit in the 111th Judicial District Court of Webb County, Texas
(Vaquillas Ranch Company, Ltd., et al vs. Transcontinental Gas Pipe Line
Corporation and Transco Gas Supply Company) in which the plaintiffs contend that
TGPL tortuously interfered with the plaintiffs' lease by inducing the producer
to enter into certain agreements that reduced TGPL's take-or-pay obligations and
the price TGPL was obligated to pay for the gas it purchased. The plaintiffs are
requesting an unspecified amount of actual and punitive damages for the alleged
tortuous interference. It is likely that this lawsuit will be consolidated with
the Vaquillas Ranch lawsuit that has been remanded to state court.
On January 14, 1994, a lawsuit was filed in the 4th Judicial District Court
of Rusk County, Texas (Marathon Oil Company vs. Transcontinental Gas Pipe Line
Corporation and Transco Energy Company (Marathon)) and, on March 15, 1994, a
lawsuit was filed in the 189th Judicial District Court of Harris County, Texas
(Texaco, Inc. vs. Transcontinental Gas Pipe Line Corporation (Texaco)). In the
Marathon
72
<PAGE> 74
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
and Texaco lawsuits, the respective plaintiffs each have made claims against
TGPL for reimbursements of settlement amounts paid to royalty owners. In the
Marathon and Texaco lawsuits, the respective plaintiffs seek to recover
approximately $3.6 million and approximately $14.7 million, respectively. In the
Marathon lawsuit, trial has been set for July 31, 1995.
Each of these lawsuits is in the discovery process. TGPL has denied
liability in the litigation and believes that it has meritorious defenses to the
claims which it intends to pursue vigorously. TGPL believes at this time that
its exposure, if any, under the provisions of its settlements with the producers
is substantially less than the amounts claimed by the royalty owners. TGPL has
not provided a reserve for these lawsuits. Although no assurances can be given,
Transco believes that the ultimate resolution of TGPL's royalty claims and
litigation will not have a material adverse effect on Transco's Contributed
Assets' financial position, results of operation or net cash flows.
Coal Litigation. In April 1985, a lawsuit was filed in the Clay Circuit
Court of the 41st Judicial Circuit of the Commonwealth of Kentucky (Spurlock,
Stewart, Allen, et. al. vs. Leeco, Inc.) in which the plaintiffs alleged
intentional trespass and the wrongful taking of coal from their property by
Leeco, Inc., a subsidiary of Transco Coal Company (TCC). In July 1992, the
Special Judge of the Clay Circuit Court awarded the plaintiffs approximately
$3.5 million in damages, with interest accruing post-judgment. Leeco appealed
the judgment, based on advice of counsel that the lower court had committed
reversible error. In September 1994, the Kentucky Court of Appeals affirmed the
earlier judgment for the plaintiffs, although the court remanded an award of
attorneys' fees for reconsideration by the trial court. In December 1994, the
parties entered into a settlement that resulted in Leeco recording a charge of
$4.0 million pretax, $2.6 million after-tax.
Continental Energy Associates. On November 14, 1994, Continental Energy
Associates Limited Partnership, a Massachusetts limited partnership (the
Partnership), filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy
Code with the United States Bankruptcy Court, Middle District of Pennsylvania
(the Bankruptcy Court). The Partnership owns a cogeneration facility in
Hazleton, Pennsylvania (the Facility).
Hazleton Fuel Management Company (HFMC), a subsidiary of Transco, supplies
natural gas and fuel oil to the Facility. As of December 31, 1994, it had
current outstanding receivables from the Partnership of approximately $17.2
million, for which Transco has established a reserve in the same amount.
The construction of the Facility was funded by several banks that have a
security interest in all of the Partnership's assets. HFMC has asserted to the
Bankruptcy Court that payment of its receivables are superior to the lien of the
banks and intends to vigorously pursue the collection of such amounts. The
Bankruptcy Court has authorized the prepayment to HFMC of all future gas
deliveries to the Facility subject to the Bankruptcy Court's review of the
prices of such gas deliveries. In February 1995, the Partnership filed a motion
requesting the Bankruptcy Court to reject the gas supply contract with HFMC. In
addition, in February 1995, the Bankruptcy Court appointed a "responsible
officer" to assume control of the Facility in place of the debtor.
Although no assurances can be given, Transco believes that the ultimate
resolution of the Partnership's reorganization proceeding will not have a
material adverse effect on Transco's Contributed Assets' financial position,
results of operations or net cash flows.
E. ENVIRONMENTAL MATTERS
Transco's Contributed Assets are subject to extensive federal, state and
local environmental laws and regulations which affect the Company's operations
related to the construction and operation of gas gathering facilities and coal
mining. Appropriate governmental authorities may enforce these laws and
regulations with a variety of civil and criminal enforcement measures, including
monetary penalties, assessment and remediation requirements and injunctions as
to future compliance. The Company's use and disposal of hazardous materials are
subject to the requirements of the federal Toxic Substances Control Act (TSCA),
the federal Resource
73
<PAGE> 75
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Conservation and Recovery Act (RCRA) and comparable state statutes. The
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA),
also known as "Superfund," imposes liability, without regard to the fault or the
legality of the original act, for release of a "hazardous substance" into the
environment. Because these laws and regulations change from time to time,
practices that have been acceptable to the industry and to the regulators have
to be changed and assessment and monitoring have to be undertaken to determine
whether those practices have damaged the environment and whether remediation is
required. Since 1989, the Company has had studies underway to test facilities
for the presence of toxic and hazardous substances to determine to what extent,
if any, remediation may be necessary. At December 31, 1994, the Company does not
believe that there is any significant remediation required related to Transco's
Contributed Assets.
TXC, for itself and as managing general partner of Transco Exploration
Partners, Ltd., has been named as a potentially responsible party (PRP) in three
Superfund sites and in two Louisiana state sites. Based on present volumetric
estimates, TXC's estimated exposure at three of the Superfund sites where it has
been named as a PRP is less than $400,000 and TXC's estimated individual
exposure at each of the two Louisiana state sites where they have been named as
a PRP is less than $100,000 per site. Liability under CERCLA (and applicable
state law) can be joint and several with other PRPs. Although volumetric
allocation is a factor in assessing liability, it is not necessarily
determinative; thus, the ultimate liability could be substantially greater than
the amounts described above. Although no assurances can be given, the Company
does not believe that the PRP status of TXC will have a material adverse effect
on Transco's Contributed Assets' financial position, results of operations or
net cash flows.
Magnolia Methane Corp. has been named as a PRP in one Superfund waste
disposal site and has negotiated a de minimis buyout for $11,000. Magnolia
Methane Corp. does not anticipate future exposure at this site to exceed
$100,000.
F. FINANCING
Long-term debt. At December 31, 1994, long-term debt issues were
outstanding as follows (in thousands):
<TABLE>
<S> <C>
Transco Energy Company:
Debentures:
9 7/8% due 2020..................................................... $ 125,000
----------
Notes:
9 1/2% due 1995..................................................... 150,000
9 1/8% due 1998..................................................... 200,000
11 1/4% due 1999.................................................... 300,000
9 5/8% due 2000..................................................... 125,000
9 3/8% due 2001..................................................... 150,000
----------
Total notes.................................................... 925,000
----------
Transco Coal Company:
Other due 1995-2000.................................................... 251
----------
Total long-term debt issues.................................... 1,050,251
Less:
Unamortized debt premium and discount.................................. 5,253
Current maturities..................................................... 150,102
----------
Total long-term debt, less current maturities.................. $ 894,896
==========
</TABLE>
74
<PAGE> 76
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Sinking fund or prepayment requirements for the years 1995 through 1999
applicable to long-term debt outstanding at December 31, 1994, are $150.1
million, $0.1 million, none, $200.0 million and $300.0 million, respectively.
No property is pledged as collateral under any of the long-term debt
issues.
Short-term debt. As of December 31, 1994, $27 million of short-term debt
was outstanding under Transco's Amended Bank Credit Facility. As of December 31,
1993, no short-term debt was outstanding. The weighted average interest rate on
short-term debt during 1994 was 8.9%.
Recapitalization. In connection with the Merger, in January 1995, the
Boards of Directors of Transco and Williams approved a proposed recapitalization
plan for Transco under which Williams will advance or contribute to Transco up
to an estimated $950 million to execute the proposed plan. The following actions
were completed in January and February 1995 in connection with the
recapitalization plan:
- Termination of Transco's Amended Bank Credit Facility dated December 31,
1993, and the repayment of the outstanding balance of $36 million,
replacing it with new credit agreements described below;
- Termination of Transco's interest rate swaps that had effectively
converted $450 million of fixed-rate debt into floating-rate debt; and
- Termination of Transco's Reimbursement Facility dated December 31, 1993,
replacing it with letters of credit obtained pursuant to a Standby Letter
of Credit Facility between First Interstate Bank of California and
Williams.
Transco's Amended Bank Credit Facility was replaced with a Credit Agreement
among Williams, Transco, and TCC (Credit Agreement). Under the Credit Agreement,
Williams may advance to Transco and TCC up to an aggregate of $950 million, not
exceeding $50 million to TCC. Interest on advances under the Credit Agreement is
paid at the London Interbank Offer Rate (LIBOR), which at December 31, 1994 was
5.94%, plus an applicable margin, which at December 31, 1994 was 0.625%.
In addition, the recapitalization plan includes a tender offer initiated by
Transco on February 10, 1995, to acquire any and all of its outstanding 11 1/4%
Notes due July 1, 1999. The offer expired on February 17, 1995. In February
1995, Transco acquired approximately $284 million, or 94%, of the 11 1/4% Notes.
The price paid for the 11 1/4% Notes tendered was computed using a yield to call
equal to a fixed spread of 30 basis points over the yield to maturity of the
U.S. Treasury Note due August 15, 1997, at the time the 11 1/4% Notes were
tendered. The remaining outstanding 11 1/4% Notes are first callable on July 1,
1997, at a price of 101.875%.
Restrictive covenants. As a result of the termination of the Amended Bank
Credit Facility and the Reimbursement Facility, as discussed above, the
restrictive covenants contained in those agreements were terminated. Prior to
the initiation of the tender offer for the 11 1/4% Notes discussed above,
holders of a majority in principal amount of the 11 1/4% Notes agreed to waive
certain provisions of the Indenture dated as of July 1, 1992 (Indenture), under
which the 11 1/4% Notes were issued, that restricted the disposition of certain
Transco assets. The holders of the majority in principal amount of the 11 1/4%
Notes also agreed to certain amendments to the Indenture that eliminated certain
restrictive covenants in the Indenture. The amendments eliminated the
restrictive covenants which limited, among other things, the incurrence of new
debt by Transco or its material subsidiaries (as defined) and Transco's ability
to make restricted payments, including dividends.
G. PREFERRED STOCK
Transco has authorized 15,000,000 shares of cumulative first preferred
stock and 2,000,000 shares of cumulative second preferred stock, both without
par value. There are two issues of cumulative first preferred
75
<PAGE> 77
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
stock outstanding at December 31, 1994, the $3.50 Series and the $4.75 Series.
None of the second preferred had been issued at December 31, 1994.
$4.75 Series. At December 31, 1994, 2,979,900 shares of Transco's $4.75
Series Cumulative Convertible Preferred Stock were issued and outstanding. The
$4.75 Series provides for no sinking fund or mandatory redemption and the stated
value is $50 per share. The $4.75 Series is convertible into common stock of
Transco, at the option of the holder at any time, at the conversion rate of
0.894 share of common stock for each share of preferred stock.
Transco has given notice to holders that it plans to redeem all of the
outstanding shares of the $4.75 Series. The redemption is to be effective March
20, 1995, at a redemption price of $50.475 per share plus accrued dividends.
$3.50 Series. In November 1993, Transco issued 2,500,000 shares of $3.50
Series Cumulative Convertible Preferred Stock, all of which were outstanding at
December 31, 1994. The $3.50 Series provides for no sinking fund or mandatory
redemption and the stated value is $50 per share. The $3.50 Series is
convertible into common stock of Transco, at the option of the holder at any
time, at the conversion rate of 2.5 shares of common stock for each share of
preferred stock.
Effective with the date of the Merger, each issued and outstanding share of
Transco's $3.50 Series will be converted into the right to receive one share of
preferred stock of Williams' which will be designated the Williams' $3.50 Series
Cumulative Convertible Preferred Stock. Each share of Williams' $3.50 Series
will be initially convertible into 1.5625 shares of Williams' common stock and
will have the designation, preferences and rights set forth in the Merger
Agreement. The conversion ratio of Williams' $3.50 Series into Williams' common
shares represents the conversion ratio of Transco $3.50 Series into Transco
common shares multiplied by 0.625, the conversion ratio of Transco common shares
into Williams' common shares.
In the event of a change in control of Transco (as defined in the
Certificate of Designation, Preferences and Rights), each holder of the stock
has the right, at the holder's option, to require Transco to redeem all or any
part of the holder's shares out of funds lawfully available unless such change
in control is approved by Transco's continuing directors. Holders do not have
such redemption rights in connection with the tender offer or the Merger which
was approved by Transco's Board of Directors.
H. COMMON STOCK
Merger Agreement. As discussed in Note A, Williams commenced a tender offer
which began on December 16, 1994 and expired on January 17, 1995. On January 18,
1995, Williams accepted for payment 24.6 million shares, or approximately 60%,
of Transco's common stock for $17.50 per share and common stock purchase right.
The remainder of the outstanding shares of Transco's common stock will be
converted into the right to receive 0.625 of a share of Williams' common stock
and 0.3125 attached Williams' preferred stock purchase rights for each share of
Transco's common stock.
Reserved shares. At December 31, 1994, there were 75,524,740 shares of
common stock of Transco reserved for issuance under various employee incentive
and benefit plans, for conversion of Transco's convertible securities and for
issuance in the event common stock purchase rights are exercised.
Challenger litigation settlement. In May 1992, TGPL and Challenger Minerals
Inc. entered into a Settlement Agreement to settle all matters in Challenger's
lawsuit. Part of the settlement included issuing Transco common stock with a
market value of $15 million to Challenger in 1994. TGPL had placed 1,500,000
shares of Transco common stock in escrow. In February 1994, 1,017,771 shares of
Transco common stock were released to Challenger from escrow, which was
determined by dividing $15 million by Transco's average stock price during
January 1994. The remainder of the shares were returned to Transco and recorded
as treasury shares.
76
<PAGE> 78
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Purchase rights. In January 1986, Transco declared a dividend distribution
of one common share purchase right on each outstanding share of common stock.
When exercisable, each right entitles its holder to buy one share of Transco's
common stock at a price of $150 per share. The rights become exercisable 10 days
after a person or group acquires 20% or more of Transco's voting stock or makes
an offer, the consummation of which would result in such person or group owning
30% or more of Transco's common stock. On January 17, 1995, prior to Williams'
acceptance for payment of 24.6 million shares, or 60%, of Transco's common stock
pursuant to its tender offer, Transco redeemed all of the outstanding common
stock purchase rights for $0.05 per right. Pursuant to the terms of the Merger
Agreement and the tender offer, all rights to the proceeds of such redemption
with respect to Transco's common stock and associated common stock purchase
rights accepted for payment pursuant to the tender offer were assigned to
Williams.
Incentive plans. A total of 3,250,000 shares of common stock has been
authorized for grants of stock options, awards of restricted stock and awards of
other stock compensation. Shares available for future grants at December 31,
1994 were 1,487,567.
Stock options. Stock options under Transco's stock option plans entitle
employees to purchase shares of common stock directly from Transco at the market
price of Transco's common stock on the date of grant. Each option becomes
exercisable in such amounts and at such intervals as the Compensation Committee
of the Board of Directors may determine in granting such option, but cannot be
exercisable until at least six months after the date of grant. The expiration
date of an option is determined by the Compensation Committee at the time of
grant, but cannot be later than 10 years from the date of grant. The following
table summarizes the activity that occurred in the plans during 1994 (in
thousands, except per share amounts):
<TABLE>
<CAPTION>
OPTION PRICE NUMBER OF
PER SHARES UNDER
SHARE RANGE OPTION
--------------- ------------
<S> <C> <C>
Balance at beginning of year............................. $ 13.125-56.375 2,454
Granted.................................................. 14.375-15.875 1,006
Exercised................................................ 13.125-14.625 (15)
Cancelled................................................ 13.125-53.000 (453)
------
Balance at end of year................................... 13.125-56.375 2,992
======
Total shares exercisable at year-end..................... 1,511
======
</TABLE>
As a result of the tender offer by Williams, certain unvested stock options
vested upon the completion of the tender offer. The remaining unvested options
will vest at the effective time of the Merger. If the stock options are not
exercised prior to or at the effective time, the options will be cancelled and
holders of the options will have the choice to receive an amount in cash to the
extent the option price is below $17.50, or to receive replacement options from
Williams.
Restricted stock. Awards of restricted shares of common stock to certain
employees are based on terms and conditions established by the Compensation
Committee of the Board of Directors, but cannot be exercisable until at least
six months after the date of grant. The restricted stock may not be sold,
exchanged, transferred or assigned or otherwise encumbered by the recipient
until the satisfaction of all of such terms and conditions set by the
Compensation Committee.
77
<PAGE> 79
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
The following table summarizes the activity in restricted stock shares
during 1994 (in thousands):
<TABLE>
<S> <C>
Balance at beginning of year................................... 168
Awarded........................................................ 73
Earned......................................................... (12)
Forfeited...................................................... (42)
---
Balance at end of year......................................... 187
===
</TABLE>
Of the 187,287 shares outstanding at December 31, 1994, 85,575 shares and
87,125 shares are applicable to performance measurement and vesting periods
ending during the years 1995 and 1996, respectively. In January 1995, 14,587
shares were earned that were applicable to the performance measurement period
ending December 31, 1994. Differences between the restricted stock share
balances above and the balances included in Common Stockholders' Deficit in the
accompanying Combined Balance Sheet reflect the proportional number of
restricted shares for which compensation expense has been recognized.
In conjunction with certain of the restricted stock shares described above,
restricted stock units were issued to holders of restricted stock. A restricted
stock unit represents one share of common stock to be issued in the future upon
the determination by the Compensation Committee that Transco and its
subsidiaries had achieved specified performance goals in excess of the goals set
for a corresponding grant of restricted stock. At December 31, 1994, 72,025
restricted stock units were outstanding.
As a result of the tender offer by Williams, the performance measurement
periods scheduled to end December 31, 1995 and 1996 ended one day prior to the
expiration of the tender offer. The number of shares of common stock earned and
issuable to employees for these performance measurement periods in exchange for
restricted stock and restricted stock units totaled 192,565 shares and were paid
in cash at a price of $17.50 per share during the first quarter of 1995. Under
the Merger Agreement, 18,650 shares of non-performance-based restricted stock
will become vested at the consummation of the Merger and will be converted into
the right to receive unrestricted shares of Williams' common stock based upon
the exchange rate in the Merger.
I. EMPLOYEE BENEFIT PLANS
Retirement plans. Substantially all of the Company's employees are covered
under a retirement plan offered by either Transco (Transco Retirement Plan) or
Transco Coal Company (TCC Retirement Plan). Additionally, substantially all of
TGPL's employees are covered under the Transco Retirement Plan.
The benefits under the Transco Retirement Plan are determined by a formula
based on the employee's highest 36 consecutive months of earnings out of the
last 60 months of service prior to actual retirement date and years of
participation in the plan. The TCC Retirement Plan benefit formula considers the
employee's earnings for the last 60 months of service. Both plans provide for
the vesting of employees after five years of credited service. Transco's funding
policy is to contribute an amount at least equal to the minimum funding
requirements actuarially determined by an independent actuary in accordance with
the Employee Retirement Income Security Act of 1974. The plans' assets, which
are managed by external investment organizations, include cash and cash
equivalents, corporate and government debt instruments, preferred and common
stocks, commingled funds, international equity funds and venture capital limited
partnership interests.
78
<PAGE> 80
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
The following table sets forth the funded status of the Transco and TCC
Retirement Plans at October 1, 1994 and the amount of accrued pension costs of
Transco's Contributed Assets and TGPL as of December 31, 1994 (in thousands).
The funded status and the amount of accrued pension costs, as set forth below,
include amounts related to TGPL due to these amounts not being readily separable
from Transco's Contributed Assets' amounts. At December 31, 1994, the Transco
and TCC Retirement Plans included approximately 4,880 participants, of which
approximately 2,825 were associated with TGPL.
<TABLE>
<S> <C>
Actuarial present value of accumulated benefit obligation, including
vested benefits of $113,398 at October 1, 1994....................... $ (130,482)
===========
Actuarial present value of projected benefit obligation................ $ (173,341)
Plan assets at fair value.............................................. 135,711
-----------
Projected benefit obligation in excess of plan assets.................. (37,630)
Unrecognized net loss.................................................. 14,057
Unrecognized net asset................................................. (5,249)
Unrecognized prior service cost........................................ (2,498)
Activity subsequent to measurement date................................ 2,504
-----------
Accrued pension cost................................................... $ (28,816)
===========
</TABLE>
The following table sets forth the components of pension cost for both
plans for the year ended December 31, 1994 (in thousands).
<TABLE>
<S> <C>
Service cost -- benefits earned during the period...................... $ 12,484
Interest cost on projected benefit obligation.......................... 17,822
Actual return on plan assets........................................... (6,662)
Net amortization and deferral.......................................... (17,343)
--------
Pension cost........................................................... $ 6,301
========
</TABLE>
The projected unit credit method is used to determine the actuarial present
value of the accumulated benefit obligation and the projected benefit
obligation. The various assumptions used to determine the projected benefit
obligation for the plans for 1994 were a discount rate of 7.5%, a rate of
increase in future compensation levels of 5.0% and an expected long-term rate of
return on assets of 10%. Pension costs are determined using the assumptions as
of the beginning of the year. The funded status is determined using the
assumptions as of the end of the year.
Tran$tock. In January 1987, the Board of Directors approved an employee
stock ownership plan called Tran$tock, which subsequently purchased 3,966,942
shares of newly issued Transco common stock at $45 3/8 per share. Tran$tock was
funded by a $180 million loan which was extinguished at year-end 1994. Tran$tock
used $120 million of the funds received from the restructuring of Transco's
retirement plan, tax-deductible dividends paid on the common stock held in the
plan and contributions by Transco to service the loan. The final allocation of
shares was made to eligible participants in January 1995.
Compensation expense of $7.7 million, related to Tran$tock has been
recognized in 1994. As a result of reductions in dividends on Transco's common
stock in 1987 and 1991, Transco was required to make tax-deductible
contributions to the plan to service interest and principal on the remaining
loan balance. Included in compensation expense related to Tran$tock in 1994 is
$7.5 million related to these contributions and $0.2 million in tax-deductible
dividends on unallocated, unleveraged Tran$tock shares.
Postretirement benefits other than pensions. Transco has two plans that
provide certain health care and life insurance benefits for retired employees of
Transco Coal Company (TCC Plan) and all other subsidiaries of the Company, and
TGPL (Transco Plan).
79
<PAGE> 81
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
The Transco Plan provides medical and life insurance benefits to the
Company's employees who retire under the Transco Retirement Plan with at least
ten years of participation in Transco's group insurance plans and the retirement
plan immediately preceding retirement. Effective January 1, 1994, the Transco
Plan was amended to require monthly contributions by retirees and to increase
annual deductibles, out-of-pocket limits and lifetime maximum benefits per
individual.
The TCC Plan provides medical and dental benefits to TCC employees who
retire under the TCC Retirement Plan with at least ten years of service and
ceases such coverage when retirees attain age 70. Life insurance benefits are
not provided to TCC retirees. The TCC Plan is contributory whereby TCC retirees
pay premiums to TCC to continue their benefits. Effective July 1, 1993, TCC
implemented annual deductibles
and out-of-pocket limits for retirees which were further increased effective
January 1, 1994.
The medical benefits for all retired Transco employees are currently funded
at a specified amount per month through a trust established under the provisions
of section 501(c)(9) of the Internal Revenue Code. The benefits for retired TCC
employees are currently funded on a pay-as-you-go basis.
The following table sets forth the plans' combined funded status at
December 31, 1994 reconciled with the accrued postretirement benefits of
Transco's Contributed Assets and TGPL as of December 31, 1994 (in thousands). At
December 31, 1994, the Transco and TCC Plans included 4,894 participants
associated with Transco's Contributed Assets and TGPL, of which 2,885
participants were associated with TGPL.
<TABLE>
<S> <C>
Accumulated postretirement benefit obligation:
Retirees............................................................. $ (65,185)
Fully eligible active plan participants.............................. (39,557)
Other active plan participants....................................... (14,986)
---------
(119,728)
Plans assets at fair value............................................. 32,372
---------
Accumulated postretirement benefit obligation in excess of plan
assets............................................................... (87,356)
Unrecognized net gain.................................................. (10,662)
Unrecognized transition obligation..................................... 99,222
---------
Prepaid postretirement benefit cost.................................... $ 1,204
=========
</TABLE>
The following table sets forth the components of the net periodic
postretirement benefit cost, for both postretirement benefit plans for the year
ended December 31, 1994 (in thousands).
<TABLE>
<S> <C>
Service cost -- benefits earned during the period...................... $ 3,131
Interest cost on accumulated postretirement benefit obligation......... 8,498
Actual return on plan assets........................................... (894)
Amortization of transition obligation.................................. 5,512
Net amortization and deferral.......................................... (526)
-------
Net periodic postretirement benefit cost............................... $ 15,721
=======
</TABLE>
The annual expense is subject to change in future periods as a result of,
among other things, the passage of time, changes in participants, changes in
plan benefits and changes in assumptions upon which the estimates are made.
For measurement purposes as of December 31, 1994, the initial annual rate
of increase in the per capita cost of covered health care benefits was assumed
to be 11.4%. The rate was assumed to decrease gradually to 6% for the year 2004
and remain at that level thereafter. The health care cost trend rate assumption
has a significant effect on the amounts reported. To illustrate, increasing the
assumed health care cost trend rate by
80
<PAGE> 82
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
one percentage point in each year would increase the accumulated postretirement
benefit obligation for health care benefits as of January 1, 1995 by 12% and the
aggregate of the service and interest cost components of the net periodic
postretirement health care benefit cost for 1995 by 14%.
To determine the accumulated postretirement benefit obligation, both plans
used a discount rate of 7.75% and a salary growth assumption of 5.0% per annum.
Plan assets are managed by external investment organizations and include cash
and cash equivalents, commingled funds, preferred and common stocks,
international equity funds and government and corporate debt instruments. The
expected long-term rate of return on plan assets was 7% after taxes. Realized
returns on plan assets are subject to federal income taxes at a sliding scale
that reaches a 39.6% tax rate.
J. INCOME TAXES
Following is a summary of the benefit of income taxes for 1994 (in
thousands):
<TABLE>
<S> <C>
Federal:
Current................................................................. $(49,068)
Deferred................................................................ (27,620)
--------
(76,688)
--------
State and municipal:
Current................................................................. (2,381)
Deferred................................................................ (148)
--------
(2,529)
--------
Benefit of income taxes................................................... $(79,217)
========
</TABLE>
Following is a reconciliation of the statutory federal income tax rate to
the effective tax rate for 1994 (in thousands):
<TABLE>
<CAPTION>
PERCENT OF
AMOUNT PRETAX INCOME
-------- -------------
<S> <C> <C>
Taxes computed by applying statutory rate.................... $(72,823) (35.0)%
Statutory depletion in excess of cost depletion on coal
properties................................................. (2,596) (1.2)
Other, net................................................... (1,269) (0.6)
-------- ------
Benefit of federal income taxes.............................. $(76,688) (36.8)%
======== ======
</TABLE>
81
<PAGE> 83
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Deferred income taxes result from temporary differences between the tax
basis of an asset or liability and its reported amount in the financial
statements that will result in taxable or deductible amounts in future years, or
temporary differences resulting from events that have been recognized in the
financial statements that will result in taxable or deductible amounts in future
years. The tax effect of each type of temporary difference and carryforward
reflected in deferred income tax benefits and liabilities as of December 31,
1994 are as follows (in thousands):
(ASSETS) LIABILITIES
<TABLE>
<S> <C>
Unused alternative minimum tax credits.................................... $(99,755)
Asset impairments expensed for financial purposes but deferred for tax
purposes................................................................ (14,369)
Oil and gas exploration and development costs expensed for financial
purposes but deferred for tax purposes, net............................. (13,936)
Depreciation differences on gas gathering and liquids separation and
fractionation plant, net................................................ 6,363
Depreciation, depletion and amortization differences related to coal
operations, net......................................................... 36,850
Differences between tax and book basis of partnership interests........... 15,566
Other, net................................................................ 5,384
--------
Net deferred income tax asset............................................. $(63,897)
========
</TABLE>
At December 31, 1994, Transco had, for federal income tax purposes,
estimated alternative minimum tax credits of $99.8 million with no expiration
date. These credits have been recognized for financial statement purposes.
K. INVESTMENT IN UNCONSOLIDATED AFFILIATES AND NOTES RECEIVABLE
Investment in unconsolidated affiliates. As of December 31, 1994, the
Company had investments consisting of a 50% or less ownership interest in
various companies that are constructing and operating natural gas gathering and
processing facilities, liquids separation facilities, intrastate pipelines
located onshore and offshore Texas and Louisiana and the Liberty Pipeline in the
states of New York and New Jersey; and providing compressed natural gas vehicle
fueling services in the states of California, Arizona, Nevada and Texas. Of the
net investments shown in the table below, $7 million are in partnerships in
which the Company is a general partner. The Company's credit risk exposure in
the event of nonperformance by the investees is the book value of the investment
and the obligations that may be incurred as a general partner. The remaining
investments are in joint ventures in which the Company's credit risk exposure in
the event of nonperformance by the investees is limited to the book value of the
investment. In the fourth quarter of 1994, a $4.2 million pretax charge was
recorded to establish a reserve for the Company's investment in the Liberty
Pipeline general partnership following the indefinite delay of the project. Also
in the fourth quarter of 1994, TXG Gas Marketing Company recorded a $3.5 million
pretax charge to establish a reserve for its investment in certain gas
processing facilities. In December 1994, the Company sold an indirect 12.5%
interest it held in its headquarters building through its investment in the Post
Oak/Alabama Partnership.
82
<PAGE> 84
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Following is a summary of the Company's net investment in unconsolidated
affiliates as of December 31, 1994 and equity on earnings (losses) for the year
ended December 31, 1994 (amounts in thousands):
<TABLE>
<CAPTION>
EQUITY IN
PERCENT NET EARNINGS
SEGMENT/INVESTMENT OWNERSHIP INVESTMENT (LOSSES)
------------------------------------------------------- --------- ---------- ---------
<S> <C> <C> <C>
Gas Marketing:
Cameron Meadows Processing Plant..................... 50.00% $ 9,624 $ (234)
Other................................................ various 1,672 (412)
------- ------
11,296 (646)
------- ------
Gas Gathering.......................................... various 5,730 414
------- ------
Other:
Liberty Pipeline Company............................. 36.21% -- 296
Post Oak/Alabama Partnership......................... 50.00% -- 3,521
Other................................................ various 1,576 (170)
------- ------
1,576 3,647
------- ------
Combined............................................... $ 18,602 $ 3,415
======= ======
</TABLE>
Notes Receivable. In connection with the sale of Petro Source Corporation
(Petro Source) in September 1988, the Company holds subordinated notes of $11
million due in 1998 from Petro Source Investments, Inc. Petro Source is based in
Texas and markets crude oil, natural gas liquids and petroleum products
throughout the Gulf Coast states, East Coast states and Nevada. These notes are
secured by the common stock of Petro Source.
In connection with the sale of Transco Exploration and Production Company
(TEPCO) in July 1992, the Company received an unsecured promissory note of $2
million due in 1997 from Forest Oil Corporation.
The Company's credit risk exposure in the event of nonperformance by the
borrowers is limited to the book value of the notes. The Company's policy for
collateral on these notes is to take a mortgage if the note is related to real
property or to take a security interest if the note is related to personal
property.
L. INVESTMENT IN NONOPERATING INTEREST IN COALBED METHANE PROPERTIES
In 1989, Transco began investing in certain coalbed methane properties in
the Black Warrior Basin in Alabama. The coalbed methane project has not
performed up to the original expectations and encountered costs that were higher
than originally anticipated. Transco, through its subsidiary Magnolia Methane
Corp. (Magnolia), assumed operatorship of the coalbed methane project in
February 1992. In order to eliminate the need for future capital investments by
Magnolia and to eliminate losses incurred in the operation of these properties,
in July 1993, Magnolia and TECO, a subsidiary of TECO Energy Inc., agreed to
transfer Magnolia's interest in 500 wells in the Black Warrior Basin of Alabama
to TECO. In exchange for the transfer of its interest, Magnolia received $15.5
million in cash plus future production payments based on various percentages of
net proceeds, as defined, generated from gas production from the properties and
tax credits under Section 29 of the Internal Revenue Code of 1986. The $15.5
million of proceeds were treated as a recovery of capitalized costs with no gain
or loss recognized.
Under the terms of the agreement, before Magnolia begins to receive
payments for its nonoperating interest, TECO is entitled to recover its initial
cash investment and a return thereon. Magnolia is entitled to receive production
payments until the termination date which is the earlier of (i) December 31,
2005, or (ii) such date as it is determined that 85% of the economically
recoverable reserves existing at July 1, 1993 have been recovered from the
transferred properties. As of December 31, 1994, Magnolia had not received any
payments pursuant to the agreement. Although all future development costs will
be borne by TECO, TECO is
83
<PAGE> 85
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
under no obligation to invest in or develop any gas production from the coalbed
methane properties. Magnolia has agreed to indemnify TECO from certain
liabilities (including environmental liabilities) relating to Magnolia's coalbed
methane properties. Transco has guaranteed performance of Magnolia's obligations
under the agreement and Transco Energy Marketing Company's (TEMCO) obligation to
purchase gas from certain of the coalbed methane properties.
At December 31, 1994, 500 wells had been drilled on the coalbed methane
properties transferred to TECO, of which 325 were completed and 139 were
producing gas at a combined rate of approximately 14 million cubic feet per day
(MMcf/d) (unaudited). Based on reserve engineering studies prepared by
independent petroleum engineers, the Company estimates that proved gas reserves
net to TECO and the Company's interest are approximately 74 billion cubic feet
(Bcf) as of January 1, 1995 (unaudited). There are significant uncertainties
inherent in estimating quantities of proved reserves and in projecting rates of
production and the timing and amount of future costs. Oil and gas reserve
engineering must be recognized as a subjective process of estimating underground
accumulations of oil and gas that cannot be measured in an exact way and
estimates of other engineers might differ materially from the estimate discussed
above. The accuracy of any reserve estimate is a function of the quality of
available data and of engineering and geological interpretation and judgment.
Results of drilling, testing and production subsequent to the date of the
estimate may justify revision of such estimate, and, as a general rule, reserve
estimates based upon volumetric analysis are inherently less reliable than those
based on lengthy production history. Accordingly, reserve estimates are often
different from the quantities of oil and gas that ultimately are recovered.
The Company's remaining investment is subject to a ceiling test that limits
the investment to the aggregate of the present value of future net revenues of
proved properties and the lower of cost or fair value of unproved properties.
The Company's ceiling test at December 31, 1994, was calculated using estimated
future production payments to be received from TECO based on year-end gas prices
and the total cost of proved and unproved properties. Based on that calculation,
in December 1994, the Company recorded a non-cash charge of $45.0 million, $29.3
million after-tax, to reduce the book value of its nonoperating interest in the
coalbed methane properties.
At December 31, 1994, the Company's investment in its nonoperating interest
in the coalbed methane properties totaled $86 million (after the effects of the
$45 million charge in 1994). The ultimate recovery of the Company's remaining
investment depends on production from the properties and future gas prices. The
Company cannot predict at this time the ultimate results of these operations or
the amounts of reserves that may ultimately be recoverable. If future
development operations do not result in establishing sufficient reserves to
recover the Company's remaining coalbed methane investment, or if other factors
cause the Company's evaluation of its investment to diminish, additional
reductions in the book value of the Company's investment would be required in
future periods through non-cash charges to earnings (see Note C).
At December 31, 1994, the Company's investment in the Magnolia Pipeline
totaled $67 million. The ultimate recovery of the Company's investment in the
Magnolia Pipeline is dependent on transportation of gas produced in the Black
Warrior Basin, including production from the properties transferred to TECO, as
well as transportation of gas from other sources (see Note C).
M. COMMITMENTS AND CONTINGENCIES
LEASE OBLIGATIONS
TGPL has a 20-year lease agreement with Transco Tower Limited, with annual
minimum lease payments of $27 million, for the Transco headquarters building
which expires in 2004. TGPL has an option to renew and extend the existing lease
term under the same provisions for three successive renewal terms of five years
each. TGPL's Transco Tower lease agreement covers substantially all space
occupied by Transco and its
84
<PAGE> 86
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
subsidiaries. The Company reimburses TGPL for its share of the building lease
expense. In 1994 Transco's Contributed Assets' share of TGPL's Transco Tower
lease was $1.6 million.
The Company's total combined lease expense was $4.5 million during 1994
which includes Transco's Contributed Assets' share of TGPL's Transco Tower lease
discussed above. The future minimum lease payments under the Company's various
operating leases are $1.1 million in 1995 and $0.7 million in 1996.
LONG-TERM GAS PURCHASE AND TRANSPORTATION CONTRACTS
At December 31, 1994, TEMCO had no minimum purchase commitments under
long-term gas purchase contracts with pricing provisions that are not variable
market based or at a significant premium to market prices.
TEMCO has entered into sales agreements with customers that provide for
above-spot-market gas sales prices and expects such sales agreements will be
adequate to permit TEMCO to recover its gas purchase costs. However, because
certain of its gas purchase contracts contain floor price provisions, a spot
market price environment of approximately $1.50 per MMbtu or less may expose
TEMCO to financial risks of not fully recovering its gas costs.
In addition, TEMCO is a party to firm transportation contracts with third
parties in which monthly demand charges are paid for pipeline capacity in order
to transport Canadian gas to markets in the United States. During 1994, TEMCO
substantially recovered the cost of its firm transportation capacity under those
contracts through various business alternatives. TEMCO's current annual
commitment for such firm transportation capacity is approximately $56 million
under contracts that substantially expire in 2002. To the extent TEMCO is unable
to continue to find business alternatives for potentially underutilized
transportation capacity or receive sales prices at or near its cost, Gas
Marketing's results of operations could be negatively impacted. However, TEMCO
believes that the aggregate cost of the firm transportation capacity will be
recovered and, therefore, will not have a material adverse effect on Transco's
Contributed Assets' financial position, results of operations or net cash flows.
The Company's basic business policy is to perform under the terms and
conditions of its contractual obligations. To achieve this objective, an
operating plan is utilized to monitor the current status of contractual
obligations under each gas purchase agreement, whereby the obligation-to-date is
matched against the performance-to-date. Any overperformance or underperformance
is corrected by appropriate adjustments to the operating plan over the remainder
of the period of the agreement. Deliverability tests, actual takes and prices
paid are some of the factors reviewed at least monthly, and in some cases
weekly, in order to ensure that performance is proceeding according to plan.
Since the Company has been and expects to continue to be able to perform in
accordance with its contract terms and expects to recover all material contract
costs from customers, no provision has been recorded for future loss. Although
no assurances can be given, the Company does not believe that financial risks
associated with its long-term gas purchase contracts will have a material
adverse effect on its financial position, results of operations or net cash
flows.
ROYALTY COMMITMENTS
TCC has various coal lease agreements which require minimum annual royalty
payments. Royalties on actual production from these leases are available to
offset the minimum annual obligation. These minimum royalties total $6.5
million, $7.2 million, $7.2 million, $6.9 million and $5.1 million for the years
1995 through 1999, respectively, and $23.6 million for all years thereafter.
WORKERS' COMPENSATION RESERVES
Coal mining subsidiary companies of TCC are liable under the Federal Coal
Mine Health and Safety Act of 1969, as amended, to pay pneumoconiosis (black
lung) benefits to eligible employees and former
85
<PAGE> 87
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
employees, and their dependents. The subsidiaries also are liable under various
state statutes for black lung and for other types of workers' compensation
claims (traumatic claims). A self-insurance program is maintained for all black
lung claims. Traumatic claims are self-insured up to certain limits and
independent insurance carriers cover those claims not self-insured.
SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK
Trade receivables. As of December 31, 1994, approximately $83 million or
85% of the Company's trade receivables was associated with the operations of the
Gas Marketing segment. These trade receivables primarily are due from local
distribution companies and other pipeline companies predominantly located in the
eastern and midwestern United States. Approximately $13 million or 13% of the
Company's trade receivables was associated with the operations of the Coal
segment and primarily is due from electric utilities and industrial customers
throughout the eastern United States. The Company's credit risk exposure in the
event of nonperformance by the other parties is limited to the face value of the
receivables. No collateral is required on these receivables. The Company has not
historically experienced significant credit losses in connection with its trade
receivables.
DERIVATIVE FINANCIAL INSTRUMENTS
Interest rate swap agreements. In July 1992 and January 1994, Transco
executed five-year interest rate swap agreements with a group of banks that
effectively converted $300 million and $150 million, respectively, of Transco's
fixed-rate debt into floating-rate debt. Under the swap agreements, Transco paid
a floating rate of interest based on the six-month LIBOR and the banks paid
Transco fixed rates of interest. The difference paid or received was charged or
credited to interest expense with a cumulative net pretax interest savings to
Transco of approximately $15 million through December 31, 1994. In conjunction
with the recapitalization plan and the Merger, these agreements were terminated
in January 1995 at a cost of approximately $29 million.
The nominal amounts at December 31, 1994 of each agreement and rates of
interest paid and received during the year ended December 31, 1994 were as
follows:
<TABLE>
<CAPTION>
NOMINAL AMOUNT RATES PAID RATES RECEIVED
---------------- ---------------- ----------------
<S> <C> <C>
$300,000,000 5.82% 6.37%
$150,000,000 4.31% 5.23%
</TABLE>
Other derivative financial instruments. The Company has been a party to
various futures contracts and option agreements traded on the New York
Mercantile Exchange and various option and commodity price swap agreements made
in the over-the-counter market (derivatives) in the management of price
volatility in its natural gas and natural gas liquids marketing activities. The
Company does not use derivatives for trading purposes. Derivatives designated as
hedges are carried at market value with gains and losses deferred until the
hedged marketing activity is included in current net income or loss. In
connection with open contracts on natural gas and natural gas liquids marketing
activity designated as hedges, the Company recorded a net deferred loss of
approximately $1.2 million at December 31, 1994, based on the market value of
the open contracts calculated using the applicable year-end closing prices. The
December 1994 open contracts are expected to be closed from January 1995 through
October 1998. As of December 31, 1994, open contracts on natural gas and natural
gas liquids activity had an absolute notional quantity of 56 Bcf and 132.6
million barrels, respectively. The total net cash flow requirement related to
these contracts at December 31, 1994 was $4.2 million.
The Company is exposed to market risk on these contracts to the extent of
changes in the market prices for natural gas and liquids between December 31,
1994, and the date the contracts are closed. However,
86
<PAGE> 88
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
market risk exposure on hedged transactions is offset by the gain or loss
recognized upon the sale of the products that are hedged. While market values
are used to express the amounts of derivatives, the amounts potentially subject
to credit risks, in the event of nonperformance by third parties, are
substantially smaller. The Company minimizes such risk exposure by limiting the
third parties to companies whose long-term credit ratings are at the minimum
investment grade, and, in the majority of cases, they possess at least a single
A Standard & Poor's Corporation designation. Therefore, the Company does not
expect to record any losses as a result of third party default.
RESERVE FOR ASSET IMPAIRMENTS
In addition to the asset impairments discussed in Notes D and K, in the
fourth quarter of 1994, the Gas Marketing segment recorded a $14.9 million
pretax charge to establish an impairment reserve for its investment in certain
gas processing facilities and a liquids pipeline and separation plant and the
Gas Gathering segment recorded a $3.5 million pretax charge to establish an
impairment reserve for its investment in certain gas gathering assets.
N. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount and estimated fair values of the Company's financial
instruments as of December 31, 1994 are as follows (in thousands):
<TABLE>
<CAPTION>
CARRYING AMOUNT FAIR VALUE
--------------- ----------
<S> <C> <C>
Financial assets:
Cash and short-term financial assets.................. $ 73,639 $ 73,639
Long-term notes receivable............................ 13,000 13,000
Receivables (derivatives)............................. 1,595 1,595
Financial liabilities:
Short-term financial liabilities...................... 408,968 407,271
Long-term debt, less current maturities............... 900,149 879,349
Payables (derivatives)................................ 2,767 33,420
</TABLE>
CASH AND SHORT-TERM FINANCIAL ASSETS AND LIABILITIES
For short-term instruments, the carrying amount is a reasonable estimate of
fair value due to the short maturity of those instruments. For current
maturities of long-term debt which is publicly traded, the estimated fair value
is based on quoted market prices at year end, less accrued interest.
LONG-TERM NOTES RECEIVABLE
The carrying amount for all long-term notes receivable is a reasonable
estimate of fair value since these notes earn an appropriate rate of interest
for the risk involved.
DERIVATIVE FINANCIAL INSTRUMENTS
The amounts shown as receivables and payables (derivatives) relate to the
Company's interest rate swaps and natural gas and natural gas liquids futures,
options and commodity price swaps.
The carrying amount of these derivatives approximates fair value for all
periods except for certain commodity price and interest rate swaps which are not
included in the accompanying Combined Balance Sheet as of December 31, 1994. The
estimated fair value of these derivative financial instruments is based on the
estimated consideration that would be received to terminate those agreements and
contracts in a gain position and the estimated cost that would be incurred to
terminate those agreements and contracts in a loss
87
<PAGE> 89
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
position. In conjunction with the recapitalization plan and the Merger,
discussed in Note F, the interest rate swap agreements were terminated in
January 1995 at a cost of approximately $29 million.
LONG-TERM DEBT
Effectively all of the Company's debt is publicly traded; therefore,
estimated fair value is based on quoted market prices at year end, less accrued
interest.
O. TRANSACTIONS WITH AFFILIATES
Natural gas sales revenues. Prior to 1993, TGPL and Texas Gas were
responsible for all jurisdictional gas sales to their pipeline customers and
TEMCO and TXG Gas Marketing Company were responsible for all non-jurisdictional
gas sales. After FERC approval in January 1993, Transco realigned its gas
marketing businesses under the common management of Transco Gas Marketing
Company (TGMC). These changes were needed to more closely coordinate gas
marketing operations to improve efficiencies, reduce costs and improve
profitability. During 1993, TGMC began to manage all jurisdictional merchant gas
sales of TGPL and Texas Gas. Under this agency agreement, TGMC bills TGPL and
Texas Gas for the cost of managing their merchant gas sales service and receives
all margins associated with such business. During 1994, TGMC received agency
fees of $26.3 million which has been included in Other Sales in the Combined
Statement of Operations.
Included in Transco's Contributed Assets' gas sales revenues for 1994 is
$93.6 million and $58.5 million for sales to TGPL and Texas Gas, respectively.
All gas sales are made at market or contract prices.
Cost of natural gas sales and transportation. Included in the Company's
costs of natural gas sales and transportation for 1994 is $45.1 million related
to gas purchases from and transportation services by Texas Gas and $209.4
million related to gas purchases from and transportation services by TGPL. All
gas purchases with affiliates are made at market or contract prices. The rates
charged to provide transportation services to affiliates are the same as those
that are charged to similarly-situated nonaffiliated customers.
Management services. Prior to the Merger, Transco had a policy of charging
subsidiary companies, including TGPL and Texas Gas, for management services
provided by the parent company and other affiliated companies. During 1994,
$22.3 million was charged to TGPL and Texas Gas for management services provided
by the Company. Management considers the cost of these services reasonable.
Advances from affiliates. For consolidated cash management purposes, TGPL
and Texas Gas have made interest-bearing advances to Transco and/or received
interest-bearing advances and capital contributions from Transco. The advances
are represented by demand notes. At December 31, 1994, Transco's Contributed
Assets had net advances payable to TGPL and Texas Gas of $266.2 million. These
advances which Transco's Contributed Assets expects to repay within the next
twelve months, have been reflected as current in the accompanying Combined
Balance Sheet. As general corporate policy, the interest rate on intercompany
demand notes is 1 1/2% below the prime rate of Citibank, N.A.
88
<PAGE> 90
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANT ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
(a) The financial statements and schedules listed in the accompanying index
to consolidated financial statements are filed as a part of this
Registration Statement.
(b) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------------------- ------------------------------------------------------------------------
<C> <S>
3.1 -- Certificate of Incorporation of the Company, as amended.
3.2 -- By-laws of the Company.
4.1 -- Form of Senior Debt Indenture.
4.2 -- Form of Subordinated Debt Indenture.
4.3 -- Form of Floating Rate Senior Note.
4.4 -- Form of Fixed Rate Senior Note.
4.5 -- Form of Floating Rate Subordinated Note.
4.6 -- Form of Fixed Rate Subordinated Note.
*4.7 -- U.S. $800,000,000 Credit Agreement, dated as of February 23, 1995,
among the Company and certain of its subsidiaries, and the lenders
named therein and Citibank, N.A., as agent (filed as Exhibit 4(d) to
the Williams Form 10-K for the year ended December 31, 1994).
*4.8 -- First Amendment, dated as of June 15, 1995, to Exhibit 4.9 above
(filed as Exhibit 4.9 to the Northwest Pipeline Corporation
Registration Statement on Form S-3 filed September 14, 1995).
12 -- Computation of Ratio of Earnings to Fixed Charges.
24.1 -- Power of Attorney.
24.2 -- Certified copy of resolution authorizing signatures pursuant to power
of attorney.
</TABLE>
- ---------------
* Such exhibit has heretofore been filed with the Securities and Exchange
Commission as part of the filing indicated and is incorporated herein by
reference.
89
<PAGE> 91
WILLIAMS HOLDINGS OF DELAWARE, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
ITEM 15(A)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
NOT COVERED BY REPORT OF INDEPENDENT AUDITORS:
WILLIAMS HOLDINGS OF DELAWARE, INC.
Unaudited Pro Forma Financial Statements......................................... 23
Unaudited Pro Forma Combined Statement of Income for the Year Ended December 31,
1994............................................................................ 24
Notes to Unaudited Pro Forma Combined Statement of Income for the Year Ended
December 31, 1994............................................................... 25
Unaudited Pro Forma Statement of Income for the Six Months Ended June 30, 1995... 26
Notes to Unaudited Pro Forma Statement of Income for the Six Months Ended June
30, 1995........................................................................ 27
Unaudited Consolidated Statement of Income for the Six Months Ended
June 30, 1995 and 1994......................................................... 28
Unaudited Consolidated Balance Sheet at June 30, 1995 and December 31, 1994...... 29
Unaudited Consolidated Statement of Cash Flows for the Six Months Ended
June 30, 1995 and 1994......................................................... 30
Notes to Unaudited Consolidated Financial Statements -- June 30, 1995 and 1994... 31
Quarterly Financial Data (unaudited).............................................
COVERED BY REPORT OF INDEPENDENT AUDITORS:
WILLIAMS HOLDINGS OF DELAWARE, INC.
Consolidated Statement of Income for the Years Ended December 31, 1994, 1993 and
1992............................................................................ 38
Consolidated Balance Sheet at December 31, 1994 and 1993......................... 39
Consolidated Statement of Stockholder's Equity for the Years Ended
December 31, 1994, 1993 and 1992............................................... 40
Consolidated Statement of Cash Flows for the Year Ended December 31, 1994, 1993
and 1992........................................................................ 41
Notes to Audited Consolidated Financial Statements............................... 42
Schedule for the Three Years Ended December 31, 1994
II -- Valuation and Qualifying Accounts........................................
TRANSCO ENERGY COMPANY -- CONTRIBUTED ASSETS COMBINED FINANCIAL STATEMENTS*
Combined Balance Sheet at December 31, 1994...................................... 61
Combined Statement of Operations for the Year Ended December 31, 1994............ 63
Combined Statement of Cash Flows for the Year Ended December 31, 1994............ 64
Combined Statement of Common Stockholders' Deficit for the Year Ended December
31, 1994........................................................................ 65
Schedule of Segment Information for the Year Ended December 31, 1994............. 66
Notes to Combined Financial Statements........................................... 67
</TABLE>
- ---------------
* These financial statements are presented in accordance with Rule 3-05 of
Regulation S-X.
All other schedules have been omitted since the required information is
not present or is not present in amounts sufficient to require submission of
the schedule, or because the information required is included in the financial
statements and notes thereto.
90
<PAGE> 92
WILLIAMS HOLDINGS OF DELAWARE, INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS(A)
<TABLE>
<CAPTION>
ADDITIONS
-------------------
CHARGED
TO COSTS
BEGINNING AND ENDING
BALANCE EXPENSES OTHER DEDUCTIONS(B) BALANCE
--------- -------- ----- ------------- -------
(MILLIONS)
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts:
1994..................................... $ 9.4 $ 4.0(c) $ -- $ 6.2(d) $ 7.2
1993..................................... 15.5 .3(e) -- 6.4 9.4
1992..................................... 9.2 16.5 -- 10.2 15.5
</TABLE>
- ---------------
(a) Deducted from related assets.
(b) Represents balances written off, net of recoveries and reclassifications.
(c) Excludes $5.7 million related to discontinued operations.
(d) Includes the discontinued operations beginning balance reclassification of
$3.6 million.
(e) Includes $4.1 million reversal of amounts previously accrued.
91
<PAGE> 93
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
WILLIAMS HOLDINGS OF DELAWARE, INC.
By /s/ DAVID M. HIGBEE
David M. Higbee
Secretary
Dated: October 18, 1995
92
<PAGE> 94
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ---------- --------------------------------------------------------------------------------------
<C> <S> <C>
3.1 -- Certificate of Incorporation of the Company, as amended.
3.2 -- By-laws of the Company.
4.1 -- Form of Senior Debt Indenture.
4.2 -- Form of Subordinated Debt Indenture.
4.3 -- Form of Floating Rate Senior Note.
4.4 -- Form of Fixed Rate Senior Note.
4.5 -- Form of Floating Rate Subordinated Note.
4.6 -- Form of Fixed Rate Subordinated Note.
*4.7 -- U.S. $800,000,000 Credit Agreement, dated as of February 23, 1995,
among the Company and certain of its subsidiaries, and the lenders
named therein and Citibank, N.A., as agent (filed as Exhibit 4(d) to
the Williams Form 10-K for the year ended December 31, 1994).
*4.8 -- First Amendment, dated as of June 15, 1995, to Exhibit 4.9 above (filed
as Exhibit 4.9 to the Northwest Pipeline Corporation Registration
Statement on Form S-3 filed September 14, 1995).
12 -- Computation of Ratio of Earnings to Fixed Charges.
24.1 -- Power of Attorney.
24.2 -- Certified copy of resolution authorizing signatures pursuant to power
of attorney.
</TABLE>
- ---------------
* Such exhibit has heretofore been filed with the Securities and Exchange
Commission as part of the filing indicated and is incorporated herein by
reference.
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
* * * * *
WTG HOLDINGS, INC., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware, DOES
HEREBY CERTIFY:
FIRST: That the Board of Directors of said Corporation, by
unanimous written consent dated March 13, 1995, adopted a resolution proposing
and declaring advisable the following amendment to the Certificate of
Incorporation of said Corporation:
RESOLVED that the Certificate of
Incorporation of WTG HOLDINGS, INC. be amended by changing the
First Article thereof so that, as amended, said Article shall
be and read as follows:
"FIRST: The name of the Corporation is:
WILLIAMS HOLDINGS OF DELAWARE, INC."
SECOND: That in lieu of a meeting and vote of stockholders,
the sole stockholder has given unanimous written consent to said amendment in
accordance with the provisions of section 228 of the General Corporation Law of
the State of Delaware.
<PAGE> 2
Page 2
THIRD: That the aforesaid amendment was duly adopted in
accordance with the applicable provisions of sections 242 and 228 of the
General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said WTG HOLDINGS, INC. has caused this
certificate to be signed by Jack D. McCarthy, its Senior Vice President, and
attested by David M. Higbee, its Secretary, this 13th of March, 1995.
WTG HOLDINGS, INC.
By: /s/ JACK D. MCCARTHY
------------------------------
Jack D. McCarthy
Senior Vice President
ATTEST:
By: /s/ DAVID M. HIGBEE
------------------------------
David M. Higbee
Secretary
<PAGE> 3
CERTIFICATE OF INCORPORATION
OF
WTG HOLDINGS, INC.
FIRST: The name of the Company is:
WTG HOLDINGS, INC.
SECOND: Its registered office in the State of Delaware is to be
located at 1209 Orange Street, City of Wilmington, State of Delaware, County of
New Castle, and the name and address of its registered agent is The Corporation
Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware 19801.
THIRD: The nature of the business and the objects and purposes
proposed to be transacted, promoted and carried on, are to engage in any lawful
acts or activities for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The total number of shares of Common Stock which the Company
shall have authority to issue is 1,000 shares, all of which shall be with a par
value of one dollar ($1.00) per share.
FIFTH: The name and mailing address of the incorporator is:
NAME MAILING ADDRESS
---- ---------------
Bob F. McCoy One Williams Center
Tulsa, OK 74172
SIXTH: Upon the filing of the Certificate of Incorporation, the
authority of the incorporator shall terminate and the following named
individuals, whose mailing addresses are set out beside their names, shall
serve as directors until the first Annual Meeting of Stockholders or until
their successors are elected and qualified:
NAME MAILING ADDRESS
---- ---------------
Keith E. Bailey One Williams Center
Tulsa, OK 74172
John C. Bumgarner, Jr. One Williams Center
Tulsa, OK 74172
Roy A. Wilkens One Williams Center
Tulsa, OK 74172
SEVENTH: The following provisions are inserted for the
management of the business and for the conduct of the affairs of the Company
and for defining and regulating the powers of the Company and its directors and
stockholders:
<PAGE> 4
Page 2
1. The private property of the stockholders of the Company shall
not be subject to the payment of corporate debts to any extent whatsoever.
2. The first meeting of the stockholders for the election of
directors shall be held in Tulsa, Oklahoma, at the office of the Company, on
July 5, 1995, or at such other time and place as may be designated by the Board
of Directors, and thereafter the directors shall be elected at the time and
place named in the By-laws of the Company.
3. Written ballots shall not be required for the election of
directors of the Company.
4. The Board of Directors shall have the power to make, alter or
repeal By-laws of the Company.
5. The By-laws of the Company may fix or provide the manner of
fixing and altering the number of directors constituting the Board of
Directors, provided that such number shall not be less than three.
6. To the fullest extent permitted by the General Corporation Law
of the State of Delaware, as the same exists or may hereafter be amended, a
director of the Company shall not be liable to the Company or its stockholders
for monetary damages for breach of such director's fiduciary duty as a
director.
IN WITNESS WHEREOF, I, the undersigned, being the incorporator of the
Company hereinbefore named, do certify that the facts herein stated are true,
that the execution of this instrument is my act and deed, and that I
accordingly have hereunto set my hand this 21st day of July, 1994.
/s/ BOB F. MCCOY
-----------------------------------
Bob F. McCoy
<PAGE> 1
EXHIBIT 3.2
BY-LAWS
OF
WILLIAMS HOLDINGS OF DELAWARE, INC.
ARTICLE I
STOCKHOLDERS
Section 1.1. Annual Meetings. The Annual Meeting of
Stockholders shall be held for the election of Directors on the first Tuesday
in July in each year, beginning with the year 1995, if such day be not a legal
holiday in the state where such meeting is to be held, or, if a legal holiday,
then at the same time on the next succeeding business day at the principal
office of the Corporation in the State of Delaware or at such other place
either within or without the State of Delaware as may be designated by the
Board of Directors from time to time. Any proper business may be transacted at
the Annual Meeting.
Section 1.2. Special Meetings. Special meetings of
stockholders, to be held at the principal office of the Corporation in the
State of Delaware or at such other place within or without the State of
Delaware and at such date and time as may be stated in the notice of the
meeting, and for any purpose or purposes, unless otherwise prescribed by
statute, may be called by the Board of Directors or by the Chairman of the
Board or by the President, and shall be called by the President or the
Secretary at the request in writing of stockholders owning a majority of the
issued and outstanding shares of capital stock of the Corporation of the class
or classes which would be entitled to vote on the matter or matters proposed to
be acted upon at such special meeting of stockholders. Any such request shall
state the purpose or purposes of the proposed meeting.
Section 1.3. Notices of Meetings. Whenever stock-holders
are required or permitted to take any action at a meeting, except as provided
by Section 7.3 hereof, a written notice of the meeting shall be given which
shall state the place, date and hour of the meeting, and, in the case of a
special meeting, the purpose or purposes for which the meeting is called.
Unless otherwise provided by law, the written notice of any meeting shall be
given not less than ten nor more than sixty days before the date of the meeting
to each stockholder entitled to vote at such meeting. If mailed, such notice
shall be deemed to be given when deposited in the United States mail, postage
prepaid, directed to the stockholder at his address as it appears on the
records of the Corporation.
Section 1.4. Adjournments. Any meeting of stock-holders,
annual or special, may adjourn from time to time to reconvene at the same or
some other place, and notice need not be given of any such adjourned meeting if
the time and place thereof are announced at the meeting at which the
adjournment is taken. At the adjourned meeting, the Corporation may transact
any business
<PAGE> 2
which might have been transacted at the original meeting. If the adjournment
is for more than thirty days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
Section 1.5. Quorum. At any meeting of stockholders,
except where otherwise provided by law or the Certificate of Incorporation or
these By-laws, the holders of a majority of the outstanding shares of each
class of stock entitled to vote at the meeting, present in person or
represented by proxy, shall constitute a quorum. For purposes of the
foregoing, two or more classes or series of stock shall be considered a single
class if the holders thereof are entitled to vote together as a single class at
the meeting. In the absence of a quorum the stockholders so present may, by
majority vote, adjourn the meeting from time to time in the manner provided by
Section 1.4 of these By-laws until a quorum shall attend. Shares of its own
capital stock belonging on the record date for the meeting to the Corporation
or to another corporation, if a majority of the shares entitled to vote in the
election of directors of such other corporation is held, directly or
indirectly, by the Corporation, shall neither be entitled to vote nor be
counted for quorum purposes; provided, however, that the foregoing shall not
limit the right of the Corporation to vote stock, including but not limited to
its own stock, held by it in a fiduciary capacity.
Section 1.6. Organization. Meetings of stockholders shall
be presided over by the Chairman of the Board, or in his absence by the
President, or in his absence by a Vice President, or in the absence of the
foregoing persons by a chairman designated by the Board of Directors, or in the
absence of such designation by a chairman chosen at the meeting. The Secretary
shall act as secretary of the meeting, but in his absence the chairman of the
meeting may appoint any person to act as secretary of the meeting.
Section 1.7. Voting; Proxies. Unless otherwise provided
in the Certificate of Incorporation, each stockholder entitled to vote at any
meeting of stockholders shall be entitled to one vote for each share of stock
held by him which has voting power upon the matter in question. Each
stockholder entitled to vote at a meeting of stockholders or to express consent
or dissent to corporate action in writing without a meeting may authorize
another person or persons to act for him by proxy, but no such proxy shall be
voted or acted upon after three years from its date, unless the proxy provides
for a longer period. A duly executed proxy shall be irrevocable if it states
that it is irrevocable and if, and only as long as, it is coupled with an
interest sufficient in law to support an irrevocable power. A stockholder may
revoke any proxy which is not irrevocable by attending the meeting and voting
in person or by filing an instrument in writing revoking the proxy or another
duly executed proxy bearing a later date with the Secretary of the Corporation.
The vote for Directors and, upon the demand of any stockholder, the vote upon
any question before the meeting shall be by written ballot. All elections
shall be had and
-2-
<PAGE> 3
all questions decided, unless otherwise provided by law, the Certificate of
Incorporation or these By-laws, by a plurality vote.
Section 1.8. Fixing Date for Determination of
Stock-holders of Record. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a record
date, which shall not be more than sixty nor less than ten days before the date
of such meeting, nor more than sixty days prior to any other action. If no
record date is fixed: (1) the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given,
or, if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held; (2) the record date for determining
stockholders entitled to express consent to corporate action in writing without
a meeting, when no prior action by the Board is necessary, shall be on the day
on which the first written consent is expressed; and (3) the record date for
determining stockholders for any other purpose shall be at the close of
business on the day on which the Board adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board may fix a new record date for the adjourned
meeting.
Section 1.9. List of Stockholders Entitled to Vote. The
Secretary shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place
of the meeting during the whole time thereof and may be inspected by any
stockholder who is present.
ARTICLE II
BOARD OF DIRECTORS
Section 2.1. Powers; Numbers; Qualifications. The
business and affairs of the Corporation shall be managed by the
-3-
<PAGE> 4
Board of Directors, except as may be otherwise provided by law or in the
Certificate of Incorporation. The number of Directors constituting the whole
Board shall be not more than fifteen nor less than three. The authorized
number of Directors within the limits above specified shall be determined by
resolution of the Board of Directors.
Section 2.2. Election; Term of Office; Resignation;
Vacancies. Each Director shall hold office until the Annual Meeting of
Stockholders next succeeding his election and until his successor is elected
and qualified or until his earlier resignation or removal. Any Director may
resign at any time upon written notice to the Board of Directors or to the
President or the Secretary of the Corporation. Such resignation shall take
effect at the time specified therein, and unless otherwise specified therein,
no acceptance of such resignation shall be necessary to make it effective.
Unless otherwise provided in the Certificate of Incorporation or these By-laws,
vacancies and newly created directorships resulting from any increase in the
authorized number of Directors or from any other cause may be filled by a
majority of the Directors then in office, although less than a quorum.
Section 2.3. Regular Meetings. Regular meetings of the
Board of Directors may be held at such places within or without the State of
Delaware and at such times as the Board may from time to time determine, and if
so determined, notice thereof need not be given.
Section 2.4. Special Meetings. Special meetings of the
Board of Directors may be held at any time or place within or without the State
of Delaware whenever called by the Chairman of the Board or the President or a
majority of the Directors then in office. Reasonable notice thereof shall be
given by the person or persons calling the meeting.
Section 2.5. Telephonic Meetings Permitted. Unless
otherwise restricted by the Certificate of Incorporation or these By-laws,
members of the Board of Directors, or any committee designated by the Board,
may participate in a meeting of the Board or of such committee, as the case may
be, by means of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant to this By-law shall constitute
presence in person at such meeting.
Section 2.6. Quorum; Vote Required for Action. At all
meetings of the Board of Directors, Directors constituting a majority of the
entire Board shall constitute a quorum for the transaction of business. The
vote of a majority of the Directors present at a meeting at which a quorum is
present shall be the act of the Board unless the Certificate of Incorporation
or these By-laws shall require a vote of a greater number. In case at any
meeting of the Board a quorum shall not be present, the members of the Board
present may adjourn the meeting from time to time until a quorum shall attend.
-4-
<PAGE> 5
Section 2.7. Organization. Meetings of the Board of
Directors shall be presided over by the Chairman of the Board, or in his
absence by the President, or in their absence by a chairman chosen at the
meeting. The Secretary shall act as secretary of the meeting, but in his
absence the chairman of the meeting may appoint any person to act as secretary
of the meeting.
Section 2.8. Informal Action by Directors. Any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board or of such committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
or committee.
ARTICLE III
COMMITTEES
Section 3.1. Committees of the Board. The Board of
Directors may, by resolution passed by a majority of the entire Board,
designate one or more committees, each committee to consist of one or more of
the Directors. The Board may designate one or more Directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. Vacancies in any such committee shall be filled
by the Board, but in the absence or disqualification of a member of such
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board to act at the meeting in place
of any such absent or disqualified member. Any such committee, to the extent
provided in the resolution of the Board, shall have and may exercise all the
powers and authority of the Board in the management of the business and affairs
of the Corporation, and may authorize the seal of the Corporation to be affixed
to all papers which may require it; but no such committee shall have power or
authority in reference to amending the Certificate of Incorporation, adopting
an agreement of merger or consolidation, recommending to the stockholders the
sale, lease or exchange of all or substantially all of the Corporation's
property and assets, recommending to the stockholders a dissolution of the
Corporation or a revocation of dissolution, indemnifying Directors or amending
these By-laws; and, unless the resolution expressly so provides, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock.
Section 3.2. Committee Rules. Unless the Board of
Directors otherwise provides, each committee designated by the Board may make,
alter and repeal rules for the conduct of its business. In the absence of a
provision by the Board or a provision in the rules of such committee to the
contrary, a majority of the entire authorized number of members of such
committee shall constitute a quorum for the transaction of
-5-
<PAGE> 6
business, the vote of a majority of the members present at a meeting at the
time of such if a quorum is then present shall be the act of such committee,
and in other respects such committee shall conduct its business in the same
manner as the Board conducts its business pursuant to Article II of these
By-laws.
ARTICLE IV
OFFICERS
Section 4.1. General. The officers of the Corporation
shall be elected by the Board of Directors and shall be a Chairman of the Board
of Directors, a President and one or more Vice Presidents, a Secretary, a
Treasurer and such other officers as the Board of Directors may from time to
time elect. Any number of offices may be held by the same person, unless
otherwise prohibited by law, the Certificate of Incorporation or these By-laws.
The officers of the Corporation need not be stockholders of the Corporation
nor, except in the case of the Chairman of the Board of Directors, need such
officers be Directors of the Corporation.
Section 4.2. Election. The Board of Directors shall elect
the officers of the Corporation who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined from
time to time by the Board of Directors; and all officers of the Corporation
shall hold office until their successors are chosen and qualified, or until
their death, resignation or removal. Any officer elected by the Board of
Directors may be removed at any time by the affirmative vote of a majority of
the Board of Directors. Any vacancy occurring in any office of the Corporation
shall be filled by the Board of Directors.
Section 4.3. Chairman of the Board of Directors. The
Chairman of the Board of Directors shall direct the policy of the Corporation,
subject, however, to the control of the Board of Directors and of any duly
authorized committee of Directors. The Chairman shall, if present, preside at
all meetings of the Board of Directors and of the stockholders. The Chairman
may, with the Treasurer or the Secretary, or an Assistant Treasurer or an
Assistant Secretary, sign certificates for stock of the Corporation. The
Chairman may sign and execute in the name of the Corporation deeds, mortgages,
bonds, contracts and other instruments, except in cases where the signing and
execution thereof shall be expressly delegated by the Board of Directors or by
a duly authorized committee of Directors, or by these By-laws to some other
officer or agent of the Corporation, or shall be required by law otherwise to
be signed or executed. The Chairman shall have the power to appoint, determine
the duties and fix the compensation of such agents and employees as in the
Chairman's judgment may be necessary or proper for the transaction of the
business of the Corporation, including the right of removal of any officer
(other than an officer who is also a Director), with or without cause, and the
termination of employment of any employee.
-6-
<PAGE> 7
In general, the Chairman shall perform all duties incident to the office of
Chairman of the Board, and such other duties as may from time to time be
assigned by the Board of Directors or by any duly authorized committee of
Directors.
Section 4.4. Chief Executive Officer. The Chief Execu-tive
Officer of the Corporation, if other than the Chairman of the Board, shall,
during the absence or disability of the Chairman of the Board, exercise all
powers and discharge all the duties of the Chairman of the Board. The Chief
Executive Officer may, with the Treasurer or the Secretary, or an Assistant
Treasurer or an Assistant Secretary, sign certificates for stock of the
Corporation. The Chief Executive Officer may sign and execute in the name of
the Corporation deeds, mortgages, bonds, contracts and other instruments,
except in cases where the signing and execution thereof shall be expressly
delegated by the Board of Directors or by a duly authorized committee of
Directors, or by these By-laws, to some other officer or agent of the
Corporation, or shall be required by law otherwise to be signed or executed.
The Chief Executive Officer shall have the power to appoint, determine the
duties and fix the compensation of such agents and employees as in the judgment
of the Chief Executive Officer may be necessary or proper for the transaction
of the business of the Corporation, including the right of removal of any
officer (other than an officer who is also a Director), with or without cause,
and the termination of employment of any employee. In general, the Chief
Executive Officer shall perform all duties incident to the office and such
other duties as may from time to time be assigned by the Board of Directors,
the Chairman of the Board or by any duly authorized committee of Directors.
Section 4.5. President. The President shall have general
supervision of the business of the Corporation. During the absence or
disability of the Chairman of the Board and the Chief Executive Officer, the
President shall exercise all the powers and discharge all the duties of the
Chairman of the Board and the Chief Executive Officer. The President may, with
the Treasurer or the Secretary, or an Assistant Treasurer or an Assistant
Secretary, sign certificates for stock of the Corporation. The President may
sign and execute in the name of the Corporation deeds, mortgages, bonds,
contracts and other instruments, except in cases where the signing and
execution thereof shall be expressly delegated by the Board of Directors or by
a duly authorized committee of Directors, or by these By-laws, to some other
officer or agent of the Corporation, or shall be required by law otherwise to
be signed or executed. The President shall have the power to appoint,
determine the duties and fix the compensation of such agents and employees as
in the judgment of the President may be necessary or proper for the transaction
of the business of the Corporation, including the right of removal of any
officer (other than an officer who is also a Director), with or without cause,
and the termination of employment of any employee. In general, the President
shall perform all duties incident to the office of President, and such other
duties as may from time to time be assigned by the Board of Directors, the
-7-
<PAGE> 8
Chairman of the Board or by any duly authorized committee of Directors.
Section 4.6. Vice Presidents. At the request of the
President or in his absence or in the event of his inability or refusal to act,
any Vice President shall perform the duties of the President, and when so
acting, shall have all the powers of and be subject to all the restrictions
upon the President; any Vice President may also sign and execute in the name of
the Corporation deeds, mortgages, bonds, contracts and other instruments,
except in cases where the signing and execution thereof shall be expressly
delegated by the Board of Directors or by a duly authorized committee of
Directors, or by these By-laws, to some other officer or agent of the
Corporation, or shall be required by law otherwise to be signed or executed;
and each Vice President shall perform such other duties and have such other
powers as the Board of Directors from time to time may prescribe.
Section 4.7. Secretary. The Secretary shall keep the minutes
of the meetings of the stockholders, of the Board of Directors and of any
committee appointed by the Board in books provided for that purpose; he shall
see that all notices are duly given in accordance with the provisions of these
By-laws or as required by law; he shall be custodian of the records and of the
corporate seal or seals of the Corporation; he shall see that the corporate
seal is affixed to all documents, the execution of which, on behalf of the
Corporation, under its seal, is duly authorized, and when so affixed may attest
the same; he may sign, with the President or a Vice President, certificates of
stock of the Corporation; and, in general, he shall perform all duties incident
to the office of a secretary of a corporation, and such other duties as, from
time to time, may be assigned to him by the Board of Directors.
Section 4.8. Treasurer. The Treasurer shall have charge
of and be responsible for all funds, securities, receipts and disbursements of
the Corporation, and shall deposit, or cause to be deposited, in the name of
the Corporation, all moneys or other valuable effects in such banks, trust
companies or other depositories as shall, from time to time, be selected by the
Board of Directors; he shall render to the President and to the Board of
Directors, whenever requested, an account of the financial condition of the
Corporation; he may sign, with the President or Vice President, certificates of
stock of the Corporation; and, in general, he shall perform all duties incident
to the office of a treasurer of a corporation, and such other duties as, from
time to time, may be assigned to him by the Board of Directors.
Section 4.9. Assistant Officers. The Board of Directors
may appoint one or more assistant officers. Each assistant officer shall, at
the request of or in the absence or disability of the officer to whom he is an
assistant, perform the duties of such officer and he shall have such other
authority and perform such other duties as the Board of Directors may
prescribe.
-8-
<PAGE> 9
Section 4.10. Subordinate Officers. The Board of Directors
may appoint such subordinate officers as it may deem desirable. Each such
officer shall hold office for such period, have such authority and perform such
duties as the Board of Directors may prescribe. The Board of Directors may,
from time to time, authorize any officer to appoint and remove subordinate
officers and prescribe the powers and duties thereof.
Section 4.11. Officers Holding Two or More Offices. Any
number of the above offices may be held by the same person, but no officer
shall execute, acknowledge or verify any instrument in more than one capacity
if such instrument is required by law or by these By-laws to be executed,
acknowledged or verified by two officers.
Section 4.12. Removal. Any officer of the Corporation may
be removed, with or without cause, by a vote of a majority of the entire Board
of Directors at a meeting for that purpose.
Section 4.13. Signatures. Any corporate instrument signed
by an officer shall be presumed to have been so signed (a) at the request of
the Board of Directors or the President, as the case may be, or (b) in the
absence or because of the disability of the officer or officers otherwise
authorized to so sign, or (c) because of expressly delegated or assigned
authority to the officer so signing, and such signature may be relied upon by
the person to whom the instrument is delivered without establishing the
authority or power of the officer to so sign.
ARTICLE V
STOCK
Section 5.1. Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed by or in the name of
the Corporation by the Chairman of the Board or the President or a Vice
President, and by the Treasurer or an Assistant Treasurer or the Secretary or
an Assistant Secretary of the Corporation, certifying the number of shares
owned by him in the Corporation. Any or all the signatures on the certificate
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
Section 5.2. Lost, Stolen or Destroyed Stock
Certifi-cates; Issuance of New Certificates. The Corporation may issue a new
certificate of stock in the place of any certificate theretofore issued by it,
alleged to have been lost, stolen or destroyed, and the Corporation may require
the owner of the lost, stolen or destroyed certificate, or his legal
representative, to give the Corporation a bond sufficient to indemnify it
against any claim that may be made against it on account of the alleged loss,
-9-
<PAGE> 10
theft or destruction of any such certificate or the issuance of such new
certificate.
ARTICLE VI
INDEMNIFICATION
Section 6.1. Power to Indemnify in Actions, Suits or
Proceedings Other Than Those by or in the Right of the Corporation. Subject to
Section 6.3 of this Article VI, the Corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Corporation) by reason of the fact that such person is or was a Director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with such action,
suit or proceeding if such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe the 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 person did not act in good faith and in a manner which
such person reasonably believed to be in or not opposed to the best interests
of the Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that the conduct was unlawful.
Section 6.2. Power to Indemnify in Actions, Suits or
Proceedings by or in the Right of the Corporation. Subject to Section 6.3 of
this Article VI, the Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that such person is or was a
Director, officer, employee or agent of the Corporation, or is or was serving
at the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred
in connection with the defense or settlement of such action or suit if such
person acted in good faith and in a manner such person reasonably believed to
be in or not opposed to the best interests of the Corporation; except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought shall determine
upon application
-10-
<PAGE> 11
that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnify for such expenses which the Court of Chancery of the State of
Delaware or such other court shall deem proper.
Section 6.3. Authorization of Indemnification. Any
indemnification under this Article VI (unless ordered by a court) shall be made
by the Corporation only as authorized in the specific case upon a determination
that indemnification of the Director, officer, employee or agent is proper in
the circumstances because such person has met the applicable standard of
conduct set forth in Section 6.1 or Section 6.2 of this Article VI, as the case
may be. Such determination shall be made (a) by the Board of Directors by a
majority vote of a quorum consisting of Directors who were not parties to such
action, suit or proceeding, or (b) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested Directors so directs, by independent
legal counsel in a written opinion, or (c) by the stockholders. To the extent,
however, that a Director, officer, employee or agent of the Corporation has
been successful on the merits or otherwise in defense of any action, suit or
proceeding described above, or in defense of any claim, issue or matter
therein, such person shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred in connection therewith,
without the necessity of authorization in the specific case.
Section 6.4. Good Faith Defined. For purposes of any
determination under Section 6.3 of this Article VI, a person shall be deemed to
have acted in good faith and in a manner such person reasonably believed to be
in or not opposed to the best interests of the Corporation, or, with respect to
any criminal action or proceeding, to have had no reasonable cause to believe
such person's conduct was unlawful, if such person's action is based on the
records or books of account of the Corporation or another enterprise, or on
information supplied to such person by the officers of the Corporation or
another enterprise in the course of their duties, or on the advice of legal
counsel for the Corporation or another enterprise or on information or records
given or reports made to the Corporation or another enterprise by an
independent certified public accountant or by an appraiser or other expert
selected with reasonable care by the Corporation or another enterprise. The
term "another enterprise" as used in this Section 6.4 shall mean any other
corporation or any partnership, joint venture, trust or other enterprise of
which such person is or was serving at the request of the Corporation as a
director, officer, employee or agent. The provision of this Section 6.4 shall
not be deemed to be exclusive or to limit in any way the circumstances in which
a person may be deemed to have met the applicable standard of conduct set forth
in Sections 6.1 or 6.2 of this Article VI, as the case may be.
Section 6.5. Indemnification by a Court. Notwith-standing
any contrary determination in the specific case under Section 6.3 of this
Article VI, and notwithstanding the absence of any determination thereunder,
any Director, officer, employee or
-11-
<PAGE> 12
agent may apply to any court of competent jurisdiction in the State of
Delaware for indemnification to the extent otherwise permissible under Sections
6.1 and 6.2 of this Article VI. The basis of such indemnification by a court
shall be a determination by such court that indemnification of the Director,
officer, employee or agent is proper in the circumstances because such person
has met the applicable standards of conduct set forth in Sections 6.1 or 6.2 of
this Article VI, as the case may be. Notice of any application for
indemnification pursuant to this Section 6.5 shall be given to the Corporation
promptly upon the filing of such application.
Section 6.6. Expenses Payable in Advance. Expenses
incurred by an officer or Director in defending a civil or criminal action,
suit or proceeding may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking
by or on behalf of the Director or officer to repay such amount if it shall
ultimately be determined that such person is not entitled to be indemnified by
the Corporation as authorized in this Article VI. Such expenses incurred by
other employees and agents shall be so paid upon such terms and conditions, if
any, as the Board of Directors deems appropriate.
Section 6.7. Nonexclusivity of Indemnification and
Advancement of Expenses. The indemnification and advancement of expenses
provided by or granted pursuant to this Article VI shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any By-law, agreement, contract,
vote of stockholders or disinterested Directors or otherwise, both as to action
in such person's official capacity and as to action in another capacity while
holding such office, it being the policy of the Corporation that
indemnification of the persons specified in Sections 6.1 and 6.2 of this
Article VI shall be made to the fullest extent permitted by law. The
provisions of this Article VI shall not be deemed to preclude the
indemnification of any person who is not specified in Sections 6.1 and 6.2 of
this Article VI but whom the Corporation has the power or obligation to
indemnify under the provisions of the General Corporation Law of the State of
Delaware, or otherwise.
Section 6.8. Insurance. The Corporation may purchase and
maintain insurance on behalf of any person who is or was a Director, officer,
employee or agent of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against such person and incurred by such person in any such
capacity, or arising out of such person's status as such, whether or not the
Corporation would have the power or the obligation to indemnify such person
against such liability under the provisions of this Article VI.
-12-
<PAGE> 13
Section 6.9. Meaning of "Corporation" and "Other
Enter-prises" for the Purposes of Article VI. For purposes of this Article VI,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
Directors, officers, employees or agents so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the
provisions of this Article VI with respect to the resulting or surviving
corporation as such person would have with respect to such constituent
corporation if its separate existence had continued.
For purposes of this Article VI, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the Corporation"
shall include any service as a Director, officer, employee or agent of the
Corporation which imposes duties on, or involves services by, such Director,
officer, employee or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in a
manner such person reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner "not opposed to the best interests of the Corporation"
as referred to in this Article VI.
Section 6.10. Survival of Indemnification and Advance-ment
of Expenses. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article VI shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
Director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such person.
ARTICLE VII
MISCELLANEOUS
Section 7.1. Fiscal Year. The fiscal year of the
Corporation shall end on the thirty-first day of December in each year, or on
such other day as may be fixed from time to time by the Board of Directors.
Section 7.2. Seal. The Corporation may have a corporate
seal which shall have inscribed thereon the name of the Corporation, the year
of its organization and the words "Corporate Seal, Delaware." The corporate
seal may be used by causing it or
-13-
<PAGE> 14
a facsimile thereof to be impressed or affixed or in any other manner
reproduced.
Section 7.3. Waiver of Notice of Meetings of
Stock-holders, Directors and Committees. Whenever notice is required to be
given by law or under any provision of the Certificate of Incorporation or
these By-laws, a written waiver thereof, signed by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, directors or committees of
directors need be specified in any written waiver of notice unless so required
by the Certificate of Incorporation or these By-laws.
Section 7.4. Interested Directors, Quorum. No contract or
transaction between the Corporation and one or more of its Directors or
officers, or between the Corporation and any other corporation, partnership,
association or other organization in which one or more of its Directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the Director or officer
is present at or participates in the meeting of the Board of Directors or
committee thereof which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose; if: (1) the material
facts as to his relationship or interest and as to the contract or transaction
are disclosed or are known to the Board or the committee, and the Board or
committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested Directors, even though the
disinterested Directors be less than a quorum; or (2) the material facts as to
his relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
stockholders; or (3) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified, by the Board, a
committee thereof or the stockholders. Common or interested Directors may be
counted in determining the presence of a quorum at a meeting of the Board or of
a committee which authorizes the contract or transaction.
Section 7.5. Form of Records. Any records maintained by
the Corporation in the regular course of its business, including its stock
ledger, books of account and minute books, may be kept on, or be in the form
of, punch cards, magnetic tape, photographs, microphotographs or any other
information storage device, provided that the records so kept can be converted
into clearly legible form within a reasonable time. The Corporation shall so
convert any records so kept upon the request of any person entitled to inspect
the same.
-14-
<PAGE> 15
Section 7.6. Amendment of By-laws. These By-laws may be
altered or repealed, and new By-laws made, by the affirmative vote of a
majority of the entire Board of Directors, but the stockholders may make
additional By-laws and may alter or repeal any By-law whether or not adopted by
them.
-15-
<PAGE> 1
EXHIBIT 4.1
========================================================
WILLIAMS HOLDINGS OF DELAWARE, INC.
AND
CITIBANK, N.A., Trustee
Senior Indenture
Dated as of _____________, 199__
__________
========================================================
<PAGE> 2
CROSS REFERENCE SHEET *
__________
Provisions of Trust Indenture Act of 1939 and Indenture to be
dated as of ___________, 199__ between WILLIAMS HOLDINGS OF DELAWARE, INC. and
CITIBANK, N.A., Trustee:
<TABLE>
<CAPTION>
Section of the Act Section of Indenture
- ------------------ --------------------
<S> <C>
310(a)(1) and (2)................ 6.9
310(a)(3) and (4)................ Inapplicable
310(b)........................... 6.8 and 6.10(a), (b) and (d)
310(c)........................... Inapplicable
311(a)........................... 6.13(a) and (c)(1) and (2)
311(b)........................... 6.13(b)
311(c)........................... Inapplicable
312(a)........................... 4.1 and 4.2(a)
312(b)........................... 4.2(a) and (b)(i) and (ii)
312(c)........................... 4.2(c)
313(a)........................... 4.4(a)(i), (ii), (iii), (iv), (v) and (vi)
313(b)(1)........................ Inapplicable
313(b)(2)........................ 4.4
313(c)........................... 4.4
313(d)........................... 4.4
314(a)........................... 4.3
314(b)........................... Inapplicable
314(c)(1) and (2)................ 11.5
314(c)(3)........................ Inapplicable
314(d)........................... Inapplicable
314(e)........................... 11.5
314(f)........................... Inapplicable
315(a), (c) and (d).............. 6.1
315(b)........................... 5.11
315(e)........................... 5.12
316(a)(1)........................ 5.9
316(a)(2)........................ Not required
316(a) (last sentence)........... 7.4
316(b)........................... 5.7
317(a)........................... 5.2
317(b)........................... 3.4(a) and (b)
318(a)........................... 11.7
</TABLE>
____________________
* This Cross Reference Sheet is not part of the Indenture.
i
<PAGE> 3
TABLE OF CONTENTS
__________
<TABLE>
<CAPTION>
Page
<S> <C>
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS
Authorization of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Compliance with Legal Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purpose of and Consideration for Indenture . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE
DEFINITIONS
SECTION 1.1. Certain Terms Defined . . . . . . . . . . . . . . . . . . . . . . 1
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . 2
Authorized Newspaper . . . . . . . . . . . . . . . . . . . . . . 2
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . 2
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Composite Rate . . . . . . . . . . . . . . . . . . . . . . . . . 2
Consolidated Funded Indebtedness . . . . . . . . . . . . . . . . 3
Consolidated Net Tangible Assets . . . . . . . . . . . . . . . . 3
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . 4
Coupon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
covenant defeasance . . . . . . . . . . . . . . . . . . . . . . . 4
Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ECU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . 4
Foreign Currency . . . . . . . . . . . . . . . . . . . . . . . . 4
Funded Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 4
Holder, Holder of Securities,
Securityholder . . . . . . . . . . . . . . . . . . . . . . . . 5
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Issuer Order . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Judgment Currency . . . . . . . . . . . . . . . . . . . . . . . . 5
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . 5
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . 5
original issue date . . . . . . . . . . . . . . . . . . . . . . . 6
Original Issue Discount Security . . . . . . . . . . . . . . . . 6
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
Periodic Offering . . . . . . . . . . . . . . . . . . . . . . . . 7
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
record date . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Registered Global Security . . . . . . . . . . . . . . . . . . . 7
Registered Security . . . . . . . . . . . . . . . . . . . . . . . 7
Required Currency . . . . . . . . . . . . . . . . . . . . . . . . 7
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . 7
Security or Securities . . . . . . . . . . . . . . . . . . . . . 8
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Trust Indenture Act of 1939 . . . . . . . . . . . . . . . . . . . 8
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Unregistered Security . . . . . . . . . . . . . . . . . . . . . . 8
U.S. Government Obligations . . . . . . . . . . . . . . . . . . . 8
Yield to Maturity . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE TWO
SECURITIES
SECTION 2.1. Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.2. Form of Trustee's Certificate
of Authentication . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.3. Amount Unlimited; Issuable in Series . . . . . . . . . . . . . . 9
SECTION 2.4. Authentication and Delivery of
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.5. Execution of Securities . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.6. Certificate of Authentication . . . . . . . . . . . . . . . . . . 16
SECTION 2.7. Denomination and Date of
Securities; Payments of Interest . . . . . . . . . . . . . . . 16
SECTION 2.8. Registration, Transfer and Exchange . . . . . . . . . . . . . . . 17
SECTION 2.9. Mutilated, Defaced, Destroyed, Lost
and Stolen Securities . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.10 Cancellation of Securities;
Destruction Thereof . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.11. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE THREE
COVENANTS OF THE ISSUER
SECTION 3.1. Payment of Principal and Interest . . . . . . . . . . . . . . . . 23
SECTION 3.2. Offices for Payments, etc . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.3. Appointment to Fill a Vacancy in
Office of Trustee . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.4. Paying Agents . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.5. Written Statement to Trustee . . . . . . . . . . . . . . . . . . 26
SECTION 3.6. Limitations upon Liens . . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.7. Luxembourg Publications . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C> <C>
ARTICLE FOUR
SECURITYHOLDERS LISTS AND REPORTS BY THE
ISSUER AND THE TRUSTEE
SECTION 4.1. Issuer to Furnish Trustee Information
as to Names and Addresses of
Securityholders . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.2. Preservation and Disclosure of
Securityholders Lists . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.3. Reports by the Issuer . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.4. Reports by the Trustee . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE FIVE
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.1. Event of Default Defined; Acceleration
of Maturity; Waiver of Default . . . . . . . . . . . . . . . . 35
SECTION 5.2. Collection of Indebtedness by Trustee;
Trustee May Prove Debt . . . . . . . . . . . . . . . . . . . . 38
SECTION 5.3. Application of Proceeds . . . . . . . . . . . . . . . . . . . . . 41
SECTION 5.4. Suits for Enforcement . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.5. Restoration of Rights on Abandonment
of Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.6. Limitations on Suits by
Securityholders . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.7. Unconditional Right of
Securityholders to Institute
Certain Suits . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.8. Powers and Remedies Cumulative;
Delay or Omission Not Waiver of
Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.9. Control by Holders of Securities . . . . . . . . . . . . . . . . 43
SECTION 5.10. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.11. Trustee to Give Notice of Default,
But May Withhold in Certain
Circumstances . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.12. Right of Court to Require Filing
of Undertaking to Pay Costs . . . . . . . . . . . . . . . . . . 45
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C> <C>
ARTICLE SIX
CONCERNING THE TRUSTEE
SECTION 6.1. Duties and Responsibilities of the
Trustee; During Default; Prior to
Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 6.2. Certain Rights of the Trustee . . . . . . . . . . . . . . . . . . 47
SECTION 6.3. Trustee Not Responsible for Recitals,
Disposition of Securities or
Application of Proceeds Thereof . . . . . . . . . . . . . . . . 48
SECTION 6.4. Trustee and Agents May Hold
Securities or Coupons;
Collections, etc. . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 6.5. Moneys Held by Trustee . . . . . . . . . . . . . . . . . . . . . 49
SECTION 6.6. Compensation and Indemnification
of Trustee and Its Prior Claim . . . . . . . . . . . . . . . . 49
SECTION 6.7. Right of Trustee to Rely on
Officers' Certificate, etc . . . . . . . . . . . . . . . . . . 49
SECTION 6.8. Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6.9. Persons Eligible for Appointment
as Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6.10. Resignation and Removal; Appointment
of Successor Trustee . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6.11. Acceptance of Appointment by
Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 6.12. Merger, Conversion, Consolidation or
Succession to Business of Trustee . . . . . . . . . . . . . . . 53
SECTION 6.13. Preferential Collection of Claims
Against the Issuer . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 6.14. Appointment of Authenticating Agent . . . . . . . . . . . . . . . 54
ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS
SECTION 7.1. Evidence of Action Taken by
Securityholders . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 7.2. Proof of Execution of Instruments and
of Holding of Securities . . . . . . . . . . . . . . . . . . . 56
SECTION 7.3. Holders to be Treated as Owners . . . . . . . . . . . . . . . . . 57
SECTION 7.4. Securities Owned by Issuer Deemed Not
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 7.5. Right of Revocation of Action Taken . . . . . . . . . . . . . . . 58
</TABLE>
v
<PAGE> 7
<TABLE>
<S> <C> <C>
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.1. Supplemental Indentures Without
Consent of Securityholders . . . . . . . . . . . . . . . . . . 59
SECTION 8.2. Supplemental Indentures With Consent
of Securityholders . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 8.3. Effect of Supplemental Indenture . . . . . . . . . . . . . . . . 62
SECTION 8.4. Documents to Be Given to Trustee . . . . . . . . . . . . . . . . 62
SECTION 8.5. Notation on Securities in Respect of
Supplemental Indentures . . . . . . . . . . . . . . . . . . . . 62
ARTICLE NINE
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 9.1. Issuer May Consolidate, etc.
Only on Certain Terms . . . . . . . . . . . . . . . . . . . . . 63
SECTION 9.2. Successor Corporation Substituted . . . . . . . . . . . . . . . . 63
ARTICLE TEN
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
SECTION 10.1. Satisfaction and Discharge of
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 10.2. Application by Trustee of Funds
Deposited for Payment of Securities . . . . . . . . . . . . . . 69
SECTION 10.3. Repayment of Moneys Held by Paying
Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10.4. Return of Moneys Held By Trustee and
Paying Agent Unclaimed for Two
Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10.5. Indemnity For U.S. Government
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 10.6. Excess Funds . . . . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
SECTION 11.1. Incorporators, Stockholders, Officers
and Directors of Issuer Exempt from
Individual Liability . . . . . . . . . . . . . . . . . . . . . 70
SECTION 11.2. Provisions of Indenture for the Sole
Benefit of Parties and Holders of
Securities and Coupons . . . . . . . . . . . . . . . . . . . . 70
</TABLE>
vi
<PAGE> 8
<TABLE>
<S> <C> <C>
SECTION 11.3. Successors and Assigns of Issuer
Bound by Indenture . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 11.4. Notices and Demands on Issuer,
Trustee and Holders of Securities
and Coupons . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 11.5. Officers' Certificates and Opinions
of Counsel; Statements to Be
Contained Therein . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 11.6. Payments Due on Saturdays, Sundays
and Holidays . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 11.7. Conflict of Any Provision of
Indenture with Trust Indenture
Act of 1939 . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 11.8. New York Law to Govern . . . . . . . . . . . . . . . . . . . . . 73
SECTION 11.9. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 11.10. Effect of Headings . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 11.11. Securities in a Foreign Currency
or in ECU . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 11.12. Judgment Currency . . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE TWELVE
REDEMPTION OF SECURITIES AND SINKING FUNDS
SECTION 12.1. Applicability of Article . . . . . . . . . . . . . . . . . . . . 75
SECTION 12.2. Notice of Redemption; Partial
Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 12.3. Payment of Securities Called for
Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 12.4. Exclusion of Certain Securities from
Eligibility for Selection for
Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 12.5. Mandatory and Optional Sinking
Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
</TABLE>
vii
<PAGE> 9
THIS INDENTURE, dated as of _____________, 199__ between
WILLIAMS HOLDINGS OF DELAWARE, INC., a Delaware corporation (the "Issuer"), and
CITIBANK, N.A., as trustee (the "Trustee"),
W I T N E S S E T H :
WHEREAS, the Issuer has duly authorized the issue from time to
time of its unsecured debentures, notes or other evidences of indebtedness to
be issued in one or more series (the "Securities") up to such principal amount
or amounts as may from time to time be authorized in accordance with the terms
of this Indenture;
WHEREAS, the Issuer has duly authorized the execution and
delivery of this Indenture to provide, among other things, for the
authentication, delivery and administration of the Securities; and
WHEREAS, all things necessary to make this Indenture a valid
indenture and agreement according to its terms have been done;
NOW, THEREFORE:
In consideration of the premises and the purchases of the
Securities by the holders thereof, the Issuer and the Trustee mutually covenant
and agree for the equal and proportionate benefit of the respective holders
from time to time of the Securities and of the Coupons, if any, appertaining
thereto as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.1 Certain Terms Defined. The following terms
(except as otherwise expressly provided or unless the context otherwise clearly
requires) for all purposes of this Indenture and of any indenture supplemental
hereto shall have the respective meanings specified in this Article. All other
terms used in this Indenture that are defined in the Trust Indenture Act of
1939 or the definitions of which in the Securities Act of 1933 are referred to
in the Trust Indenture Act of 1939, including terms defined therein by
reference to the Securities Act of 1933 (except as herein otherwise expressly
provided or unless the context otherwise requires), shall 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. 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.
<PAGE> 10
The terms defined in this Article have the meanings assigned to them in this
Article and include the plural as well as the singular.
"Authenticating Agent" shall have the meaning set forth in
Section 6.14.
"Authorized Newspaper" means a newspaper (which, in the case
of The City of New York, will, if practicable, be The Wall Street Journal
(Eastern Edition), in the case of the United Kingdom, will, if practicable, be
the Financial Times (London Edition) and, in the case of Luxembourg, will, if
practicable, be the Luxemburger Wort) published in an official language of the
country of publication customarily published at least once a day for at least
five days in each calendar week and of general circulation in The City of New
York, the United Kingdom or in Luxembourg, as applicable. If it shall be
impractical in the opinion of the Trustee to make any publication of any notice
required hereby in an Authorized Newspaper, any publication or other notice in
lieu thereof which is made or given with the approval of the Trustee shall
constitute a sufficient publication of such notice.
"Board of Directors" means either the Board of Directors of
the Issuer or any committee of such Board duly authorized to act on its behalf.
"Board Resolution" means a copy of one or more resolutions,
certified by the secretary or an assistant secretary of the Issuer to have been
duly adopted or consented to by the Board of Directors and to be in full force
and effect, and delivered to the Trustee.
"Business Day" means, with respect to any Security, a day that
in the city (or in any of the cities, if more than one) in which amounts are
payable, as specified in the form of such Security, is not a day on which
banking institutions are authorized or required by law or regulation to close.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, or if at any time after the execution and delivery 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 on such date.
"Composite Rate" means, at any time, the rate of interest, per
annum, compounded semiannually, equal to the sum of the rates of interest borne
by the Securities of each series (as specified on the face of the Securities of
each series, provided, that, in the case of the Securities with variable rates
of interest, the interest rate to be used in calculating the Composite
-2-
<PAGE> 11
Rate shall be the interest rate applicable to such Securities at the beginning
of the year in which the Composite Rate is being determined and, provided,
further, that, in the case of Securities which do not bear interest, the
interest rate to be used in calculating the Composite Rate shall be a rate
equal to the yield to maturity on such Securities, calculated at the time of
issuance of such Securities) multiplied, in the case of each series of
Securities, by the percentage of the aggregate principal amount of the
Securities of all series Outstanding represented by the Outstanding Securities
of such series. For the purposes of this calculation, the aggregate principal
amounts of Outstanding Securities that are denominated in a foreign currency,
shall be calculated in the manner set forth in Section 11.11.
"Consolidated Funded Indebtedness" means the aggregate of all
outstanding Funded Indebtedness of the Issuer and its consolidated
Subsidiaries, determined on a consolidated basis in accordance with generally
accepted accounting principles.
"Consolidated Net Tangible Assets" means the total assets
appearing on a consolidated balance sheet of the Issuer and its consolidated
Subsidiaries, less:
(1) intangible assets, unamortized debt discount and expense
and stock expense and other deferred debits;
(2) all current and accrued liabilities (other than
Consolidated Funded Indebtedness and capitalized rentals or leases);
deferred credits (other than deferred investment tax credits),
deferred gains and deferred income and billings recorded as revenues
deferred pending the outcome of a rate proceeding (less applicable
income taxes) to the extent refunds thereof shall not have been
finally determined;
(3) all reserves (other than for deferred Federal income
taxes arising from timing differences) not already deducted from
assets;
(4) all advances made by the Issuer or its consolidated
Subsidiaries to finance oil or natural gas exploration and development
to the extent that the Indebtedness related thereto and of an equal
amount is excluded from Funded Indebtedness by virtue of the proviso
to the definition thereof;
(5) an amount equal to the amount excluded from Funded
Indebtedness representing "production payment" financing of oil or
natural gas exploration and development by the Issuer or its
consolidated Subsidiaries; and
-3-
<PAGE> 12
(6) appropriate allowance for minority stock- holder
interests.
"Corporate Trust Office" means the office of the Trustee at
which the corporate trust business of the Trustee shall, at any particular
time, be principally administered, which office is, at the date as of which
this Indenture is dated, located at 120 Wall Street, 13th Floor, New York, New
York 10043, except that for purposes of the presentation of Registered
Securities for payment or registration of transfer or exchange, such term means
the office or agency of the Trustee in said city at which at any particular
time the corporate agency business of the Trustee shall be conducted which
office at the date of execution of this Indenture is located at 111 Wall
Street, New York, New York 10043.
"Coupon" means any interest coupon appertaining to a Security.
"covenant defeasance" shall have the meaning set forth in
Section 10.1(C).
"Depositary" means, with respect to the Securities of any
series issuable or issued in the form of one or more Registered Global
Securities, the Person designated as Depositary by the Issuer pursuant to
Section 2.3 until a successor Depositary shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Depositary" shall mean
or include each Person who is then a Depositary hereunder, and if at any time
there is more than one such Person, "Depositary" as used with respect to the
Securities of any such series shall mean the Depositary with respect to the
Registered Global Securities of that series.
"Dollar" means the coin or currency of the United States of
America as at the time of payment is legal tender for the payment of public and
private debts.
"ECU" means the European Currency Unit as defined and revised
from time to time by the Council of European Communities.
"Event of Default" means any event or condition specified as
such in Section 5.1.
"Foreign Currency" means a currency issued by the government
of a country other than the United States.
"Funded Indebtedness" means any Indebtedness which matures
more than one year after the date as of which Funded Indebtedness is being
determined less any such Indebtedness as will be retired through or by means of
any deposit or payment required to be made within one year from such date under
any prepayment provision, sinking fund, purchase fund or otherwise; provided,
however, that such term shall not include Indebtedness of the Issuer or any of
its Subsidiaries incurred to finance outstanding
-4-
<PAGE> 13
advances to others to finance oil or natural gas exploration and development to
the extent that the latter are not in default in their obligations to the
Issuer or such Subsidiary, nor shall such term include Indebtedness of the
Issuer or any of its Subsidiaries incurred to finance oil or natural gas
exploration and development by means commonly referred to as a "production
payment" to the extent that the Issuer or any of its Subsidiaries have not
guaranteed the repayment of the production payment.
"Holder", "Holder of Securities", "Securityholder" or other
similar terms mean (a) in the case of any Registered Security, the Person in
whose name such Security is registered in the security register kept by the
Issuer for that purpose in accordance with the terms hereof, and (b) in the
case of any Unregistered Security, the bearer of such Security, or any Coupon
appertaining thereto, as the case may be.
"Indebtedness" means indebtedness which is for money borrowed
from others.
"Indenture" means this instrument as originally executed and
delivered or, if amended or supplemented as herein provided, as so amended or
supplemented or both, and shall include the forms and terms of particular
series of Securities established as contemplated hereunder.
"Interest" means, when used with respect to non-interest
bearing Securities, interest payable after maturity.
"Issuer" means (except as otherwise provided in Article Six)
Williams Holdings of Delaware, Inc., a Delaware corporation and, subject to
Article Nine, its successors and assigns.
"Issuer Order" means a written statement, request or order of
the Issuer signed in its name by any one of the Chairman of the Board, the
President, a Vice President, a Secretary or a Treasurer of the Issuer.
"Judgment Currency" shall have the meaning set forth in
Section 11.12.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, the President or a Vice President, and by the
Controller, Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary of the Issuer and delivered to the Trustee. Each such certificate
shall include the statements provided for in Section 11.5, if applicable.
"Opinion of Counsel" means an opinion in writing signed by
legal counsel who may be an employee of or counsel to the Issuer and who shall
be satisfactory to the Trustee. Each such opinion shall include the statements
provided for in Section 11.5, if applicable.
-5-
<PAGE> 14
"original issue date" of any Security (or portion thereof)
means the earlier of (a) the date of such Security or (b) the date of any
Security (or portion thereof) for which such Security was issued (directly or
indirectly) on registration of transfer, exchange or substitution.
"Original Issue Discount Security" means any Security that
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the maturity thereof pursuant to
Section 5.1.
"Outstanding" when used with reference to Securities, shall,
subject to the provisions of Section 7.4, mean, as of any particular time, all
Securities authenticated and delivered by the Trustee under this Indenture,
except
(a) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities, or portions thereof, for the payment or
redemption of which moneys or U.S. Government Obligations (as provided
for in Section 10.1) in the necessary amount shall have been deposited
in trust with the Trustee or with any paying agent (other than the
Issuer) or shall have been set aside, segregated and held in trust by
the Issuer for the Holders of such Securities (if the Issuer shall act
as its own paying agent), provided that if such Securities, or
portions thereof, are to be redeemed prior to the maturity thereof,
notice of such redemption shall have been given as herein provided, or
provision satisfactory to the Trustee shall have been made for giving
such notice; and
(c) Securities which shall have been paid or in substitution
for which other Securities shall have been authenticated and delivered
pursuant to the terms of Section 2.9 (except with respect to any such
Security as to which proof satisfactory to the Trustee is presented
that such Security is held by a Person in whose hands such Security is
a legal, valid and binding obligation of the Issuer).
In determining whether the Holders of the requisite principal
amount of Outstanding Securities of any or all series have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, the
principal amount of an Original Issue Discount Security that shall be deemed to
be Outstanding for such purposes shall be the amount of the principal thereof
that would be due and payable as of the date of such determination upon a
declaration of acceleration of the maturity thereof pursuant to Section 5.1.
"Periodic Offering" means an offering of Securities of a
series from time to time, the specific terms of which Securities, including,
without limitation, the rate or rates of interest, if
-6-
<PAGE> 15
any, thereon, the stated maturity or maturities thereof and the redemption
provisions, if any, with respect thereto, are to be determined by the Issuer or
its agents upon the issuance of such Securities.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
"principal" whenever used with reference to the Securities or
any Security or any portion thereof, shall be deemed to include "and premium,
if any".
"record date" shall have the meaning set forth in Section 2.7.
"Registered Global Security", means a Security evidencing all
or a part of a series of Registered Securities, issued to the Depositary for
such series in accordance with Section 2.4, and bearing the legend prescribed
in Section 2.4.
"Registered Security" means any Security registered on the
Security register of the Issuer.
"Required Currency" shall have the meaning set forth in
Section 11.12.
"Responsible Officer" when used with respect to the Trustee
means the chairman of the board of directors, any vice chairman of the board of
directors, the chairman of the trust committee, the chairman of the executive
committee, any vice chairman of the executive committee, the president, any
vice president, (whether or not designated by numbers or words added before or
after the title "vice president") the cashier, the secretary, the treasurer,
any trust officer, any assistant trust officer, any assistant vice president,
any assistant cashier, any assistant secretary, any assistant treasurer, or any
other officer or assistant officer of the Trustee customarily performing
functions similar to those performed by the persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of his knowledge of and familiarity with the particular subject.
"Security" or "Securities" has the meaning stated in the first
recital of this Indenture, or, as the case may be, Securities that have been
authenticated and delivered under this Indenture.
-7-
<PAGE> 16
"Subsidiary" means any corporation at least a majority of the
outstanding securities of which having ordinary voting power shall be owned by
the Issuer and/or another Subsidiary or Subsidiaries.
"Trust Indenture Act of 1939" (except as otherwise provided in
Sections 8.1 and 8.2) means the Trust Indenture Act of 1939, as amended.
"Trustee" means the Person identified as "Trustee" in the
first paragraph hereof and, subject to the provisions of Article Six, shall
also include any successor trustee. "Trustee" shall also mean or include each
Person who is then a trustee hereunder and if at any time there is more than
one such Person, "Trustee" as used with respect to the Securities of any series
shall mean the trustee with respect to the Securities of such series.
"Unregistered Security" means any Security other than a
Registered Security.
"U.S. Government Obligations" shall have the meaning set forth
in Section 10.1(A).
"Yield to Maturity" means the yield to maturity on a series of
Securities, calculated at the time of issuance of such series, or, if
applicable, at the most recent redetermination of interest on such series, and
calculated in accordance with accepted financial practice.
ARTICLE TWO
SECURITIES
SECTION 2.1 Forms Generally. The Securities of each series
and the Coupons, if any, to be attached thereto shall be substantially in such
form (not inconsistent with this Indenture) as shall be established by or
pursuant to one or more Board Resolutions (as set forth in a Board Resolution
or, to the extent established pursuant to rather than set forth in a Board
Resolution, an Officers' Certificate detailing such establishment) or in one or
more indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture and may have imprinted or otherwise reproduced
thereon such legend or legends or endorsements, not inconsistent with the
provisions of this Indenture, as may be required to comply with any law or with
any rules or regulations pursuant thereto, or with any rules of any securities
exchange or to conform to general usage, all as may be determined by the
officers executing such Securities and Coupons, if any, as evidenced by their
execution of such Securities and Coupons.
-8-
<PAGE> 17
The definitive Securities and Coupons, if any, shall be
printed, lithographed or engraved on steel engraved borders or may be produced
in any other manner, all as determined by the officers executing such
Securities and Coupons, if any, as evidenced by their execution of such
Securities and Coupons, if any.
SECTION 2.2 Form of Trustee's Certificate of Authentication.
The Trustee's certificate of authentication on all Securities shall be in
substantially the following form:
"This is one of the Securities of the series referred to in
the within-mentioned Senior Indenture.
Citibank, N.A.,
as Trustee
By _____________________
Authorized Officer"
If at any time there shall be an Authenticating Agent
appointed with respect to any series of Securities, then the Securities of such
series may have endorsed thereon, in addition to or in lieu of the Trustee's
certificate of authentication to be borne by the Securities of each such
series, an alternative certificate of authentication substantially as follows:
"This is one of the Securities of the series referred to in
the within-mentioned Senior Indenture.
_________________________,
as Authenticating Agent
By _____________________
Authorized Officer"
SECTION 2.3 Amount Unlimited; Issuable in Series. The
aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series, and each
such series shall rank equally and pari passu with all other unsecured and
unsubordinated debt of the Issuer. There shall be established in or pursuant
to one or more Board Resolutions (and,
-9-
<PAGE> 18
to the extent established pursuant to rather than set forth in a Board
Resolution, in an Officers' Certificate detailing such establishment) or
established in one or more indentures supplemental hereto, prior to the initial
issuance of Securities of any series,
(1) the designation of the Securities of the series, which
shall distinguish the Securities of the series from the Securities of
all other series;
(2) any limit upon the aggregate principal amount of the
Securities of the series that may be authenticated and delivered under
this Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to Section 2.8, 2.9, 2.11, 8.5 or
12.3);
(3) if other than Dollars, the coin or currency in which the
Securities of that series are denominated (including, but not limited
to, any Foreign Currency or ECU);
(4) the date or dates on which the principal of the
Securities of the series is payable;
(5) the rate or rates at which the Securities of the series
shall bear interest, if any, the date or dates from which such
interest shall accrue, on which such interest shall be payable and (in
the case of Registered Securities) on which a record shall be taken
for the determination of Holders to whom interest is payable and/or
the method by which such rate or rates or date or dates shall be
determined the rate of penalty, if any, on any overdue interest
payment and the right of the Issuer to extend the interest payment
periods of the Securities of the series, the maximum duration, if any,
of any such extension or extensions, the additional interest, if any
payable on such Securities if any interest payment period is extended
and any notice (which in every case shall include notice to the
Trustee) which must be given upon the exercise of such right;
(6) the place or places where the principal of and any
interest on Securities of the series shall be payable (if other than
as provided in Section 3.2);
(7) the right, if any, of the Issuer to redeem Securities, in
whole or in part, at its option and the period or periods within
which, the price or prices at which and any terms and conditions upon
which Securities of the series may be so redeemed, pursuant to any
sinking fund or otherwise;
(8) the obligation, if any, of the Issuer to redeem,
repurchase or repay Securities of the series pursuant to any mandatory
redemption, sinking fund or analogous provisions or
-10-
<PAGE> 19
at the option of a Holder thereof and the price or prices at which and
the period or periods within which and any terms and conditions upon
which Securities of the series shall be redeemed, repurchased or
repaid, in whole or in part, pursuant to such obligation;
(9) if other than denominations of $1,000 and any integral
multiple thereof in the case of Registered Securities, or $1,000 and
$5,000 in the case of Unregistered Securities, the denominations in
which Securities of the series shall be issuable;
(10) if other than the principal amount thereof, the portion
of the principal amount of Securities of the series which shall be
payable upon declaration of acceleration of the maturity thereof;
(11) if other than the coin or currency in which the
Securities of that series are denominated, the coin or currency in
which payment of the principal of or interest on the Securities of
such series shall be payable;
(12) if the principal of or interest on the Securities of
such series are to be payable, at the election of the Issuer or a
Holder thereof, in a coin or currency other than that in which the
Securities are denominated, the period or periods within which, and
the terms and conditions upon which, such election may be made;
(13) if the amount of payments of principal of and interest
on the Securities of the series may be determined with reference to an
index based on a coin or currency other than that in which the
Securities of the series are denominated, the manner in which such
amounts shall be determined;
(14) whether the Securities of the series will be issuable as
Registered Securities (and if so, whether such Securities will be
issuable as Registered Global Securities) or Unregistered Securities
(with or without Coupons), or any combination of the foregoing, any
restrictions applicable to the offer, sale or delivery of Unregistered
Securities or the payment of interest thereon and, if other than as
provided in Section 2.8, the terms upon which Unregistered Securities
of any series may be exchanged for Registered Securities of such
series and vice versa;
(15) whether and under what circumstances the Issuer will pay
additional amounts on the Securities of the series held by a Person
who is not a U.S. Person in respect of any tax, assessment or
governmental charge withheld or deducted and, if so, whether the
Issuer will have the option to redeem such Securities rather than pay
such additional amounts;
-11-
<PAGE> 20
(16) if the Securities of such series are to be issuable in
definitive form (whether upon original issue or upon exchange of a
temporary Security of such series) only upon receipt of certain
certificates or other documents or satisfaction of other conditions,
the form and terms of such certificates, documents or conditions;
(17) any trustees, depositaries, authenticating or paying
agents, transfer agents or registrars or any other agents with respect
to the Securities of such series;
(18) any other Events of Default or covenants with respect to
the Securities of such series; and
(19) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series and Coupons, if any,
appertaining thereto, shall be substantially identical, except in the case of
Registered Securities as to denomination and except as may otherwise be
provided by or pursuant to the Board Resolution or Officers' Certificate
referred to above or as set forth in any such indenture supplemental hereto.
All Securities of any one series need not be issued at the same time and may be
issued from time to time, consistent with the terms of this Indenture, if so
provided by or pursuant to such Board Resolution, such Officers' Certificate or
in any such indenture supplemental hereto.
SECTION 2.4 Authentication and Delivery of Securities. The
Issuer may deliver Securities of any series having attached thereto appropriate
Coupons, if any, executed by the Issuer to the Trustee for authentication
together with the applicable documents referred to below in this Section, and
the Trustee shall thereupon authenticate and deliver such Securities to or upon
the order of the Issuer (contained in the Issuer Order referred to below in
this Section) or pursuant to such procedures acceptable to the Trustee and to
such recipients as may be specified from time to time by an Issuer Order. The
maturity date, original issue date, interest rate and any other terms of the
Securities of such series and Coupons, if any, appertaining thereto shall be
specified in or pursuant to such Issuer Order and procedures. If provided for
in such procedures, such Issuer Order may authorize authentication and delivery
pursuant to electronic instructions from the Issuer or its duly authorized
agent, which instructions shall be promptly confirmed in writing. In
authenticating such Securities and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive (in the case of subparagraphs 2, 3 and 4 below only at or
before the time of the first request of the Issuer to the Trustee to
authenticate Securities of such series) and (subject to Section 6.1) shall be
fully protected in relying upon, unless and until such documents have been
superseded or revoked:
-12-
<PAGE> 21
(1) an Issuer Order requesting such authentication and
setting forth delivery instructions if the Securities and Coupons, if
any, are not to be delivered to the Issuer, provided that, with
respect to Securities of a series subject to a Periodic Offering, (a)
such Issuer Order may be delivered by the Issuer to the Trustee prior
to the delivery to the Trustee of such Securities for authentication
and delivery, (b) the Trustee shall authenticate and deliver
Securities of such series for original issue from time to time, in an
aggregate principal amount not exceeding the aggregate principal
amount established for such series, pursuant to an Issuer Order or
pursuant to procedures acceptable to the Trustee as may be specified
from time to time by an Issuer Order, (c) the maturity date or dates,
original issue date or dates, interest rate or rates and any other
terms of Securities of such series shall be determined by an Issuer
Order or pursuant to such procedures and (d) if provided for in such
procedures, such Issuer Order may authorize authentication and
delivery pursuant to electronic instructions from the Issuer or its
duly authorized agent or agents, which instructions shall be promptly
confirmed in writing;
(2) any Board Resolution, Officers' Certificate and/or
executed supplemental indenture referred to in Sections 2.1 and 2.3 by
or pursuant to which the forms and terms of the Securities and
Coupons, if any, were established;
(3) an Officers' Certificate setting forth the form or forms
and terms of the Securities and Coupons, if any, stating that the form
or forms and terms of the Securities and Coupons, if any, have been
established pursuant to Sections 2.1 and 2.3 and comply with this
Indenture, and covering such other matters as the Trustee may
reasonably request; and
(4) at the option of the Issuer, either an Opinion of
Counsel, or a letter addressed to the Trustee permitting to it to rely
on an Opinion of Counsel, substantially to the effect that:
(a) the forms of the Securities and Coupons, if any,
have been duly authorized and established in conformity with
the provisions of this Indenture;
(b) in the case of an underwritten offering, the
terms of the Securities have been duly authorized and
established in conformity with the provisions of this
Indenture, and, in the case of an offering that is not
underwritten, certain terms of the Securities have been
established pursuant to a Board Resolution, an Officers'
Certificate or a supplemental indenture in accordance with
this Indenture, and when such other terms as are to be
established pursuant to procedures set forth in an
-13-
<PAGE> 22
Issuer Order shall have been established, all such terms will
have been duly authorized by the Issuer and will have been
established in conformity with the provisions of this
Indenture;
(c) when the Securities and Coupons, if any, have
been executed by the Issuer and authenticated by the Trustee
in accordance with the provisions of this Indenture and
delivered to and duly paid for by the purchasers thereof, they
will have been duly issued under this Indenture and will be
valid and legally binding obligations of the Issuer,
enforceable in accordance with their respective terms, and
will be entitled to the benefits of this Indenture; and
(d) the execution and delivery by the Issuer of, and
the performance by the Issuer of its obligations under, the
Securities and Coupons, if any, will not contravene any
provision of applicable law or the certificate of
incorporation or by-laws of the Issuer or any agreement or
other instrument binding upon the Issuer or any of its
Subsidiaries that is material to the Issuer and its
Subsidiaries, considered as one enterprise, or, to the best of
such counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over
the Issuer or any Subsidiary, and no consent, approval or
authorization of any governmental body or agency is required
for the performance by the Issuer of its obligations under the
Securities and Coupons, if any, except such as are specified
and have been obtained and such as may be required by the
securities or blue sky laws of the various states in
connection with the offer and sale of the Securities.
In rendering such opinions, such counsel may qualify any
opinions as to enforceability by stating that such enforceability may be
limited by bankruptcy, insolvency, reorganization, liquidation, moratorium and
other similar laws affecting the rights and remedies of creditors and is
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Such
counsel may rely, as to all matters governed by the laws of jurisdictions other
than the State of New York and the federal law of the United States, upon
opinions of other counsel (copies of which shall be delivered to the Trustee),
in which case the opinion shall state that such counsel believes he and the
Trustee are entitled so to rely. Such counsel may also state that, insofar as
such opinion involves factual matters, he has relied, to the extent he deems
proper, upon certificates of officers of the Issuer and its subsidiaries and
certificates of public officials.
-14-
<PAGE> 23
The Trustee shall have the right to decline to authenticate
and deliver any Securities under this Section if the Trustee, being advised by
counsel, determines that such action may not lawfully be taken by the Issuer or
if the Trustee in good faith by its board of directors or board of trustees,
executive committee, or a trust committee of directors or trustees or
Responsible Officers shall determine that such action would expose the Trustee
to personal liability to existing Holders or would affect the Trustee's own
rights, duties or immunities under the Securities, this Indenture or otherwise.
If the Issuer shall establish pursuant to Section 2.3 that the
Securities of a series are to be issued in the form of one or more Registered
Global Securities, then the Issuer shall execute and the Trustee shall, in
accordance with this Section and the Issuer Order with respect to such series,
authenticate and deliver one or more Registered Global Securities that (i)
shall represent and shall be denominated in an amount equal to the aggregate
principal amount of all of the Securities of such series issued and not yet
cancelled, (ii) shall be registered in the name of the Depositary for such
Registered Global Security or Securities or the nominee of such Depositary,
(iii) shall be delivered by the Trustee to such Depositary or pursuant to such
Depositary's instructions and (iv) shall bear a legend substantially to the
following effect: "Unless and until it is exchanged in whole or in part for
Securities in definitive registered form, this Security may not be transferred
except as a whole by the Depositary to the nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary."
Each Depositary must, at the time of its designation and at
all times while it serves as Depositary, be a clearing agency registered under
the Securities Exchange Act of 1934 and any other applicable statute or
regulation.
SECTION 2.5 Execution of Securities. The Securities and, if
applicable, each Coupon appertaining thereto shall be signed on behalf of the
Issuer by its Chairman of the Board, its President or one of its Vice
Presidents, under its corporate seal (except in the case of Coupons) which may,
but need not, be attested. Such signatures may be the manual or facsimile
signatures of the present or any future such officers. The seal of the Issuer
may be in the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Securities. Typographical and other
minor errors or defects in any such reproduction of the seal or any such
signature shall not affect the validity or enforceability of any Security that
has been duly authenticated and delivered by the Trustee.
In case any officer of the Issuer who shall have signed any of
the Securities or Coupons, if any, shall cease to be such
-15-
<PAGE> 24
officer before the Security or Coupon so signed (or the Security to which the
Coupon so signed appertains) shall be authenticated and delivered by the
Trustee or disposed of by the Issuer, such Security or Coupon nevertheless may
be authenticated and delivered or disposed of as though the person who signed
such Security or Coupon had not ceased to be such officer of the Issuer; and
any Security or Coupon may be signed on behalf of the Issuer by such persons
as, at the actual date of the execution of such Security or Coupon, shall be
the proper officers of the Issuer, although at the date of the execution and
delivery of this Indenture any such person was not such an officer.
SECTION 2.6 Certificate of Authentication. Only such
Securities as shall bear thereon a certificate of authentication substantially
in the form hereinbefore recited, executed by the Trustee or an Authenticating
Agent, if any, by the manual signature of one of their authorized officers,
shall be entitled to the benefits of this Indenture or be valid or obligatory
for any purpose. No Coupon shall be entitled to the benefits of this Indenture
or shall be valid and obligatory for any purpose until the certificate of
authentication on the Security to which such Coupon appertains shall have been
duly executed by the Trustee or an Authenticating Agent, if any. The execution
of such certificate by the Trustee or an Authenticating Agent, if any, upon any
Security executed by the Issuer shall be conclusive evidence that the Security
so authenticated has been duly authenticated and delivered hereunder and that
the Holder is entitled to the benefits of this Indenture.
SECTION 2.7 Denomination and Date of Securities; Payments of
Interest. The Securities of each series shall be issuable as Registered
Securities or Unregistered Securities in denominations established as
contemplated by Section 2.3 or, with respect to the Registered Securities of
any series, if not so established, in denominations of $1,000 and any integral
multiple thereof. If denominations of Unregistered Securities of any series
are not so established, such Securities shall be issuable in denominations of
$1,000 and $5,000. The Securities of each series shall be numbered, lettered
or otherwise distinguished in such manner or in accordance with such plan as
the officers of the Issuer executing the same may determine with the approval
of the Trustee, as evidenced by the execution and authentication thereof.
Each Registered Security shall be dated the date of its
authentication. Each Unregistered Security shall be dated as provided in the
resolution or resolutions of the Board of Directors of the Issuer referred to
in Section 2.3. The Securities of each series shall bear interest, if any,
from the date, and such interest shall be payable on the dates, established as
contemplated by Section 2.3.
The Person in whose name any Registered Security of any series
is registered at the close of business on any record date
-16-
<PAGE> 25
applicable to a particular series with respect to any interest payment date for
such series shall be entitled to receive the interest, if any, payable on such
interest payment date notwithstanding any transfer or exchange of such
Registered Security subsequent to the record date and prior to such interest
payment date, except if and to the extent the Issuer shall default in the
payment of the interest due on such interest payment date for such series, in
which case such defaulted interest shall be paid to the Persons in whose names
Outstanding Registered Securities for such series are registered at the close
of business on a subsequent record date (which shall be not less than five
Business Days prior to the date of payment of such defaulted interest)
established by notice given by mail by or on behalf of the Issuer to the
Holders of Registered Securities not less than 15 days preceding such
subsequent record date. The term "record date" as used with respect to any
interest payment date (except a date for payment of defaulted interest) for the
Securities of any series shall mean the date specified as such in the terms of
the Registered Securities of such series established as contemplated by Section
2.3, or, if no such date is so established, if such interest payment date is
the first day of a calendar month, the fifteenth day of the next preceding
calendar month or, if such interest payment date is the fifteenth day of a
calendar month, the first day of such calendar month, whether or not such
record date is a Business Day.
SECTION 2.8 Registration, Transfer and Exchange. The Issuer
will keep at each office or agency to be maintained for the purpose as provided
in Section 3.2 for each series of Securities a register in which, subject to
such reasonable regulations as it may prescribe, it will provide for the
registration of Registered Securities of such series and the registration of
transfer of Registered Securities of such series. Such register shall be in
written form in the English language or in any other form capable of being
converted into such form within a reasonable time. At all reasonable times
such register or registers shall be open for inspection by the Trustee.
Upon due presentation for registration of transfer of any
Registered Security of any series at any such office or agency to be maintained
for the purpose as provided in Section 3.2, the Issuer shall execute and the
Trustee shall authenticate and deliver in the name of the transferee or
transferees a new Registered Security or Registered Securities of the same
series, maturity date, interest rate and original issue date in authorized
denominations for a like aggregate principal amount.
Unregistered Securities (except for any temporary global
Unregistered Securities) and Coupons (except for Coupons attached to any
temporary global Unregistered Securities) shall be transferable by delivery.
-17-
<PAGE> 26
At the option of the Holder thereof, Registered Securities of
any series (other than a Registered Global Security, except as set forth below)
may be exchanged for a Registered Security or Registered Securities of such
series having authorized denominations and an equal aggregate principal amount,
upon surrender of such Registered Securities to be exchanged at the agency of
the Issuer that shall be maintained for such purpose in accordance with Section
3.2 and upon payment, if the Issuer shall so require, of the charges
hereinafter provided. If the Securities of any series are issued in both
registered and unregistered form, except as otherwise specified pursuant to
Section 2.3, at the option of the Holder thereof, Unregistered Securities of
any series may be exchanged for Registered Securities of such series having
authorized denominations and an equal aggregate principal amount, upon
surrender of such Unregistered Securities to be exchanged at the agency of the
Issuer that shall be maintained for such purpose in accordance with Section
3.2, with, in the case of Unregistered Securities that have Coupons attached,
all unmatured Coupons and all matured Coupons in default thereto appertaining,
and upon payment, if the Issuer shall so require, of the charges hereinafter
provided. At the option of the Holder thereof, if Unregistered Securities of
any series, maturity date, interest rate and original issue date are issued in
more than one authorized denomination, except as otherwise specified pursuant
to Section 2.3, such Unregistered Securities may be exchanged for Unregistered
Securities of such series having authorized denominations and an equal
aggregate principal amount, upon surrender of such Unregistered Securities to
be exchanged at the agency of the Issuer that shall be maintained for such
purpose in accordance with Section 3.2 or as specified pursuant to Section 2.3,
with, in the case of Unregistered Securities that have Coupons attached, all
unmatured Coupons and all matured Coupons in default thereto appertaining, and
upon payment, if the Issuer shall so require, of the charges hereinafter
provided. Unless otherwise specified pursuant to Section 2.3, Registered
Securities of any series may not be exchanged for Unregistered Securities of
such series. Whenever any Securities are so surrendered for exchange, the
Issuer shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive. All
Securities and Coupons surrendered upon any exchange or transfer provided for
in this Indenture shall be promptly cancelled and disposed of by the Trustee
and the Trustee will deliver a certificate of disposition thereof to the
Issuer.
All Registered Securities presented for registration of
transfer, exchange, redemption or payment shall (if so required by the Issuer
or the Trustee) be duly endorsed by, or be accompanied by a written instrument
or instruments of transfer in form satisfactory to the Issuer and the Trustee
duly executed by the Holder or his attorney duly authorized in writing.
The Issuer may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in
-18-
<PAGE> 27
connection with any exchange or registration of transfer of Securities. No
service charge shall be made for any such transaction.
The Issuer shall not be required to exchange or register a
transfer of (a) any Securities of any series for a period of 15 days next
preceding the first mailing of notice of redemption of Securities of such
series to be redeemed or (b) any Securities selected, called or being called
for redemption, in whole or in part, except, in the case of any Security to be
redeemed in part, the portion thereof not so to be redeemed.
Notwithstanding any other provision of this Section 2.8,
unless and until it is exchanged in whole or in part for Securities in
definitive registered form, a Registered Global Security representing all or a
portion of the Securities of a series may not be transferred except as a whole
by the Depositary for such series to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any such nominee to a successor Depositary
for such series or a nominee of such successor Depositary.
If at any time the Depositary for any Registered Securities of
a series represented by one or more Registered Global Securities notifies the
Issuer that it is unwilling or unable to continue as Depositary for such
Registered Securities or if at any time the Depositary for such Registered
Securities shall no longer be eligible under Section 2.4, the Issuer shall
appoint a successor Depositary with respect to such Registered Securities. If
a successor Depositary for such Registered Securities is not appointed by the
Issuer within 90 days after the Issuer receives such notice or becomes aware of
such ineligibility, the Issuer's election pursuant to Section 2.3 that such
Registered Securities be represented by one or more Registered Global
Securities shall no longer be effective and the Issuer will execute, and the
Trustee, upon receipt of an Officers' Certificate for the authentication and
delivery of definitive Securities of such series, will authenticate and
deliver, Securities of such series in definitive registered form without
Coupons, in any authorized denominations, in an aggregate principal amount
equal to the principal amount of the Registered Global Security or Securities
representing such Registered Securities in exchange for such Registered Global
Security or Securities.
The Issuer may at any time and in its sole discretion
determine that the Registered Securities of any series issued in the form of
one or more Registered Global Securities shall no longer be represented by a
Registered Global Security or Securities. In such event the Issuer will
execute, and the Trustee, upon receipt of an Officers' Certificate for the
authentication and delivery of definitive Securities of such series, will
authenticate and deliver, Securities of such series in definitive registered
form without Coupons, in any authorized
-19-
<PAGE> 28
denominations, in an aggregate principal amount equal to the principal amount
of the Registered Global Security or Securities representing such Registered
Securities, in exchange for such Registered Global Security or Securities.
If specified by the Issuer pursuant to Section 2.3 with
respect to Securities represented by a Registered Global Security, the
Depositary for such Registered Global Security may surrender such Registered
Global Security in exchange in whole or in part for Securities of the same
series in definitive registered form on such terms as are acceptable to the
Issuer and such Depositary. Thereupon, the Issuer shall execute, and the
Trustee shall authenticate and deliver, without service charge,
(i) to the Person specified by such Depositary a new
Registered Security or Securities of the same series, of any
authorized denominations as requested by such Person, in an aggregate
principal amount equal to and in exchange for such Person's beneficial
interest in the Registered Global Security; and
(ii) to such Depositary a new Registered Global Security in a
denomination equal to the difference, if any, between the principal
amount of the surrendered Registered Global Security and the aggregate
principal amount of Registered Securities authenticated and delivered
pursuant to clause (i) above.
Upon the exchange of a Registered Global Security for
Securities in definitive registered form without Coupons, in authorized
denominations, such Registered Global Security shall be cancelled by the
Trustee or its agent. Securities in definitive registered form without Coupons
issued in exchange for a Registered Global Security pursuant to this Section
2.8 shall be registered in such names and in such authorized denominations as
the Depositary for such Registered Global Security, pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct the
Trustee or an agent of the Issuer or the Trustee. The Trustee or such agent
shall deliver such Securities to or as directed by the Persons in whose names
such Securities are so registered.
All Securities issued upon any transfer or exchange of
Securities shall be valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such transfer or exchange.
Notwithstanding anything herein or in the terms of any series
of Securities to the contrary, none of the Issuer, the Trustee or any agent of
the Issuer or the Trustee (any of which, other than the Issuer, shall rely on
an Officers' Certificate and an Opinion of Counsel) shall be required to
exchange any Unregistered Security for a Registered Security if such exchange
would result in adverse Federal income tax consequences to the Issuer (such as,
for example, the inability of the Issuer to deduct
-20-
<PAGE> 29
from its income, as computed for Federal income tax purposes, the interest
payable on the Unregistered Securities) under then applicable United States
Federal income tax laws.
SECTION 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen
Securities. In case any temporary or definitive Security or any Coupon
appertaining to any Security shall become mutilated, defaced or be destroyed,
lost or stolen, the Issuer in its discretion may execute, and upon the written
request of any officer of the Issuer, the Trustee shall authenticate and
deliver a new Security of the same series, maturity date, interest rate and
original issue date, bearing a number or other distinguishing symbol not
contemporaneously outstanding, in exchange and substitution for the mutilated
or defaced Security, or in lieu of and in substitution for the Security so
destroyed, lost or stolen with Coupons corresponding to the Coupons
appertaining to the Securities so mutilated, defaced, destroyed, lost or
stolen, or in exchange or substitution for the Security to which such
mutilated, defaced, destroyed, lost or stolen Coupon appertained, with Coupons
appertaining thereto corresponding to the Coupons so mutilated, defaced,
destroyed, lost or stolen. In every case the applicant for a substitute
Security or Coupon shall furnish to the Issuer and to the Trustee and any agent
of the Issuer or the Trustee such security or indemnity as may be required by
them to indemnify and defend and to save each of them harmless and, in every
case of destruction, loss or theft, evidence to their satisfaction of the
destruction, loss or theft of such Security or Coupon and of the ownership
thereof and in the case of mutilation or defacement shall surrender the
Security and related Coupons to the Trustee or such agent.
Upon the issuance of any substitute Security or Coupon, the
Issuer may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee or its agent)
connected therewith. In case any Security or Coupon which has matured or is
about to mature or has been called for redemption in full shall become
mutilated or defaced or be destroyed, lost or stolen, the Issuer may instead of
issuing a substitute Security, pay or authorize the payment of the same or the
relevant Coupon (without surrender thereof except in the case of a mutilated or
defaced Security or Coupon), if the applicant for such payment shall furnish to
the Issuer and to the Trustee and any agent of the Issuer or the Trustee such
security or indemnity as any of them may require to save each of them harmless,
and, in every case of destruction, loss or theft, the applicant shall also
furnish to the Issuer and the Trustee and any agent of the Issuer or the
Trustee evidence to their satisfaction of the destruction, loss or theft of
such Security or Coupon and of the ownership thereof.
Every substitute Security or Coupon of any series issued
pursuant to the provisions of this Section by virtue of the fact
-21-
<PAGE> 30
that any such Security or Coupon is destroyed, lost or stolen shall constitute
an additional contractual obligation of the Issuer, whether or not the
destroyed, lost or stolen Security or Coupon shall be at any time enforceable
by anyone and shall be entitled to all the benefits of (but shall be subject to
all the limitations of rights set forth in) this Indenture equally and
proportionately with any and all other Securities or Coupons of such series
duly authenticated and delivered hereunder. All Securities and Coupons shall
be held and owned upon the express condition that, to the extent permitted by
law, the foregoing provisions are exclusive with respect to the replacement or
payment of mutilated, defaced or destroyed, lost or stolen Securities and
Coupons and shall preclude any and all other rights or remedies notwithstanding
any law or statute existing or hereafter enacted to the contrary with respect
to the replacement or payment of negotiable instruments or other securities
without their surrender.
SECTION 2.10 Cancellation of Securities; Destruction Thereof.
All Securities and Coupons surrendered for payment, redemption, registration of
transfer or exchange, or for credit against any payment in respect of a sinking
or analogous fund, if surrendered to the Issuer or any agent of the Issuer or
the Trustee or any agent of the Trustee, shall be delivered to the Trustee or
its agent for cancellation or, if surrendered to the Trustee, shall be
cancelled by it; and no Securities or Coupons shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Indenture. The
Trustee or its agent shall dispose of cancelled Securities and Coupons held by
it and deliver a certificate of disposition to the Issuer. If the Issuer or
its agent shall acquire any of the Securities or Coupons, such acquisition
shall not operate as a redemption or satisfaction of the indebtedness
represented by such Securities or Coupons unless and until the same are
delivered to the Trustee or its agent for cancellation.
SECTION 2.11 Temporary Securities. Pending the preparation
of definitive Securities for any series, the Issuer may execute and the Trustee
shall authenticate and deliver temporary Securities for such series (printed,
lithographed, typewritten or otherwise reproduced, in each case in form
satisfactory to the Trustee). Temporary Securities of any series shall be
issuable as Registered Securities without Coupons, or as Unregistered
Securities with or without Coupons attached thereto, of any authorized
denomination, and substantially in the form of the definitive Securities of
such series but with such omissions, insertions and variations as may be
appropriate for temporary Securities, all as may be determined by the Issuer
with the concurrence of the Trustee as evidenced by the execution and
authentication thereof. Temporary Securities may contain such references to
any provisions of this Indenture as may be appropriate. Every temporary
Security shall be executed by the Issuer and be authenticated by the Trustee
upon the same conditions and in substantially the same manner, and with like
effect, as the
-22-
<PAGE> 31
definitive Securities. Without unreasonable delay the Issuer shall execute and
shall furnish definitive Securities of such series and thereupon temporary
Registered Securities of such series may be surrendered in exchange therefor
without charge at each office or agency to be maintained by the Issuer for that
purpose pursuant to Section 3.2 and, in the case of Unregistered Securities, at
any agency maintained by the Issuer for such purpose as specified pursuant to
Section 2.3, and the Trustee shall authenticate and deliver in exchange for
such temporary Securities of such series an equal aggregate principal amount of
definitive Securities of the same series having authorized denominations and,
in the case of Unregistered Securities, having attached thereto any appropriate
Coupons. Until so exchanged, the temporary Securities of any series shall be
entitled to the same benefits under this Indenture as definitive Securities of
such series, unless otherwise established pursuant to Section 2.3. The
provisions of this Section are subject to any restrictions or limitations on
the issue and delivery of temporary Unregistered Securities of any series that
may be established pursuant to Section 2.3 (including any provision that
Unregistered Securities of such series initially be issued in the form of a
single global Unregistered Security to be delivered to a depositary or agency
located outside the United States and the procedures pursuant to which
definitive or global Unregistered Securities of such series would be issued in
exchange for such temporary global Unregistered Security).
ARTICLE THREE
COVENANTS OF THE ISSUER
SECTION 3.1 Payment of Principal and Interest. The Issuer
covenants and agrees for the benefit of each series of Securities that it will
duly and punctually pay or cause to be paid the principal of, and interest on,
each of the Securities of such series (together with any additional amounts
payable pursuant to the terms of such Securities) at the place or places, at
the respective times and in the manner provided in such Securities and in the
Coupons, if any, appertaining thereto and in this Indenture. The interest on
Securities with Coupons attached (together with any additional amounts payable
pursuant to the terms of such Securities) shall be payable only upon
presentation and surrender of the several Coupons for such interest
installments as are evidenced thereby as they severally mature. If any
temporary Unregistered Security provides that interest thereon may be paid
while such Security is in temporary form, the interest on any such temporary
Unregistered Security (together with any additional amounts payable pursuant to
the terms of such Security) shall be paid, as to the installments of interest
evidenced by Coupons attached thereto, if any, only upon presentation and
surrender thereof, and, as to the other installments of interest, if any, only
upon presentation of such Securities for notation thereon of the payment of
such interest, in each case subject to any
-23-
<PAGE> 32
restrictions that may be established pursuant to Section 2.3. The interest on
Registered Securities (together with any additional amounts payable pursuant to
the terms of such Securities) shall be payable only to or upon the written
order of the Holders thereof and, at the option of the Issuer, may be paid by
wire transfer or by mailing checks for such interest payable to or upon the
written order of such Holders at their last addresses as they appear on the
registry books of the Issuer.
SECTION 3.2 Offices for Payments, etc. So long as any
Registered Securities are authorized for issuance pursuant to this Indenture or
are outstanding hereunder, the Issuer will maintain in the Borough of
Manhattan, The City of New York, an office or agency where the Registered
Securities of each series may be presented for payment, where the Securities of
each series may be presented for exchange as is provided in this Indenture and,
if applicable, pursuant to Section 2.3 and where the Registered Securities of
each series may be presented for registration of transfer as in this Indenture
provided.
The Issuer will maintain one or more offices or agencies in a
city or cities located outside the United States (including any city in which
such an agency is required to be maintained under the rules of any stock
exchange on which the Securities of such series are listed) where the
Unregistered Securities, if any, of each series and Coupons, if any,
appertaining thereto may be presented for payment. No payment on any
Unregistered Security or Coupon will be made upon presentation of such
Unregistered Security or Coupon at an agency of the Issuer within the United
States nor will any payment be made by transfer to an account in, or by mail to
an address in, the United States unless pursuant to applicable United States
laws and regulations then in effect such payment can be made, in the Issuer's
sole discretion, without adverse tax consequences to the Issuer.
Notwithstanding the foregoing, payments in Dollars of Unregistered Securities
of any series and Coupons appertaining thereto which are payable in Dollars may
be made at an agency of the Issuer maintained in the Borough of Manhattan, The
City of New York if such payment in Dollars at each agency maintained by the
Issuer outside the United States for payment on such Unregistered Securities is
illegal or effectively precluded by exchange controls or other similar
restrictions.
The Issuer will maintain in the Borough of Manhattan, The City
of New York, an office or agency where notices and demands to or upon the
Issuer in respect of the Securities of any series, the Coupons appertaining
thereto or this Indenture may be served.
The Issuer will give to the Trustee written notice of the
location of each such office or agency and of any change of location thereof.
In case the Issuer shall fail to maintain any agency required by this Section
to be located 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 of any of
the
-24-
<PAGE> 33
above agencies, presentations and demands may be made and notices may be served
at the Corporate Trust Office of the Trustee.
The Issuer may from time to time designate one or more
additional offices or agencies where the Securities of a series and any Coupons
appertaining thereto may be presented for payment, where the Securities of that
series may be presented for exchange as provided in this Indenture and pursuant
to Section 2.3 and where the Registered Securities of that series may be
presented for registration of transfer as in this Indenture provided, and the
Issuer may from time to time rescind any such designation, as the Issuer may
deem desirable or expedient; provided, however, that no such designation or
rescission shall in any manner relieve the Issuer of its obligation to maintain
the agencies provided for in this Section. The Issuer will give to the Trustee
prompt written notice of any such designation or rescission thereof.
SECTION 3.3 Appointment to Fill a Vacancy in Office of
Trustee. The Issuer, 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 with respect to each
series of Securities hereunder.
SECTION 3.4 Paying Agents. Whenever the Issuer shall appoint
a paying agent other than the Trustee with respect to the Securities of any
series, 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
provisions of this Section,
(a) that it will hold all sums received by it as such agent
for the payment of the principal of or interest on the Securities of
such series (whether such sums have been paid to it by the Issuer or
by any other obligor on the Securities of such series) in trust for
the benefit of the Holders of the Securities of such series, or
Coupons appertaining thereto, if any, or of the Trustee, and
(b) that it will give the Trustee notice of any failure by
the Issuer (or by any other obligor on the Securities of such series)
to make any payment of the principal of or interest on the Securities
of such series when the same shall be due and payable.
The Issuer will, on or prior to each due date of the principal
of or interest on the Securities of such series, deposit with the paying agent
a sum sufficient to pay such principal or interest so becoming due, provided,
in the case of bearer securities, deposit will be made at least 1 Business Day
prior to the payment date, and (unless such paying agent is the Trustee) the
Issuer will promptly notify the Trustee of any failure to take such action.
-25-
<PAGE> 34
If the Issuer shall act as its own paying agent with respect
to the Securities of any series, it will, on or before each due date of the
principal of or interest on the Securities of such series, set aside, segregate
and hold in trust for the benefit of the Holders of the Securities of such
series or the Coupons appertaining thereto a sum sufficient to pay such
principal or interest so becoming due. The Issuer will promptly notify the
Trustee of any failure to take such action.
Anything in this Section to the contrary notwithstanding, but
subject to Section 10.1, the Issuer may at any time, for the purpose of
obtaining a satisfaction and discharge with respect to one or more or all
series of Securities hereunder, or for any other reason, pay or cause to be
paid to the Trustee all sums held in trust for any such series by the Issuer or
any paying agent hereunder, as required by this Section, such sums to be held
by the Trustee upon the trusts herein contained.
Anything in this Section to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section is subject to the
provisions of Sections 10.3 and 10.4.
SECTION 3.5 Written Statement to Trustee. The Issuer will
deliver to the Trustee on or before May 31 in each year (beginning with May 31,
1996) an Officers' Certificate (which need not comply with Section 11.5)
stating that in the course of the performance by the signers of their duties as
officers of the Issuer they would normally have knowledge of any default by the
Issuer in the performance of any covenants contained in this Indenture, 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.
At least one signatory to such Officers' Certificate shall be the principal
executive officer, principal financial officer or principal accounting officer
of the Issuer.
SECTION 3.6 Limitations upon Liens. After the date hereof
and so long as any Securities are outstanding, the Issuer will not, and will
not permit any Subsidiary to, issue, assume or guarantee any Indebtedness
secured by a mortgage, pledge, lien, security interest or encumbrance (any
mortgage, pledge, lien, security interest or encumbrance being hereinafter in
this Article referred to as a "mortgage" or "mortgages" or as a "lien" or
"liens") of, or upon any property of the Issuer or of any Subsidiary, without
effectively providing that the Securities (together with, if the Issuer shall
so determine, any other Indebtedness of the Issuer ranking equally with the
Securities) shall be equally and ratably secured with such Indebtedness;
provided, however, that the foregoing restriction shall not apply to
(a) Any purchase money mortgage created by the Issuer or a
Subsidiary to secure all or part of the purchase price of
-26-
<PAGE> 35
any property (or to secure a loan made to enable the Issuer or a
Subsidiary to acquire the property described in such mortgage),
provided that the principal amount of the Indebtedness secured by any
such mortgage, together with all other Indebtedness secured by a
mortgage on such property, shall not exceed the purchase price of the
property acquired;
(b) Any mortgage existing on any property at the time of the
acquisition thereof by the Issuer or a Subsidiary whether or not
assumed by the Issuer or a Subsidiary, and any mortgage on any
property acquired or constructed by the Issuer or a Subsidiary and
created not later than 12 months after (i) such acquisition or
completion of such construction or (ii) commencement of full operation
of such property, whichever is later; provided, however, that, if
assumed or created by the Issuer or a Subsidiary, the principal amount
of the Indebtedness secured by such mortgage, together with all other
Indebtedness secured by a mortgage on such property, shall not exceed
the purchase price of the property, acquired and/or the cost of the
property constructed;
(c) Any mortgage created or assumed by the Issuer or a
Subsidiary on any contract for the sale of any product or service or
any rights thereunder or any proceeds therefrom, including accounts
and other receivables, related to the operation or use of any property
acquired or constructed by the Issuer or a Subsidiary and created not
later than 12 months after (i) such acquisition or completion of such
construction or (ii) commencement of full operation of such property,
whichever is later;
(d) Any mortgage existing on any property of a Subsidiary at
the time it becomes a Subsidiary;
(e) Any refunding or extension of maturity, in whole or in
part, of any mortgage created or assumed in accordance with the
provisions of subdivision (a), (b), (c) or (d) above or (j) or (bb)
below, provided that the principal amount of the Indebtedness secured
by such refunding mortgage or extended mortgage shall not exceed the
principal amount of the Indebtedness secured by the mortgage to be
refunded or extended outstanding at the time of such refunding or
extension and that such refunding mortgage or extended mortgage shall
be limited in lien to the same property that secured the mortgage so
refunded or extended;
(f) Any mortgage created or assumed by the Issuer or a
Subsidiary to secure loans to the Issuer or a Subsidiary maturing
within 12 months of the date of creation thereof and not renewable or
extendible by the terms thereof at the option of the obligor beyond
such 12 months, and made in the ordinary course of business;
-27-
<PAGE> 36
(g) Mechanics' or materialmen's liens or any lien or charge
arising by reason of pledges or deposits to secure payment of
workmen's compensation or other insurance, good faith deposits in
connection with tenders or leases of real estate, bids or contracts
(other than contracts for the payment of money), deposits to secure
public or statutory obligations, deposits to secure or in lieu of
surety, stay or appeal bonds and deposits as security for the payment
of taxes or assessments or other similar charges;
(h) Any mortgage arising by reason of deposits with or the
giving of any form of security to any governmental agency or any body
created or approved by law or governmental regulation for any purpose
at any time as required by law or governmental regulation as a
condition to the transaction of any business or the exercise of any
privilege or license, or to enable the Issuer or a Subsidiary to
maintain self-insurance or to participate in any fund for liability on
any insurance risks or in connection with workmen's compensation,
unemployment insurance, old age pensions or other social security or
to share in the privileges or benefits required for companies
participating in such arrangements;
(i) Any mortgage which is payable, both with respect to
principal and interest, solely out of the proceeds of oil, gas, coal
or other minerals or timber to be produced from the property subject
thereto and to be sold or delivered by the Issuer or a Subsidiary,
including any interest of the character commonly referred to as a
"production payment";
(j) Any mortgage created or assumed by a Subsidiary on oil,
gas, coal or other mineral or timber property, owned or leased by a
Subsidiary to secure loans to such Subsidiary for the purposes of
developing such properties, including any interest of the character
commonly referred to as a "production payment"; provided, however,
that neither the Issuer nor any other Subsidiary shall assume or
guarantee such loans or otherwise be liable in respect thereto;
(k) Mortgages upon rights-of-way;
(l) Undetermined mortgages and charges incidental to
construction or maintenance;
(m) The right reserved to, or vested in, any municipality or
governmental or other public authority or railroad by the terms of any
right, power, franchise, grant, license, permit or by any provision of
law, to terminate or to require annual or other periodic payments as a
condition to the continuance of such right, power, franchise, grant,
license or permit;
-28-
<PAGE> 37
(n) The lien of taxes and assessments which are not at the
time delinquent;
(o) The lien of specified taxes and assessments which are
delinquent but the validity of which is being contested in good faith
at the time by the Issuer or a Subsidiary;
(p) The lien reserved in leases for rent and for compliance
with the terms of the lease in the case of leasehold estates;
(q) Defects and irregularities in the titles to any property
(including rights-of-way and easements) which are not material to the
business of the Issuer and its Subsidiaries considered as a whole;
(r) Any mortgages securing Indebtedness neither assumed nor
guaranteed by the Issuer or a Subsidiary nor on which it customarily
pays interest, existing upon real estate or rights in or relating to
real estate (including rights-of-way and easements) acquired by the
Issuer or a Subsidiary, which mortgages do not materially impair the
use of such property for the purposes for which it is held by the
Issuer or such Subsidiary;
(s) Easements, exceptions or reservations in any property of
the Issuer or a Subsidiary granted or reserved for the purpose of
pipelines, roads, telecommunication equipment and cable, streets,
alleys, highways, railroad purposes, the removal of oil, gas, coal or
other minerals or timber, and other like purposes, or for the joint or
common use of real property, facilities and equipment, which do not
materially impair the use of such property for the purposes for which
it is held by the Issuer or such Subsidiary;
(t) Rights reserved to or vested in any municipality or
public authority to control or regulate any property of the Issuer or
a Subsidiary, or to use such property in any manner which does not
materially impair the use of such property for the purposes for which
it is held by the Issuer or such Subsidiary;
(u) Any obligations or duties, affecting the property of the
Issuer or a Subsidiary, to any municipality or public authority with
respect to any franchise, grant, license or permit;
(v) The liens of any judgments in an aggregate amount not in
excess of $1,000,000 or the lien of any judgment the execution of
which has been stayed or which has been appealed and secured, if
necessary, by the filing of an appeal bond;
(w) Zoning laws and ordinances;
-29-
<PAGE> 38
(x) Any mortgage existing on any office equipment, data
processing equipment (including computer and computer peripheral
equipment) or transportation equipment (including motor vehicles,
aircraft and marine vessels);
(y) Any mortgage created or assumed by the Issuer or a
Subsidiary on oil, gas, coal or other mineral or timber property owned
by the Issuer or a Subsidiary;
(z) Leases now or hereafter existing and any renewals or
extensions thereof;
(aa) Any mortgage created by the Issuer or a Subsidiary on
any contract (or any rights thereunder or proceeds therefrom)
providing for advances by the Issuer or such Subsidiary to finance gas
exploration and development, which mortgage is created to secure
indebtedness incurred to finance such advances; and
(bb) Any mortgage not permitted by clauses (a) through (aa)
above if at the time of, and after giving effect to, the creation or
assumption of any such mortgage, the aggregate of all Indebtedness of
the Issuer and its Subsidiaries secured by all such mortgages not so
permitted by clauses (a) through (aa) above do not exceed 5% of
Consolidated Net Tangible Assets.
In the event that the Issuer or a Subsidiary shall hereafter
secure the Securities equally and ratably with any other obligation or
Indebtedness pursuant to the provisions of this Section 3.6, the Trustee is
hereby authorized to enter into an indenture supplemental hereto and to take
such action, if any, as it may deem advisable to enable it to enforce
effectively the rights of the Holders of the Securities so secured, equally and
ratably with such other obligation or Indebtedness.
Subject to the provisions of Section 6.1, the Trustee, at its
request, may receive an Opinion of Counsel as conclusive evidence that any such
supplemental indenture or steps taken to secure the Securities equally and
ratably comply with the provisions of this Section 3.6.
SECTION 3.7 Luxembourg Publications. In the event of the
publication of any notice pursuant to Section 5.11, 6.8, 6.10(a), 6.11, 8.2,
10.4, 12.2 or 12.5 or Section 310(b) of the Trust Indenture Act of 1939, the
party making such publication in the Borough of Manhattan, The City of New York
and London shall also, to the extent that notice is required to be given to
Holders of Securities of any series by applicable Luxembourg law or stock
exchange regulation, as evidenced by an Officers' Certificate delivered to such
party, make a similar publication in Luxembourg.
-30-
<PAGE> 39
ARTICLE FOUR
SECURITYHOLDERS LISTS AND REPORTS BY THE
ISSUER AND THE TRUSTEE
SECTION 4.1 Issuer to Furnish Trustee Information as to Names
and Addresses of Securityholders. The Issuer and any other obligor on the
Securities covenant and agree that they will furnish or cause to be furnished
to the Trustee a list in such form as the Trustee may reasonably require of the
names and addresses of the Holders of the Registered Securities of each series:
(a) semiannually and not more than 15 days after each record
date for the payment of interest on such Registered Securities, as
hereinabove specified, as of such record date and on dates to be
determined pursuant to Section 2.3 for non-interest bearing Registered
Securities in each year, and
(b) at such other times as the Trustee may request in
writing, within 30 days after receipt by the Issuer of any such
request as of a date not more than 15 days prior to the time such
information is furnished,
provided that if and so long as the Trustee shall be the Security registrar for
such series and all of the Securities of any series are Registered Securities,
such list shall not be required to be furnished.
SECTION 4.2 Preservation and Disclosure of Securityholders
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
each series of Registered Securities (i) contained in the most recent list
furnished to it as provided in Section 4.1, (ii) received by it in the capacity
of Security registrar for such series, if so acting, and (iii) filed with it
within two preceding years pursuant to Section 313(c)(2) of the Trust Indenture
Act of 1939. The Trustee may destroy any list furnished to it as provided in
Section 4.1 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 of a particular series (in which case the applicants must all
hold Securities of such series) or with Holders of all Securities with respect
to their rights under this Indenture or under such Securities and such
application 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
-31-
<PAGE> 40
(i) afford to such applicants access to the information
preserved at the time by the Trustee in accordance with the provisions
of subsection (a) of this Section, or
(ii) inform such applicants as to the approximate number of
Holders of Registered Securities of such series or of all Registered
Securities, as the case may be, whose names and addresses appear in
the information preserved at the time by the Trustee, in accordance
with the provisions of subsection (a) of this Section, 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 to such applicants
access to such information, the Trustee shall, upon the written request of such
applicants, mail to each Securityholder of such series or all Holders of
Registered Securities, as the case may be, whose name and address appears in
the information preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 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
Registered Securities of such series or of all Registered 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 and Coupons, by
receiving and holding the same, agrees with the Issuer and the Trustee that
neither the Issuer nor the Trustee nor any agent of the Issuer or the Trustee
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, 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
such subsection (b).
-32-
<PAGE> 41
SECTION 4.3 Reports by the Issuer. The Issuer covenants:
(a) to file with the Trustee, within 30 days after the Issuer
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 the Commission may
from time to time by rules and regulations prescribe) which the Issuer
may be required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934; or if the Issuer
is not required to file information, documents, or reports pursuant to
either of such Sections, then to file with the Trustee and the
Commission, in accordance with rules and regulations prescribed from
time to time by the Commission, such of the supplementary and periodic
information, documents, and reports which may be required pursuant to
Section 13 of the Securities Exchange Act of 1934 in respect of a debt
security listed and registered on a national securities exchange as
may be prescribed from time to time in such rules and regulations;
(b) to file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by
the Commission, such additional information, documents, and reports
with respect to compliance by the Issuer with the conditions and
covenants provided for in this Indenture as may be required from time
to time by such rules and regulations; and
(c) to transmit by mail to the Holders of Securities within
30 days after the filing thereof with the Trustee, in the manner and
to the extent provided in Section 313(c) of the Trust Indenture Act of
1939, such summaries of any information, documents and reports
required to be filed by the Issuer pursuant to subsections (a) and (b)
of this Section as may be required to be transmitted to such Holders
by rules and regulations prescribed from time to time by the
Commission.
SECTION 4.4 Reports by the Trustee. The Trustee shall
transmit to the Securityholders such reports concerning the Trustee and its
actions under this Indenture as may be required pursuant to the Trust Indenture
Act of 1939 at the times and in the manner provided pursuant thereto. Reports
required annually shall be provided by October 15 of each year for the previous
year commencing October 15, 1996.
A copy of each such report shall, at the time of such
transmission to Securityholders, be furnished to the Issuer and be filed by the
Trustee with each stock exchange upon which the Securities of any applicable
series are listed and also with the Commission. The Issuer agrees to notify
the Trustee with respect
-33-
<PAGE> 42
to any series when and as the Securities of such series become admitted to
trading on any national securities exchange.
ARTICLE FIVE
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.1 Event of Default Defined; Acceleration of
Maturity; Waiver of Default. "Event of Default" with respect to Securities of
any series wherever used herein, means each one of the following events which
shall have occurred and be continuing (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 instalment of interest upon
any of the Securities of such series as and when the same shall become
due and payable, and continuance of such default for a period of 30
days unless specifically otherwise provided in a Board Resolution,
Officers' Certificate or indenture supplemental hereto provided
pursuant to Section 2.3; or
(b) default in the payment of all or any part of the
principal on any of the Securities of such series as and when the same
shall become due and payable either at maturity, upon any redemption,
by declaration or otherwise; or
(c) default in the performance, or breach, of any covenant or
warranty of the Issuer in the Securities of such series (other than a
covenant or warranty in respect of the Securities of such series 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 Issuer by the Trustee or to the
Issuer and the Trustee by the Holders of at least 25% in aggregate
principal amount of the Outstanding Securities of all series affected
thereby, 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) the entry of a decree or order by a court having
jurisdiction in the premises adjudging the Issuer a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization arrangement, adjustment or composition of or in respect
of the Issuer under the Federal bankruptcy law or any other applicable
Federal or state law, or appointing a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Issuer or of
-34-
<PAGE> 43
any substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or
order unstayed and in effect for a period of 60 consecutive days; or
(e) the institution by the Issuer of proceedings to be
adjudicated a bankrupt or insolvent or the consent by it to the
institution of bankruptcy or insolvency proceedings against it, or the
filing by it of a petition or answer or consent seeking reorganization
or relief under the Federal bankruptcy law or any other applicable
Federal or state law, or the consent by it to the filing of any such
petition or to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Issuer or of
any substantial part of its property, or the making by it of a general
assignment for the benefit of creditors;
(f) any other Event of Default provided in the supplemental
indenture under which such series of Securities is issued or in the
form of Security for such series;
provided, however, that the occurrence of any of the events described in the
foregoing clause (c) or (f) shall not constitute an Event of Default if such
occurrence is the result of changes in generally accepted accounting principles
as recognized by the American Institute of Certified Public Accountants at the
date as of which this Indenture is executed and a certificate to such effect is
delivered to the Trustee by the Issuer's independent public accountants.
If an Event of Default described in clauses (a), (b), (c) or
(f) (if the Event of Default under clause (c) or (f), as the case may be, is
with respect to less than all series of Securities then Outstanding) occurs and
is continuing, then, and in each and every such case, except for any series of
Securities the principal of which shall have already become due and payable,
either the Trustee or the Holders of not less than 25% in aggregate principal
amount of the Securities of each such affected series then Outstanding
hereunder (voting as a single class) by notice in writing to the Issuer (and to
the Trustee if given by Securityholders), may declare the entire principal (or,
if the Securities of any such affected series are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of such series) of all Securities of all such affected series, and the
interest accrued thereon, if any, to be due and payable immediately, and upon
any such declaration, the same shall become immediately due and payable. If an
Event of Default described in clause (c) or (f) (if the Event of Default under
clause (c) or (f), as the case may be, is with respect to all series of
Securities then Outstanding), (d) or (e) occurs and is continuing, then and in
each and every such case, unless the principal of all the Securities shall have
already become due and payable, either the Trustee or the Holders of not less
than 25% in
-35-
<PAGE> 44
aggregate principal amount of all the Securities then Outstanding hereunder
(treated as one class), by notice in writing to the Issuer (and to the Trustee
if given by Securityholders), may declare the entire principal (or, if any
Securities are Original Issue Discount Securities, such portion of the
principal as may be specified in the terms thereof) of all the Securities then
Outstanding, and interest accrued thereon, if any, to be due and payable
immediately, and upon any such declaration the same shall become immediately
due and payable.
The foregoing provisions, however, are subject to the
condition that if, at any time after the principal (or, if the Securities are
Original Issue Discount Securities, such portion of the principal as may be
specified in the terms thereof) of the Securities of any series (or of all the
Securities, as the case may be) shall have been so declared due and payable,
and before any judgment or decree for the payment of the moneys due shall have
been obtained or entered as hereinafter provided, the Issuer shall pay or shall
deposit with the Trustee a sum sufficient to pay all matured installments of
interest upon all the Securities of such series (or of all the Securities, as
the case may be) and the principal of any and all Securities of each such
series (or of all the Securities, as the case may be) which shall have become
due otherwise than by acceleration (with interest upon such principal and, to
the extent that payment of such interest is enforceable under applicable law,
on overdue instalments of interest, at the same rate as the rate of interest or
Yield to Maturity (in the case of Original Issue Discount Securities) specified
in the Securities of each such series (or at the respective rates of interest
or Yields to Maturity of all the Securities, as the case may be) to the date of
such payment or deposit) and such amount as shall be sufficient to cover
reasonable compensation to the Trustee and each predecessor Trustee, its
agents, attorneys and counsel, and all other expenses and liabilities incurred,
and all advances made, by the Trustee and each predecessor Trustee except as a
result of negligence or bad faith, and if any and all Events of Default under
the Indenture, other than the non-payment of the principal of Securities which
shall have become due by acceleration, shall have been cured, waived or
otherwise remedied as provided herein--then and in every such case the Holders
of a majority in aggregate principal amount of all the Securities of each such
series, or of all the Securities, in each case voting as a single class, then
Outstanding, by written notice to the Issuer and to the Trustee, may waive all
defaults with respect to each such series (or with respect to all the
Securities, as the case may be) and rescind and annul such declaration and its
consequences, but no such waiver or rescission and annulment shall extend to or
shall affect any subsequent default or shall impair any right consequent
thereon.
For all purposes under this Indenture, if a portion of the
principal of any Original Issue Discount Securities shall have been accelerated
and declared due and payable pursuant to the provisions hereof, then, from and
after such declaration, unless
-36-
<PAGE> 45
such declaration has been rescinded and annulled, the principal amount of such
Original Issue Discount Securities shall be deemed, for all purposes hereunder,
to be such portion of the principal thereof as shall be due and payable as a
result of such acceleration, and payment of such portion of the principal
thereof as shall be due and payable as a result of such acceleration, together
with interest, if any, thereon and all other amounts owing thereunder, shall
constitute payment in full of such Original Issue Discount Securities.
SECTION 5.2 Collection of Indebtedness by Trustee; Trustee
May Prove Debt. The Issuer covenants that (a) in the case an Event of Default
referred to in Section 5.1(a) shall occur with respect to the Securities of any
series, or (b) in case default shall be made in the payment of all or any part
of the principal of any of the Securities of any series when the same shall
have become due and payable, whether upon maturity of the Securities of such
series or upon any redemption or by declaration or otherwise -- then upon
demand of the Trustee, the Issuer will pay to the Trustee for the benefit of
the Holders of the Securities of such series the whole amount that then shall
have become due and payable on all Securities of such series, and such Coupons,
for principal or interest, as the case may be (with interest to the date of
such payment upon the overdue principal and, to the extent that payment of such
interest is enforceable under applicable law, on overdue instalments of
interest at the same rate as the rate of interest or Yield to Maturity (in the
case of Original Issue Discount Securities) specified in the Securities of such
series); and in addition thereto, such further amount as shall be sufficient to
cover the costs and expenses of collection, including reasonable compensation
to the Trustee and each predecessor Trustee, their respective agents, attorneys
and counsel, and any expenses and liabilities incurred, and all advances made,
by the Trustee and each predecessor Trustee except as a result of its
negligence or bad faith.
Until such demand is made by the Trustee, the Issuer may pay
the principal of and interest on the Securities of any series to the registered
Holders, whether or not the Securities of such series be overdue.
In case the Issuer 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 action or proceedings
at law or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceedings to judgment or final decree, and may
enforce any such judgment or final decree against the Issuer or other obligor
upon the Securities and collect in the manner provided by law out of the
property of the Issuer or other obligor upon the Securities, wherever situated
the moneys adjudged or decreed to be payable.
-37-
<PAGE> 46
In case there shall be pending proceedings relative to the
Issuer or any other obligor upon the Securities under Title 11 of the United
States Code or any other applicable Federal or state bankruptcy, insolvency or
other similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor, or in case of any other comparable judicial proceedings relative to
the Issuer or other obligor upon the Securities, or to the creditors or
property of the Issuer 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, shall be entitled and empowered, by intervention in such proceedings
or otherwise:
(a) to file and prove a claim or claims for the whole amount
of principal and interest (or, if the Securities of any series are
Original Issue Discount Securities, such portion of the principal
amount as may be specified in the terms of such series) owing and
unpaid in respect of the Securities of any series, and to file such
other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for reasonable
compensation to the Trustee and each predecessor Trustee, and their
respective agents, attorneys and counsel, and for reimbursement of all
expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee, except as a result of negligence
or bad faith) and of the Securityholders allowed in any judicial
proceedings relative to the Issuer or other obligor upon the
Securities, or to the creditors or property of the Issuer or such
other obligor,
(b) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of the Securities of any series 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
(c) to collect and receive any moneys or other property
payable or deliverable on any such claims, and to distribute all
amounts received with respect to the claims of the Securityholders and
of the Trustee on their behalf; and any trustee, receiver, or
liquidator, custodian or other similar official is hereby authorized
by each of the Securityholders to make payments to the Trustee, and,
in the event that the Trustee shall consent to the making of payments
directly to the Securityholders, to pay to the Trustee such amounts as
shall be sufficient to cover reasonable compensation to the Trustee,
each predecessor Trustee and their respective agents, attorneys and
counsel, and all other expenses and liabilities
-38-
<PAGE> 47
incurred, and all advances made, by the Trustee and each predecessor
Trustee except as a result of negligence or bad faith.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities of any series 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 except, as aforesaid, to vote for the
election of a trustee in bankruptcy or similar Person.
All rights of action and of asserting claims under this
Indenture, or under any of the Securities of any series or Coupons appertaining
to such Securities, may be enforced by the Trustee without the possession of
any of the Securities of such series or Coupons appertaining to such Securities
or the production thereof on any trial or other proceedings relative thereto,
and any such action or proceedings instituted by the Trustee shall be brought
in its own name as trustee of an express trust, and any recovery of judgment,
subject to the payment of the expenses, disbursements and compensation of the
Trustee, each predecessor Trustee and their respective agents and attorneys,
shall be for the ratable benefit of the Holders of the Securities or Coupons
appertaining to such Securities in respect of which such action was taken.
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 or Coupons appertaining to such Securities in
respect to which such action was taken, and it shall not be necessary to make
any Holders of such Securities or Coupons appertaining to such Securities
parties to any such proceedings.
SECTION 5.3 Application of Proceeds. Any moneys collected
by the Trustee pursuant to this Article in respect of any series shall be
applied in the following order at the date or dates fixed by the Trustee and,
in case of the distribution of such moneys on account of principal or interest,
upon presentation of the several Securities and Coupons appertaining to such
Securities in respect of which monies have been collected and stamping (or
otherwise noting) thereon the payment, or issuing Securities of such series in
reduced principal amounts in exchange for the presented Securities of like
series if only partially paid, or upon surrender thereof if fully paid:
FIRST: To the payment of costs and expenses applicable to
such series in respect of which monies have been collected, including
reasonable compensation to the Trustee and each predecessor Trustee
and their respective agents and attorneys and of all expenses and
liabilities incurred, and all advances
-39-
<PAGE> 48
made, by the Trustee and each predecessor Trustee except as a result
of negligence or bad faith;
SECOND: In case the principal of the Securities of such
series in respect of which moneys have been collected shall not have
become and be then due and payable, to the payment of interest on the
Securities of such series in default in the order of the maturity of
the instalments of such interest, with interest (to the extent that
such interest has been collected by the Trustee) upon the overdue
instalments of interest at the same rate as the rate of interest or
Yield to Maturity (in the case of Original Issue Discount Securities)
specified in such Securities, such payments to be made ratably to the
Persons entitled thereto, without discrimination or preference;
THIRD: In case the principal of the Securities of such series
in respect of which moneys have been collected shall have become and
shall be then due and payable, to the payment of the whole amount then
owing and unpaid upon all the Securities of such series for principal
and interest, with interest upon the overdue principal, and (to the
extent that such interest has been collected by the Trustee) upon
overdue instalments of interest at the same rate as the rate of
interest or Yield to Maturity (in the case of Original Issue Discount
Securities) specified in the Securities of such series; and in case
such moneys shall be insufficient to pay in full the whole amount so
due and unpaid upon the Securities of such series, then to the payment
of such principal and interest or Yield to Maturity, without
preference or priority of principal over interest or Yield to
Maturity, or of interest or Yield to Maturity over principal, or of
any instalment of interest over any other instalment of interest, or
of any Security of such series over any other Security of such series,
ratably to the aggregate of such principal and accrued and unpaid
interest or Yield to Maturity; and
FOURTH: To the payment of the remainder, if any, to the
Issuer or any other Person lawfully entitled thereto.
SECTION 5.4 Suits for Enforcement. In case an Event of
Default has occurred, has not been waived 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 at law or in
equity or 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.
-40-
<PAGE> 49
SECTION 5.5 Restoration of Rights on Abandonment of
Proceedings. In case the Trustee shall have proceeded to enforce any right
under this Indenture and such proceedings shall have been discontinued or
abandoned for any reason, or shall have been determined adversely to the
Trustee, then and in every such case the Issuer and the Trustee shall be
restored respectively to their former positions and rights hereunder, and all
rights, remedies and powers of the Issuer, the Trustee and the Securityholders
shall continue as though no such proceedings had been taken.
SECTION 5.6 Limitations on Suits by Securityholders. No
Holder of any Security of any series or of any Coupon appertaining thereto
shall have any right by virtue or by availing of any provision of this
Indenture to institute any action or proceeding at law or in equity or in
bankruptcy or otherwise upon or under or with respect to this Indenture, or for
the appointment of a trustee, receiver, liquidator, custodian or other similar
official or for any other remedy hereunder, unless such Holder previously shall
have given to the Trustee written notice of default and of the continuance
thereof, as hereinbefore provided, and unless also the Holders of not less than
25% in aggregate principal amount of the Securities of each affected series
then Outstanding (treated as a single class) shall have made written request
upon the Trustee to institute such action or proceedings 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 or proceeding and no direction inconsistent with such written
request shall have been given to the Trustee pursuant to Section 5.9; it being
understood and intended, and being expressly covenanted by the taker and Holder
of every Security or Coupon with every other taker and Holder and the Trustee,
that no one or more Holders of Securities of any series or Coupons appertaining
to such Securities shall have any right in any manner whatever by virtue or by
availing of any provision of this Indenture to affect, disturb or prejudice the
rights of any other such Holder of Securities or Coupons appertaining to such
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 of the applicable series and Coupons appertaining to such
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.
SECTION 5.7 Unconditional Right of Securityholders to
Institute Certain Suits. Notwithstanding any other provision in this Indenture
and any provision of any Security, the right of any Holder of any Security or
Coupon to receive payment of the principal of and interest on such Security or
Coupon on or after
-41-
<PAGE> 50
the respective due dates expressed in such Security or Coupon, or to institute
suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.
SECTION 5.8 Powers and Remedies Cumulative; Delay or Omission
Not Waiver of Default. Except as provided in Section 5.6, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders of
Securities or Coupons is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
No delay or omission of the Trustee or of any Holder of
Securities or Coupons 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 Event of Default or an
acquiescence therein; and, subject to Section 5.6, every power and remedy given
by this Indenture or by law to the Trustee or to the Holders of Securities or
Coupons may be exercised from time to time, and as often as shall be deemed
expedient, by the Trustee or by the Holders of Securities or Coupons.
SECTION 5.9 Control by Holders of Securities. The Holders of
a majority in aggregate principal amount of the Securities of each series
affected (with all such series voting as a single class) 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 with respect to the
Securities of such series by this Indenture; provided that such direction shall
not be otherwise than in accordance with law and the provisions of this
Indenture and provided further that (subject to the provisions of Section 6.1)
the Trustee shall have the right to decline to follow any such direction if the
Trustee, being advised by counsel, shall determine that the action or
proceeding so directed may not lawfully be taken or if the Trustee in good
faith by its board of directors, the executive committee, or a trust committee
of directors or Responsible Officers of the Trustee shall determine that the
action or proceedings so directed would involve the Trustee in personal
liability or if the Trustee in good faith shall so determine that the actions
or forebearances specified in or pursuant to such direction would be unduly
prejudicial to the interests of Holders of the Securities of all series so
affected not joining in the giving of said direction, it being understood that
(subject to Section 6.1) the Trustee shall have no duty to ascertain whether or
not such actions or forebearances are unduly prejudicial to such Holders.
-42-
<PAGE> 51
Nothing in this Indenture shall impair the right of the
Trustee in its discretion to take any action deemed proper by the Trustee and
which is not inconsistent with such direction or directions by Securityholders.
SECTION 5.10 Waiver of Past Defaults. Prior to the
acceleration of the maturity of any Securities as provided in Section 5.1, the
Holders of a majority in aggregate principal amount of the Securities of all
series at the time Outstanding with respect to which an Event of Default shall
have occurred and be continuing (voting as a single class) may on behalf of the
Holders of all such Securities waive any past default or Event of Default
described in Section 5.1 and its consequences, except a default in respect of a
covenant or provision hereof which cannot be modified or amended without the
consent of the Holder of each Security affected. In the case of any such
waiver, the Issuer, the Trustee and the Holders of all such 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.
Upon any such waiver, such default shall cease to exist and be
deemed to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have been cured, and not to have occurred
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 5.11 Trustee to Give Notice of Default, But May
Withhold in Certain Circumstances. The Trustee shall, within 90 days after the
occurrence of a default with respect to the Securities of any series, give
notice of all defaults with respect to that series known to the Trustee (i) if
any Unregistered Securities of that series are then Outstanding, to the Holders
thereof, by publication at least once in an Authorized Newspaper in the Borough
of Manhattan, The City of New York and at least once in an Authorized Newspaper
in London (and, if required by Section 3.7, at least once in an Authorized
Newspaper in Luxembourg) and (ii) to all Holders of Securities of such series
in the manner and to the extent provided in Section 313(c) of Trust Indenture
Act of 1939, unless in each case such defaults shall have been cured before the
mailing or publication of such notice (the term "defaults" for the purpose of
this Section being hereby defined to mean any event or condition which is, or
with notice or lapse of time or both would become, an Event of Default);
provided that, except in the case of default in the payment of the principal of
or interest on any of the Securities of such series, or in the payment of any
sinking fund instalment on such series, 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 or trustees and/or Responsible
Officers of the Trustee in good faith
-43-
<PAGE> 52
determines that the withholding of such notice is in the interests of the
Securityholders of such series.
SECTION 5.12 Right of Court to Require Filing of Undertaking
to Pay Costs. All parties to this Indenture agree, and each Holder of any
Security or Coupon 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, suffered 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, 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 shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Securityholder or
group of Securityholders of any series holding in the aggregate more than 10%
in aggregate principal amount of the Securities of such series, or, in the case
of any suit relating to or arising under clause (c) or (f) of Section 5.1 (if
the suit relates to Securities of more than one but less than all series), l0%
in aggregate principal amount of Securities then Outstanding and affected
thereby, or in the case of any suit relating to or arising under clause (c) or
(f) (if the suit under clause (c) or (f) relates to all the Securities then
Outstanding), (d) or (e) of Section 5.1, 10% in aggregate principal amount of
all Securities then Outstanding, or to any suit instituted by any
Securityholder for the enforcement of the payment of the principal of or
interest on any Security on or after the due date expressed in such Security or
any date fixed for redemption.
ARTICLE SIX
CONCERNING THE TRUSTEE
SECTION 6.1 Duties and Responsibilities of the Trustee;
During Default; Prior to Default. With respect to the Holders of any series of
Securities issued hereunder, the Trustee, prior to the occurrence of an Event
of Default with respect to the Securities of a particular series and after the
curing or waiving of all Events of Default which may have occurred with respect
to such series, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. In case an Event of Default with
respect to the Securities of a series has occurred (which has not been cured or
waived) the Trustee shall exercise with respect to such series of Securities
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.
-44-
<PAGE> 53
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 wilful misconduct, except that
(a) prior to the occurrence of an Event of Default with
respect to the Securities of any series and after the curing or
waiving of all such Events of Default with respect to such series
which may have occurred:
(i) the duties and obligations of the Trustee with
respect to the Securities of any series shall be determined
solely by the express provisions of this Indenture, and the
Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and
(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 statements, certificates or opinions
furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such statements,
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 Responsible Officers of
the Trustee, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts; and
(c) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders pursuant to Section 5.9 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 shall be reasonable ground for
believing that the repayment of such funds or adequate indemnity against such
liability is not reasonably assured to it.
-45-
<PAGE> 54
SECTION 6.2 Certain Rights of the Trustee. Subject to
Section 6.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate or
any other certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture, note, Coupon, Security 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 Issuer
mentioned herein shall be sufficiently evidenced by an Officers'
Certificate (unless other evidence in respect thereof be herein
specifically prescribed); and any resolution of the Board of Directors
may be evidenced to the Trustee by a copy thereof certified by the
secretary or an assistant secretary of the Issuer;
(c) the Trustee may consult with counsel and any written
advice or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted to be taken by it hereunder in good faith and in reliance
thereon in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any
of the trusts 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 security or indemnity against the
costs, expenses and liabilities which might 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, rights or powers conferred upon it by this
Indenture;
(f) prior to the occurrence of an Event of Default hereunder
and after the curing or waiving of all Events of Default, the Trustee
shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, appraisal, bond,
debenture, note, Coupon, Security, or other paper or document unless
requested in writing so to do by the Holders of not less than a
majority in aggregate principal amount of the Securities of all series
affected then Outstanding; provided that, if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in
the opinion of the Trustee, not reasonably assured to the Trustee
-46-
<PAGE> 55
by the security afforded to it by the terms of this Indenture, the
Trustee may require reasonable indemnity against such expenses or
liabilities as a condition to proceeding; the reasonable expenses of
every such investigation shall be paid by the Issuer or, if paid by
the Trustee or any predecessor Trustee, shall be repaid by the Issuer
upon demand; and
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys not regularly in its employ and the
Trustee shall not be responsible for any misconduct or negligence on
the part of any such agent or attorney appointed with due care by it
hereunder.
SECTION 6.3 Trustee Not Responsible for Recitals, Disposition
of Securities or Application of Proceeds Thereof. The recitals contained
herein and in the Securities, except the Trustee's certificates of
authentication, shall be taken as the statements of the Issuer, and the Trustee
assumes no responsibility for the correctness of the same. The Trustee makes
no representation as to the validity or sufficiency of this Indenture or of the
Securities or Coupons. The Trustee shall not be accountable for the use or
application by the Issuer of any of the Securities or of the proceeds thereof.
SECTION 6.4 Trustee and Agents May Hold Securities or
Coupons; Collections, etc. The Trustee or any agent of the Issuer or the
Trustee, in its individual or any other capacity, may become the owner or
pledgee of Securities or Coupons with the same rights it would have if it were
not the Trustee or such agent and, subject to Sections 6.8 and 6.13, may
otherwise deal with the Issuer and receive, collect, hold and retain
collections from the Issuer with the same rights it would have if it were not
the Trustee or such agent.
SECTION 6.5 Moneys Held by Trustee. Subject to the
provisions of Section 10.4 hereof, all moneys received by the Trustee shall,
until used or applied as herein provided, be held in trust for the purposes for
which they were received, but need not be segregated from other funds except to
the extent required by mandatory provisions of law. Neither the Trustee nor
any agent of the Issuer or the Trustee shall be under any liability for
interest on any moneys received by it hereunder.
SECTION 6.6 Compensation and Indemnification of Trustee and
Its Prior Claim. The Issuer covenants and agrees to pay to the Trustee from
time to time, and the Trustee shall be entitled to, reasonable compensation
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) and the Issuer covenants and
agrees to pay or reimburse the Trustee and each predecessor Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or
made by or on behalf of it in accordance with any of the provisions
-47-
<PAGE> 56
of this Indenture (including the reasonable compensation and the expenses and
disbursements of its counsel and of all agents and other persons not regularly
in its employ) except any such expense, disbursement or advance as may arise
from its negligence or bad faith. The Issuer also covenants to indemnify the
Trustee and each predecessor Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
this Indenture or the trusts hereunder and its duties hereunder, including the
costs and expenses of defending itself against or investigating any claim of
liability in the premises. The obligations of the Issuer under this Section to
compensate and indemnify the Trustee and each predecessor Trustee and to pay or
reimburse the Trustee and each predecessor Trustee for expenses, disbursements
and advances shall constitute additional indebtedness hereunder and shall
survive the satisfaction and discharge of this Indenture. Such additional
indebtedness shall be a senior claim to that of the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the benefit of the Holders of particular Securities or Coupons,
and the Securities are hereby subordinated to such senior claim.
SECTION 6.7 Right of Trustee to Rely on Officers'
Certificate, etc. Subject to Sections 6.1 and 6.2, whenever in the
administration of the trusts of this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking
or suffering or omitting any action hereunder, such matter (unless other
evidence in respect thereof be herein specifically prescribed) may, in the
absence of negligence or bad faith on the part of the Trustee, be deemed to be
conclusively proved and established by an Officers' Certificate delivered to
the Trustee, and such certificate, in the absence of negligence or bad faith on
the part of the Trustee, shall be full warrant to the Trustee for any action
taken, suffered or omitted by it under the provisions of this Indenture upon
the faith thereof.
SECTION 6.8 Conflicting Interests. If the Trustee has or
shall acquire any conflicting interest, within the meaning of the Trust
Indenture Act of 1939, the Trustee shall either eliminate such interest or
resign, to the extent and in the manner provided by, and subject to the
provisions of, the Trust Indenture Act of 1939 and this Indenture. To the
extent permitted by such Act, the Trustee shall not be deemed to have a
conflicting interest by reason of being a trustee under this Indenture with
respect to Securities of more than one series.
SECTION 6.9 Persons Eligible for Appointment as Trustee.
The Trustee for each series of Securities hereunder shall at all times be a
corporation organized and doing business under the laws of the United States of
America or of any State or the District of Columbia having a combined capital
and surplus of at least $5,000,000, and which is authorized under such laws to
-48-
<PAGE> 57
exercise corporate trust powers and is subject to supervision or examination by
Federal, State or District of Columbia authority. Such corporation shall have
its principal place of business in the Borough of Manhattan, The City of New
York if there be such a corporation in such location willing to act upon
reasonable and customary terms and conditions. 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, 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. In case at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section, the Trustee
shall resign immediately in the manner and with the effect specified in Section
6.10.
SECTION 6.10 Resignation and Removal; Appointment of
Successor Trustee. (a) The Trustee, or any trustee or trustees hereafter
appointed, may at any time resign with respect to one or more or all series of
Securities by giving written notice of resignation to the Issuer and (i) if any
Unregistered Securities of a series affected are then Outstanding, by giving
notice of such resignation to the Holders thereof, by publication at least once
in an Authorized Newspaper in the Borough of Manhattan, The City of New York,
and at least once in an Authorized Newspaper in London (and, if required by
Section 3.7, at least once in an Authorized Newspaper in Luxembourg), (ii) if
any Unregistered Securities of a series affected are then Outstanding, by
mailing notice of such resignation to the Holders thereof who have filed their
names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust
Indenture Act of 1939 at such addresses as were so furnished to the Trustee and
(iii) by mailing notice of such resignation to the Holders of then Outstanding
Registered Securities of each series affected at their addresses as they shall
appear on the registry books. Upon receiving such notice of resignation, the
Issuer shall promptly appoint a successor trustee or trustees with respect to
the applicable series by written instrument in duplicate, executed by authority
of the Board of Directors, one copy of which instrument shall be delivered to
the resigning Trustee and one copy to the successor trustee or trustees. If no
successor trustee shall have been so appointed with respect to any series and
have accepted appointment within 30 days after the mailing of such notice of
resignation, 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 or Securities of the applicable
series for at least six months may, subject to the provisions of Section 5.12,
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.
-49-
<PAGE> 58
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with the provisions of
Section 6.8 with respect to any series of Securities after written
request therefor by the Issuer or by any Securityholder who has been a
bona fide Holder of a Security or Securities of such series for at
least six months; or
(ii) the Trustee shall cease to be eligible in accordance with
the provisions of Section 6.9 and shall fail to resign after written
request therefor by the Issuer or by any Securityholder; or
(iii) the Trustee shall become incapable of acting with respect
to any series of Securities, or shall be adjudged a bankrupt or
insolvent, or a receiver or liquidator 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 Issuer may remove the Trustee with respect to the
applicable series of Securities and appoint a successor trustee for such series
by written instrument, in duplicate, executed by order of the Board of
Directors, 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 5.12, any Securityholder who has been a bona fide Holder of a Security
or Securities of such series 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 with
respect to such series. Such court may thereupon, after such notice, if any,
as it may deem proper and prescribe, remove the Trustee and appoint a successor
trustee.
(c) The Holders of a majority in aggregate principal amount
of the Securities of each series at the time Outstanding may at any time remove
the Trustee with respect to Securities of such series and appoint a successor
trustee with respect to the Securities of such series by delivering to the
Trustee so removed, to the successor trustee so appointed and to the Issuer the
evidence provided for in Section 7.1 of the action in that regard taken by the
Securityholders.
(d) Any resignation or removal of the Trustee with respect to
any series and any appointment of a successor trustee with respect to such
series pursuant to any of the provisions of this Section 6.10 shall become
effective upon acceptance of appointment by the successor trustee as provided
in Section 6.11.
-50-
<PAGE> 59
SECTION 6.11 Acceptance of Appointment by Successor Trustee.
Any successor trustee appointed as provided in Section 6.10 shall execute and
deliver to the Issuer and to its predecessor trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee with respect to all or any applicable series shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become vested with all rights, powers, duties and obligations
with respect to such series of its predecessor hereunder, with like effect as
if originally named as trustee for such series hereunder; but, nevertheless, on
the written request of the Issuer or of the successor trustee, upon payment of
its charges then unpaid, the trustee ceasing to act shall, subject to Section
10.4, pay over to the successor trustee all moneys at the time held by it
hereunder and shall execute and deliver an instrument transferring to such
successor trustee all such rights, powers, duties and obligations. Upon
request of any such successor trustee, the Issuer 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 prior claim upon all property or funds held
or collected by such trustee to secure any amounts then due it pursuant to the
provisions of Section 6.6.
If a successor trustee is appointed with respect to the
Securities of one or more (but not all) series, the Issuer, the predecessor
trustee and each successor trustee with respect to the Securities of any
applicable series shall execute and deliver an indenture supplemental hereto
which shall contain such provisions as shall be deemed necessary or desirable
to confirm that all the rights, powers, trusts and duties of the predecessor
trustee with respect to the Securities of any series as to which the
predecessor trustee is not retiring shall continue to be vested in the
predecessor trustee, and shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one trustee, it being understood that
nothing herein or in such supplemental indenture shall constitute such trustees
co-trustees of the same trust and that each such trustee shall be trustee of a
trust or trusts under separate indentures.
No successor trustee with respect to any series of Securities
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 6.8 and Section 310(a) of the Trust Indenture Act of 1939 and
eligible under the provisions of Section 6.9.
Upon acceptance of appointment by any successor trustee as
provided in this Section 6.11, the Issuer shall give notice thereof (a) if any
Unregistered Securities of a series affected are then Outstanding, to the
Holders thereof, by publication of such notice at least once in an Authorized
Newspaper in the Borough of
-51-
<PAGE> 60
Manhattan, The City of New York and at least once in an Authorized Newspaper in
London (and, if required by Section 3.7, at least once in an Authorized
Newspaper in Luxembourg), (b) if any Unregistered Securities of a series
affected are then Outstanding, to the Holders thereof who have filed their
names and addresses with the Trustee pursuant to Section 4.4(c)(ii), by mailing
such notice to such Holders at such addresses as were so furnished to the
Trustee (and the Trustee shall make such information available to the Issuer
for such purpose) and (c) to the Holders of Registered Securities of each
series affected, by mailing such notice to such Holders at their addresses as
they shall appear on the registry books. If the acceptance of appointment is
substantially contemporaneous with the resignation, then the notice called for
by the preceding sentence may be combined with the notice called for by Section
6.10. If the Issuer fails to give such notice within ten days after acceptance
of appointment by the successor trustee, the successor trustee shall cause such
notice to be given at the expense of the Issuer.
SECTION 6.12 Merger, Conversion, Consolidation or Succession
to Business of Trustee. 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 the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided that such
corporation shall be qualified under the provisions of Section 6.8 and eligible
under the provisions of Section 6.9, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
In case at the time such successor to the Trustee shall
succeed to the trusts created by this Indenture any of the Securities of any
series 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 of any series 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 certificate shall have the full force which it is anywhere in
the Securities of such series or in this Indenture provided that the
certificate of the Trustee shall have; provided, that the right to adopt the
certificate of authentication of any predecessor trustee or to authenticate
Securities of any series in the name of any predecessor trustee shall apply
only to its successor or successors by merger, conversion or consolidation.
SECTION 6.13 Preferential Collection of Claims Against the
Issuer. If and when the Trustee shall be or become a creditor of the Issuer
(or any other obligor upon the Securities), the
-52-
<PAGE> 61
Trustee shall be subject to the provisions of the Trust Indenture Act of 1939
regarding the collection of claims against the Issuer (or such other obligor).
For purpose of Sections 311(b)(4) and (6) of the Trust Indenture Act of 1939:
(a) "cash transaction" means any transaction in which full
payment for goods or securities sold is made within seven days after
delivery of the goods or securities in currency or in checks or other
orders drawn upon banks or bankers and payable upon demand; and
(b) "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by the Issuer (or any such obligor) for the purpose of
financing the purchase, processing, manufacture, shipment, storage or
sale of goods, wares or merchandise and which is secured by documents
evidencing title to, possession of, or a lien upon the goods, wares or
merchandise or the receivables or proceeds arising from the sale of
the goods, wares or merchandise previously constituting the security,
provided the security is received by the Trustee simultaneously with
the creation of the creditor relationship with the Issuer (or any such
obligor) arising from the making, drawing, negotiating or incurring of
the draft, bill of exchange, acceptance or obligation.
SECTION 6.14 Appointment of Authenticating Agent. As long as
any Securities of a series remain Outstanding, the Trustee may, by an
instrument in writing, appoint with the approval of the Issuer an
authenticating agent (the "Authenticating Agent") which shall be authorized to
act on behalf of the Trustee to authenticate Securities, including Securities
issued upon exchange, registration of transfer, partial redemption or pursuant
to Section 2.9. Securities of each such series authenticated by such
Authenticating Agent shall be entitled to the benefits of this Indenture and
shall be valid and obligatory for all purposes as if authenticated by the
Trustee. Whenever reference is made in this Indenture to the authentication
and delivery of Securities of any series by the Trustee or to the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
for such series and a certificate of authentication executed on behalf of the
Trustee by such Authenticating Agent. Such Authenticating Agent shall at all
times be a corporation organized and doing business under the laws of the
United States of America or of any State, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $5,000,000 (determined as provided in Section 6.9 with respect to the
Trustee) and subject to supervision or examination by Federal or State
authority.
-53-
<PAGE> 62
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, conversion or consolidation to which any
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate agency business of any Authenticating Agent, shall continue to be the
Authenticating Agent with respect to all series of Securities for which it
served as Authenticating Agent without the execution or filing of any paper or
any further act on the part of the Trustee or such Authenticating Agent.
Any Authenticating Agent may at any time, and if it shall cease to be
eligible shall, resign by giving written notice of resignation to the Trustee
and to the Issuer. The Trustee may at any time terminate the agency of an
Authenticating Agent by giving written notice of termination to such
Authenticating Agent and to the Issuer. 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 in accordance with the
provisions of this Section 6.14 with respect to one or more series of
Securities, the Trustee may upon receipt of an Issuer Order appoint a successor
Authenticating Agent and the Issuer shall provide notice of such appointment to
all Holders of Securities of such series in the manner and to the extent
provided in Section 11.4. 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. The Issuer agrees to pay to the
Authenticating Agent for such series from time to time reasonable compensation.
The Authenticating Agent for the Securities of any series shall have no
responsibility or liability for any action taken by it as such at the direction
of the Trustee.
Sections 6.2, 6.3, 6.4, 6.6, 6.9 and 7.3 shall be applicable
to any Authenticating Agent.
ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS
SECTION 7.1 Evidence of Action Taken by Securityholders. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by a specified
percentage in principal amount of the Securityholders of any or all series may
be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such specified percentage of Securityholders in person
or by agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee. Proof of execution of any instrument
or of a writing appointing any such agent shall be sufficient for any purpose
of this Indenture and
-54-
<PAGE> 63
(subject to Sections 6.1 and 6.2) conclusive in favor of the Trustee and the
Issuer, if made in the manner provided in this Article.
SECTION 7.2 Proof of Execution of Instruments and of Holding
of Securities. Subject to Sections 6.1 and 6.2, the execution of any
instrument by a Securityholder or his agent or proxy may be proved in the
following manner:
(a) The fact and date of the execution by any Holder of any
instrument may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments
of deeds or administer oaths that the Person executing such
instruments acknowledged to him the execution thereof, or by an
affidavit of a witness to such execution sworn to before any such
notary or other such officer. Where such execution is by or on behalf
of any legal entity other than an individual, such certificate or
affidavit shall also constitute sufficient proof of the authority of
the Person executing the same. The fact of the holding by any Holder
of an Unregistered Security of any series, and the identifying number
of such Security and the date of his holding the same, may be proved
by the production of such Security or by a certificate executed by any
trust company, bank, banker or recognized securities dealer wherever
situated satisfactory to the Trustee, if such certificate shall be
deemed by the Trustee to be satisfactory. Each such certificate shall
be dated and shall state that on the date thereof a Security of such
series bearing a specified identifying number was deposited with or
exhibited to such trust company, bank, banker or recognized securities
dealer by the Person named in such certificate. Any such certificate
may be issued in respect of one or more Unregistered Securities of one
or more series specified therein. The holding by the Person named in
any such certificate of any Unregistered Securities of any series
specified therein shall be presumed to continue for a period of one
year from the date of such certificate unless at the time of any
determination of such holding (1) another certificate bearing a later
date issued in respect of the same Securities shall be produced, or
(2) the Security of such series specified in such certificate shall be
produced by some other Person, or (3) the Security of such series
specified in such certificate shall have ceased to be Outstanding.
The fact and date of the execution of any such instrument and the
amount and numbers of Securities of any series held by the Person so
executing such instrument and the amount and numbers of any Security
or Securities for such series may also be proven in accordance with
such reasonable rules and regulations as may be prescribed by the
Trustee for such series or in any other manner which the Trustee for
such series may deem sufficient.
-55-
<PAGE> 64
(b) In the case of Registered Securities, the ownership of
such Securities shall be proved by the Security register or by a
certificate of the Security registrar.
The Issuer may set a record date for purposes of determining
the identify of Holders of Registered Securities of any series entitled to vote
or consent to any action referred to in Section 7.1, which record date may be
set at any time or from time to time by notice to the Trustee, for any date or
dates (in the case of any adjournment or reconsideration) not more than 90 days
nor less than five days prior to the proposed date of such vote or consent, and
thereafter, notwithstanding any other provisions hereof, with respect to
Registered Securities of any series, only Holders of Registered Securities of
such series of record on such record date shall be entitled to so vote or give
such consent with respect to such action or revoke such vote or consent.
SECTION 7.3 Holders to be Treated as Owners. The Issuer, the
Trustee and any agent of the Issuer or the Trustee may deem and treat the
Person in whose name any Security shall be registered upon the Security
register for such series as the absolute owner of such Security (whether or not
such Security shall be overdue and notwithstanding any notation of ownership or
other writing thereon) for the purpose of receiving payment of or on account of
the principal of and, subject to the provisions of this Indenture, interest on
such Security and for all other purposes; and neither the Issuer nor the
Trustee nor any agent of the Issuer or the Trustee shall be affected by any
notice to the contrary. The Issuer, the Trustee and any agent of the Issuer or
the Trustee may treat the Holder of any Unregistered Security and the Holder of
any Coupon as the absolute owner of such Unregistered Security or Coupon
(whether or not such Unregistered Security or Coupon shall be overdue) for the
purpose of receiving payment thereof or on account thereof and for all other
purposes and neither the Issuer, the Trustee, nor any agent of the Issuer or
the Trustee shall be affected by any notice to the contrary. All such payments
so made to any such Person, 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 Unregistered Security or Coupon.
SECTION 7.4 Securities Owned by Issuer Deemed Not
Outstanding. In determining whether the Holders of the requisite aggregate
principal amount of Outstanding Securities of any or all series have concurred
in any direction, consent or waiver under this Indenture, Securities which are
owned by the Issuer or any other obligor on the Securities with respect to
which such determination is being made or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Issuer or any other obligor on the Securities with respect to which such
determination is being made shall be disregarded and deemed not to be
Outstanding for the purpose of any such determination, except that for the
purpose of determining
-56-
<PAGE> 65
whether the Trustee shall be protected in relying on any such direction,
consent or waiver only Securities which the Trustee knows are so owned shall be
so disregarded. Securities so owned which have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to such Securities and
that the pledgee is not the Issuer or any other obligor upon the Securities or
any Person directly or indirectly controlling or controlled by or under direct
or indirect common control with the Issuer or any other obligor on the
Securities. In case of a dispute as to such right, the advice of counsel shall
be full protection in respect of any decision made by the Trustee in accordance
with such advice. Upon request of the Trustee, the Issuer shall furnish to the
Trustee promptly an Officers' Certificate listing and identifying all
Securities, if any, known by the Issuer to be owned or held by or for the
account of any of the above-described Persons; and, subject to Sections 6.1 and
6.2, the Trustee shall be entitled to accept such Officers' Certificate as
conclusive evidence of the facts therein set forth and of the fact that all
Securities not listed therein are Outstanding for the purpose of any such
determination.
SECTION 7.5 Right of Revocation of Action Taken. At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
7.1, of the taking of any action by the Holders of the percentage in aggregate
principal amount of the Securities of any or all series, as the case may be,
specified in this Indenture in connection with such action, any Holder of a
Security the serial number of which is shown by the evidence to be included
among the serial numbers of the Securities the Holders of which have consented
to such action may, by filing written notice at the Corporate Trust Office and
upon proof of holding as provided in this Article, revoke such action so far as
concerns such 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 Securities
issued in exchange or substitution therefor or on registration of transfer
thereof, irrespective of whether or not any notation in regard thereto is made
upon any such Security. Any action taken by the Holders of the percentage in
aggregate principal amount of the Securities of any or all series, as the case
may be, specified in this Indenture in connection with such action shall be
conclusively binding upon the Issuer, the Trustee and the Holders of all the
Securities affected by such action.
-57-
<PAGE> 66
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.1 Supplemental Indentures Without Consent of
Securityholders. The Issuer, when authorized by a resolution of its Board of
Directors (which resolution may provide general terms or parameters for such
action and may provide that the specific terms of such action may be determined
in accordance with or pursuant to an Officers' Certificate), and the Trustee
may from time to time and at any time enter into an indenture or indentures
supplemental hereto (which shall conform to the provisions of the Trust
Indenture Act of 1939 as in force at the date of the execution thereof) for one
or more of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge to the
Trustee as security for the Securities of one or more series any
property or assets;
(b) to evidence the succession of another corporation to the
Issuer, or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Issuer
pursuant to Article Nine;
(c) to add to the covenants of the Issuer such further
covenants, restrictions, conditions or provisions as the Issuer and
the Trustee shall consider to be for the protection of the Holders of
Securities or Coupons, and to make the occurrence, or the occurrence
and continuance, of a default in any such additional covenants,
restrictions, conditions or provisions an Event of Default permitting
the enforcement of all or any of the several remedies provided in this
Indenture as herein set forth; provided, that in respect of any such
additional covenant, restriction, condition or provision such
supplemental indenture 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 an Event of Default or may limit the remedies
available to the Trustee upon such an Event of Default or may limit
the right of the Holders of a majority in aggregate principal amount
of the Securities of such series to waive such an Event of Default;
(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 any other provisions as
the Issuer may deem necessary or desirable, provided that no such
action shall adversely affect the interests of the Holders of the
Securities or Coupons;
-58-
<PAGE> 67
(e) to establish the form or terms of Securities of any
series or of the Coupons appertaining to such Securities as permitted
by Sections 2.1 and 2.3; and
(f) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities of one
or more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one trustee,
pursuant to the requirements of Section 6.11.
The Trustee is hereby authorized to join with the Issuer in
the execution of any such supplemental indenture, to make any further
appropriate agreements and stipulations which may be therein contained and to
accept the conveyance, transfer, assignment, mortgage or pledge of any property
thereunder, but the Trustee shall not be obligated to enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of
this Section may be executed without the consent of the Holders of any of the
Securities at the time Outstanding, notwithstanding any of the provisions of
Section 8.2.
SECTION 8.2 Supplemental Indentures With Consent of
Securityholders. With the consent (evidenced as provided in Article Seven) of
the Holders of not less than a majority in aggregate principal amount of the
Securities at the time Outstanding of all series affected by such supplemental
indenture (voting as one class), the Issuer, when authorized by a resolution of
its Board of Directors (which resolution may provide general terms or
parameters for such action and may provide that the specific terms of such
action may be determined in accordance with or pursuant to an Issuer Order),
and the Trustee may, from time to time and at any time, enter into an indenture
or indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act of 1939 as in force at the date of execution thereof) for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of any supplemental
indenture or of modifying in any manner the rights of the Holders of the
Securities of each such series or of the Coupons appertaining to such
Securities; provided, that no such supplemental indenture shall (a) extend the
final maturity of any Security, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon, or reduce
any amount payable on redemption thereof, or make the principal thereof
(including any amount in respect of original issue discount) or interest
thereon payable in any coin or currency other than that provided in the
Securities and Coupons or in accordance with the terms thereof, or reduce the
amount of the principal of an Original Issue Discount Security that would be
due and payable upon
-59-
<PAGE> 68
an acceleration of the maturity thereof pursuant to Section 5.1 or the amount
thereof provable in bankruptcy pursuant to Section 5.2, or alter the provisions
of Section 11.11 or 11.12 or impair or affect the right of any Securityholder
to institute suit for the payment thereof or, if the Securities provide
therefor, any right of repayment at the option of the Securityholder, in each
case without the consent of the Holder of each Security so affected, or (b)
reduce the aforesaid percentage of Securities of any series, the consent of the
Holders of which is required for any such supplemental indenture, without the
consent of the Holders of each Security so affected.
A supplemental indenture which changes or eliminates any
covenant or other provision of this Indenture which has expressly been included
solely for the benefit of one or more particular series of Securities, or which
modifies the rights of Holders of Securities of such series, or of Coupons
appertaining to such Securities, with respect to such covenant or provision,
shall be deemed not to affect the rights under this Indenture of the Holders of
Securities of any other series or of the Coupons appertaining to such
Securities.
Upon the request of the Issuer, accompanied by a copy of a
resolution of the Board of Directors (which resolution may provide general
terms or parameters for such action and may provide that the specific terms of
such action may be determined in accordance with or pursuant to an Issuer
Order) certified by the secretary or an assistant secretary of the Issuer
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of the Holders of the
Securities as aforesaid and other documents, if any, required by Section 7.1,
the Trustee shall join with the Issuer 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.
It shall not be necessary for the consent of the
Securityholders under this Section to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof.
Promptly after the execution by the Issuer and the Trustee of
any supplemental indenture pursuant to the provisions of this Section, the
Trustee shall give notice thereof (i) to the Holders of then Outstanding
Registered Securities of each series affected thereby, by mailing a notice
thereof by first-class mail to such Holders at their addresses as they shall
appear on the Security register, (ii) if any Unregistered Securities of a
series affected thereby are then Outstanding, to the Holders thereof who have
filed their names and addresses with the Trustee pursuant to Section
4.4(c)(ii), by mailing a notice thereof by first-class mail
-60-
<PAGE> 69
to such Holders at such addresses as were so furnished to the Trustee and (iii)
if any Unregistered Securities of a series affected thereby are then
Outstanding, to all Holders thereof, by publication of a notice thereof at
least once in an Authorized Newspaper in the Borough of Manhattan, The City of
New York and at least once in an Authorized Newspaper in London (and, if
required by Section 3.7, at least once in an Authorized Newspaper in
Luxembourg), and in each case such notice shall set forth in general terms the
substance of such supplemental indenture. Any failure of the Issuer to give
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such supplemental indenture.
SECTION 8.3 Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, 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 Issuer and the Holders
of Securities of each series affected thereby 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 8.4 Documents to Be Given to Trustee. The Trustee,
subject to the provisions of Sections 6.1 and 6.2, may receive an Officers'
Certificate and an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant to this Article Eight complies with
the applicable provisions of this Indenture.
SECTION 8.5 Notation on Securities in Respect of Supplemental
Indentures. Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to the provisions of this
Article may bear a notation in form approved by the Trustee for such series as
to any matter provided for by such supplemental indenture or as to any action
taken by Securityholders. If the Issuer or the Trustee shall so determine, new
Securities of any series 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 by the Issuer,
authenticated by the Trustee and delivered in exchange for the Securities of
such series then Outstanding.
-61-
<PAGE> 70
ARTICLE NINE
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 9.1 Issuer May Consolidate, etc., Only on Certain
Terms.
The Issuer shall not consolidate with or merge into any other
corporation or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, unless:
(a) the corporation formed by such consolidation or into
which the Issuer is merged or the Person which acquires by conveyance,
transfer or lease the properties and assets of the Issuer
substantially as an entirety shall expressly assume, by a supplemental
indenture hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the
principal of and interest on all the Securities and Coupons, if any,
according to their tenor, and the performance of every covenant of
this Indenture on the part of the Issuer to be performed or observed;
(b) immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of time,
or both, would become an Event of Default, shall have happened and be
continuing;
(c) the Issuer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such
consolidation, merger, conveyance, transfer or lease and such
supplemental indenture comply with this Article and that all
conditions precedent herein provided for relating to such transaction
have been complied with; and
(d) the Issuer has delivered to the Trustee such other
documents as the Trustee may, in its discretion, reasonably require.
SECTION 9.2 Successor Corporation Substituted. In case of
any such consolidation, merger, sale, lease or conveyance, and following such
an assumption by the successor Person, such successor Person shall succeed to
and be substituted for the Issuer, with the same effect as if it had been named
herein. Such successor Person may cause to be signed, and may issue either in
its own name or in the name of the Issuer prior to such succession any or all
of the Securities issuable hereunder which together with any Coupons
appertaining thereto theretofore shall not have been signed by the Issuer and
delivered to the Trustee; and, upon the order of such successor Person, instead
of the Issuer, and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver any
Securities together with any Coupons appertaining thereto which previously
shall have been signed and delivered by the officers of
-62-
<PAGE> 71
the Issuer to the Trustee for authentication, and any Securities which such
successor Person thereafter shall cause to be signed and delivered to the
Trustee for that purpose. All of the Securities so issued together with any
Coupons appertaining thereto 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 Securities
had been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale, lease or
conveyance such changes in phrasing and form (but not in substance) may be made
in the Securities and Coupons thereafter to be issued as may be appropriate.
In the event of any such sale or conveyance (other than a
conveyance by way of lease) the Issuer or any successor Person which shall
theretofore have become such in the manner described in this Article shall be
discharged from all obligations and covenants under this Indenture and the
Securities and may be liquidated and dissolved.
ARTICLE TEN
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
SECTION 10.1 Satisfaction and Discharge of Indenture. (A)
If at any time (a) the Issuer shall have paid or caused to be paid the
principal of and interest on all the Securities of any series Outstanding
hereunder and all unmatured Coupons appertaining thereto (other than Securities
of such series and Coupons appertaining thereto which have been destroyed, lost
or stolen and which have been replaced or paid as provided in Section 2.9) as
and when the same shall have become due and payable, or (b) the Issuer shall
have delivered to the Trustee for cancellation all Securities of any series
theretofore authenticated and all unmatured Coupons appertaining thereto (other
than any Securities of such series and Coupons appertaining thereto which shall
have been destroyed, lost or stolen and which shall have been replaced or paid
as provided in Section 2.9) or (c) in the case of any series of Securities
where the exact amount (including the currency of payment) of principal of and
interest due on which can be determined at the time of making the deposit
referred to in clause (ii) below, (i) all the Securities of such series and all
unmatured Coupons appertaining thereto not theretofore 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 (ii) the Issuer shall have irrevocably deposited
or caused to be deposited with the Trustee as trust funds the entire amount in
cash (other than moneys repaid by the Trustee or any paying agent to the Issuer
in accordance with
-63-
<PAGE> 72
Section 10.4) or, in the case of any series of Securities the payments on which
may only be made in Dollars, direct obligations of the United States of
America, backed by its full faith and credit ("U.S. Government Obligations"),
maturing as to principal and interest at such times and in such amounts as will
insure the availability of cash, or a combination thereof, sufficient in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay
(A) the principal and interest on all Securities of such series and Coupons
appertaining thereto on each date that such principal or interest is due and
payable and (B) any mandatory sinking fund payments on the dates on which such
payments are due and payable in accordance with the terms of the Indenture and
the Securities of such series; and if, in any such case, the Issuer shall also
pay or cause to be paid all other sums payable hereunder by the Issuer, then
this Indenture shall cease to be of further effect (except as to (i) rights of
registration of transfer and exchange of Securities of such series and of
Coupons appertaining thereto and the Issuer's right of optional redemption, if
any, (ii) substitution of mutilated, defaced, destroyed, lost or stolen
Securities or Coupons, (iii) rights of Holders of Securities and Coupons
appertaining thereto to receive payments of principal thereof and interest
thereon, upon the original stated due dates therefor (but not upon
acceleration), and remaining rights of the Holders to receive mandatory sinking
fund payments, if any, (iv) the rights, obligations, duties and immunities of
the Trustee hereunder, (v) the rights of the Holders of Securities of such
series and Coupons appertaining thereto as beneficiaries hereof with respect to
the property so deposited with the Trustee payable to all or any of them, and
(vi) the obligations of the Issuer under Sections 3.2 and 6.6) and the Trustee,
on demand of the Issuer accompanied by an Officers' Certificate and an Opinion
of Counsel and at the cost and expense of the Issuer, shall execute proper
instruments acknowledging such satisfaction of and discharging this Indenture;
provided, that the rights of Holders of the Securities and Coupons to receive
amounts in respect of principal of and interest on the Securities and Coupons
held by them shall not be delayed longer than required by then-applicable
mandatory rules or policies of any securities exchange upon which the
Securities are listed. The Issuer agrees to reimburse the Trustee for any
costs or expenses thereafter reasonably and properly incurred and to compensate
the Trustee for any services thereafter reasonably and properly rendered by the
Trustee in connection with this Indenture or the Securities of such series.
(B) The following provisions shall apply to the Securities of
each series unless specifically otherwise provided in a Board Resolution,
Officers' Certificate or indenture supplemental hereto provided pursuant to
Section 2.3. In addition to discharge of the Indenture pursuant to the next
preceding paragraph, in the case of any series of Securities the exact amounts
(including the currency of payment) of principal of and interest due on which
can be determined at the time of making the deposit referred to in
-64-
<PAGE> 73
clause (a) below, the Issuer shall be deemed to have paid and discharged the
entire indebtedness on all the Securities of such a series and the Coupons
appertaining thereto on the 91st day after the date of the deposit referred to
in subparagraph (a) below, and the provisions of this Indenture with respect to
the Securities of such series and Coupons appertaining thereto shall no longer
be in effect (except as to (i) rights of registration of transfer and exchange
of Securities of such series and of Coupons appertaining thereto and the
Issuer's right of optional redemption, if any, (ii) substitution of mutilated,
defaced, destroyed, lost or stolen Securities or Coupons, (iii) rights of
Holders of Securities and Coupons appertaining thereto to receive payments of
principal thereof and interest thereon, upon the original stated due dates
therefor (but not upon acceleration), and remaining rights of the Holders to
receive mandatory sinking fund payments, if any, (iv) the rights, obligations,
duties and immunities of the Trustee hereunder, (v) the rights of the Holders
of Securities of such series and Coupons appertaining thereto as beneficiaries
hereof with respect to the property so deposited with the Trustee payable to
all or any of them and (vi) the obligations of the Issuer under Sections 3.2
and 6.6) and the Trustee, at the expense of the Issuer, shall at the Issuer's
request, execute proper instruments acknowledging the same, if
(a) with reference to this provision the Issuer has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee as trust funds in trust, specifically pledged as security for,
and dedicated solely to, the benefit of the Holders of the Securities
of such series and Coupons appertaining thereto (i) cash in an amount,
or (ii) in the case of any series of Securities the payments on which
may only be made in Dollars, U.S. Government Obligations, maturing as
to principal and interest at such times and in such amounts as will
insure the availability of cash or (iii) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay (A) the principal and
interest on all Securities of such series and Coupons appertaining
thereto on each date that such principal or interest is due and
payable through final maturity or earlier redemption and (B) any
mandatory sinking fund payments on the dates on which such payments
are due and payable in accordance with the terms of the Indenture and
the Securities of such series;
(b) such deposit will not result in a breach or violation of,
or constitute a default under, any agreement or instrument to which
the Issuer is a party or by which it is bound;
(c) the Issuer has delivered to the Trustee an Opinion of
Counsel based on the fact that (x) the Issuer has received from, or
there has been published by, the Internal Revenue
-65-
<PAGE> 74
Service a ruling or (y) since the date hereof, there has been a change
in the applicable Federal income tax law, in either case to the effect
that, and such opinion shall confirm that, the Holders of the
Securities of such series and Coupons appertaining thereto will not
recognize income, gain or loss for Federal income tax purposes as a
result of such deposit, defeasance and discharge and will be subject
to Federal income tax on the same amounts, in the same manner and at
the same times, as would have been the case if such deposit,
defeasance and discharge had not occurred;
(d) the Issuer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to the defeasance
contemplated by this provision have been complied with; and
(e) if the Securities of such series are to be redeemed,
either notice of such redemption shall have been given or the Issuer
shall have given the Trustee irrevocable directions to give notice of
such redemption in the name, and at the expense of the Issuer, under
arrangements satisfactory to the Trustee.
(C) The Issuer shall be released from its obligations under
Sections 3.6 and 9.1 with respect to the Securities of any series, and any
Coupons appertaining thereto, Outstanding on and after the date the conditions
set forth below are satisfied (hereinafter, "covenant defeasance"). For this
purpose, such covenant defeasance means that, with respect to the Outstanding
Securities of any series, the Issuer may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in such
Section, whether directly or indirectly by reason of any reference elsewhere
herein to such Section or by reason of any reference in such Section to any
other provision herein or in any other document and such omission to comply
shall not constitute an Event of Default under Section 5.1, but the remainder
of this Indenture and such Securities and Coupons shall be unaffected thereby.
The following shall be the conditions to application of this subsection C of
this Section 10.1:
(a) The Issuer has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for,
and dedicated solely to, the benefit of the Holders of the Securities
of such series and Coupons appertaining thereto, (i) cash in an
amount, or (ii) in the case of any series of Securities the payments
on which may only be made in Dollars, U.S. Government Obligations
maturing as to principal and interest at such times and in such
amounts as will insure the availability of cash or (iii) a combination
thereof, sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay (A) the principal and
interest on all Securities of such series and
-66-
<PAGE> 75
Coupons appertaining thereto on each date that such principal or
interest is due and payable through final maturity or earlier
redemption and (B) any mandatory sinking fund payments on the day on
which such payments are due and payable in accordance with the terms
of the Indenture and the Securities of such series.
(b) No Event of Default or event which with notice or lapse
of time or both would become an Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such
deposit or, insofar as subsections 5.1(d) and (e) are concerned, at
any time during the period ending on the 91st day after the date of
such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period).
(c) Such covenant defeasance shall not cause the Trustee to
have a conflicting interest as defined in Section 310(b) of and for
purposes of the Trust Indenture Act of 1939 with respect to any
securities of the Issuer.
(d) Such covenant defeasance shall not result in a breach or
violation of, or constitute a default under, this Indenture or any
other agreement or instrument to which the Issuer is a party or by
which it is bound.
(e) Such covenant defeasance shall not cause any Securities
then listed on any registered national securities exchange under the
Securities Exchange Act of 1934, as amended, to be delisted.
(f) The Issuer shall have delivered to the Trustee an
Officers' Certificate and Opinion of Counsel to the effect that the
Holders of the Securities of such series and Coupons appertaining
thereto will not recognize income, gain or loss for Federal income tax
purposes as a result of such covenant defeasance and will be subject
to Federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such covenant defeasance
had not occurred.
(g) The Issuer shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to the covenant defeasance
contemplated by this provision have been complied with.
(h) If the Securities of such series are to be redeemed,
either Notice of such redemption shall have been given or the Issuer
shall have given the Trustee irrevocable directions to give Notice of
such redemption in the name, and at the expense of the Issuer under
arrangements satisfactory to the Trustee.
-67-
<PAGE> 76
SECTION 10.2 Application by Trustee of Funds Deposited for
Payment of Securities. Subject to Section 10.4, all moneys deposited with the
Trustee (or other trustee) pursuant to Section 10.1 shall be held in trust and
applied by it to the payment, either directly or through any paying agent
(including the Issuer acting as its own paying agent), to the Holders of the
particular Securities of such series and of Coupons appertaining thereto for
the payment or redemption of which such moneys have been deposited with the
Trustee, of all sums due and to become due thereon for principal and interest;
but such money need not be segregated from other funds except to the extent
required by law.
SECTION 10.3 Repayment of Moneys Held by Paying Agent. In
connection with the satisfaction and discharge of this Indenture with respect
to Securities of any series, all moneys then held by any paying agent under the
provisions of this Indenture with respect to such series of Securities shall,
upon demand of the Issuer, 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 10.4 Return of Moneys Held by Trustee and Paying
Agent Unclaimed for Two Years. Any moneys deposited with or paid to the
Trustee or any paying agent for the payment of the principal of or interest on
any Security of any series or Coupons attached thereto and not applied but
remaining unclaimed for two years after the date upon which such principal or
interest shall have become due and payable, shall, upon the written request of
the Issuer and unless otherwise required by mandatory provisions of applicable
escheat or abandoned or unclaimed property law, be repaid to the Issuer by the
Trustee for such series or such paying agent, and the Holder of the Securities
of such series and of any Coupons appertaining thereto shall, unless otherwise
required by mandatory provisions of applicable escheat or abandoned or
unclaimed property laws, thereafter look only to the Issuer for any payment
which such Holder may be entitled to collect, and all liability of the Trustee
or any paying agent with respect to such moneys shall thereupon cease;
provided, however, that the Trustee or such paying agent, before being required
to make any such repayment with respect to moneys deposited with it for any
payment (a) in respect of Registered Securities of any series, shall at the
expense of the Issuer, mail by first-class mail to Holders of such Securities
at their addresses as they shall appear on the Security register, and (b) in
respect of Unregistered Securities of any series, shall at the expense of the
Issuer cause to be published once, in an Authorized Newspaper in the Borough of
Manhattan, The City of New York and once in an Authorized Newspaper in London
(and if required by Section 3.7, once in an Authorized Newspaper in
Luxembourg), notice, that such moneys remain and that, after a date specified
therein, which shall not be less than 30 days from the date of such mailing or
publication, any unclaimed balance of such money then remaining will be repaid
to the Issuer.
-68-
<PAGE> 77
SECTION 10.5 Indemnity for U.S. Government Obligations. The
Issuer 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 10.1 or the principal or interest received in respect of
such obligations.
SECTION 10.6 Excess Funds. The Trustee shall deliver to
the Issuer from time to time upon Issuer Order any U.S. Government Obligations
or money held by it as provided in Section 10.1 which, as expressed in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee (which
may include the applicable such opinion delivered to the Trustee pursuant to
Section 10.1), are then in excess of the amount thereof which then would have
been required to be deposited for the purpose for which such obligations or
money were deposited or received.
ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
SECTION 11.1 Incorporators, Stockholders, Officers and
Directors of Issuer Exempt from Individual Liability. No recourse under or
upon any obligation, covenant or agreement contained in this Indenture, or in
any Security, or because of any indebtedness evidenced thereby, shall be had
against any incorporator, as such or against any past, present or future
stockholder, officer or director, as such, of the Issuer or of any successor,
either directly or through the Issuer or any successor, under any rule of law,
statute or constitutional provision or by the enforcement of any assessment or
by any legal or equitable proceeding or otherwise, all such liability being
expressly waived and released by the acceptance of the Securities and the
Coupons appertaining thereto by the Holders thereof and as part of the
consideration for the issue of the Securities and the Coupons appertaining
thereto.
SECTION 11.2 Provisions of Indenture for the Sole Benefit of
Parties and Holders of Securities and Coupons. Nothing in this Indenture, in
the Securities or in the Coupons appertaining thereto, expressed or implied,
shall give or be construed to give to any Person, other than the parties hereto
and their successors and the Holders of the Securities or Coupons, if any, any
legal or equitable right, remedy or claim under this Indenture or under any
covenant or provision herein contained, all such covenants and provisions being
for the sole benefit of the parties hereto and their successors and of the
Holders of the Securities or Coupons, if any.
SECTION 11.3 Successors and Assigns of Issuer Bound by
Indenture. All the covenants, stipulations, promises and agreements in this
Indenture contained by or in behalf of the Issuer shall bind its successors and
assigns, whether so expressed or not.
-69-
<PAGE> 78
SECTION 11.4 Notices and Demands on Issuer, Trustee and
Holders of Securities and Coupons. 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 or Coupons to or on the Issuer may be given or
served by being deposited postage prepaid, first-class mail (except as
otherwise specifically provided herein) addressed (until another address of the
Issuer is filed by the Issuer with the Trustee) to Williams Holdings of
Delaware, Inc., One Williams Center, Tulsa, Oklahoma 74172, Attention:
Treasurer. Any notice, direction, request or demand by the Issuer or any
Holder of Securities or Coupons to or upon the Trustee shall be deemed to have
been sufficiently given or served by being deposited postage prepaid,
first-class mail (except as otherwise specifically provided herein) addressed
(until another address of the Trustee is filed by the Trustee with the Issuer)
to Citibank, N.A. at its Corporate Trust Office, Attention: Corporate Agency
and Trust.
Where this Indenture provides for notice to Holders of
Registered Securities, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each Holder entitled thereto, at his last address as it
appears in the Security register. In any case where notice to such Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed
with the Trustee, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.
In case, by reason of the suspension of or irregularities in
regular mail service, it shall be impracticable to mail notice to the Issuer
when such notice is required to be given pursuant to any provision of this
Indenture, then any manner of giving such notice as shall be reasonably
satisfactory to the Trustee shall be deemed to be a sufficient giving of such
notice.
SECTION 11.5 Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein. Upon any application or demand by the
Issuer to the Trustee to take any action under any of the provisions of this
Indenture, the Issuer shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent 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, except that in the case of any such application or demand
as to which the furnishing of such documents is specifically required by any
provision of this Indenture
-70-
<PAGE> 79
relating to such particular application or demand, no additional certificate or
opinion need be furnished.
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 shall include (a) a statement that the
person making such certificate or opinion has read such covenant or condition,
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based, (c) a statement that, in the opinion of such
person, he has made such examination or investigation as is necessary to enable
him to express an opinion as to whether or not such covenant or condition has
been complied with and (d) a statement as to whether or not, in the opinion of
such person, such condition or covenant has been complied with.
Any certificate, statement or opinion of an officer of the
Issuer may be based, insofar as it relates to legal matters, upon a certificate
or opinion of or representations by counsel, unless such officer knows that the
certificate or opinion or representations with respect to the matters upon
which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous. Any certificate, statement or opinion of counsel may be based,
insofar as it relates to factual matters or information with respect to which
is in the possession of the Issuer, upon the certificate, statement or opinion
of or representations by an officer or officers of the Issuer, unless such
counsel knows that the certificate, statement or opinion or representations
with respect to the matters upon which his certificate, statement or opinion
may be based as aforesaid are erroneous, or in the exercise of reasonable care
should know that the same are erroneous.
Any certificate, statement or opinion of an officer of the
Issuer or of counsel may be based, insofar as it relates to accounting matters,
upon a certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Issuer, unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with and directed to the Trustee shall contain a statement
that such firm is independent.
SECTION 11.6 Payments Due on Saturdays, Sundays and Holidays.
If the date of maturity of interest on or principal of the Securities of any
series or any Coupons appertaining thereto or
-71-
<PAGE> 80
the date fixed for redemption or repayment of any such Security or Coupon shall
not be a Business Day, then, unless otherwise specified pursuant to Section 2.3
with respect to a series of Securities, payment of interest or principal 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 maturity or the date
fixed for redemption, and no interest shall accrue for the period after such
date.
SECTION 11.7 Conflict of Any Provision of Indenture with
Trust Indenture Act of 1939. If any provision hereof limits, qualifies or
conflicts with a provision of the Trust Indenture Act of 1939 which is required
under such Act to be a part of and govern this Indenture, the latter provision
shall control. If any provision of this Indenture modifies or excludes any
provision of the Trust Indenture Act of 1939 which may be so modified or
excluded, the latter provision shall be deemed to apply to this Indenture as so
modified or to be excluded, as the case may be.
SECTION 11.8 New York Law to Govern. This Indenture and each
Security and Coupon shall be deemed to be a contract under the laws of the
State of New York, and for all purposes shall be construed in accordance with
the laws of such State, except as may otherwise be required by mandatory
provisions of law.
SECTION 11.9 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 11.10 Effect of Headings. The Article and Section
headings herein and the Table of Contents are for convenience only and shall
not affect the construction hereof.
SECTION 11.11 Securities in a Foreign Currency or in ECU.
Unless otherwise specified in an Officers' Certificate delivered pursuant to
Section 2.3 of this Indenture with respect to a particular series of
Securities, whenever for purposes of this Indenture any action may be taken by
the Holders of a specified percentage in aggregate principal amount of
Securities of all series or all series affected by a particular action at the
time Outstanding and, at such time, there are Outstanding Securities of any
series which are denominated in a coin or currency other than Dollars
(including ECUs), then the principal amount of Securities of such series which
shall be deemed to be Outstanding for the purpose of taking such action shall
be that amount of Dollars that could be obtained for such amount at the Market
Exchange Rate in effect on the date of initial issuance of such series. For
purposes of this Section 11.11, Market Exchange Rate shall mean the noon Dollar
buying rate in New York City for cable transfers of that currency as published
by the Federal Reserve Bank of New York; provided, however, in the case of
ECUs, Market Exchange Rate shall mean the rate of exchange determined by the
Commission of the
-72-
<PAGE> 81
European Communities (or any successor thereto) as published in the Official
Journal of the European Communities (such publication or any successor
publication, the "Journal"). If such Market Exchange Rate is not available for
any reason with respect to such currency, the Trustee shall use, in its sole
discretion and without liability on its part, such quotation of the Federal
Reserve Bank of New York or, in the case of ECUs, the rate of exchange as
published in the Journal, as of the most recent available date, or quotations
or, in the case of ECUs, rates of exchange from one or more major banks in The
City of New York or in the country of issue of the currency in question, which
for purposes of the ECU shall be Brussels, Belgium, or such other quotations
or, in the case of ECU, rates of exchange as the Trustee shall deem
appropriate. The provisions of this paragraph shall apply in determining the
equivalent principal amount in respect of Securities of a series denominated in
a currency other than Dollars in connection with any action taken by Holders of
Securities pursuant to the terms of this Indenture.
All decisions and determinations of the Trustee regarding the
Market Exchange Rate or any alternative determination provided for in the
preceding paragraph shall be in its sole discretion and shall, in the absence
of manifest error, be conclusive to the extent permitted by law for all
purposes and irrevocably binding upon the Issuer and all Holders.
SECTION 11.12 Judgment Currency. The Issuer agrees, to the
fullest extent that it may effectively do so under applicable law, that (a) if
for the purpose of obtaining judgment in any court it is necessary to convert
the sum due in respect of the principal of or interest on the Securities of any
series (the "Required Currency") into a currency in which a judgment will be
rendered (the "Judgment Currency"), the rate of exchange used shall be the rate
at which in accordance with normal banking procedures the Trustee could
purchase in The City of New York the Required Currency with the Judgment
Currency on the day on which a final unappealable judgment is entered, unless
such day is not a New York Banking Day, then, to the extent permitted by
applicable law, the rate of exchange used shall be the rate at which in
accordance with normal banking procedures the Trustee could purchase in The
City of New York the Required Currency with the Judgment Currency on the New
York Banking Day preceding the day on which a final unappealable judgment is
entered, and (b) its obligations under this Indenture to make payments in the
Required Currency (i) shall not be discharged or satisfied by any tender, or
any recovery pursuant to any judgment (whether or not entered in accordance
with subsection (a)), in any currency other than the Required Currency, except
to the extent that such tender or recovery shall result in the actual receipt,
by the payee, of the full amount of the Required Currency expressed to be
payable in respect of such payments, (ii) shall be enforceable as an
alternative or additional cause of action for the purpose of recovering in the
Required Currency the amount, if any, by which such actual receipt shall fall
short of the full amount of the Required Currency so expressed
-73-
<PAGE> 82
to be payable and (iii) shall not be affected by judgment being obtained for
any other sum due under this Indenture. For purposes of the foregoing, "New
York Banking Day" means any day except a Saturday, Sunday or a legal holiday in
The City of New York or a day on which banking institutions in The City of New
York are authorized or required by law or executive order to close.
ARTICLE TWELVE
REDEMPTION OF SECURITIES AND SINKING FUNDS
SECTION 12.1 Applicability of Article. The provisions of
this Article shall be applicable to the Securities of any series which are
redeemable before their maturity or to any sinking fund for the retirement of
Securities of a series except as otherwise specified as contemplated by Section
2.3 for Securities of such series.
SECTION 12.2 Notice of Redemption; Partial Redemptions.
Notice of redemption to the Holders of Registered Securities of any series to
be redeemed as a whole or in part at the option of the Issuer shall be given by
mailing notice of such redemption by first class mail, postage prepaid, at
least 30 days and not more than 60 days prior to the date fixed for redemption
to such Holders of Securities of such series at their last addresses as they
shall appear upon the registry books. Notice of redemption to the Holders of
Unregistered Securities to be redeemed as a whole or in part, who have filed
their names and addresses with the Trustee pursuant to Section 4.4(c)(ii),
shall be given by mailing notice of such redemption, by first class mail,
postage prepaid, at least 30 days and not more than 60 prior to the date fixed
for redemption, to such Holders at such addresses as were so furnished to the
Trustee (and, in the case of any such notice given by the Issuer, the Trustee
shall make such information available to the Issuer for such purpose). Notice
of redemption to all other Holders of Unregistered Securities shall be
published in an Authorized Newspaper in the Borough of Manhattan, The City of
New York and in an Authorized Newspaper in London (and, if required by Section
3.7, in an Authorized Newspaper in Luxembourg), in each case, once in each of
three successive calendar weeks, the first publication to be not less than 30
nor more than 60 days prior to the date fixed for redemption. Any notice which
is mailed in the manner herein provided shall be conclusively presumed to have
been duly given, whether or not the Holder receives the notice. Failure to
give notice by mail, or any defect in the notice to the Holder of any Security
of a series designated for redemption as a whole or in part shall not affect
the validity of the proceedings for the redemption of any other Security of
such series.
The notice of redemption to each such Holder shall specify the
principal amount of each Security of such series held by such Holder to be
redeemed, the date fixed for redemption, the
-74-
<PAGE> 83
redemption price, the numbers of the certificate for such Security being
redeemed, the place or places of payment, that payment will be made upon
presentation and surrender of such Securities and, in the case of Securities
with Coupons attached thereto, of all Coupons appertaining thereto maturing
after the date fixed for redemption, that such redemption is pursuant to the
mandatory or optional sinking fund, or both, if such be the case, that interest
accrued to the date fixed for redemption will be paid as specified in such
notice and that on and after said date interest thereon or on the portions
thereof to be redeemed will cease to accrue. In case any Security of a series
is to be redeemed in part only the notice of redemption shall state the portion
of the principal amount thereof to be redeemed and shall state that on and
after the date fixed for redemption, upon surrender of such Security, a new
Security or Securities of such series in principal amount equal to the
unredeemed portion thereof will be issued.
The notice of redemption of Securities of any series to be
redeemed at the option of the Issuer shall be given by the Issuer or, at the
Issuer's request, by the Trustee in the name and at the expense of the Issuer.
On or before the redemption date specified in the notice of
redemption given as provided in this Section, provided, in the case of bearer
Securities, deposit will be made at least 1 Business Day prior to the payment
date, the Issuer will deposit with the Trustee or with one or more paying
agents (or, if the Issuer is acting as its own paying agent, set aside,
segregate and hold in trust as provided in Section 3.4) an amount of money
sufficient to redeem on the redemption date all the Securities of such series
so called for redemption at the appropriate redemption price, together with
accrued interest to the date fixed for redemption. The Issuer will deliver to
the Trustee at least 70 days prior to the date fixed for redemption an
Officers' Certificate stating the aggregate principal amount of Securities to
be redeemed. In case of a redemption at the election of the Issuer prior to
the expiration of any restriction on such redemption, the Issuer shall deliver
to the Trustee, prior to the giving of any notice of redemption to Holders
pursuant to this Section, an Officers' Certificate stating that such
restriction has been complied with.
If less than all the Securities of a series are to be
redeemed, the Trustee shall select, in such manner as it shall deem appropriate
and fair, Securities of such series to be redeemed in whole or in part.
Securities may be redeemed in part in multiples equal to the minimum authorized
denomination for Securities of such series or any multiple thereof. The
Trustee shall promptly notify the Issuer in writing of the Securities of such
series selected for redemption and, in the case of any Securities of such
series selected for partial redemption, the principal amount thereof to be
redeemed. For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities of any series
shall relate, in the case of any Security
-75-
<PAGE> 84
redeemed or to be redeemed only in part, to the portion of the principal amount
of such Security which has been or is to be redeemed.
SECTION 12.3 Payment of Securities Called for Redemption. If
notice of redemption has been given as above provided, the Securities or
portions of Securities specified in such notice shall become due and payable on
the date and at the place stated in such notice at the applicable redemption
price, together with interest accrued to the date fixed for redemption, and on
and after said date (unless the Issuer shall default in the payment of such
Securities at the redemption price, together with interest accrued to said
date) interest on the Securities or portions of Securities so called for
redemption shall cease to accrue, and the unmatured Coupons, if any,
appertaining thereto shall be void, and, except as provided in Sections 6.5 and
10.4, such Securities shall cease from and after the date fixed for redemption
to be entitled to any benefit or security under this Indenture, and the Holders
thereof shall have no right in respect of such Securities except the right to
receive the redemption price thereof and unpaid interest to the date fixed for
redemption. On presentation and surrender of such Securities at a place of
payment specified in said notice, together with all Coupons, if any,
appertaining thereto maturing after the date fixed for redemption, said
Securities or the specified portions thereof shall be paid and redeemed by the
Issuer at the applicable redemption price, together with interest accrued
thereon to the date fixed for redemption; provided that payment of interest
becoming due on or prior to the date fixed for redemption shall be payable in
the case of Securities with Coupons attached thereto, to the Holders of the
Coupons for such interest upon surrender thereof, and in the case of Registered
Securities, to the Holders of such Registered Securities registered as such on
the relevant record date subject to the terms and provisions of Sections 2.3
and 2.7 hereof.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal shall, until paid or duly
provided for, bear interest from the date fixed for redemption at the rate of
interest or Yield to Maturity (in the case of an Original Issue Discount
Security) borne by such Security.
If any Security with Coupons attached thereto is surrendered
for redemption and is not accompanied by all appurtenant Coupons maturing after
the date fixed for redemption, the surrender of such missing Coupon or Coupons
may be waived by the Issuer and the Trustee, if there be furnished to each of
them such security or indemnity as they may require to save each of them
harmless.
Upon presentation of any Security redeemed in part only, the
Issuer shall execute and the Trustee shall authenticate and deliver to or on
the order of the Holder thereof, at the expense of
-76-
<PAGE> 85
the Issuer, a new Security or Securities of such series, of authorized
denominations, in principal amount equal to the unredeemed portion of the
Security so presented.
SECTION 12.4 Exclusion of Certain Securities from Eligibility
for Selection for Redemption. Securities shall be excluded from eligibility
for selection for redemption if they are identified by registration and
certificate number in an Officers' Certificate delivered to the Trustee at
least 40 days prior to the last date on which notice of redemption may be given
as being owned of record and beneficially by, and not pledged or hypothecated
by either (a) the Issuer or (b) an entity specifically identified in such
written statement as directly or indirectly controlling or controlled by or
under direct or indirect common control with the Issuer.
SECTION 12.5 Mandatory and Optional Sinking Funds. The
minimum amount of any sinking fund payment provided for by the terms of the
Securities of any series is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
terms of the Securities of any series is herein referred to as an "optional
sinking fund payment". The date on which a sinking fund payment is to be made
is herein referred to as the "sinking fund payment date".
In lieu of making all or any part of any mandatory sinking
fund payment with respect to any series of Securities in cash, the Issuer may
at its option (a) deliver to the Trustee Securities of such series theretofore
purchased or otherwise acquired (except upon redemption pursuant to the
mandatory sinking fund) by the Issuer or receive credit for Securities of such
series (not previously so credited) theretofore purchased or otherwise acquired
(except as aforesaid) by the Issuer and delivered to the Trustee for
cancellation pursuant to Section 2.10, (b) receive credit for optional sinking
fund payments (not previously so credited) made pursuant to this Section, or
(c) receive credit for Securities of such series (not previously so credited)
redeemed by the Issuer through any optional redemption provision contained in
the terms of such series. Securities so delivered or credited shall be
received or credited by the Trustee at the sinking fund redemption price
specified in such Securities.
On or before the 60th day next preceding each sinking fund
payment date for any series, the Issuer will deliver to the Trustee an
Officers' Certificate (which need not contain the statements required by
Section 11.5) (a) specifying the portion of the mandatory sinking fund payment
to be satisfied by payment of cash and the portion to be satisfied by credit of
Securities of such series and the basis for such credit, (b) stating that none
of the Securities of such series has theretofore been so credited, (c) stating
that no defaults in the payment of interest or Events of Default with respect
to such series have occurred (which have not been waived or cured) and are
continuing and (d) stating whether or
-77-
<PAGE> 86
not the Issuer intends to exercise its right to make an optional sinking fund
payment with respect to such series and, if so, specifying the amount of such
optional sinking fund payment which the Issuer intends to pay on or before the
next succeeding sinking fund payment date. Any Securities of such series to be
credited and required to be delivered to the Trustee in order for the Issuer to
be entitled to credit therefor as aforesaid which have not theretofore been
delivered to the Trustee shall be delivered for cancellation pursuant to
Section 2.10 to the Trustee with such Officers' Certificate (or reasonably
promptly thereafter if acceptable to the Trustee). Such Officers' Certificate
shall be irrevocable and upon its receipt by the Trustee the Issuer shall
become unconditionally obligated to make all the cash payments or payments
therein referred to, if any, on or before the next succeeding sinking fund
payment date. Failure of the Issuer, on or before any such 60th day, to
deliver such Officers' Certificate and Securities specified in this paragraph,
if any, shall not constitute a default but shall constitute, on and as of such
date, the irrevocable election of the Issuer (i) that the mandatory sinking
fund payment for such series due on the next succeeding sinking fund payment
date shall be paid entirely in cash without the option to deliver or credit
Securities of such series in respect thereof and (ii) that the Issuer will make
no optional sinking fund payment with respect to such series as provided in
this Section.
If the sinking fund payment to be made in cash on the next
succeeding sinking fund payment date plus any unused balance of any preceding
sinking fund payments made in cash shall be $50,000 (or the equivalent thereof
in any Foreign Currency or ECU) or less the Trustee, unless requested by the
Issuer, shall not give the next succeeding notice of the redemption of
Securities of such series through the operation of the sinking fund. The
amount of any sinking fund payments not so applied or allocated to the
redemption of Securities of such series shall be added to the next cash sinking
fund payment for such series and, together with such payment, shall be applied
in accordance with the provisions of this Section. Any and all sinking fund
moneys held on the stated maturity date of the Securities of any particular
series (or earlier, if such maturity is accelerated), which are not held for
the payment or redemption of particular Securities of such series shall be
applied, together with other moneys, if necessary, sufficient for the purpose,
to the payment of the principal of, and interest on, the Securities of such
series at maturity.
On or before each sinking fund payment date, the Issuer shall
pay to the Trustee in cash or shall otherwise provide for the payment of all
interest accrued to the date fixed for redemption on Securities to be redeemed
on such sinking fund payment date, provided, that in the case of bearer
Securities, such payment shall be made to the Trustee at least the Business Day
prior to the sinking fund payment date.
-78-
<PAGE> 87
The Trustee shall not redeem or cause to be redeemed any
Securities of a series with sinking fund moneys or give any notice of
redemption of Securities for such series by operation of the sinking fund
during the continuance of a default in payment of interest on such Securities
or of any Event of Default except that, where the giving of notice of
redemption of any Securities shall theretofore have been made, the Trustee
shall redeem or cause to be redeemed such Securities, provided that it shall
have received from the Issuer a sum sufficient for such redemption. Except as
aforesaid, any moneys in the sinking fund for such series at the time when any
such default or Event of Default shall occur, and any moneys thereafter paid
into the sinking fund, shall, during the continuance of such default or Event
of Default, be deemed to have been collected under Article Five and held for
the payment of all such Securities. In case such Event of Default shall have
been waived as provided in Section 5.10 or the default cured on or before the
sixtieth day preceding the sinking fund payment date in any year, such moneys
shall thereafter be applied on the next succeeding sinking fund payment date in
accordance with this Section to the redemption of such Securities.
-79-
<PAGE> 88
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of ______________, 199__.
WILLIAMS HOLDINGS OF DELAWARE, INC.
By ________________________________
Title:
[CORPORATE SEAL]
Attest:
By _________________________
Title:
CITIBANK, N.A.
TRUSTEE
By ________________________________
Title:
[CORPORATE SEAL]
Attest:
By _________________________
Title:
-80-
<PAGE> 89
STATE OF _________ )
) ss.:
COUNTY OF ________ )
On this ____ of ________, 199__ before me personally came
, to me personally known, who, being by me duly sworn, did depose and
say that he is the of Williams Holdings of
Delaware, Inc., one of the corporations described in and which executed the
above instrument; that he knows the corporate seal of said corporation; that the
seal affixed to said instrument is such corporate seal; that it was so affixed
by authority of the Board of Directors of said corporation, and that he signed
his name thereto by like authority.
[NOTARIAL SEAL]
_______________________________________
Notary Public
STATE OF ______________ )
) ss.:
COUNTY OF ______________ )
On this ____ of _________, 199__ before me personally came
, to me personally known, who, being by me duly sworn, did depose and
say that he is _______________ of Citibank, N.A., one of the corporations
described in and which executed the above instrument; that he knows the
corporate seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
[NOTARIAL SEAL]
_______________________________________
Notary Public
-81-
<PAGE> 1
EXHIBIT 4.2
========================================================
WILLIAMS HOLDINGS OF DELAWARE, INC.
AND
CITIBANK, N.A., Trustee
Subordinated Indenture
Dated as of _____________, 199__
__________
========================================================
<PAGE> 2
CROSS REFERENCE SHEET *
__________
Provisions of Trust Indenture Act of 1939 and Indenture to be
dated as of ___________, 199__ between WILLIAMS HOLDINGS OF DELAWARE, INC. and
CITIBANK, N.A., Trustee:
<TABLE>
<CAPTION>
Section of the Act Section of Indenture
- ------------------ --------------------
<S> <C>
310(a)(1) and (2)................ 6.9
310(a)(3) and (4)................ Inapplicable
310(b)........................... 6.8 and 6.10(a), (b) and (d)
310(c)........................... Inapplicable
311(a)........................... 6.13(a) and (c)(1) and (2)
311(b)........................... 6.13(b)
311(c)........................... Inapplicable
312(a)........................... 4.1 and 4.2(a)
312(b)........................... 4.2(a) and (b)(i) and (ii)
312(c)........................... 4.2(c)
313(a)........................... 4.4(a)(i), (ii), (iii), (iv), (v) and (vi)
313(b)(1)........................ Inapplicable
313(b)(2)........................ 4.4
313(c)........................... 4.4
313(d)........................... 4.4
314(a)........................... 4.3
314(b)........................... Inapplicable
314(c)(1) and (2)................ 11.5
314(c)(3)........................ Inapplicable
314(d)........................... Inapplicable
314(e)........................... 11.5
314(f)........................... Inapplicable
315(a), (c) and (d).............. 6.1
315(b)........................... 5.11
315(e)........................... 5.12
316(a)(1)........................ 5.9
316(a)(2)........................ Not required
316(a) (last sentence)........... 7.4
316(b)........................... 5.7
317(a)........................... 5.2
317(b)........................... 3.4(a) and (b)
318(a)........................... 11.7
</TABLE>
_________________________
* This Cross Reference Sheet is not part of the Indenture.
i
<PAGE> 3
TABLE OF CONTENTS
__________
<TABLE>
<CAPTION>
Page
<S> <C> <C>
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS
Authorization of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Compliance with Legal Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purpose of and Consideration for Indenture . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE
DEFINITIONS
SECTION 1.1. Certain Terms Defined . . . . . . . . . . . . . . . . . . . . . 1
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . 2
Authorized Newspaper . . . . . . . . . . . . . . . . . . . . . . 2
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . 2
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Composite Rate . . . . . . . . . . . . . . . . . . . . . . . . . 3
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . 3
Coupon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
covenant defeasance . . . . . . . . . . . . . . . . . . . . . . . 3
Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ECU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . 4
Foreign Currency . . . . . . . . . . . . . . . . . . . . . . . . 4
Holder, Holder of Securities,
Securityholder . . . . . . . . . . . . . . . . . . . . . . . . 4
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Issuer Order . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Judgment Currency . . . . . . . . . . . . . . . . . . . . . . . . 4
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . 4
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . 4
original issue date . . . . . . . . . . . . . . . . . . . . . . . 5
Original Issue Discount Security . . . . . . . . . . . . . . . . 5
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Periodic Offering . . . . . . . . . . . . . . . . . . . . . . . . 6
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
record date . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Registered Global Security . . . . . . . . . . . . . . . . . . . 6
Registered Security . . . . . . . . . . . . . . . . . . . . . . . 6
Required Currency . . . . . . . . . . . . . . . . . . . . . . . . 6
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . 6
Security or Securities . . . . . . . . . . . . . . . . . . . . . 6
Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 7
Trust Indenture Act of 1939 . . . . . . . . . . . . . . . . . . . 7
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Unregistered Security . . . . . . . . . . . . . . . . . . . . . . 7
U.S. Government Obligations . . . . . . . . . . . . . . . . . . . 7
Yield to Maturity . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE TWO
SECURITIES
SECTION 2.1. Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.2. Form of Trustee's Certificate
of Authentication . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.3. Amount Unlimited; Issuable in Series . . . . . . . . . . . . . . 9
SECTION 2.4. Authentication and Delivery of
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.5. Execution of Securities . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.6. Certificate of Authentication . . . . . . . . . . . . . . . . . 15
SECTION 2.7. Denomination and Date of
Securities; Payments of Interest . . . . . . . . . . . . . . . 15
SECTION 2.8. Registration, Transfer and Exchange . . . . . . . . . . . . . . 16
SECTION 2.9. Mutilated, Defaced, Destroyed, Lost
and Stolen Securities . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.10. Cancellation of Securities;
Destruction Thereof . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.11. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE THREE
COVENANTS OF THE ISSUER
SECTION 3.1. Payment of Principal and Interest . . . . . . . . . . . . . . . 23
SECTION 3.2. Offices for Payments, etc. . . . . . . . . . . . . . . . . . . . 23
SECTION 3.3. Appointment to Fill a Vacancy in
Office of Trustee . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.4. Paying Agents . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.5. Written Statement to Trustee . . . . . . . . . . . . . . . . . . 25
SECTION 3.6. Luxembourg Publications . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C> <C>
ARTICLE FOUR
SECURITYHOLDERS LISTS AND REPORTS BY THE
ISSUER AND THE TRUSTEE
SECTION 4.1. Issuer to Furnish Trustee Information
as to Names and Addresses of
Securityholders . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.2. Preservation and Disclosure of
Securityholders Lists . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.3. Reports by the Issuer . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.4. Reports by the Trustee . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE FIVE
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.1. Event of Default Defined; Acceleration
of Maturity; Waiver of Default . . . . . . . . . . . . . . . . 29
SECTION 5.2. Collection of Indebtedness by Trustee;
Trustee May Prove Debt . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.3. Application of Proceeds . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.4. Suits for Enforcement . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.5. Restoration of Rights on Abandonment
of Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.6. Limitations on Suits by
Securityholders . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.7. Unconditional Right of Securityholders
to Institute Certain Suits . . . . . . . . . . . . . . . . . . 37
SECTION 5.8. Powers and Remedies Cumulative; Delay
or Omission Not Waiver of Default . . . . . . . . . . . . . . . 37
SECTION 5.9. Control by Holders of Securities . . . . . . . . . . . . . . . . 38
SECTION 5.10. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . 38
SECTION 5.11. Trustee to Give Notice of Default,
But May Withhold in Certain
Circumstances . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 5.12. Right of Court to Require Filing
of Undertaking to Pay Costs . . . . . . . . . . . . . . . . . . 39
ARTICLE SIX
CONCERNING THE TRUSTEE
SECTION 6.1. Duties and Responsibilities of the Trustee;
During Default; Prior to Default . . . . . . . . . . . . . . . 40
SECTION 6.2. Certain Rights of the Trustee . . . . . . . . . . . . . . . . . 41
SECTION 6.3. Trustee Not Responsible for Recitals,
Disposition of Securities or
Application of Proceeds Thereof . . . . . . . . . . . . . . . . 43
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C> <C>
SECTION 6.4. Trustee and Agents May Hold Securities
or Coupons; Collections, etc. . . . . . . . . . . . . . . . . . 43
SECTION 6.5. Moneys Held by Trustee . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6.6. Compensation and Indemnification
of Trustee and Its Prior Claim . . . . . . . . . . . . . . . . 43
SECTION 6.7. Right of Trustee to Rely on
Officers' Certificate, etc. . . . . . . . . . . . . . . . . . . 44
SECTION 6.8. Conflicting Interests . . . . . . . . . . . . . . . . . . . . . 44
SECTION 6.9. Persons Eligible for Appointment
as Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 6.10. Resignation and Removal; Appointment
of Successor Trustee . . . . . . . . . . . . . . . . . . . . . 45
SECTION 6.11. Acceptance of Appointment by
Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 6.12. Merger, Conversion, Consolidation or
Succession to Business of Trustee . . . . . . . . . . . . . . . 48
SECTION 6.13. Preferential Collection of Claims
Against the Issuer . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 6.14. Appointment of Authenticating Agent . . . . . . . . . . . . . . 49
ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS
SECTION 7.1. Evidence of Action Taken by
Securityholders . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.2. Proof of Execution of Instruments and
of Holding of Securities . . . . . . . . . . . . . . . . . . . 51
SECTION 7.3. Holders to be Treated as Owners . . . . . . . . . . . . . . . . 52
SECTION 7.4. Securities Owned by Issuer Deemed Not
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 7.5. Right of Revocation of Action Taken . . . . . . . . . . . . . . 53
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.1. Supplemental Indentures Without
Consent of Securityholders . . . . . . . . . . . . . . . . . . 54
SECTION 8.2. Supplemental Indentures With Consent
of Securityholders . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 8.3. Effect of Supplemental Indenture . . . . . . . . . . . . . . . . 57
SECTION 8.4. Documents to Be Given to Trustee . . . . . . . . . . . . . . . . 57
SECTION 8.5. Notation on Securities in Respect of
Supplemental Indentures . . . . . . . . . . . . . . . . . . . . 57
SECTION 8.6. Subordination Unimpaired . . . . . . . . . . . . . . . . . . . . 57
</TABLE>
v
<PAGE> 7
<TABLE>
<S> <C> <C>
ARTICLE NINE
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 9.1. Issuer May Consolidate, etc.
Only on Certain Terms . . . . . . . . . . . . . . . . . . . . . 58
SECTION 9.2. Successor Corporation Substituted . . . . . . . . . . . . . . . . 58
ARTICLE TEN
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
SECTION 10.1. Satisfaction and Discharge of
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 10.2. Application by Trustee of Funds
Deposited for Payment of Securities . . . . . . . . . . . . . . 65
SECTION 10.3. Repayment of Moneys Held by Paying
Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 10.4. Return of Moneys Held By Trustee and
Paying Agent Unclaimed for Two
Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 10.5. Indemnity For U.S. Government
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 10.6. Excess Funds . . . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
SECTION 11.1. Incorporators, Stockholders, Officers
and Directors of Issuer Exempt from
Individual Liability . . . . . . . . . . . . . . . . . . . . . 67
SECTION 11.2. Provisions of Indenture for the Sole
Benefit of Parties and Holders of
Securities and Coupons . . . . . . . . . . . . . . . . . . . . 67
SECTION 11.3. Successors and Assigns of Issuer
Bound by Indenture . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 11.4. Notices and Demands on Issuer,
Trustee and Holders of Securities
and Coupons . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 11.5. Officers' Certificates and Opinions
of Counsel; Statements to Be
Contained Therein . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 11.6. Payments Due on Saturdays, Sundays
and Holidays . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 11.7. Conflict of Any Provision of
Indenture with Trust Indenture
Act of 1939 . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 11.8. New York Law to Govern . . . . . . . . . . . . . . . . . . . . . 70
</TABLE>
vi
<PAGE> 8
<TABLE>
<S> <C> <C>
SECTION 11.9. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 11.10. Effect of Headings . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 11.11. Securities in a Foreign Currency
or in ECU . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 11.12. Judgment Currency . . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE TWELVE
REDEMPTION OF SECURITIES AND SINKING FUNDS
SECTION 12.1. Applicability of Article . . . . . . . . . . . . . . . . . . . . 72
SECTION 12.2. Notice of Redemption; Partial
Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 12.3. Payment of Securities Called for
Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 12.4. Exclusion of Certain Securities from
Eligibility for Selection for
Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 12.5. Mandatory and Optional Sinking
Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
ARTICLE THIRTEEN
SUBORDINATION
SECTION 13.1. Securities and Coupons Subordinated
to Senior Indebtedness . . . . . . . . . . . . . . . . . . . . 77
SECTION 13.2. Disputes with Holders of Certain
Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 13.3. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 13.4. Obligation of Issuer Unconditional . . . . . . . . . . . . . . . 80
SECTION 13.5. Payments on Securities and
Coupons Permitted . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 13.6. Effectuation of Subordination
by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 13.7. Knowledge of Trustee . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 13.8. Trustee May Hold Senior Indebtedness . . . . . . . . . . . . . . 82
SECTION 13.9. Rights of Holders of Senior
Indebtedness Not Impaired . . . . . . . . . . . . . . . . . . . 82
SECTION 13.10. Article Applicable to Paying Agents . . . . . . . . . . . . . . . 82
SECTION 13.11. Trustee; Compensation Not
Prejudiced . . . . . . . . . . . . . . . . . . . . . . . . . . 82
TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
</TABLE>
vii
<PAGE> 9
THIS INDENTURE, dated as of _____________, 199__ between
WILLIAMS HOLDINGS OF DELAWARE, INC., a Delaware corporation (the "Issuer"), and
CITIBANK, N.A., as trustee (the "Trustee"),
W I T N E S S E T H :
WHEREAS, the Issuer has duly authorized the issue from time to
time of its unsecured debentures, notes or other evidences of indebtedness to
be issued in one or more series (the "Securities") up to such principal amount
or amounts as may from time to time be authorized in accordance with the terms
of this Indenture;
WHEREAS, the Issuer has duly authorized the execution and
delivery of this Indenture to provide, among other things, for the
authentication, delivery and administration of the Securities; and
WHEREAS, all things necessary to make this Indenture a valid
indenture and agreement according to its terms have been done;
NOW, THEREFORE:
In consideration of the premises and the purchases of the
Securities by the holders thereof, the Issuer and the Trustee mutually covenant
and agree for the equal and proportionate benefit of the respective holders
from time to time of the Securities and of the Coupons, if any, appertaining
thereto as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.1 Certain Terms Defined. The following terms
(except as otherwise expressly provided or unless the context otherwise clearly
requires) for all purposes of this Indenture and of any indenture supplemental
hereto shall have the respective meanings specified in this Article. All other
terms used in this Indenture that are defined in the Trust Indenture Act of
1939 or the definitions of which in the Securities Act of 1933 are referred to
in the Trust Indenture Act of 1939, including terms defined therein by
reference to the Securities Act of 1933 (except as herein otherwise expressly
provided or unless the context otherwise requires), shall 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. 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
<PAGE> 10
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. The terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular.
"Authenticating Agent" shall have the meaning set forth in
Section 6.14.
"Authorized Newspaper" means a newspaper (which, in the case
of The City of New York, will, if practicable, be The Wall Street Journal
(Eastern Edition), in the case of the United Kingdom, will, if practicable, be
the Financial Times (London Edition) and, in the case of Luxembourg, will, if
practicable, be the Luxemburger Wort) published in an official language of the
country of publication customarily published at least once a day for at least
five days in each calendar week and of general circulation in The City of New
York, the United Kingdom or in Luxembourg, as applicable. If it shall be
impractical in the opinion of the Trustee to make any publication of any notice
required hereby in an Authorized Newspaper, any publication or other notice in
lieu thereof which is made or given with the approval of the Trustee shall
constitute a sufficient publication of such notice.
"Board of Directors" means either the Board of Directors of
the Issuer or any committee of such Board duly authorized to act on its behalf.
"Board Resolution" means a copy of one or more resolutions,
certified by the secretary or an assistant secretary of the Issuer to have been
duly adopted or consented to by the Board of Directors and to be in full force
and effect, and delivered to the Trustee.
"Business Day" means, with respect to any Security, a day that
in the city (or in any of the cities, if more than one) in which amounts are
payable, as specified in the form of such Security, is not a day on which
banking institutions are authorized or required by law or regulation to close.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, or if at any time after the execution and delivery 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 on such date.
-2-
<PAGE> 11
"Composite Rate" means, at any time, the rate of interest, per
annum, compounded semiannually, equal to the sum of the rates of interest borne
by the Securities of each series (as specified on the face of the Securities of
each series, provided, that, in the case of the Securities with variable rates
of interest, the interest rate to be used in calculating the Composite Rate
shall be the interest rate applicable to such Securities at the beginning of
the year in which the Composite Rate is being determined and, provided,
further, that, in the case of Securities which do not bear interest, the
interest rate to be used in calculating the Composite Rate shall be a rate
equal to the yield to maturity on such Securities, calculated at the time of
issuance of such Securities) multiplied, in the case of each series of
Securities, by the percentage of the aggregate principal amount of the
Securities of all series Outstanding represented by the Outstanding Securities
of such series. For the purposes of this calculation, the aggregate principal
amounts of Outstanding Securities that are denominated in a foreign currency,
shall be calculated in the manner set forth in Section 11.11.
"Corporate Trust Office" means the office of the Trustee at
which the corporate trust business of the Trustee shall, at any particular
time, be principally administered, which office is, at the date as of which
this Indenture is dated, located at 120 Wall Street, 13th Floor, New York, New
York 10043, except that for purposes of the presentation of Registered
Securities for payment or registration of transfer or exchange, such term means
the office or agency of the Trustee in said city at which at any particular
time the corporate agency business of the Trustee shall be conducted which
office at the date of execution of this Indenture is located at 111 Wall
Street, New York, New York 10043.
"Coupon" means any interest coupon appertaining to a Security.
"covenant defeasance" shall have the meaning set forth in
Section 10.1(C).
"Depositary" means, with respect to the Securities of any
series issuable or issued in the form of one or more Registered Global
Securities, the Person designated as Depositary by the Issuer pursuant to
Section 2.3 until a successor Depositary shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Depositary" shall mean
or include each Person who is then a Depositary hereunder, and if at any time
there is more than one such Person, "Depositary" as used with respect to the
Securities of any such series shall mean the Depositary with respect to the
Registered Global Securities of that series.
"Dollar" means the coin or currency of the United States of
America as at the time of payment is legal tender for the payment of public and
private debts.
-3-
<PAGE> 12
"ECU" means the European Currency Unit as defined and revised
from time to time by the Council of European Communities.
"Event of Default" means any event or condition specified as
such in Section 5.1.
"Foreign Currency" means a currency issued by the government
of a country other than the United States.
"Holder", "Holder of Securities", "Securityholder" or other
similar terms mean (a) in the case of any Registered Security, the Person in
whose name such Security is registered in the security register kept by the
Issuer for that purpose in accordance with the terms hereof, and (b) in the
case of any Unregistered Security, the bearer of such Security, or any Coupon
appertaining thereto, as the case may be.
"Indenture" means this instrument as originally executed and
delivered or, if amended or supplemented as herein provided, as so amended or
supplemented or both, and shall include the forms and terms of particular
series of Securities established as contemplated hereunder.
"Interest" means, when used with respect to non-interest
bearing Securities, interest payable after maturity.
"Issuer" means (except as otherwise provided in Article Six)
Williams Holdings of Delaware, Inc., a Delaware corporation and, subject to
Article Nine, its successors and assigns.
"Issuer Order" means a written statement, request or order of
the Issuer signed in its name by any one of the Chairman of the Board, the
President, or a Vice President, a Secretary or a Treasurer of the Issuer.
"Judgment Currency" shall have the meaning set forth in
Section 11.12.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, the President or a Vice President, and by the
Controller, Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary of the Issuer and delivered to the Trustee. Each such certificate
shall include the statements provided for in Section 11.5, if applicable.
"Opinion of Counsel" means an opinion in writing signed by
legal counsel who may be an employee of or counsel to the Issuer and who shall
be satisfactory to the Trustee. Each such opinion shall include the statements
provided for in Section 11.5, if applicable.
-4-
<PAGE> 13
"original issue date" of any Security (or portion thereof)
means the earlier of (a) the date of such Security or (b) the date of any
Security (or portion thereof) for which such Security was issued (directly or
indirectly) on registration of transfer, exchange or substitution.
"Original Issue Discount Security" means any Security that
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the maturity thereof pursuant to
Section 5.1.
"Outstanding" when used with reference to Securities, shall,
subject to the provisions of Section 7.4, mean, as of any particular time, all
Securities authenticated and delivered by the Trustee under this Indenture,
except
(a) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities, or portions thereof, for the payment or
redemption of which moneys or U.S. Government Obligations (as provided
for in Section 10.1) in the necessary amount shall have been deposited
in trust with the Trustee or with any paying agent (other than the
Issuer) or shall have been set aside, segregated and held in trust by
the Issuer for the Holders of such Securities (if the Issuer shall act
as its own paying agent), provided that if such Securities, or
portions thereof, are to be redeemed prior to the maturity thereof,
notice of such redemption shall have been given as herein provided, or
provision satisfactory to the Trustee shall have been made for giving
such notice; and
(c) Securities which shall have been paid or in substitution
for which other Securities shall have been authenticated and delivered
pursuant to the terms of Section 2.9 (except with respect to any such
Security as to which proof satisfactory to the Trustee is presented
that such Security is held by a Person in whose hands such Security is
a legal, valid and binding obligation of the Issuer).
In determining whether the Holders of the requisite principal
amount of Outstanding Securities of any or all series have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, the
principal amount of an Original Issue Discount Security that shall be deemed to
be Outstanding for such purposes shall be the amount of the principal thereof
that would be due and payable as of the date of such determination upon a
declaration of acceleration of the maturity thereof pursuant to Section 5.1.
"Periodic Offering" means an offering of Securities of a
series from time to time, the specific terms of which Securities,
-5-
<PAGE> 14
including, without limitation, the rate or rates of interest, if any, thereon,
the stated maturity or maturities thereof and the redemption provisions, if
any, with respect thereto, are to be determined by the Issuer or its agents
upon the issuance of such Securities.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
"principal" whenever used with reference to the Securities or
any Security or any portion thereof, shall be deemed to include "and premium,
if any".
"record date" shall have the meaning set forth in Section 2.7.
"Registered Global Security", means a Security evidencing all
or a part of a series of Registered Securities, issued to the Depositary for
such series in accordance with Section 2.4, and bearing the legend prescribed
in Section 2.4.
"Registered Security" means any Security registered on the
Security register of the Issuer.
"Required Currency" shall have the meaning set forth in
Section 11.12.
"Responsible Officer" when used with respect to the Trustee
means the chairman of the board of directors, any vice chairman of the board of
directors, the chairman of the trust committee, the chairman of the executive
committee, any vice chairman of the executive committee, the president, any
vice president, (whether or not designated by numbers or words added before or
after the title "vice president") the cashier, the secretary, the treasurer,
any trust officer, any assistant trust officer, any assistant vice president,
any assistant cashier, any assistant secretary, any assistant treasurer, or any
other officer or assistant officer of the Trustee customarily performing
functions similar to those performed by the persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of his knowledge of and familiarity with the particular subject.
"Security" or "Securities" has the meaning stated in the first
recital of this Indenture, or, as the case may be, Securities that have been
authenticated and delivered under this Indenture.
"Senior Indebtedness" means obligations (other than
non-recourse obligations, the Securities or any other obligations specifically
designated as being subordinate in right of payment to
-6-
<PAGE> 15
Senior Indebtedness) of, or guaranteed or assumed by, the Issuer for borrowed
money or evidenced by bonds, debentures, notes or other similar instruments,
and amendments, renewals, extensions, modifications and refundings of any such
indebtedness or obligation.
"Trust Indenture Act of 1939" (except as otherwise provided in
Sections 8.1 and 8.2) means the Trust Indenture Act of 1939 as amended.
"Trustee" means the Person identified as "Trustee" in the
first paragraph hereof and, subject to the provisions of Article Six, shall
also include any successor trustee. "Trustee" shall also mean or include each
Person who is then a trustee hereunder and if at any time there is more than
one such Person, "Trustee" as used with respect to the Securities of any series
shall mean the trustee with respect to the Securities of such series.
"Unregistered Security" means any Security other than a
Registered Security.
"U.S. Government Obligations" shall have the meaning set forth
in Section 10.1(A).
"Yield to Maturity" means the yield to maturity on a series of
Securities, calculated at the time of issuance of such series, or, if
applicable, at the most recent redetermination of interest on such series, and
calculated in accordance with accepted financial practice.
ARTICLE TWO
SECURITIES
SECTION 2.1 Forms Generally. The Securities of each series
and the Coupons, if any, to be attached thereto shall be substantially in such
form (not inconsistent with this Indenture) as shall be established by or
pursuant to one or more Board Resolutions (as set forth in a Board Resolution
or, to the extent established pursuant to rather than set forth in a Board
Resolution, an Officers' Certificate detailing such establishment) or in one or
more indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture and may have imprinted or otherwise reproduced
thereon such legend or legends or endorsements, not inconsistent with the
provisions of this Indenture, as may be required to comply with any law or with
any rules or regulations pursuant thereto, or with any rules of any securities
exchange or to conform to general usage, all as may be determined by the
officers executing such Securities and Coupons,
-7-
<PAGE> 16
if any, as evidenced by their execution of such Securities and Coupons.
The definitive Securities and Coupons, if any, shall be
printed, lithographed or engraved on steel engraved borders or may be produced
in any other manner, all as determined by the officers executing such
Securities and Coupons, if any, as evidenced by their execution of such
Securities and Coupons, if any.
SECTION 2.2 Form of Trustee's Certificate of Authentication.
The Trustee's certificate of authentication on all Securities shall be in
substantially the following form:
"This is one of the Securities of the series referred to in
the within-mentioned Subordinated Indenture.
Citibank, N.A.,
as Trustee
By _______________________
Authorized Officer"
If at any time there shall be an Authenticating Agent
appointed with respect to any series of Securities, then the Securities of such
series may have endorsed thereon, in addition to or in lieu of the Trustee's
certificate of authentication to be borne by the Securities of each such
series, an alternative certificate of authentication substantially as follows:
"This is one of the Securities of the series referred to in
the within-mentioned Subordinated Indenture.
__________________________,
as Authenticating Agent
By _______________________
Authorized Officer"
SECTION 2.3 Amount Unlimited; Issuable in Series. The
aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series, and the
Securities of each such series shall rank equally and pari
-8-
<PAGE> 17
passu with the Securities of each other series, but all Securities issued
hereunder shall be subordinate and junior in right of payment, to the extent
and in the manner set forth in Article Thirteen, to all Senior Indebtedness of
the Issuer. There shall be established in or pursuant to one or more Board
Resolutions (and, to the extent established pursuant to rather than set forth
in a Board Resolution, in an Officers' Certificate detailing such
establishment) or established in one or more indentures supplemental hereto,
prior to the initial issuance of Securities of any series,
(1) the designation of the Securities of the series, which
shall distinguish the Securities of the series from the Securities of
all other series;
(2) any limit upon the aggregate principal amount of the
Securities of the series that may be authenticated and delivered under
this Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to Section 2.8, 2.9, 2.11, 8.5 or
12.3);
(3) if other than Dollars, the coin or currency in which the
Securities of that series are denominated (including, but not limited
to, any Foreign Currency or ECU);
(4) the date or dates on which the principal of the
Securities of the series is payable;
(5) the rate or rates at which the Securities of the series
shall bear interest, if any, the date or dates from which such
interest shall accrue, on which such interest shall be payable and (in
the case of Registered Securities) on which a record shall be taken
for the determination of Holders to whom interest is payable and/or
the method by which such rate or rates or date or dates shall be
determined the rate of penalty, if any, on any overdue interest
payment and the right of the Issuer to extend the interest payment
periods of the Securities of the series, the maximum duration, if any,
of any such extension or extensions, the additional interest, if any,
payable on such Securities if any interest payment period is extended
and any notice (which in every case shall include notice to the
Trustee) which must be given upon the exercise of such right;
(6) the place or places where the principal of and any
interest on Securities of the series shall be payable (if other than
as provided in Section 3.2);
(7) the right, if any, of the Issuer to redeem Securities, in
whole or in part, at its option and the period or periods within
which, the price or prices at which and any
-9-
<PAGE> 18
terms and conditions upon which Securities of the series may be so
redeemed, pursuant to any sinking fund or otherwise;
(8) the obligation, if any, of the Issuer to redeem,
repurchase or repay Securities of the series pursuant to any mandatory
redemption, sinking fund or analogous provisions or at the option of a
Holder thereof and the price or prices at which and the period or
periods within which and any terms and conditions upon which
Securities of the series shall be redeemed, repurchased or repaid, in
whole or in part, pursuant to such obligation;
(9) if other than denominations of $1,000 and any integral
multiple thereof in the case of Registered Securities, or $1,000 and
$5,000 in the case of Unregistered Securities, the denominations in
which Securities of the series shall be issuable;
(10) if other than the principal amount thereof, the portion of
the principal amount of Securities of the series which shall be
payable upon declaration of acceleration of the maturity thereof;
(11) if other than the coin or currency in which the Securities
of that series are denominated, the coin or currency in which payment
of the principal of or interest on the Securities of such series shall
be payable;
(12) if the principal of or interest on the Securities of such
series are to be payable, at the election of the Issuer or a Holder
thereof, in a coin or currency other than that in which the Securities
are denominated, the period or periods within which, and the terms and
conditions upon which, such election may be made;
(13) if the amount of payments of principal of and interest on
the Securities of the series may be determined with reference to an
index based on a coin or currency other than that in which the
Securities of the series are denominated, the manner in which such
amounts shall be determined;
(14) whether the Securities of the series will be issuable as
Registered Securities (and if so, whether such Securities will be
issuable as Registered Global Securities) or Unregistered Securities
(with or without Coupons), or any combination of the foregoing, any
restrictions applicable to the offer, sale or delivery of Unregistered
Securities or the payment of interest thereon and, if other than as
provided in Section 2.8, the terms upon which Unregistered Securities
of any series may be exchanged for Registered Securities of such
series and vice versa;
-10-
<PAGE> 19
(15) whether and under what circumstances the Issuer will pay
additional amounts on the Securities of the series held by a Person
who is not a U.S. Person in respect of any tax, assessment or
governmental charge withheld or deducted and, if so, whether the
Issuer will have the option to redeem such Securities rather than pay
such additional amounts;
(16) if the Securities of such series are to be issuable in
definitive form (whether upon original issue or upon exchange of a
temporary Security of such series) only upon receipt of certain
certificates or other documents or satisfaction of other conditions,
the form and terms of such certificates, documents or conditions;
(17) any trustees, depositaries, authenticating or paying
agents, transfer agents or registrars or any other agents with respect
to the Securities of such series;
(18) any other Events of Default or covenants with respect to
the Securities of such series; and
(19) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series and Coupons, if any,
appertaining thereto, shall be substantially identical, except in the case of
Registered Securities as to denomination and except as may otherwise be
provided by or pursuant to the Board Resolution or Officers' Certificate
referred to above or as set forth in any such indenture supplemental hereto.
All Securities of any one series need not be issued at the same time and may be
issued from time to time, consistent with the terms of this Indenture, if so
provided by or pursuant to such Board Resolution, such Officers' Certificate or
in any such indenture supplemental hereto.
SECTION 2.4 Authentication and Delivery of Securities. The
Issuer may deliver Securities of any series having attached thereto appropriate
Coupons, if any, executed by the Issuer to the Trustee for authentication
together with the applicable documents referred to below in this Section, and
the Trustee shall thereupon authenticate and deliver such Securities to or upon
the order of the Issuer (contained in the Issuer Order referred to below in
this Section) or pursuant to such procedures acceptable to the Trustee and to
such recipients as may be specified from time to time by an Issuer Order. The
maturity date, original issue date, interest rate and any other terms of the
Securities of such series and Coupons, if any, appertaining thereto shall be
specified in or pursuant to such Issuer Order and procedures. If provided for
in such procedures, such Issuer Order may authorize authentication and delivery
pursuant to electronic instructions from the Issuer or its duly authorized
agent, which instructions shall be promptly confirmed in writing. In
authenticating such Securities and
-11-
<PAGE> 20
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive (in the case of
subparagraphs 2, 3 and 4 below only at or before the time of the first request
of the Issuer to the Trustee to authenticate Securities of such series) and
(subject to Section 6.1) shall be fully protected in relying upon, unless and
until such documents have been superseded or revoked:
(1) an Issuer Order requesting such authentication and
setting forth delivery instructions if the Securities and Coupons, if
any, are not to be delivered to the Issuer, provided that, with
respect to Securities of a series subject to a Periodic Offering, (a)
such Issuer Order may be delivered by the Issuer to the Trustee prior
to the delivery to the Trustee of such Securities for authentication
and delivery, (b) the Trustee shall authenticate and deliver
Securities of such series for original issue from time to time, in an
aggregate principal amount not exceeding the aggregate principal
amount established for such series, pursuant to an Issuer Order or
pursuant to procedures acceptable to the Trustee as may be specified
from time to time by an Issuer Order, (c) the maturity date or dates,
original issue date or dates, interest rate or rates and any other
terms of Securities of such series shall be determined by an Issuer
Order or pursuant to such procedures and (d) if provided for in such
procedures, such Issuer Order may authorize authentication and
delivery pursuant to electronic instructions from the Issuer or its
duly authorized agent or agents, which instructions shall be promptly
confirmed in writing;
(2) any Board Resolution, Officers' Certificate and/or
executed supplemental indenture referred to in Sections 2.1 and 2.3 by
or pursuant to which the forms and terms of the Securities and
Coupons, if any, were established;
(3) an Officers' Certificate setting forth the form or forms
and terms of the Securities and Coupons, if any, stating that the form
or forms and terms of the Securities and Coupons, if any, have been
established pursuant to Sections 2.1 and 2.3 and comply with this
Indenture, and covering such other matters as the Trustee may
reasonably request; and
(4) at the option of the Issuer, either an Opinion of
Counsel, or a letter addressed to the Trustee permitting it to rely on
an Opinion of Counsel, substantially to the effect that:
(a) the forms of the Securities and Coupons, if any,
have been duly authorized and established in conformity with
the provisions of this Indenture;
-12-
<PAGE> 21
(b) in the case of an underwritten offering, the
terms of the Securities have been duly authorized and
established in conformity with the provisions of this
Indenture, and, in the case of an offering that is not
underwritten, certain terms of the Securities have been
established pursuant to a Board Resolution, an Officers'
Certificate or a supplemental indenture in accordance with
this Indenture, and when such other terms as are to be
established pursuant to procedures set forth in an Issuer
Order shall have been established, all such terms will have
been duly authorized by the Issuer and will have been
established in conformity with the provisions of this
Indenture;
(c) when the Securities and Coupons, if any, have
been executed by the Issuer and authenticated by the Trustee
in accordance with the provisions of this Indenture and
delivered to and duly paid for by the purchasers thereof, they
will have been duly issued under this Indenture and will be
valid and legally binding obligations of the Issuer,
enforceable in accordance with their respective terms, and
will be entitled to the benefits of this Indenture; and
(d) the execution and delivery by the Issuer of, and
the performance by the Issuer of its obligations under, the
Securities and Coupons, if any, will not contravene any
provision of applicable law or the certificate of
incorporation or by-laws of the Issuer or any agreement or
other instrument binding upon the Issuer or any of its
subsidiaries that is material to the Issuer and its
subsidiaries, considered as one enterprise, or, to the best of
such counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over
the Issuer or any subsidiary, and no consent, approval or
authorization of any governmental body or agency is required
for the performance by the Issuer of its obligations under the
Securities and Coupons, if any, except such as are specified
and have been obtained and such as may be required by the
securities or blue sky laws of the various states in
connection with the offer and sale of the Securities.
In rendering such opinions, such counsel may qualify any
opinions as to enforceability by stating that such enforceability may be
limited by bankruptcy, insolvency, reorganization, liquidation, moratorium and
other similar laws affecting the rights and remedies of creditors and is
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Such
counsel may rely, as to all matters governed by the laws of jurisdictions other
than the
-13-
<PAGE> 22
State of New York and the federal law of the United States, upon opinions of
other counsel (copies of which shall be delivered to the Trustee), in which
case the opinion shall state that such counsel believes he and the Trustee are
entitled so to rely. Such counsel may also state that, insofar as such opinion
involves factual matters, he has relied, to the extent he deems proper, upon
certificates of officers of the Issuer and its subsidiaries and certificates of
public officials.
The Trustee shall have the right to decline to authenticate
and deliver any Securities under this Section if the Trustee, being advised by
counsel, determines that such action may not lawfully be taken by the Issuer or
if the Trustee in good faith by its board of directors or board of trustees,
executive committee, or a trust committee of directors or trustees or
Responsible Officers shall determine that such action would expose the Trustee
to personal liability to existing Holders or would affect the Trustee's own
rights, duties or immunities under the Securities, this Indenture or otherwise.
If the Issuer shall establish pursuant to Section 2.3 that the
Securities of a series are to be issued in the form of one or more Registered
Global Securities, then the Issuer shall execute and the Trustee shall, in
accordance with this Section and the Issuer Order with respect to such series,
authenticate and deliver one or more Registered Global Securities that (i)
shall represent and shall be denominated in an amount equal to the aggregate
principal amount of all of the Securities of such series issued and not yet
cancelled, (ii) shall be registered in the name of the Depositary for such
Registered Global Security or Securities or the nominee of such Depositary,
(iii) shall be delivered by the Trustee to such Depositary or pursuant to such
Depositary's instructions and (iv) shall bear a legend substantially to the
following effect: "Unless and until it is exchanged in whole or in part for
Securities in definitive registered form, this Security may not be transferred
except as a whole by the Depositary to the nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary."
Each Depositary must, at the time of its designation and at
all times while it serves as Depositary, be a clearing agency registered under
the Securities Exchange Act of 1934 and any other applicable statute or
regulation.
SECTION 2.5 Execution of Securities. The Securities and, if
applicable, each Coupon appertaining thereto shall be signed on behalf of the
Issuer by its Chairman of the Board, its President or one of its Vice
Presidents, under its corporate seal (except in the case of Coupons) which may,
but need not, be attested. Such signatures may be the manual or facsimile
-14-
<PAGE> 23
signatures of the present or any future such officers. The seal of the Issuer
may be in the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Securities. Typographical and other
minor errors or defects in any such reproduction of the seal or any such
signature shall not affect the validity or enforceability of any Security that
has been duly authenticated and delivered by the Trustee.
In case any officer of the Issuer who shall have signed any of
the Securities or Coupons, if any, shall cease to be such officer before the
Security or Coupon so signed (or the Security to which the Coupon so signed
appertains) shall be authenticated and delivered by the Trustee or disposed of
by the Issuer, such Security or Coupon nevertheless may be authenticated and
delivered or disposed of as though the person who signed such Security or
Coupon had not ceased to be such officer of the Issuer; and any Security or
Coupon may be signed on behalf of the Issuer by such persons as, at the actual
date of the execution of such Security or Coupon, shall be the proper officers
of the Issuer, although at the date of the execution and delivery of this
Indenture any such person was not such an officer.
SECTION 2.6 Certificate of Authentication. Only such
Securities as shall bear thereon a certificate of authentication substantially
in the form hereinbefore recited, executed by the Trustee or an Authenticating
Agent, if any, by the manual signature of one of their authorized officers,
shall be entitled to the benefits of this Indenture or be valid or obligatory
for any purpose. No Coupon shall be entitled to the benefits of this Indenture
or shall be valid and obligatory for any purpose until the certificate of
authentication on the Security to which such Coupon appertains shall have been
duly executed by the Trustee or an Authenticating Agent, if any. The execution
of such certificate by the Trustee or an Authenticating Agent, if any, upon any
Security executed by the Issuer shall be conclusive evidence that the Security
so authenticated has been duly authenticated and delivered hereunder and that
the Holder is entitled to the benefits of this Indenture.
SECTION 2.7 Denomination and Date of Securities; Payments of
Interest. The Securities of each series shall be issuable as Registered
Securities or Unregistered Securities in denominations established as
contemplated by Section 2.3 or, with respect to the Registered Securities of
any series, if not so established, in denominations of $1,000 and any integral
multiple thereof. If denominations of Unregistered Securities of any series
are not so established, such Securities shall be issuable in denominations of
$1,000 and $5,000. The Securities of each series shall be numbered, lettered
or otherwise distinguished in such manner or in accordance with such plan as
the officers of the Issuer executing the same may determine with the approval
of the Trustee, as evidenced by the execution and authentication thereof.
-15-
<PAGE> 24
Each Registered Security shall be dated the date of its
authentication. Each Unregistered Security shall be dated as provided in the
resolution or resolutions of the Board of Directors of the Issuer referred to
in Section 2.3. The Securities of each series shall bear interest, if any,
from the date, and such interest shall be payable on the dates, established as
contemplated by Section 2.3.
The Person in whose name any Registered Security of any series
is registered at the close of business on any record date applicable to a
particular series with respect to any interest payment date for such series
shall be entitled to receive the interest, if any, payable on such interest
payment date notwithstanding any transfer or exchange of such Registered
Security subsequent to the record date and prior to such interest payment date,
except if and to the extent the Issuer shall default in the payment of the
interest due on such interest payment date for such series, in which case such
defaulted interest shall be paid to the Persons in whose names Outstanding
Registered Securities for such series are registered at the close of business
on a subsequent record date (which shall be not less than five Business Days
prior to the date of payment of such defaulted interest) established by notice
given by mail by or on behalf of the Issuer to the Holders of Registered
Securities not less than 15 days preceding such subsequent record date. The
term "record date" as used with respect to any interest payment date (except a
date for payment of defaulted interest) for the Securities of any series shall
mean the date specified as such in the terms of the Registered Securities of
such series established as contemplated by Section 2.3, or, if no such date is
so established, if such interest payment date is the first day of a calendar
month, the fifteenth day of the next preceding calendar month or, if such
interest payment date is the fifteenth day of a calendar month, the first day
of such calendar month, whether or not such record date is a Business Day.
SECTION 2.8 Registration, Transfer and Exchange. The Issuer
will keep at each office or agency to be maintained for the purpose as provided
in Section 3.2 for each series of Securities a register in which, subject to
such reasonable regulations as it may prescribe, it will provide for the
registration of Registered Securities of such series and the registration of
transfer of Registered Securities of such series. Such register shall be in
written form in the English language or in any other form capable of being
converted into such form within a reasonable time. At all reasonable times
such register or registers shall be open for inspection by the Trustee.
Upon due presentation for registration of transfer of any
Registered Security of any series at any such office or agency to be maintained
for the purpose as provided in Section 3.2, the
-16-
<PAGE> 25
Issuer shall execute and the Trustee shall authenticate and deliver in the name
of the transferee or transferees a new Registered Security or Registered
Securities of the same series, maturity date, interest rate and original issue
date in authorized denominations for a like aggregate principal amount.
Unregistered Securities (except for any temporary global
Unregistered Securities) and Coupons (except for Coupons attached to any
temporary global Unregistered Securities) shall be transferable by delivery.
At the option of the Holder thereof, Registered Securities of
any series (other than a Registered Global Security, except as set forth below)
may be exchanged for a Registered Security or Registered Securities of such
series having authorized denominations and an equal aggregate principal amount,
upon surrender of such Registered Securities to be exchanged at the agency of
the Issuer that shall be maintained for such purpose in accordance with Section
3.2 and upon payment, if the Issuer shall so require, of the charges
hereinafter provided. If the Securities of any series are issued in both
registered and unregistered form, except as otherwise specified pursuant to
Section 2.3, at the option of the Holder thereof, Unregistered Securities of
any series may be exchanged for Registered Securities of such series having
authorized denominations and an equal aggregate principal amount, upon
surrender of such Unregistered Securities to be exchanged at the agency of the
Issuer that shall be maintained for such purpose in accordance with Section
3.2, with, in the case of Unregistered Securities that have Coupons attached,
all unmatured Coupons and all matured Coupons in default thereto appertaining,
and upon payment, if the Issuer shall so require, of the charges hereinafter
provided. At the option of the Holder thereof, if Unregistered Securities of
any series, maturity date, interest rate and original issue date are issued in
more than one authorized denomination, except as otherwise specified pursuant
to Section 2.3, such Unregistered Securities may be exchanged for Unregistered
Securities of such series having authorized denominations and an equal
aggregate principal amount, upon surrender of such Unregistered Securities to
be exchanged at the agency of the Issuer that shall be maintained for such
purpose in accordance with Section 3.2 or as specified pursuant to Section 2.3,
with, in the case of Unregistered Securities that have Coupons attached, all
unmatured Coupons and all matured Coupons in default thereto appertaining, and
upon payment, if the Issuer shall so require, of the charges hereinafter
provided. Unless otherwise specified pursuant to Section 2.3, Registered
Securities of any series may not be exchanged for Unregistered Securities of
such series. Whenever any Securities are so surrendered for exchange, the
Issuer shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive. All
Securities and Coupons surrendered upon any exchange or transfer provided for
in this Indenture shall be promptly
-17-
<PAGE> 26
cancelled and disposed of by the Trustee and the Trustee will deliver a
certificate of disposition thereof to the Issuer.
All Registered Securities presented for registration of
transfer, exchange, redemption or payment shall (if so required by the Issuer
or the Trustee) be duly endorsed by, or be accompanied by a written instrument
or instruments of transfer in form satisfactory to the Issuer and the Trustee
duly executed by the Holder or his attorney duly authorized in writing.
The Issuer may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
exchange or registration of transfer of Securities. No service charge shall be
made for any such transaction.
The Issuer shall not be required to exchange or register a
transfer of (a) any Securities of any series for a period of 15 days next
preceding the first mailing of notice of redemption of Securities of such
series to be redeemed or (b) any Securities selected, called or being called
for redemption, in whole or in part, except, in the case of any Security to be
redeemed in part, the portion thereof not so to be redeemed.
Notwithstanding any other provision of this Section 2.8,
unless and until it is exchanged in whole or in part for Securities in
definitive registered form, a Registered Global Security representing all or a
portion of the Securities of a series may not be transferred except as a whole
by the Depositary for such series to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any such nominee to a successor Depositary
for such series or a nominee of such successor Depositary.
If at any time the Depositary for any Registered Securities of
a series represented by one or more Registered Global Securities notifies the
Issuer that it is unwilling or unable to continue as Depositary for such
Registered Securities or if at any time the Depositary for such Registered
Securities shall no longer be eligible under Section 2.4, the Issuer shall
appoint a successor Depositary with respect to such Registered Securities. If
a successor Depositary for such Registered Securities is not appointed by the
Issuer within 90 days after the Issuer receives such notice or becomes aware of
such ineligibility, the Issuer's election pursuant to Section 2.3 that such
Registered Securities be represented by one or more Registered Global
Securities shall no longer be effective and the Issuer will execute, and the
Trustee, upon receipt of an Officers' Certificate for the authentication and
delivery of definitive Securities of such series, will authenticate and
deliver, Securities of such series in definitive registered form without
Coupons, in any authorized denominations, in an aggregate principal amount
equal to the principal amount of the
-18-
<PAGE> 27
Registered Global Security or Securities representing such Registered
Securities in exchange for such Registered Global Security or Securities.
The Issuer may at any time and in its sole discretion
determine that the Registered Securities of any series issued in the form of
one or more Registered Global Securities shall no longer be represented by a
Registered Global Security or Securities. In such event the Issuer will
execute, and the Trustee, upon receipt of an Officers' Certificate for the
authentication and delivery of definitive Securities of such series, will
authenticate and deliver, Securities of such series in definitive registered
form without Coupons, in any authorized denominations, in an aggregate
principal amount equal to the principal amount of the Registered Global
Security or Securities representing such Registered Securities, in exchange for
such Registered Global Security or Securities.
If specified by the Issuer pursuant to Section 2.3 with
respect to Securities represented by a Registered Global Security, the
Depositary for such Registered Global Security may surrender such Registered
Global Security in exchange in whole or in part for Securities of the same
series in definitive registered form on such terms as are acceptable to the
Issuer and such Depositary. Thereupon, the Issuer shall execute, and the
Trustee shall authenticate and deliver, without service charge,
(i) to the Person specified by such Depositary a new
Registered Security or Securities of the same series, of any
authorized denominations as requested by such Person, in an aggregate
principal amount equal to and in exchange for such Person's beneficial
interest in the Registered Global Security; and
(ii) to such Depositary a new Registered Global Security in a
denomination equal to the difference, if any, between the principal
amount of the surrendered Registered Global Security and the aggregate
principal amount of Registered Securities authenticated and delivered
pursuant to clause (i) above.
Upon the exchange of a Registered Global Security for
Securities in definitive registered form without Coupons, in authorized
denominations, such Registered Global Security shall be cancelled by the
Trustee or its agent. Securities in definitive registered form without Coupons
issued in exchange for a Registered Global Security pursuant to this Section
2.8 shall be registered in such names and in such authorized denominations as
the Depositary for such Registered Global Security, pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct the
Trustee or an agent of the Issuer or the Trustee. The Trustee or such agent
shall deliver such Securities to or as directed by the Persons in whose names
such Securities are so registered.
-19-
<PAGE> 28
All Securities issued upon any transfer or exchange of
Securities shall be valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such transfer or exchange.
Notwithstanding anything herein or in the terms of any series
of Securities to the contrary, none of the Issuer, the Trustee or any agent of
the Issuer or the Trustee (any of which, other than the Issuer, shall rely on
an Officers' Certificate and an Opinion of Counsel) shall be required to
exchange any Unregistered Security for a Registered Security if such exchange
would result in adverse Federal income tax consequences to the Issuer (such as,
for example, the inability of the Issuer to deduct from its income, as computed
for Federal income tax purposes, the interest payable on the Unregistered
Securities) under then applicable United States Federal income tax laws.
SECTION 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen
Securities. In case any temporary or definitive Security or any Coupon
appertaining to any Security shall become mutilated, defaced or be destroyed,
lost or stolen, the Issuer in its discretion may execute, and upon the written
request of any officer of the Issuer, the Trustee shall authenticate and
deliver a new Security of the same series, maturity date, interest rate and
original issue date, bearing a number or other distinguishing symbol not
contemporaneously outstanding, in exchange and substitution for the mutilated
or defaced Security, or in lieu of and in substitution for the Security so
destroyed, lost or stolen with Coupons corresponding to the Coupons
appertaining to the Securities so mutilated, defaced, destroyed, lost or
stolen, or in exchange or substitution for the Security to which such
mutilated, defaced, destroyed, lost or stolen Coupon appertained, with Coupons
appertaining thereto corresponding to the Coupons so mutilated, defaced,
destroyed, lost or stolen. In every case the applicant for a substitute
Security or Coupon shall furnish to the Issuer and to the Trustee and any agent
of the Issuer or the Trustee such security or indemnity as may be required by
them to indemnify and defend and to save each of them harmless and, in every
case of destruction, loss or theft, evidence to their satisfaction of the
destruction, loss or theft of such Security or Coupon and of the ownership
thereof and in the case of mutilation or defacement shall surrender the
Security and related Coupons to the Trustee or such agent.
Upon the issuance of any substitute Security or Coupon, the
Issuer may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee or its agent)
connected therewith. In case any Security or Coupon which has matured or is
about to mature or has been called for redemption in full shall become
mutilated or defaced or be destroyed, lost or stolen, the Issuer may instead of
-20-
<PAGE> 29
issuing a substitute Security, pay or authorize the payment of the same or the
relevant Coupon (without surrender thereof except in the case of a mutilated or
defaced Security or Coupon), if the applicant for such payment shall furnish to
the Issuer and to the Trustee and any agent of the Issuer or the Trustee such
security or indemnity as any of them may require to save each of them harmless,
and, in every case of destruction, loss or theft, the applicant shall also
furnish to the Issuer and the Trustee and any agent of the Issuer or the
Trustee evidence to their satisfaction of the destruction, loss or theft of
such Security or Coupon and of the ownership thereof.
Every substitute Security or Coupon of any series issued
pursuant to the provisions of this Section by virtue of the fact that any such
Security or Coupon is destroyed, lost or stolen shall constitute an additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Security or Coupon shall be at any time enforceable by anyone and shall
be entitled to all the benefits of (but shall be subject to all the limitations
of rights set forth in) this Indenture equally and proportionately with any and
all other Securities or Coupons of such series duly authenticated and delivered
hereunder. All Securities and Coupons shall be held and owned upon the express
condition that, to the extent permitted by law, the foregoing provisions are
exclusive with respect to the replacement or payment of mutilated, defaced or
destroyed, lost or stolen Securities and Coupons and shall preclude any and all
other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement or payment of
negotiable instruments or other securities without their surrender.
SECTION 2.10 Cancellation of Securities; Destruction Thereof.
All Securities and Coupons surrendered for payment, redemption, registration of
transfer or exchange, or for credit against any payment in respect of a sinking
or analogous fund, if surrendered to the Issuer or any agent of the Issuer or
the Trustee or any agent of the Trustee, shall be delivered to the Trustee or
its agent for cancellation or, if surrendered to the Trustee, shall be
cancelled by it; and no Securities or Coupons shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Indenture. The
Trustee or its agent shall dispose of cancelled Securities and Coupons held by
it and deliver a certificate of disposition to the Issuer. If the Issuer or
its agent shall acquire any of the Securities or Coupons, such acquisition
shall not operate as a redemption or satisfaction of the indebtedness
represented by such Securities or Coupons unless and until the same are
delivered to the Trustee or its agent for cancellation.
SECTION 2.11 Temporary Securities. Pending the preparation
of definitive Securities for any series, the Issuer may execute and the Trustee
shall authenticate and deliver temporary
-21-
<PAGE> 30
Securities for such series (printed, lithographed, typewritten or otherwise
reproduced, in each case in form satisfactory to the Trustee). Temporary
Securities of any series shall be issuable as Registered Securities without
Coupons, or as Unregistered Securities with or without Coupons attached
thereto, of any authorized denomination, and substantially in the form of the
definitive Securities of such series but with such omissions, insertions and
variations as may be appropriate for temporary Securities, all as may be
determined by the Issuer with the concurrence of the Trustee as evidenced by
the execution and authentication thereof. Temporary Securities may contain
such references to any provisions of this Indenture as may be appropriate.
Every temporary Security shall be executed by the Issuer and be authenticated
by the Trustee upon the same conditions and in substantially the same manner,
and with like effect, as the definitive Securities. Without unreasonable delay
the Issuer shall execute and shall furnish definitive Securities of such series
and thereupon temporary Registered Securities of such series may be surrendered
in exchange therefor without charge at each office or agency to be maintained
by the Issuer for that purpose pursuant to Section 3.2 and, in the case of
Unregistered Securities, at any agency maintained by the Issuer for such
purpose as specified pursuant to Section 2.3, and the Trustee shall
authenticate and deliver in exchange for such temporary Securities of such
series an equal aggregate principal amount of definitive Securities of the same
series having authorized denominations and, in the case of Unregistered
Securities, having attached thereto any appropriate Coupons. Until so
exchanged, the temporary Securities of any series shall be entitled to the same
benefits under this Indenture as definitive Securities of such series, unless
otherwise established pursuant to Section 2.3. The provisions of this Section
are subject to any restrictions or limitations on the issue and delivery of
temporary Unregistered Securities of any series that may be established
pursuant to Section 2.3 (including any provision that Unregistered Securities
of such series initially be issued in the form of a single global Unregistered
Security to be delivered to a depositary or agency located outside the United
States and the procedures pursuant to which definitive or global Unregistered
Securities of such series would be issued in exchange for such temporary global
Unregistered Security).
-22-
<PAGE> 31
ARTICLE THREE
COVENANTS OF THE ISSUER
SECTION 3.1 Payment of Principal and Interest. The Issuer
covenants and agrees for the benefit of each series of Securities that it will
duly and punctually pay or cause to be paid the principal of, and interest on,
each of the Securities of such series (together with any additional amounts
payable pursuant to the terms of such Securities) at the place or places, at
the respective times and in the manner provided in such Securities and in the
Coupons, if any, appertaining thereto and in this Indenture. The interest on
Securities with Coupons attached (together with any additional amounts payable
pursuant to the terms of such Securities) shall be payable only upon
presentation and surrender of the several Coupons for such interest
installments as are evidenced thereby as they severally mature. If any
temporary Unregistered Security provides that interest thereon may be paid
while such Security is in temporary form, the interest on any such temporary
Unregistered Security (together with any additional amounts payable pursuant to
the terms of such Security) shall be paid, as to the installments of interest
evidenced by Coupons attached thereto, if any, only upon presentation and
surrender thereof, and, as to the other installments of interest, if any, only
upon presentation of such Securities for notation thereon of the payment of
such interest, in each case subject to any restrictions that may be established
pursuant to Section 2.3. The interest on Registered Securities (together with
any additional amounts payable pursuant to the terms of such Securities) shall
be payable only to or upon the written order of the Holders thereof and, at the
option of the Issuer, may be paid by wire transfer or by mailing checks for
such interest payable to or upon the written order of such Holders at their
last addresses as they appear on the registry books of the Issuer.
SECTION 3.2 Offices for Payments, etc. So long as any
Registered Securities are authorized for issuance pursuant to this Indenture or
are outstanding hereunder, the Issuer will maintain in the Borough of
Manhattan, The City of New York, an office or agency where the Registered
Securities of each series may be presented for payment, where the Securities of
each series may be presented for exchange as is provided in this Indenture and,
if applicable, pursuant to Section 2.3 and where the Registered Securities of
each series may be presented for registration of transfer as in this Indenture
provided.
The Issuer will maintain one or more offices or agencies in a
city or cities located outside the United States (including any city in which
such an agency is required to be maintained under the rules of any stock
exchange on which the Securities of such series are listed) where the
Unregistered Securities, if any, of
-23-
<PAGE> 32
each series and Coupons, if any, appertaining thereto may be presented for
payment. No payment on any Unregistered Security or Coupon will be made upon
presentation of such Unregistered Security or Coupon at an agency of the Issuer
within the United States nor will any payment be made by transfer to an account
in, or by mail to an address in, the United States unless pursuant to
applicable United States laws and regulations then in effect such payment can
be made, in the Issuer's sole discretion, without adverse tax consequences to
the Issuer. Notwithstanding the foregoing, payments in Dollars of Unregistered
Securities of any series and Coupons appertaining thereto which are payable in
Dollars may be made at an agency of the Issuer maintained in the Borough of
Manhattan, The City of New York or in Wilmington, Delaware if such payment in
Dollars at each agency maintained by the Issuer outside the United States for
payment on such Unregistered Securities is illegal or effectively precluded by
exchange controls or other similar restrictions.
The Issuer will maintain in the Borough of Manhattan, The City
of New York, an office or agency where notices and demands to or upon the
Issuer in respect of the Securities of any series, the Coupons appertaining
thereto or this Indenture may be served.
The Issuer will give to the Trustee written notice of the
location of each such office or agency and of any change of location thereof.
In case the Issuer shall fail to maintain any agency required by this Section
to be located 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 of any of
the above agencies, presentations and demands may be made and notices may be
served at the Corporate Trust Office of the Trustee.
The Issuer may from time to time designate one or more
additional offices or agencies where the Securities of a series and any Coupons
appertaining thereto may be presented for payment, where the Securities of that
series may be presented for exchange as provided in this Indenture and pursuant
to Section 2.3 and where the Registered Securities of that series may be
presented for registration of transfer as in this Indenture provided, and the
Issuer may from time to time rescind any such designation, as the Issuer may
deem desirable or expedient; provided, however, that no such designation or
rescission shall in any manner relieve the Issuer of its obligation to maintain
the agencies provided for in this Section. The Issuer will give to the Trustee
prompt written notice of any such designation or rescission thereof.
SECTION 3.3 Appointment to Fill a Vacancy in Office of
Trustee. The Issuer, 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 with respect to each
series of Securities hereunder.
-24-
<PAGE> 33
SECTION 3.4 Paying Agents. Whenever the Issuer shall appoint
a paying agent other than the Trustee with respect to the Securities of any
series, 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
provisions of this Section,
(a) that it will hold all sums received by it as such agent
for the payment of the principal of or interest on the Securities of
such series (whether such sums have been paid to it by the Issuer or
by any other obligor on the Securities of such series) in trust for
the benefit of the Holders of the Securities of such series, or
Coupons appertaining thereto, if any, or of the Trustee, and
(b) that it will give the Trustee notice of any failure by
the Issuer (or by any other obligor on the Securities of such series)
to make any payment of the principal of or interest on the Securities
of such series when the same shall be due and payable.
The Issuer will, on or prior to each due date of the principal
of or interest on the Securities of such series, deposit with the paying agent
a sum sufficient to pay such principal or interest so becoming due, provided,
in the case of bearer Securities, deposit will be made at least 1 Business Day
prior to the payment date, and (unless such paying agent is the Trustee) the
Issuer will promptly notify the Trustee of any failure to take such action.
If the Issuer shall act as its own paying agent with respect
to the Securities of any series, it will, on or before each due date of the
principal of or interest on the Securities of such series, set aside, segregate
and hold in trust for the benefit of the Holders of the Securities of such
series or the Coupons appertaining thereto a sum sufficient to pay such
principal or interest so becoming due. The Issuer will promptly notify the
Trustee of any failure to take such action.
Anything in this Section to the contrary notwithstanding, but
subject to Section 10.1, the Issuer may at any time, for the purpose of
obtaining a satisfaction and discharge with respect to one or more or all
series of Securities hereunder, or for any other reason, pay or cause to be
paid to the Trustee all sums held in trust for any such series by the Issuer or
any paying agent hereunder, as required by this Section, such sums to be held
by the Trustee upon the trusts herein contained.
Anything in this Section to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section is subject to the
provisions of Sections 10.3 and 10.4.
-25-
<PAGE> 34
SECTION 3.5 Written Statement to Trustee. The Issuer will
deliver to the Trustee on or before May 31 in each year (beginning with May 31,
1996) an Officers' Certificate (which need not comply with Section 11.5)
stating that in the course of the performance by the signers of their duties as
officers of the Issuer they would normally have knowledge of any default by the
Issuer in the performance of any covenants contained in this Indenture, 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.
At least one signatory to such Officers' Certificate shall be the principal
executive officer, principal financial officer or principal accounting officer
of the Issues.
SECTION 3.6 Luxembourg Publications. In the event of the
publication of any notice pursuant to Section 5.11, 6.8, 6.10(a), 6.11, 8.2,
10.4, 12.2 or 12.5 or Section 310(b) of the Trust Indenture Act of 1939, the
party making such publication in the Borough of Manhattan, The City of New York
and London shall also, to the extent that notice is required to be given to
Holders of Securities of any series by applicable Luxembourg law or stock
exchange regulation, as evidenced by an Officers' Certificate delivered to such
party, make a similar publication in Luxembourg.
ARTICLE FOUR
SECURITYHOLDERS LISTS AND REPORTS BY THE
ISSUER AND THE TRUSTEE
SECTION 4.1 Issuer to Furnish Trustee Information as to Names
and Addresses of Securityholders. The Issuer and any other obligor on the
Securities covenant and agree that they will furnish or cause to be furnished
to the Trustee a list in such form as the Trustee may reasonably require of the
names and addresses of the Holders of the Registered Securities of each series:
(a) semiannually and not more than 15 days after each record
date for the payment of interest on such Registered Securities, as
hereinabove specified, as of such record date and on dates to be
determined pursuant to Section 2.3 for non-interest bearing Registered
Securities in each year, and
(b) at such other times as the Trustee may request in
writing, within 30 days after receipt by the Issuer of any such
request as of a date not more than 15 days prior to the time such
information is furnished,
provided that if and so long as the Trustee shall be the Security registrar for
such series and all of the Securities of any series
-26-
<PAGE> 35
are Registered Securities, such list shall not be required to be furnished.
SECTION 4.2 Preservation and Disclosure of Securityholders
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
each series of Registered Securities (i) contained in the most recent list
furnished to it as provided in Section 4.1, (ii) received by it in the capacity
of Security registrar for such series, if so acting, and (iii) filed with it
within two preceding years pursuant to 4.4(c)(ii). The Trustee may destroy any
list furnished to it as provided in Section 4.1 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 of a particular series (in which case the applicants must all
hold Securities of such series) or with Holders of all Securities with respect
to their rights under this Indenture or under such Securities and such
application 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 to such applicants access to the information
preserved at the time by the Trustee in accordance with the provisions
of subsection (a) of this Section, or
(ii) inform such applicants as to the approximate number of
Holders of Registered Securities of such series or of all Registered
Securities, as the case may be, whose names and addresses appear in
the information preserved at the time by the Trustee, in accordance
with the provisions of subsection (a) of this Section, 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 to such applicants
access to such information, the Trustee shall, upon the written request of such
applicants, mail to each Securityholder of such series or all Holders of
Registered Securities, as the case may be, whose name and address appears in
the information preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 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
-27-
<PAGE> 36
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 Registered Securities of such series or of
all Registered 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 and Coupons, by
receiving and holding the same, agrees with the Issuer and the Trustee that
neither the Issuer nor the Trustee nor any agent of the Issuer or the Trustee
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, 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
such subsection (b).
SECTION 4.3 Reports by the Issuer. The Issuer covenants:
(a) to file with the Trustee, within 30 days after the Issuer
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 the Commission may
from time to time by rules and regulations prescribe) which the Issuer
may be required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934; or if the Issuer
is not required to file information, documents, or reports pursuant to
either of such Sections, then to file with the Trustee and the
Commission, in accordance with rules and regulations prescribed from
time to time by the Commission, such of the supplementary and periodic
information, documents, and reports which may be required pursuant to
Section 13 of the Securities Exchange Act of 1934 in respect of a debt
security listed and registered on a national securities exchange as
may be prescribed from time to time in such rules and regulations;
-28-
<PAGE> 37
(b) to file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by
the Commission, such additional information, documents, and reports
with respect to compliance by the Issuer with the conditions and
covenants provided for in this Indenture as may be required from time
to time by such rules and regulations; and
(c) to transmit by mail to the Holders of Securities within
30 days after the filing thereof with the Trustee, in the manner and
to the extent provided in Section 313(c) of the Trust Indenture Act of
1939, such summaries of any information, documents and reports
required to be filed by the Issuer pursuant to subsections (a) and (b)
of this Section as may be required to be transmitted to such Holders
by rules and regulations prescribed from time to time by the
Commission.
SECTION 4.4 Reports by the Trustee. The Trustee shall
transmit to the Securityholders such reports concerning the Trustee and its
actions under this Indenture as may be required pursuant to the Trust Indenture
Act of 1939 at the times and in the manner provided pursuant thereto. Reports
required annually shall be provided by October 15 of each year for the previous
year commencing October 15, 1996.
A copy of each such report shall, at the time of such
transmission to Securityholders, be furnished to the Issuer and be filed by the
Trustee with each stock exchange upon which the Securities of any applicable
series are listed and also with the Commission. The Issuer agrees to notify
the Trustee with respect to any series when and as the Securities of such
series become admitted to trading on any national securities exchange.
ARTICLE FIVE
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.1 Event of Default Defined; Acceleration of
Maturity; Waiver of Default. "Event of Default" with respect to Securities of
any series wherever used herein, means each one of the following events which
shall have occurred and be continuing (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):
-29-
<PAGE> 38
(a) default in the payment of any installment of interest
upon any of the Securities of such series as and when the same shall
become due and payable, and continuance of such default for a period
of 30 days unless specifically otherwise provided in a Board
Resolution, Officers' Certificate or indenture supplemental hereto
provided pursuant to Section 2.3; or
(b) default in the payment of all or any part of the
principal on any of the Securities of such series as and when the same
shall become due and payable either at maturity, upon any redemption,
by declaration or otherwise; or
(c) default in the performance, or breach, of any covenant or
warranty of the Issuer in the Securities of such series (other than a
covenant or warranty in respect of the Securities of such series 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 Issuer by the Trustee or to the
Issuer and the Trustee by the Holders of at least 25% in aggregate
principal amount of the Outstanding Securities of all series affected
thereby, 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) the entry of a decree or order by a court having
jurisdiction in the premises adjudging the Issuer a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization arrangement, adjustment or composition of or in respect
of the Issuer under the Federal bankruptcy law or any other applicable
Federal or state law, or appointing a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Issuer or of
any substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or
order unstayed and in effect for a period of 60 consecutive days; or
(e) the institution by the Issuer of proceedings to be
adjudicated a bankrupt or insolvent or the consent by it to the
institution of bankruptcy or insolvency proceedings against it, or the
filing by it of a petition or answer or consent seeking reorganization
or relief under the Federal bankruptcy law or any other applicable
Federal or state law, or the consent by it to the filing of any such
petition or to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Issuer or of
any substantial part of its property, or the making by it of a general
assignment for the benefit of creditors; or
-30-
<PAGE> 39
(f) any other Event of Default provided in the supplemental
indenture under which such series of Securities is issued or in the
form of Security for such series;
provided, however, that the occurrence of any of the events described in the
foregoing clause (c) or (f) shall not constitute an Event of Default if such
occurrence is the result of changes in generally accepted accounting principles
as recognized by the American Institute of Certified Public Accountants at the
date as of which this Indenture is executed and a certificate to such effect is
delivered to the Trustee by the Issuer's independent public accountants.
If an Event of Default described in clauses (a), (b), (c) or
(f) (if the Event of Default under clause (c) or (f), as the case may be, is
with respect to less than all series of Securities then Outstanding) occurs and
is continuing, then, and in each and every such case, except for any series of
Securities the principal of which shall have already become due and payable,
either the Trustee or the Holders of not less than 25% in aggregate principal
amount of the Securities of each such affected series then Outstanding
hereunder (voting as a single class) by notice in writing to the Issuer (and to
the Trustee if given by Securityholders), may declare the entire principal (or,
if the Securities of any such affected series are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of such series) of all Securities of all such affected series, and the
interest accrued thereon, if any, to be due and payable immediately, and upon
any such declaration, the same shall become immediately due and payable. If an
Event of Default described in clause (c) or (f) (if the Event of Default under
clause (c) or (f), as the case may be, is with respect to all series of
Securities then Outstanding), (d) or (e) occurs and is continuing, then and in
each and every such case, unless the principal of all the Securities shall have
already become due and payable, either the Trustee or the Holders of not less
than 25% in aggregate principal amount of all the Securities then Outstanding
hereunder (treated as one class), by notice in writing to the Issuer (and to
the Trustee if given by Securityholders), may declare the entire principal (or,
if any Securities are Original Issue Discount Securities, such portion of the
principal as may be specified in the terms thereof) of all the Securities then
Outstanding, and interest accrued thereon, if any, to be due and payable
immediately, and upon any such declaration the same shall become immediately
due and payable.
The foregoing provisions, however, are subject to the
condition that if, at any time after the principal (or, if the Securities are
Original Issue Discount Securities, such portion of the principal as may be
specified in the terms thereof) of the Securities of any series (or of all the
Securities, as the case may be) shall have been so declared due and payable,
and before any
-31-
<PAGE> 40
judgment or decree for the payment of the moneys due shall have been obtained
or entered as hereinafter provided, the Issuer shall pay or shall deposit with
the Trustee a sum sufficient to pay all matured installments of interest upon
all the Securities of each such series (or of all the Securities, as the case
may be) and the principal of any and all Securities of each such series (or of
all the Securities, as the case may be) which shall have become due otherwise
than by acceleration (with interest upon such principal and, to the extent that
payment of such interest is enforceable under applicable law, on overdue
installments of interest, at the same rate as the rate of interest or Yield to
Maturity (in the case of Original Issue Discount Securities) specified in the
Securities of each such series (or at the respective rates of interest or
Yields to Maturity of all the Securities, as the case may be) to the date of
such payment or deposit) and such amount as shall be sufficient to cover
reasonable compensation to the Trustee and each predecessor Trustee, its
agents, attorneys and counsel, and all other expenses and liabilities incurred,
and all advances made, by the Trustee and each predecessor Trustee except as a
result of negligence or bad faith, and if any and all Events of Default under
the Indenture, other than the non-payment of the principal of Securities which
shall have become due by acceleration, shall have been cured, waived or
otherwise remedied as provided herein--then and in every such case the Holders
of a majority in aggregate principal amount of all the Securities of each such
series, or of all the Securities, in each case voting as a single class, then
Outstanding, by written notice to the Issuer and to the Trustee, may waive all
defaults with respect to each such series (or with respect to all the
Securities, as the case may be) and rescind and annul such declaration and its
consequences, but no such waiver or rescission and annulment shall extend to or
shall affect any subsequent default or shall impair any right consequent
thereon.
For all purposes under this Indenture, if a portion of the
principal of any Original Issue Discount Securities shall have been accelerated
and declared due and payable pursuant to the provisions hereof, then, from and
after such declaration, unless such declaration has been rescinded and
annulled, the principal amount of such Original Issue Discount Securities shall
be deemed, for all purposes hereunder, to be such portion of the principal
thereof as shall be due and payable as a result of such acceleration, and
payment of such portion of the principal thereof as shall be due and payable as
a result of such acceleration, together with interest, if any, thereon and all
other amounts owing thereunder, shall constitute payment in full of such
Original Issue Discount Securities.
SECTION 5.2 Collection of Indebtedness by Trustee; Trustee
May Prove Debt. The Issuer covenants that (a) in the case an Event of Default
referred to in Section 5.1(a) shall occur with respect to the Securities of any
series, or (b) in case default shall be made in the payment of all or any part
of the principal of
-32-
<PAGE> 41
any of the Securities of any series when the same shall have become due and
payable, whether upon maturity of the Securities of such series or upon any
redemption or by declaration or otherwise -- then upon demand of the Trustee,
the Issuer will pay to the Trustee for the benefit of the Holders of the
Securities of such series the whole amount that then shall have become due and
payable on all Securities of such series, and such Coupons, for principal or
interest, as the case may be (with interest to the date of such payment upon
the overdue principal and, to the extent that payment of such interest is
enforceable under applicable law, on overdue installments of interest at the
same rate as the rate of interest or Yield to Maturity (in the case of Original
Issue Discount Securities) specified in the Securities of such series); and in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including reasonable compensation to the Trustee
and each predecessor Trustee, their respective agents, attorneys and counsel,
and any expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee except as a result of its negligence or
bad faith.
Until such demand is made by the Trustee, the Issuer may pay
the principal of and interest on the Securities of any series to the registered
Holders, whether or not the Securities of such series be overdue.
In case the Issuer 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 action or proceedings
at law or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceedings to judgment or final decree, and may
enforce any such judgment or final decree against the Issuer or other obligor
upon the Securities and collect in the manner provided by law out of the
property of the Issuer or other obligor upon the Securities, wherever situated
the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings relative to the
Issuer or any other obligor upon the Securities under Title 11 of the United
States Code or any other applicable Federal or state bankruptcy, insolvency or
other similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor, or in case of any other comparable judicial proceedings relative to
the Issuer or other obligor upon the Securities, or to the creditors or
property of the Issuer 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
-33-
<PAGE> 42
Section, shall be entitled and empowered, by intervention in such proceedings
or otherwise:
(a) to file and prove a claim or claims for the whole amount
of principal and interest (or, if the Securities of any series are
Original Issue Discount Securities, such portion of the principal
amount as may be specified in the terms of such series) owing and
unpaid in respect of the Securities of any series, and to file such
other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for reasonable
compensation to the Trustee and each predecessor Trustee, and their
respective agents, attorneys and counsel, and for reimbursement of all
expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee, except as a result of negligence
or bad faith) and of the Securityholders allowed in any judicial
proceedings relative to the Issuer or other obligor upon the
Securities, or to the creditors or property of the Issuer or such
other obligor,
(b) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of the Securities of any series 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
(c) to collect and receive any moneys or other property
payable or deliverable on any such claims, and to distribute all
amounts received with respect to the claims of the Securityholders and
of the Trustee on their behalf; and any trustee, receiver, or
liquidator, custodian or other similar official is hereby authorized
by each of the Securityholders to make payments to the Trustee, and,
in the event that the Trustee shall consent to the making of payments
directly to the Securityholders, to pay to the Trustee such amounts as
shall be sufficient to cover reasonable compensation to the Trustee,
each predecessor Trustee and their respective agents, attorneys and
counsel, and all other expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor Trustee except as a
result of negligence or bad faith.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities of any series 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 except, as aforesaid, to vote for the
election of a trustee in bankruptcy or similar Person.
-34-
<PAGE> 43
All rights of action and of asserting claims under this
Indenture, or under any of the Securities of any series or Coupons appertaining
to such Securities, may be enforced by the Trustee without the possession of
any of the Securities of such series or Coupons appertaining to such Securities
or the production thereof on any trial or other proceedings relative thereto,
and any such action or proceedings instituted by the Trustee shall be brought
in its own name as trustee of an express trust, and any recovery of judgment,
subject to the payment of the expenses, disbursements and compensation of the
Trustee, each predecessor Trustee and their respective agents and attorneys,
shall be for the ratable benefit of the Holders of the Securities or Coupons
appertaining to such Securities in respect of which such action was taken.
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 or Coupons appertaining to such Securities in
respect to which such action was taken, and it shall not be necessary to make
any Holders of such Securities or Coupons appertaining to such Securities
parties to any such proceedings.
SECTION 5.3 Application of Proceeds. Any moneys collected
by the Trustee pursuant to this Article in respect of any series shall, subject
to the subordination provisions hereof, be applied in the following order at
the date or dates fixed by the Trustee and, in case of the distribution of such
moneys on account of principal or interest, upon presentation of the several
Securities and Coupons appertaining to such Securities in respect of which
monies have been collected and stamping (or otherwise noting) thereon the
payment, or issuing Securities of such series in reduced principal amounts in
exchange for the presented Securities of like series if only partially paid, or
upon surrender thereof if fully paid:
FIRST: To the payment of costs and expenses applicable to
such series in respect of which monies have been collected, including
reasonable compensation to the Trustee and each predecessor Trustee
and their respective agents and attorneys and of all expenses and
liabilities incurred, and all advances made, by the Trustee and each
predecessor Trustee except as a result of negligence or bad faith;
SECOND: In case the principal of the Securities of such
series in respect of which moneys have been collected shall not have
become and be then due and payable, to the payment of interest on the
Securities of such series in default in the order of the maturity of
the installments of such interest, with interest (to the extent that
such interest has been collected by the Trustee) upon the overdue
installments of interest at the same rate as the rate of interest or
Yield to
-35-
<PAGE> 44
Maturity (in the case of Original Issue Discount Securities) specified
in such Securities, such payments to be made ratably to the Persons
entitled thereto, without discrimination or preference;
THIRD: In case the principal of the Securities of such series
in respect of which moneys have been collected shall have become and
shall be then due and payable, to the payment of the whole amount then
owing and unpaid upon all the Securities of such series for principal
and interest, with interest upon the overdue principal, and (to the
extent that such interest has been collected by the Trustee) upon
overdue installments of interest at the same rate as the rate of
interest or Yield to Maturity (in the case of Original Issue Discount
Securities) specified in the Securities of such series; and in case
such moneys shall be insufficient to pay in full the whole amount so
due and unpaid upon the Securities of such series, then to the payment
of such principal and interest or Yield to Maturity, without
preference or priority of principal over interest or Yield to
Maturity, or of interest or Yield to Maturity over principal, or of
any installment of interest over any other installment of interest, or
of any Security of such series over any other Security of such series,
ratably to the aggregate of such principal and accrued and unpaid
interest or Yield to Maturity; and
FOURTH: To the payment of the remainder, if any, to the
Issuer or any other Person lawfully entitled thereto.
SECTION 5.4 Suits for Enforcement. In case an Event of
Default has occurred, has not been waived 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 at law or in
equity or 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 5.5 Restoration of Rights on Abandonment of
Proceedings. In case the Trustee shall have proceeded to enforce any right
under this Indenture and such proceedings shall have been discontinued or
abandoned for any reason, or shall have been determined adversely to the
Trustee, then and in every such case the Issuer and the Trustee shall be
restored respectively to their former positions and rights hereunder, and all
rights, remedies and powers of the Issuer, the Trustee and the Securityholders
shall continue as though no such proceedings had been taken.
-36-
<PAGE> 45
SECTION 5.6 Limitations on Suits by Securityholders. No
Holder of any Security of any series or of any Coupon appertaining thereto
shall have any right by virtue or by availing of any provision of this
Indenture to institute any action or proceeding at law or in equity or in
bankruptcy or otherwise upon or under or with respect to this Indenture, or for
the appointment of a trustee, receiver, liquidator, custodian or other similar
official or for any other remedy hereunder, unless such Holder previously shall
have given to the Trustee written notice of default and of the continuance
thereof, as hereinbefore provided, and unless also the Holders of not less than
25% in aggregate principal amount of the Securities of each affected series
then Outstanding (treated as a single class) shall have made written request
upon the Trustee to institute such action or proceedings 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 or proceeding and no direction inconsistent with such written
request shall have been given to the Trustee pursuant to Section 5.9; it being
understood and intended, and being expressly covenanted by the taker and Holder
of every Security or Coupon with every other taker and Holder and the Trustee,
that no one or more Holders of Securities of any series or Coupons appertaining
to such Securities shall have any right in any manner whatever by virtue or by
availing of any provision of this Indenture to affect, disturb or prejudice the
rights of any other such Holder of Securities or Coupons appertaining to such
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 of the applicable series and Coupons appertaining to such
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.
SECTION 5.7 Unconditional Right of Securityholders to
Institute Certain Suits. Notwithstanding any other provision in this Indenture
and any provision of any Security, the right of any Holder of any Security or
Coupon to receive payment of the principal of and interest on such Security or
Coupon on or after the respective due dates expressed in such Security or
Coupon, or to institute suit for the enforcement of any such payment on or
after such respective dates, shall not be impaired or affected without the
consent of such Holder.
SECTION 5.8 Powers and Remedies Cumulative; Delay or Omission
Not Waiver of Default. Except as provided in Section 5.6, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders of
Securities or Coupons is intended to be
-37-
<PAGE> 46
exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.
No delay or omission of the Trustee or of any Holder of
Securities or Coupons 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 Event of Default or an
acquiescence therein; and, subject to Section 5.6, every power and remedy given
by this Indenture or by law to the Trustee or to the Holders of Securities or
Coupons may be exercised from time to time, and as often as shall be deemed
expedient, by the Trustee or by the Holders of Securities or Coupons.
SECTION 5.9 Control by Holders of Securities. The Holders of
a majority in aggregate principal amount of the Securities of each series
affected (with all such series voting as a single class) 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 with respect to the
Securities of such series by this Indenture; provided that such direction shall
not be otherwise than in accordance with law and the provisions of this
Indenture and provided further that (subject to the provisions of Section 6.1)
the Trustee shall have the right to decline to follow any such direction if the
Trustee, being advised by counsel, shall determine that the action or
proceeding so directed may not lawfully be taken or if the Trustee in good
faith by its board of directors, the executive committee, or a trust committee
of directors or Responsible Officers of the Trustee shall determine that the
action or proceedings so directed would involve the Trustee in personal
liability or if the Trustee in good faith shall so determine that the actions
or forebearances specified in or pursuant to such direction would be unduly
prejudicial to the interests of Holders of the Securities of all series so
affected not joining in the giving of said direction, it being understood that
(subject to Section 6.1) the Trustee shall have no duty to ascertain whether or
not such actions or forebearances are unduly prejudicial to such Holders.
Nothing in this Indenture shall impair the right of the
Trustee in its discretion to take any action deemed proper by the Trustee and
which is not inconsistent with such direction or directions by Securityholders.
SECTION 5.10 Waiver of Past Defaults. Prior to the
acceleration of the maturity of any Securities as provided in
-38-
<PAGE> 47
Section 5.1, the Holders of a majority in aggregate principal amount of the
Securities of all series at the time Outstanding with respect to which an Event
of Default shall have occurred and be continuing (voting as a single class) may
on behalf of the Holders of all such Securities waive any past default or Event
of Default described in Section 5.1 and its consequences, except a default in
respect of a covenant or provision hereof which cannot be modified or amended
without the consent of the Holder of each Security affected. In the case of
any such waiver, the Issuer, the Trustee and the Holders of all such 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.
Upon any such waiver, such default shall cease to exist and be
deemed to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have been cured, and not to have occurred
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 5.11 Trustee to Give Notice of Default, But May
Withhold in Certain Circumstances. The Trustee shall, within 90 days after the
occurrence of a default with respect to the Securities of any series, give
notice of all defaults with respect to that series known to the Trustee (i) if
any Unregistered Securities of that series are then Outstanding, to the Holders
thereof, by publication at least once in an Authorized Newspaper in the Borough
of Manhattan, The City of New York and at least once in an Authorized Newspaper
in London (and, if required by Section 3.6, at least once in an Authorized
Newspaper in Luxembourg) and (ii) to all Holders of Securities of such series
in the manner and to the extent provided in Section 313(c) of the Trust
Indenture Act of 1989, unless in each case such defaults shall have been cured
before the mailing or publication of such notice (the term "defaults" for the
purpose of this Section being hereby defined to mean any event or condition
which is, or with notice or lapse of time or both would become, an Event of
Default); provided that, except in the case of default in the payment of the
principal of or interest on any of the Securities of such series, or in the
payment of any sinking fund installment on such series, 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 or trustees and/or
Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interests of the Securityholders of such
series.
SECTION 5.12 Right of Court to Require Filing of Undertaking
to Pay Costs. All parties to this Indenture agree, and each Holder of any
Security or Coupon by his acceptance thereof shall be deemed to have agreed,
that any court may in its
-39-
<PAGE> 48
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,
suffered 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, 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 shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Securityholder or group of
Securityholders of any series holding in the aggregate more than 10% in
aggregate principal amount of the Securities of such series, or, in the case of
any suit relating to or arising under clause (c) or (f) of Section 5.1 (if the
suit relates to Securities of more than one but less than all series), 10% in
aggregate principal amount of Securities then Outstanding and affected thereby,
or in the case of any suit relating to or arising under clause (c) or (f) (if
the suit under clause (c) or (f) relates to all the Securities then
Outstanding), (d) or (e) of Section 5.1, 10% in aggregate principal amount of
all Securities then Outstanding, or to any suit instituted by any
Securityholder for the enforcement of the payment of the principal of or
interest on any Security on or after the due date expressed in such Security or
any date fixed for redemption.
ARTICLE SIX
CONCERNING THE TRUSTEE
SECTION 6.1 Duties and Responsibilities of the Trustee;
During Default; Prior to Default. With respect to the Holders of any series of
Securities issued hereunder, the Trustee, prior to the occurrence of an Event
of Default with respect to the Securities of a particular series and after the
curing or waiving of all Events of Default which may have occurred with respect
to such series, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. In case an Event of Default with
respect to the Securities of a series has occurred (which has not been cured or
waived) the Trustee shall exercise with respect to such series of Securities
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 wilful misconduct, except that
-40-
<PAGE> 49
(a) prior to the occurrence of an Event of Default with
respect to the Securities of any series and after the curing or
waiving of all such Events of Default with respect to such series
which may have occurred:
(i) the duties and obligations of the Trustee with
respect to the Securities of any series shall be determined
solely by the express provisions of this Indenture, and the
Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and
(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 statements, certificates or opinions
furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such statements,
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 Responsible Officers of
the Trustee, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts; and
(c) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders pursuant to Section 5.9 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 shall be reasonable ground for
believing that the repayment of such funds or adequate indemnity against such
liability is not reasonably assured to it.
SECTION 6.2 Certain Rights of the Trustee. Subject to
Section 6.1:
-41-
<PAGE> 50
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate or
any other certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture, note, Coupon, Security 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 Issuer
mentioned herein shall be sufficiently evidenced by an Officers'
Certificate (unless other evidence in respect thereof be herein
specifically prescribed); and any resolution of the Board of Directors
may be evidenced to the Trustee by a copy thereof certified by the
secretary or an assistant secretary of the Issuer;
(c) the Trustee may consult with counsel and any written
advice or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted to be taken by it hereunder in good faith and in reliance
thereon in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any
of the trusts 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 security or indemnity against the
costs, expenses and liabilities which might 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, rights or powers conferred upon it by this
Indenture;
(f) prior to the occurrence of an Event of Default hereunder
and after the curing or waiving of all Events of Default, the Trustee
shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, appraisal, bond,
debenture, note, Coupon, Security, or other paper or document unless
requested in writing so to do by the Holders of not less than a
majority in aggregate principal amount of the Securities of all series
affected then Outstanding; provided that, if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in
the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Indenture, the
Trustee may require reasonable indemnity against such
-42-
<PAGE> 51
expenses or liabilities as a condition to proceeding; the reasonable
expenses of every such investigation shall be paid by the Issuer or,
if paid by the Trustee or any predecessor Trustee, shall be repaid by
the Issuer upon demand; and
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys not regularly in its employ and the
Trustee shall not be responsible for any misconduct or negligence on
the part of any such agent or attorney appointed with due care by it
hereunder.
SECTION 6.3 Trustee Not Responsible for Recitals, Disposition
of Securities or Application of Proceeds Thereof. The recitals contained
herein and in the Securities, except the Trustee's certificates of
authentication, shall be taken as the statements of the Issuer, and the Trustee
assumes no responsibility for the correctness of the same. The Trustee makes
no representation as to the validity or sufficiency of this Indenture or of the
Securities or Coupons. The Trustee shall not be accountable for the use or
application by the Issuer of any of the Securities or of the proceeds thereof.
SECTION 6.4 Trustee and Agents May Hold Securities or
Coupons; Collections, etc. The Trustee or any agent of the Issuer or the
Trustee, in its individual or any other capacity, may become the owner or
pledgee of Securities or Coupons with the same rights it would have if it were
not the Trustee or such agent and, subject to Sections 6.8 and 6.13, may
otherwise deal with the Issuer and receive, collect, hold and retain
collections from the Issuer with the same rights it would have if it were not
the Trustee or such agent.
SECTION 6.5 Moneys Held by Trustee. Subject to the
provisions of Section 10.4 hereof, all moneys received by the Trustee shall,
until used or applied as herein provided, be held in trust for the purposes for
which they were received, but need not be segregated from other funds except to
the extent required by mandatory provisions of law. Neither the Trustee nor
any agent of the Issuer or the Trustee shall be under any liability for
interest on any moneys received by it hereunder.
SECTION 6.6 Compensation and Indemnification of Trustee and
Its Prior Claim. The Issuer covenants and agrees to pay to the Trustee from
time to time, and the Trustee shall be entitled to, reasonable compensation
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) and the Issuer covenants and
agrees to pay or reimburse the Trustee and each predecessor Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or
made by or on behalf of it in accordance with any of the provisions of this
Indenture (including the reasonable compensation and the
-43-
<PAGE> 52
expenses and disbursements of its counsel and of all agents and other persons
not regularly in its employ) except any such expense, disbursement or advance
as may arise from its negligence or bad faith. The Issuer also covenants to
indemnify the Trustee and each predecessor Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or bad
faith on its part, arising out of or in connection with the acceptance or
administration of this Indenture or the trusts hereunder and its duties
hereunder, including the costs and expenses of defending itself against or
investigating any claim of liability in the premises. The obligations of the
Issuer under this Section to compensate and indemnify the Trustee and each
predecessor Trustee and to pay or reimburse the Trustee and each predecessor
Trustee for expenses, disbursements and advances shall constitute additional
indebtedness hereunder and shall survive the satisfaction and discharge of this
Indenture. Such additional indebtedness shall be a senior claim to that of the
Securities upon all property and funds held or collected by the Trustee as
such, except funds held in trust for the benefit of the Holders of particular
Securities or Coupons, and the Securities are hereby subordinated to such
senior claim.
SECTION 6.7 Right of Trustee to Rely on Officers'
Certificate, etc. Subject to Sections 6.1 and 6.2, whenever in the
administration of the trusts of this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking
or suffering or omitting any action hereunder, such matter (unless other
evidence in respect thereof be herein specifically prescribed) may, in the
absence of negligence or bad faith on the part of the Trustee, be deemed to be
conclusively proved and established by an Officers' Certificate delivered to
the Trustee, and such certificate, in the absence of negligence or bad faith on
the part of the Trustee, shall be full warrant to the Trustee for any action
taken, suffered or omitted by it under the provisions of this Indenture upon
the faith thereof.
SECTION 6.8 Conflicting Interests. If the Trustee has or
shall acquire any conflicting interest within the meaning of the Trust
Indenture Act of 1939, the Trustee shall either eliminate such interest or
resign, to the extent and in the manner provided by, and subject to the
provisions of the Trust Indenture Act of 1939 and this Indenture. To the
extent permitted by such Act, the Trustee shall not be deemed to have a
conflicting interest by reason of being a trustee under this Indenture with
respect to Securities of more than one series.
SECTION 6.9 Persons Eligible for Appointment as Trustee.
The Trustee for each series of Securities hereunder shall at all times be a
corporation organized and doing business under the laws of the United States of
America or of any State or the District of Columbia having a combined capital
and surplus of at least $5,000,000, and which is authorized under such laws to
-44-
<PAGE> 53
exercise corporate trust powers and is subject to supervision or examination by
Federal, State or District of Columbia authority. Such corporation shall have
its principal place of business either in the Borough of Manhattan, The City of
New York or in Wilmington, Delaware if there be such a corporation in such
location willing to act upon reasonable and customary terms and conditions. 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, 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. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, the Trustee shall resign immediately in the manner and with the effect
specified in Section 6.10.
SECTION 6.10 Resignation and Removal; Appointment of
Successor Trustee. (a) The Trustee, or any trustee or trustees hereafter
appointed, may at any time resign with respect to one or more or all series of
Securities by giving written notice of resignation to the Issuer and (i) if any
Unregistered Securities of a series affected are then Outstanding, by giving
notice of such resignation to the Holders thereof, by publication at least once
in an Authorized Newspaper in the Borough of Manhattan, The City of New York,
and at least once in an Authorized Newspaper in London (and, if required by
Section 3.6, at least once in an Authorized Newspaper in Luxembourg), (ii) if
any Unregistered Securities of a series affected are then Outstanding, by
mailing notice of such resignation to the Holders thereof who have filed their
names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust
Indenture Act of 1939 at such addresses as were so furnished to the Trustee and
(iii) by mailing notice of such resignation to the Holders of then Outstanding
Registered Securities of each series affected at their addresses as they shall
appear on the registry books. Upon receiving such notice of resignation, the
Issuer shall promptly appoint a successor trustee or trustees with respect to
the applicable series by written instrument in duplicate, executed by authority
of the Board of Directors, one copy of which instrument shall be delivered to
the resigning Trustee and one copy to the successor trustee or trustees. If no
successor trustee shall have been so appointed with respect to any series and
have accepted appointment within 30 days after the mailing of such notice of
resignation, 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 or Securities of the applicable
series for at least six months may, subject to the provisions of Section 5.12,
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.
-45-
<PAGE> 54
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with the provisions of
Section 6.8 with respect to any series of Securities after written
request therefor by the Issuer or by any Securityholder who has been a
bona fide Holder of a Security or Securities of such series for at
least six months; or
(ii) the Trustee shall cease to be eligible in accordance with
the provisions of Section 6.9 and shall fail to resign after written
request therefor by the Issuer or by any Securityholder; or
(iii) the Trustee shall become incapable of acting with respect
to any series of Securities, or shall be adjudged a bankrupt or
insolvent, or a receiver or liquidator 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 Issuer may remove the Trustee with respect to the
applicable series of Securities and appoint a successor trustee for such series
by written instrument, in duplicate, executed by order of the Board of
Directors, 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 5.12, any Securityholder who has been a bona fide Holder of a Security
or Securities of such series 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 with
respect to such series. Such court may thereupon, after such notice, if any,
as it may deem proper and prescribe, remove the Trustee and appoint a successor
trustee.
(c) The Holders of a majority in aggregate principal amount
of the Securities of each series at the time Outstanding may at any time remove
the Trustee with respect to Securities of such series and appoint a successor
trustee with respect to the Securities of such series by delivering to the
Trustee so removed, to the successor trustee so appointed and to the Issuer the
evidence provided for in Section 7.1 of the action in that regard taken by the
Securityholders.
(d) Any resignation or removal of the Trustee with respect to
any series and any appointment of a successor trustee with respect to such
series pursuant to any of the provisions of this Section 6.10 shall become
effective upon acceptance of appointment by the successor trustee as provided
in Section 6.11.
-46-
<PAGE> 55
SECTION 6.11 Acceptance of Appointment by Successor Trustee.
Any successor trustee appointed as provided in Section 6.10 shall execute and
deliver to the Issuer and to its predecessor trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee with respect to all or any applicable series shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become vested with all rights, powers, duties and obligations
with respect to such series of its predecessor hereunder, with like effect as
if originally named as trustee for such series hereunder; but, nevertheless, on
the written request of the Issuer or of the successor trustee, upon payment of
its charges then unpaid, the trustee ceasing to act shall, subject to Section
10.4, pay over to the successor trustee all moneys at the time held by it
hereunder and shall execute and deliver an instrument transferring to such
successor trustee all such rights, powers, duties and obligations. Upon
request of any such successor trustee, the Issuer 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 prior claim upon all property or funds held
or collected by such trustee to secure any amounts then due it pursuant to the
provisions of Section 6.6.
If a successor trustee is appointed with respect to the
Securities of one or more (but not all) series, the Issuer, the predecessor
trustee and each successor trustee with respect to the Securities of any
applicable series shall execute and deliver an indenture supplemental hereto
which shall contain such provisions as shall be deemed necessary or desirable
to confirm that all the rights, powers, trusts and duties of the predecessor
trustee with respect to the Securities of any series as to which the
predecessor trustee is not retiring shall continue to be vested in the
predecessor trustee, and shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one trustee, it being understood that
nothing herein or in such supplemental indenture shall constitute such trustees
co-trustees of the same trust and that each such trustee shall be trustee of a
trust or trusts under separate indentures.
No successor trustee with respect to any series of Securities
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 6.8 and Section 310(a) of the Trust Indenture Act of 1939 and
eligible under the provisions of Section 6.9.
Upon acceptance of appointment by any successor trustee as
provided in this Section 6.11, the Issuer shall give notice thereof (a) if any
Unregistered Securities of a series affected are then Outstanding, to the
Holders thereof, by publication of such
-47-
<PAGE> 56
notice at least once in an Authorized Newspaper in the Borough of Manhattan,
The City of New York and at least once in an Authorized Newspaper in London
(and, if required by Section 3.6, at least once in an Authorized Newspaper in
Luxembourg), (b) if any Unregistered Securities of a series affected are then
Outstanding, to the Holders thereof who have filed their names and addresses
with the Trustee pursuant to Section 4.4(c)(ii), by mailing such notice to such
Holders at such addresses as were so furnished to the Trustee (and the Trustee
shall make such information available to the Issuer for such purpose) and (c)
to the Holders of Registered Securities of each series affected, by mailing
such notice to such Holders at their addresses as they shall appear on the
registry books. If the acceptance of appointment is substantially
contemporaneous with the resignation, then the notice called for by the
preceding sentence may be combined with the notice called for by Section 6.10.
If the Issuer fails to give such notice within ten days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be given at the expense of the Issuer.
SECTION 6.12 Merger, Conversion, Consolidation or Succession
to Business of Trustee. 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 the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided that such
corporation shall be qualified under the provisions of Section 6.8 and eligible
under the provisions of Section 6.9, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
In case at the time such successor to the Trustee shall
succeed to the trusts created by this Indenture any of the Securities of any
series 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 of any series 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 certificate shall have the full force which it is anywhere in
the Securities of such series or in this Indenture provided that the
certificate of the Trustee shall have; provided, that the right to adopt the
certificate of authentication of any predecessor trustee or to authenticate
Securities of any series in the name of any predecessor trustee shall apply
only to its successor or successors by merger, conversion or consolidation.
-48-
<PAGE> 57
SECTION 6.13 Preferential Collection of Claims Against the
Issuer. If and when the Trustee shall be or become a creditor of the Issuer
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act of 1939 regarding the collection of
claims against the Issue (or such other obligor). For purposes of Sections
311(b)(4) and (6) of the Trust Indenture Act of 1939:
(a) "cash transaction" means any transaction in which full
payment for goods or securities sold is made within seven days after
delivery of the goods or securities in currency or in checks or other
orders drawn upon banks or bankers and payable upon demand; and
(b) "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by the Issuer (or any such obligor) for the purpose of
financing the purchase, processing, manufacture, shipment, storage or
sale of goods, wares or merchandise and which is secured by documents
evidencing title to, possession of, or a lien upon the goods, wares or
merchandise or the receivables or proceeds arising from the sale of
the goods, wares or merchandise previously constituting the security,
provided the security is received by the Trustee simultaneously with
the creation of the creditor relationship with the Issuer (or any such
obligor) arising from the making, drawing, negotiating or incurring of
the draft, bill of exchange, acceptance or obligation.
SECTION 6.14 Appointment of Authenticating Agent. As long as
any Securities of a series remain Outstanding, the Trustee may, by an
instrument in writing, appoint with the approval of the Issuer an
authenticating agent (the "Authenticating Agent") which shall be authorized to
act on behalf of the Trustee to authenticate Securities, including Securities
issued upon exchange, registration of transfer, partial redemption or pursuant
to Section 2.9. Securities of each such series authenticated by such
Authenticating Agent shall be entitled to the benefits of this Indenture and
shall be valid and obligatory for all purposes as if authenticated by the
Trustee. Whenever reference is made in this Indenture to the authentication
and delivery of Securities of any series by the Trustee or to the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
for such series and a certificate of authentication executed on behalf of the
Trustee by such Authenticating Agent. Such Authenticating Agent shall at all
times be a corporation organized and doing business under the laws of the
United States of America or of any State, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $5,000,000 (determined as provided in Section 6.9 with respect to the
Trustee)
-49-
<PAGE> 58
and subject to supervision or examination by Federal or State authority.
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, conversion or consolidation to which any
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate agency business of any Authenticating Agent, shall continue to be the
Authenticating Agent with respect to all series of Securities for which it
served as Authenticating Agent without the execution or filing of any paper or
any further act on the part of the Trustee or such Authenticating Agent.
Any Authenticating Agent may at any time, and if it shall
cease to be eligible shall, resign by giving written notice of resignation to
the Trustee and to the Issuer. The Trustee may at any time terminate the
agency of an Authenticating Agent by giving written notice of termination to
such Authenticating Agent and to the Issuer. 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 in accordance with the
provisions of this Section 6.14 with respect to one or more series of
Securities, the Trustee may upon receipt of an Issuer Order appoint a successor
Authenticating Agent and the Issuer shall provide notice of such appointment to
all Holders of Securities of such series in the manner and to the extent
provided in Section 11.4. 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. The Issuer agrees to pay to the
Authenticating Agent for such series from time to time reasonable compensation.
The Authenticating Agent for the Securities of any series shall have no
responsibility or liability for any action taken by it as such at the direction
of the Trustee.
Sections 6.2, 6.3, 6.4, 6.6, 6.9 and 7.3 shall be applicable
to any Authenticating Agent.
ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS
SECTION 7.1 Evidence of Action Taken by Securityholders. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by a specified
percentage in principal amount of the Securityholders of any or all series may
be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such specified percentage of Securityholders in person
or
-50-
<PAGE> 59
by agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee. Proof of execution of any instrument
or of a writing appointing any such agent shall be sufficient for any purpose
of this Indenture and (subject to Sections 6.1 and 6.2) conclusive in favor of
the Trustee and the Issuer, if made in the manner provided in this Article.
SECTION 7.2 Proof of Execution of Instruments and of Holding
of Securities. Subject to Sections 6.1 and 6.2, the execution of any
instrument by a Securityholder or his agent or proxy may be proved in the
following manner:
(a) The fact and date of the execution by any Holder of any
instrument may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments
of deeds or administer oaths that the Person executing such
instruments acknowledged to him the execution thereof, or by an
affidavit of a witness to such execution sworn to before any such
notary or other such officer. Where such execution is by or on behalf
of any legal entity other than an individual, such certificate or
affidavit shall also constitute sufficient proof of the authority of
the Person executing the same. The fact of the holding by any Holder
of an Unregistered Security of any series, and the identifying number
of such Security and the date of his holding the same, may be proved
by the production of such Security or by a certificate executed by any
trust company, bank, banker or recognized securities dealer wherever
situated satisfactory to the Trustee, if such certificate shall be
deemed by the Trustee to be satisfactory. Each such certificate shall
be dated and shall state that on the date thereof a Security of such
series bearing a specified identifying number was deposited with or
exhibited to such trust company, bank, banker or recognized securities
dealer by the Person named in such certificate. Any such certificate
may be issued in respect of one or more Unregistered Securities of one
or more series specified therein. The holding by the Person named in
any such certificate of any Unregistered Securities of any series
specified therein shall be presumed to continue for a period of one
year from the date of such certificate unless at the time of any
determination of such holding (1) another certificate bearing a later
date issued in respect of the same Securities shall be produced, or
(2) the Security of such series specified in such certificate shall be
produced by some other Person, or (3) the Security of such series
specified in such certificate shall have ceased to be Outstanding.
The fact and date of the execution of any such instrument and the
amount and numbers of Securities of any series held by the Person so
executing such instrument and the amount and numbers of any Security
or Securities for such series may also be
-51-
<PAGE> 60
proven in accordance with such reasonable rules and regulations as may
be prescribed by the Trustee for such series or in any other manner
which the Trustee for such series may deem sufficient.
(b) In the case of Registered Securities, the ownership of
such Securities shall be proved by the Security register or by a
certificate of the Security registrar.
The Issuer may set a record date for purposes of determining
the identify of Holders of Registered Securities of any series entitled to vote
or consent to any action referred to in Section 7.1, which record date may be
set at any time or from time to time by notice to the Trustee, for any date or
dates (in the case of any adjournment or reconsideration) not more than 90 days
nor less than five days prior to the proposed date of such vote or consent, and
thereafter, notwithstanding any other provisions hereof, with respect to
Registered Securities of any series, only Holders of Registered Securities of
such series of record on such record date shall be entitled to so vote or give
such consent with respect to such action or revoke such vote or consent.
SECTION 7.3 Holders to be Treated as Owners. The Issuer, the
Trustee and any agent of the Issuer or the Trustee may deem and treat the
Person in whose name any Security shall be registered upon the Security
register for such series as the absolute owner of such Security (whether or not
such Security shall be overdue and notwithstanding any notation of ownership or
other writing thereon) for the purpose of receiving payment of or on account of
the principal of and, subject to the provisions of this Indenture, interest on
such Security and for all other purposes; and neither the Issuer nor the
Trustee nor any agent of the Issuer or the Trustee shall be affected by any
notice to the contrary. The Issuer, the Trustee and any agent of the Issuer or
the Trustee may treat the Holder of any Unregistered Security and the Holder of
any Coupon as the absolute owner of such Unregistered Security or Coupon
(whether or not such Unregistered Security or Coupon shall be overdue) for the
purpose of receiving payment thereof or on account thereof and for all other
purposes and neither the Issuer, the Trustee, nor any agent of the Issuer or
the Trustee shall be affected by any notice to the contrary. All such payments
so made to any such Person, 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 Unregistered Security or Coupon.
SECTION 7.4 Securities Owned by Issuer Deemed Not
Outstanding. In determining whether the Holders of the requisite aggregate
principal amount of Outstanding Securities of any or all series have concurred
in any direction, consent or waiver under this Indenture, Securities which are
owned by the Issuer or any other obligor on the Securities with respect to
which such
-52-
<PAGE> 61
determination is being made or by any Person directly or indirectly controlling
or controlled by or under direct or indirect common control with the Issuer or
any other obligor on the Securities with respect to which such determination is
being made shall be disregarded and deemed not to be Outstanding for the
purpose of any such determination, except that for the purpose of determining
whether the Trustee shall be protected in relying on any such direction,
consent or waiver only Securities which the Trustee knows are so owned shall be
so disregarded. Securities so owned which have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to such Securities and
that the pledgee is not the Issuer or any other obligor upon the Securities or
any Person directly or indirectly controlling or controlled by or under direct
or indirect common control with the Issuer or any other obligor on the
Securities. In case of a dispute as to such right, the advice of counsel shall
be full protection in respect of any decision made by the Trustee in accordance
with such advice. Upon request of the Trustee, the Issuer shall furnish to the
Trustee promptly an Officers' Certificate listing and identifying all
Securities, if any, known by the Issuer to be owned or held by or for the
account of any of the above-described Persons; and, subject to Sections 6.1 and
6.2, the Trustee shall be entitled to accept such Officers' Certificate as
conclusive evidence of the facts therein set forth and of the fact that all
Securities not listed therein are Outstanding for the purpose of any such
determination.
SECTION 7.5 Right of Revocation of Action Taken. At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
7.1, of the taking of any action by the Holders of the percentage in aggregate
principal amount of the Securities of any or all series, as the case may be,
specified in this Indenture in connection with such action, any Holder of a
Security the serial number of which is shown by the evidence to be included
among the serial numbers of the Securities the Holders of which have consented
to such action may, by filing written notice at the Corporate Trust Office and
upon proof of holding as provided in this Article, revoke such action so far as
concerns such 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 Securities
issued in exchange or substitution therefor or on registration of transfer
thereof, irrespective of whether or not any notation in regard thereto is made
upon any such Security. Any action taken by the Holders of the percentage in
aggregate principal amount of the Securities of any or all series, as the case
may be, specified in this Indenture in connection with such action shall be
conclusively binding upon the Issuer, the Trustee and the Holders of all the
Securities affected by such action.
-53-
<PAGE> 62
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.1 Supplemental Indentures Without Consent of
Securityholders. The Issuer, when authorized by a resolution of its Board of
Directors (which resolution may provide general terms or parameters for such
action and may provide that the specific terms of such action may be determined
in accordance with or pursuant to an Officers' Certificate), and the Trustee
may from time to time and at any time enter into an indenture or indentures
supplemental hereto (which shall conform to the provisions of the Trust
Indenture Act of 1939 as in force at the date of the execution thereof) for one
or more of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge to the
Trustee as security for the Securities of one or more series any
property or assets;
(b) to evidence the succession of another corporation to the
Issuer, or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Issuer
pursuant to Article Nine;
(c) to add to the covenants of the Issuer such further
covenants, restrictions, conditions or provisions as the Issuer and
the Trustee shall consider to be for the protection of the Holders of
Securities or Coupons, and to make the occurrence, or the occurrence
and continuance, of a default in any such additional covenants,
restrictions, conditions or provisions an Event of Default permitting
the enforcement of all or any of the several remedies provided in this
Indenture as herein set forth; provided, that in respect of any such
additional covenant, restriction, condition or provision such
supplemental indenture 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 an Event of Default or may limit the remedies
available to the Trustee upon such an Event of Default or may limit
the right of the Holders of a majority in aggregate principal amount
of the Securities of such series to waive such an Event of Default;
(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 any other provisions as
the Issuer may deem necessary or desirable, provided that no such
action shall adversely affect the interests of the Holders of the
Securities or Coupons;
-54-
<PAGE> 63
(e) to establish the form or terms of Securities of any
series or of the Coupons appertaining to such Securities as permitted
by Sections 2.1 and 2.3; and
(f) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities of one
or more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one trustee,
pursuant to the requirements of Section 6.11.
The Trustee is hereby authorized to join with the Issuer in
the execution of any such supplemental indenture, to make any further
appropriate agreements and stipulations which may be therein contained and to
accept the conveyance, transfer, assignment, mortgage or pledge of any property
thereunder, but the Trustee shall not be obligated to enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of
this Section may be executed without the consent of the Holders of any of the
Securities at the time Outstanding, notwithstanding any of the provisions of
Section 8.2.
SECTION 8.2 Supplemental Indentures With Consent of
Securityholders. With the consent (evidenced as provided in Article Seven) of
the Holders of not less than a majority in aggregate principal amount of the
Securities at the time Outstanding of all series affected by such supplemental
indenture (voting as one class), the Issuer, when authorized by a resolution of
its Board of Directors (which resolution may provide general terms or
parameters for such action and may provide that the specific terms of such
action may be determined in accordance with or pursuant to an Issuer Order),
and the Trustee may, from time to time and at any time, enter into an indenture
or indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act of 1939 as in force at the date of execution thereof) for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of any supplemental
indenture or of modifying in any manner the rights of the Holders of the
Securities of each such series or of the Coupons appertaining to such
Securities; provided, that no such supplemental indenture shall (a) extend the
final maturity of any Security, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon, or reduce
any amount payable on redemption thereof, or make the principal thereof
(including any amount in respect of original issue discount) or interest
thereon payable in any coin or currency other than that provided in the
Securities and Coupons or in accordance with the terms thereof, or reduce the
amount of the principal of an
-55-
<PAGE> 64
Original Issue Discount Security that would be due and payable upon an
acceleration of the maturity thereof pursuant to Section 5.1 or the amount
thereof provable in bankruptcy pursuant to Section 5.2, or alter the provisions
of Section 11.11 or 11.12 or impair or affect the right of any Securityholder
to institute suit for the payment thereof or, if the Securities provide
therefor, any right of repayment at the option of the Securityholder, in each
case without the consent of the Holder of each Security so affected, or (b)
reduce the aforesaid percentage of Securities of any series, the consent of the
Holders of which is required for any such supplemental indenture, without the
consent of the Holders of each Security so affected.
A supplemental indenture which changes or eliminates any
covenant or other provision of this Indenture which has expressly been included
solely for the benefit of one or more particular series of Securities, or which
modifies the rights of Holders of Securities of such series, or of Coupons
appertaining to such Securities, with respect to such covenant or provision,
shall be deemed not to affect the rights under this Indenture of the Holders of
Securities of any other series or of the Coupons appertaining to such
Securities.
Upon the request of the Issuer, accompanied by a copy of a
resolution of the Board of Directors (which resolution may provide general
terms or parameters for such action and may provide that the specific terms of
such action may be determined in accordance with or pursuant to an Issuer
Order) certified by the secretary or an assistant secretary of the Issuer
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of the Holders of the
Securities as aforesaid and other documents, if any, required by Section 7.1,
the Trustee shall join with the Issuer 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.
It shall not be necessary for the consent of the
Securityholders under this Section to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof.
Promptly after the execution by the Issuer and the Trustee of
any supplemental indenture pursuant to the provisions of this Section, the
Trustee shall give notice thereof (i) to the Holders of then Outstanding
Registered Securities of each series affected thereby, by mailing a notice
thereof by first-class mail to such Holders at their addresses as they shall
appear on the Security register, (ii) if any Unregistered Securities of a
series affected thereby are then Outstanding, to the Holders thereof who
-56-
<PAGE> 65
have filed their names and addresses with the Trustee pursuant to Section
4.4(c)(ii), by mailing a notice thereof by first-class mail to such Holders at
such addresses as were so furnished to the Trustee and (iii) if any
Unregistered Securities of a series affected thereby are then Outstanding, to
all Holders thereof, by publication of a notice thereof at least once in an
Authorized Newspaper in the Borough of Manhattan, The City of New York and at
least once in an Authorized Newspaper in London (and, if required by Section
3.6, at least once in an Authorized Newspaper in Luxembourg), and in each case
such notice shall set forth in general terms the substance of such supplemental
indenture. Any failure of the Issuer to give such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture.
SECTION 8.3 Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, 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 Issuer and the Holders
of Securities of each series affected thereby 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 8.4 Documents to Be Given to Trustee. The Trustee,
subject to the provisions of Sections 6.1 and 6.2, may receive an Officers'
Certificate and an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant to this Article Eight complies with
the applicable provisions of this Indenture.
SECTION 8.5 Notation on Securities in Respect of Supplemental
Indentures. Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to the provisions of this
Article may bear a notation in form approved by the Trustee for such series as
to any matter provided for by such supplemental indenture or as to any action
taken by Securityholders. If the Issuer or the Trustee shall so determine, new
Securities of any series 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 by the Issuer,
authenticated by the Trustee and delivered in exchange for the Securities of
such series then Outstanding.
SECTION 8.6 Subordination Unimpaired. This Indenture may not
be amended to alter the subordination of any of the Outstanding Securities
without the written consent of each holder
-57-
<PAGE> 66
of Senior Indebtedness then outstanding that would be adversely affected
thereby.
ARTICLE NINE
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 9.1 Issuer May Consolidate, etc., Only on Certain
Terms.
The Issuer shall not consolidate with or merge into any other
corporation or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, unless:
(a) the corporation formed by such consolidation or into
which the Issuer is merged or the Person which acquires by conveyance,
transfer or lease the properties and assets of the Issuer
substantially as an entirety shall expressly assume, by a supplemental
indenture hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the
principal of and interest on all the Securities and Coupons, if any,
according to their tenor, and the performance of every covenant of
this Indenture on the part of the Issuer to be performed or observed;
(b) immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of time,
or both, would become an Event of Default, shall have happened and be
continuing;
(c) the Issuer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such
consolidation, merger, conveyance, transfer or lease and such
supplemental indenture comply with this Article and that all
conditions precedent herein provided for relating to such transaction
have been complied with; and
(d) the Issuer has delivered to the Trustee such other
documents as the Trustee may, in its discretion, reasonably require.
SECTION 9.2 Successor Corporation Substituted. In case of
any such consolidation, merger, sale, lease or conveyance, and following such
an assumption by the successor Person, such successor Person shall succeed to
and be substituted for the Issuer, with the same effect as if it had been named
herein. Such successor Person may cause to be signed, and may issue either in
its own name or in the name of the Issuer prior to such succession any or all
of the Securities issuable hereunder which together with any Coupons
appertaining thereto theretofore shall not have been
-58-
<PAGE> 67
signed by the Issuer and delivered to the Trustee; and, upon the order of such
successor Person, instead of the Issuer, and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee shall
authenticate and shall deliver any Securities together with any Coupons
appertaining thereto which previously shall have been signed and delivered by
the officers of the Issuer to the Trustee for authentication, and any
Securities which such successor Person thereafter shall cause to be signed and
delivered to the Trustee for that purpose. All of the Securities so issued
together with any Coupons appertaining thereto 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 Securities had been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale, lease or
conveyance such changes in phrasing and form (but not in substance) may be made
in the Securities and Coupons thereafter to be issued as may be appropriate.
In the event of any such sale or conveyance (other than a
conveyance by way of lease) the Issuer or any successor Person which shall
theretofore have become such in the manner described in this Article shall be
discharged from all obligations and covenants under this Indenture and the
Securities and may be liquidated and dissolved.
ARTICLE TEN
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
SECTION 10.1 Satisfaction and Discharge of Indenture. (A)
If at any time (a) the Issuer shall have paid or caused to be paid the
principal of and interest on all the Securities of any series Outstanding
hereunder and all unmatured Coupons appertaining thereto (other than Securities
of such series and Coupons appertaining thereto which have been destroyed, lost
or stolen and which have been replaced or paid as provided in Section 2.9) as
and when the same shall have become due and payable, or (b) the Issuer shall
have delivered to the Trustee for cancellation all Securities of any series
theretofore authenticated and all unmatured Coupons appertaining thereto (other
than any Securities of such series and Coupons appertaining thereto which shall
have been destroyed, lost or stolen and which shall have been replaced or paid
as provided in Section 2.9) or (c) in the case of any series of Securities
where the exact amount (including the currency of payment) of principal of and
interest due on which can be determined at the time of making the deposit
referred to in clause (ii) below, (i) all the Securities of such series and all
unmatured Coupons appertaining
-59-
<PAGE> 68
thereto not theretofore 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 (ii)
the Issuer shall have irrevocably deposited or caused to be deposited with the
Trustee as trust funds the entire amount in cash (other than moneys repaid by
the Trustee or any paying agent to the Issuer in accordance with Section 10.4)
or, in the case of any series of Securities the payments on which may only be
made in Dollars, direct obligations of the United States of America, backed by
its full faith and credit ("U.S. Government Obligations"), maturing as to
principal and interest at such times and in such amounts as will insure the
availability of cash, or a combination thereof, sufficient in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay (A) the
principal and interest on all Securities of such series and Coupons
appertaining thereto on each date that such principal or interest is due and
payable and (B) any mandatory sinking fund payments on the dates on which such
payments are due and payable in accordance with the terms of the Indenture and
the Securities of such series; and if, in any such case, the Issuer shall also
pay or cause to be paid all other sums payable hereunder by the Issuer, then
this Indenture shall cease to be of further effect (except as to (i) rights of
registration of transfer and exchange of Securities of such series and of
Coupons appertaining thereto and the Issuer's right of optional redemption, if
any, (ii) substitution of mutilated, defaced, destroyed, lost or stolen
Securities or Coupons, (iii) rights of Holders of Securities and Coupons
appertaining thereto to receive payments of principal thereof and interest
thereon, upon the original stated due dates therefor (but not upon
acceleration), and remaining rights of the Holders to receive mandatory sinking
fund payments, if any, (iv) the rights, obligations, duties and immunities of
the Trustee hereunder, (v) the rights of the Holders of Securities of such
series and Coupons appertaining thereto as beneficiaries hereof with respect to
the property so deposited with the Trustee payable to all or any of them, and
(vi) the obligations of the Issuer under Sections 3.2 and 6.6) and the Trustee,
on demand of the Issuer accompanied by an Officers' Certificate and an Opinion
of Counsel and at the cost and expense of the Issuer, shall execute proper
instruments acknowledging such satisfaction of and discharging this Indenture;
provided, that the rights of Holders of the Securities and Coupons to receive
amounts in respect of principal of and interest on the Securities and Coupons
held by them shall not be delayed longer than required by then-applicable
mandatory rules or policies of any securities exchange upon which the
Securities are listed. The Issuer agrees to reimburse the Trustee for any
costs or expenses thereafter reasonably and properly incurred and to compensate
the Trustee for any services thereafter reasonably and properly rendered by the
Trustee in connection with this Indenture or the Securities of such series.
-60-
<PAGE> 69
(B) The following provisions shall apply to the Securities of
each series unless specifically otherwise provided in a Board Resolution,
Officers' Certificate or indenture supplemental hereto provided pursuant to
Section 2.3. In addition to discharge of the Indenture pursuant to the next
preceding paragraph, in the case of any series of Securities the exact amounts
(including the currency of payment) of principal of and interest due on which
can be determined at the time of making the deposit referred to in clause (a)
below, the Issuer shall be deemed to have paid and discharged the entire
indebtedness on all the Securities of such a series and the Coupons
appertaining thereto on the 91st day after the date of the deposit referred to
in subparagraph (a) below, and the provisions of this Indenture with respect to
the Securities of such series and Coupons appertaining thereto shall no longer
be in effect (except as to (i) rights of registration of transfer and exchange
of Securities of such series and of Coupons appertaining thereto and the
Issuer's right of optional redemption, if any, (ii) substitution of mutilated,
defaced, destroyed, lost or stolen Securities or Coupons, (iii) rights of
Holders of Securities and Coupons appertaining thereto to receive payments of
principal thereof and interest thereon, upon the original stated due dates
therefor (but not upon acceleration), and remaining rights of the Holders to
receive mandatory sinking fund payments, if any, (iv) the rights, obligations,
duties and immunities of the Trustee hereunder, (v) the rights of the Holders
of Securities of such series and Coupons appertaining thereto as beneficiaries
hereof with respect to the property so deposited with the Trustee payable to
all or any of them and (vi) the obligations of the Issuer under Sections 3.2
and 6.6) and the Trustee, at the expense of the Issuer, shall at the Issuer's
request, execute proper instruments acknowledging the same, if
(a) with reference to this provision the Issuer has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee as trust funds in trust, specifically pledged as security for,
and dedicated solely to, the benefit of the Holders of the Securities
of such series and Coupons appertaining thereto (i) cash in an amount,
or (ii) in the case of any series of Securities the payments on which
may only be made in Dollars, U.S. Government Obligations, maturing as
to principal and interest at such times and in such amounts as will
insure the availability of cash or (iii) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay (A) the principal and
interest on all Securities of such series and Coupons appertaining
thereto on each date that such principal or interest is due and
payable and (B) any mandatory sinking fund payments on the dates on
which such payments are due and payable in accordance with the terms
of the Indenture and the Securities of such series;
-61-
<PAGE> 70
(b) such deposit will not result in a breach or violation of,
or constitute a default under, any agreement or instrument to which
the Issuer is a party or by which it is bound;
(c) the Issuer has delivered to the Trustee an Opinion of
Counsel based on the fact that (x) the Issuer has received from, or
there has been published by, the Internal Revenue Service a ruling or
(y) since the date hereof, there has been a change in the applicable
Federal income tax law, in either case to the effect that, and such
opinion shall confirm that, the Holders of the Securities of such
series and Coupons appertaining thereto will not recognize income,
gain or loss for Federal income tax purposes as a result of such
deposit, defeasance and discharge and will be subject to Federal
income tax on the same amounts, in the same manner and at the same
times, as would have been the case if such deposit, defeasance and
discharge had not occurred;
(d) the Issuer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to the defeasance
contemplated by this provision have been complied with;
(e) no event or condition shall exist that, pursuant to the
provisions of Section 13.1, would prevent the Issuer from making
payments of the principal of or interest on the Securities of such
series and Coupons appertaining thereto on the date of such deposit or
at any time during the period ending on the 91st day after the date of
such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period);
(f) the Issuer has delivered to the Trustee an Opinion of
Counsel to the effect that (x) the trust funds will not be subject to
any rights of holders of Senior Indebtedness, including without
limitation those arising under Article Thirteen of this Indenture, and
(y) after the 91st day following the deposit, the trust funds will not
be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally,
except that if a court were to rule under any such law in any case or
proceeding that the trust funds remained property of the Issuer, no
opinion is given as to the effect of such laws on the trust funds
except the following: (A) assuming such trust funds remained in the
Trustee's possession prior to such court ruling to the extent not paid
to Holders of Securities of such series and Coupons appertaining
thereto, the Trustee will hold, for the benefit of such Holders, a
valid and perfected security interest in such trust funds that is not
avoidable in bankruptcy or otherwise, (B) such Holders will be
entitled to receive adequate protection of their
-62-
<PAGE> 71
interests in such trust funds if such trust funds are used, and (C) no
property, rights in property or other interests granted to the Trustee
or such Holders in exchange for or with respect to any of such funds
will be subject to any prior rights of holders of Senior Indebtedness,
including without limitation those arising under Article Thirteen of
this Indenture; and
(g) if the Securities of such series are to be redeemed,
either notice of such redemption shall have been given or the Issuer
shall have given the Trustee irrevocable directions to give notice of
such redemption in the name, and at the expense of the Issuer, under
arrangements satisfactory to the Trustee.
(C) The Issuer shall be released from its obligations under
Section 9.1 with respect to the Securities of any series, and any Coupons
appertaining thereto, Outstanding on and after the date the conditions set
forth below are satisfied (hereinafter, "covenant defeasance"). For this
purpose, such covenant defeasance means that, with respect to the Outstanding
Securities of any series, the Issuer may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in such
Section, whether directly or indirectly by reason of any reference elsewhere
herein to such Section or by reason of any reference in such Section to any
other provision herein or in any other document and such omission to comply
shall not constitute an Event of Default under Section 5.1, but the remainder
of this Indenture and such Securities and Coupons shall be unaffected thereby.
The following shall be the conditions to application of this subsection C of
this Section 10.1:
(a) The Issuer has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for,
and dedicated solely to, the benefit of the Holders of the Securities
of such series and Coupons appertaining thereto, (i) cash in an
amount, or (ii) in the case of any series of Securities the payments
on which may only be made in Dollars, U.S. Government Obligations
maturing as to principal and interest at such times and in such
amounts as will insure the availability of cash or (iii) a combination
thereof, sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay (A) the principal and
interest on all Securities of such series and Coupons appertaining
thereto on each date that such principal or interest is due and
payable through final maturity or earlier redemption and (B) any
mandatory sinking fund payments on the day on which such payments are
due and payable in accordance with the terms of the Indenture and the
Securities of such series.
-63-
<PAGE> 72
(b) No Event of Default or event which with notice or lapse
of time or both would become an Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such
deposit or, insofar as subsections 5.1(d) and (e) are concerned, at
any time during the period ending on the 91st day after the date of
such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period).
(c) Such covenant defeasance shall not cause the Trustee to
have a conflicting interest as defined in Section 310(b) of and for
purposes of the Trust Indenture Act of 1939 with respect to any
securities of the Issuer.
(d) Such covenant defeasance shall not result in a breach or
violation of, or constitute a default under, this Indenture or any
other agreement or instrument to which the Issuer is a party or by
which it is bound.
(e) Such covenant defeasance shall not cause any Securities
then listed on any registered national securities exchange under the
Securities Exchange Act of 1934, as amended, to be delisted.
(f) No event or condition shall exist that, pursuant to the
provisions of Section 13.1, would prevent the Issuer from making
payments of the principal of or interest on the Securities of such
series and Coupons appertaining thereto on the date of such deposit or
at any time during the period ending on the 91st day after the date of
such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period).
(g) The Issuer shall have delivered to the Trustee an
Officers' Certificate and Opinion of Counsel to the effect that the
Holders of the Securities of such series and Coupons appertaining
thereto will not recognize income, gain or loss for Federal income tax
purposes as a result of such covenant defeasance and will be subject
to Federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such covenant defeasance
had not occurred.
(h) The Issuer shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to the covenant defeasance
contemplated by this provision have been complied with.
(i) The Issuer has delivered to the Trustee an Opinion of
Counsel to the effect that (x) the trust funds will not be subject to
any rights of holders of Senior Indebtedness,
-64-
<PAGE> 73
including without limitation those arising under Article Thirteen of
this Indenture, and (y) after the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, except that if a court were to rule under
any such law in any case or proceeding that the trust funds remained
property of the Issuer, no opinion is given as to the effect of such
laws on the trust funds except the following: (A) assuming such trust
funds remained in the Trustee's possession prior to such court ruling
to the extent not paid to Holders of Securities of such series and
Coupons appertaining thereto, the Trustee will hold, for the benefit
of such Holders, a valid and perfected security interest in such trust
funds that is not avoidable in bankruptcy or otherwise, (B) such
Holders will be entitled to receive adequate protection of their
interests in such trust funds if such trust funds are used, and (C) no
property, rights in property or other interests granted to the Trustee
or such Holders in exchange for or with respect to any of such funds
will be subject to any prior rights of holders of Senior Indebtedness,
including without limitation those arising under Article Thirteen of
this Indenture.
(j) If the Securities of such series are to be redeemed,
either notice of such redemption shall have been given or the Issuer
shall have given the Trustee irrevocable directions to give notice of
such redemption in the name, and at the expense of the Issuer, under
arrangements satisfactory to the Trustee.
SECTION 10.2 Application by Trustee of Funds Deposited for
Payment of Securities. Subject to Section 10.4, all moneys deposited with the
Trustee (or other trustee) pursuant to Section 10.1 shall be held in trust and
applied by it to the payment, either directly or through any paying agent
(including the Issuer acting as its own paying agent), to the Holders of the
particular Securities of such series and of Coupons appertaining thereto for
the payment or redemption of which such moneys have been deposited with the
Trustee, of all sums due and to become due thereon for principal and interest;
but such money need not be segregated from other funds except to the extent
required by law.
SECTION 10.3 Repayment of Moneys Held by Paying Agent. In
connection with the satisfaction and discharge of this Indenture with respect
to Securities of any series, all moneys then held by any paying agent under the
provisions of this Indenture with respect to such series of Securities shall,
upon demand of the Issuer, 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.
-65-
<PAGE> 74
SECTION 10.4 Return of Moneys Held by Trustee and Paying
Agent Unclaimed for Two Years. Any moneys deposited with or paid to the
Trustee or any paying agent for the payment of the principal of or interest on
any Security of any series or Coupons attached thereto and not applied but
remaining unclaimed for two years after the date upon which such principal or
interest shall have become due and payable, shall, upon the written request of
the Issuer and unless otherwise required by mandatory provisions of applicable
escheat or abandoned or unclaimed property law, be repaid to the Issuer by the
Trustee for such series or such paying agent, and the Holder of the Securities
of such series and of any Coupons appertaining thereto shall, unless otherwise
required by mandatory provisions of applicable escheat or abandoned or
unclaimed property laws, thereafter look only to the Issuer for any payment
which such Holder may be entitled to collect, and all liability of the Trustee
or any paying agent with respect to such moneys shall thereupon cease;
provided, however, that the Trustee or such paying agent, before being required
to make any such repayment with respect to moneys deposited with it for any
payment (a) in respect of Registered Securities of any series, shall at the
expense of the Issuer, mail by first-class mail to Holders of such Securities
at their addresses as they shall appear on the Security register, and (b) in
respect of Unregistered Securities of any series, shall at the expense of the
Issuer cause to be published once, in an Authorized Newspaper in the Borough of
Manhattan, The City of New York and once in an Authorized Newspaper in London
(and if required by Section 3.6, once in an Authorized Newspaper in
Luxembourg), notice, that such moneys remain and that, after a date specified
therein, which shall not be less than 30 days from the date of such mailing or
publication, any unclaimed balance of such money then remaining will be repaid
to the Issuer.
SECTION 10.5 Indemnity for U.S. Government Obligations. The
Issuer 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 10.1 or the principal or interest received in respect of
such obligations.
SECTION 10.6 Excess Funds. The Trustee shall deliver to
the Issuer from time to time upon Issuer Order any U.S. Government Obligations
or money held by it as provided in Section 10.1 which, as expressed in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee (which
may include the applicable such opinion delivered to the Trustee pursuant to
Section 10.1), are then in excess of the amount thereof which then would have
been required to be deposited for the purpose for which such obligations or
money were deposited or received.
-66-
<PAGE> 75
ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
SECTION 11.1 Incorporators, Stockholders, Officers and
Directors of Issuer Exempt from Individual Liability. No recourse under or
upon any obligation, covenant or agreement contained in this Indenture, or in
any Security, or because of any indebtedness evidenced thereby, shall be had
against any incorporator, as such or against any past, present or future
stockholder, officer or director, as such, of the Issuer or of any successor,
either directly or through the Issuer or any successor, under any rule of law,
statute or constitutional provision or by the enforcement of any assessment or
by any legal or equitable proceeding or otherwise, all such liability being
expressly waived and released by the acceptance of the Securities and the
Coupons appertaining thereto by the Holders thereof and as part of the
consideration for the issue of the Securities and the Coupons appertaining
thereto.
SECTION 11.2 Provisions of Indenture for the Sole Benefit of
Parties and Holders of Securities and Coupons. Nothing in this Indenture, in
the Securities or in the Coupons appertaining thereto, expressed or implied,
shall give or be construed to give to any Person, other than the parties hereto
and their successors and the holders of Senior Indebtedness and the Holders of
the Securities or Coupons, if any, any legal or equitable right, remedy or
claim under this Indenture or under any covenant or provision herein contained,
all such covenants and provisions being for the sole benefit of the parties
hereto and their successors, the holders of the Senior Indebtedness and the
Holders of the Securities or Coupons, if any.
SECTION 11.3 Successors and Assigns of Issuer Bound by
Indenture. All the covenants, stipulations, promises and agreements in this
Indenture contained by or in behalf of the Issuer shall bind its successors and
assigns, whether so expressed or not.
SECTION 11.4 Notices and Demands on Issuer, Trustee and
Holders of Securities and Coupons. 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 or Coupons to or on the Issuer may be given or
served by being deposited postage prepaid, first-class mail (except as
otherwise specifically provided herein) addressed (until another address of the
Issuer is filed by the Issuer with the Trustee) to Williams Holdings of
Delaware, Inc., One Williams Center, Tulsa, Oklahoma 74172, Attention: Chief
Financial Officer, with a copy to its General Counsel at the same address. Any
notice, direction, request or demand by the Issuer or any Holder of Securities
or Coupons to or upon the Trustee shall be deemed to have been sufficiently
given or served by being deposited postage prepaid,
-67-
<PAGE> 76
first-class mail (except as otherwise specifically provided herein) addressed
(until another address of the Trustee is filed by the Trustee with the Issuer)
to Citibank, N.A. at its Corporate Trust Office, Attention: Corporate Agency
and Trust.
Where this Indenture provides for notice to Holders of
Registered Securities, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each Holder entitled thereto, at his last address as it
appears in the Security register. In any case where notice to such Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed
with the Trustee, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.
In case, by reason of the suspension of or irregularities in
regular mail service, it shall be impracticable to mail notice to the Issuer
when such notice is required to be given pursuant to any provision of this
Indenture, then any manner of giving such notice as shall be reasonably
satisfactory to the Trustee shall be deemed to be a sufficient giving of such
notice.
SECTION 11.5 Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein. Upon any application or demand by the
Issuer to the Trustee to take any action under any of the provisions of this
Indenture, the Issuer shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent 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, except that in the case of any such application or demand
as to which the furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular application or demand,
no additional certificate or opinion need be furnished.
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 shall include (a) a statement that the
person making such certificate or opinion has read such covenant or condition,
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based, (c) a statement that, in the opinion of such
person, he has made such examination or investigation as is
-68-
<PAGE> 77
necessary to enable him to express an opinion as to whether or not such
covenant or condition has been complied with and (d) a statement as to whether
or not, in the opinion of such person, such condition or covenant has been
complied with.
Any certificate, statement or opinion of an officer of the
Issuer may be based, insofar as it relates to legal matters, upon a certificate
or opinion of or representations by counsel, unless such officer knows that the
certificate or opinion or representations with respect to the matters upon
which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous. Any certificate, statement or opinion of counsel may be based,
insofar as it relates to factual matters or information with respect to which
is in the possession of the Issuer, upon the certificate, statement or opinion
of or representations by an officer or officers of the Issuer, unless such
counsel knows that the certificate, statement or opinion or representations
with respect to the matters upon which his certificate, statement or opinion
may be based as aforesaid are erroneous, or in the exercise of reasonable care
should know that the same are erroneous.
Any certificate, statement or opinion of an officer of the
Issuer or of counsel may be based, insofar as it relates to accounting matters,
upon a certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Issuer, unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with and directed to the Trustee shall contain a statement
that such firm is independent.
SECTION 11.6 Payments Due on Saturdays, Sundays and Holidays.
If the date of maturity of interest on or principal of the Securities of any
series or any Coupons appertaining thereto or the date fixed for redemption or
repayment of any such Security or Coupon shall not be a Business Day, then,
unless otherwise specified pursuant to Section 2.3 with respect to a series of
Securities payment of interest or principal 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 maturity or the date fixed for redemption, and no
interest shall accrue for the period after such date.
SECTION 11.7 Conflict of Any Provision of Indenture with
Trust Indenture Act of 1939. If any provision hereof limits,
-69-
<PAGE> 78
qualifies or conflicts with a provision of the Trust Indenture Act of 1939
which is required under such Act to be a part of and govern this Indenture, the
latter provision shall control. If any provision of this Indenture modifies or
excludes any provision of the Trust Indenture Act of 1939 which may be so
modified or excluded, the latter provision shall be deemed to apply to this
Indenture as so modified or to be excluded, as the case may be.
SECTION 11.8 New York Law to Govern. This Indenture and each
Security and Coupon shall be deemed to be a contract under the laws of the
State of New York, and for all purposes shall be construed in accordance with
the laws of such State, except as may otherwise be required by mandatory
provisions of law.
SECTION 11.9 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 11.10 Effect of Headings. The Article and Section
headings herein and the Table of Contents are for convenience only and shall
not affect the construction hereof.
SECTION 11.11 Securities in a Foreign Currency or in ECU.
Unless otherwise specified in an Officers' Certificate delivered pursuant to
Section 2.3 of this Indenture with respect to a particular series of
Securities, whenever for purposes of this Indenture any action may be taken by
the Holders of a specified percentage in aggregate principal amount of
Securities of all series or all series affected by a particular action at the
time Outstanding and, at such time, there are Outstanding Securities of any
series which are denominated in a coin or currency other than Dollars
(including ECUs), then the principal amount of Securities of such series which
shall be deemed to be Outstanding for the purpose of taking such action shall
be that amount of Dollars that could be obtained for such amount at the Market
Exchange Rate in effect on the date of initial issuance of such series. For
purposes of this Section 11.11, Market Exchange Rate shall mean the noon Dollar
buying rate in New York City for cable transfers of that currency as published
by the Federal Reserve Bank of New York; provided, however, in the case of
ECUs, Market Exchange Rate shall mean the rate of exchange determined by the
Commission of the European Communities (or any successor thereto) as published
in the Official Journal of the European Communities (such publication or any
successor publication, the "Journal"). If such Market Exchange Rate is not
available for any reason with respect to such currency, the Trustee shall use,
in its sole discretion and without liability on its part, such quotation of the
Federal Reserve Bank of New York or, in the case of ECUs, the rate of exchange
as published in the Journal, as of the most recent available date, or
quotations or, in the case of ECUs, rates of exchange from one or more major
banks in The City of New York or in the country of issue of the currency in
-70-
<PAGE> 79
question, which for purposes of the ECU shall be Brussels, Belgium, or such
other quotations or, in the case of ECU, rates of exchange as the Trustee shall
deem appropriate. The provisions of this paragraph shall apply in determining
the equivalent principal amount in respect of Securities of a series
denominated in a currency other than Dollars in connection with any action
taken by Holders of Securities pursuant to the terms of this Indenture.
All decisions and determinations of the Trustee regarding the
Market Exchange Rate or any alternative determination provided for in the
preceding paragraph shall be in its sole discretion and shall, in the absence
of manifest error, be conclusive to the extent permitted by law for all
purposes and irrevocably binding upon the Issuer and all Holders.
SECTION 11.12 Judgment Currency. The Issuer agrees, to the
fullest extent that it may effectively do so under applicable law, that (a) if
for the purpose of obtaining judgment in any court it is necessary to convert
the sum due in respect of the principal of or interest on the Securities of any
series (the "Required Currency") into a currency in which a judgment will be
rendered (the "Judgment Currency"), the rate of exchange used shall be the rate
at which in accordance with normal banking procedures the Trustee could
purchase in The City of New York the Required Currency with the Judgment
Currency on the day on which final unappealable judgment is entered, unless
such day is not a New York Banking Day, then, to the extent permitted by
applicable law, the rate of exchange used shall be the rate at which in
accordance with normal banking procedures the Trustee could purchase in The
City of New York the Required Currency with the Judgment Currency on the New
York Banking Day preceding the day on which a final unappealable judgment is
entered, and (b) its obligations under this Indenture to make payments in the
Required Currency (i) shall not be discharged or satisfied by any tender, or
any recovery pursuant to any judgment (whether or not entered in accordance
with subsection (a)), in any currency other than the Required Currency, except
to the extent that such tender or recovery shall result in the actual receipt,
by the payee, of the full amount of the Required Currency expressed to be
payable in respect of such payments, (ii) shall be enforceable as an
alternative or additional cause of action for the purpose of recovering in the
Required Currency the amount, if any, by which such actual receipt shall fall
short of the full amount of the Required Currency so expressed to be payable
and (iii) shall not be affected by judgment being obtained for any other sum
due under this Indenture. For purposes of the foregoing, "New York Banking
Day" means any day except a Saturday, Sunday or a legal holiday in The City of
New York or a day on which banking institutions in The City of New York are
authorized or required by law or executive order to close.
-71-
<PAGE> 80
ARTICLE TWELVE
REDEMPTION OF SECURITIES AND SINKING FUNDS
SECTION 12.1 Applicability of Article. The provisions of
this Article shall be applicable to the Securities of any series which are
redeemable before their maturity or to any sinking fund for the retirement of
Securities of a series except as otherwise specified as contemplated by Section
2.3 for Securities of such series.
SECTION 12.2 Notice of Redemption; Partial Redemptions.
Notice of redemption to the Holders of Registered Securities of any series to
be redeemed as a whole or in part at the option of the Issuer shall be given by
mailing notice of such redemption by first class mail, postage prepaid, at
least 30 days and not more than 60 days prior to the date fixed for redemption
to such Holders of Securities of such series at their last addresses as they
shall appear upon the registry books. Notice of redemption to the Holders of
Unregistered Securities to be redeemed as a whole or in part, who have filed
their names and addresses with the Trustee pursuant to Section 4.4(c)(ii),
shall be given by mailing notice of such redemption, by first class mail,
postage prepaid, at least 30 days and not more than 60 prior to the date fixed
for redemption, to such Holders at such addresses as were so furnished to the
Trustee (and, in the case of any such notice given by the Issuer, the Trustee
shall make such information available to the Issuer for such purpose). Notice
of redemption to all other Holders of Unregistered Securities shall be
published in an Authorized Newspaper in the Borough of Manhattan, The City of
New York and in an Authorized Newspaper in London (and, if required by Section
3.6, in an Authorized Newspaper in Luxembourg), in each case, once in each of
three successive calendar weeks, the first publication to be not less than 30
nor more than 60 days prior to the date fixed for redemption. Any notice which
is mailed in the manner herein provided shall be conclusively presumed to have
been duly given, whether or not the Holder receives the notice. Failure to
give notice by mail, or any defect in the notice to the Holder of any Security
of a series designated for redemption as a whole or in part shall not affect
the validity of the proceedings for the redemption of any other Security of
such series.
The notice of redemption to each such Holder shall specify the
principal amount of each Security of such series held by such Holder to be
redeemed, the date fixed for redemption, the redemption price, the numbers of
the certificate for such Security being redeemed, the place or places of
payment, that payment will be made upon presentation and surrender of such
Securities and, in the case of Securities with Coupons attached thereto, of all
Coupons appertaining thereto maturing after the date fixed for redemption, that
such redemption is pursuant to the mandatory or
-72-
<PAGE> 81
optional sinking fund, or both, if such be the case, that interest accrued to
the date fixed for redemption will be paid as specified in such notice and that
on and after said date interest thereon or on the portions thereof to be
redeemed will cease to accrue. In case any Security of a series is to be
redeemed in part only the notice of redemption shall state the portion of the
principal amount thereof to be redeemed and shall state that on and after the
date fixed for redemption, upon surrender of such Security, a new Security or
Securities of such series in principal amount equal to the unredeemed portion
thereof will be issued.
The notice of redemption of Securities of any series to be
redeemed at the option of the Issuer shall be given by the Issuer or, at the
Issuer's request, by the Trustee in the name and at the expense of the Issuer.
On or before the redemption date specified in the notice of
redemption given as provided in this Section, provided, in the case of bearer
Securities, deposit will be made at least 1 Business Day prior to the payment
date, the Issuer will deposit with the Trustee or with one or more paying
agents (or, if the Issuer is acting as its own paying agent, set aside,
segregate and hold in trust as provided in Section 3.4) an amount of money
sufficient to redeem on the redemption date all the Securities of such series
so called for redemption at the appropriate redemption price, together with
accrued interest to the date fixed for redemption. The Issuer will deliver to
the Trustee at least 70 days prior to the date fixed for redemption an
Officers' Certificate stating the aggregate principal amount of Securities to
be redeemed. In case of a redemption at the election of the Issuer prior to
the expiration of any restriction on such redemption, the Issuer shall deliver
to the Trustee, prior to the giving of any notice of redemption to Holders
pursuant to this Section, an Officers' Certificate stating that such
restriction has been complied with.
If less than all the Securities of a series are to be
redeemed, the Trustee shall select, in such manner as it shall deem appropriate
and fair, Securities of such series to be redeemed in whole or in part.
Securities may be redeemed in part in multiples equal to the minimum authorized
denomination for Securities of such series or any multiple thereof. The
Trustee shall promptly notify the Issuer in writing of the Securities of such
series selected for redemption and, in the case of any Securities of such
series selected for partial redemption, the principal amount thereof to be
redeemed. For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities of any series
shall relate, in the case of any Security redeemed or to be redeemed only in
part, to the portion of the principal amount of such Security which has been or
is to be redeemed.
-73-
<PAGE> 82
SECTION 12.3 Payment of Securities Called for Redemption. If
notice of redemption has been given as above provided, the Securities or
portions of Securities specified in such notice shall become due and payable on
the date and at the place stated in such notice at the applicable redemption
price, together with interest accrued to the date fixed for redemption, and on
and after said date (unless the Issuer shall default in the payment of such
Securities at the redemption price, together with interest accrued to said
date) interest on the Securities or portions of Securities so called for
redemption shall cease to accrue, and the unmatured Coupons, if any,
appertaining thereto shall be void, and, except as provided in Sections 6.5 and
10.4, such Securities shall cease from and after the date fixed for redemption
to be entitled to any benefit or security under this Indenture, and the Holders
thereof shall have no right in respect of such Securities except the right to
receive the redemption price thereof and unpaid interest to the date fixed for
redemption. On presentation and surrender of such Securities at a place of
payment specified in said notice, together with all Coupons, if any,
appertaining thereto maturing after the date fixed for redemption, said
Securities or the specified portions thereof shall be paid and redeemed by the
Issuer at the applicable redemption price, together with interest accrued
thereon to the date fixed for redemption; provided that payment of interest
becoming due on or prior to the date fixed for redemption shall be payable in
the case of Securities with Coupons attached thereto, to the Holders of the
Coupons for such interest upon surrender thereof, and in the case of Registered
Securities, to the Holders of such Registered Securities registered as such on
the relevant record date subject to the terms and provisions of Sections 2.3
and 2.7 hereof.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal shall, until paid or duly
provided for, bear interest from the date fixed for redemption at the rate of
interest or Yield to Maturity (in the case of an Original Issue Discount
Security) borne by such Security.
If any Security with Coupons attached thereto is surrendered
for redemption and is not accompanied by all appurtenant Coupons maturing after
the date fixed for redemption, the surrender of such missing Coupon or Coupons
may be waived by the Issuer and the Trustee, if there be furnished to each of
them such security or indemnity as they may require to save each of them
harmless.
Upon presentation of any Security redeemed in part only, the
Issuer shall execute and the Trustee shall authenticate and deliver to or on
the order of the Holder thereof, at the expense of the Issuer, a new Security
or Securities of such series, of authorized denominations, in principal amount
equal to the unredeemed portion of the Security so presented.
-74-
<PAGE> 83
SECTION 12.4 Exclusion of Certain Securities from Eligibility
for Selection for Redemption. Securities shall be excluded from eligibility
for selection for redemption if they are identified by registration and
certificate number in an Officers' Certificate delivered to the Trustee at
least 40 days prior to the last date on which notice of redemption may be given
as being owned of record and beneficially by, and not pledged or hypothecated
by either (a) the Issuer or (b) an entity specifically identified in such
written statement as directly or indirectly controlling or controlled by or
under direct or indirect common control with the Issuer.
SECTION 12.5 Mandatory and Optional Sinking Funds. The
minimum amount of any sinking fund payment provided for by the terms of the
Securities of any series is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
terms of the Securities of any series is herein referred to as an "optional
sinking fund payment". The date on which a sinking fund payment is to be made
is herein referred to as the "sinking fund payment date".
In lieu of making all or any part of any mandatory sinking
fund payment with respect to any series of Securities in cash, the Issuer may
at its option (a) deliver to the Trustee Securities of such series theretofore
purchased or otherwise acquired (except upon redemption pursuant to the
mandatory sinking fund) by the Issuer or receive credit for Securities of such
series (not previously so credited) theretofore purchased or otherwise acquired
(except as aforesaid) by the Issuer and delivered to the Trustee for
cancellation pursuant to Section 2.10, (b) receive credit for optional sinking
fund payments (not previously so credited) made pursuant to this Section, or
(c) receive credit for Securities of such series (not previously so credited)
redeemed by the Issuer through any optional redemption provision contained in
the terms of such series. Securities so delivered or credited shall be
received or credited by the Trustee at the sinking fund redemption price
specified in such Securities.
On or before the 60th day next preceding each sinking fund
payment date for any series, the Issuer will deliver to the Trustee an
Officers' Certificate (which need not contain the statements required by
Section 11.5) (a) specifying the portion of the mandatory sinking fund payment
to be satisfied by payment of cash and the portion to be satisfied by credit of
Securities of such series and the basis for such credit, (b) stating that none
of the Securities of such series has theretofore been so credited, (c) stating
that no defaults in the payment of interest or Events of Default with respect
to such series have occurred (which have not been waived or cured) and are
continuing and (d) stating whether or not the Issuer intends to exercise its
right to make an optional sinking fund payment with respect to such series and,
if so, specifying the amount of such optional sinking fund payment which
-75-
<PAGE> 84
the Issuer intends to pay on or before the next succeeding sinking fund payment
date. Any Securities of such series to be credited and required to be
delivered to the Trustee in order for the Issuer to be entitled to credit
therefor as aforesaid which have not theretofore been delivered to the Trustee
shall be delivered for cancellation pursuant to Section 2.10 to the Trustee
with such Officers' Certificate (or reasonably promptly thereafter if
acceptable to the Trustee). Such Officers' Certificate shall be irrevocable
and upon its receipt by the Trustee the Issuer shall become unconditionally
obligated to make all the cash payments or payments therein referred to, if
any, on or before the next succeeding sinking fund payment date. Failure of
the Issuer, on or before any such 60th day, to deliver such Officers'
Certificate and Securities specified in this paragraph, if any, shall not
constitute a default but shall constitute, on and as of such date, the
irrevocable election of the Issuer (i) that the mandatory sinking fund payment
for such series due on the next succeeding sinking fund payment date shall be
paid entirely in cash without the option to deliver or credit Securities of
such series in respect thereof and (ii) that the Issuer will make no optional
sinking fund payment with respect to such series as provided in this Section.
If the sinking fund payment to be made in cash on the next
succeeding sinking fund payment date plus any unused balance of any preceding
sinking fund payments made in cash shall be $50,000 (or the equivalent thereof
in any Foreign Currency or ECU) or less, the Trustee, unless requested by the
Issuer, shall not give the next succeeding notice of the redemption of
Securities of such series through the operation of the sinking fund.The amount
of any sinking fund payments not so applied or allocated to the redemption of
Securities of such series shall be added to the next cash sinking fund payment
for such series and, together with such payment, shall be applied in accordance
with the provisions of this Section. Any and all sinking fund moneys held on
the stated maturity date of the Securities of any particular series (or
earlier, if such maturity is accelerated), which are not held for the payment
or redemption of particular Securities of such series shall be applied,
together with other moneys, if necessary, sufficient for the purpose, to the
payment of the principal of, and interest on, the Securities of such series at
maturity.
On or before each sinking fund payment date, the Issuer shall
pay to the Trustee in cash or shall otherwise provide for the payment of all
interest accrued to the date fixed for redemption on Securities to be redeemed
on such sinking fund payment date, provided that, in the case of bearer
Securities, such payment shall be made to the Trustee at least the Business Day
prior to the sinking fund payment date.
The Trustee shall not redeem or cause to be redeemed any
Securities of a series with sinking fund moneys or give any notice
-76-
<PAGE> 85
of redemption of Securities for such series by operation of the sinking fund
during the continuance of a default in payment of interest on such Securities
or of any Event of Default except that, where the giving of notice of
redemption of any Securities shall theretofore have been made, the Trustee
shall redeem or cause to be redeemed such Securities, provided that it shall
have received from the Issuer a sum sufficient for such redemption. Except as
aforesaid, any moneys in the sinking fund for such series at the time when any
such default or Event of Default shall occur, and any moneys thereafter paid
into the sinking fund, shall, during the continuance of such default or Event
of Default, be deemed to have been collected under Article Five and held for
the payment of all such Securities. In case such Event of Default shall have
been waived as provided in Section 5.10 or the default cured on or before the
sixtieth day preceding the sinking fund payment date in any year, such moneys
shall thereafter be applied on the next succeeding sinking fund payment date in
accordance with this Section to the redemption of such Securities.
-77-
<PAGE> 86
ARTICLE THIRTEEN
SUBORDINATION
SECTION 13.1 Securities and Coupons Subordinated to Senior
Indebtedness. The Issuer covenants and agrees, and each Holder of a Security
or Coupon, by his acceptance thereof, likewise covenants and agrees, that the
indebtedness represented by the Securities and any Coupons and the payment of
the principal of and interest on each and all of the Securities and of any
Coupons is hereby expressly subordinated, to the extent and in the manner
hereinafter set forth, in right of payment to the prior payment in full of
Senior Indebtedness.
In the event (a) of any insolvency or bankruptcy proceedings
or any receivership, liquidation, reorganization or other similar proceedings
in respect of the Issuer or a substantial part of its property, or of any
proceedings for liquidation, dissolution or other winding up of the Issuer,
whether or not involving insolvency or bankruptcy, or (b) subject to the
provisions of Section 13.2 that (i) a default shall have occurred with respect
to the payment of principal of or interest on or other monetary amounts due and
payable on any Senior Indebtedness, or (ii) there shall have occurred an event
of default (other than a default in the payment of principal or interest or
other monetary amounts due and payable) in respect of any Senior Indebtedness,
as defined therein or in the instrument under which the same is outstanding,
permitting the holder or holders thereof to accelerate the maturity thereof
(with notice or lapse of time, or both), and such event of default shall have
continued beyond the period of grace, if any, in respect thereof, and, in the
cases of subclauses (i) and (ii) of this clause (b), such default or event of
default shall not have been cured or waived or shall not have ceased to exist,
or (c) that the principal of and accrued interest on the Securities of any
series shall have been declared due and payable pursuant to Section 5.1 and
such declaration shall not have been rescinded and annulled as provided in
Section 5.1, then:
(1) the holders of all Senior Indebtedness shall first be
entitled to receive payment of the full amount due thereon, or
provision shall be made for such payment in money or money's worth,
before the Holders of any of the Securities or Coupons are entitled to
receive a payment on account of the principal of or interest on the
indebtedness evidenced by the Securities or of the Coupons, including,
without limitation, any payments made pursuant to Article Twelve;
(2) any payment by, or distribution of assets of, the Issuer
of any kind or character, whether in cash, property or securities, to
which the Holders of any of the Securities or Coupons or the Trustee
would be entitled except for the
-78-
<PAGE> 87
provisions of this Article shall be paid or delivered by the person
making such payment or distribution, whether a trustee in bankruptcy,
a receiver or liquidating trustee or otherwise, directly to the
holders of such Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture
under which any instruments evidencing any of such Senior Indebtedness
may have been issued, ratably according to the aggregate amounts
remaining unpaid on account of such Senior Indebtedness held or
represented by each, to the extent necessary to make payment in full
of all Senior Indebtedness remaining unpaid after giving effect to any
concurrent payment or distribution (or provision therefor) to the
holders of such Senior Indebtedness, before any payment or
distribution is made to the holders of the indebtedness evidenced by
the Securities or Coupons or to the Trustee under this instrument; and
(3) in the event that, notwithstanding the foregoing, any
payment by, or distribution of assets of, the Issuer of any kind or
character, whether in cash, property or securities, in respect of
principal of or interest on the Securities or in connection with any
repurchase by the Issuer of the Securities, shall be received by the
Trustee or the Holders of any of the Securities or Coupons before all
Senior Indebtedness is paid in full, or provision made for such
payment in money or money's worth, such payment or distribution in
respect of principal of or interest on the Securities or in connection
with any repurchase by the Issuer of the Securities shall be paid over
to the holders of such Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture
under which any instruments evidencing any such Senior Indebtedness
may have been issued, ratably as aforesaid, for application to the
payment of all Senior Indebtedness remaining unpaid until all such
Senior Indebtedness shall have been paid in full, after giving effect
to any concurrent payment or distribution (or provision therefor) to
the holders of such Senior Indebtedness.
Notwithstanding the foregoing, at any time after the
91st day following the date of deposit of cash or, in the case of
Securities payable only in Dollars, U.S. Government Obligations
pursuant to Section 10.1(B) or (C) (provided all other conditions set
out in such Section shall have been satisfied) the funds so deposited
and any interest thereon will not be subject to any rights of holders
of Senior Indebtedness including, without limitation, those arising
under this Article 13.
SECTION 13.2 Disputes with Holders of Certain Senior
Indebtedness. Any failure by the Issuer to make any payment on or perform any
other obligation under Senior Indebtedness, other than
-79-
<PAGE> 88
any indebtedness incurred by the Issuer or assumed or guaranteed, directly or
indirectly, by the Issuer for money borrowed (or any deferral, renewal,
extension or refunding thereof) or any indebtedness or obligation as to which
the provisions of this Section shall have been waived by the Issuer in the
instrument or instruments by which the Issuer incurred, assumed, guaranteed or
otherwise created such indebtedness or obligation, shall not be deemed a
default or event of default under Section 13.1(b) if (i) the Issuer shall be
disputing its obligation to make such payment or perform such obligation and
(ii) either (A) no final judgment relating to such dispute shall have been
issued against the Issuer which is in full force and effect and is not subject
to further review, including a judgment that has become final by reason of the
expiration of the time within which a party may seek further appeal or review,
and (B) in the event of a judgment that is subject to further review or appeal
has been issued, the Issuer shall in good faith be prosecuting an appeal or
other proceeding for review and a stay of execution shall have been obtained
pending such appeal or review.
SECTION 13.3 Subrogation. Subject to the payment in full of
all Senior Indebtedness, the Holders of the Securities and any Coupons shall be
subrogated (equally and ratably with the holders of all obligations of the
Issuer which by their express terms are subordinated to Senior Indebtedness of
the Issuer to the same extent as the Securities are subordinated and which are
entitled to like rights of subrogation) to the rights of the holders of Senior
Indebtedness to receive payments or distributions of cash, property or
securities of the Issuer applicable to the Senior Indebtedness until all
amounts owing on the Securities and any Coupons shall be paid in full, and as
between the Issuer, its creditors other than holders of such Senior
Indebtedness and the Holders, no such payment or distribution made to the
holders of Senior Indebtedness by virtue of this Article that otherwise would
have been made to the Holders shall be deemed to be a payment by the Issuer on
account of such Senior Indebtedness, it being understood that the provisions of
this Article are and are intended solely for the purpose of defining the
relative rights of the Holders, on the one hand, and the holders of Senior
Indebtedness, on the other hand.
SECTION 13.4 Obligation of Issuer Unconditional. Nothing
contained in this Article or elsewhere in this Indenture or in the Securities
or any Coupons is intended to or shall impair, as among the Issuer, its
creditors other than the holders of Senior Indebtedness and the Holders, the
obligation of the Issuer, which is absolute and unconditional, to pay to the
Holders the principal of and interest on the Securities and the amounts owed
pursuant to any Coupons 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 and creditors of the Issuer other than the holders of
Senior Indebtedness, nor shall anything herein
-80-
<PAGE> 89
or therein prevent the Trustee or any Holder from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture,
subject to the rights, if any, under this Article of the holders of Senior
Indebtedness in respect of cash, property or securities of the Issuer received
upon the exercise of any such remedy.
Upon payment or distribution of assets of the Issuer referred
to in this Article, the Trustee and the Holders shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction in which any
such dissolution, winding up, liquidation or reorganization proceeding
affecting the affairs of the Issuer is pending or upon a certificate of the
trustee in bankruptcy, receiver, assignee for the benefit of creditors,
liquidating trustee or agent or other person making any payment or
distribution, delivered to the Trustee or to the Holders, for the purpose of
ascertaining the persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Issuer, the amount thereof or payable thereon, the amount paid or
distributed thereon and all other facts pertinent thereto or to this Article.
SECTION 13.5 Payments on Securities and Coupons Permitted.
Nothing contained in this Article or elsewhere in this Indenture or in the
Securities or Coupons shall affect the obligations of the Issuer to make, or
prevent the Issuer from making, payment of the principal of or interest on the
Securities and of any Coupons in accordance with the provisions hereof and
thereof, except as otherwise provided in this Article.
SECTION 13.6 Effectuation of Subordination by Trustee. Each
holder of Securities or Coupons, by his acceptance thereof, authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes.
SECTION 13.7 Knowledge of Trustee. Notwithstanding the
provisions of this Article or any other provisions 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 moneys to or by the Trustee, or the
taking of any other action by the Trustee, unless and until the Trustee shall
have received written notice thereof mailed or delivered to the Trustee at its
Corporate Trust Office from the Issuer, any Holder, any paying agent or the
holder or representative of any class of Senior Indebtedness; provided that if
at least three Business Days prior to the date upon which by the terms hereof
any such moneys may become payable for any purpose (including, without
limitation, the payment of the principal or interest on any Security or
interest on any Coupon) the Trustee shall not have received with respect to
such moneys the notice provided for in this Section, then, anything
-81-
<PAGE> 90
herein contained to the contrary notwithstanding, the Trustee shall have full
power and authority to receive such moneys and to apply the same to the purpose
for which they were received and shall not be affected by any notice to the
contrary that may be received by it within three Business Days prior to or on
or after such date.
SECTION 13.8 Trustee May Hold Senior Indebtedness. The
Trustee shall be entitled to all the rights set forth in this Article with
respect to any Senior Indebtedness at the time held by it, to the same extent
as any other holder of Senior Indebtedness, and nothing in Section 6.3 or
elsewhere in this Indenture shall deprive the Trustee of any of its rights as
such holder.
SECTION 13.9 Rights of Holders of Senior Indebtedness Not
Impaired. No right of any present or future holder of any Senior Indebtedness
to enforce the subordination herein shall at any time or in any way be
prejudiced or impaired by any act or failure to act on the part of the Issuer
or by any noncompliance by the Issuer with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof any such holder may have
or be otherwise charged with.
With respect to the holders of Senior Indebtedness, (i) the
duties and obligations of the Trustee shall be determined solely by the express
provisions of this Indenture, (ii) the Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set forth in
this Indenture, (iii) no implied covenants or obligations shall be read into
this Indenture against the Trustee and (iv) the Trustee shall not be deemed to
be a fiduciary as to such holders.
SECTION 13.10 Article Applicable to Paying Agents. In case at
any time any paying agent other than the Trustee shall have been appointed by
the Issuer and be then acting hereunder, the term "Trustee" as used in this
Article shall in such case (unless the context shall require otherwise) 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, provided, however, that
Sections 13.7 and 13.8 shall not apply to the Issuer if it acts as its own
paying agent.
SECTION 13.11 Trustee; Compensation Not Prejudiced. Nothing
in this Article shall apply to claims of, or payments to, the Trustee pursuant
to Section 6.6.
-82-
<PAGE> 91
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of ____________, 199__.
WILLIAMS HOLDINGS OF DELAWARE, INC.
By _________________________________
Title:
[CORPORATE SEAL]
Attest:
By _________________________
Title:
CITIBANK, N.A.
TRUSTEE
By _________________________________
Title:
[CORPORATE SEAL]
Attest:
By _________________________
Title:
-83-
<PAGE> 92
STATE OF OKLAHOMA )
) ss.:
COUNTY OF TULSA )
On this ____ of ________, 199__ before me personally came
, to me personally known, who, being by me duly sworn, did depose and
say that he is the of Williams Holdings of Delaware, Inc.,
one of the corporations described in and which executed the above instrument;
that he knows the corporate seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by authority of
the Board of Directors of said corporation, and that he signed his name thereto
by like authority.
[NOTARIAL SEAL]
________________________________
Notary Public
STATE OF )
) ss.:
COUNTY OF ____________ )
On this ____ of _________, 199__ before me personally came
, to me personally known, who, being by me duly sworn, did depose and
say that he is a ____________________ of Citibank, N.A., one of the corporations
described in and which executed the above instrument; that he knows the
corporate seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
[NOTARIAL SEAL]
________________________________
Notary Public
-84-
<PAGE> 1
EXHIBIT 4.3
Floating Rate Senior Note
REGISTERED REGISTERED
No. FLR Cusip
Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the issuer or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co. or
such other name as requested by an authorized representative of The Depository
Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since
the registered owner hereof, Cede & Co., has an interest herein.*
IF APPLICABLE, THE "TOTAL AMOUNT OF OID",
"ORIGINAL YIELD TO MATURITY" AND "INITIAL
ACCRUAL PERIOD OID" (COMPUTED UNDER THE
APPROXIMATE METHOD) SET FORTH BELOW HAS
BEEN COMPLETED SOLELY FOR THE PURPOSES OF
APPLYING THE FEDERAL INCOME TAX ORIGINAL
ISSUE DISCOUNT ("OID") RULES.
WILLIAMS HOLDINGS OF DELAWARE, INC.
SENIOR MEDIUM-TERM NOTE
(Floating Rate)
<TABLE>
<S> <C> <C>
BASE RATE: ORIGINAL ISSUE DATE: MATURITY DATE:
APPLICABILITY OF MODIFIED INTEREST ACCRUAL DATE: INTEREST PAYMENT DATES:
FOLLOWING BANKING DAY CONVENTION:
INITIAL INTEREST DATE: INTEREST RESET PERIOD:
INITIAL INTEREST RESET DATE: INTEREST RESET DATES:
INDEX MATURITY:
</TABLE>
___________
* Applies only if this Note is a Registered Global Security.
<PAGE> 2
<TABLE>
<S> <C> <C>
SPREAD (PLUS OR MINUS): MAXIMUM INTEREST RATE: MINIMUM INTEREST RATE:
ALTERNATE RATE EVENT SPREAD: INITIAL REDEMPTION DATE: SPECIFIED CURRENCY:
TOTAL AMOUNT OF OID:
SPREAD MULTIPLIER: INITIAL REDEMPTION PERCENTAGE: ORIGINAL YIELD TO MATURITY:
INITIAL REPAYMENT DATE: ANNUAL REDEMPTION PERCENTAGE INITIAL ACCRUAL PERIOD OID:
REDUCTION:
INITIAL REPAYMENT PERCENTAGE:
ANNUAL REPAYMENT PERCENTAGE
REDUCTION:
</TABLE>
TRUSTEE'S [AND/OR AUTHENTICATING AGENT'S] CERTIFICATE[S] OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Senior
Indenture.
Citibank, N.A.,
as Trustee
By:__________________________
Authorized Officer
[___________________________,
as Authenticating Agent
By:__________________________
Authorized Officer]
2
<PAGE> 3
Williams Holdings of Delaware, Inc., a Delaware corporation (the
"Issuer"), for value received, hereby promises to pay to
, or registered assignees, the principal sum of
on the Maturity Date specified above, (except to the extent redeemed or repaid
prior to the Maturity Date) and to pay interest thereon, from the Original
Issue Date specified above at a rate per annum equal to the Initial Interest
Rate specified above until the Initial Interest Reset Date specified above, and
thereafter at a rate per annum determined in accordance with the provisions
specified on the reverse hereof until the principal hereof is paid or duly made
available for payment. The Issuer will pay interest in arrears monthly,
quarterly, semiannually or annually as specified above as the Interest Payment
Period on each Interest Payment Date (as specified above), commencing with the
first Interest Payment Date next succeeding the Original Issue Date specified
above, and on the Maturity Date (or any redemption or repayment date);
provided, however, that if the Original Issue Date occurs between a Record
Date, as defined below, and the next succeeding Interest Payment Date, interest
payments will commence on the second Interest Payment Date succeeding the
Original Issue Date to the registered holder of this Note on the Record Date
with respect to such second Interest Payment Date; and provided, further, that
if an Interest Payment Date or the Maturity Date or redemption or repayment
date would fall on a day that is not a Business Day, as defined on the reverse
hereof, such Interest Payment Date, Maturity Date or redemption or repayment
date shall be the following day that is a Business Day, except that if the
Modified Following Banking Day Convention is specified above as applicable and
such next Business Day falls in the next calendar month, the Interest Payment
Date, Maturity Date or redemption or repayment date shall be the immediately
preceding day that is a Business Day.
Interest on this Note will accrue from the most recent Interest
Payment Date to which interest has been paid or duly provided for or, if no
interest has been paid or duly provided for, from the Original Issue Date or,
if the Interest Reset Period specified above is daily or weekly, from, and
including, the date hereof (if no interest has been paid on this Note) or from,
and excluding, the last date in respect of which interest has been paid or duly
provided for, as the case may be. The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, subject to certain
exceptions described herein, be paid to the person in whose name this Note (or
one or more predecessor Notes) is registered at the close of business on the
date 15 calendar days prior to an Interest Payment Date (whether or not a
Business Day) (the "Record Date"); provided, however, that interest payable on
the Maturity Date (or any redemption or repayment date)
3
<PAGE> 4
will be payable to the person to whom the principal hereof shall be payable.
Payment of the principal of this Note, any premium and the
interest due at the Maturity Date (or any redemption or repayment date) will be
made in immediately available funds upon surrender of this Note at the office
or agency of the Trustee, as defined on the reverse hereof, maintained for that
purpose in the Borough of Manhattan, The City of New York, or at such other
paying agency as the Issuer may determine. Payment of the principal of and
premium, if any, and interest on this Note will be made in such coin or
currency of the United States of America or in a Specified Currency other than
U.S. dollars as indicated herein as at the time of payment is legal tender for
payment of public and private debts; provided, however, that U.S. dollar
payments of interest, other than interest due at maturity or any date of
redemption or repayment, will be made by United States dollar check mailed to
the address of the person entitled thereto as such address shall appear in the
Note register. A holder of U.S. $10,000,000 or more in aggregate principal
amount of Notes having the same Interest Payment Date will be entitled to
receive payments of interest, other than interest due at maturity or any date
of redemption or repayment, by wire transfer of immediately available funds if
appropriate wire transfer instructions in writing have been received by the
Trustee not less than 15 calendar days prior to the applicable Interest Payment
Date. Payments of interest on Notes in a Specified Currency other than U.S.
dollars will be made by wire transfer of immediately available funds to an
account maintained by the holder with a bank located outside the United States,
and the holder of such Notes shall provide the Trustee with the appropriate
wire transfer instructions.
Reference is hereby made to the further provisions of this Note
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed
by the Trustee or by the Authenticating Agent, referred to on the reverse
hereof, by manual signature, this Note shall not be entitled to any benefit
under the Senior Indenture, as defined on the reverse hereof, or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed under its corporate seal.
DATED: WILLIAMS HOLDINGS OF DELAWARE, INC.
By: ________________________________
Title:
4
<PAGE> 5
This Note is one of the duly authorized issue of Senior
Medium-Term Notes having maturities more than nine months from the date of
issue (the "Notes") of the Issuer. The Notes are issuable under a Senior
Indenture, dated as of ________________, 199__ (herein called the "Senior
Indenture") between the Issuer and Citibank, N.A., as Trustee (herein called
the "Trustee", which term includes any successor trustee under the Senior
Indenture), to which Senior Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities of the Issuer, the Trustee and holders of the
Notes and the terms upon which the Notes are, and are to be, authenticated and
delivered. The terms of individual Notes may vary with respect to interest
rates, interest rate formulas, issue dates, maturity dates, or otherwise, all
as provided in the Senior Indenture. To the extent not inconsistent herewith,
the terms of the Senior Indenture are hereby incorporated by reference herein.
Unless otherwise indicated on the face of this Note, this Note may
not be redeemed prior to the Maturity Date. If so indicated on the face of
this Note, this Note may be redeemed at the option of the Issuer, on or after a
specified date or dates prior to the Maturity Date on the terms set forth on
the face hereof, together with interest accrued and unpaid thereon to the date
of redemption. Notice of redemption shall be mailed to the registered holders
of the Notes designated for redemption at their addresses as the same shall
appear on the Note register not less than 30 nor more than 60 days prior to the
date fixed for redemption, subject to all the conditions and provisions of the
Senior Indenture. In the event of redemption of this Note in part only, a new
Note or Notes for the amount of the unredeemed portion hereof shall be issued
in the name of the holder hereof upon the cancellation hereof.
Unless otherwise indicated on the face of this Note, this Note may
not be repaid prior to the Maturity Date. If so indicated on the face of this
Note, this Note may be subject to repayment at the option of the holder, on or
after a specified date or dates prior to the Maturity Date on the terms set
forth on the face hereof, together with interest accrued and unpaid thereon to
the date of repayment. For this Note to be repaid in whole or in part at the
option of the holder hereof, the Trustee must receive not less than 30 or more
than 45 days prior to the Repayment Date (i) the Note with the form entitled
"Option to Elect Repayment" below duly completed or (ii) a telegram, telex,
facsimile transmission or a letter from a member of a national securities
exchange or the National Association of Securities Dealers, Inc. or a
commercial bank or a trust company in the United States of America setting
forth the name of the holder of this Note, the principal amount hereof, the
certificate number of this Note or a description of the Note's tenor or terms,
the principal amount hereof to be prepaid, a statement that the option to elect
repayment is being exercised thereby and a guarantee that this Note with the
form entitled
5
<PAGE> 6
"Option to Elect Repayment" below duly completed will be received by the
Trustee no later than five Business Days after the date of such telegram,
telex, facsimile transmission or letter and this Note and form duly completed
are received by the Trustee by such fifth Business Day. Exercise of such
repayment option shall be irrevocable. Such option may be exercised by the
holder for less than the entire principal amount hereof provided that the
principal amount remaining outstanding after repayment is at least $100,000 or
any larger amount that is an integral multiple of $1,000. In the event of
repayment of this Note in part only, a new Note or Notes for the amount of the
portion hereof that is not repaid shall be issued in the name of the holder
hereof upon the cancellation hereof.
This Note will bear interest at the rate determined in accordance
with the applicable provisions below by reference to the Base Rate shown on the
face hereof based on the Index Maturity, if any, shown on the face hereof (i)
plus or minus the Spread, if any, or (ii) multiplied by the Spread Multiplier,
if any, specified on the face hereof. Commencing with the Initial Interest
Reset Date specified on the face hereof, the rate at which interest on this
Note is payable shall be reset as of each Interest Reset Date (as used herein,
the term "Interest Reset Date" shall include the Initial Interest Reset Date).
The Interest Reset Dates will be the Interest Reset Dates specified on the face
hereof; provided, however, that (i) the interest rate in effect for the period
from the Original Issue Date to the Initial Interest Reset Date specified on
the face hereof will be the Initial Interest Rate, (ii) the interest rate in
effect hereon for the 15 days immediately prior to the Maturity Date hereof
(or, with respect to any principal amount to be redeemed or repaid, any
redemption or repayment date) shall be that in effect on the 15th day preceding
the Maturity Date hereof or such date of redemption or repayment, as the case
may be, and (iii) if any Note is issued between a Record Date and the related
Interest Payment Dates, and such Note has daily or weekly Interest Reset Dates,
then notwithstanding the fact that an Interest Reset Date may occur prior to
such Interest Payment Date, the Initial Interest Rate set forth on the face
hereof shall remain in effect through the first Interest Reset Date occurring
on or subsequent to such Interest Payment Date. If any Interest Reset Date
would otherwise be a day that is not a Business Day, such Interest Reset Date
shall be postponed to the next succeeding day that is a Business Day, except
that in the event the Modified Following Banking Date Convention is specified
on the face hereof as applicable and such Business Day is in the next
succeeding calendar month, such Interest Reset Date shall be the next preceding
Business Day. As used herein, "Business Day" means any day, other than a
Saturday or Sunday, and that is neither a legal holiday nor a day on which
banking institutions are authorized or required by law or regulation to close
in The City of New York and (i) with respect to Notes denominated in a
Specified Currency other than U.S. dollars or European Currency Units ("ECUs"),
in the capital city of the country of the Specified
6
<PAGE> 7
Currency, (ii) with respect to Notes denominated in ECUs, in Brussels, Belgium
and (iii) with respect to Notes bearing interest calculated by reference to
LIBOR, in the City of London.
The Interest Determination Date pertaining to an Interest Reset
Date for Notes bearing interest calculated by reference to the CD Rate,
Commercial Paper Rate, Federal Funds Rate and Prime Rate will be the second
Business Day next preceding such Interest Reset Date. The Interest
Determination Date pertaining to an Interest Reset Date for Notes bearing
interest calculated by reference to LIBOR shall be the second London Business
Day preceding such Interest Reset Date. The Interest Determination Date
pertaining to an Interest Reset Date for Notes bearing interest calculated by
reference to the Treasury Rate shall be the day of the week in which such
Interest Reset Date falls on which Treasury bills normally would be auctioned;
provided, however, that if as a result of a legal holiday an auction is held on
the Friday of the week preceding such Interest Reset Date, the related Interest
Determination Date shall be such preceding Friday; and provided, further, that
if an auction shall fall on any Interest Reset Date, then the Interest Reset
Date shall instead be the first Business Day following the date of such
auction.
The "Calculation Date" pertaining to any Interest Determination
Date will be the earlier of the tenth calendar day after such Interest
Determination Date or the next succeeding Record Date after such Interest
Determination Date or, if either such day is not a Business Day, the next
succeeding Business Day.
Determination of CD Rate. If the Base Rate specified on the face
hereof is the CD Rate, the CD Rate with respect to this Note shall be
determined on each Interest Determination Date and shall be the rate on such
date for negotiable certificates of deposit having the Index Maturity specified
on the face hereof as published by the Board of Governors of the Federal
Reserve System in "Statistical Release H.15(519), Selected Interest Rates," or
any successor publication of the Board of Governors of the Federal Reserve
System ("H.15(519)"), under the heading "CDs (Secondary Market)," or, if not so
published by 9:00 A.M., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, the CD Rate will be the rate on such
Interest Determination Date for negotiable certificates of deposit of the Index
Maturity specified on the face hereof as published by the Federal Reserve Bank
of New York in its daily statistical release "Composite 3:30 P.M. Quotations
for U.S. Government Securities" ("Composite Quotations") under the heading
"Certificates of Deposit." If neither of such rates is published by 3:00 P.M.,
New York City time, on such Calculation Date, then the CD Rate on such Interest
Determination Date will be calculated by the Calculation Agent referred to on
the face hereof and will be the arithmetic mean of the secondary market offered
rates as of 10:00 A.M., New York City time, on such Interest Determination
Date, for certificates of deposit in the denomination of $5,000,000 with a
remaining maturity
7
<PAGE> 8
closest to the Index Maturity specified on the face hereof of three leading
nonbank dealers in negotiable U.S. dollar certificates of deposit in The City
of New York selected by the Calculation Agent for negotiable certificates of
deposit of major United States money center banks of the highest credit
standing in the market for negotiable certificates of deposit; provided,
however, that if the dealers selected as aforesaid by the Calculation Agent are
not quoting as mentioned in this sentence, the rate of interest in effect for
the applicable period will be the same as the CD Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset
Period, the rate of interest payable hereon shall be the Initial Interest
Rate).
Determination of Commercial Paper Rate. If the Base Rate
specified on the face hereof is the Commercial Paper Rate, the Commercial Paper
Rate with respect to this Note shall be determined on each Interest
Determination Date and shall be the Money Market Yield (as defined herein) of
the rate on such date for commercial paper having the Index Maturity specified
on the face hereof, as such rate shall be published in H.15(519) under the
heading "Commercial Paper," or if not so published prior to 9:00 A.M., New York
City time, on the Calculation Date pertaining to such Interest Determination
Date, the Commercial Paper Rate shall be the Money Market Yield of the rate on
such Interest Determination Date for commercial paper of the Index Maturity
specified on the face hereof as published in Composite Quotations under the
heading "Commercial Paper." If neither of such rates is published by 3:00
P.M., New York City time, on such Calculation Date, then the Commercial Paper
Rate shall be the Money Market Yield of the arithmetic mean of the offered
rates as of 11:00 A.M., New York City time, on such Interest Determination
Date of three leading dealers in commercial paper in The City of New York
selected by the Calculation Agent for commercial paper of the Index Maturity
specified on the face hereof, placed for an industrial issuer whose bond rating
is "AA," or the equivalent, from a nationally recognized rating agency;
provided, however, that if the dealers selected as aforesaid by the Calculation
Agent are not quoting as mentioned in this sentence, the rate of interest in
effect for the applicable period will be the same as the Commercial Paper Rate
for the immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the rate of interest payable hereon shall be the Initial
Interest Rate).
"Money Market Yield" shall be the yield calculated in accordance
with following formula:
D x 360 X 100
Money Market Yield = -------------
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal and "M" refers to the
actual number of days in the interest period for which interest is being
calculated.
8
<PAGE> 9
Determination of Federal Funds Rate. If the Base Rate specified
on the face hereof is the Federal Funds Rate, the Federal Funds Rate with
respect to this Note shall be determined on each Interest Determination Date
and shall be the rate on such date for Federal Funds as published in H.15(519)
under the heading "Federal Funds (Effective)," or, if not so published by 9:00
A.M., New York City time, on the Calculation Date pertaining to such Interest
Determination Date, the Federal Funds Rate will be the rate on such Interest
Determination Date as published in Composite Quotations under the heading
"Federal Funds/Effective Rate." If neither of such rates is published by 3:00
P.M., New York City time, on such Calculation Date, the Federal Funds Rate for
such Interest Determination Date will be calculated by the Calculation Agent
and will be the arithmetic mean of the rates for the last transaction in
overnight Federal funds as of 11:00 A.M., New York City time, on such Interest
Determination Date arranged by three leading brokers in Federal funds
transactions in The City of New York selected by the Calculation Agent;
provided, however, that if the brokers selected as aforesaid by the Calculation
Agent are not quoting as mentioned in this sentence, the rate of interest in
effect for the applicable period will be the same as the Federal Funds Rate for
the immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the rate of interest payable hereon shall be the Initial
Interest Rate).
Determination of LIBOR. If the Base Rate specified on the face
hereof is LIBOR, LIBOR with respect to this Note shall be determined on each
Interest Determination Date as follows:
(i) As of the Interest Determination Date, the Calculation Agent
shall determine the arithmetic mean of the offered rates for deposits in
United States dollars for the period of the Index Maturity specified on the
face hereof which appear on the Reuters Screen LIBO Page at approximately
11:00 A.M., London time, on such Interest Determination Date. "Reuters
Screen LIBO Page," as used herein, means the display designated as Page
"LIBO" on the Reuters Monitor Money Rate Service (or such other page as may
replace the LIBO page on that service for the purpose of displaying London
interbank offered rates of major banks).
(ii) If fewer than two offered rates appear on the Reuters Screen
LIBO Page, the Calculation Agent will request the principal London offices
of each of four major banks in the London interbank market, as selected by
the Calculation Agent, to provide the Calculation Agent with its offered
quotation for deposits in United States dollars for the period of the Index
Maturity, specified on the face hereof, to prime banks in the London
interbank market at approximately 11:00 A.M., London time, on such Interest
Determination Date and in a principal amount of not less than U.S.
$1,000,000 that is representative for a single transaction in such market
at such time. If at least two such quotations are provided, LIBOR will be
the
9
<PAGE> 10
arithmetic mean of such quotations. If fewer than two quotations are
provided, LIBOR in respect of such Interest Determination Date will be the
arithmetic mean of the rates quoted by three major banks in The City of New
York selected by the Calculation Agent (after consultation with the Issuer)
at approximately 11:00 A.M., New York City Time, on such Interest
Determination Date for loans in U.S. dollars to leading European banks, for
the period of the Index Maturity and in a principal amount of not less than
U.S. $1,000,000 that is representative of a single transaction in such
market at such time; provided, however, that if fewer than three banks
selected as aforesaid by the Calculation Agent are not quoting as mentioned
in this sentence, LIBOR for such Interest Reset Period will be the same as
LIBOR for the immediately preceding Interest Reset Period (or, if there was
no such Interest Reset Period, the rate of interest payable hereon shall be
the Initial Interest Rate).
Determination of Prime Rate. If the Base Rate specified on the
face hereof is the Prime Rate, the Prime Rate with respect to this Note shall
be determined on each Interest Determination Date and shall be the rate set
forth in H.15(519) for such date opposite the caption "Bank Prime Loan." If
such rate is not yet published by 9:00 A.M., New York City time, on the
Calculation Date, the Prime Rate for such Interest Determination Date will be
the arithmetic mean of the rates of interest publicly announced by each bank
named on the Reuters Screen NYMF Page as such bank's prime rate or base lending
rate as in effect for such Interest Determination Date as quoted on the Reuters
Screen NYMF Page on such Interest Determination Date, or, if fewer than four
such rates appear on the Reuters Screen NYMF Page for such Interest
Determination Date, the rate shall be the arithmetic mean of the prime rates
quoted on the basis of the actual number of days in the year divided by 360 as
of the close of business on such Interest Determination Date by at least two of
the three major money center banks in The City of New York selected by the
Calculation Agent from which quotations are requested. If fewer than two
quotations are provided, the Prime Rate shall be calculated by the Calculation
Agent and shall be determined as the arithmetic mean on the basis of the prime
rates in The City of New York by the appropriate number of substitute banks or
trust companies organized and doing business under the laws of the United
States, or any State thereof, in each case having total equity capital of at
least U.S. $500 million and being subject to supervision or examination by
Federal or State authority, selected by the Calculation Agent to quote such
rate or rates.
If in any month or two consecutive months the Prime Rate is not
published in H.15(519) and the banks or trust companies selected as aforesaid
are not quoting as mentioned in the preceding paragraph, the "Prime Rate" for
such Interest Reset Period will be the same as the Prime Rate for the
immediately preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the rate of interest payable hereon shall be the Initial Interest
10
<PAGE> 11
Rate). If this failure continues over three or more consecutive months, the
Prime Rate for each succeeding Interest Determination Date until the maturity
or redemption or repayment of this Note or, if earlier, until this failure
ceases, shall be LIBOR determined as if the Base Rate specified on the face
hereof were LIBOR, and the Spread, if any, shall be the number of basis points
specified on the face hereof as the "Alternative Rate Event Spread."
Determination of Treasury Rate. If the Base Rate specified on the
face hereof is the Treasury Rate, the Treasury Rate with respect to this Note
shall be determined on each Interest Determination Date and shall be the rate
for the auction held on such date of direct obligations of the United States
("Treasury Bills") having the Index Maturity specified on the face hereof, as
published in H.15(519) under the heading "Treasury Bills--auction average
(investment)," or if not so published by 9:00 A.M., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, the auction
average rate on such Interest Determination (expressed as a bond equivalent, on
the basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis) as otherwise announced by the United States Department of the Treasury.
In the event that the results of the auction of Treasury Bills having the Index
Maturity specified on the face hereof are not published or reported as provided
above by 3:00 P.M., New York City time, on such Calculation Date or if no such
auction is held on such Determination Date, then the Treasury Rate shall be
calculated by the Calculation Agent and shall be a yield to maturity (expressed
as a bond equivalent, on the basis of a year of 365 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 P.M., New York City time, on such Interest
Determination Date, of three leading primary United States government
securities dealers selected by the Calculation Agent for the issue of Treasury
Bills with a remaining maturity closest to the Index Maturity specified on the
face hereof; provided, however, that if the dealers selected as aforesaid by
the Calculation Agent are not quoting as mentioned in this sentence, the
Treasury Rate for such Interest Reset Date will be the same as the Treasury
Rate for the immediately preceding Interest Reset Period (or if there was no
such Interest Reset Period, the rate of interest payable hereon shall be the
Initial Interest Rate).
Notwithstanding the foregoing, the interest rate hereon shall not
be greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, specified on the face hereof. The Calculation Agent
shall calculate the interest rate hereon in accordance with the foregoing on or
before each Calculation Date. The interest rate on this Note will in no event
be higher than the maximum rate permitted by New York law, as the same may be
modified by United States Federal law of general application.
11
<PAGE> 12
At the request of the holder hereof, the Calculation Agent will
provide to the holder hereof the interest rate hereon then in effect and, if
determined, the interest rate that will become effective as of the next
Interest Reset Date.
Interest payments on this Note will include interest accrued to
but excluding the Interest Payment Dates or Maturity Date (or any redemption or
repayment date), as the case may be; provided, however, that if the Interest
Reset Period with respect to this Note is daily or weekly, interest payable on
any Interest Payment Date, other than interest payable on any date on which
principal hereof is payable, will include interest accrued through and
including the Record Date next preceding the applicable Interest Payment Date.
Accrued interest hereon shall be an amount calculated by multiplying the face
amount hereof by an accrued interest factor. Such accrued interest factor
shall be computed by adding the interest factor calculated for each day in the
period for which interest is being paid. The interest factor for each such date
shall be computed by dividing the interest rate applicable to such day by 360
if the Base Rate is CD Rate, Commercial Paper Rate, Federal Funds Rate, Prime
Rate or LIBOR, as specified on the face hereof, or by the actual number of days
in the year if the Base Rate is the Treasury Rate, as specified on the face
hereof. All percentages resulting from any calculation of the rate of interest
on this Note will be rounded, if necessary, to the nearest one
hundred-thousandth of a percentage point (.0000001), with five one-millionths
of a percentage point rounded upward, and all dollar amounts used in or
resulting from such calculation on this Note will be rounded to the nearest
cent (with one-half cent rounded upward). The interest rate in effect on any
Interest Reset Date will be the applicable rate as reset on such date. The
interest rate applicable to any other day is the interest rate from the
immediately preceding Interest Reset Date (or, if none, the Initial Interest
Rate).
This Note and all the obligations of the Issuer hereunder are
direct, unsecured obligations of the Issuer and rank without preference or
priority among themselves and pari passu with all other existing and future
unsecured and unsubordinated indebtedness of the Issuer, subject to certain
statutory exceptions in the event of liquidation upon insolvency.
This Note, and any Note or Notes issued upon transfer or exchange
hereof, is issuable only in fully registered form, without coupons, and, if
denominated in U.S. Dollars, is issuable only in denominations of U.S.
$100,000 and any integral multiple of U.S. $1,000 in excess thereof. If this
Note is denominated in a Specified Currency other than U.S. dollars, it is
issuable only in denominations of the equivalent of U.S. $100,000 (rounded down
to an integral multiple of 1,000 units of such Specified Currency), or any
amount in excess thereof which is an integral multiple of 1,000 units of such
Specified Currency, as determined by reference to the noon dollar buying rate
in New York City for cable transfers of
12
<PAGE> 13
such Specified Currency published by the Federal Reserve Bank of New York (the
"Market Exchange Rate") on the Business Day immediately preceding the date of
issuance: provided, however, in the case of ECUs, the Market Exchange Rate
shall be the rate of exchange determined by the Commission of the European
Communities (or any successor thereto) as published in the official Journal of
the European Communities, or any successor publication on the Business Day
immediately preceding the day of issuance.
The Trustee has been appointed registrar for the Notes (the
"Registrar", which term includes any successor registrar appointed by the
Issuer), and the Registrar shall maintain at its office in the Borough of
Manhattan, The City of New York a register for the registration and transfer of
Notes. This Note may be transferred at the aforesaid office of the Registrar
by surrendering this Note for cancellation, accompanied by a written instrument
of transfer in form satisfactory to the Registrar and duly executed by the
registered holder hereof in person or by the holder's attorney duly authorized
in writing, and thereupon the Registrar shall issue in the name of the
transferee or transferees, in exchange herefor, a new Note or Notes having
identical terms and provisions for a like aggregate principal amount in
authorized denominations, subject to the terms and conditions set forth herein;
provided, however, that the Registrar shall not be required (i) to register the
transfer of or exchange any Note that has been called for redemption in whole
or in part, except the unredeemed portion of Notes being redeemed in part, (ii)
to register the transfer of or exchange any Note if the holder thereof has
exercised his right, if any, to require the Issuer to repurchase such Note in
whole or in part, except the portion of such Note not required to be
repurchased, or (iii) to register the transfer of or exchange Notes to the
extent and during the period so provided in the Senior Indenture with respect
to the redemption of Notes. Notes are exchangeable at said office for other
Notes of other authorized denominations of equal aggregate principal amount
having identical terms and provisions. All such exchanges and transfers of
Notes will be free of charge, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge in connection
therewith. All Notes surrendered for exchange or transfer shall be accompanied
by a written instrument of transfer in form satisfactory to the Registrar and
executed by the registered holder in person or by the holder's attorney duly
authorized in writing. The date of registration of any Note delivered upon any
exchange or transfer of Notes shall be such that no gain or loss of interest
results from such exchange or transfer.
In case any Note shall at any time become mutilated, defaced or be
destroyed, lost or stolen and such Note or evidence of the loss, theft or
destruction thereof (together with the indemnity hereinafter referred to and
such other documents or proof as may be required in the premises) shall be
delivered to the Trustee, a new Note of like tenor will be issued by the Issuer
in exchange for the Note so mutilated, or in lieu of the Note so destroyed or
lost or
13
<PAGE> 14
stolen, but, in the case of any destroyed or lost or stolen Note, only upon
receipt of evidence satisfactory to the Trustee and the Issuer that such Note
was destroyed or lost or stolen and, if required, upon receipt also of
indemnity satisfactory to each of them. All expenses and reasonable charges
associated with procuring such indemnity and with the preparation,
authentication and delivery of a new Note shall be borne by the owner of the
Note mutilated, defaced, destroyed, lost or stolen.
The Senior Indenture provides that, (a) if an Event of Default (as
defined in such Senior Indenture) due to the default in payment of principal
of, premium, if any, or interest on, any series of debt securities issued under
the Senior Indenture, including the series of Senior Medium-Term Notes of which
this Note forms a part, or due to the default in the performance or breach of
any other covenant or warranty of the Issuer applicable to the debt securities
of such series but not applicable to all outstanding debt securities issued
under the Senior Indenture shall have occurred and be continuing, either the
Trustee or the holders of not less than 25% in principal amount of the debt
securities of each affected series (voting as a single class) may then declare
the principal of all debt securities of all such series and interest accrued
thereon to be due and payable immediately and (b) if an Event of Default due to
a default in the performance of any other of the covenants or agreements in the
Senior Indenture applicable to all outstanding debt securities issued
thereunder, including this Note, or due to certain events of bankruptcy,
insolvency and reorganization of the Issuer, shall have occurred and be
continuing, either the Trustee or the holders of not less than 25% in principal
amount of all debt securities issued under the Senior Indenture then
outstanding (treated as one class) may declare the principal of all such debt
securities and interest accrued thereon to be due and payable immediately, but
upon certain conditions such declarations may be annulled and past defaults may
be waived (except a continuing default in payment of principal (or premium, if
any) or interest on such debt securities) by the holders of a majority in
principal amount of the debt securities of all affected series then
outstanding.
The Senior Indenture permits the Issuer and the Trustee, with the
consent of the holders of not less than a majority in aggregate principal
amount of the debt securities of each series issued under the Senior Indenture
then outstanding and affected, to execute supplemental indentures adding any
provisions to or changing in any manner the rights of the holders of each
series so affected; provided that the Issuer and the Trustee may not, without
the consent of the holder of each outstanding debt security affected thereby,
(a) extend the final maturity of any such debt security, or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon, or reduce any amount payable on redemption or repayment
thereof, or change the currency of payment thereof, or impair or affect the
rights of any holder to institute suit for the payment thereof without the
14
<PAGE> 15
consent of the holder of each debt security so affected; or (b) reduce the
aforesaid percentage in principal amount of debt securities the consent of the
holders of which is required for any such supplemental indenture, without the
consent of the holders of each debt security so affected.
Except as set forth below, if the principal of, or interest on,
this Note is payable in a Specified Currency other than U.S. dollars and such
Specified Currency is not available to the Issuer for making payments hereon
due to the imposition of exchange controls or other circumstances beyond the
control of the Issuer or is no longer used by the government of the country
issuing such currency or for the settlement of transactions by public
institutions within the international banking community, then the Issuer will
be entitled to satisfy its obligations to the holder of this Note by making
such payments in U.S. dollars on the basis of the Market Exchange Rate on the
date of such payment or, it the Market Exchange Rate is not available on such
date, as of the most recent practicable date. Any payment made under such
circumstances in U.S. dollars where the required payment is in a Specified
Currency other than U.S. dollars will not constitute an Event of Default.
If payment in respect of this Note is required to be made in ECUs
and ECUs are unavailable due to the imposition of exchange controls or other
circumstances beyond the Issuer's control or are no longer used in the European
Monetary System, then all payments in respect of this Note shall be made in
U.S. dollars until ECUs are again available or so used. The amount of each
payment in U.S. dollars shall be computed on the basis of the equivalent of the
ECU in U.S. dollars, determined as described below, as of the second Business
Day prior to the date on which such payment is due.
The equivalent of the ECU in U.S. dollars as of any date (the "Day
of Valuation") shall be determined by the Issuer or its agent on the following
basis. The component currencies of the ECU for this purpose (the "Components")
shall be the currency amounts that were components of the ECU as of the last
date on which the ECU was used in the European Monetary System. The equivalent
of the ECU in U.S. dollars shall be calculated by aggregating the U.S. dollar
equivalents of the Components. The U.S. dollar equivalent of each of the
Components shall be determined by the Issuer or such agent on the basis of the
most recently available Market Exchange Rates for such Components.
If the official unit of any Component is altered by way of
combination or subdivision, the number of units of that currency as a
Components shall be divided or multiplied in the same proportion. If two or
more Components are consolidated into a single currency, the amounts of those
currencies as Components shall be replaced by an amount in such single currency
equal to the sum of the amounts of the consolidated component currencies
expressed in such single currency. If any Component is divided into two or
more currencies,
15
<PAGE> 16
the amount of the original component currency shall be replaced by the amounts
of such two or more currencies, each of which shall be equal to the amount of
the original component currency separated into the number of currencies into
which such original currency was divided.
All determinations referred to above made by the Issuer or its
agent shall be at its sole discretion and shall, in the absence of manifest
error, be conclusive to the extent permitted by law for all purposes and
binding on holders of Notes.
So long as this Note shall be outstanding, the Issuer will cause
to be maintained an office or agency for the payment of the principal of and
premium, if any, and interest on this Note as herein provided in the Borough of
Manhattan, The City of New York, and an office or agency in said Borough of
Manhattan, The City of New York, for the registration, transfer and exchange as
aforesaid of the Notes. The Issuer may designate other agencies for the
payment of said principal, premium and interest at such place or places
(subject to applicable laws and regulations) as the Issuer may decide. So long
as there shall be such an agency, the Issuer shall keep the Trustee advised of
the names and locations of such agencies, if any are so designated.
With respect to moneys paid by the Issuer and held by the Trustee
for the payment of the principal of or interest or premium, if any, on any
Notes that remain unclaimed at the end of two years after such principal,
interest or premium shall have become due and payable (whether at maturity or
upon call for redemption or otherwise), (i) the Trustee shall notify the
holders of such Notes that such moneys shall be repaid to the Issuer and any
person claiming such moneys shall thereafter look only to the Issuer for
payment thereof and (ii) such moneys shall be so repaid to the Issuer. Upon
such repayment all liability of the Trustee with respect to such moneys shall
thereupon cease, without, however, limiting in any way any obligation that the
Issuer may have to pay the principal of or interest or premium, if any, on this
Note as the same shall become due.
No provision of this Note or of the Senior Indenture shall alter
or impair the obligation of the Issuer, which is absolute and unconditional, to
pay the principal of, premium, if any, and interest on this Note at the time,
place, and rate, and in the coin or currency, herein prescribed unless
otherwise agreed between the Issuer and the registered holder of this Note.
Prior to due presentment of this Note for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee
may treat the holder in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note be overdue, and neither the Issuer,
the Trustee nor any such agent shall be affected by notice to the contrary.
16
<PAGE> 17
No recourse shall be had for the payment of the principal of or
the interest on this Note, for any claim based hereon, or otherwise in respect
hereof, or based on or in respect of the Senior Indenture or any indenture
supplemental thereto, against any incorporator, shareholder, officer or
director, as such, past present or future, of the Issuer or of any successor
corporation, either directly or through the Issuer or any successor
corporation, 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 issue hereof, expressly waived and released.
This Note shall for all purposes be governed by, and construed in
accordance with, the laws of the State of New York.
All terms used in this Note which are defined in the Senior
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Senior Indenture.
17
<PAGE> 18
ABBREVIATIONS
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM-as tenants in common
TEN ENT-as tenants by the entireties
JT TEN-as joint tenants with right of survivorship and
not as tenants in common
UNIF GIFT MIN ACT-____________Custodian____________
(Cust) (Minor)
Under Uniform Gifts to Minors Act__________________
(State)
Additional abbreviations may also be used though not in the above
list.
____________________
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
[PLEASE PRINT OR TYPE NAME AND ADDRESS INCLUDING ZIP CODE,
OF ASSIGNEE]
[PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE]
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing such person attorney to transfer such note on the books of the
Issuer, with full power of substitution in the premises.
Dated: _______________________ _____________________________
[Signature of Assignor]
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Note in every particular
without alteration or enlargement or any change whatsoever.
18
<PAGE> 19
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the
Issuer to repay the within Note (or portion hereof specified below) pursuant to
its terms at a price equal to the applicable Repayment Price thereof together
with interest to the Repayment Date, to the undersigned at
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address of the undersigned)
If less than the entire principal amount of the within Note is to
be repaid, specify the portion thereof which the holder elects to have repaid
$___________________; and specify the denomination or denominations (which
shall be in authorized denominations) of the Notes to be issued to the holder
for the portion of the within Note not being repaid (in the absence of any such
specification, one such Note will be issued for the portion not being repaid):
________________________________________________________________________________
Date: ____________________________ _______________________________
(Signature)
19
<PAGE> 1
EXHIBIT 4.4
Fixed Rate Senior Note
REGISTERED REGISTERED
No. FXR CUSIP:
Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the issuer or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co. or
such other name as requested by an authorized representative of The Depository
Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since
the registered owner hereof, Cede & Co., has an interest herein.*
IF APPLICABLE, THE "TOTAL AMOUNT OF OID", "ORIGINAL YIELD TO
MATURITY" AND "INITIAL ACCRUAL PERIOD OID" (COMPUTED UNDER THE
APPROXIMATE METHOD) SET FORTH BELOW HAS BEEN COMPLETED SOLELY
FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME TAX ORIGINAL
ISSUE DISCOUNT ("OID") RULES.
WILLIAMS HOLDINGS OF DELAWARE, INC.
SENIOR MEDIUM-TERM NOTE
(Fixed Rate)
<TABLE>
<S> <C> <C> <C>
ORIGINAL ISSUE DATE: INITIAL REDEMPTION DATE: INTEREST RATE: MATURITY DATE:
INTEREST PAYMENT DATES:
March 1
September 1
INTEREST ACCRUAL DATE: SPECIFIED CURRENCY:
TOTAL AMOUNT INITIAL REDEMPTION APPLICABILITY OF MODIFIED
OF OID: PERCENTAGE: PAYMENT UPON ACCELERATION:
</TABLE>
__________
* Applies only if this Note is a Registered Global Security.
<PAGE> 2
<TABLE>
<S> <C> <C>
ANNUAL REDEMPTION PERCENTAGE If yes, state Issue Price:
REDUCTION:
ORIGINAL YIELD TO MATURITY:
INITIAL REPAYMENT DATE:
INITIAL ACCRUAL PERIOD OID:
INITIAL REPAYMENT
PERCENTAGE:
ANNUAL REPAYMENT PERCENTAGE
REDUCTION:
</TABLE>
TRUSTEE'S [AND/OR AUTHENTICATING AGENT'S] CERTIFICATE[S] OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Senior
Indenture.
Citibank, N.A.,
as Trustee
By:__________________________
Authorized Officer
[___________________________,
as Authenticating Agent
By:__________________________
Authorized Officer]
2
<PAGE> 3
Williams Holdings of Delaware, Inc., a Delaware corporation
(the "Issuer"), for value received, hereby promises to pay to
or registered assignees, the principal sum of
, on the Maturity Date specified above (except to the extent redeemed or repaid
prior to the Maturity Date) and to pay interest thereon at the Interest Rate
per annum specified above from the Original Issue Date specified above until
the principal hereof is paid or duly made available for payment (except as
provided below), semiannually in arrears on the first day of March and
September in each year commencing on the Interest Payment Date next succeeding
the Original Issue Date specified above, and on the Maturity Date (or any
redemption or repayment date); provided, however, that if the Original Issue
Date occurs between a Record Date, as defined below, and the next succeeding
Interest Payment Date, interest payments will commence on the second Interest
Payment Date succeeding the Original Issue Date to the registered holder of
this Note on the Record Date with respect to such second Interest Payment Date.
Interest on this Note will accrue from the most recent
Interest Payment Date to which interest has been paid or duly provided for, or,
if no interest has been paid or duly provided for, from the Original Issue
Date, until the principal hereof has been paid or duly made available for
payment (except as provided below). The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date, will, subject to
certain exceptions described herein, be paid to the person in whose name this
Note (or one or more predecessor Notes) is registered at the close of business
on the date 15 calendar days prior to an Interest Payment Date (whether or not
a Business Day) (the "Record Date"); provided, however, that interest payable
on the Maturity Date (or any redemption or repayment date) will be payable to
the person to whom the principal hereof shall be payable. As used herein,
"Business Day" means any day, other than a Saturday or Sunday, and that is
neither a legal holiday nor a day on which banking institutions are authorized
or required by law or regulation to close in The City of New York and (i) with
respect to Notes denominated in a Specified Currency other than U.S. dollars or
European Currency Units ("ECUs") in the capital city of the country of the
Specified Currency and (ii) with respect to Notes denominated in ECUs, in
Brussels, Belgium.
Payment of the principal of this Note, any premium and the
interest due at the Maturity Date (or any redemption or repayment date) will be
made in immediately available funds upon
3
<PAGE> 4
surrender of this Note at the office or agency of the Trustee as defined on the
reverse hereof, maintained for that purpose in the Borough of Manhattan, The
City of New York, or at such other paying agency as the Issuer may determine.
Payment of the principal of and premium, if any, and interest on this Note will
be made in such coin or currency of the United States of America or in a
Specified Currency other than U.S. dollars as indicated herein as at the time
of payment is legal tender for payment of public and private debts; provided,
however, that U.S. dollar payments of interest, other than interest due at
maturity or any date of redemption or repayment, will be made by United States
dollar check mailed to the address of the person entitled thereto as such
address shall appear in the Note register. A holder of U.S. $10,000,000 or
more in aggregate principal amount of Notes having the same Interest Payment
Date will be entitled to receive payments of interest, other than interest due
at maturity or any date of redemption or repayment, by wire transfer of
immediately available funds if appropriate wire transfer instructions in
writing have been received by the Trustee not less than 15 calendar days prior
to the applicable Interest Payment Date. Payments of interest on Notes in a
Specified Currency other than U.S. dollars will be made by wire transfer of
immediately available funds to an account maintained by the holder with a bank
located outside the United States and the holder of such Notes shall provide
the Trustee with the appropriate wire transfer instructions.
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee or by the Authenticating Agent, referred to on the
reverse hereof, by manual signature, this Note shall not be entitled to any
benefit under the Senior Indenture, as defined on the reverse hereof, or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed under its corporate seal.
DATED: WILLIAMS HOLDINGS OF DELAWARE, INC.
By: ________________________________
Title:
4
<PAGE> 5
This Note is one of a duly authorized issue of Senior
Medium-Term Notes having maturities more than nine months from the date of
issue (the "Notes") of the Issuer. The Notes are issuable under a Senior
Indenture, dated as of _____________, 199__ (herein called the "Senior
Indenture") between the Issuer and Citibank, N.A., as Trustee (herein called
the "Trustee", which term includes any successor trustee under the Senior
Indenture), to which Senior Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities of the Issuer, the Trustee and holders of the
Notes and the terms upon which the Notes are, and are to be, authenticated and
delivered. The terms of individual Notes may vary with respect to interest
rates, interest rate formulas, issue dates, maturity dates, or otherwise, all
as provided in the Senior Indenture. To the extent not inconsistent herewith
the terms of the Senior Indenture are hereby incorporated by reference herein.
Unless otherwise indicated on the face of this Note, this Note
may not be redeemed prior to the Maturity Date. If so indicated on the face of
this Note, this Note may be redeemed at the option of the Issuer on or after a
specified date or dates prior to the Maturity Date on the terms set forth on
the face hereof, together with interest accrued and unpaid thereon to the date
of redemption (except as provided below). Notice of redemption shall be mailed
to the registered holders of the Notes designated for redemption at their
addresses as the same shall appear on the Note register not less than 30 nor
more than 60 days prior to the date fixed for redemption, subject to all the
conditions and provisions of the Senior Indenture. In the event of redemption
of this Note in part only, a new Note or Notes for the amount of the unredeemed
portion hereof shall be issued in the name of the holder hereof upon the
cancellation hereof.
Unless otherwise indicated on the face of this Note, this Note
may not be repaid prior to the Maturity Date. If so indicated on the face of
this Note, this Note may be subject to repayment at the option of the holder on
or after a specified date or dates prior to the Maturity Date on the terms set
forth on the face hereof, together with interest accrued and unpaid thereon to
the date of repayment (except as provided below). For this Note to be repaid
in whole or in part at the option of the holder hereof, the Trustee must
receive not less than 30 or more than 45 days prior to the Repayment Date (i)
the Note with the form entitled "Option to Elect Repayment" below duly
completed or (ii) a telegram, telex, facsimile transmission or a letter from a
member of a national securities exchange or the National Association of
Securities Dealers, Inc. or a commercial bank or a trust company in the United
States of America setting forth the name of the holder of this Note, the
principal amount hereof, the certificate number of this Note or a description
of the Note's tenor or terms, the principal amount hereof to be prepaid, a
statement that the option to elect
5
<PAGE> 6
repayment is being exercised thereby and a guarantee that this Note to be
prepaid with the form entitled "Option to Elect Repayment" below duly completed
will be received by the Trustee no later than five Business Days after the date
of such telegram, telex, facsimile transmission or letter and this Note and
form duly completed are received by the Trustee by such fifth Business Day.
Exercise of such repayment option shall be irrevocable. Such option may be
exercised by the holder for less than the entire principal amount provided that
the principal amount remaining outstanding after repayment is at least $100,000
or any larger amount that is an integral multiple of $1,000. In the event of
repayment of this Note in part only, a new Note or Notes for the amount of the
portion hereof that is not repaid shall be issued in the name of the holder
hereof upon the cancellation hereof.
Interest payments on this Note will include interest accrued
to but excluding the Interest Payment Dates or the Maturity Date (or earlier
redemption date), as the case may be. Interest payments for this Note will be
computed and paid on the basis of a 360-day year of twelve 30-day months.
In the case where the Interest Payment Date or the Maturity
Date (or any redemption or repayment date) does not fall on a Business Day,
payment of interest, premium, if any, or principal otherwise payable on such
date 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 Interest Payment
Date or on the Maturity Date (or the redemption or repayment date), and no
interest shall accrue for the period from and after the Interest Payment Date
or the Maturity Date (or the redemption or repayment date) to the next such
succeeding Business Day.
This Note and all the obligations of the Issuer hereunder are
direct, unsecured obligations of the Issuer, and rank without preference or
priority among themselves and pari passu with all other existing and future
unsecured and unsubordinated indebtedness of the Issuer.
This Note, and any Note or Notes issued upon transfer or
exchange hereof, is issuable only in fully registered form, without coupons,
and, if denominated in U.S. dollars, is issuable only in denominations of U.S.
$100,000 and any integral multiple of U.S. $1,000 in excess thereof. If this
Note is denominated in a Specified Currency other than U.S. dollars, it is
issuable only in denominations of the equivalent of U.S. $100,000 (rounded down
to an integral multiple of 1,000 units of such Specified Currency), or any
amount in excess thereof which is an integral multiple of 1,000 units of such
Specified Currency, as determined by reference to the noon dollar buying rate
in New York City for cable transfers of such Specified Currency published by
the Federal Reserve Bank of New York (the "Market Exchange Rate") on the
Business Day immediately preceding the date of issuance; provided, however, in
the case of ECUs, the Market Exchange Rate shall be the rate of
6
<PAGE> 7
exchange determined by the Commission of the European Communities (or any
successor thereto) as published in the Official Journal of the European
Communities, or any successor publication, on the Business Day immediately
preceding the date of issuance.
The Trustee has been appointed registrar for the Notes, (the
"Registrar," which such term includes any successor registrar appointed by the
Issuer), and the Registrar shall maintain at its office in the Borough of
Manhattan, The City of New York a register for the registration and transfer of
Notes. This Note may be transferred at the aforesaid office of the Registrar
by surrendering this Note for cancellation, accompanied by a written instrument
of transfer in form satisfactory to the Registrar and duly executed by the
registered holder hereof in person or by the holder's attorney duly authorized
in writing, and thereupon the Registrar will issue in the name of the
transferee or transferees, in exchange herefor, a new Note or Notes having
identical terms and provisions and for a like aggregate principal amount in
authorized denominations, subject to the terms and conditions set forth herein;
provided, however, that the Registrar shall not be required (i) to register the
transfer of or exchange any Note that has been called for redemption in whole
or in part, except the unredeemed portion of Notes being redeemed in part, (ii)
to register the transfer of or exchange any Note if the holder thereof has
exercised his right, if any, to require the Issuer to repurchase such Note in
whole or in part, except the portion of such Note not required to be
repurchased, or (iii) to register the transfer or exchange Notes to the extent
and during the period so provided in the Senior Indenture with respect to the
redemption of Notes. Notes are exchangeable at said office for other Notes of
other authorized denominations of equal aggregate principal amount having
identical terms and provisions. All such exchanges and transfers of Notes will
be free of charge, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge in connection therewith. All Notes
surrendered for exchange or transfer shall be accompanied by a written
instrument of transfer in form satisfactory to the Registrar and executed by
the registered holder in person or by the holder's attorney duly authorized in
writing. The date of registration of any Note delivered upon any exchange or
transfer of Notes shall be such that no gain or loss of interest results from
such exchange or transfer.
In case any Note shall at any time become mutilated, defaced
or be destroyed, lost or stolen and such Note or evidence of the loss, theft or
destruction thereof (together with the indemnity hereinafter referred to and
such other documents or proof as may be required in the premises) shall be
delivered to the Trustee, a new Note of like tenor will be issued by the Issuer
in exchange for the Note so mutilated or defaced, or in lieu of the Note so
destroyed or lost or stolen, but, in the case of any destroyed or lost or
stolen Note, only upon receipt of evidence satisfactory to the Trustee and the
Issuer that such Note was destroyed or lost or stolen and, if required, upon
receipt also of
7
<PAGE> 8
indemnity satisfactory to each of them. All expenses and reasonable charges
associated with procuring such indemnity and with the preparation,
authentication and delivery of a new Note shall be borne by the owner of the
Note mutilated, defaced, destroyed, lost or stolen.
The Senior Indenture provides that, (a) if an Event of Default
(as defined in the Senior Indenture) due to the default in payment of principal
of, premium, if any, or interest on, any series of debt securities issued under
the Senior Indenture, including the series of Senior Medium-Term Notes of which
this Note forms a part, or due to the default in the performance or breach of
any other covenant or warranty of the Issuer applicable to the debt securities
of such series but not applicable to all outstanding debt securities issued
under the Senior Indenture shall have occurred and be continuing, either the
Trustee or the holders of not less than 25% in principal amount of the debt
securities of each affected series (voting as a single class) may then declare
the principal of all debt securities of all such series and interest accrued
thereon to be due and payable immediately and (b) if an Event of Default due to
a default in the performance of any other of the covenants or agreements in the
Senior Indenture applicable to all outstanding debt securities issued
thereunder, including this Note, or due to certain events of bankruptcy,
insolvency and reorganization of the Issuer, shall have occurred and be
continuing, either the Trustee or the holders of not less than 25% in principal
amount of all debt securities issued under the Senior Indenture then
outstanding (treated as one class) may declare the principal of all such debt
securities and interest accrued thereon to be due and payable immediately, but
upon certain conditions such declarations may be annulled and past defaults may
be waived (except a continuing default in payment of principal (or premium, if
any) or interest on such debt securities) by the holders of a majority in
principal amount of the debt securities of all affected series then
outstanding.
If the face hereof indicates that this Note is subject to
"Modified Payment upon Acceleration," then if the principal hereof is declared
to be due and payable as described in the preceding paragraph, the amount of
principal due and payable with respect to this Note shall be limited to the
aggregate principal amount hereof multiplied by the sum of the Issue Price
specified on the face hereof (expressed as a percentage of the aggregate
principal amount) plus the original issue discount amortized from the Original
Issue Date to the date of declaration, which amortization shall be calculated
using the "interest method" (computed in accordance with generally accepted
accounting principles in effect on the date of declaration).
The Senior Indenture permits the Issuer and the Trustee, with
the consent of the holders of not less than a majority in aggregate principal
amount of the debt securities of each series issued under the Senior Indenture
then outstanding and affected, to
8
<PAGE> 9
execute supplemental indentures adding any provisions to or changing in any
manner the rights of the holders of each series so affected; provided that the
Issuer and the Trustee may not, without the consent of the holder of each
outstanding debt security affected thereby, (a) extend the final maturity of
any such debt security, or reduce the principal amount thereof, or reduce the
rate or extend the time of payment of interest thereon, or reduce any amount
payable on redemption or repayment thereof, or change the currency of payment
thereof, or impair or affect the rights of any holder to institute suit for the
payment thereof without the consent of the holder of each debt security so
affected; or (b) reduce the aforesaid percentage in principal amount of debt
securities the consent of the holders of which is required for any such
supplemental indenture, without the consent of the holders of each debt
security so affected.
Except as set forth below, if the principal of, or interest
on, this Note is payable in a Specified Currency other than U.S. dollars and
such Specified Currency is not available to the Issuer for making payments
hereon due to the imposition of exchange controls or other circumstances beyond
the control of the Issuer or is no longer used by the government of the country
issuing such currency or for the settlement of transactions by public
institutions within the international banking community, then the Issuer will
be entitled to satisfy its obligations to the holder of this Note by making
such payments in U.S. dollars on the basis of the Market Exchange Rate on the
date of such payment or, if the Market Exchange Rate is not available on such
date, as of the most recent practicable date. Any payment made under such
circumstances in U.S. dollars where the required payment is in a Specified
Currency other than U.S. dollars will not constitute an Event of Default.
If payment in respect of this Note is required to be made in
ECUs and ECUs are unavailable due to the imposition of exchange controls or
other circumstances beyond the Issuer's control or are no longer used in the
European Monetary System, then all payments in respect of this Note shall be
made in U.S. dollars until ECUs are again available or so used. The amount of
each payment in U.S. dollars shall be computed on the basis of the equivalent
of the ECU in U.S. dollars, determined as described below, as of the second
Business Day prior to the date on which such payment is due.
The equivalent of the ECU in U.S. dollars as of any date (the
"Day of Valuation") shall be determined by the Issuer or its agent on the
following basis. The component currencies of the ECU for this purpose (the
"Components") shall be the currency amounts that were components of the ECU as
of the last date on which the ECU was used in the European Monetary System.
The equivalent of the ECU in U.S. dollars shall be calculated by aggregating
the U.S. dollar equivalents of the Components. The U.S. dollar equivalent of
each of the Components shall be determined by the Issuer or such
9
<PAGE> 10
agent on the basis of the most recently available Market Exchange Rates for
such Components.
If the official unit of any Component is altered by way of
combination or subdivision, the number of units of that currency as a Component
shall be divided or multiplied in the same proportion. If two or more
Components are consolidated into a single currency, the amounts of those
currencies as Components shall be replaced by an amount in such single currency
equal to the sum of the amounts of the consolidated component currencies
expressed in such single currency. If any Component is divided into two or
more currencies, the amount of the original component currency shall be
replaced by the amounts of such two or more currencies, each of which shall be
equal to the amount of the original component currency separated into the
number of currencies into which such original currency was divided.
All determinations referred to above made by the Issuer or its
agent shall be at its sole discretion and shall, in the absence of manifest
error, be conclusive to the extent permitted by law for all purposes and
binding on holders of Notes.
So long as this Note shall be outstanding, the Issuer will
cause to be maintained an office or agency for the payment of the principal of
and premium, if any, and interest on this Note as herein provided in the
Borough of Manhattan, The City of New York, and an office or agency in said
Borough of Manhattan, The City of New York for the registration, transfer and
exchange as aforesaid of the Notes. The Issuer may designate other agencies
for the payment of said principal, premium and interest at such place or places
(subject to applicable laws and regulations) as the Issuer may decide. So long
as there shall be any such agency, the Issuer shall keep the Trustee advised of
the names and locations of such agencies, if any are so designated.
With respect to moneys paid by the Issuer and held by the
Trustee for payment of the principal of or interest or premium, if any, on any
Notes, that remain unclaimed at the end of two years after such principal,
interest or premium shall have become due and payable (whether at maturity or
upon call for redemption or otherwise), (i) the Trustee shall notify the
holders of such Notes that such moneys shall be repaid to the Issuer and any
person claiming such moneys shall thereafter look only to the Issuer for
payment thereof and (ii) such moneys shall be so repaid to the Issuer. Upon
such repayment all liability of the Trustee with respect to such moneys shall
thereupon cease, without, however, limiting in any way any obligation that the
Issuer may have to pay the principal of or interest or premium, if any, on this
Note as the same shall become due.
No provision of this Note or of the Senior Indenture shall
alter or impair the obligation of the Issuer, which is absolute and
unconditional, to pay the principal of, premium, if
10
<PAGE> 11
any, and interest on this Note at the time, place, and rate, and in the coin or
currency, herein prescribed unless otherwise agreed between the Issuer and the
registered holder of this Note.
Prior to due presentment of this Note for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee
may treat the holder in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note be overdue, and neither the Issuer,
the Trustee nor any such agent shall be affected by notice to the contrary.
No recourse shall be had for the payment of the principal of
or the interest on this Note, for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Senior Indenture or any
indenture supplemental thereto, against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Issuer or of any
successor corporation, either directly or through the Issuer of any successor
corporation, 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 issue hereof, expressly waived and released.
This Note shall for all purposes be governed by, and construed
in accordance with, the laws of the State of New York.
All terms used in this Note which are defined in the Senior
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Senior Indenture.
11
<PAGE> 12
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM-as tenants in common
TEN ENT-as tenants by the entireties
JT TEN-as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT-...........Custodian...........
(Cust) (Minor)
Under Uniform Gifts to Minors Act...............
(State)
Additional abbreviations may also be used though not in the
above list.
_____________
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
[PLEASE PRINT OR TYPE NAME AND ADDRESS INCLUDING ZIP CODE, OF ASSIGNEE]
[PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE]
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing such person attorney to transfer such note on the books of the
Issuer, with full power of substitution in the premises.
Dated: _______________________ _____________________________
[Signature of Assignor]
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Note in every particular without
alteration or enlargement or any change whatsoever.
12
<PAGE> 13
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the
Issuer to repay the within Note (or portion hereof specified below) pursuant to
its terms at a price equal to the applicable Repayment Price thereof together
with interest to the Repayment Date, to the undersigned at
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address of the undersigned)
If less than the entire principal amount of the within Note is
to be repaid, specify the portion thereof which the holder elects to have
repaid $___________________; and specify the denomination or denominations
(which shall be in authorized denominations) of the Notes to be issued to the
holder for the portion of the within Note not being repaid (in the absence of
any such specification, one such Note will be issued for the portion not being
repaid):
________________________________________________________________________________
Date: ______________________________ ____________________________________
(Signature)
13
<PAGE> 1
EXHIBIT 4.5
Floating Rate Subordinated Note
REGISTERED REGISTERED
No. FLR Cusip
Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the issuer or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co. or
such other name as requested by an authorized representative of The Depository
Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since
the registered owner hereof, Cede & Co., has an interest herein.*
IF APPLICABLE, THE "TOTAL AMOUNT OF OID",
"ORIGINAL YIELD TO MATURITY" AND "INITIAL
ACCRUAL PERIOD OID" (COMPUTED UNDER THE
APPROXIMATE METHOD) SET FORTH BELOW HAS
BEEN COMPLETED SOLELY FOR THE PURPOSES OF
APPLYING THE FEDERAL INCOME TAX ORIGINAL
ISSUE DISCOUNT ("OID") RULES.
WILLIAMS HOLDINGS OF DELAWARE, INC.
SUBORDINATED MEDIUM-TERM NOTE
(Floating Rate)
<TABLE>
<S> <C> <C>
BASE RATE: ORIGINAL ISSUE DATE: MATURITY DATE:
APPLICABILITY OF INTEREST ACCRUAL DATE: INTEREST PAYMENT DATES:
MODIFIED FOLLOWING
BANKING DAY INITIAL INTEREST INTEREST RESET PERIOD:
CONVENTION: DATE:
INITIAL INTEREST RESET INTEREST RESET DATES:
INDEX MATURITY: DATE:
</TABLE>
__________
* Applies only if this Note is a Registered Global Security.
<PAGE> 2
<TABLE>
<S> <C> <C>
SPREAD (PLUS OR MAXIMUM INTEREST RATE:
MINUS):
MINIMUM INTEREST RATE:
ALTERNATE RATE INITIAL REDEMPTION DATE: SPECIFIED CURRENCY:
EVENT SPREAD:
TOTAL AMOUNT OF OID:
SPREAD MULTIPLIER: INITIAL REDEMPTION ORIGINAL YIELD TO
PERCENTAGE: MATURITY:
INITIAL REPAYMENT ANNUAL REDEMPTION INITIAL ACCRUAL
DATE: PERCENTAGE REDUCTION: PERIOD OID:
INITIAL REPAYMENT
PERCENTAGE:
ANNUAL REPAYMENT
PERCENTAGE REDUCTION:
</TABLE>
TRUSTEE'S [AND/OR AUTHENTICATING AGENT'S] CERTIFICATE[S] OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Subordinated
Indenture.
Citibank, N.A.,
as Trustee
By:__________________________
Authorized Officer
[___________________________,
as Authenticating Agent
By:__________________________
Authorized Officer]
2
<PAGE> 3
Williams Holdings of Delaware, Inc., a Delaware corporation (the
"Issuer"), for value received, hereby promises to pay to
, or registered assignees, the principal sum of
on the Maturity Date specified above, (except to the extent redeemed or repaid
prior to the Maturity Date) and to pay interest thereon, from the Original
Issue Date specified above at a rate per annum equal to the Initial Interest
Rate specified above until the Initial Interest Reset Date specified above, and
thereafter at a rate per annum determined in accordance with the provisions
specified on the reverse hereof until the principal hereof is paid or duly made
available for payment. The Issuer will pay interest in arrears monthly,
quarterly, semiannually or annually as specified above as the Interest Payment
Period on each Interest Payment Date (as specified above), commencing with the
first Interest Payment Date next succeeding the Original Issue Date specified
above, and on the Maturity Date (or any redemption or repayment date);
provided, however, that if the Original Issue Date occurs between a Record
Date, as defined below, and the next succeeding Interest Payment Date, interest
payments will commence on the second Interest Payment Date succeeding the
Original Issue Date to the registered holder of this Note on the Record Date
with respect to such second Interest Payment Date; and provided, further, that
if an Interest Payment Date or the Maturity Date or redemption or repayment
date would fall on a day that is not a Business Day, as defined on the reverse
hereof, such Interest Payment Date, Maturity Date or redemption or repayment
date shall be the following day that is a Business Day, except that if the
Modified Following Banking Day Convention is specified above as applicable and
such next Business Day falls in the next calendar month, the Interest Payment
Date, Maturity Date or redemption or repayment date shall be the immediately
preceding day that is a Business Day.
Interest on this Note will accrue from the most recent Interest
Payment Date to which interest has been paid or duly provided for or, if no
interest has been paid or duly provided for, from the Original Issue Date or,
if the Interest Reset Period specified above is daily or weekly, from, and
including, the date hereof (if no interest has been paid on this Note) or from,
and excluding, the last date in respect of which interest has been paid or duly
provided for, as the case may be. The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, subject to certain
exceptions described herein, be paid to the person in whose name this Note (or
one or more predecessor
3
<PAGE> 4
Notes) is registered at the close of business on the date 15 calendar days
prior to an Interest Payment Date (whether or not a Business Day) (the "Record
Date"); provided, however, that interest payable on the Maturity Date (or any
redemption or repayment date) will be payable to the person to whom the
principal hereof shall be payable.
Payment of the principal of this Note, any premium and the
interest due at the Maturity Date (or any redemption or repayment date) will be
made in immediately available funds upon surrender of this Note at the office
or agency of the Trustee, as defined on the reverse hereof, or at the office or
agency of such paying agent as the Issuer may determine maintained for that
purpose in the Borough of Manhattan, The City of New York, or at the office or
agency of such other paying agency as the Issuer may determine. Payment of the
principal of and premium, if any, and interest on this Note will be made in
such coin or currency of the United States of America or in a Specified
Currency other than U.S. dollars as indicated herein as at the time of payment
is legal tender for payment of public and private debts; provided, however,
that U.S. dollar payments of interest, other than interest due at maturity or
any date of redemption or repayment, will be made by United States dollar check
mailed to the address of the person entitled thereto as such address shall
appear in the Note register. A holder of U.S. $10,000,000 or more in aggregate
principal amount of Notes having the same Interest Payment Date will be
entitled to receive payments of interest, other than interest due at maturity
or any date of redemption or repayment, by wire transfer of immediately
available funds if appropriate wire transfer instructions in writing have been
received by the Trustee or any Paying Agent not less than 15 calendar days
prior to the applicable Interest Payment Date. Payments of interest on Notes
in a Specified Currency other than U.S. dollars will be made by wire transfer
of immediately available funds to an account maintained by the holder with a
bank located outside the United States, and the holder of such Notes shall
provide the Trustee or any Paying Agent with the appropriate wire transfer
instructions.
Reference is hereby made to the further provisions of this Note
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place, including, without
limitation, the provisions relating to the subordination of this Note to the
Issuer's Senior Indebtedness, as defined on the reverse hereof.
Unless the certificate of authentication hereon has been executed
by the Trustee or by the Authenticating Agent, referred to on the reverse
hereof, by manual signature, this Note shall not be entitled to any benefit
under the Subordinated Indenture, as defined on the reverse hereof, or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed under its corporate seal.
4
<PAGE> 5
DATED: WILLIAMS HOLDINGS OF DELAWARE, INC.
By: ________________________________
Title:
5
<PAGE> 6
This Note is one of the duly authorized issue of Subordinated
Medium-Term Notes having maturities more than nine months from the date of
issue (the "Notes") of the Issuer. The Notes are issuable under a Subordinated
Indenture, dated as of _______________, 199__ (herein called the "Subordinated
Indenture") between the Issuer and Citibank, N.A. as Trustee (herein called the
"Trustee", which term includes any successor trustee under the Subordinated
Indenture), to which Subordinated Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities of the Issuer, the Trustee and
holders of the Notes and the terms upon which the Notes are, and are to be,
authenticated and delivered. The Trustee has appointed _______________ as
Authenticating Agent (the "Authenticating Agent," which terms includes any
successor authenticating agent appointed by the Trustee) with respect to the
Notes, and the Issuer has appointed the Trustee at its corporate trust office
in The City of New York as registrar and as a Paying Agent with respect to the
Notes. The terms of individual Notes may vary with respect to interest rates,
interest rate formulas, issue dates, maturity dates, or otherwise, all as
provided in the Subordinated Indenture. To the extent not inconsistent
herewith, the terms of the Subordinated Indenture are hereby incorporated by
reference herein.
Unless otherwise indicated on the face of this Note, this Note may
not be redeemed prior to the Maturity Date. If so indicated on the face of
this Note, this Note may be redeemed at the option of the Issuer, on or after a
specified date or dates prior to the Maturity Date on the terms set forth on
the face hereof, together with interest accrued and unpaid thereon to the date
of redemption. Notice of redemption shall be mailed to the registered holders
of the Notes designated for redemption at their addresses as the same shall
appear on the Note register not less than 30 nor more than 60 days prior to the
date fixed for redemption, subject to all the conditions and provisions of the
Subordinated Indenture. In the event of redemption of this Note in part only,
a new Note or Notes for the amount of the unredeemed portion hereof shall be
issued in the name of the holder hereof upon the cancellation hereof.
Unless otherwise indicated on the face of this Note, this Note may
not be repaid prior to the Maturity Date. If so indicated on the face of this
Note, this Note may be subject to repayment at the option of the holder, on or
after a specified date or dates prior to the Maturity Date on the terms set
forth on the face hereof, together with interest accrued and unpaid thereon to
the date of repayment. For this Note to be repaid in whole or in part at the
option of the holder hereof, the Paying Agent must receive not less than 30 or
more than 45 days prior to the Repayment Date (i) the Note with the form
entitled "Option to Elect Repayment" below duly completed or (ii) a telegram,
telex, facsimile transmission or a letter from a member of a national
securities exchange or the National Association of Securities Dealers, Inc. or
a commercial bank or a trust company in the United States of America
6
<PAGE> 7
setting forth the name of the holder of this Note, the principal amount hereof,
the certificate number of this Note or a description of the Note's tenor or
terms, the principal amount hereof to be prepaid, a statement that the option
to elect repayment is being exercised thereby and a guarantee that this Note
with the form entitled "Option to Elect Repayment" below duly completed will be
received by the Paying Agent no later than five Business Days after the date of
such telegram, telex, facsimile transmission or letter and this Note and form
duly completed are received by the Paying Agent by such fifth Business Day.
Exercise of such repayment option shall be irrevocable. Such option may be
exercised by the holder for less than the entire principal amount hereof
provided that the principal amount remaining outstanding after repayment is at
least $100,000 or any larger amount that is an integral multiple of $1,000. In
the event of repayment of this Note in part only, a new Note or Notes for the
amount of the portion hereof that is not repaid shall be issued in the name of
the holder hereof upon the cancellation hereof.
This Note will bear interest at the rate determined in accordance
with the applicable provisions below by reference to the Base Rate shown on the
face hereof based on the Index Maturity, if any, shown on the face hereof (i)
plus or minus the Spread, if any, or (ii) multiplied by the Spread Multiplier,
if any, specified on the face hereof. Commencing with the Initial Interest
Reset Date specified on the face hereof, the rate at which interest on this
Note is payable shall be reset as of each Interest Reset Date (as used herein,
the term "Interest Reset Date" shall include the Initial Interest Reset Date).
The Interest Reset Dates will be the Interest Reset Dates specified on the face
hereof; provided, however, that (i) the interest rate in effect for the period
from the Original Issue Date to the Initial Interest Reset Date specified on
the face hereof will be the Initial Interest Rate, (ii) the interest rate in
effect hereon for the 15 days immediately prior to the Maturity Date hereof
(or, with respect to any principal amount to be redeemed or repaid, any
redemption or repayment date) shall be that in effect on the 15th day preceding
the Maturity Date hereof or such date of redemption or repayment, as the case
may be, and (iii) if any Note is issued between a Record Date and the related
Interest Payment Dates, and such Note has daily or weekly Interest Reset Dates,
then notwithstanding the fact that an Interest Reset Date may occur prior to
such Interest Payment Date, the Initial Interest Rate set forth on the face
hereof shall remain in effect through the first Interest Reset Date occurring
on or subsequent to such Interest Payment Date. If any Interest Reset Date
would otherwise be a day that is not a Business Day, such Interest Reset Date
shall be postponed to the next succeeding day that is a Business Day, except
that in the event the Modified Following Banking Date Convention is specified
on the face hereof as applicable and such Business Day is in the next
succeeding calendar month, such Interest Reset Date shall be the next preceding
Business Day. As used herein, "Business Day" means any day, other than a
Saturday or Sunday, and that is neither a legal holiday nor a day on which
7
<PAGE> 8
banking institutions are authorized or required by law or regulation to close
in The City of New York and (i) with respect to Notes denominated in a
Specified Currency other than U.S. dollars or European Currency Units ("ECUs"),
in the capital city of the country of the Specified Currency, (ii) with respect
to Notes denominated in ECUs, in Brussels, Belgium and (iii) with respect to
Notes bearing interest calculated by reference to LIBOR, in the City of London.
The Interest Determination Date pertaining to an Interest Reset
Date for Notes bearing interest calculated by reference to the CD Rate,
Commercial Paper Rate, Federal Funds Rate and Prime Rate will be the second
Business Day next preceding such Interest Reset Date. The Interest
Determination Date pertaining to an Interest Reset Date for Notes bearing
interest calculated by reference to LIBOR shall be the second London Business
Day preceding such Interest Reset Date. The Interest Determination Date
pertaining to an Interest Reset Date for Notes bearing interest calculated by
reference to the Treasury Rate shall be the day of the week in which such
Interest Reset Date falls on which Treasury bills normally would be auctioned;
provided, however, that if as a result of a legal holiday an auction is held on
the Friday of the week preceding such Interest Reset Date, the related Interest
Determination Date shall be such preceding Friday; and provided, further, that
if an auction shall fall on any Interest Reset Date, then the Interest Reset
Date shall instead be the first Business Day following the date of such
auction.
Determination of CD Rate. If the Base Rate specified on the face
hereof is the CD Rate, the CD Rate with respect to this Note shall be
determined on each Interest Determination Date and shall be the rate on such
date for negotiable certificates of deposit having the Index Maturity specified
on the face hereof as published by the Board of Governors of the Federal
Reserve System in "Statistical Release H.15(519), Selected Interest Rates," or
any successor publication of the Board of Governors of the Federal Reserve
System ("H.15(519)"), under the heading "CDs (Secondary Market)," or, if not so
published by 9:00 A.M., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, the CD Rate will be the rate on such
Interest Determination Date for negotiable certificates of deposit of the Index
Maturity specified on the face hereof as published by the Federal Reserve Bank
of New York in its daily statistical release "Composite 3:30 P.M. Quotations
for U.S. Government Securities" ("Composite Quotations") under the heading
"Certificates of Deposit." If neither of such rates is published by 3:00 P.M.,
New York City time, on such Calculation Date, then the CD Rate on such Interest
Determination Date will be calculated by the Calculation Agent referred to on
the face hereof and will be the arithmetic mean of the secondary market offered
rates as of 10:00 A.M., New York City time, on such Interest Determination
Date, for certificates of deposit in the denomination of $5,000,000 with a
remaining maturity closest to the Index Maturity specified on the face hereof
of three leading nonbank dealers in negotiable U.S. dollar certificates of
deposit in The
8
<PAGE> 9
City of New York selected by the Calculation Agent for negotiable certificates
of deposit of major United States money center banks of the highest credit
standing in the market for negotiable certificates of deposit; provided,
however, that if the dealers selected as aforesaid by the Calculation Agent are
not quoting as mentioned in this sentence, the rate of interest in effect for
the applicable period will be the same as the CD Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset
Period, the rate of interest payable hereon shall be the Initial Interest
Rate).
Determination of Commercial Paper Rate. If the Base Rate
specified on the face hereof is the Commercial Paper Rate, the Commercial Paper
Rate with respect to this Note shall be determined on each Interest
Determination Date and shall be the Money Market Yield (as defined herein) of
the rate on such date for commercial paper having the Index Maturity specified
on the face hereof, as such rate shall be published in H.15(519) under the
heading "Commercial Paper," or if not so published prior to 9:00 A.M., New York
City time, on the Calculation Date pertaining to such Interest Determination
Date, the Commercial Paper Rate shall be the Money Market Yield of the rate on
such Interest Determination Date for commercial paper of the Index Maturity
specified on the face hereof as published in Composite Quotations under the
heading "Commercial Paper." If neither of such rates is published by 3:00
P.M., New York City time, on such Calculation Date, then the Commercial Paper
Rate shall be the Money Market Yield of the arithmetic mean of the offered
rates as of 11:00 A.M., New York City time, on such Interest Determination Date
of three leading dealers in commercial paper in The City of New York selected
by the Calculation Agent for commercial paper of the Index Maturity specified
on the face hereof, placed for an industrial issuer whose bond rating is "AA,"
or the equivalent, from a nationally recognized rating agency; provided,
however, that if the dealers selected as aforesaid by the Calculation Agent are
not quoting as mentioned in this sentence, the rate of interest in effect for
the applicable period will be the same as the Commercial Paper Rate for the
immediately preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the rate of interest payable hereon shall be the Initial Interest
Rate).
"Money Market Yield" shall be the yield calculated in accordance
with following formula:
D x 360 X 100
Money Market Yield = -------------
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal and "M" refers to the
actual number of days in the interest period for which interest is being
calculated.
9
<PAGE> 10
Determination of Federal Funds Rate. If the Base Rate specified
on the face hereof is the Federal Funds Rate, the Federal Funds Rate with
respect to this Note shall be determined on each Interest Determination Date
and shall be the rate on such date for Federal Funds as published in H.15(519)
under the heading "Federal Funds (Effective)," or, if not so published by 9:00
A.M., New York City time, on the Calculation Date pertaining to such Interest
Determination Date, the Federal Funds Rate will be the rate on such Interest
Determination Date as published in Composite Quotations under the heading
"Federal Funds/Effective Rate." If neither of such rates is published by 3:00
P.M., New York City time, on such Calculation Date, the Federal Funds Rate for
such Interest Determination Date will be calculated by the Calculation Agent
and will be the arithmetic mean of the rates for the last transaction in
overnight Federal funds as of 11:00 A.M., New York City time, on such Interest
Determination Date arranged by three leading brokers in Federal funds
transactions in The City of New York selected by the Calculation Agent;
provided, however, that if the brokers selected as aforesaid by the Calculation
Agent are not quoting as mentioned in this sentence, the rate of interest in
effect for the applicable period will be the same as the Federal Funds Rate for
the immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the rate of interest payable hereon shall be the Initial
Interest Rate).
Determination of LIBOR. If the Base Rate specified on the face
hereof is LIBOR, LIBOR with respect to this Note shall be determined on each
Interest Determination Date as follows:
(i) As of the Interest Determination Date, the Calculation Agent
shall determine the arithmetic mean of the offered rates for deposits in
United States dollars for the period of the Index Maturity specified on the
face hereof which appear on the Reuters Screen LIBO Page at approximately
11:00 A.M., London time, on such Interest Determination Date. "Reuters
Screen LIBO Page," as used herein, means the display designated as Page
"LIBO" on the Reuters Monitor Money Rate Service (or such other page as may
replace the LIBO page on that service for the purpose of displaying London
interbank offered rates of major banks).
(ii) If fewer than two offered rates appear on the Reuters Screen
LIBO Page, the Calculation Agent will request the principal London offices
of each of four major banks in the London interbank market, as selected by
the Calculation Agent, to provide the Calculation Agent with its offered
quotation for deposits in United States dollars for the period of the Index
Maturity, specified on the face hereof, to prime banks in the London
interbank market at approximately 11:00 A.M., London time, on such Interest
Determination Date and in a principal amount of not less than U.S.
$1,000,000 that is representative for a single transaction in such market
at such time. If at least two such quotations are provided, LIBOR will be
the arithmetic mean of such quotations. If fewer than two quotations are
provided,
10
<PAGE> 11
LIBOR in respect of such Interest Determination Date will be the arithmetic
mean of the rates quoted by three major banks in The City of New York
selected by the Calculation Agent (after consultation with the Issuer) at
approximately 11:00 A.M., New York City Time, on such Interest
Determination Date for loans in U.S. dollars to leading European banks, for
the period of the Index Maturity and in a principal amount of not less than
U.S. $1,000,000 that is representative of a single transaction in such
market at such time; provided, however, that if fewer than three banks
selected as aforesaid by the Calculation Agent are not quoting as mentioned
in this sentence, LIBOR for such Interest Reset Period will be the same as
LIBOR for the immediately preceding Interest Reset Period (or, if there was
no such Interest Reset Period, the rate of interest payable hereon shall be
the Initial Interest Rate).
Determination of Prime Rate. If the Base Rate specified on the
face hereof is the Prime Rate, the Prime Rate with respect to this Note shall
be determined on each Interest Determination Date and shall be the rate set
forth in H.15(519) for such date opposite the caption "Bank Prime Loan." If
such rate is not yet published by 9:00 A.M., New York City time, on the
Calculation Date, the Prime Rate for such Interest Determination Date will be
the arithmetic mean of the rates of interest publicly announced by each bank
named on the Reuters Screen NYMF Page as such bank's prime rate or base lending
rate as in effect for such Interest Determination Date as quoted on the Reuters
Screen NYMF Page on such Interest Determination Date, or, if fewer than four
such rates appear on the Reuters Screen NYMF Page for such Interest
Determination Date, the rate shall be the arithmetic mean of the prime rates
quoted on the basis of the actual number of days in the year divided by 360 as
of the close of business on such Interest Determination Date by at least two of
the three major money center banks in The City of New York selected by the
Calculation Agent from which quotations are requested. If fewer than two
quotations are provided, the Prime Rate shall be calculated by the Calculation
Agent and shall be determined as the arithmetic mean on the basis of the prime
rates in The City of New York by the appropriate number of substitute banks or
trust companies organized and doing business under the laws of the United
States, or any State thereof, in each case having total equity capital of at
least U.S. $500 million and being subject to supervision or examination by
Federal or State authority, selected by the Calculation Agent to quote such
rate or rates.
If in any month or two consecutive months the Prime Rate is not
published in H.15(519) and the banks or trust companies selected as aforesaid
are not quoting as mentioned in the preceding paragraph, the "Prime Rate" for
such Interest Reset Period will be the same as the Prime Rate for the
immediately preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the rate of interest payable hereon shall be the Initial Interest
Rate). If this failure continues over three or more consecutive months, the
Prime Rate for each succeeding Interest Determination Date until the
11
<PAGE> 12
maturity or redemption or repayment of this Note or, if earlier, until this
failure ceases, shall be LIBOR determined as if the Base Rate specified on the
face hereof were LIBOR, and the Spread, if any, shall be the number of basis
points specified on the face hereof as the "Alternative Rate Event Spread."
Determination of Treasury Rate. If the Base Rate specified on the
face hereof is the Treasury Rate, the Treasury Rate with respect to this Note
shall be determined on each Interest Determination Date and shall be the rate
for the auction held on such date of direct obligations of the United States
("Treasury Bills") having the Index Maturity specified on the face hereof, as
published in H.15(519) under the heading "Treasury Bills--auction average
(investment)," or if not so published by 9:00 A.M., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, the auction
average rate on such Interest Determination (expressed as a bond equivalent, on
the basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis) as otherwise announced by the United States Department of the Treasury.
In the event that the results of the auction of Treasury Bills having the Index
Maturity specified on the face hereof are not published or reported as provided
above by 3:00 P.M., New York City time, on such Calculation Date or if no such
auction is held on such Determination Date, then the Treasury Rate shall be
calculated by the Calculation Agent and shall be a yield to maturity (expressed
as a bond equivalent, on the basis of a year of 365 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 P.M., New York City time, on such Interest
Determination Date, of three leading primary United States government
securities dealers selected by the Calculation Agent for the issue of Treasury
Bills with a remaining maturity closest to the Index Maturity specified on the
face hereof; provided, however, that if the dealers selected as aforesaid by
the Calculation Agent are not quoting as mentioned in this sentence, the
Treasury Rate for such Interest Reset Date will be the same as the Treasury
Rate for the immediately preceding Interest Reset Period (or if there was no
such Interest Reset Period, the rate of interest payable hereon shall be the
Initial Interest Rate).
Notwithstanding the foregoing, the interest rate hereon shall not
be greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, specified on the face hereof. The Calculation Agent
shall calculate the interest rate hereon in accordance with the foregoing on or
before each Calculation Date. The interest rate on this Note will in no event
be higher than the maximum rate permitted by New York law, as the same may be
modified by United States Federal law of general application.
At the request of the holder hereof, the Calculation Agent will
provide to the holder hereof the interest rate hereon then in effect and, if
determined, the interest rate that will become effective as of the next
Interest Reset Date.
12
<PAGE> 13
Interest payments on this Note will include interest accrued to
but excluding the Interest Payment Dates or Maturity Date (or any redemption or
repayment date), as the case may be; provided, however, that if the Interest
Reset Period with respect to this Note is daily or weekly, interest payable on
any Interest Payment Date, other than interest payable on any date on which
principal hereof is payable, will include interest accrued through and
including the Record Date next preceding the applicable Interest Payment Date.
Accrued interest hereon shall be an amount calculated by multiplying the face
amount hereof by an accrued interest factor. Such accrued interest factor
shall be computed by adding the interest factor calculated for each day in the
period for which interest is being paid. The interest factor for each such date
shall be computed by dividing the interest rate applicable to such day by 360
if the Base Rate is CD Rate, Commercial Paper Rate, Federal Funds Rate, Prime
Rate or LIBOR, as specified on the face hereof, or by the actual number of days
in the year if the Base Rate is the Treasury Rate, as specified on the face
hereof. All percentages resulting from any calculation of the rate of interest
on this Note will be rounded, if necessary, to the nearest one
hundred-thousandth of a percentage point (.0000001), with five one-millionths
of a percentage point rounded upward, and all dollar amounts used in or
resulting from such calculation on this Note will be rounded to the nearest
cent (with one-half cent rounded upward). The interest rate in effect on any
Interest Reset Date will be the applicable rate as reset on such date. The
interest rate applicable to any other day is the interest rate from the
immediately preceding Interest Reset Date (or, if none, the Initial Interest
Rate).
This Note and all other obligations of the Issuer hereunder will
constitute part of the subordinated debt of the Issuer, will be issued under
the Subordinated Indenture and will be subordinate and junior in right of
payment, to the extent and in the manner set forth in the Subordinated
Indenture, to all "Senior Indebtedness" of the Issuer. The Subordinated
Indenture defines "Senior Indebtedness" as obligations (other than non-recourse
obligations, the debt securities, including this Note, issued under the
Subordinated Indenture or any other obligations specifically designated as
being subordinate in right of payment to Senior Indebtedness) of, or guaranteed
or assumed by, the Issuer for borrowed money or evidenced by bonds, debentures,
notes or other similar instruments, and amendments, renewals, extensions,
modifications and refundings of any such indebtedness or obligation.
This Note, and any Note or Notes issued upon transfer or exchange
hereof, is issuable only in fully registered form, without coupons, and, if
denominated in U.S. Dollars, is issuable only in denominations of U.S.
$100,000 and any integral multiple of U.S. $1,000 in excess thereof. If this
Note is denominated in a Specified Currency other than U.S. dollars, it is
issuable only in denominations of the equivalent of U.S. $100,000 (rounded down
to an integral multiple of 1,000 units of such Specified Currency), or any
amount in excess thereof which is an integral multiple of 1,000
13
<PAGE> 14
units of such Specified Currency, as determined by reference to the noon dollar
buying rate in New York City for cable transfers of such Specified Currency
published by the Federal Reserve Bank of New York (the "Market Exchange Rate")
on the Business Day immediately preceding the date of issuance; provided,
however, in the case of ECUs, the Market Exchange Rate shall be the rate of
exchange determined by the Commission of the European Communities (or any
successor thereto) as published in the official Journal of the European
Communities, or any successor publication on the Business Day immediately
preceding the day of issuance.
The Trustee has been appointed registrar for the Notes (the
"Registrar," which term includes any successor registrar appointed by the
Issuer), and the Registrar shall maintain at its office in the Borough of
Manhattan, The City of New York a register for the registration and transfer of
Notes. This Note may be transferred at the aforesaid office of the Registrar
by surrendering this Note for cancellation, accompanied by a written instrument
of transfer in form satisfactory to the Registrar and duly executed by the
registered holder hereof in person or by the holder's attorney duly authorized
in writing, and thereupon the Registrar shall issue in the name of the
transferee or transferees, in exchange herefor, a new Note or Notes having
identical terms and provisions for a like aggregate principal amount in
authorized denominations, subject to the terms and conditions set forth herein;
provided, however, that the Registrar shall not be required (i) to register the
transfer of or exchange any Note that has been called for redemption in whole
or in part, except the unredeemed portion of Notes being redeemed in part, (ii)
to register the transfer of or exchange any Note if the holder thereof has
exercised his right, if any, to require the Issuer to repurchase such Note in
whole or in part, except the portion of such Note not required to be
repurchased, or (iii) to register the transfer of or exchange Notes to the
extent and during the period so provided in the Subordinated Indenture with
respect to the redemption of Notes. Notes are exchangeable at said office for
other Notes of other authorized denominations of equal aggregate principal
amount having identical terms and provisions. All such exchanges and transfers
of Notes will be free of charge, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge in connection
therewith. All Notes surrendered for exchange or transfer shall be accompanied
by a written instrument of transfer in form satisfactory to the Registrar and
executed by the registered holder in person or by the holder's attorney duly
authorized in writing. The date of registration of any Note delivered upon any
exchange or transfer of Notes shall be such that no gain or loss of interest
results from such exchange or transfer.
In case any Note shall at any time become mutilated, defaced or be
destroyed, lost or stolen and such Note or evidence of the loss, theft or
destruction thereof (together with the indemnity hereinafter referred to and
such other documents or proof as may be required in the premises) shall be
delivered to the Trustee, a new
14
<PAGE> 15
Note of like tenor will be issued by the Issuer in exchange for the Note so
mutilated, or in lieu of the Note so destroyed or lost or stolen, but, in the
case of any destroyed or lost or stolen Note, only upon receipt of evidence
satisfactory to the Registrar and the Issuer that such Note was destroyed or
lost or stolen and, if required, upon receipt also of indemnity satisfactory to
each of them. All expenses and reasonable charges associated with procuring
such indemnity and with the preparation, authentication and delivery of a new
Note shall be borne by the owner of the Note mutilated, defaced, destroyed,
lost or stolen.
The Subordinated Indenture provides that, (a) if an Event of
Default (as defined in such Subordinated Indenture) due to the default in
payment of principal of, premium, if any, or interest on, any series of debt
securities issued under the Subordinated Indenture, including the series of
Subordinated Medium-Term Notes of which this Note forms a part, or due to the
default in the performance or breach of any other covenant or warranty of the
Issuer applicable to the debt securities of such series but not applicable to
all outstanding debt securities issued under the Subordinated Indenture shall
have occurred and be continuing, either the Trustee or the holders of not less
than 25% in principal amount of the debt securities of each affected series
(voting as a single class) may then declare the principal of all debt
securities of all such series and interest accrued thereon to be due and
payable immediately and (b) if an Event of Default due to a default in the
performance of any other of the covenants or agreements in the Subordinated
Indenture applicable to all outstanding debt securities issued thereunder,
including this Note, or due to certain events of bankruptcy, insolvency and
reorganization of the Issuer, shall have occurred and be continuing, either the
Trustee or the holders of not less than 25% in principal amount of all debt
securities issued under the Subordinated Indenture then outstanding (treated as
one class) may declare the principal of all such debt securities and interest
accrued thereon to be due and payable immediately, but upon certain conditions
such declarations may be annulled and past defaults may be waived (except a
continuing default in payment of principal (or premium, if any) or interest on
such debt securities) by the holders of a majority in principal amount of the
debt securities of all affected series then outstanding.
The Subordinated Indenture permits the Issuer and the Trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of the debt securities of each series issued under the
Subordinated Indenture then outstanding and affected, to execute supplemental
indentures adding any provisions to or changing in any manner the rights of the
holders of each series so affected; provided that the Issuer and the Trustee
may not, without the consent of the holder of each outstanding debt security
affected thereby, (a) extend the final maturity of any such debt security, or
reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, or reduce any amount payable on redemption or
repayment thereof, or change the
15
<PAGE> 16
currency of payment thereof, or impair or affect the rights of any holder to
institute suit for the payment thereof without the consent of the holder of
each debt security so affected; or (b) reduce the aforesaid percentage in
principal amount of debt securities the consent of the holders of which is
required for any such supplemental indenture, without the consent of the
holders of each debt security so affected; provided, however, that neither this
Note nor the Subordinated Indenture may be amended to alter the subordination
provisions hereof or thereof without the written consent of each holder of
Senior Indebtedness then outstanding that would be adversely affected thereby.
Except as set forth below, if the principal of, or interest on,
this Note is payable in a Specified Currency other than U.S. dollars and such
Specified Currency is not available to the Issuer for making payments hereon
due to the imposition of exchange controls or other circumstances beyond the
control of the Issuer or is no longer used by the government of the country
issuing such currency or for the settlement of transactions by public
institutions within the international banking community, then the Issuer will
be entitled to satisfy its obligations to the holder of this Note by making
such payments in U.S. dollars on the basis of the Market Exchange Rate on the
date of such payment or, it the Market Exchange Rate is not available on such
date, as of the most recent practicable date. Any payment made under such
circumstances in U.S. dollars where the required payment is in a Specified
Currency other than U.S. dollars will not constitute an Event of Default.
If payment in respect of this Note is required to be made in ECUs
and ECUs are unavailable due to the imposition of exchange controls or other
circumstances beyond the Issuer's control or are no longer used in the European
Monetary System, then all payments in respect of this Note shall be made in
U.S. dollars until ECUs are again available or so used. The amount of each
payment in U.S. dollars shall be computed on the basis of the equivalent of the
ECU in U.S. dollars, determined as described below, as of the second Business
Day prior to the date on which such payment is due.
The equivalent of the ECU in U.S. dollars as of any date (the "Day
of Valuation") shall be determined by the Issuer or its agent on the following
basis. The component currencies of the ECU for this purpose (the "Components")
shall be the currency amounts that were components of the ECU as of the last
date on which the ECU was used in the European Monetary System. The equivalent
of the ECU in U.S. dollars shall be calculated by aggregating the U.S. dollar
equivalents of the Components. The U.S. dollar equivalent of each of the
Components shall be determined by the Issuer or such agent on the basis of the
most recently available Market Exchange Rates for such Components.
If the official unit of any Component is altered by way of
combination or subdivision, the number of units of that currency as
16
<PAGE> 17
a Components shall be divided or multiplied in the same proportion. If two or
more Components are consolidated into a single currency, the amounts of those
currencies as Components shall be replaced by an amount in such single currency
equal to the sum of the amounts of the consolidated component currencies
expressed in such single currency. If any Component is divided into two or
more currencies, the amount of the original component currency shall be
replaced by the amounts of such two or more currencies, each of which shall be
equal to the amount of the original component currency separated into the
number of currencies into which such original currency was divided.
All determinations referred to above made by the Issuer or its
agent shall be at its sole discretion and shall, in the absence of manifest
error, be conclusive to the extent permitted by law for all purposes and
binding on holders of Notes.
So long as this Note shall be outstanding, the Issuer will cause
to be maintained an office or agency for the payment of the principal of and
premium, if any, and interest on this Note as herein provided in the Borough of
Manhattan, The City of New York, and an office or agency in said Borough of
Manhattan for the registration, transfer and exchange as aforesaid of the
Notes. The Issuer may designate other agencies for the payment of said
principal, premium and interest at such place or places (subject to applicable
laws and regulations) as the Issuer may decide. So long as there shall be such
an agency, the Issuer shall keep the Trustee advised of the names and locations
of such agencies, if any are so designated.
With respect to moneys paid by the Issuer and held by the Trustee
or any Paying Agent for the payment of the principal of or interest or premium,
if any, on any Notes that remain unclaimed at the end of two years after such
principal, interest or premium shall have become due and payable (whether at
maturity or upon call for redemption or otherwise), (i) the Trustee or such
Paying Agent shall notify the holders of such Notes that such moneys shall be
repaid to the Issuer and any person claiming such moneys shall thereafter look
only to the Issuer for payment thereof and (ii) such moneys shall be so repaid
to the Issuer. Upon such repayment all liability of the Trustee or such Paying
Agent with respect to such moneys shall thereupon cease, without, however,
limiting in any way any obligation that the Issuer may have to pay the
principal of or interest or premium, if any, on this Note as the same shall
become due.
No provision of this Note or of the Subordinated Indenture shall
alter or impair the obligation of the Issuer, which is absolute and
unconditional, to pay the principal of, premium, if any, and interest on this
Note at the time, place, and rate, and in the coin or currency, herein
prescribed unless otherwise agreed between the Issuer and the registered holder
of this Note.
17
<PAGE> 18
Prior to due presentment of this Note for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee
may treat the holder in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note be overdue, and neither the Issuer,
the Trustee nor any such agent shall be affected by notice to the contrary.
No recourse shall be had for the payment of the principal of or
the interest on this Note, for any claim based hereon, or otherwise in respect
hereof, or based on or in respect of the Subordinated Indenture or any
indenture supplemental thereto, against any incorporator, shareholder, officer
or director, as such, past present or future, of the Issuer or of any successor
corporation, either directly or through the Issuer or any successor
corporation, 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 issue hereof, expressly waived and released.
This Note shall for all purposes be governed by, and construed in
accordance with, the laws of the State of New York.
All terms used in this Note which are defined in the Subordinated
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Subordinated Indenture.
18
<PAGE> 19
ABBREVIATIONS
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM-as tenants in common
TEN ENT-as tenants by the entireties
JT TEN-as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT-____________Custodian____________
(Cust) (Minor)
Under Uniform Gifts to Minors Act__________________
(State)
Additional abbreviations may also be used though not in the above
list.
____________________
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
[PLEASE PRINT OR TYPE NAME AND ADDRESS INCLUDING ZIP CODE,
OF ASSIGNEE]
[PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE]
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing such person attorney to transfer such note on the books of the
Issuer, with full power of substitution in the premises.
Dated: _______________________ _____________________________
[Signature of Assignor]
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Note in every particular
without alteration or enlargement or any change whatsoever.
19
<PAGE> 20
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the
Issuer to repay the within Note (or portion hereof specified below) pursuant to
its terms at a price equal to the applicable Repayment Price thereof together
with interest to the Repayment Date, to the undersigned at
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address of the undersigned)
If less than the entire principal amount of the within Note is to
be repaid, specify the portion thereof which the holder elects to have repaid
$___________________; and specify the denomination or denominations (which
shall be in authorized denominations) of the Notes to be issued to the holder
for the portion of the within Note not being repaid (in the absence of any such
specification, one such Note will be issued for the portion not being repaid):
________________________________________________________________________________
Date:_____________________________ ____________________________________
(Signature)
20
<PAGE> 1
EXHIBIT 4.6
Fixed Rate Subordinated Note
REGISTERED REGISTERED
No. FXR CUSIP:
Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the issuer or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co. or
such other name as requested by an authorized representative of The Depository
Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since
the registered owner hereof, Cede & Co., has an interest herein.*
IF APPLICABLE, THE "TOTAL AMOUNT OF OID", "ORIGINAL YIELD TO
MATURITY" AND "INITIAL ACCRUAL PERIOD OID" (COMPUTED UNDER THE
APPROXIMATE METHOD) SET FORTH BELOW HAS BEEN COMPLETED SOLELY
FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME TAX ORIGINAL
ISSUE DISCOUNT ("OID") RULES.
WILLIAMS HOLDINGS OF DELAWARE, INC.
SUBORDINATED MEDIUM-TERM NOTE
(Fixed Rate)
<TABLE>
<S> <C> <C> <C>
ORIGINAL INITIAL REDEMPTION INTEREST RATE: MATURITY
ISSUE DATE: DATE: DATE:
INTEREST PAYMENT
DATES:
INTEREST SPECIFIED
ACCRUAL DATE: CURRENCY:
APPLICABILITY OF
TOTAL AMOUNT INITIAL REDEMPTION MODIFIED PAYMENT
OF OID: PERCENTAGE: UPON ACCELERATION:
</TABLE>
__________
* Applies only if this Note is a Registered Global Security.
<PAGE> 2
<TABLE>
<S> <C> <C>
ANNUAL REDEMPTION If yes, state
ORIGINAL PERCENTAGE Issue Price:
YIELD TO REDUCTION:
MATURITY:
INITIAL INITIAL REPAYMENT
ACCRUAL DATE:
PERIOD OID:
INITIAL REPAYMENT
PERCENTAGE:
ANNUAL REPAYMENT
PERCENTAGE
REDUCTION:
</TABLE>
TRUSTEE'S [AND/OR AUTHENTICATING AGENT'S] CERTIFICATE[S] OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned
Subordinated Indenture.
Citibank, N.A.,
as Trustee
By:__________________________
Authorized Officer
[___________________________,
as Authenticating Agent
By:__________________________
Authorized Officer]
2
<PAGE> 3
Williams Holdings of Delaware, Inc., a Delaware corporation
(the "Issuer"), for value received, hereby promises to pay to
or registered assignees, the principal sum of
, on the Maturity Date specified above (except to the extent redeemed or repaid
prior to the Maturity Date) and to pay interest thereon at the Interest Rate
per annum specified above from the Original Issue Date specified above until
the principal hereof is paid or duly made available for payment (except as
provided below), semiannually in arrears on the first day of March and
September in each year commencing on the Interest Payment Date next succeeding
the Original Issue Date specified above, and on the Maturity Date (or any
redemption or repayment date); provided, however, that if the Original Issue
Date occurs between a Record Date, as defined below, and the next succeeding
Interest Payment Date, interest payments will commence on the second Interest
Payment Date succeeding the Original Issue Date to the registered holder of
this Note on the Record Date with respect to such second Interest Payment Date.
Interest on this Note will accrue from the most recent
Interest Payment Date to which interest has been paid or duly provided for, or,
if no interest has been paid or duly provided for, from the Original Issue
Date, until the principal hereof has been paid or duly made available for
payment (except as provided below). The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date, will, subject to
certain exceptions described herein, be paid to the person in whose name this
Note (or one or more predecessor Notes) is registered at the close of business
on the date 15 calendar days prior to an Interest Payment Date (whether or not
a Business Day) (the "Record Date"); provided, however, that interest payable
on the Maturity Date (or any redemption or repayment date) will be payable to
the person to whom the principal hereof shall be payable. As used herein,
"Business Day" means any day, other than a Saturday or Sunday, and that is
neither a legal holiday nor a day on which banking institutions are authorized
or required by law or regulation to close in The City of New York and (i) with
respect to Notes denominated in a Specified Currency other than U.S. dollars or
European Currency Units ("ECUs") in the capital city of the country of the
Specified Currency and (ii) with respect to Notes denominated in ECUs, in
Brussels, Belgium.
Payment of the principal of this Note, any premium and the
interest due at the Maturity Date (or any redemption or repayment date) will be
made in immediately available funds upon surrender of
3
<PAGE> 4
this Note at the office or agency of the Trustee as defined on the reverse
hereof, or at the office or agency of such paying agent as the Issuer may
determine maintained for that purpose in the Borough of Manhattan, The City of
New York, or such other paying agency as the Issuer may determine. Payment of
the principal of and premium, if any, and interest on this Note will be made in
such coin or currency of the United States of America or in a Specified
Currency other than U.S. dollars as indicated herein as at the time of payment
is legal tender for payment of public and private debts; provided, however,
that U.S. dollar payments of interest, other than interest due at maturity or
any date of redemption or repayment, will be made by United States dollar check
mailed to the address of the person entitled thereto as such address shall
appear in the Note register. A holder of U.S. $10,000,000 or more in aggregate
principal amount of Notes having the same Interest Payment Date will be
entitled to receive payments of interest, other than interest due at maturity
or any date of redemption or repayment, by wire transfer of immediately
available funds if appropriate wire transfer instructions in writing have been
received by the Trustee or any Paying Agent not less than 15 calendar days
prior to the applicable Interest Payment Date. Payments of interest on Notes
in a Specified Currency other than U.S. dollars will be made by wire transfer
of immediately available funds to an account maintained by the holder with a
bank located outside the United States and the holder of such Notes shall
provide the Trustee or any Paying Agent with the appropriate wire transfer
instructions.
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place, including, without
limitation, the provisions relating to the subordination of this Note to the
Issuer's Senior Indebtedness, as defined on the reverse hereof.
Unless the certificate of authentication hereon has been
executed by the Trustee or by the Authenticating Agent, referred to on the
reverse hereof, by manual signature, this Note shall not be entitled to any
benefit under the Subordinated Indenture, as defined on the reverse hereof, or
be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed under its corporate seal.
DATED: WILLIAMS HOLDINGS OF DELAWARE, INC.
By: ________________________________
Title:
4
<PAGE> 5
This Note is one of a duly authorized issue of Subordinated
Medium-Term Notes having maturities more than nine months from the date of
issue (the "Notes") of the Issuer. The Notes are issuable under a Subordinated
Indenture, dated as of ______________, 199__ (herein called the "Subordinated
Indenture"), between the Issuer and Citibank, N.A., as Trustee (herein called
the "Trustee", which term includes any successor trustee under the Subordinated
Indenture), to which Subordinated Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities of the Issuer, the Trustee and
holders of the Notes and the terms upon which the Notes are, and are to be,
authenticated and delivered. The Trustee has appointed _______________ as
Authenticating Agent (the "Authenticating Agent," which term includes any
successor authenticating agent appointed by the Trustee) with respect to the
Notes, and the Issuer has appointed the Trustee at its corporate trust office
in The City of New York as the registrar and as a Paying Agent with respect to
the Notes. The terms of individual Notes may vary with respect to interest
rates, interest rate formulas, issue dates, maturity dates, or otherwise, all
as provided in the Subordinated Indenture. To the extent not inconsistent
herewith, the terms of the Subordinated Indenture are hereby incorporated by
reference herein.
Unless otherwise indicated on the face of this Note, this Note
may not be redeemed prior to the Maturity Date. If so indicated on the face of
this Note, this Note may be redeemed at the option of the Issuer on or after a
specified date or dates prior to the Maturity Date on the terms set forth on
the face hereof, together with interest accrued and unpaid thereon to the date
fixed for redemption (except as provided below). Notice of redemption shall be
mailed to the registered holders of the Notes designated for redemption at
their addresses as the same shall appear on the Note register not less than 30
nor more than 60 days prior to the date of redemption, subject to all the
conditions and provisions of the Subordinated Indenture. In the event of
redemption of this Note in part only, a new Note or Notes for the amount of the
unredeemed portion hereof shall be issued in the name of the holder hereof upon
the cancellation hereof.
Unless otherwise indicated on the face of this Note, this Note
may not be repaid prior to the Maturity Date. If so indicated on the face of
this Note, this Note may be subject to repayment at the option of the holder on
or after a specified date or dates prior to the Maturity Date on the terms set
forth on the face hereof, together with interest accrued and unpaid thereon to
the date of repayment (except as provided below). For this Note to be repaid
in whole or in part at the option of the holder hereof, the Paying Agent must
receive not less than 30 or more than 45 days prior to the Repayment Date (i)
the Note with the form entitled "Option to Elect Repayment" below duly
completed or (ii) a telegram, telex, facsimile transmission or a letter from a
member of a national securities exchange or the National Association of
Securities
5
<PAGE> 6
Dealers, Inc. or a commercial bank or a trust company in the United States of
America setting forth the name of the holder of this Note, the principal amount
hereof, the certificate number of this Note or a description of the Note's
tenor or terms, the principal amount hereof to be prepaid, a statement that the
option to elect repayment is being exercised thereby and a guarantee that this
Note to be prepaid with the form entitled "Option to Elect Repayment" below
duly completed will be received by the Paying Agent no later than five Business
Days after the date of such telegram, telex, facsimile transmission or letter
and this Note and form duly completed are received by the Paying Agent by such
fifth Business Day. Exercise of such repayment option shall be irrevocable.
Such option may be exercised by the holder for less than the entire principal
amount hereof, provided that the principal amount remaining outstanding after
repayment is at least $100,000 or any larger amount that is an integral
multiple of $1,000. In the event of repayment of this Note in part only, a new
Note or Notes for the amount of the portion hereof that is not repaid shall be
issued in the name of the holder hereof upon the cancellation hereof.
Interest payments on this Note will include interest accrued
to but excluding the Interest Payment Dates or the Maturity Date (or earlier
redemption date), as the case may be. Interest payments for this Note will be
computed and paid on the basis of a 360-day year of twelve 30-day months.
In the case where the Interest Payment Date or the Maturity
Date (or any redemption or repayment date) does not fall on a Business Day,
payment of interest, premium, if any, or principal otherwise payable on such
date 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 Interest Payment
Date or on the Maturity Date (or the redemption or repayment date), and no
interest shall accrue for the period from and after the Interest Payment Date
or the Maturity Date (or the redemption or repayment date) to such next
succeeding Business Day.
This Note and all other obligations of the Issuer hereunder
will constitute part of the subordinated debt of the Issuer, will be issued
under the Subordinated Indenture and will be subordinate and junior in right of
payment, to the extent and in the manner set forth in the Subordinated
Indenture, to all "Senior Indebtedness" of the Issuer. The Subordinated
Indenture defines "Senior Indebtedness" as obligations (other than non-recourse
obligations, the debt securities, including this Note, issued under the
Subordinated Indenture or any other obligations specifically designated as
being subordinate in right of payment to Senior Indebtedness) of, or guaranteed
or assumed by, the Issuer for borrowed money or evidenced by bonds, debentures,
notes or other similar instruments, and amendments, renewals, extensions,
modifications and refundings of any such indebtedness or obligation.
6
<PAGE> 7
This Note, and any Note or Notes issued upon transfer or
exchange hereof, is issuable only in fully registered form, without coupons,
and if denominated in U.S. dollars, is issuable only in denominations of U.S.
$100,000 and any integral multiple of U.S. $1,000 in excess thereof. If this
Note is denominated in a Specified Currency other than U.S. dollars, it is
issuable in denominations of the equivalent of U.S. $100,000 (rounded down to
an integral multiple of 1,000 units of such Specified Currency), or any amount
in excess thereof which is an integral multiple of 1,000 units of such
Specified Currency, as determined by reference to the noon dollar buying rate
in New York City for cable transfers of such Specified Currency published by
the Federal Reserve Bank of New York (the "Market Exchange Rate") on the
Business Day immediately preceding the date of issuance; provided, however, in
the case of ECUs, the Market Exchange Rate shall be the rate of exchange
determined by the Commission of the European Communities (or any successor
thereto) as published in the Official Journal of the European Communities, or
any successor publication, on the Business Day immediately preceding the date
of issuance.
The Trustee has been appointed registrar for the Notes (the
"Registrar," which term includes any successor registrar appointed by the
Issuer), and the Registrar shall maintain at its office in the Borough of
Manhattan, The City of New York a register for the registration and transfer of
Notes. This Note may be transferred at the aforesaid office of the Registrar
by surrendering this Note for cancellation, accompanied by a written instrument
of transfer in form satisfactory to the Registrar and duly executed by the
registered holder hereof in person or by the holder's attorney duly authorized
in writing, and thereupon the Registrar shall issue in the name of the
transferee or transferees, in exchange herefor, a new Note or Notes having
identical terms and provisions and for a like aggregate principal amount in
authorized denominations, subject to the terms and conditions set forth herein;
provided, however, that the Registrar shall not be required (i) to register
the transfer of or exchange any Note that has been called for redemption in
whole or in part, except the unredeemed portion of Notes being redeemed in
part, (ii) to register the transfer of or exchange any Note if the holder
thereof has exercised his right, if any, to require the Issuer to repurchase
such Note in whole or in part, except the portion of such Note not required to
be repurchased, or (iii) to register the transfer or exchange Notes to the
extent and during the period so provided in the Subordinated Indenture with
respect to the redemption of Notes. Notes are exchangeable at said office for
other Notes of other authorized denominations of equal aggregate principal
amount having identical terms and provisions. All such exchanges and transfers
of Notes will be free of charge, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge in connection
therewith. All Notes surrendered for exchange or transfer shall be accompanied
by a written instrument of transfer in form approved by the Registrar and
executed by the registered holder in person or by the holder's attorney duly
authorized in writing. The date of registration of
7
<PAGE> 8
any Note delivered upon any exchange or transfer of Notes shall be such that no
gain or loss of interest results from such exchange or transfer.
In case any Note shall at any time become mutilated, defaced
or be destroyed, lost or stolen and such Note or evidence of the loss, theft or
destruction thereof (together with the indemnity hereinafter referred to and
such other documents or proof as may be required in the premises) shall be
delivered to the Registrar a new Note of like tenor will be issued by the
Issuer in exchange for the Note so mutilated or defaced, or in lieu of the Note
so destroyed or lost or stolen, but, in the case of any destroyed or lost or
stolen Note, only upon receipt of evidence satisfactory to the Registrar and
the Issuer that such Note was destroyed or lost or stolen and, if required,
upon receipt also of indemnity satisfactory to each of them. All expenses and
reasonable charges associated with procuring such indemnity and with the
preparation, authentication and delivery of a new Note shall be borne by the
owner of the Note mutilated, defaced, destroyed, lost or stolen.
The Subordinated Indenture provides that, (a) if an Event of
Default (as defined in the Subordinated Indenture) due to the default in
payment of principal of, premium, if any, or interest on, any series of debt
securities issued under the Subordinated Indenture, including the series of
Subordinated Medium-Term Notes of which this Note forms a part, or due to the
default in the performance or breach of any other covenant or warranty of the
Issuer applicable to the debt securities of such series but not applicable to
all outstanding debt securities issued under the Subordinated Indenture shall
have occurred and be continuing, either the Trustee or the holders of not less
than 25% in principal amount of the debt securities of each affected series
(voting as a single class) may then declare the principal of all debt
securities of all such series and interest accrued thereon to be due and
payable immediately and (b) if an Event of Default due to a default in the
performance of any other of the covenants or agreements in the Subordinated
Indenture applicable to all outstanding debt securities issued thereunder,
including this Note, or due to certain events of bankruptcy, insolvency and
reorganization of the Issuer, shall have occurred and be continuing, either the
Trustee or the holders of not less than 25% in principal amount of all debt
securities issued under the Subordinated Indenture then outstanding (treated as
one class) may declare the principal of all such debt securities and interest
accrued thereon to be due and payable immediately, but upon certain conditions
such declarations may be annulled and past defaults may be waived (except a
continuing default in payment of principal (or premium, if any) or interest on
such debt securities) by the holders of a majority in principal amount of the
debt securities of all affected series then outstanding.
If the face hereof indicates that this Note is subject to
"Modified Payment upon Acceleration," then if the principal hereof is declared
to be due and payable as described in the preceding
8
<PAGE> 9
paragraph, the amount of principal due and payable with respect to this Note
shall be limited to the aggregate principal amount hereof multiplied by the sum
of the Issue Price specified on the face hereof (expressed as a percentage of
the aggregate principal amount) plus the original issue discount amortized from
the Original Issue Date to the date of declaration, which amortization shall be
calculated using the "interest method" (computed in accordance with generally
accepted accounting principles in effect on the date of declaration).
The Subordinated Indenture permits the Issuer and the Trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of the debt securities of each series issued under the
Subordinated Indenture then outstanding and affected, to execute supplemental
indentures adding any provisions to or changing in any manner the rights of the
holders of each series so affected; provided that the Issuer and the Trustee
may not, without the consent of the holder of each outstanding debt security
affected thereby, (a) extend the final maturity of any such debt security, or
reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, or reduce any amount payable on redemption or
repayment thereof, or change the currency of payment thereof, or impair or
affect the rights of any holder to institute suit for the payment thereof
without the consent of the holder of each debt security so affected; or (b)
reduce the aforesaid percentage in principal amount of debt securities the
consent of the holders of which is required for any such supplemental
indenture, without the consent of the holders of each debt security so
affected; provided, however, that neither this Note nor the Subordinated
Indenture may be amended to alter the subordination provisions hereof or
thereof without the written consent of each holder of Senior Indebtedness then
outstanding that would be adversely affected thereby.
Except as set forth below, if the principal of, or interest
on, this Note is payable in a Specified Currency other than U.S. dollars and
such Specified Currency is not available to the Issuer for making payments
hereon due to the imposition of exchange controls or other circumstances beyond
the control of the Issuer or is no longer used by the government of the country
issuing such currency or for the settlement of transactions by public
institutions within the international banking community, then the Issuer will
be entitled to satisfy its obligations to the holder of this Note by making
such payments in U.S. dollars on the basis of the Market Exchange Rate on the
date of such payment or, if the Market Exchange Rate is not available on such
date, as of the most recent practicable date. Any payment made under such
circumstances in U.S. dollars where the required payment is in a Specified
Currency other than U.S. dollars will not constitute an Event of Default.
If payment in respect of this Note is required to be made in
ECUs and ECUs are unavailable due to the imposition of exchange
9
<PAGE> 10
controls or other circumstances beyond the Issuer's control or are no longer
used in the European Monetary System, then all payments in respect of this Note
shall be made in U.S. dollars until ECUs are again available or so used. The
amount of each payment in U.S. dollars shall be computed on the basis of the
equivalent of the ECU in U.S. dollars, determined as described below, as of the
second Business Day prior to the date on which such payment is due.
The equivalent of the ECU in U.S. dollars as of any date (the
"Day of Valuation") shall be determined by the Issuer or its agent on the
following basis. The component currencies of the ECU for this purpose (the
"Components") shall be the currency amounts that were components of the ECU as
of the last date on which the ECU was used in the European Monetary System.
The equivalent of the ECU in U.S. dollars shall be calculated by aggregating
the U.S. dollar equivalents of the Components. The U.S. dollar equivalent of
each of the Components shall be determined by the Issuer or such agent on the
basis of the most recently available Market Exchange Rates for such Components.
If the official unit of any Component is altered by way of
combination or subdivision, the number of units of that currency as a Component
shall be divided or multiplied in the same proportion. If two or more
Components are consolidated into a single currency, the amounts of those
currencies as Components shall be replaced by an amount in such single currency
equal to the sum of the amounts of the consolidated component currencies
expressed in such single currency. If any Component is divided into two or
more currencies, the amount of the original component currency shall be
replaced by the amounts of such two or more currencies, each of which shall be
equal to the amount of the original component currency separated into the
number of currencies into which such original currency was divided.
All determinations referred to above made by the Issuer or its
agent shall be at its sole discretion and shall, in the absence of manifest
error, be conclusive to the extent permitted by law for all purposes and
binding on holders of Notes.
So long as this Note shall be outstanding, the Issuer will
cause to be maintained an office or agency for the payment of the principal of
and premium, if any, and interest on this Note as herein provided in the
Borough of Manhattan, The City of New York, and an office or agency in said
Borough of Manhattan, The City of New York for the registration, transfer and
exchange as aforesaid of the Notes. The Issuer may designate other agencies
for the payment of said principal, premium and interest at such place or places
(subject to applicable laws and regulations) as the Issuer may decide. So long
as there shall be any such agency, the Issuer shall keep the Trustee advised of
the names and locations of such agencies, if any are so designated.
10
<PAGE> 11
With respect to moneys paid by the Issuer and held by the
Trustee or any Paying Agent for payment of the principal of or interest or
premium, if any, on any Notes, that remain unclaimed at the end of two years
after such principal, interest or premium shall have become due and payable
(whether at maturity or upon call for redemption or otherwise), (i) the Trustee
or such Paying Agent shall notify the holders of such Notes that such moneys
shall be repaid to the Issuer and any person claiming such moneys shall
thereafter look only to the Issuer for payment thereof and (ii) such moneys
shall be so repaid to the Issuer. Upon such repayment all liability of the
Trustee or such Paying Agent with respect to such moneys shall thereupon cease,
without, however, limiting in any way any obligation that the Issuer may have
to pay the principal of or interest or premium, if any, on this Note as the
same shall become due.
No provision of this Note or of the Subordinated Indenture
shall alter or impair the obligation of the Issuer, which is absolute and
unconditional, to pay the principal of, premium, if any, and interest on this
Note at the time, place, and rate, and in the coin or currency, herein
prescribed unless otherwise agreed between the Issuer and the registered holder
of this Note.
Prior to due presentment of this Note for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee
may treat the holder in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note be overdue, and neither the Issuer,
the Trustee nor any such agent shall be affected by notice to the contrary.
No recourse shall be had for the payment of the principal of
or the interest on this Note, for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Subordinated Indenture or any
indenture supplemental thereto, against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Issuer or of any
successor corporation, either directly or through the Issuer of any successor
corporation, 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 issue hereof, expressly waived and released.
This Note shall for all purposes be governed by, and construed
in accordance with, the laws of the State of New York.
All terms used in this Note which are defined in the
Subordinated Indenture and not otherwise defined herein shall have the meanings
assigned to them in the Subordinated Indenture.
11
<PAGE> 12
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM-as tenants in common
TEN ENT-as tenants by the entireties
JT TEN-as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT-...........Custodian...........
(Cust) (Minor)
Under Uniform Gifts to Minors Act...............
(State)
Additional abbreviations may also be used though not in the
above list.
_____________
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
[PLEASE PRINT OR TYPE NAME AND ADDRESS INCLUDING ZIP CODE, OF ASSIGNEE]
[PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE]
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing such person attorney to transfer such note on the books of the
Issuer, with full power of substitution in the premises.
Dated: __________________________ _____________________________
[Signature of Assignor]
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Note in every particular without
alteration or enlargement or any change whatsoever.
12
<PAGE> 13
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the
Issuer to repay the within Note (or portion hereof specified below) pursuant to
its terms at a price equal to the applicable Repayment Price thereof together
with interest to the Repayment Date, to the undersigned at
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address of the undersigned)
If less than the entire principal amount of the within Note is
to be repaid, specify the portion thereof which the holder elects to have
repaid $___________________; and specify the denomination or denominations
(which shall be in authorized denominations) of the Notes to be issued to the
holder for the portion of the within Note not being repaid (in the absence of
any such specification, one such Note will be issued for the portion not being
repaid):
________________________________________________________________________________
Date:______________________________ _________________________________
(Signature)
13
<PAGE> 1
EXHIBIT 12
WILLIAMS HOLDINGS OF DELAWARE, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE
----------------------------------------------- 30,
1994 1993 1992 1991 1990 1995
------ ------ ----- ----- ----- ------------
<S> <C> <C> <C> <C> <C> <C>
Earnings:
Income from continuing operations
before income taxes........... $179.1 $244.9 $53.1 $23.8 $35.8 $115.0
Add:
Interest expense -- net....... 21.1 9.4 17.4 26.1 19.4 28.8
Rental expense representative
of interest factor.......... 4.9 3.4 3.6 3.8 1.1 3.6
Preferred dividends of
subsidiaries................ -- -- -- -- -- 5.4
Other......................... .8 (1.0) (5.7) (.1) (2.0) (.2)
------ ------ ----- ----- ----- ------
Total earnings as
adjusted plus fixed
charges................ $205.9 $256.7 $68.4 $53.6 $54.3 $152.6
====== ====== ===== ===== ===== ======
Fixed charges:
Interest expense -- net.......... $ 21.1 $ 9.4 $17.4 $26.1 $19.4 $ 28.8
Capitalized interest............. 4.7 5.4 2.9 3.5 1.5 4.1
Rental expense representative of
interest factor............... 4.9 3.4 3.6 3.8 1.1 3.6
Pretax effect of preferred
dividends of subsidiaries..... -- -- -- -- -- 8.3
------ ------ ----- ----- ----- ------
Total fixed charges...... $ 30.7 $ 18.2 $23.9 $33.4 $22.0 $ 44.8
====== ====== ===== ===== ===== ======
Ratio of earnings to fixed
charges.......................... 6.71 14.10 2.86 1.60 2.47 3.41
====== ====== ===== ===== ===== ======
</TABLE>
<PAGE> 1
EXHIBIT 24.1
WILLIAMS HOLDINGS OF DELAWARE, INC.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned Williams Holdings of
Delaware, Inc. does hereby constitute and appoint J. FURMAN LEWIS, BOBBY E.
POTTS and DAVID M. HIGBEE its true and lawful attorneys and each of them (with
full power to act without the others) its true and lawful attorney for it and in
its name and on its behalf to sign a Securities Exchange Act of 1934
Registration Statement on Form 10 and any and all amendments thereto and any and
all instruments necessary or incidental in connection therewith.
Each of said attorneys shall have full power of substitution and
resubstitution, and said attorneys or any of them or any substitute appointed by
any of them hereunder shall have full power and authority to do and perform in
the name and on behalf of each of the undersigned, in any and all capacities,
every act whatsoever requisite or necessary to be done in the premises, as fully
to all intents and purposes as each of the undersigned might or could do in
person, the undersigned hereby ratifying and approving the acts of said
attorneys or any of them or of any such substitute pursuant hereto.
IN WITNESS WHEREOF, the undersigned have executed this instrument, all as
of the 10th day of October, 1995.
WILLIAMS HOLDINGS OF DELAWARE,
INC.
By /s/ JAMES R. HERBSTER
James R. Herbster
Senior Vice President
ATTEST:
/s/ DAVID M. HIGBEE
David M. Higbee
Secretary
<PAGE> 1
EXHIBIT 24.2
WILLIAMS HOLDINGS OF DELAWARE, INC.
I, the undersigned, DAVID M. HIGBEE, Secretary of WILLIAMS HOLDINGS OF
DELAWARE, INC., a Delaware corporation (hereinafter called the "Corporation"),
do hereby certify that pursuant to Section 141(f) of the General Corporation Law
of the State of Delaware, the Board of Directors of this Corporation unanimously
consented, as of October 10th, 1995, to the following:
RESOLVED that the Chairman of the Board, the President, any Vice
President, the Secretary and any Assistant Secretary of the Company
be, and each of them hereby is, authorized to prepare and execute on
behalf of the Company a registration statement on Form 10 for the
registration of the Company's Common Stock, $1 par value, under the
Securities Exchange Act of 1934 and to file said registration
statement and all exhibits and other documents in connection therewith
with the Securities and Exchange Commission and to furnish the
Commission with such information as may be necessary or desirable and
proper to comply with the Exchange Act and the Rules and Regulations
of the Commission thereunder.
RESOLVED that the Chairman of the Board, the President or any
Vice President of the Company be, and each of them hereby is,
authorized and empowered to execute a Power of Attorney for use in
connection with the execution and filing, for and on behalf of the
Company, of a Registration Statement on Form 10 under the Securities
Exchange Act of 1934, with respect to the registration of the
Company's Common Stock under said Exchange Act.
I further certify that the foregoing resolutions have not been modified,
revoked or rescinded and are in full force and effect.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of
WILLIAMS HOLDINGS OF DELAWARE, INC., this 11th day of October, 1995.
/s/ DAVID M. HIGBEE
David M. Higbee
Secretary
(CORPORATE SEAL)
