================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2001
Commission file number 1-2918
ASHLAND INC.
(a Kentucky corporation)
I.R.S. No. 61-0122250
50 E. RiverCenter Boulevard
P.O. Box 391
Covington, Kentucky 41012-0391
Telephone Number: (859) 815-3333
Securities Registered Pursuant to Section 12(b):
Name of each exchange
Title of each class on which registered
- ------------------- -------------------
Common Stock, par value $1.00 per share New York Stock Exchange
and Chicago Stock Exchange
Rights to Purchase Series A Participating New York Stock Exchange
Cumulative Preferred Stock and Chicago Stock Exchange
Securities Registered Pursuant to Section 12(g): None
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X] No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [X]
At October 31, 2001, based on the New York Stock Exchange closing
price, the aggregate market value of voting stock held by non-affiliates of
the Registrant was approximately $2,759,644,567. In determining this
amount, the Registrant has assumed that its directors and executive
officers are affiliates. Such assumption shall not be deemed conclusive for
any other purpose.
At October 31, 2001, there were 69,041,473 shares of Registrant's
common stock outstanding.
Documents Incorporated by Reference
Portions of Registrant's Annual Report to Shareholders for the fiscal
year ended September 30, 2001 are incorporated by reference into Parts I,
II and IV.
Portions of Registrant's definitive Proxy Statement for its January
31, 2002 Annual Meeting of Shareholders are incorporated by reference into
Part III.
================================================================================
TABLE OF CONTENTS
Page
PART I
Item 1. Business ...................................................... 1
APAC........................................................... 1
Ashland Distribution........................................... 2
Ashland Specialty Chemical..................................... 3
Valvoline...................................................... 4
Refining and Marketing......................................... 5
Miscellaneous.................................................. 8
Item 2. Properties..................................................... 11
Item 3. Legal Proceedings.............................................. 11
Item 4. Submission of Matters to a
Vote of Security Holders...................................... 12
Item X. Executive Officers of Ashland.................................. 12
PART II
Item 5. Market for Registrant's Common Stock and Related
Security Holder Matters....................................... 13
Item 6. Selected Financial Data........................................ 13
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................... 13
Item 7A. Quantitative and Qualitative Disclosures About Market Risk..... 13
Item 8. Financial Statements and Supplementary Data.................... 13
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure........................ 13
PART III
Item 10. Directors and Executive Officers of the Registrant............. 13
Item 11. Executive Compensation......................................... 14
Item 12. Security Ownership of Certain Beneficial
Owners and Management......................................... 14
Item 13. Certain Relationships and Related Transactions................. 14
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K................................................... 14
PART I
ITEM 1. BUSINESS
Ashland Inc. is a Kentucky corporation, organized on October 22, 1936,
with its principal executive offices located at 50 E. RiverCenter
Boulevard, Covington, Kentucky 41011 (Mailing Address: 50 E. RiverCenter
Boulevard, P.O. Box 391, Covington, Kentucky 41012-0391) (Telephone: (859)
815-3333). The terms "Ashland" and the "Company" as used herein include
Ashland Inc. and its consolidated subsidiaries, except where the context
indicates otherwise.
Ashland's businesses are grouped into five industry segments: APAC,
Ashland Distribution, Ashland Specialty Chemical, Valvoline and Refining
and Marketing. Financial information about these segments for the three
fiscal years ended September 30, 2001 is set forth on pages 54 and 55 of
Ashland's Annual Report to Shareholders for the fiscal year ended September
30, 2001 ("Annual Report").
APAC performs asphalt and concrete contract construction work,
including highway paving and repair, excavation and grading, and bridge
construction, and produces asphaltic and ready-mix concrete, crushed stone
and other aggregate in the southern and midwestern United States.
Ashland Distribution distributes industrial chemicals and solvents,
plastics, fiber reinforcements and fine ingredients in North America and
plastics in Europe. Ashland Distribution also provides environmental and
energy management services. Ashland Specialty Chemical manufactures and
sells a wide variety of high-performance chemicals, resins, products and
services and certain petrochemicals.
Valvoline is a producer and marketer of premium packaged motor oil and
automotive chemicals, including appearance products, antifreeze, filters,
rust preventives and coolants. In addition, Valvoline is engaged in the
"fast oil change" business through outlets operating under the Valvoline
Instant Oil Change(R) name.
Marathon Ashland Petroleum LLC ("MAP"), a joint venture with Marathon
Oil Company, operates seven refineries with a total crude oil refining
capacity of 935,000 barrels per day. Refined products are distributed
through a network of independent and company-owned outlets in the Midwest,
the upper Great Plains and the southeastern United States. Marathon Oil
Company holds a 62% interest in MAP, and Ashland holds a 38% interest in
MAP. Ashland accounts for its investment in MAP using the equity method.
At September 30, 2001, Ashland and its consolidated subsidiaries had
approximately 25,100 employees (excluding contract employees).
APAC
The APAC group of companies is the nation's largest asphalt and
concrete paving company and is a major supplier of construction materials.
APAC performs construction work, such as paving, repairing and resurfacing
highways, streets, airports, residential and commercial developments,
sidewalks and driveways, and grading and base work. In addition, it
performs a number of construction services such as excavation and related
activities in the construction of bridges and structures, drainage
facilities and underground utilities. APAC conducts its business through 45
divisions operating in 14 southern and midwestern states. Distinguished by
their local identities, these divisions provide construction services,
technologies and materials throughout the regions in which they operate.
These divisions are supported by management and administrative staff in
Atlanta, Georgia.
To deliver its services and products, APAC utilizes extensive
aggregate-producing properties and construction equipment. It currently has
37 permanent operating quarry locations, 58 other aggregate production
facilities, 68 ready-mix concrete plants, 248 hot-mix asphalt plants and a
fleet of over 17,000 mobile equipment units, including heavy construction
equipment and transportation-related equipment. In certain market areas
APAC is vertically integrated with asphalt, aggregate and ready-mix
operations, all complementing one another.
Raw aggregate generally consists of sand, gravel, granite, limestone
and sandstone. About 30% of the raw aggregate produced by APAC is used in
APAC's own contract construction work and the production of various
processed construction materials. The remainder is sold to third parties.
APAC also purchases substantial quantities
1
of raw aggregate from other producers whose proximity to the job site
renders it economically attractive. Most other raw materials, such as
liquid asphalt, portland cement and reinforcing steel, are purchased from
third parties.
APAC has customers in both the public and private sectors.
Approximately 68% of APAC's revenues are derived directly from highway and
other public sector sources. The other 32% are derived from industrial and
commercial customers, private developers and other contractors to the
public sector.
Climate and weather significantly affect revenues in the construction
business. Due to its location, APAC tends to enjoy a relatively long
construction season. Most of APAC's operating income is generated during
the construction period of May to October.
Total backlog at September 30, 2001 was $1,629 million, compared to
$1,397 million at September 30, 2000. APAC includes a construction project
in its backlog when a contract is awarded or a firm letter of commitment is
obtained and funding is in place. The backlog at September 30, 2001 is
considered firm, and a major portion is expected to be completed during
fiscal 2002.
ASHLAND DISTRIBUTION
Ashland Distribution distributes chemicals, plastics, fiber
reinforcements and fine ingredients in North America and plastics in
Europe. Ashland Distribution owns or leases approximately 70 distribution
facilities in North America and 20 distribution facilities in 13 foreign
countries. Ashland Distribution is comprised of the following divisions:
INDUSTRIAL CHEMICALS & SOLVENTS DIVISION - This division markets
specialty and industrial chemicals, additives and solvents to industrial
chemical users in major markets through distribution centers in the United
States, Canada, Mexico and Puerto Rico, as well as some export operations.
It distributes approximately 7,000 chemicals, solvents, additives and raw
materials made by many of the nation's leading chemical manufacturers and a
growing number of offshore producers. It specializes in supplying mixed
truckloads and less-than-truckload quantities to many industries, including
the paint and coatings, inks, adhesives, polymer, rubber, industrial and
institutional compounding, automotive, appliance and paper industries. The
Industrial Chemicals & Solvents division offers e-commerce ordering at
www.go2ashland.com.
GENERAL POLYMERS DIVISION - This division markets a broad range of
branded thermoplastic resins to injection molders, extruders, blow molders,
and rotational molders in the plastics industry through distribution
locations in the United States, Canada, Mexico and Puerto Rico. It also
provides plastic material transfer and packaging services and
less-than-truckload quantities of packaged thermoplastics. The General
Polymers division offers e-commerce ordering at www.gpashland.com.
FRP SUPPLY DIVISION - This division markets mixed truckload and
less-than-truckload quantities of polyester thermosetting resins,
fiberglass and other specialty reinforcements, catalysts and allied
products to customers in the reinforced plastics and cultured marble
industries through distribution facilities located throughout North
America. The FRP Supply division offers e-commerce ordering at
www.eFRP.com.
FINE INGREDIENTS DIVISION - This division distributes cosmetic and
pharmaceutical specialty chemicals and food-grade and nutritional additives
and ingredients across North America. The Fine Ingredients division offers
e-commerce ordering at www.FIDonline.com.
ASHLAND PLASTICS EUROPE DIVISION - This division markets a broad range
of thermoplastics to processors in Europe. Ashland Plastics Europe has
distribution centers located in Belgium, England, Finland, France, Germany,
Ireland, Italy, the Netherlands, Norway, Poland, Portugal, Spain and
Sweden. The division also has a small compound manufacturing facility
located in Spain.
SERVICE BUSINESSES DIVISION - This division consists of Energy
Services and Environmental Services. Energy Services provides customized
management of energy purchasing, supply and transportation. Environmental
Services provides customers chemical waste collection, disposal and
recycling services, working in cooperation with chemical waste services
companies. Environmental Services offers e-commerce ordering at
www.ashlandES.com.
2
ASHLAND SPECIALTY CHEMICAL
Ashland Specialty Chemical manufactures and supplies specialty
chemical products and services to industries including the adhesives,
automotive, composites, foundry, merchant marine, paint, paper, plastics,
semiconductor fabrication, watercraft and water treatment industries.
Ashland Specialty Chemical owns and operates 33 manufacturing facilities
and participates in 14 manufacturing joint ventures in 18 countries.
Ashland Specialty Chemical is comprised of the following divisions:
COMPOSITE POLYMERS DIVISION - This division manufactures and sells a
broad range of chemical-resistant, fire-retardant, general-purpose and
high-performance marine grades of unsaturated polyester and vinyl ester
resins and gelcoats for the reinforced plastics industry. Key markets
include the transportation, construction and marine industries. The
division has manufacturing plants in Jacksonville and Fort Smith, Arkansas;
Los Angeles, California; Bartow, Florida; McMinnville, Oregon;
Philadelphia, Pennsylvania; Johnson Creek, Wisconsin; Kelowna, British
Columbia, Canada; Kunshan, China; Porvoo and Lahti, Finland; Sauveterre,
France; Miszewo, Poland; Benicarlo, Spain; and, through separate joint
ventures has manufacturing plants in Sao Paolo, Brazil and Jeddah, Saudi
Arabia. In addition, the division also manufactures products through other
Ashland Specialty Chemical facilities located in Neville Island,
Pennsylvania and Mississauga, Ontario, Canada.
FOUNDRY PRODUCTS DIVISION - This division manufactures and sells
foundry chemicals worldwide, including sand-binding resin systems,
refractory coatings, release agents, engineered sand additives and riser
sleeves. This division serves the global metal casting industry from 24
manufacturing locations in 18 countries.
DREW INDUSTRIAL DIVISION - This division supplies specialized
chemicals and consulting services for the treatment of boiler water,
cooling water, steam, fuel and waste streams. It also supplies process
chemicals and technical services to the pulp and paper and mining
industries and additives to manufacturers of latex and paint. It conducts
operations throughout North America, Europe and the Far East through
subsidiaries, joint venture companies and distributors. The division has
manufacturing plants in Kearny, New Jersey; Houston, Texas; Sydney and
Perth, Australia; Singapore; Ajax, Ontario, Canada; Somercotes, England;
and Auckland, New Zealand.
ELECTRONIC CHEMICALS DIVISION - This division manufactures and sells a
variety of ultrapure chemicals for the worldwide semiconductor industry
through various manufacturing locations and also custom blends and packages
ultrapure liquid chemicals to customer specifications. The division
operates manufacturing plants in Pueblo, Colorado; Easton, Pennsylvania;
Dallas, Texas; Pyongtaek-Shi, Kyonggi-Do, Korea; Milan, Italy and through a
joint venture with Union Petrochemical Corporation, an ultrapure-process
chemicals manufacturing facility in Taiwan. In addition, it enters into
long-term agreements to provide complete on-site chemical management
services, including purchasing, warehousing and delivering chemicals for
in-plant use, at major facilities of large consumers, of high purity
chemicals. The division's Fab Services business provides full-service
equipment parts-cleaning refurbishment and management services to the
semiconductor manufacturing industry from facilities in Chandler and Tempe,
Arizona; and Austin and Carrollton, Texas.
SPECIALTY POLYMERS & ADHESIVES DIVISION - This division manufactures
and sells specialty phenolic resins for paper impregnation and friction
material bonding; acrylic polymers for pressure-sensitive adhesives;
emulsion polymer isocyanate adhesives for structural wood bonding;
polyurethane and epoxy structural adhesives for bonding fiberglass
reinforced plastics, composites, thermoplastics and metals in automotive,
recreational, and industrial applications; induction bonding systems for
thermoplastic materials; elastomeric polymer adhesives and butyl rubber
roofing tapes for commercial roofing applications; and vapor-curing,
high-performance urethane coatings systems. It has manufacturing plants in
Calumet City, Illinois; Norwood and Totowa, New Jersey; Ashland and
Columbus, Ohio; White City, Oregon; and Kidderminster, England.
DREW MARINE DIVISION - This division supplies specialty chemicals for
water and fuel treatment and general maintenance, as well as sealing
products, welding and refrigerant products and fire fighting and safety
services to the world's merchant marine fleet. Drew Marine currently
provides shipboard technical service for more than 11,000 vessels from more
than 100 locations serving approximately 900 ports throughout the world.
PETROCHEMICALS DIVISION - This division manufactures maleic anhydride
at Neal, West Virginia and also markets maleic anhydride and methanol in
North America.
3
OTHER MATTERS
For information on Ashland Distribution and Ashland Specialty Chemical
and federal, state and local statutes and regulations governing releases
into, or protection of, the environment, see "Item 1. Business -
Miscellaneous - Environmental Matters" and "Item 3. Legal Proceedings -
Environmental Proceedings" in this Form 10-K.
VALVOLINE
The Valvoline Company, a division of Ashland, is a marketer of
premium-branded automotive and industrial oils, automotive chemicals,
automotive appearance products and automotive services, with sales in more
than 140 countries. The Valvoline(R) trademark was federally registered in
1873 and is the oldest trademark for a lubricating oil in the United
States. Valvoline is comprised of the following business units:
NORTH AMERICAN PRODUCTS - This unit, Valvoline's largest operating
division, markets automotive, commercial, and industrial lubricants,
automotive chemicals and automotive appearance products to a broad network
of North American customers. This unit markets Valvoline-branded motor oil,
one of the top selling brands in the U.S. private passenger car and light
truck market, and premium synthetic SynPower(R) automobile chemicals for
"under-the-hood" use. During fiscal 2001, Valvoline successfully introduced
MaxLife(TM) motor oil, the first lubricant for vehicles with more than
75,000 miles.
North American Products also markets Eagle One(R) premium automotive
appearance products, Zerex(R) antifreeze and Pyroil(R) automotive
chemicals. Zerex is the second leading antifreeze brand in the United
States. This division also markets R-12, an automotive refrigerant that was
phased out of production in 1995. R-12 is being replaced in the market by a
new generation of refrigerants and Valvoline's inventories of R-12 are
expected to be depleted in fiscal 2002.
The domestic commercial and specialty products group of the North
American Products unit has a strategic alliance with Cummins Engine
Company, Inc. to distribute heavy-duty lubricants to the commercial market.
In September 2001, Valvoline introduced Spirit(TM) 3-D Foam. Spirit is
a spray-on, peel-off 3-D foam that can be used for spraying spirit slogans
on cars, SUVs and trucks, as well as around the home, office or school.
EAGLE ONE - Eagle One is a brand of premium automobile appearance
chemicals for "above-the-hood" applications. Products include waxes,
polishes and wheel cleaners. Managed by Valvoline as a separate business
unit, Eagle One markets its products through Valvoline's North American
Products and Valvoline International divisions.
VALVOLINE INTERNATIONAL - Valvoline International markets Valvoline
branded products and Eagle One automotive appearance products through
company-owned affiliates or divisions in Argentina, Australia, Austria,
Belgium, Brazil, Denmark, Finland, Germany, Great Britain, Italy, the
Netherlands, Poland, South Africa, Sweden and Switzerland. TECTYL(R) rust
preventives are marketed in Europe. Licensees and distributors market
certain products in other parts of Europe, Mexico, Central and South
America, the Far East, the Middle East and certain African countries. Joint
ventures have been established in China, Ecuador, India, Thailand and
Venezuela. Packaging and blending plants and distribution centers in
Australia, Canada, the Netherlands and the United States supply
international customers.
VALVOLINE INSTANT OIL CHANGE(R) ("VIOC") - VIOC is one of the largest
competitors in the expanding U.S. "fast oil change" service business,
providing Valvoline with a significant share of the installed segment of
the passenger car and light truck motor oil market. As of September 30,
2001, 364 company-owned and 311 franchised service centers were operating
in 38 states.
VIOC has continued its customer service innovation through its Maximum
Vehicle Performance program ("MVP"). MVP is a computer-based program that
maintains system-wide service records on all customer vehicles. MVP also
contains a database on all car models, which allows employees to make
service recommendations based on a vehicle owner's manual recommendations.
4
REFINING AND MARKETING
Refining and Marketing operations are conducted by MAP and its
subsidiaries, including its wholly-owned subsidiaries, Speedway
SuperAmerica LLC and Marathon Ashland Pipe Line LLC. Marathon Oil Company
("Marathon") holds a 62% interest in MAP and Ashland holds a 38% interest
in MAP.
REFINING
MAP owns and operates seven refineries with an aggregate refining
capacity of 935,000 barrels of crude oil per calendar day (1 barrel = 42
United States gallons). The table below sets forth the location and daily
crude oil throughput capacity (measured in barrels) of each of MAP's
refineries as of September 30, 2001:
Garyville, Louisiana........................................... 232,000
Catlettsburg, Kentucky......................................... 222,000
Robinson, Illinois............................................. 192,000
Detroit, Michigan.............................................. 74,000
Canton, Ohio................................................... 73,000
Texas City, Texas.............................................. 72,000
St. Paul Park, Minnesota....................................... 70,000
-------
Total.......................................................... 935,000
=======
MAP's refineries include crude oil atmospheric and vacuum
distillation, fluid catalytic cracking, catalytic reforming,
desulfurization and sulfur recovery units. The refineries have the
capability to process a wide variety of crude oils and to produce typical
refinery products, including reformulated gasoline ("RFG"). In addition to
typical refinery products, the Catlettsburg refinery, an ISO-9000 certified
facility, manufactures lubricating oils and a wide range of petrochemicals.
For the twelve months ended September 30, 2001, 76% of MAP's production of
lubricating oils was purchased by Valvoline and 38% of MAP's production of
petrochemicals was purchased by Ashland Distribution.
MAP also produces a wide range of asphalt products, petroleum pitch
(primarily used in the graphite electrode, clay target and refractory
industries), aromatics, aliphatic hydrocarbons, cumene, base oil, slack wax
and molten sulfur.
The table below sets forth MAP's refinery total input and refinery
production by product group for the twelve months ended September 30, 2001,
2000 and 1999. Refinery total inputs include crude oil and other
feedstocks.
Twelve Months Ended September 30
------------------------------------------
2001 2000 1999
---- ---- ----
Refinery Input
(in thousands of barrels per day) 1,051.0 1,033.4 1,034.0
-----------------------------------
Refined Product Yields
(in thousands of barrels per day)
-----------------------------------
Gasoline........................... 560.5 559.0 565.5
Distillates........................ 278.7 271.5 265.6
Propane............................ 21.2 21.0 22.2
Feedstocks & Special Products...... 69.9 68.9 64.9
Heavy Fuel Oils.................... 44.7 41.2 45.1
Asphalt............................ 74.5 73.3 70.4
------- ------- -------
Total............. 1,049.5 1,034.9 1,033.7
======= ======= =======
Planned maintenance activities requiring temporary shutdown of certain
refinery operating units are periodically performed at each refinery. MAP
completed major turnarounds at the Robinson and Detroit refineries in the
twelve months ended September 30, 2001, and at the Catlettsburg refinery in
the period ended September 30, 2000.
5
The Garyville, Louisiana coker unit project achieved mechanical
completion in early October 2001. It is anticipated that the coker unit
project will be at full production in December 2001. To supply this new
unit, MAP reached an agreement with P.M.I. Comercio Internacional, S.A. de
C.V., an affiliate of Petroleos Mexicanos, to purchase approximately 90,000
barrels per day of heavy Mayan crude oil. This agreement is multi-year and
will begin upon completion of the coker unit.
MARKETING
MAP's principal marketing areas for gasoline and distillates include
the Midwest, the upper Great Plains and the southeastern United States.
Gasoline and distillates are sold in 24 states. Gasoline is sold at
wholesale primarily to independent marketers, jobbers and chain retailers
who resell these products through several thousand retail outlets
principally under their own names. MAP also supplies approximately 3,800
jobber-dealer, open-dealer and lessee-dealer locations using the
Marathon(R) and Ashland(R) brand names.
Gasoline, distillates and aviation products are also sold to
utilities, railroads, river towing companies, commercial fleet operators,
airlines and governmental agencies.
MAP markets asphalt through owned and leased terminals located
throughout the Midwest and Southeast. The MAP customer base includes
approximately 900 asphalt paving contractors, government entities (states,
counties, cities and townships) and asphalt roofing shingle manufacturers.
Retail sales of gasoline and diesel fuel are made through MAP's
wholly-owned subsidiary, Speedway SuperAmerica LLC ("SSA"). As of September
30, 2001, SSA had 2,145 retail outlets in 17 states in the Midwest and
Southeast which sell petroleum products and convenience store merchandise
primarily under the brand names Speedway(R) and SuperAmerica(R). The retail
locations sell a variety of food, merchandise, cigarettes, candy and
beverages. Several locations also have on-premises brand-name restaurants
such as Subway(R) and Taco Bell(R).
During the twelve months ended September 30, 2001, 67% of SSA's
revenues (excluding excise taxes) were derived from the sale of gasoline
and diesel fuel, and the remainder were derived from the sale of
merchandise.
Effective September 1, 2001, MAP and Pilot Corporation ("Pilot")
completed a transaction to form Pilot Travel Centers LLC ("PTC") which
combined SSA's and Pilot's travel centers. Pilot and MAP each own a 50%
interest in PTC. By combining these travel centers, MAP continues to
further enhance its retail presence. PTC is the largest operator of travel
centers in the United States with more than 235 locations in 35 states. The
travel centers offer diesel fuel, gasoline and a variety of other services
associated with such locations, including on-premises brand-name
restaurants.
The table below shows the volume of MAP's consolidated refined product
sales for the twelve months ended September 30, 2001, 2000 and 1999.
Twelve Months Ended September 30
------------------------------------------
2001 2000 1999
---- ---- ----
Refined Product Sales
(in thousands of barrels per day)
---------------------------------
Gasoline 741.0 752.1 699.3
Distillates 349.6 351.2 324.6
Propane 21.5 21.6 22.4
Feedstocks & Special Products 68.1 67.6 65.1
Heavy Fuel Oils 46.3 40.9 44.9
Asphalt 75.8 75.1 74.3
------- ------- -------
Total 1,302.3 1,308.5 1,230.6
======= ======= =======
Matching Buy/Sell Volumes
included in above.................... 43.7 41.4 47.7
6
MAP sells RFG in parts of its marketing territory, primarily Chicago,
Illinois; Louisville, Kentucky; Northern Kentucky; Maryland; Virginia; and
Milwaukee, Wisconsin. MAP also markets low-vapor-pressure gasolines in
eleven states.
SUPPLY AND TRANSPORTATION
The crude oil processed in MAP's refineries is obtained from
negotiated contract and spot purchases or exchanges. For the twelve months
ended September 30, 2001, MAP's negotiated contract and spot purchases for
refinery input of crude oil produced in the U.S. averaged 388,700 barrels
per day, including an average of 28,200 net barrels per day acquired from
Marathon. For the twelve months ended September 30, 2001, MAP's foreign
crude oil requirements were met largely through purchases from various
foreign national oil companies, producing companies and traders. Purchases
of foreign crude oil represented 57% of MAP's crude oil requirements for
the twelve months ended September 30, 2001.
MAP's ownership or interest in domestic pipeline systems in its
refining and marketing areas is significant. MAP owns, leases or has an
ownership interest in 6,466 miles of pipelines in 11 states. This network
transports crude oil and refined products to and from terminals, refineries
and other pipelines. It includes 68 miles of crude oil gathering lines,
3,564 miles of crude oil trunk lines and 2,834 miles of refined product
lines.
MAP has a 46.7% ownership interest in LOOP LLC ("LOOP"), which is the
owner and operator of the only U.S. deepwater port facility capable of
receiving crude oil from very large crude carriers. Ashland has retained a
4% ownership interest in LOOP. MAP also owns a 49.9% ownership interest in
LOCAP INC. ("LOCAP"), which is the owner and operator of a crude oil
pipeline connecting LOOP to the Capline system. Ashland has retained an
8.6% ownership interest in LOCAP. In addition, MAP has a 37.2% ownership
interest in the Capline system. These port and pipeline systems provide MAP
with access to common carrier transportation from the Louisiana Gulf Coast
to Patoka, Illinois. At Patoka, the Capline system connects with other
common carrier pipelines owned or leased by MAP that provide transportation
to MAP's refineries in Illinois, Kentucky, Michigan, Minnesota and Ohio.
MAP's subsidiary, Ohio River Pipe Line LLC ("ORPL"), plans to build a
pipeline from Kenova, West Virginia, to Columbus, Ohio. ORPL is a common
carrier pipeline company and the pipeline will be an interstate common
carrier pipeline. The pipeline, which will be named Cardinal Products Pipe
Line, is expected to initially move about 50,000 barrels per day of refined
petroleum products into the central Ohio region. Construction is currently
planned for the summer of 2002 pending receipt of permits, with start-up of
the pipeline to follow late in the fourth quarter of calendar 2002.
MAP has a 33.3% ownership interest in Centennial Pipeline LLC, a
limited liability company formed to develop an interstate refined petroleum
products pipeline extending from the U.S. Gulf of Mexico to the Midwest. In
March 2001, the Federal Energy Regulatory Commission approved the
abandonment of a 720-mile, 26-inch diameter pipeline extending from
Longville, Louisiana to Bourbon, Illinois, from natural gas service thereby
allowing conversion to refined products transportation by Centennial
Pipeline. Also as part of the project, a two-million barrel terminal
storage facility is being constructed and a new 74-mile, 24-inch diameter
pipeline extending from Beaumont, Texas, to Longville, Louisiana has been
built. Marathon Ashland Pipe Line LLC has been designated operator of the
pipeline. The Centennial Pipeline system will connect with existing MAP
transportation assets and other common carrier lines. It is expected to be
operational in the first quarter of calendar 2002.
MAP also has a 33.3% ownership interest in Minnesota Pipe Line
Company, which operates a crude oil pipeline in Minnesota. Minnesota Pipe
Line Company provides MAP with access to crude oil common carrier
transportation from Clearbrook, Minnesota, to Cottage Grove, Minnesota,
which is in the vicinity of MAP's St. Paul Park, Minnesota refinery.
MAP's marine transportation operations include towboats and barges
that transport refined products on the Ohio, Mississippi and Illinois
rivers, their tributaries and the Intracoastal Waterway. MAP also leases
and owns railcars in various sizes and capacities for movement and storage
of petroleum products and a large number of tractors, tank trailers and
general service trucks.
In addition, MAP owns and operates 91 terminal facilities from which
it sells a wide range of petroleum products. These facilities are supplied
by a combination of barges, pipeline, truck and/or rail.
7
OTHER MATTERS
For information on MAP and federal, state and local statutes and
regulations governing releases into the environment or protection of the
environment, see "Item 1. Business - Miscellaneous - Environmental Matters"
in this Form 10-K.
MISCELLANEOUS
ENVIRONMENTAL MATTERS
Ashland has implemented a company-wide environmental policy overseen
by the Public Policy - Environmental Committee of Ashland's Board of
Directors. Ashland's Environmental, Health and Safety group has the
responsibility to ensure that Ashland's operating groups maintain
environmental compliance in accordance with applicable laws and
regulations.
Federal, state and local laws and regulations relating to the
protection of the environment have a significant impact on how Ashland
conducts its businesses. New laws are being enacted and regulations are
being adopted by various regulatory agencies on a continuing basis, and the
costs of compliance with these new rules cannot be estimated until the
manner in which they will be implemented has been more accurately defined.
In addition, most foreign countries in which Ashland conducts business have
laws dealing with similar matters.
At September 30, 2001, Ashland's reserves for environmental
remediation amounted to $176 million, reflecting Ashland's estimates of the
most likely costs which will be incurred over an extended period to
remediate identified environmental conditions for which the costs are
reasonably estimable, without regard to any third-party recoveries.
Environmental remediation reserves are subject to numerous inherent
uncertainties that affect Ashland's ability to estimate its share of the
ultimate costs of the required remediation efforts. Such uncertainties
involve the nature and extent of contamination at each site, the extent of
required cleanup efforts under existing environmental regulations, widely
varying costs of alternate cleanup methods, changes in environmental
regulations, the potential effect of continuing improvements in remediation
technology, and the number and financial strength of other potentially
responsible parties at multiparty sites. Reserves are regularly adjusted as
environmental remediation continues. None of the remediation locations is
individually material to Ashland as its largest reserve for any site is
under $10 million. As a result, Ashland's exposure to adverse developments
with respect to any individual site is not expected to be material, and
these sites are in various stages of the ongoing environmental remediation
process. Although environmental remediation could have a material effect on
results of operations if a series of adverse developments occurs in a
particular quarter or fiscal year, Ashland believes that the chance of such
developments occurring in the same quarter or fiscal year is remote.
Ashland does not believe that any liability resulting from environmental
remediation, after taking into consideration expected recoveries from
insurers, contributions by other responsible parties and amounts already
provided for, will have a material adverse effect on its consolidated
financial position, cash flows or liquidity.
In connection with the formation of MAP, Marathon and Ashland each
retained responsibility for certain environmental costs arising out of
their respective prior ownership and operation of the facilities
transferred to MAP. In certain situations, various threshold provisions
apply, eliminating or reducing the financial responsibility of the
contributing party until certain levels of expenditure have been reached.
In other situations, sunset provisions gradually diminish the level of
financial responsibility of the contributing party over time.
AIR - The Clean Air Act (the "CAA") imposes stringent limits on air
emissions, establishes a federally mandated operating permit program, and
allows for civil and criminal enforcement actions. Additionally, it
establishes air quality attainment deadlines and control requirements based
on the severity of air pollution in a given geographical area. Various
state clean air acts implement, complement and, in some instances, add to
the requirements of the federal CAA. The requirements of the CAA and its
state counterparts have a significant impact on the daily operation of
Ashland's businesses and, in many cases, on product formulation and other
long-term business decisions. Ashland's businesses maintain numerous
permits pursuant to these clean air laws and have implemented systems to
oversee ongoing compliance efforts.
8
In July 1997, the United States Environmental Protection Agency
("EPA") promulgated revisions to the National Ambient Air Quality Standards
("NAAQS") for ground level ozone and particulate matter. These revisions,
if they are implemented by the states, could have a significant effect on
certain of Ashland's chemical manufacturing and distribution businesses,
and on MAP. The EPA's authority and scientific basis to promulgate these
standards were challenged by industry. Although in 2001 the U.S. Supreme
Court upheld the EPA's ability to set NAAQS's without considering the costs
related to compliance, several other EPA actions were remanded to the Court
of Appeals for further consideration. Litigation continues, as do efforts
by the EPA and other regulatory and law enforcement agencies to achieve the
objectives of these standards through other means. It is not currently
possible to estimate any potential financial impact that any revised
standards may have on Ashland's operations.
WATER - Ashland's businesses maintain numerous discharge permits, as
the National Pollutant Discharge Elimination System of the Clean Water Act
("CWA") and state programs require, and have implemented systems to oversee
their compliance efforts. In addition, several of MAP's operations, in
particular its barge and terminal facilities, are regulated under the Oil
Pollution Act of 1990.
SOLID WASTE - Ashland's businesses are subject to the Resource
Conservation and Recovery Act ("RCRA"), which establishes standards for the
management of solid and hazardous wastes. Besides affecting current waste
disposal practices, RCRA also addresses the environmental effects of
certain past waste disposal operations, the recycling of wastes and the
storage of regulated substances in underground tanks.
REMEDIATION - Ashland currently operates, and in the past has operated
various facilities where, during the normal course of operations, releases
of hazardous substances have occurred. Federal and state laws, including
but not limited to RCRA and various remediation laws, require that
contamination caused by such releases be assessed and, if necessary,
remediated to meet applicable standards. MAP operates, and in the past has
operated, certain retail outlets where, during the normal course of
operations, releases of petroleum products from underground storage tanks
have occurred. Federal and state laws require that contamination caused by
such releases at these sites be assessed and, if necessary, remediated to
meet applicable standards.
RESEARCH
Ashland conducts a program of research and development to invent and
improve products and processes and to improve environmental controls for
its existing facilities. It maintains its research facilities in Dublin,
Ohio; Lexington, Kentucky; and Atlanta, Georgia. Research and development
costs are expensed as they are incurred and totaled $36 million in fiscal
2001 ($33 million in 2000 and $30 million in 1999).
COMPETITION
In all its operations, Ashland is subject to intense competition both
from companies in the industries in which it operates and from products of
companies in other industries.
The majority of the business for which APAC competes is obtained by
competitive bidding. There are a substantial number of competitors in the
markets in which APAC operates and, as a result, all of APAC's goods and
services are marketed under highly competitive conditions. Factors which
influence APAC's competitiveness are price, reputation for quality, the
availability of aggregate materials, machinery and equipment, knowledge of
local markets and conditions and estimating abilities.
Each of Ashland Distribution's businesses, except for the plastics
distribution businesses, compete with national, regional and local
companies throughout North America. The plastics distribution businesses
compete in both North America and Europe. Competition in these businesses
is based primarily on price and reliability of supply. Ashland Specialty
Chemical's businesses compete globally in selected niche markets, largely
on the basis of technology and service. The number of competitors in the
specialty chemical business varies from product to product, and it is not
practical to identify such competitors because of the broad range of
products and markets served by those products. However, many of Ashland
Specialty Chemical's businesses hold proprietary technology, and Ashland
believes it has a leading or strong market position in most of its
specialty chemical products. Ashland Specialty Chemical's petrochemicals
business is largely a commodities business, with pricing and quality being
the most important factors.
Valvoline competes in the highly competitive lubricants business
principally through product and service quality, distribution capability, a
focused "master" brand strategy, advertising and sales promotion. Some of
the
9
major brands of motor oils and lubricants Valvoline competes with
internationally are Havoline(R), Castrol(R), Pennzoil(R) and Quaker
State(R). The highly competitive consumer products car care business is
primarily composed of maintenance chemicals, appearance products and tire
cleaners. Valvoline competes primarily in this market through specific
product performance benefits, distribution capability and advertising and
sales promotion. In the highly competitive "fast oil change" business,
Valvoline competes with other leading independent fast lube chains on a
national, regional or local basis, as well as automobile dealers and
service stations. Valvoline's brand recognition, service offering and
increasing market presence in the U.S. "fast oil change" market, as well as
quality of service, speed, location, convenience and sales promotion, are
important competitive factors.
MAP competes with a large number of companies to acquire crude oil for
refinery processing and in the distribution and marketing of a full array
of petroleum products. MAP believes it ranks among the top ten U.S.
petroleum companies on the basis of crude oil refining capacity as of
September 30, 2001. MAP competes in four distinct markets for the sale of
refined products - wholesale, spot, branded and retail distribution. MAP
believes it competes with approximately 50 companies in the wholesale
distribution of petroleum products to private brand marketers and large
commercial and industrial consumers; approximately 75 companies in the sale
of petroleum products in the spot market; 13 refiner/marketers in the
supply of branded petroleum products to dealers and jobbers; and over 600
petroleum product retailers in the retail sale of petroleum products. MAP
also competes in the convenience store industry through SSA's retail
outlets and in the travel center industry through their ownership in PTC.
The retail outlets offer consumers gasoline, diesel fuel (at selected
locations) and a variety of food, merchandise, cigarettes, candy and
beverages.
FORWARD-LOOKING STATEMENTS
This Form 10-K and the documents incorporated by reference contain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934, including various information within the "Capital Resources,"
"Derivative Instruments," "Outlook" and "Conversion to the Euro" sections
in Management's Discussion and Analysis in Ashland's Annual Report. Words
such as "anticipates," "believes," "estimates," "expects," "is likely,"
"predicts," and variations of such words and similar expressions are
intended to identify such forward-looking statements. Although Ashland
believes that its expectations are based on reasonable assumptions, it
cannot assure that the expectations contained in such statements will be
achieved. Important factors which could cause actual results to differ
materially from those contained in such statements are discussed under
"Risks and Uncertainties" in Note A of Notes to Consolidated Financial
Statements in Ashland's Annual Report. For a discussion of other factors
and risks affecting Ashland's revenues and operations see "Item 1. Business
- - Miscellaneous - Marketing Conditions" below.
MARKETING CONDITIONS
Domestic and international political, legislative, regulatory and
legal changes may adversely affect Ashland's results of operations.
Political actions may include changes in the policies of the Organization
of Petroleum Exporting Countries or other developments involving or
affecting oil-producing countries, including military conflict, embargoes,
internal instability or actions or reactions of the U.S. government in
anticipation of, or in response to, such actions. Profitability of MAP
depends largely on the margin between the cost of crude oil and other
feedstocks refined and the selling prices of refined products. MAP is a
purchaser of crude oil in order to satisfy its refinery throughput
requirements. As a result, MAP's overall profitability could be adversely
affected by increases in crude oil and other feedstock prices that are not
recovered in the market place through higher prices. Reference should be
made to the Refining and Marketing section of the Management's Discussion
and Analysis section in Ashland's Annual Report for a discussion of the
impact of crude oil costs on MAP's operating performance. While Ashland
maintains reserves for anticipated liabilities and carries various levels
of insurance, Ashland could be affected by civil, criminal, regulatory or
administrative actions, claims or proceedings.
Ashland's operations are subject to various U.S. and foreign laws and
regulations relating to environmental protection and worker health and
safety. These laws and regulations regulate discharges of pollutants into
the air and water, the management and disposal of hazardous substances, and
the cleanup of contaminated properties. The costs of complying with these
laws and regulations can be substantial and may increase as applicable
requirements become more stringent and new rules are implemented. If
violation of these laws and regulations occur, Ashland may be
10
forced to pay substantial fines, to complete additional costly projects, or
to modify or curtail its operations to limit contaminant emissions.
The profitability of Ashland's businesses are particularly susceptible
to downturns in the economy, particularly downturns in the segments of the
U.S. economy related to the purchase and sale of durable goods, including
housing, construction, automotive, marine and semiconductor. Both overall
demand for Ashland's products and its profit margins may decline as a
direct result of an economic recession, inflation, changes in the prices of
hydrocarbons and other raw materials (e.g., crude oil and petroleum and
chemical products), consumer confidence, interest rates or governmental
fiscal policies. In addition, Ashland's profitability may experience
significant changes as a result of variations in sales, changes in product
mix or pricing competition.
In addition, changes in climate and weather can significantly affect
the performance of several of Ashland's operations. Extreme variations from
normal climatic conditions could have a significant effect on the operating
results of APAC's construction operations. In particular, unfavorable
weather conditions will delay the completion of construction projects, and
may require the use of additional resources. In addition, most of the
refined products sold by MAP are seasonal in nature, and thus demand for
those products may decline due to significant changes in prevailing climate
and weather conditions. MAP's production or distribution operations are
also subject to disruption by extreme weather conditions such as floods,
frozen rivers or hurricanes.
ITEM 2. PROPERTIES
Ashland's corporate headquarters, which is leased, is located in
Covington, Kentucky. Principal offices of other major operations are
located in Atlanta, Georgia (APAC); Dublin, Ohio (Ashland Distribution and
Ashland Specialty Chemical); Lexington, Kentucky (Valvoline); and Russell,
Kentucky (Administrative Services). All of these offices are leased, except
for the Russell office, which is owned. Principal manufacturing, marketing
and other materially important physical properties of Ashland and its
subsidiaries are described under the appropriate segment under Item 1 in
this Form 10-K. Additional information concerning certain leases may be
found in Note J of Notes to Consolidated Financial Statements in Ashland's
Annual Report.
ITEM 3. LEGAL PROCEEDINGS
ENVIRONMENTAL PROCEEDINGS - (1) As of September 30, 2001, Ashland has
been identified as a "potentially responsible party" ("PRP") under
Superfund or similar state laws for potential joint and several liability
for clean-up costs in connection with alleged releases of hazardous
substances associated with 99 waste treatment or disposal sites. These
sites are currently subject to ongoing investigation and remedial
activities, overseen by the EPA or a state agency, in which Ashland is
typically participating as a member of a PRP group. Generally, the type of
relief sought includes remediation of contaminated soil and/or groundwater,
reimbursement for past costs of site clean-up and administrative oversight,
and/or long-term monitoring of environmental conditions at the sites. The
ultimate costs are not predictable with assurance and could be material.
However, based on its experience with site remediation, its analysis of the
specific hazardous substances at issue, the existence of other financially
viable PRPs and its current estimates of investigatory, clean-up and
monitoring costs at each site, Ashland does not believe that any liability
at these sites, either individually or in the aggregate, will have a
material adverse effect on Ashland's consolidated financial position, cash
flows or liquidity. For additional information regarding environmental
matters and reserves, see "Management's Discussion and Analysis -
Environmental Matters" and Note M of Notes to Consolidated Financial
Statements in Ashland's Annual Report and "Item 1. Business - Miscellaneous
- - Environmental Matters" in this Form 10-K.
(2) As a result of an EPA enforcement initiative wherein information
relating to construction projects conducted within refineries since 1980,
including financial data, permit status and operational results, are
reviewed for compliance with specific provisions of the CAA, MAP, as well
as several other refiners, entered into negotiations with the EPA and the
Justice Department. On August 30, 2001, the U.S. District Court for the
Eastern District of Michigan approved and entered MAP's settlement
agreement with the EPA, which includes MAP's commitment to spend
approximately $270 million in environmental capital expenditures and
improvements to MAP's refineries. These improvements include the
installation of specific control technologies over a period of eight years.
In addition, MAP's settlement provides for payment of a civil penalty in
the amount of $3.8 million and the
11
performance of $8 million in supplemental environmental projects. Ashland
has agreed to reimburse MAP a total of $1 million for these projects.
OTHER PROCEEDINGS - In addition to the environmental matters described
above, there are pending or threatened against Ashland and its current and
former subsidiaries various claims, lawsuits and administrative
proceedings. Such actions are with respect to commercial matters, product
liability, toxic tort liability, numerous asbestos claims, and other
environmental matters, which seek remedies or damages some of which are for
substantial amounts. While these actions are being contested, their outcome
is not predictable with assurance and could be material to results of
operations in the period they are recognized. However, Ashland does not
believe that any liability resulting from these actions after taking into
consideration expected recoveries from insurers, contributions by other
responsible parties and amounts already provided for, will have a material
adverse effect on its consolidated financial position, cash flows or
liquidity.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the quarter ended September
30, 2001.
ITEM X. EXECUTIVE OFFICERS OF ASHLAND
The following is a list of Ashland's executive officers, their ages
and their positions and offices during the last five years (listed
alphabetically after the Chief Executive Officer as to other Senior Vice
Presidents, Administrative Vice Presidents and other executive officers).
PAUL W. CHELLGREN (age 58) is Chairman of the Board, Chief Executive
Officer and Director of Ashland and has served in such capacities since
1997, 1996 and 1992, respectively.
JAMES R. BOYD (age 55) is Senior Vice President and Group Operating
Officer of Ashland and has served in such capacities since 1990 and 1993,
respectively. Mr. Boyd will retire from Ashland effective January 31, 2002.
DAVID J. D'ANTONI (age 56) is Senior Vice President and Group
Operating Officer of Ashland and has served in such capacities since 1988
and 1999, respectively. During the past five years, he has also served as
President of Ashland Chemical Company.
JAMES J. O'BRIEN (age 47) is Senior Vice President and Group Operating
Officer of Ashland and President of The Valvoline Company and has served in
such capacities since 1997, 2001, and 1995, respectively. During the past
five years, he has also served as Vice President of Ashland.
CHARLES F. POTTS (age 57) is Senior Vice President of Ashland and
President of APAC, Inc. and has served in such capacities since 1992.
J. MARVIN QUIN (age 54) is Senior Vice President and Chief Financial
Officer of Ashland and has served in such capacities since 1992.
KENNETH L. AULEN (age 52) is Administrative Vice President and
Controller of Ashland and has served in such capacities since 1992.
PHILIP W. BLOCK (age 54) is Administrative Vice President - Human
Resources of Ashland and has served in such capacity since 1992.
PETER M. BOKACH (age 55) is Vice President of Ashland and President of
Ashland Distribution Company and has served in such capacities since 1999.
During the past five years, he has also served as Group Vice President -
Distribution Division of Ashland Chemical Company.
JAMES A. DUQUIN (age 54) is Vice President of Ashland and President of
Ashland Specialty Chemical Company and has served in such capacities since
1999. During the past five years, he has also served as Group Vice
President - Specialty Chemical Division of Ashland Chemical Company.
DAVID L. HAUSRATH (age 49) is Vice President and General Counsel of
Ashland and has served in such capacities since 1998 and 1999,
respectively. During the past five years, he has also served as Associate
General Counsel of Ashland.
12
J. DAN LACY (age 54) is Vice President - Corporate Affairs of Ashland
and has served in such capacity since 1986.
RICHARD P. THOMAS (age 55) is Vice President and Secretary of Ashland
and has served in such capacities since 1998 and 1999, respectively. During
the past five years, he has also served as Associate General Counsel of
Ashland and Administrative Vice President and General Counsel of Ashland
Petroleum Company.
Each executive officer is elected by the Board of Directors of Ashland
to a term of one year, or until his successor is duly elected, at the
annual meeting of the Board of Directors, except in those instances where
the officer is elected other than at an annual meeting of the Board of
Directors, in which case his tenure will expire at the next annual meeting
of the Board of Directors unless the officer is re-elected.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SECURITY
HOLDER MATTERS
There is hereby incorporated by reference the information appearing in
Note P of Notes to Consolidated Financial Statements in Ashland's Annual
Report.
At September 30, 2001, there were approximately 18,500 holders of
record of Ashland's Common Stock. Ashland Common Stock is listed on the New
York and Chicago stock exchanges (ticker symbol ASH) and has trading
privileges on the Boston, Cincinnati, Pacific and Philadelphia stock
exchanges.
ITEM 6. SELECTED FINANCIAL DATA
There is hereby incorporated by reference the information appearing
under the caption "Five-Year Selected Financial Information" on page 56 in
Ashland's Annual Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
There is hereby incorporated by reference the information appearing
under the caption "Management's Discussion and Analysis" on pages 28 to 35
in Ashland's Annual Report.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There is hereby incorporated by reference the information appearing
under the caption "Derivative Instruments" on pages 33 and 34 in Ashland's
Annual Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
There is hereby incorporated by reference the consolidated financial
statements appearing on pages 37 through 55 in Ashland's Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
There is hereby incorporated by reference the information to appear
under the caption "Ashland Inc.'s Board of Directors - Nominees for
Election at the 2002 Annual Meeting" and the information regarding Section
16 beneficial ownership reporting compliance in Ashland's definitive Proxy
Statement for its January 31, 2002 Annual Meeting of Shareholders, which
will be filed with the SEC within 120 days after September 30, 2001 ("Proxy
Statement"). See also the list of Ashland's executive officers and related
information under "Executive Officers of Ashland" in Part I - Item X in
this Form 10-K.
13
ITEM 11. EXECUTIVE COMPENSATION
There is hereby incorporated by reference the information to appear
under the captions "Executive Compensation," "Compensation of Directors"
and "Miscellaneous - Personnel and Compensation Committee Interlocks and
Insider Participation" in Ashland's Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
There is hereby incorporated by reference the information to appear
under the caption "Ashland Common Stock Ownership of Directors and Certain
Officers of Ashland" and the information regarding the ownership of
securities of Ashland in Ashland's Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is hereby incorporated by reference the information to appear
under the caption "Miscellaneous - Business Relationships" in Ashland's
Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A) DOCUMENTS FILED AS PART OF THIS REPORT
(1) and (2) Financial Statements and Financial Schedule
The consolidated financial statements and financial schedule of
Ashland presented or incorporated by reference in this report are listed in
the index on page 19.
(3) Exhibits
3.1 Second Restated Articles of Incorporation of Ashland, as amended
to January 30, 1998 (filed as Exhibit 3 to Ashland's Form 10-Q for
the quarter ended December 31, 1997 and incorporated herein by
reference).
3.2 By-laws of Ashland, effective as of June 21, 2001 (filed as
Exhibit 3.2 to Ashland's Form 10-Q for the quarter ended June 30,
2001 and incorporated herein by reference).
4.1 Ashland agrees to provide the SEC, upon request, copies of
instruments defining the rights of holders of long-term debt of
Ashland and all of its subsidiaries for which consolidated or
unconsolidated financial statements are required to be filed with
the SEC.
4.2 Indenture, dated as of August 15, 1989, as amended and restated as
of August 15, 1990, between Ashland and Citibank, N.A., as
Trustee.
4.3 Indenture, dated as of September 7, 2001, between Ashland and U.S.
Bank National Association, as Trustee.
4.4 Rights Agreement, dated as of May 16, 1996, between Ashland Inc.
and the Rights Agent, together with Form of Right Certificate.
The following Exhibits 10.1 through 10.15 are compensatory plans or
arrangements or management contracts required to be filed as exhibits
pursuant to Item 601(b)(10)(ii)(A) of Regulation S-K.
10.1 Amended Stock Incentive Plan for Key Employees of Ashland Inc. and
its Subsidiaries (filed as Exhibit 10.1 to Ashland's Form 10-K for
the fiscal year ended September 30, 1999 and incorporated herein
by reference).
10.2 Ashland Inc. Deferred Compensation Plan for Non-Employee Directors
(filed as Exhibit 10.2 to Ashland's Form 10-K for the fiscal year
ended September 30, 1999 and incorporated herein by reference).
14
10.3 Ashland Inc. Deferred Compensation Plan (filed as Exhibit 10.14 to
Ashland's Form 10-K for the fiscal year ended September 30, 2000
and incorporated herein by reference).
10.4 Tenth Amended and Restated Ashland Inc. Supplemental Early
Retirement Plan for Certain Employees, as amended (filed as
Exhibit 10.2 to Ashland's Form 10-Q for the quarter ended December
31, 2000 and incorporated herein by reference).
10.5 Ashland Inc. Salary Continuation Plan.
10.6 Form of Ashland Inc. Executive Employment Contract between Ashland
Inc. and certain executives of Ashland (filed as Exhibit 10.6 to
Ashland's Form 10-K for the fiscal year ended September 30, 1999
and incorporated herein by reference).
10.7 Form of Separation Agreement and General Release between Ashland
Inc. and James R. Boyd, an executive officer of Ashland.
10.8 Form of Indemnification Agreement between Ashland Inc. and each
member of its Board of Directors.
10.9 Ashland Inc. Nonqualified Excess Benefit Pension Plan (filed as
Exhibit 10.11 to Ashland's Form 10-K for the fiscal year ended
September 30, 1998 and incorporated herein by reference).
10.10 Ashland Inc. Long-Term Incentive Plan (filed as Exhibit 10.9 to
Ashland's Form 10-K for the fiscal year ended September 30, 2000
and incorporated herein by reference).
10.11 Ashland Inc. Directors' Charitable Award Program (filed as Exhibit
10.10 to Ashland's Form 10-K for the fiscal year ended September
30, 2000 and incorporated herein by reference).
10.12 Ashland Inc. 1993 Stock Incentive Plan (filed as Exhibit 10.11 to
Ashland's Form 10-K for the fiscal year ended September 30, 2000
and incorporated herein by reference).
10.13 Ashland Inc. 1995 Performance Unit Plan (filed as Exhibit 10.12 to
Ashland's Form 10-K for the fiscal year ended September 30, 2000
and incorporated herein by reference).
10.14 Ashland Inc. 1997 Stock Incentive Plan (filed as Exhibit 10.15 to
Ashland's Form 10-K for the fiscal year ended September 30, 2000
and incorporated herein by reference).
10.15 Ashland Inc. Amended and Restated Ashland Inc. Incentive Plan
(filed as Exhibit 10.1 to Ashland's Form 10-Q for the quarter
ended December 31, 2000 and incorporated herein by reference).
10.16 Amended and Restated Limited Liability Company Agreement of
Marathon Ashland Petroleum LLC dated as of December 31, 1998
(filed as Exhibit 10.17 to Ashland's Form 10-K for the fiscal year
ended September 30, 1999 and incorporated herein by reference).
10.17 Put/Call, Registration Rights and Standstill Agreement as amended
to December 31, 1998 among Marathon Oil Company, USX Corporation,
Ashland Inc. and Marathon Ashland Petroleum (filed as Exhibit
10.18 to Ashland's Form 10-K for the fiscal year ended September
30, 1999 and incorporated herein by reference).
11 Computation of Earnings Per Share (appearing on page 43 of
Ashland's Annual Report to Shareholders, incorporated by reference
herein, for the fiscal year ended September 30, 2001).
12 Computation of Ratios of Earnings to Fixed Charges and Earnings to
Combined Fixed Charges and Preferred Stock Dividends.
13 Portions of Ashland's Annual Report to Shareholders, incorporated
by reference herein, for the fiscal year ended September 30, 2001.
21 List of subsidiaries.
15
23.1 Consent of independent auditors.
24 Power of Attorney, including resolutions of the Board of
Directors.
Upon written or oral request, a copy of the above exhibits will be
furnished at cost.
(B) REPORTS ON FORM 8-K
None.
16
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
ASHLAND INC.
(Registrant)
By:
/s/ Kenneth L. Aulen
---------------------------------------
(Kenneth L. Aulen, Administrative
Vice President and Controller)
Date: December 3, 2001
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT, IN THE CAPACITIES INDICATED, ON DECEMBER 3, 2001.
SIGNATURES CAPACITY
---------- --------
/s/ PAUL W. CHELLGREN Chairman of the Board, Chief
- --------------------------------- Executive Officer and Director
PAUL W. CHELLGREN
/s/ J. MARVIN QUIN Senior Vice President and Chief
- --------------------------------- Financial Officer
J. MARVIN QUIN
/s/ KENNETH L. AULEN Administrative Vice President,
- --------------------------------- Controller and Principal
KENNETH L. AULEN Accounting Officer
* Director
- ---------------------------------
SAMUEL C. BUTLER
* Director
- ---------------------------------
FRANK C. CARLUCCI
* Director
- ---------------------------------
ERNEST H. DREW
17
* Director
- ---------------------------------
JAMES B. FARLEY
* Director
- ---------------------------------
RALPH E. GOMORY
* Director
- ---------------------------------
ROGER W. HALE
* Director
- ---------------------------------
BERNADINE P. HEALY
* Director
- ---------------------------------
MANNIE L. JACKSON
* Director
- ---------------------------------
PATRICK F. NOONAN
* Director
- ---------------------------------
JANE C. PFEIFFER
* Director
- ---------------------------------
WILLIAM L. ROUSE , JR.
* Director
- ---------------------------------
THEODORE M. SOLSO
* Director
- ---------------------------------
MICHAEL J. WARD
* By: /s/ David L. Hausrath
---------------------
David L. Hausrath
Attorney-in-Fact
Date: December 3, 2001
18
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL SCHEDULE
PAGE
----
Consolidated financial statements:
Statements of consolidated income ...............................*
Consolidated balance sheets .....................................*
Statements of consolidated stockholders' equity .................*
Statements of consolidated cash flows ...........................*
Notes to consolidated financial statements ......................*
Information by industry segment .................................*
Report of independent auditors................................. 20
Consolidated financial schedule:
Schedule II - Valuation and qualifying accounts................ 21
-----------
*The consolidated financial statements appearing on pages 37 through
55 in Ashland's Annual Report are incorporated by reference in this Annual
Report on Form 10-K.
Schedules other than that listed above have been omitted because of
the absence of the conditions under which they are required or because the
information required is shown in the consolidated financial statements or
the notes thereto. Separate financial statements for MAP required by Rule
3-09 of Regulation S-X will be filed as an amendment to this Form 10-K
within 90 days after the end of MAP's fiscal year ending December 31, 2001.
Separate financial statements of other unconsolidated affiliates are
omitted because each company does not constitute a significant subsidiary
using the 20% tests when considered individually. Summarized financial
information for such affiliates is disclosed in Note F of Notes to
Consolidated Financial Statements in Ashland's Annual Report.
19
REPORT OF INDEPENDENT AUDITORS
We have audited the consolidated financial statements and schedule of
Ashland Inc. and consolidated subsidiaries listed in the accompanying index
to financial statements and financial schedule (Item 14(a)). These
financial statements and schedule are the responsibility of Ashland'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 auditing standards
generally accepted in the United States. 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 financial statements listed in the accompanying
index to financial statements (Item 14(a)) present fairly, in all material
respects, the consolidated financial position of Ashland Inc. and
consolidated subsidiaries at September 30, 2001 and 2000, and the
consolidated results of their operations and their cash flows for each of
the three years in the period ended September 30, 2001, in conformity with
accounting principles generally accepted in the United States. 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.
As discussed in Note A to the financial statements, in 2001 the
Company and its unconsolidated affiliate, Marathon Ashland Petroleum LLC,
changed their method of accounting for derivatives.
/s/ Ernst & Young LLP
Ernst & Young LLP
Cincinnati, Ohio
October 31, 2001
20
----------------------------------------------------------------------------------------------------------------------------------
Ashland Inc. and Consolidated Subsidiaries
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
- -----------------------------------------------------------------------------------------------------------------------------------
(In millions) Balance at Provisions Balance
beginning charged to Reserves Other at end
Description of year earnings utilized changes of year
===================================================================================================================================
YEAR ENDED SEPTEMBER 30, 2001
Reserves deducted from asset accounts
Accounts receivable $ 25 $ 34 $(25) (1) $ - $ 34
Inventories 13 5 (3) - 15
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2000
Reserves deducted from asset accounts
Accounts receivable $ 23 $ 15 $(12) (1) $ (1) $ 25
Inventories 15 3 (5) - 13
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 1999
Reserves deducted from asset accounts
Accounts receivable $ 19 $ 12 $ (8) (1) $ - $ 23
Inventories 11 7 (3) - 15
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Uncollected amounts written off, net of recoveries of $1 million
in 2001, $1 million in 2000 and $2 million in 1999.
21
EXHIBIT INDEX
Exhibit
No. Description
- ------- ------------------------------------------------------------------
4.2 Indenture between Ashland and Citibank, N.A., as trustee.
4.3 Indenture between Ashland and U. S. Bank National Association, as
trustee.
4.4 Rights Agreement between Ashland and the Rights Agent, together
with Form of Right Certificate.
10.5 Ashland Inc. Salary Continuation Plan.
10.7 Form of Separation Agreement and General Release between Ashland
Inc. and James R. Boyd.
10.8 Form of Indemnification Agreement between Ashland Inc. and each
member of its Board of Directors.
12 Computation of Ratios of Earnings to Fixed Charges and Earnings to
Combined Fixed Charges and Preferred Stock Dividends.
13 Portions of Ashland's Annual Report to Shareholders for the fiscal
year ended September 30, 2001.
21 List of subsidiaries.
23.1 Consent of independent auditors.
24 Power of Attorney, including resolutions of the Board of
Directors.
[EXECUTION COPY]
ASHLAND OIL, INC.
and
CITIBANK, N.A.,
Trustee
Amendment and Restatement
as of August 15, 1990
of the
Indenture
Dated as of August 15, 1989
Debt Securities
AMENDMENT AND RESTATEMENT as of August 15,
1990, of the INDENTURE, dated as of August 15, 1989,
between ASHLAND OIL, INC., a corporation duly
organized and existing under the laws of the
Commonwealth of Kentucky (herein called the
"Company"), having its principal office at 1000
Ashland Drive, Russell, Kentucky 41169 and CITIBANK,
N.A., a national banking association duly incorporated
and existing under the laws of the United States
(herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of
this Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as provided in this Indenture.
All things necessary to make this Indenture a valid agreement
of the Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities or of series thereof, as
follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 1.01. Definitions. For all purposes of this
Indenture, except as otherwise expressly provided or unless the context
otherwise requires:
-----------
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(2) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally accepted
accounting principles, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with
respect to any computation required or permitted hereunder shall mean
such accounting principles as are generally accepted at the date of
such computation; and
(4) 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.
Certain terms, used solely or principally within an Article
of this Indenture, may be defined in that Article.
"Act", when used with respect to any Holder, has the meaning
specified in Section 1.04.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"controls" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the
Trustee pursuant to Section 6.14 to act on behalf of the Trustee to authenticate
securities of one or more series.
"Authorized Newspaper" means a newspaper of general
circulation in the place of publication, printed in the English Language or
official language of the country of publication and customarily published on
each Business Day, whether or not published on Saturdays, Sundays or holidays.
Whenever successive weekly publications in an Authorized Newspaper are
authorized or required hereunder, they may be made (unless otherwise expressly
provided herein) on the same or different days of the week and in the same or
different Authorized Newspapers.
"Bearer Security" means any Security which is not registered
in the Security Register as to Principal (including without limitation any
Security in temporary or definitive global bearer form).
"Board of Directors" means either the board of directors
of the Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day", when used with respect to any Place of
Payment or place of publication, means any day which is not a day on which
banking institutions generally in that Place of Payment or place of publication
are authorized or obligated by or pursuant to law, regulation or executive order
to close or as specified for a series of Securities pursuant to Section 3.01 or
as specified for any Security in such Security.
"Change in Control" has the meaning specified in Section
11.07.
"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 of this instrument such Commission
is not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
"Company" means the Person named as the "Company" paragraph
this in the first of instrument until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation, and shall also mean any obligor
upon the Securities authenticated and delivered under this Indenture.
"Company Request", "Request of the Company", "Company Order"
or "Order of the Company" means a written request or order signed in the name of
the Company by its Chairman of the Board, the Vice Chairman of the Board, its
President or a Vice President, and by its Treasurer, an Assistant Treasurer, its
Controller, an Assistant Controller, its Secretary or an Assistant Secretary,
and delivered to the Trustee.
"Corporate Trust Office" means the office of the Trustee in
New York, New York, at which at any particular time its corporate trust business
shall be principally administered, which office at the date hereof is located at
120 Wall Street, New York, N.Y. 10043, except that, with respect to presentation
of Securities for payment or registration of transfers and exchanges and the
location of the Security Registrar, such term means the office or agency of the
Trustee in said city at which at any particular time its corporate agency
business shall be conducted, which at the date hereof is located at 111 Wall
Street, New York, N.Y. 10043.
"corporation" includes corporations, associations,
companies and business trusts.
"Coupon" or "coupon" means any interest coupon appertaining
to a Bearer Security.
"Defaulted Interest" has the meaning specified in Section
3.07.
"Depositary" means, with respect to the Securities of any
series issuable or issued in whole or in part in the form of one or more Global
Securities, the Person designated as Depositary by the Company pursuant to
Section 3.01 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
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 the European Communities.
"Euroclear" means the operator of the Euroclear System.
"European Communities" means the European Economic Community,
the European Coal and Steel Community and the European Atomic Energy Community.
"Event of Default" has the meaning specified in Section 5.01.
"Foreign Currency" means a currency issued by the government
of any country other than the United States of America.
"Full Rating Category" has the meaning specified in Section
11.07.
"Global Security" means a Registered Security or a Bearer
Security evidencing all or part of a series of Securities issued to the
Depositary for such series in accordance with Section 3.03.
"Holder" or "holder" means, with respect to a Registered
Security, the Person in whose name at the time a particular Registered Security
is registered in the Security Register and, with respect to a Bearer Security
and/or Coupon, the bearer thereof.
"Indenture" means this instrument as originally executed or
as it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
and shall include the terms of particular series of Securities established as
contemplated by Section 3.01.
"Interest Payment Date", when used with respect to any
Security, means the Stated Maturity of an installment of interest on such
Security.
"Maturity", when used with respect to any Security, means the
date on which the principal of such Security or an installment of principal
becomes due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, call for redemption or otherwise.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, the Vice Chairman of the Board, the President or any Vice
President, and by the Treasurer, the Controller, the Secretary or any Assistant
Treasurer, Assistant Controller or Assistant Secretary, of the Company, and
delivered to the Trustee. Each such Officers' Certificate shall contain the
statements Provided in Section 1.02, if applicable.
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for or an employee of the Company and who shall be reasonably
acceptable to the Trustee. Each Opinion of Counsel shall contain the statements
provided in Section 1.02, if applicable.
"Outstanding" or "outstanding", when used with respect to
Securities, means, as of the date of determination, all Securities theretofore
authenticated and delivered under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the
necessary amount and in the required currency or currency unit has been
theretofore deposited with the Trustee or any Paying Agent (other than
the Company) in trust or set aside and segregated in trust by the
Company (if the Company shall act as its own Paying Agent) for the
Holders of such Securities; provided that, if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor satisfactory to the Trustee has
been made; and
(iii) Securities which have been paid pursuant to Section 3.06
or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by a
.bona fide purchaser in whose hands such Securities are valid
obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, .consent or waiver hereunder or whether a
quorum is present at a meeting of Holders of Outstanding Securities or the
number of votes entitled to be cast by each Holder of a Security in respect of
such security at any such meeting (1) the principal amount of a Security
denominated in a Foreign Currency or currency unit shall be the Dollar
equivalent (as determined by the Company in good faith) as of the date of
original issuance of such Security of the principal amount of such Security and
(ii) Securities owned by the Company or any other obligor upon the Securities or
any Affiliate of the Company or of such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, or upon any such determination as to the
presence of a quorum, only Securities which the Trustee knows to be so owned
shall be so disregarded. Securities so owned which have been pledged in good
faith may be regarded as Outstanding if the pledge 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 Company or any other obligor upon the
Securities or any Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to
pay the Principal of (and Premium, if any) or interest, if any, on any
Securities on behalf of the Company.
"Person" or "person" means any individual, corporation,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Place of Payment", when used with respect to the Securities
of any series, means the place or places where, subject to the provisions of
Section 10.02, the principal of (and premium, if any) and interest on the
Securities of that series are payable as specified in accordance with Section
3.01.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such Particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 3.06 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security or a Security to which a
mutilated, destroyed, lost or stolen coupon appertains shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security or
the Security to which the mutilated, destroyed, lost or stolen coupon
appertains, as the case may be.
"Redemption Date", when used with respect to any Security to
be redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to
be redeemed, means the price, in the currency or currency unit in which such
Security is payable, at which it is to be redeemed pursuant to this Indenture.
"Registered Security" means any Security (including without
limitation any Security in temporary or definitive global registered form) which
is registered in the Security Register.
"Regular Record Date" for the interest payable on any
Interest Payment Date on the Registered Securities of any series means she date
specified for that purpose as contemplated by Section 3.01, which date shall be,
unless otherwise specified pursuant to Section 3.01, the fifteenth day preceding
such Interest Payment pate, whether or not such day shall be a Business Day.
"Required Currency" has the meaning specified in Section
1.15.
"Responsible Officer", when used with respect to the Trustee,
means the chairman or any vice chairman of the board of directors, the chairman
or any vice chairman of the executive committee of the board of directors, the
chairman of the trust committee, the president, any vice president, any
assistant vice president, the secretary, any assistant secretary, the treasurer,
any assistant treasurer, the cashier, any assistant cashier, any senior trust
officer, any trust officer or assistant trust officer, the controller or any
assistant controller or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular appropriate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Securities" has the meaning stated in the first recital of
this Indenture and more particularly means any Securities authenticated and
delivered under this Indenture.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 3.05.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 3.07.
"Stated Maturity", when used with respect to any Security (or
Coupon, if any, representing an installment of interest) or any installment of
principal thereof or interest thereon, means the date specified in such Security
(or Coupon) as the fixed date on which the Principal of such Security or such
installment of principal or interest is due and payable.
"Subsidiary" means any corporation (a) substantially all the
property of which is located, and substantially all the operations of which are
conducted, in the continental United States of America, and (b) of which the
Company, directly or indirectly, owns more than fifty percent (50%) of the
outstanding stock which at the time shall have by the terms thereof ordinary
voting power to elect directors of such corporation, irrespective of whether or
not at the time stock of any other class or classes of such corporation shall
have or might have voting power by reason of the happening of any contingency,
or (c) any such corporation of which such percentage of shares of outstanding
stock of the character described in the foregoing clause (b) shall at the time
be owned, directly or indirectly, by the Company and one or more Subsidiaries as
defined in the foregoing clauses (a) and (b) or by one or more such
Subsidiaries.
"Trustee" means the Person named as the "Trustee" in the
first paragraph of this instrument until a successor Trustee shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall 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
Securities of that series.
"Trust Indenture Act" means the Trust Indenture Act of 1939
as in force at the date as of which this instrument was executed, except as
provided in Section 9.05.
"United States" means the United States of America (including
the states and the District of Columbia), its territories, its possessions, the
Commonwealth of Puerto Rico and other areas subject to its jurisdiction.
"United States Alien" means any Person who, for United States
Federal income tax purposes, is a foreign corporation, a nonresident alien
individual, a nonresident alien fiduciary of a foreign estate or trust, or a
foreign partnership one or more of the members of which is, for United States
Federal income tax purposes, a foreign corporation, a nonresident alien
individual or a nonresident alien fiduciary of a foreign estate or trust.
"Vice President", when used with respect to the Company or
the Trustee, means any vice president, whether or not designated by a number or
a word or words added before or after the title "vice president".
"Voting Stock" means stock of any class or classes (however
designated) the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of a majority of the directors
(or persons performing similar functions) of the corporation, association or
other business entity in question, even though the right so to vote is at the
time suspended by reasons of the happening of such a contingency.
SECTION 1.02. Compliance Certificates and Opinions. Except as
otherwise expressly provided by this Indenture, upon any application or request
by the Company to the Trustee to take any action under any provision of this
Indenture, the Company shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with and an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with
a condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 1.03. Form of Documents Delivered to Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or Opinion of Counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company stating
that the information with respect to such factual matters is in the possession
of the Company, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
SECTION 1.04. Acts of Holders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Holders may be embodied in and evidenced
by one or more instruments of substantially similar tenor signed by such Holders
in person or by agent duly appointed in writing, or by any Person duly
authorized by means of any written certification, proxy or other authorization
furnished by a Depositary. If Securities of a series are issuable as Bearer
Securities, any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders of such the record of Holders of Securities of such series voting in
series may, alternatively, be embodied in and evidenced by the record of Holders
of Securities of such series voting in favor thereof, either in person or by
proxies duly appointed in writing, at any meeting of Holders of Securities of
such series duly called and held in accordance with the provisions of Article
Thirteen, or a combination of such instruments and any such record. Except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments or record are delivered to the Trustee and, where
it is hereby expressly required, to the Company. Such instrument or instruments
or record (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments or so voting at any such meeting or, in the case of the Depositary,
furnishing the written certification, proxy or other authorization pursuant to
which such instrument or instruments are signed. Proof of execution of any such
instrument or of a writing appointing any such agent or authorizing any such
Person or any such written certification or proxy shall be sufficient for any
purpose of this Indenture and (subject to Section 6.01) conclusive in favor of
the Trustee and the Company, if made in the manner provided in this Section.
The record of any meeting of Holders of Securities shall be proved in the
manner Provided in Section 13.06.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The principal amount and serial numbers of Bearer
Securities held by any Person, and the date of holding the same, may be proved
by the production of such Bearer Securities or by a certificate executed by any
trust company, bank, banker or other depositary, wherever situated, showing that
at the date therein mentioned such Person had on deposit with such depositary,
or exhibited to it, the Bearer Securities therein described; or such facts may
be proved by the certificate or affidavit of the Person holding such Bearer
Securities, if such certificate or affidavit is deemed by the Trustee to be
satisfactory. The Trustee and the Company may assume that such ownership of any
Bearer Security continues until (1) another certificate or affidavit bearing a
later date issued in respect of the same Bearer Security is produced, (2) such
Bearer Security is produced to the Trustee by some other Person, (3) such Bearer
Security is surrendered in exchange for a Registered Security or (4) such Bearer
Security is no longer Outstanding.
(d) The fact and date of execution of any such instrument or
writing pursuant to clause (c) above, the authority of the Person executing the
same and the principal amount and serial numbers of Bearer Securities held by
the Person so executing such instrument or writing and the date of holding the
same may also be proved in any other manner which the Trustee deems sufficient;
and the Trustee may in any instance require further proof with respect to any of
the matters referred to in this clause.
(e) The Principal amount and serial numbers of Registered
Securities held by any Person and the date of holding the same shall be proved
by the Security Register.
(f) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of a Holder shall bind every future Holder of the
same Security and/or Coupon and the Holder of every Security and/or Coupon
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof in respect of anything done, omitted or suffered to be done by the
Trustee or the Company in reliance thereon, whether or not notation of such
action is made upon such Security and/or Coupon.
(g) If the Company shall solicit from the Holders any
request, demand, authorization, direction, notice, consent, waiver or other Act,
the Company may, at its option, by or pursuant to a Board Resolution, fix in
advance a record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other Act,
but the Company shall have no obligation to do so. If such a record date is
fixed, such request, demand, authorization, direction, notice, consent, waiver
or other Act may be given before or after such record date, but only the Holders
of record at the close of business on such record date shall be deemed to be
Holders for the purposes of determining whether Holders of the requisite
proportion of Outstanding Securities have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent, waiver or other
Act, and for that purpose the Outstanding Securities shall be computed as of
such record date; provided that no such authorization, agreement or consent by
the holders on such record date shall be deemed effective unless it shall become
effective pursuant to the provisions of this Indenture not later than six months
after the record date.
SECTION 1.05. Notices. etc.. to Trustee and Company.
-------------------------------------
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
made, given, furnished or filed in writing to or with the Trustee at
its Corporate Trust Office, Attention: Corporate Trust Administration
and unless otherwise herein expressly provided, any such document shall
be deemed to be sufficiently made, given, furnished or filed upon its
receipt by a Responsible Officer of the Trustee assigned to its
Corporate Trust Administration, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to it at the address of its principal
office specified in the first paragraph of this instrument or at any
other address previously furnished in writing to the Trustee by the
Company, Attention: Secretary.
SECTION 1.06. Notice to Holders; Waiver. Where this Indenture
provides for notice to Holders of any event:
-------------------------
(i) if any of the Securities affected by such event are
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 affected by such event, at
his address as it appears in the Security Register, within the time
prescribed for the giving of such notice, and
(ii) if any of the Securities affected by such event are
Bearer Securities, such notice shall be sufficiently given (unless
otherwise herein expressly provided or unless otherwise specified in
such Securities) if published once in an Authorized Newspaper in New
York City and London and such other cities as shall be specified with
respect to such Securities and mailed to such Persons whose names and
addresses were previously filed with the Trustee within the two
preceding years pursuant to Section 7.03(d), within the time prescribed
for the giving of such notice.
In case by reason of the suspension of regular mail service
or by reason of any other cause it shall be impracticable to give such notice to
Holders of Registered Securities by mail, then such notification as shall be
made with the approval of the Trustee shall constitute a sufficient notification
for every purpose hereunder. In any case where notice to Holders of Registered
Securities is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder of a Registered
Security shall affect the sufficiency of such notice with respect to other
Holders of Registered Securities or the sufficiency of any notice to Holders of
Bearer Securities given as provided herein.
In case by reason of the suspension of publication of any
Authorized Newspaper or Authorized Newspapers or by reason of any other cause it
shall be impracticable to publish any notice to Holders of Bearer Securities as
provided above, then such notification to Holders of Bearer Securities as shall
be given with the approval of the Trustee shall constitute sufficient notice to
such Holders for every purpose hereunder. Neither the failure to give notice by
publication to Holders of Bearer Securities as provided above, nor any defect in
any notice so published, shall affect the sufficiency of any notice to Holders
of Registered Securities given as provided herein.
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 of Securities 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.
SECTION 1.07. Conflict with Trust Indenture Act. If any
provision hereof limits, qualifies or conflicts with another provision hereof
which is required to be included in this Indenture by any of the provisions of
the Trust Indenture Act, such required provision shall control.
SECTION 1.08. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 1.09. Successors and Assigns.
----------------------
All covenants and agreements in this Indenture by the Company shall bind its
successors and assigns, whether so expressed or not.
SECTION 1.10. Separability Clause. In case any provision in
this Indenture or in the Securities or Coupons shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 1.11. Benefits of Indenture. Nothing in this
Indenture or in the Securities or Coupons, express or implied, shall give to any
Person, other than the parties hereto and their successors hereunder and the
Holders, any benefit or any legal or equitable right, remedy or claim under this
Indenture.
SECTION 1.12. Governing Law.
-------------
This Indenture and the Securities and Coupons shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 1.13. Legal Holidays. Except as otherwise specified
as contemplated by Section 3.01, in any case where any Interest Payment Date,
Redemption Date or Stated Maturity of any Security shall not be a Business Day
at any Place of Payment, then (notwithstanding any other provision of this
Indenture or of the Securities or Coupons, if any) payment of interest or
principal (and premium, if any) need not be made at such Place of Payment on
such date, but may be made on the next succeeding Business Day at such Place of
Payment with the same force and effect as if made on the Interest Payment Date
or Redemption Date, or at the Stated Maturity, and, if so made, no interest
shall accrue for the period from and after such Interest Payment Date,
Redemption Date or Stated Maturity, as the case may be, to the next succeeding
Business Day at such Place of Payment.
SECTION 1.14. Moneys of Different Currencies To Be
Segregated. The Trustee shall segregate moneys, funds and accounts held by the
Trustee hereunder in one currency (or unit thereof) from any moneys, funds or
accounts in any other currencies (or units thereof) notwithstanding any
provision herein which would otherwise permit the Trustee to commingle such
amounts.
SECTION 1.15. Payment To Be in Proper Currency. In the case
of any Security denominated in any particular currency or currency unit (the
"Required Currency"), except as otherwise provided herein, therein or in or
pursuant to the related Board Resolution or supplemental indenture, the
obligation of the company to make any payment of principal, premium or interest
thereon shall not be discharged or satisfied by any tender by the Company, or
recovery by the Trustee, in any currency or currency unit other than the
Required Currency, except to the extent that such tender or recovery shall
result in the Trustee timely holding the full amount of the Required Currency
then due and payable. If any such tender or recovery is made in other than the
Required Currency, the Trustee may take such actions as it considers appropriate
to exchange such other currency or currency unit for the Required Currency. The
costs and risks of any such exchange, including without limitation the risks of
delay and exchange rate fluctuation, shall be borne by the Company, the Company
shall remain fully liable for any shortfall or delinquency in the full amount of
the Required Currency then due and payable and in no circumstances shall the
Trustee be liable therefor. The Company hereby waives any defense of payment
based upon any such tender or recovery which is not in the Required Currency, or
which, when exchanged for the Required Currency by the Trustee, is less than the
full amount of the Required Currency then due and payable.
SECTION 1.16. Language of Notices, etc. Any request, demand,
authorization, direction, notice, consent or waiver required or permitted under
this Indenture shall be in the English language, except that any published
notice may be in an official language of the country of publication.
ARTICLE TWO
Security Forms
SECTION 2.01. Forms Generally. The Securities of each series
and the Coupons, if any, to be attached thereto shall be in substantially the
forms (including temporary or definitive global form) as shall be established by
or pursuant to a Board Resolution 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 such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Securities and Coupons, if any, as evidenced by their
execution of the Securities and Coupons, if any. If the forms of Securities or
Coupons of any series (or any such temporary or definitive Global Security) are
established by, or by action taken pursuant to a Board Resolution, a copy of the
Board Resolution together with an appropriate record of any action taken
pursuant thereto, which Board Resolution or record of such action shall have
attached thereto a true and correct copy of the forms of Security approved by or
pursuant to such Board Resolution, shall be certified by the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Company Order contemplated by Section 3.03 for the
authentication and delivery of such Securities (or any such temporary or
definitive Global Security) or Coupons.
Unless otherwise specified as contemplated by Section 3.01,
Securities in bearer form shall have interest Coupons attached.
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 2.02. Form of Trustee's Certificate of Authentication
-----------------------------------------------
The Trustee's certificate of authentication shall be
in substantially the following form:
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
[full name of Trustee]
as Trustee
By _______________________
Authorized Officer
SECTION 2.03. Securities in Global Form. If Securities of a
series are issuable in global form, as specified as contemplated by Section
3.01, then, notwithstanding clause (8) of Section 3.01 and the provisions of
Section 3.02, such Security shall represent such of the Outstanding Securities
of such series as shall be specified therein and may provide that it shall
represent the aggregate amount of Outstanding Securities from time to time
endorsed thereon and that the aggregate amount of Outstanding Securities
represented thereby may from time to time be reduced to reflect exchanges. Any
endorsement of a Security in global form to reflect the amount, or any increase
or decrease in the amount, of Outstanding Securities represented thereby shall
be made by the Trustee in such manner and upon instructions given by such Person
or Persons as shall be specified therein or in the Company Order to be delivered
to the Trustee pursuant to Section 3.03 or Section 3.04. Subject to the
provisions of Section 3.03 and, if applicable, Section 3.04, the Trustee shall
deliver and redeliver any Security in definitive global bearer form in the
manner and upon written instructions given by the Person or Persons specified
therein or in the applicable Company Order. If a Company Order pursuant to
Section 3.03 or 3.04 has been, or simultaneously is, delivered, any instructions
by the Company with respect to endorsement or delivery or redelivery of a
Security in global form shall be in writing but need not comply with Section
1.02 and need not be accompanied by an Opinion of Counsel. The beneficial owner
of a Note represented by a definitive Global Security in bearer form may, upon
no less than 30 days' written notice to the Trustee, given by the beneficial
owner through a Depositary, exchange its interest in such definitive Global
Security for a definitive Bearer Note or Notes, or a definitive Registered Note
or Notes, of any authorized denomination. No individual definitive Bearer Note
will be delivered in or to the United States.
The provisions of the last sentence of the third to the last
paragraph of Section 3.03 shall apply to any Security represented by a Security
in global form if such Security was never issued and sold by the Company and the
Company delivers to the Trustee the Security in global form together with
written instructions (which need not comply with Section 1.02 and need not be
accompanied by an Opinion of Counsel) with regard to the reduction in the
principal amount of Securities represented thereby, together with the written
statement contemplated by the last sentence of the third to the last paragraph
of Section 3.03.
Notwithstanding the provisions of Sections 2.01 and 3.07,
unless otherwise specified as contemplated by Section 3.01, payment of principal
of and any premium and any interest on any Security in definitive global form
shall be made to the Person or Persons specified therein.
ARTICLE THREE
The Securities
SECTION 3.01. 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. There
shall be established in or pursuant to a Board Resolution and set forth in an
Officers' Certificate, or established in one or more indentures supplemental
hereto, prior to the issuance of Securities of any series,
(1) the title of the Securities of the series
(which shall distinguish the Securities of the series from all
other Securities);
(2) any limit upon the aggregate principal amount of the
Securities of the series which 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 3.04, 3.05, 3.06, 9.06 or
11.06 and except for any Securities which, pursuant to Section 3.03 are
deemed never to have been authenticated and delivered hereunder);
(3) the date or dates on which the principal (and premium, if
any) of any of the Securities of the series are payable or the method
of determination thereof;
(4) the rate or rates, or the method of determination
thereof, at which any of the Securities of the series shall bear
interest, if any, the date or dates from which such interest shall
accrue, the Interest Payment Dates on which such interest shall be
payable and the Regular Record Date for the interest payable on any
Registered Securities on any Interest Payment Date;
(5) the place or places where the principal of (and premium,
if any) and interest, if any, on any of the Securities and Coupons, if
any of the series shall be payable and the office or agency for the
Securities of the series maintained by the Company pursuant to Section
10.02;
(6) the period or periods within which, the price or prices at
which and the terms and conditions upon which any of the Securities and
any Coupons of the series may be redeemed, in whole or in part, at the
option of the Company;
(7) the terms of any sinking fund and the obligation, if any,
of the Company to redeem or purchase Securities of the series pursuant
to any sinking fund or analogous provisions or at the option of a
Holder thereof and the period or periods within which, the price or
prices at which and the terms and conditions upon which Securities of
the series shall be redeemed or purchased, in whole or in part;
(8) if other than denominations of $1,000, if registered, and
$5,000, if bearer, and in any integral multiple of the applicable
denominations for Securities denominated in Dollars, the denominations
in which the Securities of the series shall be issuable;
(9) if other than the principal amount thereof, the portion
of the principal amount of any of the Securities of the series which
shall be payable upon declaration of acceleration of the Maturity
thereof pursuant to Section 5.02;
(10) the application, if any, of Section 4.03, or such other
means of satisfaction and discharge as may be
specified for the Securities and Coupons, if any, for a series;
(11) any deletions or modifications of or additions to the
Events of Default set forth in Section 5.01 or covenants of the Company
set forth in Article Ten pertaining to the Securities of the series
(including without limitation whether the provisions of Section 10.08
or 10.09 shall not be applicable to the Securities of the series);
(12) the forms of the Securities and Coupons, if any, of
the series;
(13) if other than Dollars, the coin or currency or currencies,
or currency unit or units, in which payment of the principal of (and
premium, if any) and interest, if any, on any of the Securities of the
series shall be payable;
(14) if the principal of (and premium, if any) or interest, if
any, on any of the Securities of the series are to be payable at the
election of the Company or a Holder thereof, or under some or all other
circumstances, in a coin or currency or currencies, or currency unit or
units, 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, or the other circumstances under
which any of the Securities are to be so payable, and any provision
requiring the Holder .to bear currency exchange costs by deduction from
such payments;
(15) if the amount of payments of principal (and premium, if
any) or interest, if any, on any of the Securities of the series may be
determined with reference to an index based on (i) a coin or currency
or currencies, or currency unit or units other than that in which such
Securities are stated to be payable or (ii) any method not inconsistent
with the provisions of this Indenture specified in or pursuant to such
Board Resolution, then in each case (i) and (ii) the manner in which
such amounts shall be determined;
(16) whether the Securities of the series are to be issued as
Registered Securities or Bearer Securities (with or without Coupons);
whether Bearer Securities may be exchanged for Registered Securities of
the series and whether Registered Securities may be exchanged for
Bearer Securities of the series (if permitted by applicable laws and
regulations) and the circumstances under which and the place or places
where any such exchanges, if permitted, may be made; and whether the
Securities of the series shall be issued in whole or in part in the
form of one or more Global Securities and, in such case, the Depositary
for such Global Security or Securities and whether any Global
Securities of the series are to be issuable initially in temporary form
and whether any Global Securities of the series are to be issuable in
definitive form with or without coupons and, if so, whether beneficial
owners of interests in any such definitive Global Security may exchange
such interests for Securities of such series and of like tenor of any
authorized form and denomination and the circumstances under which and
the place or places where any such exchanges may occur, if other than
in the manner provided in Section 3.05;
(17) whether and under what circumstances and with what
procedures and documentation the Company will pay additional amounts on
any of the Securities and Coupons, if any, of the series to any Holder
who is not a U.S. Person (including a definition of such term), in
respect of any tax, assessment or governmental charge withheld or
deducted and, if so, whether the Company will have the option to redeem
such Securities rather than pay additional amounts (and the terms of
any such option);
(18) the Person to whom any interest on any Registered
Security of the series shall be payable, if other than the Person in
whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, the manner in which, or the Person to whom, any interest on
any Bearer Security of the series shall be payable, if otherwise than
upon presentation and surrender of the Coupons appertaining thereto as
they severally mature and to the extent to which, or the manner in
which, any interest payable on a temporary Global Security on an
Interest Payment Date will be paid if other than in the manner provided
in Section 3.04; and
(19) any other terms of any of the Securities of the series.
All Securities of any one series and the Coupons appertaining
to any Bearer Securities of such series shall be substantially identical except,
in the case of Registered Securities, as to denomination and except as may
otherwise be provided in or pursuant to the Board Resolution referred to above
and (subject to Section 3.03) set forth in the Officers' Certificate referred to
above or in any such indenture supplemental hereto.
At the option of the Company, interest on the Registered
Securities of any series that bears interest may be paid by mailing a check to
the address of any Holder as such address shall appear in the Securities
Register.
If any of the terms of the series are established by action
taken pursuant to a Board Resolution, a copy of such Board Resolution shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
SECTION 3.02. Denominations. The Securities of each series
shall be issuable in such denominations as shall be specified as contemplated by
Section 3.01. In the absence of any such provisions with respect to the
Securities of any series, the Securities of such series denominated in Dollars
shall be issuable in denominations of $1,000, if registered, and $5,000, if
bearer, and in any integral multiple of the applicable denominations. 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 Company executing
the same may determine with the approval of the Trustee.
SECTION 3.03. Execution, Authentication. Delivery and Dating.
The Securities shall be executed on behalf of the Company by manual or facsimile
signatures of its Chairman, its President or any of its Vice Presidents or its
Treasurer, under its corporate seal reproduced thereon attested by the manual or
facsimile signature of its Secretary or one of its Assistant Secretaries. Any
Coupons shall be executed on behalf of the Company by the manual or facsimile
signature of any such officer of the Company.
Securities and Coupons bearing the manual or facsimile
signatures of individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery
of such Securities or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any series,
together with any Coupons appertaining thereto, executed by the Company to the
Trustee for authentication, together with a Company Order for the authentication
and delivery of such Securities, and the Trustee in accordance with the Company
Order shall authenticate and deliver such Securities; provided, however, that,
in connection with its original issuance, no Bearer Security (including any
temporary Bearer Security issued pursuant to Section 3.04 which is not a Global
Security) shall be mailed or otherwise delivered to any location in the United
States; and provided; further that a Bearer Security may be delivered outside
the United States in connection with its original issuance only if the Person
entitled to receive such Bearer Security (including any temporary Bearer
Security issued pursuant to Section 3.04 which is not a Global Security) shall
have furnished a certificate in the form set forth in Exhibit A.1 to this
Indenture, dated on the earlier of the first Interest Payment Date and the date
of the delivery -of the Bearer Security in definitive form. If any Security
shall be represented by a definitive Global Security in bearer form, then, for
purposes of this Section and Section 3.04, the notation of a beneficial owner's
interest therein upon original issuance of such Security or upon exchange of a
portion of a temporary Global Security shall be deemed to be delivery in
connection with its original issuance of such beneficial owner's interest in
such definitive Global Security in bearer form. Except as permitted by Section
3.06, the Trustee shall not authenticate and deliver any Bearer Security unless
all appurtenant Coupons for interest then matured have been detached and
canceled.
If the forms or terms of the Securities of the series and any
related Coupons have been established by or pursuant to one or more Board
Resolutions as permitted by Sections 2.01 and 3.01, in authenticating such
Securities, and accepting the additional responsibilities under this Indenture
in relation to such Securities, the Trustee shall be entitled to receive, and
(subject to Section 6.01) shall be fully protected in relying upon, an Opinion
of Counsel stating:
(a) if the forms of such Securities and any Coupons have been
established by or pursuant to a Board Resolution as permitted by
Section 2.01, that such forms have been established in conformity with
the provisions of this Indenture;
(b) if the terms of such Securities and any Coupons have been
or are to be established by or pursuant to a Board Resolution as
permitted by Section 3.01, that such terms (or in the case of the
issuance of Securities pursuant to the next paragraph, the procedures
for determining such terms) have been established in conformity with
the provisions of this Indenture; and
(c) that such Securities, together with any Coupons
appertaining thereto, when authenticated and delivered by the Trustee
and issued by the Company in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute valid and legally
binding obligations of the Company, entitled to the benefits of the
Indenture and enforceable in accordance with their terms, subject, as
to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting the enforcement
of creditors' rights and to general equity principles.
If such forms or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee. Without limiting the
generality of the foregoing, the Trustee shall not be required to authenticate
Securities denominated in a Foreign Currency if the Trustee reasonably believes
that it will be unable to perform its duties with respect to such Securities.
Each Registered Security shall be dated the date of its
authentication; and each Bearer Security and any Global Security in bearer form
shall be dated as of the date of original issuance of the first Security of such
series to be issued.
No Security or Coupon shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder. Notwithstanding the
foregoing, if any Security shall have been duly authenticated and delivered
hereunder but never issued and sold by the Company, and the Company' shall
deliver such Security to the Trustee for cancellation as provided in Section
3.09 together with a written statement (which need not comply with Section 1.02
and need not be accompanied by an Opinion of Counsel) stating that such Security
has never been issued and sold by the Company, for all purposes of this
Indenture such Security shall be deemed never to have been authenticated and
delivered hereunder and shall never be entitled to the benefits of this
Indenture.
If the Company shall establish pursuant to Section 3.01 that
the Securities of a series are to be issued in whole or in part in the form of a
Global Security, then the Company shall execute and the Trustee shall in
accordance with this Section and the Company Order with respect to such series
authenticate and deliver the Global Security that (i) shall represent and shall
be denominated in an aggregate amount equal to the aggregate principal amount of
Outstanding Securities of such series to be represented by the Global Security,
(ii) shall be registered, if in registered form, in the name of the Depositary
for such Global Security or the nominee of such Depositary, and (iii) shall be
delivered by the Trustee to such Depositary or pursuant to such Depository's
instruction.
Each Depositary designated pursuant to Section 3.01 for a
Global Security in registered form 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 3.04. Temporary Securities. Pending the preparation of
definitive Securities of any series, the Company may execute, and upon Company
Order the Trustee shall authenticate and deliver, temporary Securities which are
printed, lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive Securities
in lieu of which they are issued, in registered form or, if authorized, in
bearer form with one or more Coupons or without Coupons, and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Securities may determine, as evidenced conclusively by
their execution of such Securities. Such temporary Securities may be in global
form.
Except in the case of temporary Global Securities in bearer
form (which shall be exchanged in accordance with the provisions of the
following paragraphs), if temporary Securities of any series are issued, the
Company will cause definitive Securities of that series to be prepared without
unreasonable delay. After the preparation of definitive Securities of such
series, the temporary Securities of such series shall be exchangeable for
definitive Securities of such series upon surrender of the temporary Securities
of such series at the office or agency of the Company maintained pursuant to
Section 10.02 in a Place of Payment for such series for the purpose of exchanges
of Securities of such series, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities of any series (accompanied
by any unmatured Coupons appertaining thereto) the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a like aggregate
principal amount of definitive Securities of the same series and of like tenor
or authorized denominations and having the same terms and conditions; provided,
however, that no definitive Bearer Security shall be delivered in exchange for a
temporary Registered Security; and provided further that a definitive Bearer
Security shall be delivered in exchange for a temporary Bearer Security only in
compliance with the conditions set forth in Section 3.03.
If temporary Global Securities of any series are issued in
bearer form, any such temporary Global Securities in bearer form shall, unless
otherwise provided therein, be delivered to the London office of a Depositary
(the "Common Depositary"), for the benefit of Euroclear and CEDEL S.A., for
credit to the respective accounts of the beneficial owners of such Securities
(or to such other accounts as they may direct).
Without unnecessary delay but not later than the date specified in, or
determined pursuant to the terms of, any such temporary Global Security (but in
any event in the case of definitive Securities to be delivered in bearer form
not before the beneficial owners of interests in the temporary Global Security
have provided the certification set forth in Section 3.03) (the "Exchange
Date"), the Company shall deliver to the Trustee definitive Securities, in
aggregate principal amount equal to the principal amount of such temporary
Global Security, executed by the Company. On or after the Exchange Date such
temporary Global Security shall be surrendered by the Common Depositary to the
Trustee, as the Company's agent for such purpose, to be exchanged, in whole or
from time to time in part, for definitive Securities without charge and the
Trustee shall authenticate and deliver, in exchange for each portion of such
temporary Global Security, an equal aggregate principal amount of definitive
Securities of the same series of authorized denominations and of like tenor as
the portion of such temporary Global Security to be exchanged. The definitive
Securities to be delivered in exchange for any such temporary Global Security in
bearer form shall be in bearer form, registered form, definitive global form
(registered or bearer), or any combination thereof, as specified as contemplated
by Section 3.01, and, if any combination thereof is so specified, as requested
by the beneficial owner thereof; provided, however, that, unless otherwise
specified in such temporary Global Security in bearer form, upon such
presentation by the Common Depositary, such temporary Global Security in bearer
form shall be accompanied by a certificate dated the Exchange Date or a
subsequent date and signed by Euroclear as to the portion of such temporary
Global Security in bearer form held for its account then to be exchanged and a
certificate dated the Exchange Date or a subsequent date and signed by CEDEL
S.A. as to the portion of such temporary Global Security in bearer form held for
its account then to be exchanged, each in the form set forth in Exhibit A.2 to
this Indenture; and Provided further that definitive Bearer Securities shall be
delivered in exchange for a portion of a temporary Global Security in bearer
form only in compliance with the requirements of Section 3.03.
Unless otherwise specified in such temporary Global Security in bearer form, the
interest of a beneficial owner of Securities of a series in a temporary Global
Security in bearer form shall be exchanged for definitive Securities of the same
series and of like tenor following the Exchange Date when the beneficial owner
instructs Euroclear or CEDEL S.A., as the case may be, to request such exchange
on his behalf and delivers to Euroclear or CEDEL S.A., as the case may be, a
certificate in the form set forth in Exhibit A.1 to this Indenture, dated on the
earlier of the first Interest Payment Date and the date of delivery of the
Securities in definitive form, copies of which certificate in blank shall be
available from the offices of Euroclear, CEDEL S.A., the Trustee, any
Authenticating Agent appointed for such series of Securities and any Paying
Agent appointed for such series of Securities. Unless otherwise specified in
such temporary Global Security in bearer form, any such exchange shall be made
free of charge to the beneficial owners of such temporary Global Security in
bearer form, except that a Person receiving definitive Securities must bear the
cost of insurance, postage, transportation and the like in the event that such
Person does not take delivery of such definitive Securities in person at the
offices of Euroclear or CEDEL S.A. The definitive Securities in bearer form to
be delivered in exchange for any portion of a temporary Global Security in
bearer form shall be delivered only outside the United States.
Until exchanged in full as hereinabove provided, the temporary
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of the same series and of like
tenor authenticated and delivered hereunder, except that, unless otherwise
specified as contemplated by Section 3.01, interest payable on a temporary
Global Security in bearer form on an Interest Payment Date for Securities of
such series occurring prior to the applicable Exchange Date shall be payable to
Euroclear and CEDEL S.A. on such Interest Payment Date upon delivery by
Euroclear and CEDEL S.A. to the Trustee of a certificate or certificates in the
form set forth in Exhibit A.3 to this Indenture, for credit without further
interest on or after such Interest Payment Date to the respective accounts of
the Persons who are the beneficial owners of such temporary Global Security in
bearer form (or to such other accounts as they may direct) on such Interest
Payment Date and who have each delivered to Euroclear or CEDEL S.A., as the case
may be, a certificate in the form set forth in Exhibit A.4 to this Indenture.
Any interest so received by Euroclear and CEDEL S.A. and not paid as herein
provided shall be returned to the Trustee immediately prior to the expiration of
two years after such Interest Payment Date in order to be repaid to the Company
in accordance with Section 10.03.
SECTION 3.05. Registration; Registration of Transfer and
Exchange. The Company shall cause to be kept at an office or agency to be
maintained by the Company in accordance with Section 10.02 a register (the
"Security Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Registered
Securities and the registration of transfers of Registered Securities. The
Trustee is hereby appointed "Security Registrar" for the purpose of registering
Registered Securities and transfers of Registered Securities as herein provided.
Upon surrender for registration of transfer of any Registered
Security of any series at the office or agency of the Company maintained
pursuant to Section 10.02 for such purpose in a Place of Payment for such
series, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Registered Securities of the same series of any authorized denominations and
of a like aggregate principal amount and tenor and having the same terms and
conditions.
The Company may establish pursuant to Section 3.01 that, at
the option of the Holder, Registered Securities of any series may be exchanged
for other Registered Securities of the same series of any authorized
denominations and of a like aggregate principal amount and tenor and having the
same terms and conditions, upon surrender of the Securities to be exchanged at
any such office or agency. Whenever any Securities are so surrendered for
exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is entitled to
receive. Bearer Securities may not be issued in exchange for Registered
Securities.
At the option of the Holder (if so provided pursuant to
Section 3.01) Bearer Securities of any series may be exchanged for Registered
Securities of the same series of any authorized denominations and of a like
aggregate principal amount and tenor and having the same terms and conditions,
upon surrender of the Bearer Securities to be exchanged at any such office or
agency, with all unmatured Coupons and all matured Coupons in default thereto
appertaining. If the Holder of a Bearer Security is unable to produce any such
unmatured Coupon or Coupons or matured Coupon or Coupons in default, such
exchange may be effected if the Bearer Securities are accompanied by payment in
funds acceptable to the Company in an amount equal to the face amount of such
missing Coupon or Coupons, or the surrender of such missing Coupon or Coupons
may be waived by the Company and the Trustee if there is furnished to them such
security or indemnity as they may require to save each of them and any Paying
Agent harmless. If thereafter the Holder of such Security shall surrender to any
Paying Agent any such missing Coupon in respect of which such a payment shall
have been made, such Holder shall be entitled to receive the amount of such
payment; provided, however, that, except as otherwise provided in Section 10.02,
interest represented by Coupons shall be payable only upon presentation and
surrender of those Coupons at an office or agency located outside the United
States. Notwithstanding the foregoing, in case a Bearer Security of any series
is surrendered at any such office or agency in exchange for a Registered
Security of the same series and like tenor after the close of Business at such
office or agency on (i) any Regular Record Date and before the opening of
business at such office or agency on the relevant Interest Payment Date, or (ii)
any Special Record Date and before the opening of business at such office or
agency on the related proposed date for payment of Defaulted Interest, such
Bearer Security shall be surrendered without the Coupon relating to such
Interest Payment Date or proposed date for payment, as the case may be, and
interest or Defaulted Interest, as the case may be, will not be payable on such
Interest Payment Date or proposed date for payment, as the case may be, in
respect of the Registered Security issued in exchange for such Bearer Security,
but will be payable only to the Holder of such Coupon when due in accordance
with the provisions of this Indenture.
Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.
Notwithstanding the foregoing, except as otherwise specified
as contemplated by Section 3.01, any definitive Global Security in bearer form
shall be exchangeable only as provided in this paragraph. If the beneficial
owners of interests in a definitive Global Security in bearer form are entitled
to exchange such interests for Securities of such series and of like tenor and
principal amount of another authorized form and denomination, as specified as
contemplated by Section 3.01, then without unnecessary delay but in any event
not later than the earliest date on which such interest may be so exchanged, the
Company shall deliver to the Trustee definitive Securities in aggregate
principal amount equal to the principal amount of such definitive Global
Security in bearer form, executed by the Company. On or after the earliest date
on which such interest may be so exchanged, such definitive Global Security in
bearer form shall be surrendered by the Common Depositary or such other
depositary or Common Depositary as shall be specified in the Company Order with
respect thereto to the Trustee, as the Company's agent for such purpose, to be
exchanged, in whole or from time to time in part, for definitive Securities
without charge and the Trustee shall authenticate and deliver, in exchange for
each portion of such definitive Global Security in bearer form, an equal
aggregate principal amount of definitive Securities of the same series of
authorized denominations and of like tenor as the portion of such definitive
Global Security in bearer form to be exchanged which, unless the Securities of
the series are not issuable both as Bearer Securities and as Registered
Securities, as specified as contemplated by Section 3.01, shall be in the form
of Bearer Securities or Registered Securities, or any combination thereof, as
shall be specified by the beneficial owner thereof; provided, however, that no
such exchanges may occur during a period beginning at the opening of business 15
days before any selection of Securities of that series to be redeemed and ending
on the relevant Redemption Date; and provided further that no Bearer Security
delivered in exchange for a portion of a definitive Global Security shall be
mailed or otherwise delivered to any location in the United States. If a
Registered Security is issued in exchange for any portion of a definitive Global
Security in bearer form after the close of business at the office or agency
where such exchange occurs on (i) any Regular Record Date and before the opening
of business at such office or agency on the relevant Interest Payment Date, or
(ii) any Special Record Date and the opening of business at such office or
agency on the related proposed date for payment of Defaulted Interest, interest
or Defaulted Interest, as the case may be, will not be payable on such Interest
Payment Date or proposed date for payment, as the case may be, in respect of
such Registered Security, but will be payable on such Interest Payment Date or
proposed date for payment, as the case may be, only to the Person to whom
interest in respect of such portion of such definitive Global Security in bearer
form is payable in accordance with the provisions of this Indenture.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company, evidencing
the same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Registered Security presented or surrendered for
registration of transfer or for exchange shall (if so required by the Company or
the Trustee or any transfer agent) be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar or any transfer agent duly executed, by the Holder thereof or
his attorney duly authorized in writing.
No service charge shall be made for any registration of
transfer or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 3.04, 9.06 or 11.06 not involving any
transfer.
The Company shall not be required (i) to issue, register the
transfer of or exchange Securities of any series during a period beginning at
the opening of business 15 days before any selection of Securities of that
series to be redeemed and ending at the close of business on (A) if Securities
of the series are issuable only as Registered Securities, the day of the mailing
of the relevant notice of redemption and (B) if Securities of the series are
issuable as Bearer Securities, the day of the first publication of the relevant
notice of redemption or, if Securities of the series are also issuable as
Registered Securities and there is no publication, the mailing of the relevant
notice of redemption, or (ii) to register the transfer of or exchange of any
Registered Security so selected for redemption, in whole or in part, except the
unredeemed portion of any Security being redeemed in part, or (iii) to exchange
any Bearer Security so selected for redemption except that such a Bearer
Security may be exchanged for a Registered Security of that series and like
tenor; provided that such Registered Security shall be simultaneously
surrendered for redemption.
If at any time the Depositary for the Global Securities of a series notifies the
Company that it is unwilling or unable to continue as Depositary for the Global
Securities of such series or if at any time the Depositary for the Global
Securities of such series shall no longer be eligible under Section 3.03, the
Company shall appoint a successor Depositary with respect to the Global
Securities of such series. If a successor Depositary for the Global Securities
of such series is not appointed by the Company within 90 days after the Company
receives such notice or becomes aware of such ineligibility, the Company's
election pursuant to Section 3.01 that such Registered Securities be represented
by one or more Global Securities shall no longer be effective with respect to
the Global Securities of such series and the Company will execute, and the
Trustee, upon receipt of a Company Order for the authentication and delivery of
definitive Securities of such series, will authenticate and deliver, Securities
of such series in definitive form in an aggregate principal amount equal to the
principal amount of the Global Security or Securities representing such series
in exchange for such Global Security or Securities.
If specified by the Company pursuant to Section 3.01 with
respect to a series of Securities, the Company may at any time and in its sole
discretion determine that the Securities of any series issued in the form of one
or more Global Securities shall no longer be represented by such Global Security
or Securities. In such event the Company will execute, and the Trustee, upon
receipt of a Company Order for the authentication and delivery of definitive
Securities of such series, will authenticate and deliver Securities of such
series in definitive form and in an aggregate principal amount equal to the
principal amount of the Global Security or Securities representing such series
in exchange for such Global Security or Securities.
If specified by the Company pursuant to Section 3.01 with
respect to a series of Securities, the Depositary for such series of Securities
may at its option surrender a Global Security for such series of Securities in
exchange in whole or in part for Securities of such series in definitive form on
such terms as are acceptable to the Company and such Depositary. Thereupon, the
Company shall execute, and the Trustee, upon receipt of a Company Order for the
authentication and delivery of definitive Securities of such series, shall
authenticate and deliver, without charge to the Holders,
(i) to each Person specified by such Depositary a new Security
or Securities of the series of any authorized denomination as requested
by such Person in aggregate principal amount equal to and in exchange
for such Person's beneficial interest in the Global Security or
Securities; and
(ii) to such Depositary a new Global Security in a
denomination equal to the difference, if any, between the principal
amount of the surrendered Global Security and the aggregate principal
amount of definitive Securities delivered to Holders thereof.
In any exchange provided for in any of the preceding three paragraphs, the
Company will execute and the Trustee will authenticate and deliver Securities
(a) in definitive registered form in authorized denominations, if the Securities
of such series are issuable as Registered Securities, (b) in definitive bearer
form in authorized denominations, with coupons attached, if the Securities of
such series are issuable as Bearer Securities or (c) as either Registered or
Bearer Securities, if the Securities of such series are issuable in either form;
provided, however, that a definitive Bearer Security shall be delivered in
exchange for a temporary Global Security only in compliance with the conditions
set forth in Section 3.04; and provided further that delivery of a Bearer
Security shall occur only outside the United States.
Upon the exchange of a Global Security for Securities in
definitive form, such Global Security shall be canceled by the Trustee.
Registered Securities issued in exchange for a Global Security pursuant to this
Section shall be registered in such names and in such authorized denominations
as the Depositary for such Global Security, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the Trustee. The
Trustee shall deliver such Registered Securities to the persons in whose names
such Securities are so registered.
Unless otherwise specified by the Company pursuant to Section
3.01, a 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.
SECTION 3.06. Mutilated, Destroyed. Lost and Stolen
Securities. If any mutilated Security or Security with a mutilated Coupon
appertaining to it is surrendered to the Trustee, the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a new Security
of the same series and of like tenor and principal amount and with the same
terms and conditions and bearing a number not contemporaneously outstanding with
Coupons corresponding to the Coupons, if any, appertaining to the surrendered
Security.
If there shall be delivered to the Company and the Trustee (i) evidence to their
satisfaction of the destruction, loss or theft of any Security or Coupon and
(ii) such security or indemnity as may be required by them to save each of them
and any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security or Coupon has been acquired by a bona
fide purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security or in exchange
for the Security to which a destroyed, lost or stolen Coupon appertains (upon
surrender to the Trustee of such Security with all appurtenant Coupons not
destroyed, lost or stolen) a new Security of the same series and of like tenor
and principal amount and with the same terms and conditions and bearing a number
not contemporaneously outstanding, with Coupons corresponding to the Coupons, if
any, appertaining to such destroyed, lost or stolen Security or to the Security
to which such destroyed, lost or stolen Coupon appertains.
In case any such mutilated, destroyed, lost or stolen Security
or Coupon has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Security or Coupon pay such Security or
Coupon; provided, however, that principal of (and premium, if any) and any
interest on Bearer Securities shall, except as otherwise provided in Section
10.02, be payable only at an office or agency located outside the United States
and, unless otherwise specified as contemplated by Section 3.01, any interest on
Bearer Securities shall be payable only upon presentation and surrender of the
Coupons appertaining thereto.
Upon the issuance of any new Security or Coupon under this
Section, the Company 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) connected
therewith.
Every new Security or Coupon of any series issued pursuant to
this Section in lieu of any mutilated, destroyed, lost or stolen Security or
Coupon shall constitute an original additional contractual obligation of the
Company, whether or not the mutilated, destroyed, lost or stolen Security shall
be at any time enforceable by anyone, and shall be entitled to all the benefits
of this Indenture equally and proportionately with any and all other Securities
or Coupons of that series duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities or
Coupons.
SECTION 3.07. Payment of Interest; Interest Rights Preserved.
Unless otherwise provided as contemplated by Section 3.01 with respect to any
series of Securities, interest on any Registered Security which is payable, and
is punctually paid or duly provided for, on any Interest Payment Date shall be
paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest.
Any interest on any Registered Security of any series which is
payable, but is not punctually paid or duly provided for, on any Interest
Payment Date (herein called "Defaulted Interest") shall cease to be payable to
the Holder on the relevant Regular Record Date by virtue of having been such
Holder, and such Defaulted Interest may be paid by the Company, at its election
in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Registered Securities of
such series (or their respective Predecessor Securities) are registered
at the close of business on a Special Record Date for the payment of
such Defaulted Interest, which shall be fixed in the following manner.
The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Security of such series
and the date of the proposed payment, and at the same time the Company
shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for
such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as in this Clause provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and not less
than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be mailed, first-class postage
prepaid, to each Holder of Securities of such series at his address as
it appears in the Security Register, not less than 10 days prior to
such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose
names the Securities of such series (or their respective Predecessor
Securities) are registered at the close of business on such Special
Record Date and shall no longer be payable pursuant to the following
Clause (2).
(2) The Company may make payment of any Defaulted Interest on
the Registered Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which
such Securities may be listed, and upon such notice as may be required
by such exchange, if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this Clause, such manner of payment
shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section and
Section 3.05, each Security delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Security shall carry the
rights to interest accrued and unpaid, and to accrue, which were carried by such
other Security.
None of the Company, the Trustee, any Authenticating Agent,
any Paying Agent or the Security Registrar will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of any beneficial ownership interest in a Global Security or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interest.
SECTION 3.08. Persons Deemed Owners. Prior to due presentment
of a Registered Security for registration of transfer, the Company, the Trustee
and any agent of the Company or the Trustee may treat the Person in whose name
such Registered Security is registered as the owner of such Registered Security
for the purpose of receiving payment of principal of (and premium, if any) and
(subject to Sections 3.05 and 3.07) interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
Title to any Bearer Security and any Coupons appertaining
thereto shall pass by delivery. The Company, the Trustee and any agent of the
Company or the Trustee may treat the Holder of any Bearer Security and the
Holder of any Coupon as the absolute owner of such Security or Coupon for the
purpose of receiving payment thereof or on account thereof and for all other
purposes whatsoever, whether or not such Security or Coupon be overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
SECTION 3.09. Cancellation. All Securities and Coupons
surrendered for payment, redemption, registration of transfer or exchange or for
credit against any sinking fund payment shall, if surrendered to any Person
other than the Trustee, be delivered to the Trustee. All Securities and Coupons
so delivered shall be promptly canceled by the Trustee. All Bearer Securities
and unmatured Coupons held by the Trustee pending such cancellation shall be
deemed to be delivered for cancellation for all purposes of this Indenture and
the Securities. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder
which the Company may have acquired in any manner whatsoever, and may deliver to
the Trustee (or to any other Person for delivery to the Trustee) for
cancellation any Securities previously authenticated hereunder which the Company
has not issued and sold, and all Securities so delivered shall be promptly
canceled by the Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Securities and Coupons held
by the Trustee shall be destroyed in a manner selected by the Trustee unless
otherwise directed by a Company Order.
SECTION 3.10. Computation of Interest. Except as otherwise
specified as contemplated by Section 3.01 for Securities of any series, interest
on the Securities of each series shall be computed on the basis of a 360--day
year of twelve 30-day months.
SECTION 3.11. Compliance with Certain Laws and Regulations. If
any Bearer Securities are to be issued in any series of Securities, the Company
will use reasonable efforts to provide for arrangements and procedures designed
pursuant to then applicable laws and regulations, if any, to ensure that such
Bearer Securities are sold or resold, exchanged, transferred and paid only in
compliance with such laws and regulations and without adverse consequences to
the Company, the Holders and the Trustee.
SECTION 3.12. Medium-Term Securities. Notwithstanding any
contrary provision herein, if all Securities of a series are not to be
originally issued at one time, it shall not be necessary to deliver the Company
Order, Officers' Certificate, supplemental indenture or Opinion of Counsel
otherwise required pursuant to Sections 1.02, 3.01, 3.03 and 3.04 at or prior to
the time of authentication of each Security of such series if such documents are
delivered at or prior to the authentication upon original issuance of the first
Security of such series to be issued.
An Officers' Certificate or supplemental indenture, delivered
pursuant to this Section 3.12 in the circumstances set forth in the preceding
paragraph may provide that Securities which are the subject thereof will be
authenticated and delivered by the Trustee on original issue from time to time
upon the telephonic or written order of persons designated in such Officers'
Certificate or supplemental indenture (telephonic instructions to be promptly
confirmed in writing by such persons) and that such persons are authorized to
determine, consistent with such Officers' Certificate or any applicable
supplemental indenture such terms and conditions of said Securities as are
specified in such Officers' Certificate or supplemental indenture, provided that
the foregoing procedure is acceptable to the Trustee.
ARTICLE FOUR
Satisfaction and Discharge
SECTION 4.01. Satisfaction and Discharge of Indenture. This
Indenture shall upon Company Request cease to be of further effect with respect
to a series of Securities (except as to any surviving rights of (as applicable)
registration of transfer or exchange of Securities and Coupons, if any, of such
series herein expressly provided for) and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture with respect to such series, when
(1) either
(A) all Securities and Coupons of such series
theretofore authenticated and delivered (other than (i)
Coupons appertaining to Bearer Securities surrendered for
exchange for Registered Securities and maturing after such
exchange, whose surrender is not required or has been waived
as provided in Section 3.05, (ii) Securities and Coupons of
such series which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 3.06,
(iii) Coupons appertaining to Securities called for redemption
and maturing after the relevant Redemption Date, whose
surrender has been waived as provided in Section 11.06, and
(iv) Securities and Coupons of such series for whose payment
money has theretofore been deposited in trust or segregated
and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust, as provided in Section
10.03) have been delivered to the Trustee for cancellation; or
(B) all such Securities and Coupons of such series
not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their
Stated Maturity within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in
the name, and at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust
funds in trust for the purpose an amount in the currency or
currency unit in which such Securities and Coupons of such
series are payable sufficient to pay and discharge the entire
indebtedness on such Securities and Coupons of such series not
theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and interest, if any, to the
date of such deposit (in the case of Securities and Coupons of
such series which have become due and payable) or to the
Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this
Indenture with respect to a series, the obligations of the Company to the
Trustee under Section 6.07, the obligations of the Trustee to any Authenticating
Agent under Section 6.14 and, if money shall have been deposited with the
Trustee pursuant to subclause (B) of clause (1) of this Section, the obligations
of the Trustee under Section 4.02 and the last paragraph of Section 10.03 shall
survive.
SECTION 4.02. Application of Trust Money. Subject to the
provisions of the last paragraph of Section 10.03, all money deposited with the
Trustee pursuant to Sections 4.01 and 4.03 shall be held in trust and applied by
it, in accordance with the provisions of the Securities and Coupons, if any, and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee.
SECTION 4.03. Satisfaction. Discharge and Defeasance
---------------------------------------
of Securities of Any Series.
- ---------------------------
If this Section is specified, as contemplated by Section 3.01, to be applicable
to Securities and Coupons, if any, of any series, at the Company's option,
either
(a) the Company will be deemed to have been Discharged (as
defined below) from its obligations with respect to Securities and
Coupons, if any, of such series or
(b) the Company will cease to be under any obligation to
comply with any term, provision or condition set forth in (x) Sections
8.01, 8.02, 10.08 and 10.09 or (y) the instrument or instruments
setting forth the terms, provisions or conditions of such series
pursuant to Section 3.01 provided in case of this subclause (y) that
such instrument or instruments specify which terms, provisions or
conditions, if any, are subject to this clause (b) provided further,
however, that no such instrument may specify that the Company may cease
to comply with any obligations as to which it may not be Discharged
pursuant to the definition of "Discharged"); in each case (a) and (b)
with respect to the Securities and Coupons, if any, of such series on
the 91st day after the applicable conditions set forth below in (p) and
either (q) or (r) have been satisfied:
(p) (1) the Company has paid or caused to be paid all other
sums payable with respect to the Outstanding Securities and Coupons, if
any, of such series (in addition to any required under (q) or (r)); and
(2) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel , each stating that all
conditions precedent herein provided for relating to, as applicable (i)
the satisfaction and discharge of the entire indebtedness on all
Outstanding Securities and Coupons, if any, of any such series, or (ii)
the discharge of the obligations with respect to the Securities of such
series set forth in (b) above, have been complied with;
(q) (1) the Company shall have with respect to (a) or (b)
above deposited or caused to be deposited irrevocably with the Trustee
as a trust fund specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of the Securities and Coupons, if
any, of such series (i) money in an amount (in such currency,
currencies or currency unit or units in which any Outstanding
Securities and Coupons, if any, of such series are payable) or (ii) in
the case of Securities and Coupons, if any, denominated in Dollars,
U.S. Government Obligations (as defined below) or, in the case of
Securities and Coupons, if any, denominated in a Foreign Currency,
Foreign Government Securities (as defined below), which through the
payment of interest and principal in respect thereof in accordance with
their terms will provide, not later than one day before the due date of
any payment of principal (including any premium) and interest, if any,
under the Securities and Coupons, if any, of such series, money in an
amount or (iii) a combination of (i) and (ii), sufficient (in the
opinion with respect to (ii) and (iii) of a nationally recognized firm
of independent public accountants expressed in a written certification
thereof delivered to the Trustee) to pay and discharge each installment
of principal of (including any premium), and interest, if any, on, the
Outstanding Securities and Coupons, if any, of such series on the dates
such installments of interest or principal (including any premium) are
due, in the currency, currencies or currency unit or units, in which
such Securities and Coupons, if any, are payable;
(2) (i) no Event of Default or event (including such deposit)
which with notice or lapse of time would become an Event of Default
shall have occurred and be continuing on the date of such deposit, (ii)
no Event of Default as defined in clause (5) or (6) of Section 5.01, or
event which with notice or lapse of time or both would become an Event
of Default under either such clause, shall have Occurred within 90 days
after the date of such deposit and (iii) such deposit and the related
intended consequence under (a) or (b) will not result in any default or
event of default under any material indenture, agreement or other
instrument binding upon the Company or any Subsidiary or any of their
properties; and
(3) the Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that Holders of the Securities and Coupons, if
any, of such series will not recognize income, gain or loss for Federal
income tax purposes as a result of the Company's exercise of its option
under this Section 4.03 and will be subject to Federal income tax in
the same amount, in the same manner and at the same times as would have
been the case if such option had not been exercised;
(r) the Company has properly fulfilled such other means of
satisfaction and discharge as is specified, as contemplated by Section
3.01, to be applicable to the Securities and Coupons, if any, of such
series.
Any deposits with the Trustee referred to in clause (q) (1)
above will be made under the terms of an escrow trust agreement in form
satisfactory to the Trustee. If any Outstanding Securities and Coupons, if any,
of such series are to be redeemed prior to their Stated Maturity, whether
pursuant to any mandatory redemption provisions or in accordance with any
mandatory sinking fund requirement, the applicable escrow trust agreement will
provide therefor and the Company will make arrangements for the giving of notice
of redemption by the Trustee in the name, and at the expense, of the Company.
SECTION 4.04. Reinstatement. If the Trustee is unable to apply any money, U.S.
Government Obligations or Foreign Government Securities in accordance with
Section 4.01 or 4.03 by reason of any legal proceeding or by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities and Coupons, if any, of such series shall be
revived and reinstated as though no deposit had occurred pursuant to Section
4.01 or 4.03 until such time as the Trustee is permitted to apply all such
money, U.S. Government Obligations or Foreign Government Securities in
accordance with Section 4.01 or 4.03; provided, however, that if the Company has
made any payment of interest on or principal of (and premium, if any) on any
Securities and Coupons, if any, of such series because of the reinstatement of
its obligations, the Company shall be subrogated to the rights of the Holders of
such series of Securities and Coupons, if any, to receive such payment from the
money, U.S. Government Obligations or Foreign Government Securities held by the
Trustee.
SECTION 4.05. Definitions. The following terms, as used in
-----------
this Article IV, shall have the following meanings:
"Discharged" means that the Company will be deemed to have
paid and discharged the entire indebtedness represented by, and
obligations under, the Securities and Coupons, if any, of the series as
to which this Section is specified as applicable as aforesaid and to
have satisfied all the obligations under this Indenture relating to the
Securities and Coupons, if any, of such series (and the Trustee, at the
expense of the Company, will execute proper instruments acknowledging
the same), except (A) the rights of Holders thereof to receive, from
the trust fund described in clause (q) (1) above, payment of the
principal of (premium, if any) and the interest, if any, on such
Securities and Coupons, if any, when such payments are due, (B) the
Company's obligations with respect to such Securities and Coupons, if
any, under Sections 3.05 and 3.06 (insofar as applicable to Securities
of such series), 4.02, 10.02 and 10.03 (last paragraph only) and the
Company's obligations to the Trustee under Sections 6.07 and 6.10, (C)
the rights of Holders of Securities of any series with respect to the
currency or currency units in which they are to receive payments of
principal, premium, if any, and interest and (D) the rights, powers,
trusts, duties and immunities of the Trustee hereunder, will survive
such discharge. The Company will reimburse the trust fund for any loss
suffered by it as a result of any tax, fee or other charge imposed on
or assessed against deposited U.S. Government Obligations or Foreign
Government Securities, as the case may be, or any principal or interest
paid on such obligations, and, subject to the provisions of Section
6.07, will indemnify the Trustee against any claims made against the
Trustee in connection with any such loss.
"Foreign Government Securities" means, with respect to
Securities and Coupons, if any, of any series that are denominated in a
Foreign Currency, securities that are (i) direct obligations of the
government that issued or caused to be issued such currency for the
payment of which obligations its full faith and credit is pledged or
(ii) obligations of a Person controlled or supervised by and acting as
an agency or instrumentality of such government the timely payment of
which is unconditionally guaranteed as a full faith and credit
obligation by such government, which, in either case under clauses (i)
or (ii), are not callable or redeemable at the option of the issuer
thereof.
"U.S. Government Obligations" means securities that are (i)
direct obligations of the United States of America for the payment of
which its full faith and credit is pledged or (ii) obligations of a
Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the timely payment of
which is unconditionally guaranteed as a full faith and credit
obligation of the United States of America, which, in either case under
clauses (i) or (ii), are not callable or redeemable at the option of
the issuer thereof, and will also include a depository receipt issued
by a bank or trust company as custodian with respect to any such U.S.
Government Obligation or a specified payment of interest on or
principal of any such U.S. Government Obligation held by such custodian
for the account of the holder of a depository receipt, provided that
(except as required by law) such custodian is not authorized to make
any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of interest on or
principal of the U.S. Government Obligation evidenced by such
depository receipt.
ARTICLE FIVE
Remedies
SECTION 5.01. Events of Default. "Event of Default", wherever
used herein with respect to Securities of any series, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body), unless it is either inapplicable to
a particular series or it is specifically deleted or modified in or pursuant to
the supplemental indenture or Board Resolution establishing such series of
Securities or in the form of Security for such series:
(1) default in the payment of any interest upon any Security
of that series when it becomes due and payable, and continuance of such
default for a period of 30 days; or
(2) default in the payment. of the principal of (or
premium, if any, on) any Security of that series at its
Maturity; or
(3) default in the deposit of any sinking fund payment, when
and as due by the terms of a Security of that series, and continuance
of such default for a period of 30 days; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in the performance or breach of which is elsewhere
in this Section specifically dealt with or which has expressly been
included in this Indenture solely for the benefit of a series of
Securities other than that series) and continuance of such default or
breach for a period of 60 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in principal
amount of the Outstanding Securities of that series 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
(5) the entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or (B) a
decree or order adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company
under any applicable Federal or State law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company 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 for relief or any such other
decree or order unstayed and in effect for a period of 90 consecutive
days; or
(6) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent by
it to the entry of a decree or order for relief in respect of the
Company in an involuntary case or -proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case
or proceeding against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable
Federal or State law, or the consent by it to the filing of such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar
official of the Company or of any substantial part of its property, or
the making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally
as they become due, or the taking of corporate action by the Company in
furtherance of any such action; or
(7) any other Event of Default provided with respect to
Securities of that series.
SECTION 5.02. Acceleration of Maturity; Rescission and
Annulment. If an Event of Default with respect to Securities of any series at
the time Outstanding occurs and is continuing, then in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series may declare the principal amount of all of
the Securities of that series to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by Holders) and upon any
such declaration such principal amount (or specified amount) shall become
immediately due and payable.
At any time after such a declaration of acceleration with
respect to Securities of any series has been made and before a judgment or
decree for payment of the money due has been obtained by the Trustee as
hereinafter in this Article provided, the Holders of a majority in principal
amount of the Outstanding Securities of that series, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the Trustee a
sum sufficient to pay
(A) all overdue interest on all Securities of
that series,
(B) the principal of (and premium, if any, on) any
Securities of that series which have become due otherwise than
by such declaration of acceleration and, to the extent that
payment of such interest is lawful, interest thereon at the
rate or rates prescribed therefor in such Securities,
(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate or rates
prescribed therefor in such Securities, and
(D) in Dollars all sums paid or advanced by the
Trustee hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel and all other amounts due the Trustee under Section
6.07;
and
(2) all Events of Default with respect to Securities of that
series, other than the nonpayment of the principal of Securities of
that: series which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 5.13. No
such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 5.03. Collection of Indebtedness and Suits for
----------------------------------------
Enforcement by Trustee.
-----------------------
The Company covenants that if
(1) default is made in the payment of any interest on any
Security or Coupon when such interest becomes due and payable and such
default continues for the period of grace provided for with respect to
such Security,
(2) default is made in the payment of the principal of
(or premium, if any, on) any Security at the Maturity
thereof, or
(3) default is made in the deposit of any sinking fund
payment, when and as due by the terms of a Security, the Company will,
upon demand of the Trustee, pay to it, for the benefit of the Holders
of such Securities and Coupons, if any, the whole amount then due and
payable on such Securities and Coupons, if any, for principal (and
premium, if any) and interest and, to the extent that payment of such
interest shall be legally enforceable, interest on any overdue
principal (and premium, if any) and on any overdue interest, at the
rate or rates prescribed therefor in such Securities and Coupons, if
any, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel and all other amounts due the Trustee
under Section 6.07.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon such Securities
and Coupons, if any, and collect the moneys adjudged or decreed to be payable in
the manner provided by law out of the property of the Company or any other
obligor upon such Securities and Coupons, if any, wherever situated.
If an Event of Default with respect to Securities and
Coupons, if any, of any series occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders of such series by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any such rights, whether for
the specific enforcement of any covenant or agreement in this Indenture or in
aid of the exercise of any power granted herein, or to enforce any other proper
remedy.
SECTION 5.04. Trustee May File Proofs of Claim. In case of
the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Securities or
the property of the Company or of such other obligor or their creditors, 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 on the Company
for the payment of overdue principal or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid in
respect of the Securities 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 the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel and
all other amounts due the Trustee under Section 6.07) and of the
Holders allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to
distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 6.07.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 5.05. Trustee May Enforce Claims Without Possession
of Securities. All rights of action and claims under this Indenture or the
Securities or Coupons, if any, may be prosecuted and enforced by the Trustee
without the possession of any of the Securities or Coupons or the production
thereof in any proceeding relating thereto, and any such proceeding instituted
by the Trustee shall be brought in its own name as trustee of an express trust,
and any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel and all other amounts due the Trustee under Section 6.07,
be for the ratable benefit of the Holders of the Securities and Coupons, if any,
in respect of which such judgment has been recovered.
SECTION 5.06. Application of Money Collected. Any money
collected by the Trustee pursuant to this Article shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal (or premium, if any) or
interest, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: to the payment of all amounts due the Trustee
under Section 6.07;
SECOND: to the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Securities in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for
principal (and premium, if any) and interest, respectively; and
THIRD: the balance, if any, to the Person or Persons
entitled thereto.
SECTION 5.07. Limitation on Suits.
-------------------
No Holder of any series shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment
of a receiver or trustee, or for any other remedy
hereunder, unless
(1) an Event of Default with respect to Securities of such
series shall have occurred and be continuing and such Holder has
previously given written notice to the Trustee of such continuing Event
of Default;
(2) the Holders of not less than 25% in principal amount of
the Outstanding Securities of that series shall have made written
request to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Securities of that
series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture (including without limitation the provisions of Section 5.12)
to affect, disturb or prejudice the rights of any other of such Holders, or to
obtain or to seek to obtain priority or preference over any other of such
Holders or to enforce any right under this Indenture, except in the manner
herein provided and for the equal and ratable benefit of all of such Holders.
SECTION 5.08. Unconditional Right of Holders To Receive Principal. Premium and
Interest. Notwithstanding any other provision in this Indenture, the Holder of
any Security or any Coupon shall have the right, which is absolute and
unconditional, to receive payment of the principal of (and premium, if any) and
(subject to Section 3.07) interest on such Security or Coupon on the Stated
Maturity or Maturities expressed in such Security (or, in the case of
redemption, on the Redemption Date) and to institute suit for the enforcement of
any such payment, and such rights shall not be impaired without the consent of
such Holder.
SECTION 5.09. Restoration of Rights and Remedies. If the
Trustee or any Holder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case, subject to any determination in such
proceeding, the Company, the Trustee and the Holders shall be restored severally
and respectively to their former positions hereunder and thereafter all rights
and remedies of the Trustee and the Holders shall). continue as though no such
proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative. Except as
otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities in the last paragraph of Section 3.06, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver. No delay or
omission of the Trustee or of any Holder of any Securities to exercise any right
or remedy accruing upon any Event of Default shall impair any such right or
remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article or by law to the Trustee
or to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may be.
SECTION 5.12. Control by Holders. The Holders of not less
than a majority in principal amount of the Outstanding Securities of any series
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;
provided that
(1) such direction shall not be in conflict with any rule
of law or with this Indenture,
(2) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such
direction, and
(3) subject to the provisions of Section 6.01, the Trustee
shall have the right to decline to follow any such direction if the
Trustee in good faith shall, by a Responsible Officer or Officers of
the Trustee, determine that the action so directed would involve the
Trustee in personal liability.
SECTION 5.13. Waiver of Past Defaults. The Holders of not
less than a majority in principal amount of the Outstanding Securities of any
series may on behalf of the Holders of all the Securities of such series waive
any past default hereunder with respect to such series and its consequences,
except a default
(1) in the payment of the principal of (or premium, if
any) or interest on any Security of such series, or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist with
respect to such series, and any Event of Default with respect to such series
arising therefrom shall be deemed to have been cured, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other default or
impair any right consequent thereon.
SECTION 5.14. Undertaking for Costs. All parties to this
Indenture agree, and each Holder 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 Company, to any suit instituted by the Trustee, to any
suit instituted by any Holder, or group of Holders, holding in the aggregate
more than 10% in principal amount of the Outstanding Securities of any series,
or to any suit instituted by any Holder for the enforcement of the payment of
the principal of (or premium, if any) or interest on any Security or the payment
of any Coupon on or after the Stated Maturity or Maturities expressed in such
Security (or, in the case of redemption, on or after the Redemption Date)
SECTION 5.15. Waiver of Stay or Extension Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, which may affect the covenants or the performance
of this Indenture; and the Company (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
ARTICLE SIX
The Trustee
SECTION 6.01. Certain Duties and Responsibilities.
-----------------------------------
(a) Except during the continuance of an Event of Default with
respect to any series:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such certificates or opinions
which by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this
Indenture.
(b) In case an Event of Default has occurred and is
continuing with respect to any series, the Trustee shall exercise such of the
rights and powers vested in it by this Indenture with respect to such series,
and use the same degree of care and skill in their exercise, as oa prudent man
would exercise or use under the circumstances in the conduct of his own affairs.
(c) 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
(1) this Subsection shall not be construed to limit the
effect of Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
(3) 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 of a majority in principal amount of
the Outstanding Securities of any series, given pursuant to Section
5.12, 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 with
respect to the Securities of such series; and
(4) no provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to
it.
(d) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section.
SECTION 6.02. Notice of Defaults. Within 90 days after the
occurrence of any default hereunder with respect to the Securities of any
series, the Trustee shall transmit notice of such default hereunder known to the
Trustee to the Holders of such Securities as provided in Section 7.03(d), unless
such default shall have been cured or waived; provided, however, that, except in
the case of a default in the payment of the principal of (or premium, if any) or
interest on any Security of such series or in the payment of any sinking fund
installment with respect to Securities of 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 Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interest of the Holders of Securities of such series; provided
further, that in the case of any default of the character specified in Section
5.01(4) with respect to Securities of such series, no such notice to Holders
shall be given until at least 30 days after the occurrence thereof. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default with respect
to Securities of such series.
SECTION 6.03. Certain Rights of Trustee.
-------------------------
Subject to the provisions of Section 6.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(d) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or
attorney;
(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 and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder; and
(h) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Indenture.
SECTION 6.04. Not Responsible for Recitals or Issuance of
Securities. The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities. Neither the Trustee nor any Authenticating Agent
shall be accountable for the use or application by the Company of Securities or
the proceeds thereof.
SECTION 6.05. May Hold Securities. The Trustee, any
Authenticating Agent, any Paying Agent, any Security Registrar or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Securities or warrants to purchase Securities and, subject
to Sections 6.08 and 6.13, may otherwise deal with the Company with the same
rights it would have if it were not Trustee, Paying Agent, Security Registrar or
such other agent.
SECTION 6.06. Money Held in Trust. Except as provided in
Section 1.14, money held by the Trustee or any Paying Agent in trust hereunder
need not be segregated from other funds except to the extent required by law.
The Trustee or any Paying Agent shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with the Company.
SECTION 6.07. Compensation and Reimbursement.
------------------------------
The Company agrees
(1) to pay to the Trustee from time to time in Dollars
reasonable compensation for all services rendered by it hereunder
(which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust)
(2) except as otherwise expressly provided herein, to
reimburse the Trustee in Dollars upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel) except any such expense, disbursement or advance as
may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee in Dollars 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 the trust or trusts hereunder,
including the costs and expenses of defending itself against any claim
or liability in connection with the exercise or performance of any of
its powers or duties hereunder.
As security for the performance of the obligations of the
Company under this Section the Trustee shall have a lien prior to the Securities
upon all property and funds held or collected by the Trustee as such, except
funds held in trust for the payment of principal of, premium, if any, or
interest, if any, on particular Securities.
SECTION 6.08. Disqualification; Conflicting Interests. (a) If
the Trustee has or shall acquire any conflicting interest, as defined in this
Section, with respect to the Securities and Coupons, if any, of any series, it
shall, within 90 days after ascertaining that it has such conflicting interest,
either eliminate such conflicting interest or resign with respect to the
Securities and Coupons, if any, of that series in the manner and with the effect
hereinafter specified in this Article.
(b) In the event that the Trustee shall fail to comply with
the provisions of Subsection (a) of this Section with respect to the Securities
of any series, the Trustee shall, within 10 days after the expiration of such
90-day period, transmit notice pursuant to Section 1.06, of such failure, to all
Holders of such series.
(c) For the purposes of this Section, the Trustee shall be
deemed to have a conflicting interest with respect to the Securities of any
series if
(1) the Trustee is trustee under this Indenture with respect
to the Outstanding Securities of any series other than that series or
is trustee under another indenture under which any other securities, or
certificates of interest or participation in any other securities, of
the Company are outstanding, unless such other indenture is a
collateral trust indenture under which the only collateral consists of
Securities issued under this Indenture; provided that there shall be
excluded from the operation of this paragraph the Indentures dated as
of June 1, 1988, August 15, 1977, February 15, 1970 and August 1, 1967,
under which the Medium-Term Notes, Series A, 8.20% Sinking Fund
Debentures Due 2002, 8.80% Sinking Fund Debentures Due 2000 and 6.15%
Sinking Fund Debentures Due 1992 of the Company are respectively
outstanding and this Indenture with respect to the Securities of any
series other than that series or any indenture or indentures under
which other securities, or certificates of interest or participation in
other securities, of the Company are outstanding, if
(i) this Indenture and such other indenture or
indentures are wholly unsecured and such other indenture or
indentures are hereafter qualified under the Trust Indenture
Act, unless the Commission shall have found and declared by
order pursuant to Section 3.05(b) or Section 3.07(c) of the
Trust Indenture Act that differences exist between the
provisions of this Indenture with respect to Securities of
that series and one or more other series or the provisions of
such other indenture or indentures which are so likely to
involve a material conflict of interest as to make it
necessary in the public interest or for the protection of
investors to disqualify the Trustee from acting as such under
this Indenture with respect to the Securities of that series
and such other series or under such other indenture or
indentures, or
(ii) the Company shall have sustained the burden of
proving, on application to the Commission and after
opportunity for hearing thereon, that trusteeship under this
Indenture with respect to the Securities of that series and
such other series or such other indenture or indentures is not
so likely to involve a material conflict of interest as to
make it necessary in the public interest or for the protection
of investors to disqualify the Trustee from acting as such
under this Indenture with respect to the Securities of that
series and such other series or under much other indenture or
indentures;
(2) the Trustee or any of its directors or executive
officers is an obligor upon the Securities or an
underwriter for the Company;
(3) the Trustee directly or indirectly controls or is directly
or indirectly controlled by or is under direct or indirect common
control with the Company or an underwriter for the Company;
(4) the Trustee or any of its directors or executive officers
is a director, officer partner, employee, appointee or representative
of the Company, or of an underwriter (other than the Trustee itself)
for the Company who is currently engaged in the business of
underwriting, except that (i) one individual may be a director or an
executive officer, or both, of the Trustee and a director or an
executive officer, or both, of the Company but may not be at the same
time an executive officer of both the Trustee and the Company; (ii) if
and so long as the number of directors of the Trustee in office is more
than nine, one additional individual may be a director or an executive
officer, or both, of the Trustee and a director of the Company; and
(iii) the Trustee may be designated by the Company or by any
underwriter for the Company to act in the Trustee may be designated by
the Company or by any underwriter for the Company to act in the
capacity of transfer agent, registrar, custodian, paying agent, fiscal
agent, escrow agent or depositary, or in any other similar capacity,
or, subject to the provisions of paragraph (1) of this Subsection, to
act as trustee, whether under an indenture or otherwise;
(5) 10% or more of the voting securities of the Trustee is
beneficially owned either by the Company or by any director, partner or
executive officer thereof, or 20% or more of such voting securities is
beneficially owned, collectively, by any two or more of such persons;
or 10% or more of the voting securities of the Trustee is beneficially
owned either by an underwriter for the Company or by any director,
partner or executive officer thereof, or is beneficially owned,
collectively, by any two or more such persons;
(6) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this Subsection defined) (i) 5% or more of the voting
securities, or 10% or more of any other class of security, of the
Company not including the Securities issued under this Indenture and
securities issued under any other indenture under which the Trustee is
also trustee, or (ii) 10% or more of any class of security of an
underwriter for the Company;
(7) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this Subsection defined) 5% or more of the voting
securities of any person who, to the knowledge of the Trustee, owns 10%
or more of the voting securities of, or controls directly or indirectly
or is under direct or indirect common control with, the Company;
(8) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this Subsection defined), 10% or more of any class of
security of any person who, to the knowledge of the Trustee, owns 50%
or more of the voting securities of the Company; or
(9) the Trustee owns, on May 15 in any calendar year, in the
capacity of executor, administrator, testamentary or inter vivos
trustee, guardian, committee or conservator, or in any other similar
capacity, an aggregate of 25% or more of the voting securities, or of
any class of security, of any person, the beneficial ownership of a
specified percentage of which would have constituted a conflicting
interest under paragraph (6), (7) or (8) of this Subsection. As to any
such securities of which the Trustee acquired ownership through
becoming executor, administrator or testamentary trustee of an estate
which included them, the provisions of the preceding sentence shall not
apply, for a period of two years from the date of such acquisition, to
the extent that such securities included in such estate do not exceed
25% of such voting securities or 25% of any such class of security.
Promptly after May 15 in each calendar year, the Trustee shall make a
check of its holdings of such securities in any of the above-mentioned
capacities as of such May 15. If the Company fails to make payment in
full of the principal of (or premium, if any) or interest on any of the
Securities when and as the same becomes due and payable, and such
failure continues for 30 days thereafter, the Trustee shall make a
prompt check of its holdings of such securities in any of the
above-mentioned capacities as of the date of the expiration of such
30-day period, and after such date, notwithstanding the foregoing
provisions of this paragraph, all such securities so held by the
Trustee, with sole or joint control over such securities vested in it,
shall, but only so long as such failure shall continue, be considered
as though beneficially owned by the Trustee for the purposes of
paragraphs (6), (7) and (8) of this Subsection.
The specification of percentages in paragraphs (5) to (9),
inclusive, of this Subsection shall not be construed as indicating that the
ownership of such percentages of the securities of a person is or is not
necessary or sufficient to constitute direct or indirect control for the
purposes of paragraph (3) or (7) of this Subsection.
For the purposes of paragraphs (6), (7), (8) and (9) of this
Subsection only, (i) the terms "security" and "securities" shall include only
such securities as are generally known as corporate securities, but shall not
include any note or other evidence of indebtedness issued to evidence an
obligation to repay moneys lent to a person by one or more banks, trust
companies or banking firms, or any certificate of interest or participation in
any such note or evidence of indebtedness; (ii) an obligation shall be deemed to
be "in default" when a default in payment of principal shall have continued for
30 days or more and shall not have been cured; and (iii) the Trustee shall not
be deemed to be the owner or holder of (A) any security which it holds as
collateral security, as trustee or otherwise, for an obligation which is not in
default as defined in clause (ii) above, or (B) any security which it holds as
collateral security under this Indenture, irrespective of any default hereunder,
or (C) any security which it holds as agent for collection, or as custodian,
escrow agent or depositary, or in any similar representative capacity.
(d) For the purposes of this Section:
(1) The term "underwriter", when used with reference to the
Company, means every person who, within three years prior to the time
as of which the determination is made, has purchased from the Company
with a view to, or has offered or sold for the Company in connection
with, the distribution of any security of the Company outstanding at
such time, or has participated or has had a direct or indirect
participation in any such undertaking, or has participated or has had a
participation in the direct or indirect underwriting of any such
undertaking, but such term shall not include a person whose interest
was limited to a commission from an underwriter or dealer not in excess
of the usual and customary distributors' or sellers' commission.
(2) The term "director" means any director of a corporation or
any individual performing similar functions with respect to any
organization, whether incorporated or unincorporated.
(3) The term "person" means an individual, a corporation, a
partnership, an association, a joint stock company, a trust, an
unincorporated organization or a government or political subdivision
thereof. As used in this paragraph, the term "trust" shall include only
a trust where the interest or interests of the beneficiary or
beneficiaries are evidenced by a security.
(4) The term "voting security" means any security presently
entitling the owner or holder thereof to vote in the direction or
management of the affairs of a person, or any security issued under or
pursuant to any trust, agreement or arrangement whereby a trustee or
trustees or agent or agents for the owner or holder of such security
are presently entitled to vote in the direction or management of the
affairs of a person.
(5) The term "Company" means any obligor upon the
Securities.
(6) The term "executive officer" means the president, every
vice president, every trust officer, the cashier, the secretary and the
treasurer of a corporation, and any individual customarily performing
similar functions with respect to any organization whether incorporated
or unincorporated, but shall not include the chairman of the board of
directors.
(e) The percentages of voting securities and other securities
specified in this Section shall be calculated in accordance with the following
provisions:
(1) A specified percentage of the voting securities of the
Trustee, the Company or any other person referred to in this Section
(each of whom is referred to as a "person" in this paragraph) means
such amount of the outstanding voting securities of such person as
entitled the holder or holders thereof to cast such specified
percentage of the aggregate votes which the holders of all the
outstanding voting securities of such person are entitled to cast in
the direction or management of the affairs of such person.
(2) A specified percentage of a class of securities of a
person means such percentage of the aggregate amount of securities of
the class outstanding.
(3) The term "amount", when used in regard to securities,
means the principal amount if relating to evidences of indebtedness,
the number of shares if relating to capital shares and the number of
units if relating to any other kind of security.
(4) The term "outstanding" means issued and not held by or for
the account of the issuer. The following securities shall not be deemed
outstanding within the meaning of this definition:
(i) securities of an issuer held in a sinking
fund relating to securities of the issuer of the same
class;
(ii) securities of an issuer held in a sinking fund
relating to another class of securities of the issuer, if the
obligation evidenced by such other class of securities is not
in default as to principal or interest or otherwise;
(iii) securities pledged by the issuer thereof as
security for an obligation of the issuer not in default as
to principal or interest or otherwise; and
(iv) securities held in escrow if placed in escrow
by the issuer thereof;
provided, however, that any voting securities of an issuer shall be
deemed outstanding if any person other than the issuer is entitled to
exercise the voting rights thereof.
(5) A security shall be deemed to be of the same class as
another security if both securities confer upon the holder or holders
thereof substantially the same rights and privileges; provided,
however, that, in the case of secured evidences of indebtedness, all of
which are issued under a single indenture, differences in the interest
rates or maturity dates of various series thereof shall not be deemed
sufficient to constitute such series different classes; and provided
further that, in the case of unsecured evidences of indebtedness,
differences in the interest rates or maturity dates thereof shall not
be deemed sufficient to constitute them securities of different
classes, whether or not they are issued under a single indenture.
SECTION 6.09. Corporate Trustee Required; Eligibility. There
shall at all times be a Trustee hereunder which shall be a Corporation organized
and doing business under the laws of the United States of America, any State
thereof or the District of Columbia, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000, subject to supervision or examination by Federal or State
authority. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
SECTION 6.10. Resignation and Removal; Appointment of
Successor. (a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.11.
(b) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee required by
Section 6.11 shall not have been delivered to the resigning Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the outstanding Securities of such series, delivered to the Trustee and to
the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.08(a)
after written request therefor by the Company or by any Holder who has
been a bona fide Holder of a Security for at least six months, or
(2) the Trustee for a series shall cease to be eligible under
Section 6.09 and shall fail to resign after written request therefor by
the Company or by any Holder of Securities of such series, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (ii) subject to Section 5.14, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the Trustee
for any cause, with respect to the Securities of one or more series, the Company
shall promptly appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any such successor
Trustee may be appointed with respect to the Securities of one or more or all of
such series and that at any time there shall be only one Trustee with respect to
the Securities of any particular series) and shall comply with the applicable
requirements of Section 6.11. If, within one year after such resignation,
removal or incapability, or the occurrence of such vacancy, a successor Trustee
with respect to the Securities of any series shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities of such
series delivered to the Company and the retiring Trustee, the successor Trust so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 6.11, become the successor Trustee
with respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Company. If no successor Trustee with respect
to the Securities of any series shall have been so appointed by the Company or
the Holders and accepted appointment in the manner required by Section 6.11, any
Holder who has been a bona fide Holder of a Security 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 appointment of a successor Trustee
with respect to the Securities of such series.
(f) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any series
by giving notice of such event to all Holders of Securities of such series as
provided by Section 1.06. Each notice shall include the name of the successor
Trustee with respect to the Securities of such series and the address of its
Corporate Trust Office.
SECTION 6.11. Acceptance of Appointment by Successor. (a) In
case of the appointment hereunder of a successor Trustee with respect to all
Securities, every such successor Trustee so appointed shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor
Trustee with respect to the Securities of one or more (but not all) series, the
Company, the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such appointment
and which (1) shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, each successor Trustee all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates, (2) if the retiring Trustee is not retiring with respect to all
Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series as to
which the retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) 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
cotrustees of the same trust and that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee; and upon the execution and delivery of
such supplemental indenture the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates; but, on request of the Company or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee hereunder
with respect to the Securities of that or those series to which the appointment
of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers and trusts
referred to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless
at the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 6.12. Merger, Conversion, Consolidation or Succession
to Business. Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
SECTION 6.13. Preferential Collection of Claims Against
Company. (a) Subject to Subsection (b) of this Section, if the Trustee shall be
or shall become a creditor, directly or indirectly, secured or unsecured, of the
Company within four months prior to a default, as defined in Subsection (c) of
this Section, or subsequent to such a default, then, unless and until such
default shall be cured, the Trustee shall set apart and hold in a special
account for the benefit of the Trustee individually, the Holders of the
Securities and Coupons, if any, and the holders of other indenture securities,
as defined in Subsection (c) of this Section:
(1) an amount equal to any and all reductions in the amount
due and owing upon any claim as such creditor in respect of principal
or interest, effected after the beginning of such four-month period and
valid as against the Company and its other creditors, except any such
reduction resulting from the receipt or disposition of any property
described in paragraph (2) of this Subsection, or from the exercise of
any right of set-off which the Trustee could have exercised if a
petition in bankruptcy had been filed by or against the Company upon
the date of such default; and
(2) all property received by the Trustee in respect of any
claims as such creditor, either as security therefor, or in
satisfaction or composition thereof, or otherwise, after the beginning
of such four-month period, or an amount equal to the proceeds of any
such property, if disposed of, subject, however, to the rights, if any,
of the Company and its other creditors in such property or such
proceeds.
Nothing herein contained, however, shall affect the right of the Trustee:
(A) to retain for its own account (i) payments made on account
of any such claim by any Person (other than the Company) who is liable
thereon, and (ii) the proceeds of the bona fide sale of any such claim
by the Trustee to a third-Person, and (iii) distributions made in cash,
securities or other property in respect of claims filed against the
Company in bankruptcy or receivership or in proceedings for
reorganization pursuant to the Federal Bankruptcy Act or applicable
State law;
(B) to realize, for its own account, upon any property held by
it as security for any such claim, if such property was so held prior
to the beginning of such four-month period;
(C) to realize, for its own account, but only to the extent of
the claim hereinafter mentioned, upon any property held by it as
security for any such claim, if such claim was created after the
beginning of such four-month period and such property was received as
security therefor simultaneously with the creation thereof, and if the
Trustee shall sustain the burden of proving that at the time such
property was so received the Trustee had no reasonable cause to believe
that a default, as defined in Subsection (c) of this Section, would
occur within four months; or
(D) to receive payment on any claim referred to in paragraph
(B) or (C), against the release of any property held as security for
such claim as provided in paragraph (B) or (C) as the case may be, to
the extent of the fair value of such property.
For the purposes of paragraphs (B), (C) and (D), property
substituted after the beginning of such four-month period for property held as
security at the time of such substitution shall, to the extent of the fair value
of the property released, have the same status as the property released, and, to
the extent that any claim referred to in any of such paragraphs is created in
renewal of or in substitution for or for the purpose of repaying or refunding
any pre-existing claim of the Trustee as such creditor, such claim shall have
the same status as such pre-existing claim.
If the Trustee shall be required to account, the funds and
property held in such special account and the proceeds thereof shall be
apportioned among the Trustee, the Holders and the holders of other indenture
securities in such manner that the Trustee, the Holders and the holders of other
indenture securities realize, as a result of payments from such special account
and payments of dividends on claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Federal
Bankruptcy Act or applicable State law, the same percentage of their respective
claims, figured before crediting to the claim of the Trustee anything on account
of the receipt by it from the Company of the funds and property in such special
account and before crediting to the respective claims of the Trustee and the
Holders and the holders of other indenture securities dividends on claims filed
against the Company in bankruptcy or receivership or in proceedings for
reorganization pursuant to the Federal Bankruptcy Act or applicable State law,
but after crediting thereon receipts on account of the indebtedness represented
by their respective claims from all sources other than from such dividends and
from the funds and property so held in such special account. As used in this
paragraph, with -respect to any claim, the term "dividends" shall include any
distribution with respect to such claim, in bankruptcy or receivership or
proceedings for reorganization pursuant to the Federal Bankruptcy Act or
applicable State law, whether such distribution is made in cash, securities or
other property, but shall not include any such distribution with respect to the
secured portion, if any, of such claim. The court in which such bankruptcy,
receivership or proceedings for reorganization is pending shall have
jurisdiction (i) to apportion among the Trustee, the Holders and the holders of
other indenture securities, in accordance with the provisions of this paragraph,
the funds and property held in such special account and proceeds thereof, or
(ii) in lieu of such apportionment, in whole or in part, to give to the
provisions of this paragraph due consideration in determining the fairness of
the distributions to be made to the Trustee and the Holders and the holders of
other indenture securities with respect to their respective claims, in which
event it shall not be necessary to liquidate or to appraise the value of any
securities or other property held in such special account or as security for any
such claim, or to make a specific allocation of such distributions as between
the secured and unsecured portions of such claims, or otherwise to apply the
provisions of this paragraph as a mathematical formula.
Any Trustee which has resigned or been removed after the
beginning of such four-month period shall be subject to the provisions of this
Subsection as though such resignation or removal had not occurred. If any
Trustee has resigned or been removed prior to the beginning of such four-month
period, it shall be subject to the provisions of this Subsection if and only if
the following conditions exist:
(i) the receipt of property or reduction of claim, which would
have given rise to the obligations to account, if such Trustee had
continued as Trustee, occurred after the beginning of such four-month
period; and
(ii) such receipt of property or reduction of claim occurred
within four months after such resignation or removal.
(b) There shall be excluded from the operation of Subsection
(a) of this Section a creditor relationship arising from:
(1) the ownership or acquisition of securities issued
under any indenture, or any security or securities having
a maturity of one year or more at the time of acquisition by the
Trustee;
(2) advances authorized by a receivership or bankruptcy court
of competent jurisdiction or by this Indenture, for the purpose of
preserving any property which shall at any time be subject to the lien
of this Indenture or of discharging tax liens or other prior liens or
encumbrances thereon, if notice of such advances and of the
circumstances surrounding the making thereof is given to the Holders at
the time and in the manner provided in this Indenture;
(3) disbursements made in the ordinary course of business in
the capacity of trustee under an indenture, transfer agent, registrar,
custodian, paying agent, fiscal agent or depositary, or other similar
capacity;
(4) an indebtedness created as a result of services rendered
or premises rented; or an indebtedness created as a result of goods or
securities sold in a cash transaction, as defined in Subsection (c) of
this Section;
(5) the ownership of stock or of other securities of a
corporation organized under the provisions of Section 25(a) of the
Federal Reserve Act, as amended, which is directly or indirectly a
creditor of the Company; and
(6) the acquisition, ownership, acceptance or negotiation of
any drafts, bills of exchange, acceptances or obligations which fall
within the classification of self-liquidating paper, as defined in
Subsection (c) of this Section.
(c) For the purposes of this Section only:
(1) the term "default" means any failure to make payment in
full of the principal of (or premium, if any) or interest on any of the
Securities or upon the other indenture securities when and as such
principal or interest becomes due and payable;
(2) the term "other indenture securities" means securities
upon which the Company is an obligor outstanding under any other
indenture (i) under which the Trustee is also trustee, (ii) which
contains provisions substantially similar to the provisions of this
Section and (iii) under which a default exists at the time of the
apportionment of the funds and property held in such special account;
(3) the term "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;
(4) the term "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by the Company for the purpose of financing the purchase,
processing, manufacturing, 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 Company arising from the making,
drawing, negotiating or incurring of the draft, bill of exchange,
acceptance or obligation;
(5) the term "Company" means any obligor upon the
Securities; and
(6) the term "Federal Bankruptcy Act" means the
Bankruptcy Act or Title II of the United States Code.
SECTION 6.14. Appointment of Authenticating Agent. The Trustee
may appoint an Authenticating Agent or Agents with respect to one or more series
of Securities which shall be authorized to act on behalf of the Trustee to
authenticate Securities of such series issued upon original issue or upon
exchange, registration of transfer or partial redemption thereof or pursuant to
Section 3.06, and Securities so authenticated shall be entitled to the benefits
of this Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Wherever reference is made in this
Indenture to the authentication and delivery of Securities by the Trustee or the
Trustee's certificate of authentication or the delivery of Securities to the
Trustee for authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent and delivery of Securities to the Authenticating Agent on
behalf of the Trustee. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation having a combined capital and
surplus of not less than the equivalent of $50,000,000 and subject to
supervision or examination by Federal or State authority or the equivalent
foreign authority, in the case of an Authenticating Agent who is not organized
and doing business under the laws of the United States of America, any State
thereof or the District of Columbia. If such Authenticating Agent publishes
reports of condition at least annually, pursuant to law or to the requirements
of said supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Authenticating Agent shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time an Authenticating Agent shall
cease to be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.
Any corporation into which an Authenticated 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 such
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate agency or corporate trust business of such Authenticating Agent, shall
continue to be an Authenticating Agent; provided such corporation shall be
otherwise eligible under this Section, without the execution or filing of any
paper or any further act on the part of the Trustee or such Authenticating
Agent.
An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Company. The Trustee may at any
time terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders of
Registered Securities, if any, of the series with respect to which such
Authenticating Agent will serve, as their names and addresses appear in the
Security Register. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section.
If an appointment with respect to one or more series is made
pursuant to this Section, the Securities of such series may have endorsed
thereon, in addition to the Trustee's certificate of authentication, an
alternative certificate of authentication in the following form:
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
[full name of Trustee]
---------------------------------
As Trustee
By_____________________________
As Authenticating Age
By_____________________________
Authorized Officer
If all of the Securities of a series may not be originally
issued at one time, and if the Trustee does not have an office capable of
authenticating Securities upon original issuance located in a Place of Payment
or other place where the Company wishes to have Securities of such series
authenticated upon original issuance, the Trustee, if so requested by the
Company in writing (which writing need not comply with Section 1.02 and need not
be accompanied by an Opinion of Counsel), shall appoint in accordance with this
Section an Authenticating Agent (which may be an Affiliate of the Company if
eligible to be appointed as an Authenticating Agent hereunder) having an office
in such Place of Payment or other place designated by the Company with respect
to such series of Securities, provided that the procedures for the
authentication of such Securities by the Authenticating Agent on original
issuance are acceptable to the Trustee.
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
---------------------------------------------------------
SECTION 7.01. Company To Furnish Trustee Names and Addresses
of Holders.
The Company will furnish or cause to be
furnished to the Trustee:
(a) semiannually, not later than each Interest Payment Date
in each year, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders of each series of
Registered Securities as of the preceding Regular Record Date, as the
case may be, and
(b) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the Company of any such
request, a list of similar form and content, such list to be dated as
of a date not more than 15 days prior to the time such list is
furnished, and
(c) such information concerning the Holders of Bearer
Securities which is known to the Company; provided, however, that the
Company shall have no obligation to investigate any matter relating to
any Holder of a Bearer Security or a Coupon:
notwithstanding the foregoing subsections (a) and (b), so long as the Trustee is
the Security Registrar with respect to a particular series of Securities, no
such list shall be required to be furnished in respect of such series.
SECTION 7.02. Preservation of Information; Communications to
Holders. (a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders of each series (i) contained in
the most recent list furnished to the Trustee as provided in Section 7.01, (ii)
received by the Trustee in its capacity as Security Registrar and (iii) filed
with it within the two preceding years pursuant to Section 7.03(d). The Trustee
may destroy any list furnished to it as provided in Section 7.01 upon receipt of
a new list so furnished.
(b) If three or more Holders of any series (herein 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 of such series
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 such series with respect to their rights under this Indenture or
under such Securities and is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee shall,
within five business days after the receipt of such application, at its
election, either
(i) afford such applicants access to the information
preserved at the time by the Trustee in accordance with
Section 7.02(a), or
(ii) inform such applicants as to the approximate number of
Holders of Securities of such series whose names and addresses appear
in the information preserved at the time by the Trustee in accordance
with Section 7.02(a), and as to the approximate cost of mailing to such
Holders the form of proxy or other communication, if any, specified in
such application.
If the Trustee shall elect not to afford such applicants
access to such information, the Trustee shall, upon the written request of such
applicants, mail to each Holder of Securities of such series whose name and
address appear in the information preserved at the time by the Trustee in
accordance with Section 7.02(a) 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 interest of the Holders of such series 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 Holders 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) Every Holder of Securities or Coupons, by receiving and
holding the same, agrees with the Company and the Trustee that neither the
Company nor the Trustee nor any agent of either of them shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Holders in accordance with Section 7.02(b), 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 Section 7.02(b).
SECTION 7.03. Reports by Trustee. (a) Within 60 days after
June 1 of each year following the first issuance of Securities, the Trustee
shall transmit to the Holders as provided in Section 7.03(d), a brief report
dated as of such date with respect to:
(1) its eligibility under Section 6.09 and its qualifications
under Section 6.08, or in lieu thereof, if to the best of its knowledge
it has continued to be eligible and qualified under said Sections, a
written statement to such effect;
(2) the character and amount of any advances (and if the
Trustee elects so to state, the circumstances surrounding the making
thereof) made by the Trustee (as such) which remain unpaid on the date
of such report, and for the reimbursement of which it claims or may
claim a lien or charge, prior to that of the Securities, on any
property or funds held or collected by it as Trustee, except that the
Trustee shall not be required (but may elect) to report such advances
if such advances so remaining unpaid aggregate not more than 1/2 of 1%
of the principal amount of the Securities Outstanding on the date of
such report;
(3) the amount, interest rate and maturity date of all other
indebtedness owing by the Company (or by any other obligor on the
Securities) to the Trustee in its individual capacity, on the date of
such report, with a brief description of any property held as
collateral security therefor, except an indebtedness based upon a
creditor relationship arising in any manner described in Section
6.l3(b)(2), (3), (4) or (6);
(4) the property and funds, if any, physically in
the possession of the Trustee (as such) on the date of such
report;
(5) any additional issue of Securities which the Trustee
has not previously reported; and
(6) any action taken by the Trustee in the performance of its
duties hereunder which it has not previously reported and which in its
opinion materially affects the Securities, except action in respect of
a default, notice of which has been or is to be withheld by the Trustee
in accordance with Section 6.02.
(b) The Trustee shall transmit by mail to Holders in
accordance with Section 7.03(d), a brief report with respect to the character
and amount of any advances (and if the Trustee elects so to state, the
circumstances surrounding the making thereof) made by the Trustee (as such)
since the date of the last report transmitted pursuant to Subsection (a) of this
Section (or if no such report has yet been so transmitted, since the date of
execution of this instrument) for the reimbursement of which it claims or may
claim a lien or charge, prior to that of the Securities, on property or funds
held or collected by it as Trustee and which it has not previously reported
pursuant to this Subsection, except that the Trustee shall not be required (but
may elect) to report such advances if such advances remaining unpaid at any time
aggregate 10% or less of the principal amount of the Securities Outstanding at
such time, such report to be transmitted within 90 days after such time.
(c) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which any Securities are listed, with the Commission and with the Company. The
Company will notify the Trustee when any Securities are listed on any stock
exchange.
(d) Reports pursuant to Section 7.03(a) and 7.03(b) shall be
transmitted by mail (i) to all Holders, as their names and address's appear in
the Security Register, (ii) to all Holders as have, within two years preceding
such transmission, filed their names and addresses with the Trustee for such
purpose, and (iii) except in the case of reports pursuant to Section 7.03(b), to
all Holders whose names and addresses have been furnished or received by the
Trustee pursuant to Sections 7.01 and 7.02.
SECTION 7.04. Reports by Company. The Company shall:
------------------
(1) file with the Trustee, within 15 days after the Company
is required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Company may
be required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934; or, if the
Company is not required to file information, documents or reports
pursuant to either of said Sections, then it shall 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 security listed and registered on a national
securities exchange as may be prescribed from time to time in such
rules and regulations;
(2) 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 Company with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations; and
(3) transmit by mail to Holders of Securities, in accordance
with Section 7.03(d), within 30 days after the filing thereof with the
Trustee, such summaries of any information, documents and reports
required to be filed by the Company pursuant to paragraphs (1) and (2)
of this Section as may be required by rules and regulations prescribed
from time to time by the Commission.
ARTICLE EIGHT
Consolidation. Merger. Sale or Conveyance
SECTION 8.01. Company May Consolidate. etc., Only on Certain
Terms. The Company shall not consolidate with or merge into any other
corporation or convey or transfer its properties and assets substantially as an
entirety to any entity (other than a Wholly Owned Subsidiary (as defined below)
except in the event that a Wholly Owned Subsidiary is the surviving corporation
in a consolidation or merger) unless: (i) the corporation formed by such
consolidation or into which the Company is merged or the entity which acquires
by conveyance or transfer the properties and assets of the Company substantially
as an entirety shall be a corporation organized and existing under the laws of
the United States of America or any State or the District of Columbia, and shall
expressly assume, by an indenture supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, the due and punctual payment
of the principal of (and premium, if any) and interest on all the Securities and
the performance of every covenant of this Indenture on the part of the Company
to be performed or observed; (ii) 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; and (iii) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such consolidation,
merger, conveyance or transfer and such supplemental indenture comply with this
Article and that all conditions precedent herein provided for relating to such
transaction have been complied with. The term "Wholly Owned Subsidiary" means
any Subsidiary all the stock of every class of which (other than directors'
qualifying shares) is owned by the Company either directly or through one or
more Wholly Owned Subsidiaries.
SECTION 8.02. Rights and Duties of Successor Corporation. In
case of any such consolidation, merger, sale or conveyance and upon any such
assumption by the successor corporation, such successor corporation shall
succeed to and be substituted for the Company, with the same effect as if it had
been named herein as the party of the first part and the predecessor corporation
shall be relieved of any further obligation under this Indenture. Such successor
corporation thereupon may cause to be signed, and may issue either in its own
name or in the name of the Company, any or all the Securities issuable hereunder
which theretofore shall not have been signed by the Company and delivered to the
Trustee; and, upon the order of such successor corporation, instead of the
Company, and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver any
Securities which previously shall have been signed and delivered by the officers
of the Company to the Trustee for authentication, and any Securities which such
successor corporation thereafter shall cause to be signed and delivered to the
Trustee for that purpose. All the Securities so issued shall in all respects
have the same legal rank and benefit under this Indenture as the Securities
theretofore or thereafter issued in accordance with the terms of this Indenture
as though all such Securities had been issued at the date of the execution
hereof.
In case of any consolidation, merger, sale or conveyance such
changes in phraseology and form (but not in substance) may be made in the
Securities thereafter to be issued as may be appropriate.
ARTICLE NINE
Supplemental Indentures
SECTION 9.01. Supplemental Indentures Without Consent of
Holders. Without the consent of any Holders, the Company, when authorized by or
pursuant to a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to
the Company and the assumption by any such successor of
the covenants of the Company herein and in the Securities;
(2) to add to the covenants of the Company for the benefit of
the Holders of all or any series of Securities (and if such covenants
are to be for the benefit of less than all series of Securities,
stating that such covenants are expressly being included solely for the
benefit of such series) or to surrender any right or power herein
conferred upon the Company;
(3) to add any additional Events of Default with respect to
all or any series of the Securities (and, if such Event of Default is
applicable to less than all series of Securities specifying the series
to which -such Event of Default is applicable);
(4) to add to or change any of the provisions of this
Indenture to such extent as shall be necessary to facilitate the
issuance of Securities in bearer form, registrable or not registrable
as to principal, and with or without interest coupons; to change or
eliminate any restrictions on the payment of principal of or any
premium or interest on Bearer Securities, to permit Bearer Securities
to be issued in exchange for Registered Securities, to permit Bearer
Securities to be issued in exchange for Bearer Securities of other
authorized denominations; provided that any such addition or change
shall not adversely affect the interests of the Holders of Securities
of any series or any related Coupons in any material respect;
(5) to change or eliminate any of the provisions of this
Indenture; provided that any such change or elimination shall become
effective only when there is no Security outstanding of any series
created prior to the execution of such supplemental indenture which is
adversely affected by such change in or elimination of such provision;
(6) to establish the form or terms of Securities of any
series as permitted by Sections 2.01 and 3.01;
(7) 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(b);
(8) if allowed under applicable laws and regulations to
permit payment in the United States of America (including any of the
states and the District of Columbia), its territories, its possessions
and other areas subject to its jurisdiction, of principal, premium or
interest on Bearer Securities or Coupons, if any;
(9) to provide for the issuance of uncertificated
Securities of one or more series in addition to or in place of
certificated Securities;
(10) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions with respect to
matters or questions arising under this Indenture; provided such action
shall not adversely affect the interests of the Holders of Securities
of any series in any material respect; or
(11) to secure the Securities pursuant to Section 10.08
or otherwise.
SECTION 9.02. Supplemental Indentures with Consent of
Holders. With the consent of the Holders of not less than 66-2/3% in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by or pursuant to a Board Resolution, and
the Trustee may enter into an indenture or indentures supplemental hereto for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of modifying in any manner the rights
of the Holders of Securities of such series under this Indenture; provided,
however, that no such supplemental indenture shall, without the consent of the
Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Security, or reduce the
principal amount thereof or the rate of interest thereon or any premium
payable upon the redemption thereof, or change any obligation of the
Company to pay additional amounts pursuant to Section 10.06 (except as
contemplated by Section 8.01(1) and permitted by Section 9.01(1)), or
reduce the amount of the principal of an original Issue Discount
Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 5.02, or
change any Place of Payment where, or the currency, currencies or
currency unit or units in which, any Security or any premium or the
interest thereon is payable, or impair the right to institute suit for
the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption
Date),
(2) reduce the percentage in principal amount of the
outstanding Securities of any series, the consent of whose Holders is
required for any such supplemental indenture, or the consent of whose
Holders is required for any waiver (of compliance with certain
provisions of this Indenture or certain defaults hereunder and their
consequences) provided for in this Indenture,
(3) change any obligation of the Company, with respect to
outstanding Securities of a series, to maintain an office or agency in
the places and for the purposes specified in Section 10.02 for such
series, or
(4) modify any of the provisions of this Section, Section 5.13
or Section 10.05, except to increase any such percentage or to provide
with respect to any particular series the right to condition the
effectiveness of any supplemental indenture as to that series on the
consent of the Holders of a specified percentage of the aggregate
principal amount of Outstanding Securities of such series (which
provision may be made pursuant to Section 3.01 without the consent of
any Holder) or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the
Holder of each outstanding Security affected thereby; provided,
however, that this clause shall not be deemed to require the consent of
any Holder with respect to changes in the references to "the Trustee"
and concomitant changes in this Section and Section 10.05, or the
deletion of this proviso, in accordance with the requirements of
Sections 6.11(b) and 9.01(7).
A supplemental indenture such 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 the Holders of Securities of such series with respect to
such covenant or other provision, shall be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 9.03. Execution of Supplemental Indentures. In
executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Section 6.01) shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties, immunities or liabilities under this Indenture or
otherwise.
SECTION 9.04. Effect of Supplemental Indentures. Upon the
execution of any supplemental indenture under this Article, this Indenture shall
be modified in accordance therewith, and such supplemental indenture shall form
a part of this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.
SECTION 9.05. Conformity with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act as then in effect.
SECTION 9.06. Reference in Securities to Supplemental
Indentures. Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
ARTICLE TEN
Covenants
SECTION 10.01. Payment of Principal. Premium and Interest.
The Company covenants and agrees for the benefit of each series of Securities
and Coupons, if any, that it will duly and punctually pay the principal of (and
premium, if any) and interest on the Securities and Coupons, if any, of that
series in accordance with the terms of the Securities and Coupons, if any, of
such series and this Indenture.
SECTION 10.02. Maintenance of Office or Agency. If Securities
of a series are issuable only as Registered Securities, the Company will
maintain in each Place of Payment for such series an office or agency where
Securities of that series may be presented or surrendered for payment, where
Securities of that series may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Securities of that series and this Indenture may be served. For Securities
having a Place of Payment in the Borough of Manhattan, The City of New York, the
Company hereby appoints as such agent the Trustee, acting through its Corporate
Trust Office. If Securities of a series are issuable as Bearer Securities, the
Company will maintain (A) in the Borough of Manhattan, The City of New York, an
office or agency where any Registered Securities of that series may be presented
or surrendered for payment, where any Registered Securities of that series may
be surrendered for registration of transfer, where Securities of that series may
be surrendered for exchange, where notices and demands to or upon the Company in
respect of the Securities of that series and this Indenture may be served and
where Bearer Securities of that series and related Coupons may be presented or
surrendered for payment in the circumstances described in the following
paragraph (and not otherwise) (the foregoing Corporate Trust Office of the
Trustee being hereby so appointed as such agency), (B) subject to any laws or
regulations applicable thereto, in a Place of Payment for that series which is
located outside the United States, an office or agency where Securities of that
series and related Coupons may be presented and surrendered for payment
(including payment of any additional amounts payable on Securities of that
series pursuant to Section 10.06); provided, however, that if the Securities of
that series are listed on The Stock Exchange of the United Kingdom and the
Republic of Ireland, the Luxembourg Stock Exchange or any other stock exchange
located outside the United States and such stock exchange shall so require, the
Company will maintain a Paying Agent for the Securities of that series in
London, Luxembourg or any other required city located outside the United States,
as the case may be, so long as the Securities of that series are listed on such
exchange, and (C) subject to any laws or regulations applicable thereto, in a
Place of Payment for that series located in Europe, an office or agency where
any Registered Securities of that series may be surrendered for registration of
transfer, where Securities of that series may be surrendered for exchange and
where notices and demands to or upon the Company in respect of the Securities of
that series and this Indenture may be served. The Company will give prompt
written notice to the Trustee and the Holders of the location, and any change in
the location, of any such office or agency. If at any time the Company shall
fail to maintain any such required office or agency in respect of any series of
Securities or shall fail to furnish the Trustee with the address thereof, such
presentations and surrenders of Securities of that series may be made and
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, except that Bearer Securities of that series and the related Coupons
may be presented and surrendered for payment (including payment of any
additional amounts payable on Bearer Securities of that series pursuant to
Section 10.06) at the London office of the Trustee (or an agent with a London
office appointed by the Trustee and acceptable to the Company), and the Company
hereby appoints the same as its agent to receive such respective presentations,
surrenders, notices and demands.
No payment of principal, premium or interest on Bearer Securities shall be made
at any office or agency of the Company in the United States or by check mailed
to any address in the United States or by transfer to an account maintained with
a bank located in the United States; provided, however, that, if the Securities
of a series are denominated and payable in Dollars, payment of principal of and
any premium and interest on any Bearer Security (including any additional
amounts payable on Securities of such series pursuant to Section 10.06) shall be
made at the office of the Company's Paying Agent in the Borough of Manhattan,
The City of New York, if (but only if) payment in Dollars of the full amount of
such principal, premium, interest or additional amounts, as the case may be, at
all offices or agencies outside the United States maintained for the purpose by
the Company in accordance with this Indenture is illegal or effectively
precluded by exchange controls or other similar restrictions.
The Company may also from time to time designate one or more
other offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in accordance with the requirements set forth above for
Securities of any series for such purposes. The Company will give prompt written
notice to the Trustee and the Holders of any such designation or rescission and
of any change in the location of any such other office or agency.
SECTION 10.03. Money for Securities Payments To Be Held in
Trust. If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents for
any series of Securities, it will, at or prior to the opening of business at
each Place of Payment on each due date of the principal of (and premium, if any)
or interest on any Securities of that series, deposit with a Paying Agent a sum
sufficient to pay the principal (and premium, if any) or interest so becoming
due, such sum to be held in trust for the benefit of the Persons entitled to
such principal, premium or interest, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its failure so to act.
The Company will cause each Paying Agent for any series of
Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal
of (and premium, if any) or interest on Securities of that series in
trust for the benefit of the Persons entitled thereto until such sums
shall be paid to such Persons or otherwise disposed of as herein
provided;
(2) give the Trustee notice of any default by the Company (or
any other obligor upon the Securities of that series) in making of any
Payment of principal (and premium, if any) or interest on the
Securities of that series; and
(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of (and
premium, if any) or interest on any Security of any series and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall upon written request of the Company be paid to
the Company, or (if then held by the Company) shall be discharged from such
trust; and the Holder of such Security and Coupons, if any, shall thereafter, as
an unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease.
SECTION 10.04. Statement by Officers as to Default. The
Company will deliver to the Trustee for each series of Securities, within 120
days after the end of each fiscal year of the Company (which as of the date
hereof ends on December 31 of each year) ending after the date hereof so long as
any Security is outstanding hereunder, an Officers' Certificate, stating that in
the course of the performance by the signers of their duties as such officers of
the Company they would normally obtain knowledge of any default by the Company
in the performance or fulfillment of any covenant, agreement or condition
contained in this Indenture, and stating whether or not they have obtained
knowledge of any such default existing on the date of such statement and, if so,
specifying each such default of which the signers have knowledge and the nature
thereof.
SECTION 10.05. Waiver of Certain Covenants. The Company may
omit in any particular instance to comply with any term, provision or condition
set forth in Section 10.08, if before the time for such compliance the Holders
of not less than 66-2/3% in principal amount of the Outstanding Securities of
each series affected thereby shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such term,
provision or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such term, provision or condition shall remain in
full force and effect.
SECTION 10.06. Additional Amounts. If the Securities of a
series provide for the payment of additional amounts, the Company will pay to
the Holder of any Security of such series or any Coupon appertaining thereto
additional amounts as provided therein. Whenever in this Indenture there is
mentioned, in any context, the payment of the principal of or any premium or
interest on, or in respect of, any Security of any series or payment of any
related Coupon or the net proceeds received on the sale or exchange of any
Security of any series, such mention shall be deemed to include mention of the
payment of additional amounts provided for in this Section to the extent that,
in such context, additional amounts are, were or would be payable in respect
thereof pursuant to the provisions of this Section and express mention of the
payment of additional amounts (if applicable) in any provisions hereof shall not
be construed as excluding additional amounts in those provisions hereof where
such express mention is not made.
If the Securities of a series provide for the payment of
additional amounts, at least 10 days prior to the first Interest Payment Date
with respect to that series of Securities (or if the Securities of that series
will not bear interest prior to Maturity, the first day on which a payment of
principal and any premium is made), and at least 10 days prior to each date of
payment of principal and any premium or interest if there has been any change
with respect to the matters set forth in the below-mentioned Officers'
Certificate, the Company will furnish the Trustee and the Company's Paying Agent
or Paying Agents, if other than the Trustee, with an Officers' Certificate
instructing the Trustee and such Paying Agent or Paying Agents whether such
payment of principal of and any premium or interest on the Securities of that
series shall be made to Holders of Securities of that series or any related
Coupons who are United States Aliens without withholding for or on account of
any tax, assessment or other governmental charge described in the Securities of
that series. If any such withholding shall be required, then such Officers'
Certificate shall specify by country the amount, if any, required to be withheld
on such payments to such Holders of Securities or Coupons and the Company will
pay to the Trustee or such Paying Agent the additional amounts required by this
Section. The Company covenants to indemnify the Trustee and any Paying Agent
for, and to hold them harmless against, any loss, liability or expense
reasonably incurred without negligence or bad faith on their part arising out of
or in connection with actions taken or omitted by any of them in reliance on any
Officers' Certificate furnished pursuant to this Section.
SECTION 10.07. No Lien Created. etc. This Indenture and the
--------------------
Securities do not create a Lien, charge or encumbrance on any property of
the Corporation or any Subsidiary.
SECTION 10.08. Limitation on Liens. Nothing in this Indenture
or in the Securities shall in any way restrict or prevent the Company or any
Subsidiary from incurring any indebtedness; provided that the Company covenants
and agrees that neither it nor any Subsidiary will issue, assume or guarantee
any notes, bonds, debentures or other similar evidences of indebtedness for
money borrowed (hereinafter called "Debt") secured by a mortgage, lien, pledge
or other encumbrance (hereinafter called "Mortgages") upon any of its property
or any property of such Subsidiary, real or personal, located in the continental
United States of America without effectively providing that the Securities
(together with, if the Company so determines, any other indebtedness or
obligation then existing and any other indebtedness or obligation, thereafter
created, ranking equally with the Securities) shall be secured equally and
ratably with (or, at the option of the Company, prior to) such Debt so long as
such Debt shall be so secured, except that the foregoing provisions shall not
apply to:
(a) Mortgages existing on the date of this Indenture,
(b) Mortgages affecting property of a corporation existing at
the time it becomes a Subsidiary or at the time it is merged into or
consolidated with the Company or a Subsidiary,
(c) Mortgages on property (i) existing at the time of
acquisition thereof, or (ii) to secure payment of all or part of the
purchase price thereof, or (iii) to secure Debt incurred prior to, at
the time of or within 24 months after acquisition thereof for the
purpose of financing all or part of the purchase price thereof, or (iv)
assumed or incurred in connection with the acquisition of such
property,
(d) Mortgages on property to secure all or part of the cost
of repairing, altering, constructing, improving, exploring, drilling or
developing such property, or to secure Debt incurred to provide funds
for any such purpose,
(e) Mortgages on (i) pipelines, gathering systems, pumping or
compressor stations, pipeline storage facilities or other related
facilities, (ii) tank cars, tank trucks, tank vessels, barges, tow
boats or other vessels or boats, drilling barges, drilling platforms,
or other movable railway, automotive, aeronautic or marine facilities,
(iii) office buildings, laboratory and research facilities, retail
service stations, retail or wholesale sales facilities, terminals, bulk
plants, warehouses or storage or distribution facilities, (iv)
manufacturing facilities other than units for the refining of crude
oil, (v) the equipment of any of the foregoing, or (vi) any "margin
stock" or "margin security" within the meaning of Regulation U or
Regulation G of the Board of Governors of the Federal Reserve System as
amended from time to time,
(f) Mortgages on current assets or other personal property
(other than shares of stock or indebtedness of Subsidiaries) to secure
loans maturing not more than one year from the date of the creation
thereof or to secure any renewal thereof for not more than one year at
any one time,
(g) Mortgages which secure indebtedness owing by a
Subsidiary to the Company or a Subsidiary,
(h) Mortgages on property of any Subsidiary principally
engaged in a financing or leasing business,
(i) Mortgages upon the oil, gas or other minerals produced or
to be produced (or proceeds thereof) from properties which shall have
been acquired or shall have become producing subsequent to August 15,
1977, if, in respect of each such Mortgage it shall have been given to
secure indebtedness incurred to pay or to reimburse the cost (incurred
subsequent to the date of the acquisition of such property or August
15, 1977, whichever shall be later) of drilling or equipping such
property, and
(j) any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any
Mortgage referred to in the foregoing clauses (a) to (i) inclusive or
of any Debt secured thereby, provided that the principal amount of Debt
secured thereby shall not exceed the principal amount of Debt so
secured at the time of such extension, renewal or replacement, and that
such extension, renewal or replacement Mortgage shall be limited to all
or part of substantially the same property which secured the Mortgage
extended, renewed or replaced (plus improvements on such property).
Notwithstanding the foregoing provisions of this Section, the
Company and any one or more Subsidiaries may issue, assume or guarantee Debt
secured by Mortgages which would otherwise be subject to the foregoing
restrictions in an aggregate principal amount which, together with the aggregate
outstanding principal amount of all other Debt of the Company and its
Subsidiaries which would otherwise be subject to the foregoing restrictions,
does not at any one time exceed 5% of the stockholders' equity in the Company
and its consolidated subsidiary companies as shown on the audited consolidated
balance sheet contained in the latest annual report to stockholders of the
Company. For this purpose "stockholders' equity" shall mean the aggregate of
(however designated) capital, capital stock, capital surplus, capital in excess
of par value of stock, earned surplus and net income retained for use in the
business, after deducting the cost of shares of the Company held in its
treasury.
The following types of transactions, among others, shall not
be deemed to create Debt secured by Mortgages:
(1) the sale or other transfer of oil, gas or other minerals
in place for a period of time until, or in an amount such that, the
transferee will realize therefrom a specified amount (however
determined) of money or such minerals, or the sale or other transfer
o... any other interest in property of the character commonly referred
to as an oil payment or a production payment, and
(2) Mortgages required by any contract or statute in order to
permit the Company or a subsidiary to perform any contract or
subcontract made by it with or at the request of the United States, any
State or any department, agency or instrumentality of either.
SECTION 10.09. Limitations on Sale and Lease-Back. The
Company covenants and agrees that neither it nor any Subsidiary will enter into
any arrangement with any bank, insurance company or other lender or investor, or
to which any such lender or investor is a party, providing for the leasing to
the Company or a Subsidiary for a period of more than three years or any real
property located in the continental United States of America (except a lease for
a temporary period not to exceed three years by the end of which it is intended
that the use of such real property by the lessee will be discontinued) which has
been or is to be sold or transferred by the Company or a Subsidiary to such
lender or investor or to any Person or organization to which funds have been or
are to be advanced by such lender or investor on the security of the leased
property (hereinafter called "Sale and Lease-Back Transactions") unless either:
(a) the Company or such Subsidiary would be entitled,
pursuant to the provisions of Section 10.08, to create Debt secured by
a Mortgage on the property to be leased, without equally and ratably
securing the Securities, or
(b) the Company (and in any such case the Company covenants
and agrees that it will do so), within four months after the effective
date of such Sale and Lease-Back Transactions (whether made by the
Company or a Subsidiary), applies to the retirement of Debt of the
Company maturing by the terms thereof more than one year after the
original creation thereof (herein called "Funded Debt") an amount equal
to the greater of (i) the net proceeds of the sale of the real property
leased pursuant to such arrangement or (ii) the fair value of the real
property so leased at the time of entering into such arrangement (as
determined by the Board of Directors); provided that the amount to be
applied to the retirement of Funded Debt shall be reduced by an amount
equal to the sum of (a) the principal amount of Securities delivered,
within four months after the effective date of such arrangement, to the
Trustee for retirement and cancellation and (b) the principal amount of
other Funded Debt voluntarily retired by the Company within such
four-month period, excluding retirements of Securities and other Funded
Debt pursuant to mandatory sinking fund or prepayment provisions or by
payment at maturity. No provision of Article Eleven hereof shall
restrict the retirement of Funded Debt pursuant to this Section.
ARTICLE ELEVEN
Redemption of Securities
SECTION 11.01. Applicability of Article. Securities of any
series which are redeemable before their Stated Maturity shall be redeemable in
accordance with their terms and (except as otherwise specified as contemplated
by Section 3.01 for Securities of any series) in accordance with this Article.
SECTION 11.02. Selection by Trustee of Securities To Be
Redeemed. If less than all the Securities of any series are to be redeemed, the
Company shall give the Trustee notice not less than 60 days prior to the
Redemption Date (unless a shorter notice shall be satisfactory to the Trustee)
of such Redemption Date and the principal amount of the Securities of such
series to be redeemed and the Trustee shall select the particular Securities to
be redeemed from the outstanding Securities of such series not previously called
for redemption, by such method as the Trustee shall deem fair and appropriate
and which may provide for the selection for redemption of portions (equal to the
minimum authorized denomination for Securities of that series or any integral
multiple thereof) of the principal amount of Securities of such series of a
denomination larger than the minimum authorized denomination for Securities of
that series.
The Trustee shall promptly notify the Company in writing of
the Securities selected for redemption and, in the case of any Securities
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
shall relate, in the case of any Securities redeemed or to be redeemed only in
part, to the portion of the principal amount of such Securities which has been
or is to be redeemed.
SECTION 11.03. Notice of Redemption. Notice of redemption
shall be given not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, as provided in Section 1.06.
Each such notice of redemption shall specify the Redemption Date, the Redemption
Price, the Place or Places of Payment, that the Securities of such series are
being redeemed at the option of the Company pursuant to provisions contained in
the terms of the Securities of such series or in a supplemental indenture
establishing such series, if such be the case, that on the Redemption Date the
Redemption Price will become due and payable upon each Security redeemed, that
payment will be made upon presentation and surrender of the applicable
Securities, that all Coupons, if any, maturing subsequent to the date fixed for
redemption shall be void, that any interest accrued to the Redemption Date will
be paid as specified in said notice, and that on and after said Redemption Date
any interest thereon or on the portions thereof to be redeemed will cease to
accrue. If less than all the Securities of any series are to be redeemed the
notice of redemption shall specify the numbers of the Securities of such series
to be redeemed, and, if only Bearer Securities of any series are to be redeemed,
and if such Bearer Securities may be exchanged for Registered Securities, the
last date on which exchanges of Bearer Securities for Registered Securities not
subject to redemption may be made. In case any Security of any series is to be
redeemed in part only, the notice of redemption shall state the portion of the
principal amount thereof to redeemed and shall state that on and after the
Redemption Date, upon surrender of such Security and any Coupons appertaining
thereto, a new Security or Securities of such series in principal amount equal
to the unredeemed portion thereof and with appropriate Coupons will be issued.
Notice of redemption of Securities and Coupons, if any, to be
redeemed at the election of the Company shall be given by or on behalf of the
Company.
SECTION 11.04. Deposit of Redemption Price. On or before (but
at least one Business Day before in the Place of Payment in the case of payments
not in Dollars) the opening of business on any Redemption Date, the Company
shall deposit with the Trustee or with a Paying Agent (or, if the Company is
acting as its own Paying Agent, segregate and hold in trust as provided in
Section 10.03) an amount of money in the relevant currency (or a sufficient
number of currency units, as the case may be) sufficient to pay the Redemption
Price of, and (except if the Redemption Date shall be an Interest Payment Date)
accrued interest on, all the Securities and Coupons, if any, which are to be
redeemed on that date.
SECTION 11.05. Securities Payable on Redemption Date. Notice
of redemption having been given as aforesaid, the Securities so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified, and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such
Securities shall cease to bear interest and the Coupons for such interest
appertaining to any Bearer Securities so to be redeemed, except to the extent
provided below, shall be void. Upon surrender of any such Security for
redemption in accordance with said notice, together with all Coupons, if any,
appertaining thereto maturing after the Redemption Date, such Security shall be
paid by the Company at the Redemption Price, together with accrued interest to
the Redemption Date; provided, however, that installments of interest on Bearer
Securities whose Stated Maturity is on or prior to the Redemption Date shall be
payable only at an office or agency located outside the United States (except as
otherwise provided in Section 10.02) and, unless otherwise specified as
contemplated by Section 3.01, only upon presentation and surrender of Coupons
for such interest; and provided further that, unless otherwise specified as
contemplated by Section 3.01, installments of interest on Registered Securities
whose Stated Maturity is on or prior to the Redemption Date shall be payable to
the Holders of such Securities, or one or more Predecessor Securities,
registered as such at the close of business on the relevant Record Dates
according to their terms and the provisions of Section 3.07.
If any Bearer Security surrendered for redemption shall not
be accompanied by all appurtenant Coupons maturing after the Redemption Date,
such Security may be paid after deducting from the Redemption Price an amount
equal to the face amount of all such missing Coupons, or the surrender of such
missing Coupon or Coupons may be waived by the Company and the Trustee if there
be furnished to them such security or indemnity as they may require to save each
of them and any Paying Agent harmless. If thereafter the Holder of such Security
shall surrender to the Trustee or any Paying Agent any such missing Coupon in
respect of which a deduction shall have been made from the Redemption Price,
such Holder shall be entitled to receive the amount so deducted; provided,
however, that interest represented by Coupons shall be payable only at an office
or agency located outside the United States (except as otherwise provided in
Section 10.02) and, unless otherwise specified as contemplated by Section 3.01,
only upon presentation and surrender of those coupons.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal and any premium shall,
until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Security.
SECTION 11.06. Securities Redeemed in Part. Any Security
(including any Coupons appertaining thereto) which is to be redeemed only in
part shall be surrendered at a Place of Payment therefor (with, if the Company
or the Trustee so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to the Company and the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing), and the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder of
such Security without service charge, a new Security (including any Coupons
appertaining thereto) or Securities (including any Coupons appertaining thereto)
of the same series and having the same terms and conditions, of any authorized
denomination as requested by such Holder, in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal of the Security
(including any Coupons appertaining thereto) so surrendered.
SECTION 11.07. Right To Require Repurchase of Securities by
the Company upon Change in Control and Decline in Debt Rating. (a) In the event
that (i) there shall occur any Change in Control and (ii) the prevailing rating
of the Securities by Standard & Poor's Corporation or its successors ("S&P") or
Moody's Investors Service, Inc. or its successors ("Moody's") or another
nationally recognized rating agency selected by the Company, on any date within
90 days following public notice of the occurrence of such Change in Control
shall be less than the rating of the Securities on the date 60 days prior to the
occurrence of such Change in Control by at least one Full Rating Category
("Rating Decline"), each holder of Securities shall have the right, at such
holder's option, to require the Company to purchase, and upon the exercise of
such right the Company shall purchase, all or any part of such holder's
Securities on the date (the "Repurchase Date") that is 100 days after the last
to occur of (i) public notice of such Change in Control and (ii) the Rating
Decline, at 100% of the principal amount on the Repurchase Date, plus any
accrued and unpaid interest to the Repurchase Date.
(b) On or before the 28th day following the last to occur of
(i) public notice of such Change in Control and (ii) the Rating Decline, the
Company shall give notice of a Change in Control and Rating Decline and of the
repurchase right set forth herein arising as a result thereof by first-class
mail, postage prepaid to each holder of Securities at such holder's address
appearing in the Securities Register. The Company shall also cause a copy of
such notice of a repurchase right to be published in an Authorized Newspaper in
the Borough of Manhattan, The City of New York and, if any Bearer Securities are
then Outstanding, in London and such other cities as shall be specified with
respect to such Bearer Securities.
Each notice of a repurchase right shall state:
(1) the Repurchase Date,
(2) the date by which the repurchase right must be
exercised,
(3) the price at which the repurchase is to be made, if
the repurchase right is exercised, and
(4) a description of the procedure which a holder of
Securities must follow to exercise a repurchase right.
No failure of the Company to give the foregoing notice
shall limit any holder's right to exercise a repurchase
right.
(c) To exercise a repurchase right, a holder of Securities
shall deliver to the Company (or an agent designated by the Company for such
purpose in the notice referred to in (b) above) at least ten days prior to the
Repurchase Date (i) written notice of the holder's exercise of such right, which
notice shall set forth the name of the holder, the principal amount of the
Security or Securities (or portion of a Security) to be repurchased, and a
statement that the option to exercise the repurchase right is being made
thereby, and (ii) the Security with respect to which the repurchase right is
being exercised, duly endorsed for transfer to the Company. Such written notice
shall be irrevocable.
(d) In the event a repurchase right shall be exercised in
accordance with the terms hereof, the Company shall pay or cause to be paid the
price payable with respect to the Security or Securities as to which the
repurchase right has been exercised in cash to the holder of such -Security or
Securities, on the Repurchase Date. In the event that a repurchase right is
exercised with respect to less than the entire principal amount of a surrendered
Security, the Company shall execute and deliver to the Trustee and the Trustee
shall authenticate for issuance, against surrender of such surrendered Security,
(x) in the name of the holder a new Security or Securities in the aggregate
principal amount of the unrepurchased portion of such surrendered Security and
(y) in the name of the Company a new Security or Securities in the aggregate
principal amount of the repurchased portion of such surrendered Security.
(e) As used in this Section 11.07:
(1) a "Change in Control" shall be deemed to have occurred at
such time as (i) a "person" or "group" (within the meaning of Section
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended)
becomes the "beneficial owner" (as defined in Rule l3d-3 under such
Exchange Act) of more than fifty percent (50%) of the then outstanding
Voting Stock of the Company, otherwise than through a transaction
consummated with the prior approval of the Board of Directors of the
Company, or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the
Company's Board of Directors (together with any new Director whose
election by the Company's Board of Directors or whose nomination for
election by the Company's stockholders was approved by a vote of at
least two-thirds of the Directors then still in office who either were
Directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease f or any
reason to constitute a majority of the Directors then in office.
(2) the term "Full Rating Category" shall mean (i) with
respect to S&P, any of the following categories: AAA, AA, A, BBB, BB,
B, CCC, CC and C, (ii) with respect to Moody's, any of the following
categories: Aaa, Aa, A, Baa, Ba, B, Caa, Ca and C, (iii) the
equivalent of any such category by S&P or Moody's and (iv) the
equivalent of such ratings by any other nationally recognized
securities rating agency selected by the Company. In determining
whether the rating of the Debt Securities has decreased by the
equivalent of one full Rating Category, graduations within Full Rating
Categories (-I- and - S and P; 1, 2 and 3 for Moody's; or the
equivalent
for S&P or Moody's or any such other rating agency) shall be taken
into account.
(3) the term "public notice" shall, without limitation,
include any filing or report made in accordance with the requirements
of the Securities and Exchange Commission or any press release or
public announcement made by the Company.
(f) Notwithstanding anything to the contrary contained in
this Section 11.07, if a Rating Decline shall apply to less than all series of
the Securities, the repurchase rights described herein shall apply only to the
series with respect to which there has been a Rating Decline.
ARTICLE TWELVE
Sinking Funds
SECTION 12.01. Applicability of Article. The provisions of
this Article shall be applicable to any sinking fund for the retirement of
Securities of a series except as otherwise specified as contemplated by Section
3.01 for Securities of such series.
The minimum amount of any sinking fund payment provided for
by the terms of 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 Securities of any series is herein referred to as an
"optional sinking fund payment". If provided for by the terms of Securities of
any series, the cash amount of any sinking fund payment may be subject to
reduction as provided in Section 12.02. Each sinking fund payment shall be
applied to the redemption of Securities of any series as provided for by the
terms of Securities of such series.
SECTION 12.02. Satisfaction of Sinking Fund Payments with
Securities. The Company (1) may deliver Outstanding Securities (including any
Coupons) of a series (other than any previously called for redemption) and (2)
may apply as a credit Securities of a series which have been redeemed either at
the election of the Company pursuant to the terms of such Securities (including
any Coupons) or through the application of permitted optional sinking fund
payments pursuant to the terms of such Securities, in each case in satisfaction
of all or any part of any sinking fund payment with respect to the Securities of
such series required to be made pursuant to the terms of such Securities as
provided for by the terms of such series; provided that such Securities have not
been previously so credited. Such Securities shall be received and credited for
such purpose by the Trustee at the Redemption Price specified in such Securities
for redemption through operation of the sinking fund and the amount of such
sinking fund payment shall be reduced accordingly.
SECTION 12.03. Redemption of Securities for Sinking Fund. Not
less than 60 days prior to each sinking fund payment date for any series of
Securities, the Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for that series
pursuant to the terms of that series, the portion thereof, if any, which is to
be satisfied by payment of cash and the portion thereof, if any, which is to be
satisfied by delivering and crediting Securities (including any Coupons) of that
series pursuant to Section 12.02 and stating the basis for such credit and that
such Securities have not been previously so credited and will also deliver to
the Trustee any Securities (including any coupons) to be so delivered. Not less
than 30 days before each such sinking fund payment date the Trustee shall select
the Securities to be redeemed upon such sinking fund payment date in the manner
specified in Section 11.02 and cause notice of the redemption thereof to be
given in the name of and at the expense of the Company in the manner provided in
Section 11.03. Such notice having been duly given, the redemption of such
Securities shall be made upon the terms and in the manner stated in Section
11.05 and 11.06.
ARTICLE THIRTEEN
Meetings of Holders of Securities
SECTION 13.01. Purposes for Which Meetings May Be Called. If
Securities of a series are issuable as Bearer Securities, a meeting of Holders
of Securities of such series may be called at any time and from time to time
pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities of such
series.
SECTION 13.02. Call. Notice and Place of Meetings. (a) The
Trustee may at any time call a meeting of Holders of Securities of any such
series for any purpose specified in Section 13.01, to be held at such time and
at such place in the Borough of Manhattan, The City of New York, or in London,
as the Trustee shall determine. Notice of every meeting of Holders of Securities
of any such series, setting forth the time and the place of such meeting and in
general terms the action proposed to be taken at such meeting, shall be given,
in the manner provided in Section 1.06, not less than 21 nor more than 180 days
prior to the date fixed for the meeting.
(b) In case at any time the Company, by or pursuant to a
Board Resolution, or the Holders of at least 10% in principal amount of the
Outstanding Securities of any such series shall have requested the Trustee to
call a meeting of the Holders of Securities of such series for any purpose
specified in Section 13.01, by written request setting forth in reasonable
detail the action proposed to be taken at the meeting, and the Trustee shall not
have made the first publication of the notice of such meeting within 21 days
after receipt of such request or shall not thereafter proceed to cause the
meeting to be held as provided herein, then the Company or the Holders of
Securities of such series in the amount above specified, as the case may be, may
determine the time and the place in the Borough of Manhattan, The City of New
York, or in London, for such meeting and may call such meeting for such purposes
by giving notice thereof as provided in subsection (a) of this Section.
SECTION 13.03. Persons Entitled To Vote at Meetings. To be
entitled to vote at any meeting of Holders of Securities of any series, a Person
shall be (1) Holder of one or more Outstanding Securities of such series, or (2)
a Person appointed by an instrument in writing as proxy for a Holder or Holders
of one or more Outstanding Securities of such series by such Holder or Holders.
The only Persons who shall be entitled to be present or to speak at any meeting
of Holders of Securities of any series shall be the Persons entitled to vote at
such meeting and their counsel, any representatives of the Trustee and its
counsel and any representatives of the Company and its counsel.
SECTION 13.04. Quorum; Action. The Persons entitled to vote a
majority in principal amount of the Outstanding Securities of a series shall
constitute a quorum for a meeting of Holders of Securities of such series;
provided, however, that if any action is to be taken at such meeting with
respect to a consent or waiver which this Indenture expressly provides may be
given by the Holders of Securities of not less than 66-2/3/% in principal amount
of Outstanding Securities of a series, the Persons entitled to vote 66-2/3% in
principal amount of the Outstanding Securities of such series shall constitute a
quorum. In the absence of a quorum within 30 minutes of the time appointed for
any such meeting, the meeting shall, if convened at the request of Holders of
Securities of such series, be dissolved. In any other case the meeting may be
adjourned for a period of not less than 10 days as determined by the chairman of
the meeting prior to the adjournment of such meeting. In the absence of a quorum
at any such adjourned meeting, such adjourned meeting may be further adjourned
for a period of not less than 10 days as determined by the chairman of the
meeting prior to the adjournment of such adjourned meeting. Notice of the
reconvening of any adjourned meeting shall be given as provided in Section
13.02(a), except that such notice need be given only once not less than five
days prior to the date on which the meeting is scheduled to be reconvened.
Notice of the reconvening of an adjourned meeting which was adjourned for lack
of a quorum shall state expressly the percentage, as provided above, of the
principal amount of the Outstanding Securities of such series which shall
constitute a quorum.
Any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action which this
Indenture expressly provides may be made, given or taken by the Holders of a
specified percentage in principal amount of the Outstanding Securities of a
series may be adopted at a meeting or an adjourned meeting duly reconvened and
at which a quorum is present as aforesaid by the affirmative vote of the Holders
of such specified percentage in principal amount of the outstanding Securities
of that series.
Any resolution passed or decision taken at any meeting of
Holders of Securities of any series duly held in accordance with this Section
shall be binding on all the Holders of Securities of such series and the related
Coupons, whether or not present or represented at the meeting.
SECTION 13.05. Determination of Voting Rights; Conduct and
Adjournment of Meetings. (a) Notwithstanding any other provisions of this
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Holders of Securities of a series in regard to
proof of the holding of Securities of such series and of the appointment of
proxies and in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other evidence of the
right to vote, and such other matters concerning the conduct of the meeting as
it shall deem appropriate. Except as otherwise permitted or required by any such
regulations, the holding of Securities shall be proved in the manner specified
in Section 1.04 and the appointment of any proxy shall be proved in the manner
specified in Section 1.04 or by having the signature of the person executing the
proxy witnessed or guaranteed by any trust company, bank or banker authorized by
Section 1.04 to certify to the holding of Bearer Securities. Such regulations
may provide that written instruments appointing proxies, regular on their face,
may be presumed valid and genuine without the proof specified in Section 1.04 or
other proof.
(b) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Holders of Securities as provided in Section 13.02(b), in
which case the Company or the Holders of Securities of the series calling the
meeting, as the case may be, shall in like manner appoint a temporary chairman.
A permanent chairman and a permanent secretary of the meeting shall be elected
by vote or the Persons entitled to vote a majority in principal amount of the
Outstanding Securities of such series represented at the meeting.
(c) At any meeting each Holder of a Security of such series
or proxy shall be entitled to one vote for each $1 (or the equivalent thereof)
principal amount of the Outstanding Securities of such series held or
represented by him; provided, however, that no vote shall be cast or counted at
any meeting in respect of any Security challenged as not Outstanding and ruled
by the chairman of the meeting to be not Outstanding. The chairman of the
meeting shall have no right to vote, except as a Holder of a Security of such
series or proxy.
(d) Any Meeting of Holders of Securities of any series duly
called pursuant to Section 13.02 at which a quorum is present may be adjourned
from time to time by Persons entitled to vote a majority in principal amount of
the Outstanding Securities of such series represented at the meeting; and the
meeting may be held as so adjourned without further notice.
SECTION 13.06. Counting Votes and Recording -Action of
Meetings. The vote upon any resolution submitted to any meeting of Holders of
Securities of any series shall be by written ballots on which shall be
subscribed the signatures of the Holders of Securities of such series or of
their representatives by proxy and the principal amounts and serial numbers of
the Outstanding Securities of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in duplicate of all votes cast at the meeting. A record, at least in
duplicate, of the proceedings of each meeting of Holders of Securities of any
series shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 13.02 and, if
applicable, Section 13.04. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
IN WITNESS THEREOF, the parties hereto have caused this Indenture to be duly
executed, and their respective corporate seals to be hereunto affixed and
attested, of the day and year first above written.
ASHLAND OIL, INC.,
by
---------------------------------
Title: Assistant Treasurer
Attest:
- -------------------------------------
Assistant Secretary
CITIBANK, N.A.,
by
---------------------------------
Title: Vice President
Attest:
- -------------------------------------
Assistant Secretary
EXHIBIT A
[FORMS OF CERTIFICATION]
EXHIBIT A.l
(FORM OF CERTIFICATE TO BE GIVEN BY
PERSON ENTITLED TO RECEIVE BEARER SECURITY]
CERTIFICATE
ASHLAND OIL, INC.
[Insert title or sufficient description
of Securities to be delivered]
This is to certify that as of the date hereof, and except as
set forth below, the above-captioned Securities held by you for our account (i)
are owned by a person that is not a United States person, (ii) are owned by a
United States person that is (A) the foreign branch of a United States financial
institution (as defined in U.S. Treasury Regulations Section l.165-l2(c)(1)(v))
(a "financial institution") purchasing for its own account or for resale, or (B)
a United States person who acquired the Securities through the foreign branch of
a financial institution and who holds the Securities through the financial
institution on the date hereof (and in either case (A) or (B), the financial
institution hereby agrees to comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and
the regulations thereunder), or (iii) are owned by a financial institution for
purposes of resale during the Restricted Period (as defined in U.S. Treasury
Regulations Section 1.163-5(c) (2) (i) (D) (7)). In addition, financial
institutions described in clause (iii) of the preceding sentence (whether or not
also described in clause (i) or (ii)) certify that they have not acquired the
Securities for purposes of resale directly or indirectly to a United States
person or to a person within the United States or its possessions.
As used herein, "United States person" means any citizen or
resident of the United States, any corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof, or any estate or trust the income taxation of which is
subject to United States Federal income regardless of its source, and "United
States" means the United States of America (including the states and the
District of Columbia), its territories, its possessions, the Commonwealth of
Puerto Rico and other areas subject to its jurisdiction.
We undertake to advise you by telex if the above statement as
to beneficial ownership is not correct on the date of delivery of the
above-captioned Securities in bearer form as to all of such Securities.
We understand that this certificate may be required in
connection with certain tax legislation in the United States. If administrative
or legal proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Dated: __________________ 2001
[To be dated on the earlier of the first Interest Payment Date and the date of
the delivery of the Securities in definitive form]
[Name of Person Entitled to
Receive Bearer Security]
--------------------------------
(Authorized Signature)
Name:
Title:
EXHIBIT A.2
[FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR
AND CEDEL S.A. IN CONNECTION WITH THE
EXCHANGE OF A PORTION OF A TEMPORARY GLOBAL SECURITY]
CERTIFICATE
ASHLAND OIL, INC.
[Insert title or sufficient description
of Securities to be delivered)
This is to certify with respect to $___________ principal
amount of the above-captioned Securities (i) that we have received from each of
the persons appearing in our records as persons entitled to a portion of such
principal amount (our "Qualified Account Holders") a certificate with respect to
such portion substantially in the form attached hereto, and (ii) that we are not
submitting herewith for exchange any portion of the temporary global Security
representing the above-captioned Securities excepted in such certificates.
We further certify that as of the date hereof we have not
received any notification from any of our Qualified Account Holders to the
effect that the statements made by such Qualified Account Holders with respect
to any portion of the part submitted herewith for exchange are no longer true
and cannot be relied upon as of the date hereof.
Date: __________ 2001
[To be dated no earlier than the Exchange Date]
---------------------------------------------
[MORGAN GUARANTY TRUST COMPANY OF NEW YORK, BRUSSELS OFFICE, as Operator of the
Euroclear System]
[CEDEL S.A.]
by
(Authorized Signature)
Name:
Title:
EXHIBIT A.3
[FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR
AND CEDEL S.A. TO OBTAIN
INTEREST PRIOR TO AN EXCHANGE DATE)
CERTIFICATE
ASHLAND OIL, INC.
[Insert title or sufficient
---------------------------
description of Securities]
-------------------------
We confirm that the interest payable on the Interest Payment
Date on [Insert Date] will be paid to each of the persons appearing in our
records as being entitled to interest payable on such date from whom we have
received a written certification, dated not earlier than such Interest Payment
Date, substantially in the form attached hereto. We undertake to retain
certificates received from our member organizations in connection herewith for
four years from the end of the calendar year in which such certificates are
received.
We undertake that any interest received by us and not paid as
provided above shall be returned to the Trustee for the above Securities
immediately prior to the expiration of two years after such Interest Payment
Date in order to be repaid by such Trustee to the above issuer at the end of two
years after such Interest Payment Date.
Date: ___________ 2001 [To be dated on or after the relevant Interest
Payment Date]
[MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
BRUSSELS OFFICE, as
Operator of the Euroclear
System] [CEDEL S.A.]
by
(Authorized Signature)
Name:
Title:
EXHIBIT A.4
[FORM OF CERTIFICATE TO BE GIVEN BY BENEFICIAL OWNERS
TO OBTAIN INTEREST PRIOR TO AN EXCHANGE DATE]
CERTIFICATE
ASHLAND OIL, INC.
[Insert title or sufficient
description of Securities]
This is to certify that as of the Interest Payment Date on
[Insert Date] and except as provided in the third paragraph hereof, the
above-captioned Securities held by you for our account are beneficially owned by
(i) a person that is not a United States person, (ii) a United States person
that is (A) the foreign branch of a United States financial institution (as
defined in U.S. Treasury Regulations Section 1.l65-l2(c)(l)(v)) (a "financial
institution") purchasing for its own account or for resale, or (B) a United
States person who acquired the Securities through the foreign branch of a
financial institution and who holds the Securities through the financial
institution on the date hereof (and in either case (A) or (B), the financial
institution hereby agrees to comply with the requirements of Section 165(j) (3)
(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the
regulations thereunder), or (iii) a financial institution for purposes of resale
during the Restricted Period (as defined in U.S. Treasury Regulations Section
1.163-5(c) (2) (i) (D) (7)). In addition, if the beneficial owner is a financial
institution described in clause (iii) of the preceding sentence (whether or not
also described in clause (i) or (ii)) it certifies that it has not acquired the
Securities for purposes of resale directly or indirectly to a United States
person or to a person within the United States or its possessions.
As used herein, "United States person" means any citizen or
resident of the United States, any corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof, or any estate or trust the income of which is subject to
United States Federal income taxation regardless of its source, and "United
States" means the United States of America (including the states and the
District of Columbia), its territories, its possessions, the Commonwealth of
Puerto Rico and other areas subject to its jurisdiction.
This certificate excepts and does not relate to U.S.
$__________ principal amount of the above-captioned Securities appearing in your
books as being held for our account as to which we are not yet able to certify
and as to which we understand interest cannot be credited unless and until we
are able to so certify.
We understand that this certificate may be required in
connection with certain tax legislation in the United States. If administrative
or legal proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Date: _________ 2001
To be dated on or after the
15th day before the relevant
Interest Payment Date]
[Name of Person Entitled to
Receive interest]
-----------------------------
(Authorized Signature)
Name:
Title:
ASHLAND INC.
and
U. S. BANK NATIONAL ASSOCIATION
Trustee
Indenture
Dated as of ___________ ____, 2001
Debt Securities
ASHLAND INC.
Reconciliation and Tie Between
------------------------------
Trust Indenture Act of 1939 and
-------------------------------
Indenture, dated as of */
-------------------------
Trust Indenture Indenture Section
Act Section
(S)310 (a)(1) ....................................... 6.09
(a)(2) ....................................... 6.09
(a)(3) ....................................... Not Applicable
(a)(4) ....................................... Not Applicable
(b) .......................................... 6.08
6.10
(S)311 (a) .......................................... 6.13(a)
(b) .......................................... 6.13(b)
(b)(2) ....................................... 7.03(a)(2)
7.03(b)
(S)312 (a) .......................................... 7.01
7.02(a)
(b) .......................................... 7.02(b)
(c) .......................................... 7.02(c)
(S)313 (a) .......................................... 7.03(a)
(b) .......................................... 7.03(b)
(c) .......................................... 7.03(a)
7.03(b)
(d) .......................................... 7.03(c)
(S)3.14(a) .......................................... 7.04
(b) .......................................... Not Applicable
(c)(1) ....................................... 1.02
(c)(2) ....................................... 1.02
(c)(3) ....................................... Not Applicable
(d) .......................................... Not Applicable
(e) .......................................... 1.02
(S)3.15(a) .......................................... 6.01(a)
(b) .......................................... 6.02
7.03(a)(6)
(c) .......................................... 6.01(b)
(d) .......................................... 6.01(c)
(d)(1) ....................................... 6.01(a)(1)
(d)(2) ....................................... 6.01(c)(2)
(d)(3) ....................................... 6.01(c)(3)
(e) .......................................... 5.14
(S)3.16(a) .......................................... 1.01
(a)(1)(A) .................................... 5.02
5.12
(a)(1)(B) .................................... 5.13
(a)(2) ....................................... Not Applicable
(b) .......................................... 5.08
(S)3.17(a)(1) ....................................... 5.03
(a)(2) ....................................... 5.04
(b) .......................................... 10.03
(S)3.18(a) .......................................... 1.07
*/ This reconciliation and tie shall not, for any purpose, be deemed to be a
- -- part of the Indenture.
TABLE OF CONTENTS
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.01 DEFINITIONS ................................ 1
Act .................................................. 2
Affiliate ............................................ 2
Authenticating Agent ................................. 2
Authorized Newspaper ................................. 2
Bearer Security ...................................... 2
Board of Directors ................................... 2
Board Resolution ..................................... 2
Business Day ......................................... 2
Change in Control .................................... 2
Commission ........................................... 3
Company .............................................. 3
Company Request ...................................... 3
Corporate Trust Office ............................... 3
Corporation .......................................... 3
Coupon or coupon ..................................... 3
Defaulted Interest ................................... 3
Depositary ........................................... 3
Dollar ............................................... 3
ECU .................................................. 3
Euroclear ............................................ 3
European Communities ................................. 4
Event of Default ..................................... 4
Foreign Currency ..................................... 4
Full Rating Category ................................. 4
Global Security ...................................... 4
Holder or holder ..................................... 4
Indenture ............................................ 4
Interest Payment Date ................................ 4
Maturity ............................................. 4
Officers' Certificate ................................ 4
Opinion of Counsel ................................... 4
Outstanding or outstanding ........................... 4
Paying Agent ......................................... 5
Person or person ..................................... 5
Place of Payment ..................................... 5
Predecessor Security ................................. 5
Redemption Date ...................................... 6
Redemption Price ..................................... 6
Registered Security .................................. 6
Regular Record Date .................................. 6
Required Currency .................................... 6
Responsible Officer .................................. 6
Securities ........................................... 6
Security Register and Security Registrar ............. 6
Special Record Date .................................. 6
Stated Maturity ...................................... 6
Subsidiary ........................................... 7
Trustee .............................................. 7
Trust Indenture Act .................................. 7
United States ........................................ 7
United States Alien .................................. 7
i
Vice President .......................................................... 7
Voting Stock ............................................................ 7
SECTION 1.02. COMPLIANCE CERTIFICATES AND OPINIONS ........................ 7
SECTION 1.03. FORM OF DOCUMENTS DELIVERED TO TRUSTEE ...................... 8
SECTION 1.04. ACTS OF HOLDERS ............................................. 8
SECTION 1.05. NOTICES, ETC. TO TRUSTEE AND COMPANY ........................ 10
SECTION 1.06. NOTICE TO HOLDERS; WAIVERS .................................. 10
SECTION 1.07. CONFLICT WITH TRUST INDENTURE ACT ........................... 11
SECTION 1.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS .................... 11
SECTION 1.09. SUCCESSORS AND ASSIGNS ...................................... 12
SECTION 1.10. SEPARABILITY CLAUSE ......................................... 12
SECTION 1.11 BENEFITS OF INDENTURE ....................................... 12
SECTION 1.12. GOVERNING LAW ............................................... 12
SECTION 1.13. LEGAL HOLIDAYS .............................................. 12
SECTION 1.14. MONEYS OF DIFFERENT CURRENCIES TO BE SEGREGATED ............. 12
SECTION 1.15. PAYMENT TO BE IN PROPER CURRENCY ............................ 12
SECTION 1.16. LANGUAGE OF NOTICES, ETC .................................... 13
ARTICLE TWO
SECURITY FORMS
SECTION 2.01 FORMS GENERALLY ............................................. 13
SECTION 2.02. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION ............. 13
SECTION 2.03. SECURITIES IN GLOBAL FORM ................................... 14
ARTICLE THREE
THE SECURITIES
SECTION 3.01. AMOUNT UNLIMITED, ISSUABLE IN SERIES ........................ 14
SECTION 3.02. DENOMINATIONS ............................................... 17
SECTION 3.03. EXECUTION, AUTHENTICATION DELIVERY AND DATING ............... 17
SECTION 3.04. TEMPORARY SECURITIES ........................................ 19
SECTION 3.05. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE ......... 21
SECTION 3.06. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES ............ 25
ii
SECTION 3.07. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED .................26
SECTION 3.08. PERSONS DEEMED OWNERS ..........................................27
SECTION 3.09. CANCELLATION ...................................................28
SECTION 3.10. COMPUTATION OF INTEREST ........................................28
SECTION 3.11. COMPLIANCE WITH CERTAIN LAWS AND REGULATIONS ...................28
SECTION 3.12. MEDIUM-TERM SECURITIES .........................................28
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 4.01. SATISFACTION AND DISCHARGE OF INDENTURE ........................29
SECTION 4.02. APPLICATION OF TRUST MONEY .....................................30
SECTION 4.03. SATISFACTION, DISCHARGE AND DEFEASANCE OF
SECURITIES OF ANY SERIES .......................................30
SECTION 4.04. REINSTATEMENT ..................................................32
SECTION 4.05. DEFINITIONS ....................................................32
ARTICLE FIVE
REMEDIES
SECTION 5.01. EVENTS OF DEFAULT ..............................................33
SECTION 5.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT .............34
SECTION 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE .........................................35
SECTION 5.04. TRUSTEE MAY FILE PROOFS OF CLAIM ...............................36
SECTION 5.05. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES ....37
SECTION 5.06. APPLICATION OF MONEY COLLECTED .................................37
SECTION 5.07. LIMITATION ON SUITS ............................................37
SECTION 5.08. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL PREMIUM
AND INTEREST ...................................................38
SECTION 5.09. RESTORATION OF RIGHTS AND REMEDIES .............................38
SECTION 5.10. RIGHTS AND REMEDIES CUMULATIVE .................................38
SECTION 5.11. DELAY OR OMISSION NOT WAIVER ...................................39
SECTION 5.12. CONTROL BY HOLDERS .............................................39
SECTION 5.13. WAIVER OF PAST DEFAULTS ........................................39
SECTION 5.14. UNDERTAKING FOR COSTS ..........................................39
iii
SECTION 5.15. WAIVER OF STAY OR EXTENSION LAWS ............................ 40
ARTICLE SIX
THE TRUSTEE
SECTION 6.01. CERTAIN DUTIES AND RESPONSIBILITIES ......................... 40
SECTION 6.02. NOTICE OF DEFAULTS .......................................... 41
SECTION 6.03. CERTAIN RIGHTS OF TRUSTEE ................................... 41
SECTION 6.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES ...... 42
SECTION 6.05. MAY HOLD SECURITIES ......................................... 42
SECTION 6.06. MONEY HELD IN TRUST ......................................... 43
SECTION 6.07. COMPENSATION AND REIMBURSEMENT .............................. 43
SECTION 6.08. DISQUALIFICATION; CONFLICTING INTERESTS ..................... 43
SECTION 6.09. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY ..................... 48
SECTION 6.10. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR ........... 48
SECTION 6.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR ...................... 49
SECTION 6.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.. 50
SECTION 6.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY ........... 50
SECTION 6.14. APPOINTMENT OF AUTHENTICATING AGENT ......................... 54
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.01. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.... 56
SECTION 7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS ...... 56
SECTION 7.03. REPORTS BY TRUSTEE .......................................... 57
SECTION 7.04. REPORTS BY COMPANY .......................................... 58
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 8.01. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS ........ 59
SECTION 8.02. RIGHTS AND DUTIES OF SUCCESSOR CORPORATION .................. 59
iv
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS ........... 60
SECTION 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS .............. 61
SECTION 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES ......................... 62
SECTION 9.04. EFFECT OF SUPPLEMENTAL INDENTURES ............................ 63
SECTION 9.05. CONFORMITY WITH TRUST INDENTURE ACT .......................... 63
SECTION 9.06. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES ........... 63
ARTICLE TEN
COVENANTS
SECTION 10.01. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST .................. 63
SECTION 10.02. MAINTENANCE OF OFFICE OR AGENCY ............................. 63
SECTION 10.03. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST ........... 64
SECTION 10.04. DISQUALIFICATION; CONFLICTING INTERESTS ..................... 66
SECTION 10.05. WAIVER OF CERTAIN COVENANTS ................................. 66
SECTION 10.06. ADDITIONAL AMOUNTS .......................................... 66
SECTION 10.07. NO LIEN CREATED, ETC ........................................ 67
SECTION 10.08. LIMITATION ON LIENS ......................................... 67
SECTION 10.09. LIMITATIONS ON SALE AND LEASE-BACK .......................... 69
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 11.01. APPLICABILITY OF ARTICLE .................................... 70
SECTION 11.02. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED ........... 70
SECTION 11.03. NOTICE OF REDEMPTION ........................................ 70
SECTION 11.04. DEPOSIT OF REDEMPTION PRICE ................................. 71
SECTION 11.05. SECURITIES PAYABLE ON REDEMPTION DATE ....................... 71
SECTION 11.06. SECURITIES REDEEMED IN PART ................................. 72
SECTION 11.07. RIGHT TO REQUIRE REPURCHASE OF SECURITIES BY THE COMPANY
UPON CHANGE IN CONTROL AND DECLINE IN DEBT RATING .......................... 72
v
ARTICLE TWELVE
SINKING FUNDS
SECTION 12.01. APPLICABILITY OF ARTICLE ................................. 74
SECTION 12.02. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES .... 74
SECTION 12.03. REDEMPTION OF SECURITIES FOR SINKING FUND ................ 74
ARTICLE THIRTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 13.01. PURPOSES FOR WHICH MEETINGS MAY BE CALLED ................ 75
SECTION 13.02. CALL, NOTICE AND PLACE OF MEETINGS ....................... 75
SECTION 13.03. PERSONS ENTITLED TO VOTE AT MEETINGS ..................... 75
SECTION 13.04. QUORUM; ACTION ........................................... 76
SECTION 13.05. DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT
OF MEETINGS ............................................................. 76
SECTION 13.06. COUNTING VOTES AND RECORDING ACTION OF MEETINGS .......... 77
vi
INDENTURE, dated as of _______________ ___, 2001, between
ASHLAND INC., a corporation duly organized and existing under the
laws of the Commonwealth of Kentucky (herein called the
"Company"), having its principal office at 50 E. RiverCenter
Blvd., Covington, Kentucky 41011 and U. S. Bank National
Association, a national banking association duly incorporated and
existing under the laws of the United States (herein called the
"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as provided in this Indenture.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities or of series thereof, as
follows:
ARTICLE ONE
Definitions and Other Provisions
--------------------------------
of General Application
----------------------
SECTION 1.01. Definitions. For all purposes of this Indenture,
-----------
except as otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as
are generally accepted at the date of such computation; and
(4) 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.
Certain terms, used solely or principally within an Article of this
Indenture, may be defined in that Article.
"Act", when used with respect to any Holder, has the meaning specified
in Section 1.04.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"controls" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 6.14 to act on behalf of the Trustee to authenticate
securities of one or more series.
"Authorized Newspaper" means a newspaper of general circulation in the
place of publication, printed in the English Language or official language of
the country of publication and customarily published on each Business Day,
whether or not published on Saturdays, Sundays or holidays. Whenever successive
weekly publications in an Authorized Newspaper are authorized or required
hereunder, they may be made (unless otherwise expressly provided herein) on the
same or different days of the week and in the same or different Authorized
Newspapers.
"Bearer Security" means any Security which is not registered in the
Security Register as to principal (including without limitation any Security in
temporary or definitive global bearer form).
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment or
place of publication, means any day which is not a day on which banking
institutions generally in that Place of Payment or place of publication are
authorized or obligated by or pursuant to law, regulation or executive order to
close or as specified for a series of Securities pursuant to Section 3.01 or as
specified for any Security in such Security.
"Change in Control" has the meaning specified in Section 11.07.
2
"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 of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation, and shall also mean any obligor
upon the Securities authenticated and delivered under this Indenture.
"Company Request", "Request of the Company", "Company Order" or "Order
of the Company" means a written request or order signed in the name of the
Company by its Chairman of the Board, the Vice Chairman of the Board, its
President or a Vice President, and by its Treasurer, an Assistant Treasurer, its
Controller, an Assistant Controller, its Secretary or an Assistant Secretary,
and delivered to the Trustee.
"Corporate Trust Office" means the office of the Trustee in Cincinnati,
Ohio, at which at any particular time its corporate trust business shall be
principally administered, which office at the date hereof is located at 425
Walnut Street, 6th Floor, Cincinnati, OH 45202, Attn: Corporate Trust
Department, except that, with respect to presentation of Securities for payment
or registration of transfers and exchanges and the location of the Security
Registrar, such term means the office or agency of the Trustee in said city at
which at any particular time its corporate agency business shall be conducted,
which at the date hereof is located at 425 Walnut Street, 6th Floor, Cincinnati,
OH 45202, Attn: Corporate Trust Department.
"Corporation" includes corporations, associations, companies and
business trusts.
"Coupon" or "coupon" means any interest coupon appertaining to a
Bearer Security.
"Defaulted Interest" has the meaning specified in Section 3.07.
"Depositary" means, with respect to the Securities of any series
issuable or issued in whole or in part in the form of one or more Global
Securities, the Person designated as Depositary by the Company pursuant to
Section 3.01 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
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.
"Euroclear" means the operator of the Euroclear System.
3
"European Communities" means the European Economic Community, the
European Coal and Steel Community and the European Atomic Energy Community.
"Event of Default" has the meaning specified in Section 5.01.
"Foreign Currency" means a currency issued by the government of any
country other than the United States of America.
"Full Rating Category" has the meaning specified in Section 11.07.
"Global Security" means a Registered Security or a Bearer Security
evidencing all or part of a series of Securities issued to the Depositary for
such series in accordance with Section 3.03.
"Holder" or "holder" means, with respect to a Registered Security, the
Person in whose name at the time a particular Registered Security is registered
in the Security Register and, with respect to a Bearer Security and/or Coupon,
the bearer thereof.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
and shall include the terms of particular series of Securities established as
contemplated by Section 3.01.
"Interest Payment Date", when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the Vice Chairman of the Board, the President or any Vice President,
and by the Treasurer, the Controller, the Secretary or any Assistant Treasurer,
Assistant Controller or Assistant Secretary, of the Company, and delivered to
the Trustee. Each such Officers' Certificate shall contain the statements
provided in Section 1.02, if applicable.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for or an employee of the Company and who shall be reasonably acceptable
to the Trustee. Each Opinion of Counsel shall contain the statements provided in
Section 1.02, if applicable.
"Outstanding" or "outstanding", when used with respect to Securities,
means, as of the date of determination, all Securities theretofore authenticated
and delivered under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
4
(ii) Securities for whose payment or redemption money in the
necessary amount and in the required currency or currency unit has been
theretofore deposited with the Trustee or any Paying Agent (other than the
Company) in trust or set aside and segregated in trust by the Company (if
the Company shall act as its own Paying Agent) for the Holders of such
Securities; provided that, if such Securities are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made; and
(iii) Securities which have been paid pursuant to Section 3.06 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
- -------- -------
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or whether a
quorum is present at a meeting of Holders of Outstanding Securities or the
number of votes entitled to be cast by each Holder of a Security in respect of
such security at any such meeting (1) the principal amount of a Security
denominated in a Foreign Currency or currency unit shall be the Dollar
equivalent (as determined by the Company in good faith) as of the date of
original issuance of such Security of the principal amount of such Security and
(ii) Securities owned by the Company or any other obligor upon the Securities or
any Affiliate of the Company or of such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, or upon any such determination as to the
presence of a quorum, only Securities which the Trustee knows to be so owned
shall be so disregarded. Securities so owned which have been pledged in good
faith may be regarded as Outstanding if the pledge 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 Company or any other obligor upon the
Securities or any Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest, if any, on any Securities on
behalf of the Company.
"Person" or "person" means any individual, corporation, partnership,
joint venture, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Place of Payment", when used with respect to the Securities of any
series, means the place or places where, subject to the provisions of Section
10.02, the principal of (and premium, if any) and interest on the Securities of
that series are payable as specified in accordance with Section 3.01.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
Particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.06 in
5
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security or a
Security to which a mutilated, destroyed, lost or stolen coupon appertains shall
be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen
Security or the Security to which the mutilated, destroyed, lost or stolen
coupon appertains, as the case may be.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price, in the currency or currency unit in which such
Security is payable, at which it is to be redeemed pursuant to this Indenture.
"Registered Security" means any Security (including without limitation
any Security in temporary or definitive global registered form) which is
registered in the Security Register.
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Registered Securities of any series means the date specified for
that purpose as contemplated by Section 3.01, which date shall be, unless
otherwise specified pursuant to Section 3.01, the fifteenth day preceding such
Interest Payment Date, whether or not such day shall be a Business Day.
"Required Currency" has the meaning specified in Section 1.15.
"Responsible Officer", when used with respect to the Trustee, means
the chairman or any vice chairman of the board of directors, the chairman or any
vice chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, any assistant vice
president, the secretary, any assistant secretary, the treasurer, any assistant
treasurer, the cashier, any assistant cashier, any senior trust officer, any
trust officer or assistant trust officer, the controller or any assistant
controller or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular appropriate trust matter, any other officer
to whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and delivered
under this Indenture.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.05.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 3.07.
"Stated Maturity", when used with respect to any Security (or Coupon,
if any, representing an installment of interest) or any installment of principal
thereof or interest thereon, means the date specified in such Security (or
Coupon) as the fixed date on which the principal of such Security or such
installment of principal or interest is due and payable.
6
"Subsidiary" means any corporation (a) substantially all the property
of which is located, and substantially all the operations of which are
conducted, in the continental United States of America, and (b) of which the
Company, directly or indirectly, owns more than fifty percent (50%) of the
outstanding stock which at the time shall have by the terms thereof ordinary
voting power to elect directors of such corporation, irrespective of whether or
not at the time stock of any other class or classes of such corporation shall
have or might have voting power by reason of the happening of any contingency,
or (c) any such corporation of which such percentage of shares of outstanding
stock of the character described in the foregoing clause (b) shall at the time
be owned, directly or indirectly, by the Company and one or more Subsidiaries as
defined in the foregoing clauses (a) and (b) or by one or more such
Subsidiaries.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall 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
Securities of that series.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed, except as provided
in Section 9.05.
"United States" means the United States of America (including the
states and the District of Columbia), its territories, its possessions, the
Commonwealth of Puerto Rico and other areas subject to its jurisdiction.
"United States Alien" means any Person who, for United States Federal
income tax purposes, is a foreign corporation, a nonresident alien individual, a
nonresident alien fiduciary of a foreign estate or trust, or a foreign
partnership one or more of the members of which is, for United States Federal
income tax purposes, a foreign corporation, a nonresident alien individual or a
nonresident alien fiduciary of a foreign estate or trust.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
"Voting Stock" means stock of any class or classes (however
designated) the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of a majority of the directors
(or persons performing similar functions) of the corporation, association or
other business entity in question, even though the right so to vote is at the
time suspended by reasons of the happening of such a contingency.
SECTION 1.02. Compliance Certificates and Opinions. Except as
------------------------------------
otherwise expressly provided by this Indenture, upon any application or request
by the Company to the Trustee to take any action under any provision of this
Indenture, the Company shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with and an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have
7
been complied with, except that in the case of any such application or request
as to which the furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular application or request,
no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 1.03. Form of Documents Delivered to Trustee. In any case
--------------------------------------
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.04. Acts of Holders. (a) Any request, demand, authorization,
---------------
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by agent duly appointed in writing, or by any
8
Person duly authorized by means of any written certification, proxy or other
authorization furnished by a Depositary. If Securities of a series are issuable
as Bearer Securities, any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders of such the record of Holders of Securities of such series voting in
series may, alternatively, be embodied in and evidenced by the record of Holders
of Securities of such series voting in favor thereof, either in person or by
proxies duly appointed in writing, at any meeting of Holders of Securities of
such series duly called and held in accordance with the provisions of Article
Thirteen, or a combination of such instruments and any such record. Except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments or record are delivered to the Trustee and, where
it is hereby expressly required, to the Company. Such instrument or instruments
or record (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments or so voting at any such meeting or, in the case of the Depositary,
furnishing the written certification, proxy or other authorization pursuant to
which such instrument or instruments are signed. Proof of execution of any such
instrument or of a writing appointing any such agent or authorizing any such
Person or any such written certification or proxy shall be sufficient for any
purpose of this Indenture and (subject to Section 6.01) conclusive in favor of
the Trustee and the Company, if made in the manner provided in this Section. The
record of any meeting of Holders of Securities shall be proved in the manner
provided in Section 13.06.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The principal amount and serial numbers of Bearer Securities held
by any Person, and the date of holding the same, may be proved by the production
of such Bearer Securities or by a certificate executed by any trust company,
bank, banker or other depositary, wherever situated, showing that at the date
therein mentioned such Person had on deposit with such depositary, or exhibited
to it, the Bearer Securities therein described; or such facts may be proved by
the certificate or affidavit of the Person holding such Bearer Securities, if
such certificate or affidavit is deemed by the Trustee to be satisfactory. The
Trustee and the Company may assume that such ownership of any Bearer Security
continues until (1) another certificate or affidavit bearing a later date issued
in respect of the same Bearer Security is produced, (2) such Bearer Security is
produced to the Trustee by some other Person, (3) such Bearer Security is
surrendered in exchange for a Registered Security or (4) such Bearer Security is
no longer Outstanding.
(d) The fact and date of execution of any such instrument or writing
pursuant to clause (c) above, the authority of the Person executing the same and
the principal amount and serial numbers of Bearer Securities held by the Person
so executing such instrument or writing and the date of holding the same may
also be proved in any other manner which the Trustee
9
deems sufficient; and the Trustee may in any instance require further proof with
respect to any of the matters referred to in this clause.
(e) The principal amount and serial numbers of Registered Securities
held by any Person and the date of holding the same shall be proved by the
Security Register.
(f) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of a Holder shall bind every future Holder of the same
Security and/or Coupon and the Holder of every Security and/or Coupon issued
upon the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by the
Trustee or the Company in reliance thereon, whether or not notation of such
action is made upon such Security and/or Coupon.
(g) If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company may,
at its option, by or pursuant to a Board Resolution, fix in advance a record
date for the determination of Holders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other Act, but the Company
shall have no obligation to do so. If such a record date is fixed, such request,
demand, authorization, direction, notice, consent, waiver or other Act may be
given before or after such record date, but only the Holders of record at the
close of business on such record date shall be deemed to be Holders for the
purposes of determining whether Holders of the requisite proportion of
Outstanding Securities have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act, and for
that purpose the Outstanding Securities shall be computed as of such record
date; provided that no such authorization, agreement or consent by the holders
--------
on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than six months after the
record date.
SECTION 1.05. Notices, etc. to Trustee and Company. Any request,
------------------------------------
demand, authorization, direction, notice, consent, waiver or Act of Holders or
other document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be made, given,
furnished or filed in writing to or with the Trustee at its Corporate Trust
Office, Attention: Corporate Trust Administration and unless otherwise
herein expressly provided, any such document shall be deemed to be
sufficiently made, given, furnished or filed upon its receipt by a
Responsible Officer of the Trustee assigned to its Corporate Trust
Administration, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this instrument or at any other address previously
furnished in writing to the Trustee by the Company, Attention: Treasurer,
with a copy to General Counsel.
SECTION 1.06. Notice to Holders; Waiver. Where this Indenture provides
-------------------------
for notice to Holders of any event:
10
(i) if any of the Securities affected by such event are
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 affected by such event, at
his address as it appears in the Security Register, within the time
prescribed for the giving of such notice, and
(ii) if any of the Securities affected by such event are
Bearer Securities, such notice shall be sufficiently given (unless
otherwise herein expressly provided or unless otherwise specified in
such Securities) if published once in an Authorized Newspaper in New
York City and London and such other cities as shall be specified with
respect to such Securities and mailed to such Persons whose names and
addresses were previously filed with the Trustee within the two
preceding years pursuant to Section 7.03(d), within the time prescribed
for the giving of such notice.
In case by reason of the suspension of regular mail service
or by reason of any other cause it shall be impracticable to give such notice to
Holders of Registered Securities by mail, then such notification as shall be
made with the approval of the Trustee shall constitute a sufficient notification
for every purpose hereunder. In any case where notice to Holders of Registered
Securities is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder of a Registered
Security shall affect the sufficiency of such notice with respect to other
Holders of Registered Securities or the sufficiency of any notice to Holders of
Bearer Securities given as provided herein.
In case by reason of the suspension of publication of any
Authorized Newspaper or Authorized Newspapers or by reason of any other cause it
shall be impracticable to publish any notice to Holders of Bearer Securities as
provided above, then such notification to Holders of Bearer Securities as shall
be given with the approval of the Trustee shall constitute sufficient notice to
such Holders for every purpose hereunder. Neither the failure to give notice by
publication to Holders of Bearer Securities as provided above, nor any defect in
any notice so published, shall affect the sufficiency of any notice to Holders
of Registered Securities given as provided herein.
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 of Securities 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.
SECTION 1.07. Conflict with Trust Indenture Act. If any
---------------------------------
provision hereof limits, qualifies or conflicts with another provision hereof
which is required to be included in this Indenture by any of the provisions of
the Trust Indenture Act, such required provision shall control.
SECTION 1.08. Effect of Headings and Table of Contents. The
----------------------------------------
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
11
SECTION 1.09. Successors and Assigns. All covenants and agreements in this
----------------------
Indenture by the Company shall bind its successors and assigns, whether so
expressed or not.
SECTION 1.10. Separability Clause. In case any provision in this Indenture
-------------------
or in the Securities or Coupons shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 1.11. Benefits of Indenture. Nothing in this Indenture or in the
---------------------
Securities or Coupons, express or implied, shall give to any Person, other than
the parties hereto and their successors hereunder and the Holders, any benefit
or any legal or equitable right, remedy or claim under this Indenture.
SECTION 1.12. Governing Law. This Indenture and the Securities and Coupons
-------------
shall be governed by and construed in accordance with the laws of the State of
New York.
SECTION 1.13. Legal Holidays. Except as otherwise specified as contemplated
--------------
by Section 3.01, in any case where any Interest Payment Date, Redemption Date or
Stated Maturity of any Security shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or of the
Securities or Coupons, if any) payment of interest or principal (and premium, if
any) need not be made at such Place of Payment on such date, but may be made on
the next succeeding Business Day at such Place of Payment with the same force
and effect as if made on the Interest Payment Date or Redemption Date, or at the
Stated Maturity, and, if so made, no interest shall accrue for the period from
and after such Interest Payment Date, Redemption Date or Stated Maturity, as the
case may be, to the next succeeding Business Day at such Place of Payment.
SECTION 1.14. Moneys of Different Currencies to be Segregated. The Trustee
-----------------------------------------------
shall segregate moneys, funds and accounts held by the Trustee hereunder in one
currency (or unit thereof) from any moneys, funds or accounts in any other
currencies (or units thereof) notwithstanding any provision herein which would
otherwise permit the Trustee to commingle such amounts.
SECTION 1.15. Payment to be in Proper Currency. In the case of any Security
--------------------------------
denominated in any particular currency or currency unit (the "Required
Currency"), except as otherwise provided herein, therein or in or pursuant to
the related Board Resolution or supplemental indenture, the obligation of the
Company to make any payment of principal, premium or interest thereon shall not
be discharged or satisfied by any tender by the Company, or recovery by the
Trustee, in any currency or currency unit other than the Required Currency,
except to the extent that such tender or recovery shall result in the Trustee
timely holding the full amount of the Required Currency then due and payable. If
any such tender or recovery is made in other than the Required Currency, the
Trustee may take such actions as it considers appropriate to exchange such other
currency or currency unit for the Required Currency. The costs and risks of any
such exchange, including without limitation the risks of delay and exchange rate
fluctuation, shall be borne by the Company, the Company shall remain fully
liable for any shortfall or delinquency in the full amount of the Required
Currency then due and payable and in no circumstances shall the Trustee be
liable therefor. The Company hereby waives any defense of payment based upon any
such tender or recovery which is not in the
12
Required Currency, or which, when exchanged for the Required Currency by the
Trustee, is less than the full amount of the Required Currency then due and
payable.
SECTION 1.16. Language of Notices, etc. Any request, demand, authorization,
------------------------
direction, notice, consent or waiver required or permitted under this Indenture
shall be in the English language, except that any published notice may be in an
official language of the country of publication.
ARTICLE TWO
Security Forms
--------------
SECTION 2.01. Forms Generally. The Securities of each series and the
---------------
Coupons, if any, to be attached thereto shall be in substantially the forms
(including temporary or definitive global form) as shall be established by or
pursuant to a Board Resolution 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
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Securities and Coupons, if any, as evidenced by their
execution of the Securities and Coupons, if any. If the forms of Securities or
Coupons of any series (or any such temporary or definitive Global Security) are
established by, or by action taken pursuant to a Board Resolution, a copy of the
Board Resolution together with an appropriate record of any action taken
pursuant thereto, which Board Resolution or record of such action shall have
attached thereto a true and correct copy of the forms of Security approved by or
pursuant to such Board Resolution, shall be certified by the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Company Order contemplated by Section 3.03 for the
authentication and delivery of such Securities (or any such temporary or
definitive Global Security) or Coupons.
Unless otherwise specified as contemplated by Section 3.01, Securities in
bearer form shall have interest Coupons attached.
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 2.02. Form of Trustee's Certificate of Authentication. The
-----------------------------------------------
Trustee's certificate of authentication shall be in substantially the following
form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
[full name of Trustee]
as Trustee
13
By _______________________
Authorized Officer
SECTION 2.03. Securities in Global Form. If Securities of a
-------------------------
series are issuable in global form, as specified as contemplated by Section
3.01, then, notwithstanding clause (8) of Section 3.01 and the provisions of
Section 3.02, such Security shall represent such of the Outstanding Securities
of such series as shall be specified therein and may provide that it shall
represent the aggregate amount of Outstanding Securities from time to time
endorsed thereon and that the aggregate amount of Outstanding Securities
represented thereby may from time to time be reduced to reflect exchanges. Any
endorsement of a Security in global form to reflect the amount, or any increase
or decrease in the amount, of Outstanding Securities represented thereby shall
be made by the Trustee in such manner and upon instructions given by such Person
or Persons as shall be specified therein or in the Company Order to be delivered
to the Trustee pursuant to Section 3.03 or Section 3.04. Subject to the
provisions of Section 3.03 and, if applicable, Section 3.04, the Trustee shall
deliver and redeliver any Security in definitive global bearer form in the
manner and upon written instructions given by the Person or Persons specified
therein or in the applicable Company Order. If a Company Order pursuant to
Section 3.03 or 3.04 has been, or simultaneously is, delivered, any instructions
by the Company with respect to endorsement or delivery or redelivery of a
Security in global form shall be in writing but need not comply with Section
1.02 and need not be accompanied by an Opinion of Counsel. The beneficial owner
of a Note represented by a definitive Global Security in bearer form may, upon
no less than 30 days' written notice to the Trustee, given by the beneficial
owner through a Depositary, exchange its interest in such definitive Global
Security for a definitive Bearer Note or Notes, or a definitive Registered Note
or Notes, of any authorized denomination. No individual definitive Bearer Note
will be delivered in or to the United States.
The provisions of the last sentence of the third to the last
paragraph of Section 3.03 shall apply to any Security represented by a Security
in global form if such Security was never issued and sold by the Company and the
Company delivers to the Trustee the Security in global form together with
written instructions (which need not comply with Section 1.02 and need not be
accompanied by an Opinion of Counsel) with regard to the reduction in the
principal amount of Securities represented thereby, together with the written
statement contemplated by the last sentence of the third to the last paragraph
of Section 3.03.
Notwithstanding the provisions of Sections 2.01 and 3.07,
unless otherwise specified as contemplated by Section 3.01, payment of principal
of and any premium and any interest on any Security in definitive global form
shall be made to the Person or Persons specified therein.
ARTICLE THREE
The Securities
--------------
SECTION 3.01. Amount Unlimited; Issuable in Series. The
------------------------------------
aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
14
The Securities may be issued in one or more series. Not all
Securities of any one series need be issued at the same time, and, unless
otherwise provided, a series may be reopened for issuances of additional
Securities of such series. There shall be established in or pursuant to a Board
Resolution and set forth in an Officers' Certificate, or established in one or
more indentures supplemental hereto, prior to the issuance of Securities of any
series,
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from all other Securities);
(2) any limit upon the aggregate principal amount of the
Securities of the series which 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 3.04, 3.05, 3.06, 9.06 or
11.06 and except for any Securities which, pursuant to Section 3.03 are
deemed never to have been authenticated and delivered hereunder);
(3) the date or dates on which the principal (and premium, if
any) of any of the Securities of the series are payable or the method
of determination thereof;
(4) the rate or rates, or the method of determination
thereof, at which any of the Securities of the series shall bear
interest, if any, the date or dates from which such interest shall
accrue, the Interest Payment Dates on which such interest shall be
payable and the Regular Record Date for the interest payable on any
Registered Securities on any Interest Payment Date;
(5) the place or places where the principal of (and premium,
if any) and interest, if any, on any of the Securities and Coupons, if
any of the series shall be payable and the office or agency for the
Securities of the series maintained by the Company pursuant to Section
10.02;
(6) the period or periods within which, the price or prices
at which and the terms and conditions upon which any of the Securities
and any Coupons of the series may be redeemed, in whole or in part, at
the option of the Company;
(7) the terms of any sinking fund and the obligation, if any,
of the Company to redeem or purchase Securities of the series pursuant
to any sinking fund or analogous provisions or at the option of a
Holder thereof and the period or periods within which, the price or
prices at which and the terms and conditions upon which Securities of
the series shall be redeemed or purchased, in whole or in part;
(8) if other than denominations of $1,000, if registered, and
$5,000, if bearer, and in any integral multiple of the applicable
denominations for Securities denominated in Dollars, the denominations
in which the Securities of the series shall be issuable;
(9) if other than the principal amount thereof, the portion
of the principal amount of any of the Securities of the series which
shall be payable upon declaration of acceleration of the Maturity
thereof pursuant to Section 5.02;
15
(10) the application, if any, of Section 4.03, or such other
means of satisfaction and discharge as may be specified for the
Securities and Coupons, if any, for a series;
(11) any deletions or modifications of or additions to the
Events of Default set forth in Section 5.01 or covenants of the Company
set forth in Article Ten pertaining to the Securities of the series
(including without limitation whether the provisions of Section 10.08
or 10.09 shall not be applicable to the Securities of the series);
(12) the forms of the Securities and Coupons, if any, of the
series;
(13) if other than Dollars, the coin or currency or currencies,
or currency unit or units, in which payment of the principal of (and
premium, if any) and interest, if any, on any of the Securities of the
series shall be payable;
(14) if the principal of (and premium, if any) or interest, if
any, on any of the Securities of the series are to be payable at the
election of the Company or a Holder thereof, or under some or all other
circumstances, in a coin or currency or currencies, or currency unit or
units, 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, or the other circumstances under which any of the
Securities are to be so payable, and any provision requiring the Holder
to bear currency exchange costs by deduction from such payments;
(15) if the amount of payments of principal (and premium, if
any) or interest, if any, on any of the Securities of the series may be
determined with reference to an index based on (i) a coin or currency
or currencies, or currency unit or units other than that in which such
Securities are stated to be payable or (ii) any method not inconsistent
with the provisions of this Indenture specified in or pursuant to such
Board Resolution, then in each case (i) and (ii) the manner in which
such amounts shall be determined;
(16) whether the Securities of the series are to be issued as
Registered Securities or Bearer Securities (with or without Coupons);
whether Bearer Securities may be exchanged for Registered Securities of
the series and whether Registered Securities may be exchanged for
Bearer Securities of the series (if permitted by applicable laws and
regulations) and the circumstances under which and the place or places
where any such exchanges, if permitted, may be made; and whether the
Securities of the series shall be issued in whole or in part in the
form of one or more Global Securities and, in such case, the Depositary
for such Global Security or Securities and whether any Global
Securities of the series are to be issuable initially in temporary form
and whether any Global Securities of the series are to be issuable in
definitive form with or without coupons and, if so, whether beneficial
owners of interests in any such definitive Global Security may exchange
such interests for Securities of such series and of like tenor of any
authorized form and denomination and the circumstances under which and
the place or places where any such exchanges may occur, if other than
in the manner provided in Section 3.05;
(17) whether and under what circumstances and with what
procedures and documentation the Company will pay additional amounts on
any of the Securities and Coupons, if any, of the series to any Holder
who is not a U.S. Person (including a
16
definition of such term), in respect of any tax, assessment or governmental
charge withheld or deducted and, if so, whether the Company will have the
option to redeem such Securities rather than pay additional amounts (and
the terms of any such option);
(18) the Person to whom any interest on any Registered
Security of the series shall be payable, if other than the Person in whose
name that Security (or one or more Predecessor Securities) is registered at
the close of business on the Regular Record Date for such interest, the
manner in which, or the Person to whom, any interest on any Bearer Security
of the series shall be payable, if otherwise than upon presentation and
surrender of the Coupons appertaining thereto as they severally mature and
to the extent to which, or the manner in which, any interest payable on a
temporary Global Security on an Interest Payment Date will be paid if other
than in the manner provided in Section 3.04; and
(19) any other terms of any of the Securities of the series.
All Securities of any one series and the Coupons appertaining
to any Bearer Securities of such series shall be substantially identical except,
in the case of Registered Securities, as to denomination and except as may
otherwise be provided in or pursuant to the Board Resolution referred to above
and (subject to Section 3.03) set forth in the Officers' Certificate referred to
above or in any such indenture supplemental hereto.
At the option of the Company, interest on the Registered
Securities of any series that bears interest may be paid by mailing a check to
the address of any Holder as such address shall appear in the Securities
Register.
If any of the terms of the series are established by action
taken pursuant to a Board Resolution, a copy of such Board Resolution shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
SECTION 3.02. Denominations. The Securities of each series
-------------
shall be issuable in such denominations as shall be specified as contemplated by
Section 3.01. In the absence of any such provisions with respect to the
Securities of any series, the Securities of such series denominated in Dollars
shall be issuable in denominations of $1,000, if registered, and $5,000, if
bearer, and in any integral multiple of the applicable denominations. 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 Company executing
the same may determine with the approval of the Trustee.
SECTION 3.03. Execution, Authentication, Delivery and Dating.
----------------------------------------------
The Securities shall be executed on behalf of the Company by manual or facsimile
signatures of its Chairman, its President or any of its Vice Presidents or its
Treasurer, under its corporate seal reproduced thereon attested by the manual or
facsimile signature of its Secretary or one of its Assistant Secretaries. Any
Coupons shall be executed on behalf of the Company by the manual or facsimile
signature of any such officer of the Company.
17
Securities and Coupons bearing the manual or facsimile
signatures of individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery
of such Securities or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any series,
together with any Coupons appertaining thereto, executed by the Company to the
Trustee for authentication, together with a Company Order for the authentication
and delivery of such Securities, and the Trustee in accordance with the Company
Order shall authenticate and deliver such Securities; provided, however, that,
-----------------
in connection with its original issuance, no Bearer Security (including any
temporary Bearer Security issued pursuant to Section 3.04 which is not a Global
Security) shall be mailed or otherwise delivered to any location in the United
States; and provided; further that a Bearer Security may be delivered outside
-----------------
the United States in connection with its original issuance only if the Person
entitled to receive such Bearer Security (including any temporary Bearer
Security issued pursuant to Section 3.04 which is not a Global Security) shall
have furnished a certificate in the form set forth in Exhibit A.1 to this
Indenture, dated on the earlier of the first Interest Payment Date and the date
of the delivery of the Bearer Security in definitive form. If any Security shall
be represented by a definitive Global Security in bearer form, then, for
purposes of this Section and Section 3.04, the notation of a beneficial owner's
interest therein upon original issuance of such Security or upon exchange of a
portion of a temporary Global Security shall be deemed to be delivery in
connection with its original issuance of such beneficial owner's interest in
such definitive Global Security in bearer form. Except as permitted by Section
3.06, the Trustee shall not authenticate and deliver any Bearer Security unless
all appurtenant Coupons for interest then matured have been detached and
canceled.
If the forms or terms of the Securities of the series and any
related Coupons have been established by or pursuant to one or more Board
Resolutions as permitted by Sections 2.01 and 3.01, in authenticating such
Securities, and accepting the additional responsibilities under this Indenture
in relation to such Securities, the Trustee shall be entitled to receive, and
(subject to Section 6.01) shall be fully protected in relying upon, an Opinion
of Counsel stating:
(a) if the forms of such Securities and any Coupons have been
established by or pursuant to a Board Resolution as permitted by
Section 2.01, that such forms have been established in conformity with
the provisions of this Indenture;
(b) if the terms of such Securities and any Coupons have been
or are to be established by or pursuant to a Board Resolution as
permitted by Section 3.01, that such terms (or in the case of the
issuance of Securities pursuant to the next paragraph, the procedures
for determining such terms) have been established in conformity with
the provisions of this Indenture; and
(c) that such Securities, together with any Coupons
appertaining thereto, when authenticated and delivered by the Trustee
and issued by the Company in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute valid and legally
binding obligations of the Company, entitled to the benefits of the
Indenture and enforceable in accordance with their terms, subject, as
to enforcement, to bankruptcy,
18
insolvency, reorganization and other laws of general applicability
relating to or affecting the enforcement of creditors' rights and to
general equity principles.
If such forms or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee. Without limiting the
generality of the foregoing, the Trustee shall not be required to authenticate
Securities denominated in a Foreign Currency if the Trustee reasonably believes
that it will be unable to perform its duties with respect to such Securities.
Each Registered Security shall be dated the date of its
authentication; and each Bearer Security and any Global Security in bearer form
shall be dated as of the date of original issuance of the first Security of such
series to be issued.
No Security or Coupon shall be entitled to any benefit under
this Indenture or be valid or obligatory for any purpose unless there appears on
such Security a certificate of authentication substantially in the form provided
for herein executed by the Trustee by manual signature, and such certificate
upon any Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder. Notwithstanding
the foregoing, if any Security shall have been duly authenticated and delivered
hereunder but never issued and sold by the Company, and the Company' shall
deliver such Security to the Trustee for cancellation as provided in Section
3.09 together with a written statement (which need not comply with Section 1.02
and need not be accompanied by an Opinion of Counsel) stating that such Security
has never been issued and sold by the Company, for all purposes of this
Indenture such Security shall be deemed never to have been authenticated and
delivered hereunder and shall never be entitled to the benefits of this
Indenture.
If the Company shall establish pursuant to Section 3.01 that
the Securities of a series are to be issued in whole or in part in the form of a
Global Security, then the Company shall execute and the Trustee shall in
accordance with this Section and the Company Order with respect to such series,
authenticate and deliver the Global Security that (i) shall represent and shall
be denominated in an aggregate amount equal to the aggregate principal amount of
Outstanding Securities of such series to be represented by the Global Security,
(ii) shall be registered, if in registered form, in the name of the Depositary
for such Global Security or the nominee of such Depositary, and (iii) shall be
delivered by the Trustee to such Depositary or pursuant to such Depositary's
instruction.
Each Depositary designated pursuant to Section 3.01 for a
Global Security in registered form 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 3.04. Temporary Securities. Pending the preparation
--------------------
of definitive Securities of any series, the Company may execute, and upon
Company Order the Trustee shall authenticate and deliver, temporary Securities
which are printed, lithographed, typewritten, mimeographed or otherwise
produced, in any authorized denomination, substantially of the tenor of the
definitive Securities in lieu of which they are issued, in registered form or,
if authorized, in
19
bearer form with one or more Coupons or without Coupons, and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Securities may determine, as evidenced conclusively by
their execution of such Securities. Such temporary Securities may be in global
form.
Except in the case of temporary Global Securities in bearer
form (which shall be exchanged in accordance with the provisions of the
following paragraphs), if temporary Securities of any series are issued, the
Company will cause definitive Securities of that series to be prepared without
unreasonable delay. After the preparation of definitive Securities of such
series, the temporary Securities of such series shall be exchangeable for
definitive Securities of such series upon surrender of the temporary Securities
of such series at the office or agency of the Company maintained pursuant to
Section 10.02 in a Place of Payment for such series for the purpose of exchanges
of Securities of such series, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities of any series (accompanied
by any unmatured Coupons appertaining thereto) the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a like aggregate
principal amount of definitive Securities of the same series and of like tenor
or authorized denominations and having the same terms and conditions; provided,
--------
however, that no definitive Bearer Security shall be delivered in exchange for a
- -------
temporary Registered Security; and provided further that a definitive Bearer
-------- -------
Security shall be delivered in exchange for a temporary Bearer Security only in
compliance with the conditions set forth in Section 3.03.
If temporary Global Securities of any series are issued in bearer form, any such
temporary Global Securities in bearer form shall, unless otherwise provided
therein, be delivered to the London office of a Depositary (the "Common
Depositary"), for the benefit of Euroclear and Clearstream Banking, Societe
Anonyme "Clearstream Luxembourg", for credit to the respective accounts of the
beneficial owners of such Securities (or to such other accounts as they may
direct).
Without unnecessary delay but not later than the date
specified in, or determined pursuant to the terms of, any such temporary Global
Security (but in any event in the case of definitive Securities to be delivered
in bearer form not before the beneficial owners of interests in the temporary
Global Security have provided the certification set forth in Section 3.03) (the
"Exchange Date"), the Company shall deliver to the Trustee definitive
Securities, in aggregate principal amount equal to the principal amount of such
temporary Global Security, executed by the Company. On or after the Exchange
Date such temporary Global Security shall be surrendered by the Common
Depositary to the Trustee, as the Company's agent for such purpose, to be
exchanged, in whole or from time to time in part, for definitive Securities
without charge and the Trustee shall authenticate and deliver, in exchange for
each portion of such temporary Global Security, an equal aggregate principal
amount of definitive Securities of the same series of authorized denominations
and of like tenor as the portion of such temporary Global Security to be
exchanged. The definitive Securities to be delivered in exchange for any such
temporary Global Security in bearer form shall be in bearer form, registered
form, definitive global form (registered or bearer), or any combination thereof,
as specified as contemplated by Section 3.01, and, if any combination thereof is
so specified, as requested by the beneficial owner thereof; provided, however,
-------- -------
that, unless otherwise specified in such temporary Global Security in bearer
form, upon such presentation by the Common Depositary, such temporary Global
Security in bearer form shall be accompanied by a certificate dated the Exchange
Date or a subsequent date and signed by Euroclear as to the portion of such
temporary Global Security in
20
bearer form held for its account then to be exchanged and a certificate dated
the Exchange Date or a subsequent date and signed by Clearstream Luxembourg as
to the portion of such temporary Global Security in bearer form held for its
account then to be exchanged, each in the form set forth in Exhibit A.2 to this
Indenture; and provided further that definitive Bearer Securities shall be
- ---------------- delivered in exchange for a portion of a temporary Global
Security in bearer form only in compliance with the requirements of Section
3.03.
Unless otherwise specified in such temporary Global Security in bearer form, the
interest of a beneficial owner of Securities of a series in a temporary Global
Security in bearer form shall be exchanged for definitive Securities of the same
series and of like tenor following the Exchange Date when the beneficial owner
instructs Euroclear or Clearstream Luxembourg, as the case may be, to request
such exchange on his behalf and delivers to Euroclear or Clearstream Luxembourg,
as the case may be, a certificate in the form set forth in Exhibit A.1 to this
Indenture, dated on the earlier of the first Interest Payment Date and the date
of delivery of the Securities in definitive form, copies of which certificate in
blank shall be available from the offices of Euroclear, Clearstream Luxembourg,
the Trustee, any Authenticating Agent appointed for such series of Securities
and any Paying Agent appointed for such series of Securities. Unless otherwise
specified in such temporary Global Security in bearer form, any such exchange
shall be made free of charge to the beneficial owners of such temporary Global
Security in bearer form, except that a Person receiving definitive Securities
must bear the cost of insurance, postage, transportation and the like in the
event that such Person does not take delivery of such definitive Securities in
person at the offices of Euroclear or Clearstream Luxembourg. The definitive
Securities in bearer form to be delivered in exchange for any portion of a
temporary Global Security in bearer form shall be delivered only outside the
United States.
Until exchanged in full as hereinabove provided, the temporary Securities of any
series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of the same series and of like tenor
authenticated and delivered hereunder, except that, unless otherwise specified
as contemplated by Section 3.01, interest payable on a temporary Global Security
in bearer form on an Interest Payment Date for Securities of such series
occurring prior to the applicable Exchange Date shall be payable to Euroclear
and Clearstream Luxembourg on such Interest Payment Date upon delivery by
Euroclear and Clearstream Luxembourg to the Trustee of a certificate or
certificates in the form set forth in Exhibit A.3 to this Indenture, for credit
without further interest on or after such Interest Payment Date to the
respective accounts of the Persons who are the beneficial owners of such
temporary Global Security in bearer form (or to such other accounts as they may
direct) on such Interest Payment Date and who have each delivered to Euroclear
or Clearstream Luxembourg, as the case may be, a certificate in the form set
forth in Exhibit A.4 to this Indenture. Any interest so received by Euroclear
and Clearstream Luxembourg and not paid as herein provided shall be returned to
the Trustee immediately prior to the expiration of two years after such Interest
Payment Date in order to be repaid to the Company in accordance with Section
10.03.
SECTION 3.05. Registration; Registration of Transfer and Exchange. The
---------------------------------------------------
Company shall cause to be kept at an office or agency to be maintained by the
Company in accordance with Section 10.02 a register (the "Security Register") in
which, subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of Registered Securities and the registration
of transfers of Registered Securities. The Trustee is
21
hereby appointed "Security Registrar" for the purpose of registering
Registered Securities and transfers of Registered Securities as herein provided.
Upon surrender for registration of transfer of any Registered Security
of any series at the office or agency of the Company maintained pursuant to
Section 10.02 for such purpose in a Place of Payment for such series, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Registered
Securities of the same series of any authorized denominations and of a like
aggregate principal amount and tenor and having the same terms and conditions.
The Company may establish pursuant to Section 3.01 that, at the option
of the Holder, Registered Securities of any series may be exchanged for other
Registered Securities of the same series of any authorized denominations and of
a like aggregate principal amount and tenor and having the same terms and
conditions, upon surrender of the Securities to be exchanged at any such office
or agency. Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive. Bearer Securities
may not be issued in exchange for Registered Securities.
At the option of the Holder (if so provided pursuant to Section 3.01)
Bearer Securities of any series may be exchanged for Registered Securities of
the same series of any authorized denominations and of a like aggregate
principal amount and tenor and having the same terms and conditions, upon
surrender of the Bearer Securities to be exchanged at any such office or agency,
with all unmatured Coupons and all matured Coupons in default thereto
appertaining. If the Holder of a Bearer Security is unable to produce any such
unmatured Coupon or Coupons or matured Coupon or Coupons in default, such
exchange may be effected if the Bearer Securities are accompanied by payment in
funds acceptable to the Company in an amount equal to the face amount of such
missing Coupon or Coupons, or the surrender of such missing Coupon or Coupons
may be waived by the Company and the Trustee if there is furnished to them such
security or indemnity as they may require to save each of them and any Paying
Agent harmless. If thereafter the Holder of such Security shall surrender to any
Paying Agent any such missing Coupon in respect of which such a payment shall
have been made, such Holder shall be entitled to receive the amount of such
payment; provided, however, that, except as otherwise provided in Section 10.02,
-------- -------
interest represented by Coupons shall be payable only upon presentation and
surrender of those Coupons at an office or agency located outside the United
States. Notwithstanding the foregoing, in case a Bearer Security of any series
is surrendered at any such office or agency in exchange for a Registered
Security of the same series and like tenor after the close of Business at such
office or agency on (i) any Regular Record Date and before the opening of
business at such office or agency on the relevant Interest Payment Date, or (ii)
any Special Record Date and before the opening of business at such office or
agency on the related proposed date for payment of Defaulted Interest, such
Bearer Security shall be surrendered without the Coupon relating to such
Interest Payment Date or proposed date for payment, as the case may be, and
interest or Defaulted Interest, as the case may be, will not be payable on such
Interest Payment Date or proposed date for payment, as the case may be, in
respect of the Registered Security issued in exchange for such Bearer Security,
but will be payable only to the Holder of such Coupon when due in accordance
with the provisions of this Indenture.
22
Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive.
Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 3.01, any definitive Global Security in bearer form
shall be exchangeable only as provided in this paragraph. If the beneficial
owners of interests in a definitive Global Security in bearer form are entitled
to exchange such interests for Securities of such series and of like tenor and
principal amount of another authorized form and denomination, as specified as
contemplated by Section 3.01, then without unnecessary delay but in any event
not later than the earliest date on which such interest may be so exchanged, the
Company shall deliver to the Trustee definitive Securities in aggregate
principal amount equal to the principal amount of such definitive Global
Security in bearer form, executed by the Company. On or after the earliest date
on which such interest may be so exchanged, such definitive Global Security in
bearer form shall be surrendered by the Common Depositary or such other
depositary or Common Depositary as shall be specified in the Company Order with
respect thereto to the Trustee, as the Company's agent for such purpose, to be
exchanged, in whole or from time to time in part, for definitive Securities
without charge and the Trustee shall authenticate and deliver, in exchange for
each portion of such definitive Global Security in bearer form, an equal
aggregate principal amount of definitive Securities of the same series of
authorized denominations and of like tenor as the portion of such definitive
Global Security in bearer form to be exchanged which, unless the Securities of
the series are not issuable both as Bearer Securities and as Registered
Securities, as specified as contemplated by Section 3.01, shall be in the form
of Bearer Securities or Registered Securities, or any combination thereof, as
shall be specified by the beneficial owner thereof; provided, however, that no
-----------------
such exchanges may occur during a period beginning at the opening of business 15
days before any selection of Securities of that series to be redeemed and ending
on the relevant Redemption Date; and provided further that no Bearer Security
----------------
delivered in exchange for a portion of a definitive Global Security shall be
mailed or otherwise delivered to any location in the United States. If a
Registered Security is issued in exchange for any portion of a definitive Global
Security in bearer form after the close of business at the office or agency
where such exchange occurs on (i) any Regular Record Date and before the opening
of business at such office or agency on the relevant Interest Payment Date, or
(ii) any Special Record Date and the opening of business at such office or
agency on the related proposed date for payment of Defaulted Interest, interest
or Defaulted Interest, as the case may be, will not be payable on such Interest
Payment Date or proposed date for payment, as the case may be, in respect of
such Registered Security, but will be payable on such Interest Payment Date or
proposed date for payment, as the case may be, only to the Person to whom
interest in respect of such portion of such definitive Global Security in bearer
form is payable in accordance with the provisions of this Indenture.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Registered Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Trustee or
any transfer agent) be duly endorsed, or be accompanied by a written instrument
of transfer in form satisfactory to the
23
Company and the Security Registrar or any transfer agent duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 3.04, 9.06 or 11.06 not involving any transfer.
The Company shall not be required (i) to issue, register the transfer
of or exchange Securities of any series during a period beginning at the opening
of business 15 days before any selection of Securities of that series to be
redeemed and ending at the close of business on (A) if Securities of the series
are issuable only as Registered Securities, the day of the mailing of the
relevant notice of redemption and (B) if Securities of the series are issuable
as Bearer Securities, the day of the first publication of the relevant notice of
redemption or, if Securities of the series are also issuable as Registered
Securities and there is no publication, the mailing of the relevant notice of
redemption, or (ii) to register the transfer of or exchange of any Registered
Security so selected for redemption, in whole or in part, except the unredeemed
portion of any Security being redeemed in part, or (iii) to exchange any Bearer
Security so selected for redemption except that such a Bearer Security may be
exchanged for a Registered Security of that series and like tenor; provided that
--------
such Registered Security shall be simultaneously surrendered for redemption.
If at any time the Depositary for the Global Securities of a series
notifies the Company that it is unwilling or unable to continue as Depositary
for the Global Securities of such series or if at any time the Depositary for
the Global Securities of such series shall no longer be eligible under Section
3.03, the Company shall appoint a successor Depositary with respect to the
Global Securities of such series. If a successor Depositary for the Global
Securities of such series is not appointed by the Company within 90 days after
the Company receives such notice or becomes aware of such ineligibility, the
Company's election pursuant to Section 3.01 that such Registered Securities be
represented by one or more Global Securities shall no longer be effective with
respect to the Global Securities of such series and the Company will execute,
and the Trustee, upon receipt of a Company Order for the authentication and
delivery of definitive Securities of such series, will authenticate and deliver,
Securities of such series in definitive form in an aggregate principal amount
equal to the principal amount of the Global Security or Securities representing
such series in exchange for such Global Security or Securities.
If specified by the Company pursuant to Section 3.01 with respect to a
series of Securities, the Company may at any time and in its sole discretion
determine that the Securities of any series issued in the form of one or more
Global Securities shall no longer be represented by such Global Security or
Securities. In such event the Company will execute, and the Trustee, upon
receipt of a Company Order for the authentication and delivery of definitive
Securities of such series, will authenticate and deliver Securities of such
series in definitive form and in an aggregate principal amount equal to the
principal amount of the Global Security or Securities representing such series
in exchange for such Global Security or Securities.
24
If specified by the Company pursuant to Section 3.01 with respect to a
series of Securities, the Depositary for such series of Securities may at its
option surrender a Global Security for such series of Securities in exchange in
whole or in part for Securities of such series in definitive form on such terms
as are acceptable to the Company and such Depositary. Thereupon, the Company
shall execute, and the Trustee, upon receipt of a Company Order for the
authentication and delivery of definitive Securities of such series, shall
authenticate and deliver, without charge to the Holders,
(i) to each Person specified by such Depositary a new Security or
Securities of the series of any authorized denomination as requested by
such Person in aggregate principal amount equal to and in exchange for such
Person's beneficial interest in the Global Security or Securities; and
(ii) to such Depositary a new Global Security in a denomination equal
to the difference, if any, between the principal amount of the surrendered
Global Security and the aggregate principal amount of definitive Securities
delivered to Holders thereof.
In any exchange provided for in any of the preceding three paragraphs,
the Company will execute and the Trustee will authenticate and deliver
Securities (a) in definitive registered form in authorized denominations, if the
Securities of such series are issuable as Registered Securities, (b) in
definitive bearer form in authorized denominations, with coupons attached, if
the Securities of such series are issuable as Bearer Securities or (c) as either
Registered or Bearer Securities, if the Securities of such series are issuable
in either form; provided, however, that a definitive Bearer Security shall be
-----------------
delivered in exchange for a temporary Global Security only in compliance with
the conditions set forth in Section 3.04; and provided further that delivery of
----------------
a Bearer Security shall occur only outside the United States.
Upon the exchange of a Global Security for Securities in definitive
form, such Global Security shall be canceled by the Trustee. Registered
Securities issued in exchange for a Global Security pursuant to this Section
shall be registered in such names and in such authorized denominations as the
Depositary for such Global Security, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Registered Securities to the persons in whose names such
Securities are so registered.
Unless otherwise specified by the Company pursuant to Section 3.01, a
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.
SECTION 3.06. Mutilated, Destroyed, Lost and Stolen Securities. If any
------------------------------------------------
mutilated Security or Security with a mutilated Coupon appertaining to it is
surrendered to the Trustee, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security of the same series
and of like tenor and principal amount and with the same terms and conditions
and bearing a number not contemporaneously outstanding with Coupons
corresponding to the Coupons, if any, appertaining to the surrendered Security.
25
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Security
or Coupon and (ii) such security or indemnity as may be required by them to save
each of them and any agent of either of them harmless, then, in the absence of
notice to the Company or the Trustee that such Security or Coupon has been
acquired by a bona fide purchaser, the Company shall execute and the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security or in exchange for the Security to which a destroyed, lost or stolen
Coupon appertains (upon surrender to the Trustee of such Security with all
appurtenant Coupons not destroyed, lost or stolen) a new Security of the same
series and of like tenor and principal amount and with the same terms and
conditions and bearing a number not contemporaneously outstanding, with Coupons
corresponding to the Coupons, if any, appertaining to such destroyed, lost or
stolen Security or to the Security to which such destroyed, lost or stolen
Coupon appertains.
In case any such mutilated, destroyed, lost or stolen Security or
Coupon has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Security or Coupon pay such Security or
Coupon; provided, however, that principal of (and premium, if any) and any
-----------------
interest on Bearer Securities shall, except as otherwise provided in Section
10.02, be payable only at an office or agency located outside the United States
and, unless otherwise specified as contemplated by Section 3.01, any interest on
Bearer Securities shall be payable only upon presentation and surrender of the
Coupons appertaining thereto.
Upon the issuance of any new Security or Coupon under this Section,
the Company 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) connected therewith.
Every new Security or Coupon of any series issued pursuant to this
Section in lieu of any mutilated, destroyed, lost or stolen Security or Coupon
shall constitute an original additional contractual obligation of the Company,
whether or not the mutilated, destroyed, lost or stolen Security shall be at any
time enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Securities or
Coupons of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities or Coupons.
SECTION 3.07. Payment of Interest; Interest Rights Preserved. Unless
----------------------------------------------
otherwise provided as contemplated by Section 3.01 with respect to any series of
Securities, interest on any Registered Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest.
Any interest on any Registered Security of any series which is
payable, but is not punctually paid or duly provided for, on any Interest
Payment Date (herein called "Defaulted Interest") shall cease to be payable to
the Holder on the relevant Regular Record Date by virtue
26
of having been such Holder, and such Defaulted Interest may be paid by the
Company, at its election in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Registered Securities of such series (or
their respective Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company shall
notify the Trustee in writing of the amount of Defaulted Interest proposed
to be paid on each Security of such series and the date of the proposed
payment, and at the same time the Company shall deposit with the Trustee an
amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this Clause provided.
Thereupon the Trustee shall fix a Special Record Date for the payment of
such Defaulted Interest which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and not less than 10
days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special
Record Date and, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage prepaid, to each
Holder of Securities of such series at his address as it appears in the
Security Register, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been so mailed, such Defaulted Interest shall
be paid to the Persons in whose names the Securities of such series (or
their respective Predecessor Securities) are registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest on the
Registered Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which such
Securities may be listed, and upon such notice as may be required by such
exchange, if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this Clause, such manner of payment shall be
deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section and Section 3.05,
each Security delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
None of the Company, the Trustee, any Authenticating Agent, any Paying
Agent or the Security Registrar will have any responsibility or liability for
any aspect of the records relating to or payments made on account of any
beneficial ownership interest in a Global Security or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interest.
SECTION 3.08. Persons Deemed Owners. Prior to due presentment of a
---------------------
Registered Security for registration of transfer, the Company, the Trustee and
any agent of the
27
Company or the Trustee may treat the Person in whose name such Registered
Security is registered as the owner of such Registered Security for the purpose
of receiving payment of principal of (and premium, if any) and (subject to
Sections 3.05 and 3.07) interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
Title to any Bearer Security and any Coupons appertaining thereto
shall pass by delivery. The Company, the Trustee and any agent of the Company or
the Trustee may treat the Holder of any Bearer Security and the Holder of any
Coupon as the absolute owner of such Security or Coupon for the purpose of
receiving payment thereof or on account thereof and for all other purposes
whatsoever, whether or not such Security or Coupon be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 3.09. Cancellation. All Securities and Coupons surrendered for
------------
payment, redemption, registration of transfer or exchange or for credit against
any sinking fund payment shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee. All Securities and Coupons so delivered
shall be promptly canceled by the Trustee. All Bearer Securities and unmatured
Coupons held by the Trustee pending such cancellation shall be deemed to be
delivered for cancellation for all purposes of this Indenture and the
Securities. The Company may at any time deliver to the Trustee for cancellation
any Securities previously authenticated and delivered hereunder which the
Company may have acquired in any manner whatsoever, and may deliver to the
Trustee (or to any other Person for delivery to the Trustee) for cancellation
any Securities previously authenticated hereunder which the Company has not
issued and sold, and all Securities so delivered shall be promptly canceled by
the Trustee. No Securities shall be authenticated in lieu of or in exchange for
any Securities canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Securities and Coupons held by the
Trustee shall be destroyed in a manner selected by the Trustee unless otherwise
directed by a Company Order.
SECTION 3.10. Computation of Interest. Except as otherwise specified
-----------------------
as contemplated by Section 3.01 for Securities of any series, interest on the
Securities of each series shall be computed on the basis of a 360-day year of
twelve 30-day months.
SECTION 3.11. Compliance with Certain Laws and Regulations. If any
--------------------------------------------
Bearer Securities are to be issued in any series of Securities, the Company will
use reasonable efforts to provide for arrangements and procedures designed
pursuant to then applicable laws and regulations, if any, to ensure that such
Bearer Securities are sold or resold, exchanged, transferred and paid only in
compliance with such laws and regulations and without adverse consequences to
the Company, the Holders and the Trustee.
SECTION 3.12. Medium-Term Securities. Notwithstanding any contrary
----------------------
provision herein, if all Securities of a series are not to be originally issued
at one time, it shall not be necessary to deliver the Company Order, Officers'
Certificate, supplemental indenture or Opinion of Counsel otherwise required
pursuant to Sections 1.02, 3.01, 3.03 and 3.04 at or prior to the time of
authentication of each Security of such series if such documents are delivered
at or prior to the authentication upon original issuance of the first Security
of such series to be issued.
28
An Officers' Certificate or supplemental indenture, delivered pursuant
to this Section 3.12 in the circumstances set forth in the preceding paragraph
may provide that Securities which are the subject thereof will be authenticated
and delivered by the Trustee on original issue from time to time upon the
telephonic or written order of persons designated in such Officers' Certificate
or supplemental indenture (telephonic instructions to be promptly confirmed in
writing by such persons) and that such persons are authorized to determine,
consistent with such Officers' Certificate or any applicable supplemental
indenture such terms and conditions of said Securities as are specified in such
Officers' Certificate or supplemental indenture, provided that the foregoing
procedure is acceptable to the Trustee.
ARTICLE FOUR
Satisfaction and Discharge
--------------------------
SECTION 4.01. Satisfaction and Discharge of Indenture. This Indenture
---------------------------------------
shall upon Company Request cease to be of further effect with respect to a
series of Securities (except as to any surviving rights of (as applicable)
registration of transfer or exchange of Securities and Coupons, if any, of such
series herein expressly provided for) and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture with respect to such series, when
(1) either
(A) all Securities and Coupons of such series theretofore
authenticated and delivered (other than (i) Coupons appertaining to
Bearer Securities surrendered for exchange for Registered Securities
and maturing after such exchange, whose surrender is not required or
has been waived as provided in Section 3.05, (ii) Securities and
Coupons of such series which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 3.06, (iii)
Coupons appertaining to Securities called for redemption and maturing
after the relevant Redemption Date, whose surrender has been waived as
provided in Section 11.06, and (iv) Securities and Coupons of such
series for whose payment money has theretofore been deposited in trust
or segregated and held in trust by the Company and thereafter repaid
to the Company or discharged from such trust, as provided in Section
10.03) have been delivered to the Trustee for cancellation; or
(B) all such Securities and Coupons of such series not
theretofore delivered to the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the
giving of
29
notice of redemption by the Trustee in the name, and at the
expense, of the Company.
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for the purpose an amount in the currency or currency unit in
which such Securities and Coupons of such series are payable
sufficient to pay and discharge the entire indebtedness on such
Securities and Coupons of such series not theretofore delivered to the
Trustee for cancellation, for principal (and premium, if any) and
interest, if any, to the date of such deposit (in the case of
Securities and Coupons of such series which have become due and
payable) or to the Stated Maturity or Redemption Date, as the case may
be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture with
respect to a series, the obligations of the Company to the Trustee under Section
6.07, the obligations of the Trustee to any Authenticating Agent under Section
6.14 and, if money shall have been deposited with the Trustee pursuant to
subclause (B) of clause (1) of this Section, the obligations of the Trustee
under Section 4.02 and the last paragraph of Section 10.03 shall survive.
SECTION 4.02. Application of Trust Money. Subject to the provisions of
--------------------------
the last paragraph of Section 10.03, all money deposited with the Trustee
pursuant to Sections 4.01 and 4.03 shall be held in trust and applied by it, in
accordance with the provisions of the Securities and Coupons, if any, and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee.
SECTION 4.03. Satisfaction, Discharge and Defeasance of Securities of
-------------------------------------------------------
Any Series. If this Section is specified, as contemplated by Section 3.01, to be
- ----------
applicable to Securities and Coupons, if any, of any series, at the Company's
option, either
(a) the Company will be deemed to have been Discharged (as defined
below) from its obligations with respect to Securities and Coupons, if any,
of such series or
(b) the Company will cease to be under any obligation to comply with
any term, provision or condition set forth in (x) Sections 8.01, 8.02,
10.08 and 10.09 or (y) the instrument or instruments setting forth the
terms, provisions or conditions of such series pursuant to Section 3.01
(provided in case of this subclause (y) that such instrument or instruments
--------
specify which terms, provisions or conditions, if any, are subject to this
clause (b) provided further, however, that no such instrument may specify
-------------------------
that the Company may cease to comply with any obligations as to which it
may not be
30
Discharged pursuant to the definition of "Discharged"); in each case
(a) and (b) with respect to the Securities and Coupons, if any, of
such series on the first day after the applicable conditions set forth
below in (p) and either (q) or (r) have been satisfied:
(p) (1) the Company has paid or caused to be paid all other sums
payable with respect to the Outstanding Securities and Coupons, if
any, of such series (in addition to any required under (q) or (r));
and
(2) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that all conditions
precedent herein provided for relating to, as applicable (i) the
satisfaction and discharge of the entire indebtedness on all
Outstanding Securities and Coupons, if any, of any such series, or
(ii) the discharge of the obligations with respect to the Securities
of such series set forth in (b) above, have been complied with;
(q) (1) the Company shall have with respect to (a) or (b) above
deposited or caused to be deposited irrevocably with the Trustee as a
trust fund specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of the Securities and Coupons, if any,
of such series (i) money in an amount (in such currency, currencies or
currency unit or units in which any Outstanding Securities and
Coupons, if any, of such series are payable) or (ii) in the case of
Securities and Coupons, if any, denominated in Dollars, U.S.
Government Obligations (as defined below) or, in the case of
Securities and Coupons, if any, denominated in a Foreign Currency,
Foreign Government Securities (as defined below), which through the
payment of interest and principal in respect thereof in accordance
with their terms will provide, not later than one day before the due
date of any payment of principal (including any premium) and interest,
if any, under the Securities and Coupons, if any, of such series,
money in an amount or (iii) a combination of (i) and (ii), sufficient
(in the opinion with respect to (ii) and (iii) of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee) to pay and
discharge each installment of principal of (including any premium),
and interest, if any, on, the Outstanding Securities and Coupons, if
any, of such series on the dates such installments of interest or
principal (including any premium) are due, in the currency, currencies
or currency unit or units, in which such Securities and Coupons, if
any, are payable;
(2) (i) no Event of Default or event (including such deposit)
which with notice or lapse of time would become an Event of Default
shall have occurred and be continuing on the date of such deposit,
(ii) no Event of Default as defined in clause (5) or (6) of Section
5.01, or event which with notice or lapse of time or both would become
an Event of Default under either such clause, shall have occurred
within 90 days after the date of such deposit and (iii) such deposit
and the related intended consequence under (a) or (b) will not result
in any default or event of default under any material indenture,
agreement or other instrument binding upon the Company or any
Subsidiary or any of their properties; and
(3) the Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that Holders of the Securities and Coupons,
if any, of such series will not recognize income, gain or loss for
Federal income tax purposes as a result of the
31
Company's exercise of its option under this Section 4.03 and will be
subject to Federal income tax in the same amount, in the same manner
and at the same times as would have been the case if such option had
not been exercised;
(r) the Company has properly fulfilled such other means of
satisfaction and discharge as is specified, as contemplated by Section
3.01, to be applicable to the Securities and Coupons, if any, of such
series.
Any deposits with the Trustee referred to in clause (q) (1)
above will be made under the terms of an escrow trust agreement in form
satisfactory to the Trustee. If any Outstanding Securities and Coupons, if any,
of such series are to be redeemed prior to their Stated Maturity, whether
pursuant to any mandatory redemption provisions or in accordance with any
mandatory sinking fund requirement, the applicable escrow trust agreement will
provide therefor and the Company will make arrangements for the giving of notice
of redemption by the Trustee in the name, and at the expense, of the Company.
SECTION 4.04. Reinstatement. If the Trustee is unable to apply
-------------
any money, U.S. Government Obligations or Foreign Government Securities in
accordance with Section 4.01 or 4.03 by reason of any legal proceeding or by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Company's
obligations under this Indenture and the Securities and Coupons, if any, of such
series shall be revived and reinstated as though no deposit had occurred
pursuant to Section 4.01 or 4.03 until such time as the Trustee is permitted to
apply all such money, U.S. Government Obligations or Foreign Government
Securities in accordance with Section 4.01 or 4.03; provided, however, that if
-------- -------
the Company has made any payment of interest on or principal of (and premium, if
any) any Securities and Coupons, if any, of such series because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such series of Securities and Coupons, if any, to receive such
payment from the money, U.S. Government Obligations or Foreign Government
Securities held by the Trustee.
SECTION 4.05. Definitions. The following terms, as used in this
-----------
Article Four, shall have the following meanings:
"Discharged" means that the Company will be deemed to have paid
and discharged the entire indebtedness represented by, and obligations
under, the Securities and Coupons, if any, of the series as to which
this Section is specified as applicable as aforesaid and to have
satisfied all the obligations under this Indenture relating to the
Securities and Coupons, if any, of such series (and the Trustee, at
the expense of the Company, will execute proper instruments
acknowledging the same), except (A) the rights of Holders thereof to
receive, from the trust fund described in clause (q) (1) above,
payment of the principal of (premium, if any) and the interest, if
any, on such Securities and Coupons, if any, when such payments are
due, (B) the Company's obligations with respect to such Securities and
Coupons, if any, under Sections 3.05 and 3.06 (insofar as applicable
to Securities of such series), 4.02, 10.02 and 10.03 (last paragraph
only) and the Company's obligations to the Trustee under Sections 6.07
and 6.10, (C) the rights of Holders of Securities of any series with
respect to the currency or currency units in which they are to receive
payments of principal, premium, if any, and interest and (D) the
rights, powers, trusts, duties and immunities of the Trustee
hereunder, will survive such
32
discharge. The Company will reimburse the trust fund for any loss
suffered by it as a result of any tax, fee or other charge imposed on
or assessed against deposited U.S. Government Obligations or Foreign
Government Securities, as the case may be, or any principal or interest
paid on such obligations, and, subject to the provisions of Section
6.07, will indemnify the Trustee against any claims made against the
Trustee in connection with any such loss.
"Foreign Government Securities" means, with respect to
Securities and Coupons, if any, of any series that are denominated in a
Foreign Currency, securities that are (i) direct obligations of the
government that issued or caused to be issued such currency for the
payment of which obligations its full faith and credit is pledged or
(ii) obligations of a Person controlled or supervised by and acting as
an agency or instrumentality of such government the timely payment of
which is unconditionally guaranteed as a full faith and credit
obligation by such government, which, in either case under clauses (i)
or (ii), are not callable or redeemable at the option of the issuer
thereof.
"U.S. Government Obligations" means securities that are (i)
direct obligations of the United States of America for the payment of
which its full faith and credit is pledged or (ii) obligations of a
Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the timely payment of
which is unconditionally guaranteed as a full faith and credit
obligation of the United States of America, which, in either case under
clauses (i) or (ii), are not callable or redeemable at the option of
the issuer thereof, and will also include a depository receipt issued
by a bank or trust company as custodian with respect to any such U.S.
Government Obligation or a specified payment of interest on or
principal of any such U.S. Government Obligation held by such custodian
for the account of the holder of a depository receipt, provided that
(except as required by law) such custodian is not authorized to make
any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of interest on or
principal of the U.S. Government Obligation evidenced by such
depository receipt.
ARTICLE FIVE
Remedies
--------
SECTION 5.01. Events of Default. "Event of Default", wherever
-----------------
used herein with respect to Securities of any series, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body), unless it is either inapplicable to
a particular series or it is specifically deleted or modified in or pursuant to
the supplemental indenture or Board Resolution establishing such series of
Securities or in the form of Security for such series:
(1) default in the payment of any interest upon any Security
of that series when it becomes due and payable, and continuance of such
default for a period of 30 days; or
33
(2) default in the payment of the principal of (or premium, if
any, on) any Security of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment, when
and as due by the terms of a Security of that series, and continuance
of such default for a period of 30 days; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in the performance or breach of which is elsewhere
in this Section specifically dealt with or which has expressly been
included in this Indenture solely for the benefit of a series of
Securities other than that series) and continuance of such default or
breach for a period of 60 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in principal
amount of the Outstanding Securities of that series 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
(5) the entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or (B) a
decree or order adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company
under any applicable Federal or State law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company 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 for relief or any such other
decree or order unstayed and in effect for a period of 90 consecutive
days; or
(6) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent by
it to the entry of a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case
or proceeding against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable
Federal or State law, or the consent by it to the filing of such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar
official of the Company or of any substantial part of its property, or
the making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally
as they become due, or the taking of corporate action by the Company in
furtherance of any such action; or
(7) any other Event of Default provided with respect to
Securities of that series.
SECTION 5.02. Acceleration of Maturity; Rescission and
----------------------------------------
Annulment. If an Event of Default with respect to Securities of any series at
- ---------
the time Outstanding occurs and is
34
continuing, then in every such case the Trustee or the Holders of not less than
25% in principal amount of the Outstanding Securities of that series may declare
the principal amount of all of the Securities of that series to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee
if given by Holders) and upon any such declaration such principal amount (or
specified amount) shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum sufficient
to pay
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities of
that series which have become due otherwise than by such declaration of
acceleration and, to the extent that payment of such interest is
lawful, interest thereon at the rate or rates prescribed therefor in
such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed therefor
in such Securities, and
(D) in Dollars all sums paid or advanced by the Trustee hereunder
and the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel and all other amounts due the
Trustee under Section 6.07;
and
(2) all Events of Default with respect to Securities of that series,
other than the nonpayment of the principal of Securities of that: series
which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 5.13. No such rescission shall
affect any subsequent default or impair any right consequent thereon.
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Trustee. The Company covenants that if
- -------
(1) default is made in the payment of any interest on any Security or
Coupon when such interest becomes due and payable and such default
continues for the period of grace provided for with respect to such
Security,
(2) default is made in the payment of the principal of (or premium, if
any, on) any Security at the Maturity thereof, or
35
(3) default is made in the deposit of any sinking fund payment, when
and as due by the terms of a Security,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities and Coupons, if any, the whole amount then due and
payable on such Securities and Coupons, if any, for principal (and premium, if
any) and interest and, to the extent that payment of such interest shall be
legally enforceable, interest on any overdue principal (and premium, if any) and
on any overdue interest, at the rate or rates prescribed therefor in such
Securities and Coupons, if any, and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel and all other amounts due the Trustee under Section 6.07.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Securities and Coupons, if
any, and collect the moneys adjudged or decreed to be payable in the manner
provided by law out of the property of the Company or any other obligor upon
such Securities and Coupons, if any, wherever situated.
If an Event of Default with respect to Securities and Coupons, if any,
of any series occurs and is continuing, the Trustee may in its discretion
proceed to protect and enforce its rights and the rights of the Holders of such
series by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 5.04. Trustee May File Proofs of Claim. In case of the pendency
--------------------------------
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company or any other obligor upon the Securities or the property of the
Company or of such other obligor or their creditors, 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 on the Company for the payment of overdue
principal or interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Securities
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 the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel and all other amounts due the Trustee under
Section 6.07) and of the Holders allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
36
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 6.07.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 5.05. Trustee May Enforce Claims Without Possession of
------------------------------------------------
Securities. All rights of action and claims under this Indenture or the
- ----------
Securities or Coupons, if any, may be prosecuted and enforced by the Trustee
without the possession of any of the Securities or Coupons or the production
thereof in any proceeding relating thereto, and any such proceeding instituted
by the Trustee shall be brought in its own name as trustee of an express trust,
and any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel and all other amounts due the Trustee under Section 6.07,
be for the ratable benefit of the Holders of the Securities and Coupons, if any,
in respect of which such judgment has been recovered.
SECTION 5.06. Application of Money Collected. Any money collected by
------------------------------
the Trustee pursuant to this Article shall be applied in the following order, at
the date or dates fixed by the Trustee and, in case of the distribution of such
money on account of principal (or premium, if any) or interest, upon
presentation of the Securities and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
FIRST: to the payment of all amounts due the Trustee under Section
6.07;
SECOND: to the payment of the amounts then due and unpaid for principal
of (and premium, if any) and interest on the Securities in respect of which
or for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and
payable on such Securities for principal (and premium, if any) and
interest, respectively; and
THIRD: the balance, if any, to the Person or Persons entitled thereto.
SECTION 5.07. Limitation on Suits. No Holder of any series shall have
-------------------
any right to institute any proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless
(1) an Event of Default with respect to Securities of such series shall
have occurred and be continuing and such Holder has previously given
written notice to the Trustee of such continuing Event of Default;
37
(2) the Holders of not less than 25% in principal amount of
the Outstanding Securities of that series shall have made written
request to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Securities of that
series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture (including without limitation the provisions of Section 5.12)
to affect, disturb or prejudice the rights of any other of such Holders, or to
obtain or to seek to obtain priority or preference over any other of such
Holders or to enforce any right under this Indenture, except in the manner
herein provided and for the equal and ratable benefit of all of such Holders.
SECTION 5.08. Unconditional Right of Holders to Receive
-----------------------------------------
Principal Premium and Interest. Notwithstanding any other provision in this
- ------------------------------
Indenture, the Holder of any Security or any Coupon shall have the right, which
is absolute and unconditional, to receive payment of the principal of (and
premium, if any) and (subject to Section 3.07) interest on such Security or
Coupon on the Stated Maturity or Maturities expressed in such Security (or, in
the case of redemption, on the Redemption Date) and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired without
the consent of such Holder.
SECTION 5.09. Restoration of Rights and Remedies. If the
----------------------------------
Trustee or any Holder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case, subject to any determination in such
proceeding, the Company, the Trustee and the Holders shall be restored severally
and respectively to their former positions hereunder and thereafter all rights
and remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative. Except as
------------------------------
otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities in the last paragraph of Section 3.06, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
38
SECTION 5.11. Delay or Omission Not Waiver. No delay or
----------------------------
omission of the Trustee or of any Holder of any Securities to exercise any right
or remedy accruing upon any Event of Default shall impair any such right or
remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article or by law to the Trustee
or to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may be.
SECTION 5.12. Control by Holders. The Holders of not less
------------------
than a majority in principal amount of the Outstanding Securities of any series
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;
provided that
- --------
(1) such direction shall not be in conflict with any rule of
law or with this Indenture,
(2) the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction, and
(3) subject to the provisions of Section 6.01, the Trustee
shall have the right to decline to follow any such direction if the
Trustee in good faith shall, by a Responsible Officer or Officers of
the Trustee, determine that the action so directed would involve the
Trustee in personal liability.
SECTION 5.13. Waiver of Past Defaults. The Holders of not
-----------------------
less than a majority in principal amount of the Outstanding Securities of any
series may on behalf of the Holders of all the Securities of such series waive
any past default hereunder with respect to such series and its consequences,
except a default
(1) in the payment of the principal of (or premium, if any)
or interest on any Security of such series, or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist with
respect to such series, and any Event of Default with respect to such series
arising therefrom shall be deemed to have been cured, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other default or
impair any right consequent thereon.
SECTION 5.14. Undertaking for Costs. All parties to this
---------------------
Indenture agree, and each Holder 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
39
defenses made by such party litigant; but the provisions of this Section shall
not apply to any suit instituted by the Company, to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Securities of
any series, or to any suit instituted by any Holder for the enforcement of the
payment of the principal of (or premium, if any) or interest on any Security or
the payment of any Coupon on or after the Stated Maturity or Maturities
expressed in such Security (or, in the case of redemption, on or after the
Redemption Date).
SECTION 5.15. Waiver of Stay or Extension Laws. The Company
--------------------------------
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, which may affect the covenants or the performance
of this Indenture; and the Company (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
ARTICLE SIX
The Trustee
-----------
SECTION 6.01. Certain Duties and Responsibilities. (a) Except
-----------------------------------
during the continuance of an Event of Default with respect to any series:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such certificates or opinions
which by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this
Indenture.
(b) In case an Event of Default has occurred and is
continuing with respect to any series, the Trustee shall exercise such of the
rights and powers vested in it by this Indenture with respect to such series,
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.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that
(1) this Subsection shall not be construed to limit the
effect of Subsection (a) of this Section;
40
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
(3) 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 of a majority in principal amount of
the Outstanding Securities of any series, given pursuant to Section
5.12, 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 with
respect to the Securities of such series; and
(4) no provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to
it.
(d) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section.
SECTION 6.02. Notice of Defaults. Within 90 days after the
------------------
occurrence of any default hereunder with respect to the Securities of any
series, the Trustee shall transmit notice of such default hereunder known to the
Trustee to the Holders of such Securities as provided in Section 7.03(d), unless
such default shall have been cured or waived; provided, however, that, except in
-------- -------
the case of a default in the payment of the principal of (or premium, if any) or
interest on any Security of such series or in the payment of any sinking fund
installment with respect to Securities of 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 Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interest of the Holders of Securities of such series; provided
--------
further, that in the case of any default of the character specified in Section
- -------
5.01(4) with respect to Securities of such series, no such notice to Holders
shall be given until at least 30 days after the occurrence thereof. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default with respect
to Securities of such series.
SECTION 6.03. Certain Rights of Trustee. Subject to the
-------------------------
provisions of Section 6.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
41
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(d) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or
attorney;
(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 and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder; and
(h) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Indenture.
SECTION 6.04. Not Responsible for Recitals or Issuance of
-------------------------------------------
Securities. The recitals contained herein and in the Securities, except the
- ----------
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities. Neither the Trustee nor any Authenticating Agent
shall be accountable for the use or application by the Company of Securities or
the proceeds thereof.
SECTION 6.05. May Hold Securities. The Trustee, any
-------------------
Authenticating Agent, any Paying Agent, any Security Registrar or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Securities or warrants to purchase Securities and, subject
to Sections 6.08 and 6.13, may otherwise deal with the Company with the same
rights it would have if it were not Trustee, Paying Agent, Security Registrar or
such other agent.
42
SECTION 6.06. Money Held in Trust. Except as provided in
-------------------
Section 1.14, money held by the Trustee or any Paying Agent in trust hereunder
need not be segregated from other funds except to the extent required by law.
The Trustee or any Paying Agent shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with the Company.
SECTION 6.07. Compensation and Reimbursement. The Company
------------------------------
agrees
(1) to pay to the Trustee from time to time in Dollars
reasonable compensation for all services rendered by it hereunder
(which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee in Dollars upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel) except any such expense, disbursement or advance as
may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee in Dollars 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 the trust or trusts hereunder,
including the costs and expenses of defending itself against any claim
or liability in connection with the exercise or performance of any of
its powers or duties hereunder.
As security for the performance of the obligations of the
Company under this Section the Trustee shall have a lien prior to the Securities
upon all property and funds held or collected by the Trustee as such, except
funds held in trust for the payment of principal of, premium, if any, or
interest, if any, on particular Securities.
SECTION 6.08. Disqualification; Conflicting Interests. (a) If
---------------------------------------
the Trustee has or shall acquire any conflicting interest, as defined in this
Section, with respect to the Securities and Coupons, if any, of any series, it
shall, within 90 days after ascertaining that it has such conflicting interest,
either eliminate such conflicting interest or resign with respect to the
Securities and Coupons, if any, of that series in the manner and with the effect
hereinafter specified in this Article.
(b) In the event that the Trustee shall fail to comply with
the provisions of Subsection (a) of this Section with respect to the Securities
of any series, the Trustee shall, within 10 days after the expiration of such
90-day period, transmit notice pursuant to Section 1.06, of such failure, to all
Holders of such series.
(c) For the purposes of this Section, the Trustee shall be
deemed to have a conflicting interest with respect to the Securities of any
series if
(1) the Trustee is trustee under this Indenture with respect
to the Outstanding Securities of any series other than that series or
is trustee under another indenture under
43
which any other securities, or certificates of interest or
participation in any other securities, of the Company are outstanding,
unless such other indenture is a collateral trust indenture under
which the only collateral consists of Securities issued under this
Indenture; provided that there shall be excluded from the operation of
--------
this paragraph this Indenture with respect to the Securities of any
series other than that series or any indenture or indentures under
which other securities, or certificates of interest or participation
in other securities, of the Company are outstanding, if
(i) this Indenture and such other indenture or
indentures are wholly unsecured and such other indenture or
indentures are hereafter qualified under the Trust Indenture
Act, unless the Commission shall have found and declared by
order pursuant to Section 3.05(b) or Section 3.07(c) of the
Trust Indenture Act that differences exist between the
provisions of this Indenture with respect to Securities of
that series and one or more other series or the provisions of
such other indenture or indentures which are so likely to
involve a material conflict of interest as to make it
necessary in the public interest or for the protection of
investors to disqualify the Trustee from acting as such under
this Indenture with respect to the Securities of that series
and such other series or under such other indenture or
indentures, or
(ii) the Company shall have sustained the burden of
proving, on application to the Commission and after
opportunity for hearing thereon, that trusteeship under this
Indenture with respect to the Securities of that series and
such other series or such other indenture or indentures is not
so likely to involve a material conflict of interest as to
make it necessary in the public interest or for the protection
of investors to disqualify the Trustee from acting as such
under this Indenture with respect to the Securities of that
series and such other series or under much other indenture or
indentures;
(2) the Trustee or any of its directors or executive officers
is an obligor upon the Securities or an underwriter for the Company;
(3) the Trustee directly or indirectly controls or is directly
or indirectly controlled by or is under direct or indirect common
control with the Company or an underwriter for the Company;
(4) the Trustee or any of its directors or executive officers
is a director, officer partner, employee, appointee or representative
of the Company, or of an underwriter (other than the Trustee itself)
for the Company who is currently engaged in the business of
underwriting, except that (i) one individual may be a director or an
executive officer, or both, of the Trustee and a director or an
executive officer, or both, of the Company but may not be at the same
time an executive officer of both the Trustee and the Company; (ii) if
and so long as the number of directors of the Trustee in office is more
than nine, one additional individual may be a director or an executive
officer, or both, of the Trustee and a director of the Company; and
(iii) the Trustee may be designated by the Company or by any
underwriter for the Company to act in the capacity of transfer agent,
registrar, custodian, paying agent, fiscal agent, escrow agent or
depositary, or in any other similar
44
capacity, or, subject to the provisions of paragraph (1) of this
Subsection, to act as trustee, whether under an indenture or otherwise;
(5) 10% or more of the voting securities of the Trustee is
beneficially owned either by the Company or by any director, partner or
executive officer thereof, or 20% or more of such voting securities is
beneficially owned, collectively, by any two or more of such persons;
or 10% or more of the voting securities of the Trustee is beneficially
owned either by an underwriter for the Company or by any director,
partner or executive officer thereof, or is beneficially owned,
collectively, by any two or more such persons;
(6) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this Subsection defined) (i) 5% or more of the voting
securities, or 10% or more of any other class of security, of the
Company not including the Securities issued under this Indenture and
securities issued under any other indenture under which the Trustee is
also trustee, or (ii) 10% or more of any class of security of an
underwriter for the Company;
(7) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this Subsection defined) 5% or more of the voting
securities of any person who, to the knowledge of the Trustee, owns 10%
or more of the voting securities of, or controls directly or indirectly
or is under direct or indirect common control with, the Company;
(8) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this Subsection defined), 10% or more of any class of
security of any person who, to the knowledge of the Trustee, owns 50%
or more of the voting securities of the Company; or
(9) the Trustee owns, on May 15 in any calendar year, in the
capacity of executor, administrator, testamentary or inter vivos
trustee, guardian, committee or conservator, or in any other similar
capacity, an aggregate of 25% or more of the voting securities, or of
any class of security, of any person, the beneficial ownership of a
specified percentage of which would have constituted a conflicting
interest under paragraph (6), (7) or (8) of this Subsection. As to any
such securities of which the Trustee acquired ownership through
becoming executor, administrator or testamentary trustee of an estate
which included them, the provisions of the preceding sentence shall not
apply, for a period of two years from the date of such acquisition, to
the extent that such securities included in such estate do not exceed
25% of such voting securities or 25% of any such class of security.
Promptly after May 15 in each calendar year, the Trustee shall make a
check of its holdings of such securities in any of the above-mentioned
capacities as of such May 15. If the Company fails to make payment in
full of the principal of (or premium, if any) or interest on any of the
Securities when and as the same becomes due and payable, and such
failure continues for 30 days thereafter, the Trustee shall make a
prompt check of its holdings of such securities in any of the above
mentioned capacities as of the date of the expiration of such 30-day
period, and after such date, notwithstanding the foregoing provisions
of this paragraph, all such securities so held by the Trustee, with
sole or joint control over such securities vested in it, shall, but
45
only so long as such failure shall continue, be considered as though
beneficially owned by the Trustee for the purposes of paragraphs (6),
(7) and (8) of this Subsection.
The specification of percentages in paragraphs (5) to (9),
inclusive, of this Subsection shall not be construed as indicating that the
ownership of such percentages of the securities of a person is or is not
necessary or sufficient to constitute direct or indirect control for the
purposes of paragraph (3) or (7) of this Subsection.
For the purposes of paragraphs (6), (7), (8) and (9) of this
Subsection only, (i) the terms "security" and "securities" shall include only
such securities as are generally known as corporate securities, but shall not
include any note or other evidence of indebtedness issued to evidence an
obligation to repay moneys lent to a person by one or more banks, trust
companies or banking firms, or any certificate of interest or participation in
any such note or evidence of indebtedness; (ii) an obligation shall be deemed to
be "in default" when a default in payment of principal shall have continued for
30 days or more and shall not have been cured; and (iii) the Trustee shall not
be deemed to be the owner or holder of (A) any security which it holds as
collateral security, as trustee or otherwise, for an obligation which is not in
default as defined in clause (ii) above, or (B) any security which it holds as
collateral security under this Indenture, irrespective of any default hereunder,
or (C) any security which it holds as agent for collection, or as custodian,
escrow agent or depositary, or in any similar representative capacity.
(d) For the purposes of this Section:
(1) The term "underwriter", when used with reference to the
Company, means every person who, within three years prior to the time
as of which the determination is made, has purchased from the Company
with a view to, or has offered or sold for the Company in connection
with, the distribution of any security of the Company outstanding at
such time, or has participated or has had a direct or indirect
participation in any such undertaking, or has participated or has had a
participation in the direct or indirect underwriting of any such
undertaking, but such term shall not include a person whose interest
was limited to a commission from an underwriter or dealer not in excess
of the usual and customary distributors' or sellers' commission.
(2) The term "director" means any director of a corporation or
any individual performing similar functions with respect to any
organization, whether incorporated or unincorporated.
(3) The term "person" means an individual, a corporation, a
partnership, an association, a joint stock company, a trust, an
unincorporated organization or a government or political subdivision
thereof. As used in this paragraph, the term "trust" shall include only
a trust where the interest or interests of the beneficiary or
beneficiaries are evidenced by a security.
(4) The term "voting security" means any security presently
entitling the owner or holder thereof to vote in the direction or
management of the affairs of a person, or any security issued under or
pursuant to any trust, agreement or arrangement whereby a trustee or
trustees or agent or agents for the owner or holder of such security
are presently entitled to vote in the direction or management of the
affairs of a person.
46
(5) The term "Company" means any obligor upon the Securities.
(6) The term "executive officer" means the president, every
vice president, every trust officer, the cashier, the secretary and the
treasurer of a corporation, and any individual customarily performing
similar functions with respect to any organization whether incorporated
or unincorporated, but shall not include the chairman of the board of
directors.
(e) The percentages of voting securities and other securities
specified in this Section shall be calculated in accordance with the following
provisions:
(1) A specified percentage of the voting securities of the
Trustee, the Company or any other person referred to in this Section
(each of whom is referred to as a "person" in this paragraph) means
such amount of the outstanding voting securities of such person as
entitled the holder or holders thereof to cast such specified
percentage of the aggregate votes which the holders of all the
outstanding voting securities of such person are entitled to cast in
the direction or management of the affairs of such person.
(2) A specified percentage of a class of securities of a
person means such percentage of the aggregate amount of securities of
the class outstanding.
(3) The term "amount", when used in regard to securities,
means the principal amount if relating to evidences of indebtedness,
the number of shares if relating to capital shares and the number of
units if relating to any other kind of security.
(4) The term "outstanding" means issued and not held by or for
the account of the issuer. The following securities shall not be deemed
outstanding within the meaning of this definition:
(i) securities of an issuer held in a sinking fund
relating to securities of the issuer of the same class;
(ii) securities of an issuer held in a sinking fund
relating to another class of securities of the issuer, if the
obligation evidenced by such other class of securities is not
in default as to principal or interest or otherwise;
(iii) securities pledged by the issuer thereof as security
for an obligation of the issuer not in default as to principal
or interest or otherwise; and
(iv) securities held in escrow if placed in escrow by the
issuer thereof;
provided, however, that any voting securities of an issuer shall be
-------- -------
deemed outstanding if any person other than the issuer is entitled to
exercise the voting rights thereof.
(5) A security shall be deemed to be of the same class as
another security if both securities confer upon the holder or holders
thereof substantially the same rights and privileges; provided,
--------
however, that, in the case of secured evidences of indebtedness, all
-------
47
of which are issued under a single indenture, differences in the
interest rates or maturity dates of various series thereof shall not be
deemed sufficient to constitute such series different classes; and
provided further that, in the case of unsecured evidences of
----------------
indebtedness, differences in the interest rates or maturity dates
thereof shall not be deemed sufficient to constitute them securities
of different classes, whether or not they are issued under a single
indenture.
SECTION 6.09. Corporate Trustee Required; Eligibility. There
---------------------------------------
shall at all times be a Trustee hereunder which shall be a Corporation organized
and doing business under the laws of the United States of America, any State
thereof or the District of Columbia, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000, subject to supervision or examination by Federal or State
authority. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
SECTION 6.10. Resignation and Removal; Appointment of
---------------------------------------
Successor. (a) No resignation or removal of the Trustee and no appointment of a
- ---------
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.11.
(b) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee required by
Section 6.11 shall not have been delivered to the resigning Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the outstanding Securities of such series, delivered to the Trustee and to
the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.08(a)
after written request therefor by the Company or by any Holder who has
been a bona fide Holder of a Security for at least six months, or
(2) the Trustee for a series shall cease to be eligible under
Section 6.09 and shall fail to resign after written request therefor by
the Company or by any Holder of Securities of such series, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or
48
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, (i) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (ii) subject to Section 5.14, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the Trustee
for any cause, with respect to the Securities of one or more series, the Company
shall promptly appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any such successor
Trustee may be appointed with respect to the Securities of one or more or all of
such series and that at any time there shall be only one Trustee with respect to
the Securities of any particular series) and shall comply with the applicable
requirements of Section 6.11. If, within one year after such resignation,
removal or incapability, or the occurrence of such vacancy, a successor Trustee
with respect to the Securities of any series shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities of such
series delivered to the Company and the retiring Trustee, the successor Trust so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 6.11, become the successor Trustee
with respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Company. If no successor Trustee with respect
to the Securities of any series shall have been so appointed by the Company or
the Holders and accepted appointment in the manner required by Section 6.11, any
Holder who has been a bona fide Holder of a Security 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 appointment of a successor Trustee
with respect to the Securities of such series.
(f) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any series
by giving notice of such event to all Holders of Securities of such series as
provided by Section 1.06. Each notice shall include the name of the successor
Trustee with respect to the Securities of such series and the address of its
Corporate Trust Office.
SECTION 6.11. Acceptance of Appointment by Successor. (a) In
--------------------------------------
case of the appointment hereunder of a successor Trustee with respect to all
Securities, every such successor Trustee so appointed shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder.
49
(b) In case of the appointment hereunder of a successor
Trustee with respect to the Securities of one or more (but not all) series, the
Company, the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such appointment
and which (1) shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, each successor Trustee all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates, (2) if the retiring Trustee is not retiring with respect to all
Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series as to
which the retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) 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
cotrustees of the same trust and that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee; and upon the execution and delivery of
such supplemental indenture the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates; but, on request of the Company or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee hereunder
with respect to the Securities of that or those series to which the appointment
of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers and trusts
referred to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless
at the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 6.12. Merger, Conversion, Consolidation or Succession
-----------------------------------------------
to Business. Any corporation into which the Trustee may be merged or converted
- -----------
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
SECTION 6.13. Preferential Collection of Claims Against
-----------------------------------------
Company. (a) Subject to Subsection (b) of this Section, if the Trustee shall be
- -------
or shall become a creditor, directly or
50
indirectly, secured or unsecured, of the Company within four months prior to a
default, as defined in Subsection (c) of this Section, or subsequent to such a
default, then, unless and until such default shall be cured, the Trustee shall
set apart and hold in a special account for the benefit of the Trustee
individually, the Holders of the Securities and Coupons, if any, and the holders
of other indenture securities, as defined in Subsection (c) of this Section:
(1) an amount equal to any and all reductions in the amount
due and owing upon any claim as such creditor in respect of principal
or interest, effected after the beginning of such four-month period and
valid as against the Company and its other creditors, except any such
reduction resulting from the receipt or disposition of any property
described in paragraph (2) of this Subsection, or from the exercise of
any right of set-off which the Trustee could have exercised if a
petition in bankruptcy had been filed by or against the Company upon
the date of such default; and
(2) all property received by the Trustee in respect of any
claims as such creditor, either as security therefor, or in
satisfaction or composition thereof, or otherwise, after the beginning
of such four-month period, or an amount equal to the proceeds of any
such property, if disposed of, subject, however, to the rights, if any,
------- -------
of the Company and its other creditors in such property or such
proceeds.
Nothing herein contained, however, shall affect the right of the Trustee:
(A) to retain for its own account (i) payments made on account
of any such claim by any Person (other than the Company) who is liable
thereon, and (ii) the proceeds of the bona fide sale of any such claim
by the Trustee to a third Person, and (iii) distributions made in cash,
securities or other property in respect of claims filed against the
Company in bankruptcy or receivership or in proceedings for
reorganization pursuant to the Federal Bankruptcy Act or applicable
State law;
(B) to realize, for its own account, upon any property held by
it as security for any such claim, if such property was so held prior
to the beginning of such four-month period;
(C) to realize, for its own account, but only to the extent of
the claim hereinafter mentioned, upon any property held by it as
security for any such claim, if such claim was created after the
beginning of such four-month period and such property was received as
security therefor simultaneously with the creation thereof, and if the
Trustee shall sustain the burden of proving that at the time such
property was so received the Trustee had no reasonable cause to believe
that a default, as defined in Subsection (c) of this Section, would
occur within four months; or
(D) to receive payment on any claim referred to in paragraph
(B) or (C), against the release of any property held as security for
such claim as provided in paragraph (B) or (C) as the case may be, to
the extent of the fair value of such property.
For the purposes of paragraphs (B), (C) and (D), property
substituted after the beginning of such four-month period for property held as
security at the time of such substitution shall, to the extent of the fair value
of the property released, have the same status as the property
51
released, and, to the extent that any claim referred to in any of such
paragraphs is created in renewal of or in substitution for or for the purpose of
repaying or refunding any pre-existing claim of the Trustee as such creditor,
such claim shall have the same status as such pre-existing claim.
If the Trustee shall be required to account, the funds and
property held in such special account and the proceeds thereof shall be
apportioned among the Trustee, the Holders and the holders of other indenture
securities in such manner that the Trustee, the Holders and the holders of other
indenture securities realize, as a result of payments from such special account
and payments of dividends on claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Federal
Bankruptcy Act or applicable State law, the same percentage of their respective
claims, figured before crediting to the claim of the Trustee anything on account
of the receipt by it from the Company of the funds and property in such special
account and before crediting to the respective claims of the Trustee and the
Holders and the holders of other indenture securities dividends on claims filed
against the Company in bankruptcy or receivership or in proceedings for
reorganization pursuant to the Federal Bankruptcy Act or applicable State law,
but after crediting thereon receipts on account of the indebtedness represented
by their respective claims from all sources other than from such dividends and
from the funds and property so held in such special account. As used in this
paragraph, with respect to any claim, the term "dividends" shall include any
distribution with respect to such claim, in bankruptcy or receivership or
proceedings for reorganization pursuant to the Federal Bankruptcy Act or
applicable State law, whether such distribution is made in cash, securities or
other property, but shall not include any such distribution with respect to the
secured portion, if any, of such claim. The court in which such bankruptcy,
receivership or proceedings for reorganization is pending shall have
jurisdiction (i) to apportion among the Trustee, the Holders and the holders of
other indenture securities, in accordance with the provisions of this paragraph,
the funds and property held in such special account and proceeds thereof, or
(ii) in lieu of such apportionment, in whole or in part, to give to the
provisions of this paragraph due consideration in determining the fairness of
the distributions to be made to the Trustee and the Holders and the holders of
other indenture securities with respect to their respective claims, in which
event it shall not be necessary to liquidate or to appraise the value of any
securities or other property held in such special account or as security for any
such claim, or to make a specific allocation of such distributions as between
the secured and unsecured portions of such claims, or otherwise to apply the
provisions of this paragraph as a mathematical formula.
Any Trustee which has resigned or been removed after the
beginning of such four-month period shall be subject to the provisions of this
Subsection as though such resignation or removal had not occurred. If any
Trustee has resigned or been removed prior to the beginning of such four-month
period, it shall be subject to the provisions of this Subsection if and only if
the following conditions exist:
(i) the receipt of property or reduction of claim, which
would have given rise to the obligations to account, if such Trustee
had continued as Trustee, occurred after the beginning of such
four-month period; and
(ii) such receipt of property or reduction of claim occurred
within four months after such resignation or removal.
52
(b) There shall be excluded from the operation of Subsection
(a) of this Section a creditor relationship arising from:
(1) the ownership or acquisition of securities issued
under any indenture, or any security or securities having a maturity of
one year or more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court
of competent jurisdiction or by this Indenture, for the purpose of
preserving any property which shall at any time be subject to the lien
of this Indenture or of discharging tax liens or other prior liens or
encumbrances thereon, if notice of such advances and of the
circumstances surrounding the making thereof is given to the Holders at
the time and in the manner provided in this Indenture;
(3) disbursements made in the ordinary course of business in
the capacity of trustee under an indenture, transfer agent, registrar,
custodian, paying agent, fiscal agent or depositary, or other similar
capacity;
(4) an indebtedness created as a result of services rendered
or premises rented; or an indebtedness created as a result of goods or
securities sold in a cash transaction, as defined in Subsection (c) of
this Section;
(5) the ownership of stock or of other securities of a
corporation organized under the provisions of Section 25(a) of the
Federal Reserve Act, as amended, which is directly or indirectly a
creditor of the Company; and
(6) the acquisition, ownership, acceptance or negotiation of
any drafts, bills of exchange, acceptances or obligations which fall
within the classification of self-liquidating paper, as defined in
Subsection (c) of this Section.
(c) For the purposes of this Section only:
(1) the term "default" means any failure to make payment in
full of the principal of (or premium, if any) or interest on any of the
Securities or upon the other indenture securities when and as such
principal or interest becomes due and payable;
(2) the term "other indenture securities" means securities
upon which the Company is an obligor outstanding under any other
indenture (i) under which the Trustee is also trustee, (ii) which
contains provisions substantially similar to the provisions of this
Section and (iii) under which a default exists at the time of the
apportionment of the funds and property held in such special account;
(3) the term "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;
53
(4) the term "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by the Company for the purpose of financing the purchase,
processing, manufacturing, 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 Company arising from the making,
drawing, negotiating or incurring of the draft, bill of exchange,
acceptance or obligation;
(5) the term "Company" means any obligor upon the Securities;
and
(6) the term "Federal Bankruptcy Act" means the Bankruptcy Act
or Title II of the United States Code.
SECTION 6.14. Appointment of Authenticating Agent. The Trustee
-----------------------------------
may appoint an Authenticating Agent or Agents with respect to one or more series
of Securities which shall be authorized to act on behalf of the Trustee to
authenticate Securities of such series issued upon original issue or upon
exchange, registration of transfer or partial redemption thereof or pursuant to
Section 3.06, and Securities so authenticated shall be entitled to the benefits
of this Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Wherever reference is made in this
Indenture to the authentication and delivery of Securities by the Trustee or the
Trustee's certificate of authentication or the delivery of Securities to the
Trustee for authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent and delivery of Securities to the Authenticating Agent on
behalf of the Trustee. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation having a combined capital and
surplus of not less than the equivalent of $50,000,000 and subject to
supervision or examination by Federal or State authority or the equivalent
foreign authority, in the case of an Authenticating Agent who is not organized
and doing business under the laws of the United States of America, any State
thereof or the District of Columbia. If such Authenticating Agent publishes
reports of condition at least annually, pursuant to law or to the requirements
of said supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Authenticating Agent shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time an Authenticating Agent shall
cease to be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.
Any corporation into which an Authenticated 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 such
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate agency or corporate trust business of such Authenticating Agent, shall
continue to be an Authenticating Agent; provided such corporation shall be
--------
otherwise eligible under this Section, without the execution or filing of any
paper or any further act on the part of the Trustee or such Authenticating
Agent.
54
An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Company. The Trustee may at any
time terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders of
Registered Securities, if any, of the series with respect to which such
Authenticating Agent will serve, as their names and addresses appear in the
Security Register. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section.
If an appointment with respect to one or more series is made
pursuant to this Section, the Securities of such series may have endorsed
thereon, in addition to the Trustee's certificate of authentication, an
alternative certificate of authentication in the following form:
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
[full name of Trustee]
_________________________________
As Trustee
By_____________________________
As Authenticating Agent
By_____________________________
Authorized Officer
If all of the Securities of a series may not be originally
issued at one time, and if the Trustee does not have an office capable of
authenticating Securities upon original issuance located in a Place of Payment
or other place where the Company wishes to have Securities of such series
authenticated upon original issuance, the Trustee, if so requested by the
Company in writing (which writing need not comply with Section 1.02 and need not
be accompanied by an Opinion of Counsel), shall appoint in accordance with this
Section an Authenticating Agent (which may be an Affiliate of the Company if
eligible to be appointed as an Authenticating Agent hereunder) having an office
in such Place of Payment or other place designated by the Company with respect
to such series of Securities, provided that the procedures for the
authentication of such Securities by the Authenticating Agent on original
issuance are acceptable to the Trustee.
55
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
-------------------------------------------------
SECTION 7.01. Company to Furnish Trustee Names and Addresses of Holders.
---------------------------------------------------------
The Company will furnish or cause to be furnished to the Trustee:
(a) semiannually, not later than each Interest Payment Date in each
year, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders of each series of Registered Securities
as of the preceding Regular Record Date, as the case may be, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content, such list to be dated as of a date not more than
15 days prior to the time such list is furnished, and
(c) such information concerning the Holders of Bearer Securities
which is known to the Company; provided, however, that the Company shall
-------- -------
have no obligation to investigate any matter relating to any Holder of a
Bearer Security or a Coupon:
notwithstanding the foregoing subsections (a) and (b), so long as the Trustee is
the Security Registrar with respect to a particular series of Securities, no
such list shall be required to be furnished in respect of such series.
SECTION 7.02. Preservation of Information; Communications to Holders.
------------------------------------------------------
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders of each series (i) contained in
the most recent list furnished to the Trustee as provided in Section 7.01, (ii)
received by the Trustee in its capacity as Security Registrar and (iii) filed
with it within the two preceding years pursuant to Section 7.03(d). The Trustee
may destroy any list furnished to it as provided in Section 7.01 upon receipt of
a new list so furnished.
(b) If three or more Holders of any series (herein 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 of such series
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 such series with respect to their rights under this Indenture or
under such Securities and is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee shall,
within five business days after the receipt of such application, at its
election, either
(i) afford such applicants access to the information preserved at the
time by the Trustee in accordance with Section 7.02(a), or
(ii) inform such applicants as to the approximate number of Holders of
Securities of such series whose names and addresses appear in the
information preserved at the time by the Trustee in accordance with Section
7.02(a), and as to the approximate
56
cost of mailing to such Holders the form of proxy or other
communication, if any, specified in such application.
If the Trustee shall elect not to afford such applicants
access to such information, the Trustee shall, upon the written request of such
applicants, mail to each Holder of Securities of such series whose name and
address appear in the information preserved at the time by the Trustee in
accordance with Section 7.02(a) 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 interest of the Holders of such series 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 Holders 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) Every Holder of Securities or Coupons, by receiving and
holding the same, agrees with the Company and the Trustee that neither the
Company nor the Trustee nor any agent of either of them shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Holders in accordance with Section 7.02(b), 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 Section 7.02(b).
SECTION 7.03. Reports by Trustee. (a) Within 60 days after
------------------
June 1 of each year following the first issuance of Securities, the Trustee
shall transmit to the Holders as provided in Section 7.03(d), a brief report
dated as of such date with respect to:
(1) its eligibility under Section 6.09 and its qualifications
under Section 6.08, or in lieu thereof, if to the best of its knowledge
it has continued to be eligible and qualified under said Sections, a
written statement to such effect;
(2) the character and amount of any advances (and if the
Trustee elects so to state, the circumstances surrounding the making
thereof) made by the Trustee (as such) which remain unpaid on the date
of such report, and for the reimbursement of which it claims or may
claim a lien or charge, prior to that of the Securities, on any
property or funds held or collected by it as Trustee, except that the
Trustee shall not be required (but may elect) to report such advances
if such advances so remaining unpaid aggregate not more than 1/2 of 1%
of the principal amount of the Securities Outstanding on the date of
such report;
(3) the amount, interest rate and maturity date of all other
indebtedness owing by the Company (or by any other obligor on the
Securities) to the Trustee in its
57
individual capacity, on the date of such report, with a brief
description of any property held as collateral security therefor, except
an indebtedness based upon a creditor relationship arising in any manner
described in Section 6.l3(b)(2), (3), (4) or (6);
(4) the property and funds, if any, physically in the
possession of the Trustee (as such) on the date of such report;
(5) any additional issue of Securities which the Trustee has
not previously reported; and
(6) any action taken by the Trustee in the performance of its
duties hereunder which it has not previously reported and which in its
opinion materially affects the Securities, except action in respect of
a default, notice of which has been or is to be withheld by the Trustee
in accordance with Section 6.02.
(b) The Trustee shall transmit by mail to Holders in
accordance with Section 7.03(d), a brief report with respect to the character
and amount of any advances (and if the Trustee elects so to state, the
circumstances surrounding the making thereof) made by the Trustee (as such)
since the date of the last report transmitted pursuant to Subsection (a) of this
Section (or if no such report has yet been so transmitted, since the date of
execution of this instrument) for the reimbursement of which it claims or may
claim a lien or charge, prior to that of the Securities, on property or funds
held or collected by it as Trustee and which it has not previously reported
pursuant to this Subsection, except that the Trustee shall not be required (but
may elect) to report such advances if such advances remaining unpaid at any time
aggregate 10% or less of the principal amount of the Securities Outstanding at
such time, such report to be transmitted within 90 days after such time.
(c) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which any Securities are listed, with the Commission and with the Company. The
Company will notify the Trustee when any Securities are listed on any stock
exchange.
(d) Reports pursuant to Section 7.03(a) and 7.03(b) shall be
transmitted by mail (i) to all Holders, as their names and addresses appear in
the Security Register, (ii) to all Holders as have, within two years preceding
such transmission, filed their names and addresses with the Trustee for such
purpose, and (iii) except in the case of reports pursuant to Section 7.03(b), to
all
Holders whose names and addresses have been furnished or
received by the Trustee pursuant to Sections 7.01 and 7.02.
SECTION 7.04. Reports by Company. The Company shall:
------------------
(1) file with the Trustee, within 15 days after the Company
is required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Company may
be required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934; or, if the
Company is not required to file information, documents or reports
pursuant to either of said Sections, then it shall file
58
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 security listed and registered on a national
securities exchange as may be prescribed from time to time in such
rules and regulations;
(2) 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 Company with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations; and
(3) transmit by mail to Holders of Securities, in accordance
with Section 7.03(d), within 30 days after the filing thereof with the
Trustee, such summaries of any information, documents and reports
required to be filed by the Company pursuant to paragraphs (1) and (2)
of this Section as may be required by rules and regulations prescribed
from time to time by the Commission.
ARTICLE EIGHT
Consolidation, Merger, Sale or Conveyance
-----------------------------------------
SECTION 8.01. Company May Consolidate, etc., Only on Certain
----------------------------------------------
Terms. The Company shall not consolidate with or merge into any other
- -----
corporation or convey or transfer its properties and assets substantially as an
entirety to any entity (other than a Wholly Owned Subsidiary (as defined below)
except in the event that a Wholly Owned Subsidiary is the surviving corporation
in a consolidation or merger) unless: (i) the corporation formed by such
consolidation or into which the Company is merged or the entity which acquires
by conveyance or transfer the properties and assets of the Company substantially
as an entirety shall be a corporation organized and existing under the laws of
the United States of America or any State or the District of Columbia, and shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the principal of (and premium, if any)
and interest on all the Securities and the performance of every covenant of this
Indenture on the part of the Company to be performed or observed; (ii)
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; and (iii) the Company has
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each
stating that such consolidation, merger, conveyance or transfer and such
supplemental indenture comply with this Article and that all conditions
precedent herein provided for relating to such transaction have been complied
with. The term "Wholly Owned Subsidiary" means any Subsidiary all the stock of
every class of which (other than directors' qualifying shares) is owned by the
Company either directly or through one or more Wholly Owned Subsidiaries.
SECTION 8.02. Rights and Duties of Successor Corporation. In
------------------------------------------
case of any such consolidation, merger, sale or conveyance and upon any such
assumption by the successor
59
corporation, such successor corporation shall succeed to and be substituted for
the Company, with the same effect as if it had been named herein as the party of
the first part and the predecessor corporation shall be relieved of any further
obligation under this Indenture. Such successor corporation thereupon may cause
to be signed, and may issue either in its own name or in the name of the
Company, any or all the Securities issuable hereunder which theretofore shall
not have been signed by the Company and delivered to the Trustee; and, upon the
order of such successor corporation, instead of the Company, and subject to all
the terms, conditions and limitations in this Indenture prescribed, the Trustee
shall authenticate and shall deliver any Securities which previously shall have
been signed and delivered by the officers of the Company to the Trustee for
authentication, and any Securities which such successor corporation thereafter
shall cause to be signed and delivered to the Trustee for that purpose. All the
Securities so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Securities theretofore or thereafter issued in
accordance with the terms of this Indenture as though all such Securities had
been issued at the date of the execution hereof.
In case of any consolidation, merger, sale or conveyance such
changes in phraseology and form (but not in substance) may be made in the
Securities thereafter to be issued as may be appropriate.
ARTICLE NINE
Supplemental Indentures
-----------------------
SECTION 9.01. Supplemental Indentures Without Consent of
------------------------------------------
Holders. Without the consent of any Holders, the Company, when authorized by or
- -------
pursuant to a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation
to the Company and the assumption by any such successor of the
covenants of the Company herein and in the Securities;
(2) to add to the covenants of the Company for the benefit of
the Holders of all or any series of Securities (and if such covenants
are to be for the benefit of less than all series of Securities,
stating that such covenants are expressly being included solely for the
benefit of such series) or to surrender any right or power herein
conferred upon the Company;
(3) to add any additional Events of Default with respect to
all or any series of the Securities (and, if such Event of Default is
applicable to less than all series of Securities specifying the series
to which such Event of Default is applicable);
(4) to add to or change any of the provisions of this
Indenture to such extent as shall be necessary to facilitate the
issuance of Securities in bearer form, registrable or not registrable
as to principal, and with or without interest coupons; to change or
eliminate any restrictions on the payment of principal of or any
premium or interest on Bearer Securities, to permit Bearer Securities
to be issued in exchange for Registered Securities, to permit Bearer
Securities to be issued in exchange for Bearer Securities of other
60
authorized denominations; provided that any such addition or change
--------
shall not adversely affect the interests of the Holders of Securities
of any series or any related Coupons in any material respect;
(5) to change or eliminate any of the provisions of this
Indenture; provided that any such change or elimination shall become
effective only when there is no Security outstanding of any series
created prior to the execution of such supplemental indenture which is
adversely affected by such change in or elimination of such provision;
(6) to establish the form or terms of Securities of any series as
permitted by Sections 2.01 and 3.01;
(7) 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(b);
(8) if allowed under applicable laws and regulations to permit
payment in the United States of America (including any of the states
and the District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction, of principal, premium or
interest on Bearer Securities or Coupons, if any;
(9) to provide for the issuance of uncertificated Securities of
one or more series in addition to or in place of certificated
Securities;
(10) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions with respect to
matters or questions arising under this Indenture; provided such
action shall not adversely affect the interests of the Holders of
Securities of any series in any material respect; or
(11) to secure the Securities pursuant to Section 10.08 or
otherwise.
SECTION 9.02. Supplemental Indentures with Consent of Holders.
-----------------------------------------------
With the consent of the Holders of not less than 66-2/3% in principal amount of
the Outstanding Securities of each series affected by such supplemental
indenture, by Act of said Holders delivered to the Company and the Trustee, the
Company, when authorized by or pursuant to a Board Resolution, and the Trustee
may enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities of such series under this Indenture; provided, however,
-------- -------
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Security, or reduce
the principal amount thereof or the rate of interest thereon or any
premium payable upon the redemption thereof, or change any obligation
of the Company to pay additional amounts pursuant to Section 10.06
(except
61
as contemplated by Section 8.01(1) and permitted by Section 9.01(1)),
or reduce the amount of the principal of an original Issue Discount
Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 5.02, or
change any Place of Payment where, or the currency, currencies or
currency unit or units in which, any Security or any premium or the
interest thereon is payable, or impair the right to institute suit for
the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption
Date),
(2) reduce the percentage in principal amount of the
outstanding Securities of any series, the consent of whose Holders is
required for any such supplemental indenture, or the consent of whose
Holders is required for any waiver (of compliance with certain
provisions of this Indenture or certain defaults hereunder and their
consequences) provided for in this Indenture,
(3) change any obligation of the Company, with respect to
outstanding Securities of a series, to maintain an office or agency in
the places and for the purposes specified in Section 10.02 for such
series, or
(4) modify any of the provisions of this Section, Section 5.13
or Section 10.05, except to increase any such percentage or to provide
with respect to any particular series the right to condition the
effectiveness of any supplemental indenture as to that series on the
consent of the Holders of a specified percentage of the aggregate
principal amount of Outstanding Securities of such series (which
provision may be made pursuant to Section 3.01 without the consent of
any Holder) or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the
Holder of each outstanding Security affected thereby; provided,
--------
however, that this clause shall not be deemed to require the consent of
-------
any Holder with respect to changes in the references to "the Trustee"
and concomitant changes in this Section and Section 10.05, or the
deletion of this proviso, in accordance with the requirements of
Sections 6.11(b) and 9.01(7).
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 the Holders of Securities of such series with respect to
such covenant or other provision, shall be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 9.03. Execution of Supplemental Indentures. In
------------------------------------
executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Section 6.01) shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties, immunities or liabilities under this Indenture or
otherwise.
62
SECTION 9.04. Effect of Supplemental Indentures. Upon the
---------------------------------
execution of any supplemental indenture under this Article, this Indenture shall
be modified in accordance therewith, and such supplemental indenture shall form
a part of this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.
SECTION 9.05. Conformity with Trust Indenture Act. Every
-----------------------------------
supplemental indenture executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act as then in effect.
SECTION 9.06. Reference in Securities to Supplemental
---------------------------------------
Indentures. Securities of any series authenticated and delivered after the
- ----------
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
ARTICLE TEN
Covenants
---------
SECTION 10.01. Payment of Principal, Premium and Interest.
------------------------------------------
The Company covenants and agrees for the benefit of each series of Securities
and Coupons, if any, that it will duly and punctually pay the principal of (and
premium, if any) and interest on the Securities and Coupons, if any, of that
series in accordance with the terms of the Securities and Coupons, if any, of
such series and this Indenture.
SECTION 10.02. Maintenance of Office or Agency. If Securities
-------------------------------
of a series are issuable only as Registered Securities, the Company will
maintain in each Place of Payment for such series an office or agency where
Securities of that series may be presented or surrendered for payment, where
Securities of that series may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Securities of that series and this Indenture may be served. For Securities
having a Place of Payment in the Borough of Manhattan, The City of New York, the
Company hereby appoints as such agent the Trustee, acting through its Corporate
Trust Office. If Securities of a series are issuable as Bearer Securities, the
Company will maintain (A) in the Borough of Manhattan, The City of New York, an
office or agency where any Registered Securities of that series may be presented
or surrendered for payment, where any Registered Securities of that series may
be surrendered for registration of transfer, where Securities of that series may
be surrendered for exchange, where notices and demands to or upon the Company in
respect of the Securities of that series and this Indenture may be served and
where Bearer Securities of that series and related Coupons may be presented or
surrendered for payment in the circumstances described in the following
paragraph (and not otherwise) (the foregoing Corporate Trust Office of the
Trustee being hereby so appointed as such agency), (B) subject to any laws or
regulations applicable thereto, in a Place of Payment for that series which is
located outside the United States, an office or agency where
63
Securities of that series and related Coupons may be presented and surrendered
for payment (including payment of any additional amounts payable on Securities
of that series pursuant to Section 10.06); provided, however, that if the
-------- -------
Securities of that series are listed on The Stock Exchange of the United Kingdom
and the Republic of Ireland, the Luxembourg Stock Exchange or any other stock
exchange located outside the United States and such stock exchange shall so
require, the Company will maintain a Paying Agent for the Securities of that
series in London, Luxembourg or any other required city located outside the
United States, as the case may be, so long as the Securities of that series are
listed on such exchange, and (C) subject to any laws or regulations applicable
thereto, in a Place of Payment for that series located in Europe, an office or
agency where any Registered Securities of that series may be surrendered for
registration of transfer, where Securities of that series may be surrendered for
exchange and where notices and demands to or upon the Company in respect of the
Securities of that series and this Indenture may be served. The Company will
give prompt written notice to the Trustee and the Holders of the location, and
any change in the location, of any such office or agency. If at any time the
Company shall fail to maintain any such required office or agency in respect of
any series of Securities or shall fail to furnish the Trustee with the address
thereof, such presentations and surrenders of Securities of that series may be
made and notices and demands may be made or served at the Corporate Trust Office
of the Trustee, except that Bearer Securities of that series and the related
Coupons may be presented and surrendered for payment (including payment of any
additional amounts payable on Bearer Securities of that series pursuant to
Section 10.06) at the London office of the Trustee (or an agent with a London
office appointed by the Trustee and acceptable to the Company), and the Company
hereby appoints the same as its agent to receive such respective presentations,
surrenders, notices and demands.
No payment of principal, premium or interest on Bearer
Securities shall be made at any office or agency of the Company in the United
States or by check mailed to any address in the United States or by transfer to
an account maintained with a bank located in the United States; provided,
--------
however, that, if the Securities of a series are denominated and payable in
- -------
Dollars, payment of principal of and any premium and interest on any Bearer
Security (including any additional amounts payable on Securities of such series
pursuant to Section 10.06) shall be made at the office of the Company's Paying
Agent in the Borough of Manhattan, The City of New York, if (but only if)
payment in Dollars of the full amount of such principal, premium, interest or
additional amounts, as the case may be, at all offices or agencies outside the
United States maintained for the purpose by the Company in accordance with this
Indenture is illegal or effectively precluded by exchange controls or other
similar restrictions.
The Company may also from time to time designate one or more
other offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or
-------- -------
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in accordance with the requirements set forth above for
Securities of any series for such purposes. The Company will give prompt written
notice to the Trustee and the Holders of any such designation or rescission and
of any change in the location of any such other office or agency.
SECTION 10.03. Money for Securities Payments to be Held in
-------------------------------------------
Trust. If the Company shall at any time act as its own Paying Agent with respect
- -----
to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the
64
Securities of that series, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal (and premium, if
any) or interest so becoming due until such sums shall be paid to such Persons
or otherwise disposed of as herein provided and will promptly notify the Trustee
of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for
any series of Securities, it will, at or prior to the opening of business at
each Place of Payment on each due date of the principal of (and premium, if any)
or interest on any Securities of that series, deposit with a Paying Agent a sum
sufficient to pay the principal (and premium, if any) or interest so becoming
due, such sum to be held in trust for the benefit of the Persons entitled to
such principal, premium or interest, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its failure so to act.
The Company will cause each Paying Agent for any series of
Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal
of (and premium, if any) or interest on Securities of that series in
trust for the benefit of the Persons entitled thereto until such sums
shall be paid to such Persons or otherwise disposed of as herein
provided;
(2) give the Trustee notice of any default by the Company (or
any other obligor upon the Securities of that series) in making of any
Payment of principal (and premium, if any) or interest on the
Securities of that series; and
(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of (and
premium, if any) or interest on any Security of any series and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall upon written request of the Company be paid to
the Company, or (if then held by the Company) shall be discharged from such
trust; and the Holder of such Security and Coupons, if any, shall thereafter, as
an unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease.
65
SECTION 10.04. Statement by Officers as to Default. The
-----------------------------------
Company will deliver to the Trustee for each series of Securities, within 120
days after the end of each fiscal year of the Company (which as of the date
hereof ends on September 30 of each year) ending after the date hereof so long
as any Security is outstanding hereunder, an Officers' Certificate, stating that
in the course of the performance by the signers of their duties as such officers
of the Company they would normally obtain knowledge of any default by the
Company in the performance or fulfillment of any covenant, agreement or
condition contained in this Indenture, and stating whether or not they have
obtained knowledge of any such default existing on the date of such statement
and, if so, specifying each such default of which the signers have knowledge and
the nature thereof.
SECTION 10.05. Waiver of Certain Covenants. The Company may
---------------------------
omit in any particular instance to comply with any term, provision or condition
set forth in Section 10.08, if before the time for such compliance the Holders
of not less than 66-2/3% in principal amount of the Outstanding Securities of
each series affected thereby shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such term,
provision or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such term, provision or condition shall remain in
full force and effect.
SECTION 10.06. Additional Amounts. If the Securities of a
------------------
series provide for the payment of additional amounts, the Company will pay to
the Holder of any Security of such series or any Coupon appertaining thereto
additional amounts as provided therein. Whenever in this Indenture there is
mentioned, in any context, the payment of the principal of or any premium or
interest on, or in respect of, any Security of any series or payment of any
related Coupon or the net proceeds received on the sale or exchange of any
Security of any series, such mention shall be deemed to include mention of the
payment of additional amounts provided for in this Section to the extent that,
in such context, additional amounts are, were or would be payable in respect
thereof pursuant to the provisions of this Section and express mention of the
payment of additional amounts (if applicable) in any provisions hereof shall not
be construed as excluding additional amounts in those provisions hereof where
such express mention is not made.
If the Securities of a series provide for the payment of
additional amounts, at least 10 days prior to the first Interest Payment Date
with respect to that series of Securities (or if the Securities of that series
will not bear interest prior to Maturity, the first day on which a payment of
principal and any premium is made), and at least 10 days prior to each date of
payment of principal and any premium or interest if there has been any change
with respect to the matters set forth in the below-mentioned Officers'
Certificate, the Company will furnish the Trustee and the Company's Paying Agent
or Paying Agents, if other than the Trustee, with an Officers' Certificate
instructing the Trustee and such Paying Agent or Paying Agents whether such
payment of principal of and any premium or interest on the Securities of that
series shall be made to Holders of Securities of that series or any related
Coupons who are United States Aliens without withholding for or on account of
any tax, assessment or other governmental charge described in the Securities of
that series. If any such withholding shall be required, then such Officers'
Certificate shall specify by country the amount, if any, required to be withheld
on such payments to such Holders of Securities or Coupons and the Company will
pay to the Trustee or
66
such Paying Agent the additional amounts required by this Section. The Company
covenants to indemnify the Trustee and any Paying Agent for, and to hold them
harmless against, any loss, liability or expense reasonably incurred without
negligence or bad faith on their part arising out of or in connection with
actions taken or omitted by any of them in reliance on any Officers' Certificate
furnished pursuant to this Section.
SECTION 10.07. No Lien Created, etc. This Indenture and the
--------------------
Securities do not create a Lien, charge or encumbrance on any property of the
Corporation or any Subsidiary.
SECTION 10.08. Limitation on Liens. As used herein "Lien"
-------------------
shall mean a lien or security interest (including, but not limited to, a
mortgage, encumbrance, pledge, security agreement; conditional sale or trust
receipt or a lease, consignment or bailment for security purposes securing an
obligation owed to, or a claim by, a Person other than the owner of the
Property, whether such interest is based on the common law, statute or contract,
and whether such obligation or claim is fixed or contingent) securing any notes,
bonds, debentures or other similar evidences of indebtedness for money borrowed
(hereinafter called "Debt"). As used herein, "Property" shall mean any interest
in any kind of property or asset, whether real, personal or mixed, or tangible
or intangible. The Company will not, and will not permit any Subsidiary to,
create, incur, assume or permit to exist any Lien on any Property now owned or
hereafter owned by it except:
(a) any Lien on any property or asset of the Company or any
Subsidiary existing on the date hereof;
(b) easements, rights-of-way, minor defects or irregularities
in title and other similar encumbrances having no material adverse effect on the
use or value of property or on the conduct of the Company's business;
(c) unexercised liens for taxes not delinquent or being
contested in good faith by appropriate proceedings and for which adequate
reserves are being maintained;
(d) mechanics, suppliers, materialmen's and similar liens
arising in the ordinary course of business which are being contested in good
faith by appropriate action so long as the execution of such liens has been
stayed;
(e) pledges or deposits under environmental laws, workmen's
compensation laws, unemployment insurance laws or similar legislation, or good
faith deposits in connection with bids, tenders, contracts (other than for the
payment of Debt) or leases to which the Company or a Subsidiary is a party, or
deposits to secure public or statutory obligations of the Company or a
Subsidiary or deposits for the payment of rent, in each case incurred in the
ordinary course of business to the extent required by applicable law and not
securing indebtedness;
(f) Liens on equipment arising from capital leases;
(g) any Lien existing on any property or asset prior to the
acquisition thereof by the Company or any Subsidiary or existing on any property
or asset of any Person that becomes a Subsidiary after the date hereof prior to
the time such Person becomes a
67
Subsidiary; provided that (i) such Lien is not created in contemplation
--------
of or in connection with such acquisition or such Person becoming a
Subsidiary, as the case may be, (ii) such Lien shall not apply to any
other property or assets of the Company or any Subsidiary and (iii)
such Lien shall secure only those obligations which it secures on the
date of such acquisition or the date such Person becomes a Subsidiary,
as the case may be;
(h) Liens on fixed or capital assets acquired, constructed or
improved by the Company or any Subsidiary; provided that (i) such
--------
security interests and the Debt secured thereby are incurred prior to
or within 45 days after such acquisition or the completion of such
construction or improvement and (ii) such security interests shall not
apply to any other property or assets of the Company or any Subsidiary;
(i) Liens on office buildings and research facilities;
(j) Liens which secure Debt owing by a Subsidiary to the Company
or another Subsidiary;
(k) Liens in favor of the United States of America or any state
thereof, or any department, agency or instrumentality or political
subdivision of the United States of America or any state thereof, or in
favor of any country, or any political subdivision thereof, to secure
partial, progress, advance or other payments, or performance of any
other similar obligations, including, without limitation, Liens to
secure pollution control bonds or industrial revenue or other similar
types of bonds;
(l) any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any
Liens referred to in the foregoing clauses (a), (e), (f), (g), (h),
(i), (j) and (k), provided that the principal amount of the Debt
secured thereby shall not exceed the principal amount of the
Indebtedness so secured at the time of such extension, renewal or
replacement, and that such extension, renewal or replacement Liens
shall be limited to all or part of substantially the same property
which secured the Liens extended, renewed or replaced (plus
improvements on such property);
(m) Liens on Excess Margin Stock, if any, with Excess Margin
Stock determined on the date a Lien on such Excess Margin Stock is
affixed. As used in this clause (m), "Excess Margin Stock" shall mean
that amount by which the value of all Margin Stock owned by the Company
and its Subsidiaries exceeds 25% of the value of all the Property owned
by the Company and its Subsidiaries subject to this Section 10.08.
"Margin Stock" shall have the meaning set forth in Regulation U of the
Board of Governors of the Federal Reserve System as the same may be
amended or interpreted from time to time;
(n) Liens incurred in the ordinary course of business to secure
performance of obligations with respect to statutory or regulatory
requirements, performance or return-of-money bonds, surety bonds or
other obligations of a like nature, in each case which are not incurred
in connection with the borrowing of money, the obtaining of advances or
credit or the payment of the deferred purchase price of property and
which do not in the aggregate impair in any material respect the use of
property in the business of the Company and its Subsidiaries taken as a
whole;
68
(o) Liens arising by virtue of any statutory or common law
provision relating to banker's liens, rights of setoff or similar
rights and remedies, in each case as to any deposit account or any
other fund maintained with a creditor depositary institution, provided
that (i) such deposit account is not a dedicated cash collateral
account and is not subject to restrictions against access by the
Company or a Subsidiary in excess of those set forth by regulations
promulgated by the Federal Reserve Board, and (ii) such deposit account
is not intended by the Company or Subsidiary to provide collateral to
the depository institution; and
(p) in addition to the foregoing, any other Liens securing Debt
which in the aggregate amount does not exceed an amount equal to 10% of
Consolidated assets of the Company as at the end of the then most
recently completed fiscal quarter as reflected on the financial
statements for such quarter. "Consolidated" refers to the consolidation
in accordance with generally accepted accounting principles ("GAAP") of
the accounts of the Company.
SECTION 10.09. Limitations on Sale and Lease-Back. The Company
----------------------------------
covenants and agrees that neither it nor any Subsidiary will enter into any
arrangement with any bank, insurance company or other lender or investor, or to
which any such lender or investor is a party, providing for the leasing to the
Company or a Subsidiary for a period of more than three years or any real
property located in the continental United States of America (except a lease for
a temporary period not to exceed three years by the end of which it is intended
that the use of such real property by the lessee will be discontinued) which has
been or is to be sold or transferred by the Company or a Subsidiary to such
lender or investor or to any Person or organization to which funds have been or
are to be advanced by such lender or investor on the security of the leased
property (hereinafter called "Sale and Lease-Back Transactions") unless either:
(a) the Company or such Subsidiary would be entitled, pursuant to
the provisions of Section 10.08, to create Debt secured by a Lien on
the property to be leased, without equally and ratably securing the
Securities, or
(b) the Company (and in any such case the Company covenants and
agrees that it will do so), within four months after the effective date
of such Sale and Lease-Back Transactions (whether made by the Company
or a Subsidiary), applies to the retirement of Debt of the Company
maturing by the terms thereof more than one year after the original
creation thereof (herein called "Funded Debt") an amount equal to the
greater of (i) the net proceeds of the sale of the real property leased
pursuant to such arrangement or (ii) the fair value of the real
property so leased at the time of entering into such arrangement (as
determined by the Board of Directors); provided that the amount to be
--------
applied to the retirement of Funded Debt shall be reduced by an amount
equal to the sum of (a) the principal amount of Securities delivered,
within four months after the effective date of such arrangement, to the
Trustee for retirement and cancellation and (b) the principal amount of
other Funded Debt voluntarily retired by the Company within such
four-month period, excluding retirements of Securities and other Funded
Debt pursuant to mandatory sinking fund or prepayment provisions or by
payment at maturity. No provision of Article Eleven hereof shall
restrict the retirement of Funded Debt pursuant to this Section.
69
ARTICLE ELEVEN
Redemption of Securities
------------------------
SECTION 11.01. Applicability of Article. Securities of any
------------------------
series which are redeemable before their Stated Maturity shall be redeemable in
accordance with their terms and (except as otherwise specified as contemplated
by Section 3.01 for Securities of any series) in accordance with this Article.
SECTION 11.02. Selection by Trustee of Securities to be
----------------------------------------
Redeemed. If less than all the Securities of any series are to be redeemed, the
- --------
Company shall give the Trustee notice not less than 60 days prior to the
Redemption Date (unless a shorter notice shall be satisfactory to the Trustee)
of such Redemption Date and the principal amount of the Securities of such
series to be redeemed and the Trustee shall select the particular Securities to
be redeemed from the outstanding Securities of such series not previously called
for redemption, by such method as the Trustee shall deem fair and appropriate
and which may provide for the selection for redemption of portions (equal to the
minimum authorized denomination for Securities of that series or any integral
multiple thereof) of the principal amount of Securities of such series of a
denomination larger than the minimum authorized denomination for Securities of
that series.
The Trustee shall promptly notify the Company in writing of
the Securities selected for redemption and, in the case of any Securities
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
shall relate, in the case of any Securities redeemed or to be redeemed only in
part, to the portion of the principal amount of such Securities which has been
or is to be redeemed.
SECTION 11.03. Notice of Redemption. Notice of redemption
--------------------
shall be given not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, as provided in Section 1.06.
Each such notice of redemption shall specify the Redemption
Date, the Redemption Price, the Place or Places of Payment, that the Securities
of such series are being redeemed at the option of the Company pursuant to
provisions contained in the terms of the Securities of such series or in a
supplemental indenture establishing such series, if such be the case, that on
the Redemption Date the Redemption Price will become due and payable upon each
Security redeemed, that payment will be made upon presentation and surrender of
the applicable Securities, that all Coupons, if any, maturing subsequent to the
date fixed for redemption shall be void, that any interest accrued to the
Redemption Date will be paid as specified in said notice, and that on and after
said Redemption Date any interest thereon or on the portions thereof to be
redeemed will cease to accrue. If less than all the Securities of any series are
to be redeemed the notice of redemption shall specify the numbers of the
Securities of such series to be redeemed, and, if only Bearer Securities of any
series are to be redeemed, and if such Bearer Securities may be exchanged for
Registered Securities, the last date on which exchanges of Bearer Securities for
Registered Securities not subject to redemption may be made. In case any
Security of any series
70
is to be redeemed in part only, the notice of redemption shall state the portion
of the principal amount thereof to redeemed and shall state that on and after
the Redemption Date, upon surrender of such Security and any Coupons
appertaining thereto, a new Security or Securities of such series in principal
amount equal to the unredeemed portion thereof and with appropriate Coupons will
be issued.
Notice of redemption of Securities and Coupons, if any, to be redeemed
at the election of the Company shall be given by or on behalf of the Company.
SECTION 11.04. Deposit of Redemption Price. On or before (but at least
---------------------------
one Business Day before in the Place of Payment in the case of payments not in
Dollars) the opening of business on any Redemption Date, the Company shall
deposit with the Trustee or with a Paying Agent (or, if the Company is acting as
its own Paying Agent, segregate and hold in trust as provided in Section 10.03)
an amount of money in the relevant currency (or a sufficient number of currency
units, as the case may be) sufficient to pay the Redemption Price of, and
(except if the Redemption Date shall be an Interest Payment Date) accrued
interest on, all the Securities and Coupons, if any, which are to be redeemed on
that date.
SECTION 11.05. Securities Payable on Redemption Date. Notice of
-------------------------------------
redemption having been given as aforesaid, the Securities so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified, and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such
Securities shall cease to bear interest and the Coupons for such interest
appertaining to any Bearer Securities so to be redeemed, except to the extent
provided below, shall be void. Upon surrender of any such Security for
redemption in accordance with said notice, together with all Coupons, if any,
appertaining thereto maturing after the Redemption Date, such Security shall be
paid by the Company at the Redemption Price, together with accrued interest to
the Redemption Date; provided, however, that installments of interest on Bearer
-------- -------
Securities whose Stated Maturity is on or prior to the Redemption Date shall be
payable only at an office or agency located outside the United States (except as
otherwise provided in Section 10.02) and, unless otherwise specified as
contemplated by Section 3.01, only upon presentation and surrender of Coupons
for such interest; and provided further that, unless otherwise specified as
-------- -------
contemplated by Section 3.01, installments of interest on Registered Securities
whose Stated Maturity is on or prior to the Redemption Date shall be payable to
the Holders of such Securities, or one or more Predecessor Securities,
registered as such at the close of business on the relevant Record Dates
according to their terms and the provisions of Section 3.07.
If any Bearer Security surrendered for redemption shall not be
accompanied by all appurtenant Coupons maturing after the Redemption Date, such
Security may be paid after deducting from the Redemption Price an amount equal
to the face amount of all such missing Coupons, or the surrender of such missing
Coupon or Coupons may be waived by the Company and the Trustee if there be
furnished to them such security or indemnity as they may require to save each of
them and any Paying Agent harmless. If thereafter the Holder of such Security
shall surrender to the Trustee or any Paying Agent any such missing Coupon in
respect of which a deduction shall have been made from the Redemption Price,
such Holder shall be entitled to receive the amount so deducted; provided,
--------
however, that interest represented by Coupons shall be payable only at an office
- -------
or agency located outside the United States (except as otherwise
71
provided in Section 10.02) and, unless otherwise specified as contemplated by
Section 3.01, only upon presentation and surrender of those coupons.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall, until
paid, bear interest from the Redemption Date at the rate prescribed therefor in
the Security.
SECTION 11.06. Securities Redeemed in Part. Any Security (including any
---------------------------
Coupons appertaining thereto) which is to be redeemed only in part shall be
surrendered at a Place of Payment therefor (with, if the Company or the Trustee
so requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing), and the Company shall execute, and
the Trustee shall authenticate and deliver to the Holder of such Security
without service charge, a new Security (including any Coupons appertaining
thereto) or Securities (including any Coupons appertaining thereto) of the same
series and having the same terms and conditions, of any authorized denomination
as requested by such Holder, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Security (including
any Coupons appertaining thereto) so surrendered.
SECTION 11.07. Right to Require Repurchase of Securities by the Company
--------------------------------------------------------
upon Change in Control and Decline in Debt Rating. (a) In the event that (i)
- -------------------------------------------------
there shall occur any Change in Control and (ii) the prevailing rating of the
Securities by Standard & Poor's Corporation or its successors ("S&P") or Moody's
Investors Service, Inc. or its successors ("Moody's") or another nationally
recognized rating agency selected by the Company, on any date within 90 days
following public notice of the occurrence of such Change in Control shall be
less than the rating of the Securities on the date 60 days prior to the
occurrence of such Change in Control by at least one Full Rating Category
("Rating Decline"), each holder of Securities shall have the right, at such
holder's option, to require the Company to purchase, and upon the exercise of
such right the Company shall purchase, all or any part of such holder's
Securities on the date (the "Repurchase Date") that is 100 days after the last
to occur of (i) public notice of such Change in Control and (ii) the Rating
Decline, at 100% of the principal amount on the Repurchase Date, plus any
accrued and unpaid interest to the Repurchase Date.
(b) On or before the 28th day following the last to occur of (i) public
notice of such Change in Control and (ii) the Rating Decline, the Company shall
give notice of a Change in Control and Rating Decline and of the repurchase
right set forth herein arising as a result thereof by first-class mail, postage
prepaid to each holder of Securities at such holder's address appearing in the
Securities Register. The Company shall also cause a copy of such notice of a
repurchase right to be published in an Authorized Newspaper in the Borough of
Manhattan, The City of New York and, if any Bearer Securities are then
Outstanding, in London and such other cities as shall be specified with respect
to such Bearer Securities.
Each notice of a repurchase right shall state:
(1) the Repurchase Date,
(2) the date by which the repurchase right must be exercised,
72
(3) the price at which the repurchase is to be made, if the repurchase
right is exercised, and
(4) a description of the procedure which a holder of Securities must
follow to exercise a repurchase right.
No failure of the Company to give the foregoing notice shall limit any
holder's right to exercise a repurchase right.
(c) To exercise a repurchase right, a holder of Securities shall deliver
to the Company (or an agent designated by the Company for such purpose in the
notice referred to in (b) above) at least ten days prior to the Repurchase Date
(i) written notice of the holder's exercise of such right, which notice shall
set forth the name of the holder, the principal amount of the Security or
Securities (or portion of a Security) to be repurchased, and a statement that
the option to exercise the repurchase right is being made thereby, and (ii) the
Security with respect to which the repurchase right is being exercised, duly
endorsed for transfer to the Company. Such written notice shall be irrevocable.
(d) In the event a repurchase right shall be exercised in accordance
with the terms hereof, the Company shall pay or cause to be paid the price
payable with respect to the Security or Securities as to which the repurchase
right has been exercised in cash to the holder of such Security or Securities,
on the Repurchase Date. In the event that a repurchase right is exercised with
respect to less than the entire principal amount of a surrendered Security, the
Company shall execute and deliver to the Trustee and the Trustee shall
authenticate for issuance, against surrender of such surrendered Security, (x)
in the name of the holder a new Security or Securities in the aggregate
principal amount of the unrepurchased portion of such surrendered Security and
(y) in the name of the Company a new Security or Securities in the aggregate
principal amount of the repurchased portion of such surrendered Security.
(e) As used in this Section 11.07:
(1) a "Change in Control" shall be deemed to have occurred at such time
as (i) a "person" or "group" (within the meaning of Section 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended) becomes the
"beneficial owner" (as defined in Rule l3d-3 under such Exchange Act) of
more than fifty percent (50%) of the then outstanding Voting Stock of the
Company, otherwise than through a transaction consummated with the prior
approval of the Board of Directors of the Company, or (ii) during any
period of two consecutive years, individuals who at the beginning of such
period constitute the Company's Board of Directors (together with any new
Director whose election by the Company's Board of Directors or whose
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds of the Directors then still in office who
either were Directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Directors then in office.
(2) the term "Full Rating Category" shall mean (i) with respect to S&P,
any of the following categories: AAA, AA, A, BBB, BB, B, CCC, CC and C,
(ii) with respect to Moody's, any of the following categories: Aaa, Aa, A,
Baa, Ba, B, Caa, Ca and C, (iii)
73
the equivalent of any such category by S&P or Moody's and (iv) the
equivalent of such ratings by any other nationally recognized securities
rating agency selected by the Company. In determining whether the rating of
the Debt Securities has decreased by the equivalent of one full Rating
Category, graduations within Full Rating Categories + and - S&P; 1, 2 and 3
for Moody's; or the equivalent for S&P or Moody's or any such other rating
agency) shall be taken into account.
(3) the term "public notice" shall, without limitation, include any
filing or report made in accordance with the requirements of the Securities
and Exchange Commission or any press release or public announcement made by
the Company.
(f) Notwithstanding anything to the contrary contained in this Section
11.07, if a Rating Decline shall apply to less than all series of the
Securities, the repurchase rights described herein shall apply only to the
series with respect to which there has been a Rating Decline.
ARTICLE TWELVE
Sinking Funds
-------------
SECTION 12.01. Applicability of Article. The provisions of this Article
------------------------
shall be applicable to any sinking fund for the retirement of Securities of a
series except as otherwise specified as contemplated by Section 3.01 for
Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms
of 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 Securities of any series is herein referred to as an "optional sinking
fund payment". If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 12.02. Each sinking fund payment shall be applied to the redemption
of Securities of any series as provided for by the terms of Securities of such
series.
SECTION 12.02. Satisfaction of Sinking Fund Payments with Securities.
-----------------------------------------------------
The Company (1) may deliver Outstanding Securities (including any Coupons) of a
series (other than any previously called for redemption) and (2) may apply as a
credit Securities of a series which have been redeemed either at the election of
the Company pursuant to the terms of such Securities (including any Coupons) or
through the application of permitted optional sinking fund payments pursuant to
the terms of such Securities, in each case in satisfaction of all or any part of
any sinking fund payment with respect to the Securities of such series required
to be made pursuant to the terms of such Securities as provided for by the terms
of such series; provided that such Securities have not been previously so
--------
credited. Such Securities shall be received and credited for such purpose by the
Trustee at the Redemption Price specified in such Securities for redemption
through operation of the sinking fund and the amount of such sinking fund
payment shall be reduced accordingly.
SECTION 12.03. Redemption of Securities for Sinking Fund. Not less than
-----------------------------------------
60 days prior to each sinking fund payment date for any series of Securities,
the Company will deliver to the Trustee an Officers' Certificate specifying the
amount of the next ensuing sinking
74
fund payment for that series pursuant to the terms of that series, the portion
thereof, if any, which is to be satisfied by payment of cash and the portion
thereof, if any, which is to be satisfied by delivering and crediting Securities
(including any Coupons) of that series pursuant to Section 12.02 and stating the
basis for such credit and that such Securities have not been previously so
credited and will also deliver to the Trustee any Securities (including any
coupons) to be so delivered. Not less than 30 days before each such sinking fund
payment date the Trustee shall select the Securities to be redeemed upon such
sinking fund payment date in the manner specified in Section 11.02 and cause
notice of the redemption thereof to be given in the name of and at the expense
of the Company in the manner provided in Section 11.03. Such notice having been
duly given, the redemption of such Securities shall be made upon the terms and
in the manner stated in Section 11.05 and 11.06.
ARTICLE THIRTEEN
Meetings of Holders of Securities
---------------------------------
SECTION 13.01. Purposes for Which Meetings May Be Called. If Securities
-----------------------------------------
of a series are issuable as Bearer Securities, a meeting of Holders of
Securities of such series may be called at any time and from time to time
pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities of such
series.
SECTION 13.02. Call, Notice and Place of Meetings. (a) The Trustee may
----------------------------------
at any time call a meeting of Holders of Securities of any such series for any
purpose specified in Section 13.01, to be held at such time and at such place in
the Borough of Manhattan, The City of New York, or in London, as the Trustee
shall determine. Notice of every meeting of Holders of Securities of any such
series, setting forth the time and the place of such meeting and in general
terms the action proposed to be taken at such meeting, shall be given, in the
manner provided in Section 1.06, not less than 21 nor more than 180 days prior
to the date fixed for the meeting.
(b) In case at any time the Company, by or pursuant to a Board
Resolution, or the Holders of at least 10% in principal amount of the
Outstanding Securities of any such series shall have requested the Trustee to
call a meeting of the Holders of Securities of such series for any purpose
specified in Section 13.01, by written request setting forth in reasonable
detail the action proposed to be taken at the meeting, and the Trustee shall not
have made the first publication of the notice of such meeting within 21 days
after receipt of such request or shall not thereafter proceed to cause the
meeting to be held as provided herein, then the Company or the Holders of
Securities of such series in the amount above specified, as the case may be, may
determine the time and the place in the Borough of Manhattan, The City of New
York, or in London, for such meeting and may call such meeting for such purposes
by giving notice thereof as provided in subsection (a) of this Section.
SECTION 13.03. Persons Entitled to Vote at Meetings. To be entitled to
------------------------------------
vote at any meeting of Holders of Securities of any series, a Person shall be
(1) Holder of one or more Outstanding Securities of such series, or (2) a Person
appointed by an instrument in writing as proxy for a Holder or Holders of one or
more Outstanding Securities of such series by such
75
Holder or Holders. The only Persons who shall be entitled to be present or to
speak at any meeting of Holders of Securities of any series shall be the Persons
entitled to vote at such meeting and their counsel, any representatives of the
Trustee and its counsel and any representatives of the Company and its counsel.
SECTION 13.04. Quorum; Action. The Persons entitled to vote a majority
--------------
in principal amount of the Outstanding Securities of a series shall constitute a
quorum for a meeting of Holders of Securities of such series; provided, however,
-------- -------
that if any action is to be taken at such meeting with respect to a consent or
waiver which this Indenture expressly provides may be given by the Holders of
Securities of not less than 66-2/3% in principal amount of Outstanding
Securities of a series, the Persons entitled to vote 66-2/3% in principal amount
of the Outstanding Securities of such series shall constitute a quorum. In the
absence of a quorum within 30 minutes of the time appointed for any such
meeting, the meeting shall, if convened at the request of Holders of Securities
of such series, be dissolved. In any other case the meeting may be adjourned for
a period of not less than 10 days as determined by the chairman of the meeting
prior to the adjournment of such meeting. In the absence of a quorum at any such
adjourned meeting, such adjourned meeting may be further adjourned for a period
of not less than 10 days as determined by the chairman of the meeting prior to
the adjournment of such adjourned meeting. Notice of the reconvening of any
adjourned meeting shall be given as provided in Section 13.02(a), except that
such notice need be given only once not less than five days prior to the date on
which the meeting is scheduled to be reconvened. Notice of the reconvening of an
adjourned meeting which was adjourned for lack of a quorum shall state expressly
the percentage, as provided above, of the principal amount of the Outstanding
Securities of such series which shall constitute a quorum.
Any resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action which this Indenture
expressly provides may be made, given or taken by the Holders of a specified
percentage in principal amount of the Outstanding Securities of a series may be
adopted at a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid by the affirmative vote of the Holders of such
specified percentage in principal amount of the outstanding Securities of that
series.
Any resolution passed or decision taken at any meeting of Holders of
Securities of any series duly held in accordance with this Section shall be
binding on all the Holders of Securities of such series and the related Coupons,
whether or not present or represented at the meeting.
SECTION 13.05. Determination of Voting Rights; Conduct and Adjournment
-------------------------------------------------------
of Meetings. (a) Notwithstanding any other provisions of this Indenture, the
- -----------
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Holders of Securities of a series in regard to proof of the holding
of Securities of such series and of the appointment of proxies and in regard to
the appointment and duties of inspectors of votes, the submission and
examination of proxies, certificates and other evidence of the right to vote,
and such other matters concerning the conduct of the meeting as it shall deem
appropriate. Except as otherwise permitted or required by any such regulations,
the holding of Securities shall be proved in the manner specified in Section
1.04 and the appointment of any proxy shall be proved in the manner specified in
Section 1.04 or by having the signature of the person executing the proxy
witnessed or guaranteed by any trust company, bank or banker authorized by
Section 1.04 to
76
certify to the holding of Bearer Securities. Such regulations may provide that
written instruments appointing proxies, regular on their face, may be presumed
valid and genuine without the proof specified in Section 1.04 or other proof.
(b) The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Holders of Securities as provided in Section 13.02(b), in which
case the Company or the Holders of Securities of the series calling the meeting,
as the case may be, shall in like manner appoint a temporary chairman. A
permanent chairman and a permanent secretary of the meeting shall be elected by
vote or the Persons entitled to vote a majority in principal amount of the
Outstanding Securities of such series represented at the meeting.
(c) At any meeting each Holder of a Security of such series or proxy
shall be entitled to one vote for each $1 (or the equivalent thereof) principal
amount of the Outstanding Securities of such series held or represented by him;
provided, however, that no vote shall be cast or counted at any meeting in
- -------- -------
respect of any Security challenged as not Outstanding and ruled by the chairman
of the meeting to be not Outstanding. The chairman of the meeting shall have no
right to vote, except as a Holder of a Security of such series or proxy.
(d) Any Meeting of Holders of Securities of any series duly called
pursuant to Section 13.02 at which a quorum is present may be adjourned from
time to time by Persons entitled to vote a majority in principal amount of the
Outstanding Securities of such series represented at the meeting; and the
meeting may be held as so adjourned without further notice.
SECTION 13.06. Counting Votes and Recording Action of Meetings. The vote
-----------------------------------------------
upon any resolution submitted to any meeting of Holders of Securities of any
series shall be by written ballots on which shall be subscribed the signatures
of the Holders of Securities of such series or of their representatives by proxy
and the principal amounts and serial numbers of the Outstanding Securities of
such series held or represented by them. The permanent chairman of the meeting
shall appoint two inspectors of votes who shall count all votes cast at the
meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in duplicate of all
votes cast at the meeting. A record, at least in duplicate, of the proceedings
of each meeting of Holders of Securities of any series shall be prepared by the
secretary of the meeting and there shall be attached to said record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the facts setting forth a
copy of the notice of the meeting and showing that said notice was given as
provided in Section 13.02 and, if applicable, Section 13.04. Each copy shall be
signed and verified by the affidavits of the permanent chairman and secretary of
the meeting and one such copy shall be delivered to the Company, and another to
the Trustee to be preserved by the Trustee, the latter to have attached thereto
the ballots voted at the meeting. Any record so signed and verified shall be
conclusive evidence of the matters therein stated.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
77
IN WITNESS THEREOF, 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 the day and year first above written.
ASHLAND INC.
by
___________________________________
Title: Treasurer
Attest:
_________________________________
Assistant Secretary
U.S. BANK NATIONAL ASSOCIATION
by
___________________________________
Title: Vice President
Attest:
_________________________________
Trust Officer
78
RIGHTS AGREEMENT dated as of May 16,
1996, between ASHLAND INC., a Kentucky
corporation (the "Company"), and HARRIS TRUST
AND SAVINGS BANK, an Illinois banking
corporation, as Rights Agent (the "Rights
Agent").
The Board of Directors of the Company has authorized and declared
a dividend of one Right (as hereinafter defined) for each share of Common
Stock, par value $1.00 per share, of the Company (the "Common Stock")
outstanding at the Close of Business (as hereinafter defined) on May 16,
1996 (the "Record Date"), and has authorized the issuance of one Right (as
such number may hereafter be adjusted pursuant to the provisions of this
Rights Agreement) with respect to each share of Common Stock that shall
become outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date or the Expiration Date (as such
terms are hereinafter defined); PROVIDED, HOWEVER, that Rights may be
issued with respect to shares of Common Stock that shall become outstanding
after the Distribution Date and prior to the earlier of the Redemption Date
or the Expiration Date in accordance with the provisions of Section 23.
Each Right shall initially represent the right to purchase one-thousandth
(1/1,000) of a share of Series A Participating Cumulative Preferred Stock,
without par value, of the Company (the "Preferred Shares"), having the
powers, rights and preferences set forth in the Articles of Amendment
attached as Exhibit A.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Rights
Agreement, the following terms have the meanings indicated:
"ACQUIRING PERSON" shall mean any Person who or which, alone or
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of more than 15% of the Common Shares then outstanding but
shall not include (a) the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any of its Subsidiaries, or any
Person holding Common Shares for or pursuant to the terms of any such
employee benefit plan or
(b) any such Person who has become and is such a Beneficial Owner solely
because (i) of a change in the aggregate number of Common Shares
outstanding since the last date on which such Person acquired Beneficial
Ownership of any Common Shares or (ii) it acquired such Beneficial
Ownership in the good faith belief that such acquisition would not (A)
cause such Beneficial Ownership to exceed 15% of the Common Shares then
outstanding and such Person relied in good faith in computing the
percentage of its Beneficial Ownership on publicly filed reports or
documents of the Company which are inaccurate or out-of-date or (B)
otherwise cause a Distribution Date or the adjustment provided for in
Section 11(a) to occur. Notwithstanding clause (b)(ii) of the prior
sentence, if any Person that is not an Acquiring Person due to such clause
(b)(ii) does not reduce its percentage of Beneficial Ownership of Common
Shares to 15% or less by the Close of Business on the fifth Business Day
after notice from the Company (the date of notice being the first day) that
such Person's Beneficial Ownership of Common Shares so exceeds 15%, such
Person shall, at the end of such five Business Day period, become an
Acquiring Person (and such clause (b)(ii) shall no longer apply to such
Person). For purposes of this definition, the determination whether any
Person acted in "good faith" shall be conclusively determined by the Board
of Directors of the Company.
"AFFILIATE" and "ASSOCIATE", when used with reference to any
Person, shall have the respective meanings ascribed to such terms in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as in
effect on the date of this Rights Agreement.
A Person shall be deemed the "BENEFICIAL OWNER" of, and shall be
deemed to "BENEFICIALLY OWN", and shall be deemed to have "BENEFICIAL
OWNERSHIP" of, any securities:
(a) which such Person or any of such Person's Affiliates or
Associates is deemed to "beneficially own" within the meaning of
Rule 13d-3 of the General Rules and Regulations under the
Exchange Act, as in effect on the date of this Rights Agreement;
(b) which such Person or any of such Person's Affiliates
or Associates has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (written
or oral), or upon the exercise of conversion rights, exchange
rights
(other than the Company's rights under Section 11(b)(1)),
rights (other than the Rights), warrants or options, or
otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed
the Beneficial Owner of, or to beneficially own, or to have
Beneficial Ownership of, securities tendered pursuant to a tender
or exchange offer made by or on behalf of such Person or any of
such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange thereunder, or
(ii) the right to vote pursuant to any agreement, arrangement or
understanding (written or oral); PROVIDED, HOWEVER, that a Person
shall not be deemed the Beneficial Owner of, or to beneficially
own, or to have Beneficial Ownership of, any security if (A) the
agreement, arrangement or understanding (written or oral) to vote
such security arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations under the Exchange Act and (B)
the beneficial ownership of such security is not also then
reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(c) which are beneficially owned, directly or indirectly,
by any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (written or oral) for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy or consent
as described in clause (b)(ii) of this definition) or disposing of
any securities of the Company.
Notwithstanding the foregoing, nothing contained in this definition shall
cause a Person ordinarily engaged in business as an underwriter of
securities to be the "Beneficial Owner" of, or to "beneficially own", or to
have "Beneficial Ownership" of, any securities acquired in a bona fide firm
commitment underwriting pursuant to an underwriting agreement with the
Company.
"ARTICLES OF AMENDMENT" shall mean the Articles of Amendment of
the Second Restated Articles of Incorporation of the Company designating
and establishing the Series A Participating Cumulative Preferred Stock and
setting forth the preferences, limitations and relative rights of such
series of Preferred Stock of the Company, a copy of which is attached as
Exhibit A.
"BOOK VALUE", when used with reference to Common Shares issued by
any Person, shall mean the amount of equity of such Person applicable to
each Common Share, determined (a) in accordance with generally accepted
accounting principles in effect on the date as of which such Book Value is
to be determined, (b) using all the consolidated assets and all the
consolidated liabilities of such Person on the date as of which such Book
Value is to be determined, except that no value shall be included in such
assets for goodwill arising from consummation of a business combination,
and (c) after giving effect to (i) the exercise of all rights, options and
warrants to purchase such Common Shares (other than the Rights), and the
conversion of all securities convertible into such Common Shares, at an
exercise or conversion price, per Common Share, which is less than such
Book Value before giving effect to such exercise or conversion (whether or
not exercisability or convertibility is conditioned upon occurrence of a
future event), (ii) all dividends and other distributions on the capital
stock of such Person declared prior to the date as of which such Book Value
is to be determined and to be paid or made after such date, and (iii) any
other agreement, arrangement or understanding (written or oral), or
transaction or other action prior to the date as of which such Book Value
is to be determined which would have the effect of thereafter reducing such
Book Value.
"BUSINESS COMBINATION" shall have the meaning set forth in
Section 11(c)(i).
"BUSINESS DAY" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in the
Borough of Manhattan, the City of New York, are authorized or obligated by
law or executive order to close.
"CLOSE OF BUSINESS" on any given date shall mean 5:00 p.m., New
York City time, on such date; PROVIDED, HOWEVER, that, if such date is not
a Business Day, "Close of Business" shall mean 5:00 p.m., New York City
time, on the next succeeding Business Day.
"COMMON SHARES", when used with reference to the Company prior to
a Business Combination, shall mean the shares of Common Stock of the
Company or any other shares of
capital stock of the Company into which the Common Stock shall be
reclassified or changed. "Common Shares", when used with reference to any
Person (other than the Company prior to a Business Combination), shall mean
shares of capital stock of such Person (if such Person is a corporation) of
any class or series, or units of equity interests in such Person (if such
Person is not a corporation) of any class or series, the terms of which do
not limit (as a maximum amount and not merely in proportional terms) the
amount of dividends or income payable or distributable on such class or
series or the amount of assets distributable on such class or series upon
any voluntary or involuntary liquidation, dissolution or winding up of such
Person and do not provide that such class or series is subject to
redemption at the option of such Person, or any shares of capital stock or
units of equity interests into which the foregoing shall be reclassified or
changed; PROVIDED, HOWEVER, that, if at any time there shall be more than
one such class or series of capital stock or equity interests of such
Person, "Common Shares" of such Person shall include all such classes and
series substantially in the proportion of the total number of shares or
other units of each such class or series outstanding at such time.
"COMMON STOCK" shall have the meaning set forth in the
introductory paragraph of this Rights Agreement.
"COMPANY" shall have the meaning set forth in the heading of this
Rights Agreement; PROVIDED, HOWEVER, that if there is a Business
Combination, "Company" shall have the meaning set forth in Section
11(c)(iii).
The term "CONTROL" with respect to any Person shall mean the
power to direct the management and policies of such Person, directly or
indirectly, by or through stock ownership, agency or otherwise, or pursuant
to or in connection with an agreement, arrangement or understanding
(written or oral) with one or more other Persons by or through stock
ownership, agency or otherwise; and the terms "controlling" and
"controlled" shall have meanings correlative to the foregoing.
"DISTRIBUTION DATE" shall have the meaning set forth in Section
3(b).
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
in effect on the date in question, unless otherwise specifically provided.
"EXCHANGE CONSIDERATION" shall have the meaning set forth in
Section 11(b)(i).
"EXPIRATION DATE" shall have the meaning set forth in Section
7(a).
"MAJOR PART", when used with reference to the assets of the
Company and its Subsidiaries as of any date, shall mean assets (a) having a
fair market value aggregating 50% or more of the total fair market value of
all the assets of the Company and its Subsidiaries (taken as a whole) as of
the date in question, (b) accounting for 50% or more of the total value
(net of depreciation and amortization) of all the assets of the Company and
its Subsidiaries (taken as a whole) as would be shown on a consolidated or
combined balance sheet of the Company and its Subsidiaries as of the date
in question, prepared in accordance with generally accepted accounting
principles then in effect, or (c) accounting for 50% or more of the total
amount of earnings before interest, taxes, depreciation and amortization or
of the revenues of the Company and its Subsidiaries (taken as a whole) as
would be shown on, or derived from, a consolidated or combined statement of
income or operations of the Company and its Subsidiaries for the period of
12 months ending on the last day of the Company's monthly accounting period
next preceding the date in question, prepared in accordance with generally
accepted accounting principles then in effect.
"MARKET VALUE", when used with reference to Common Shares on any
date, shall be deemed to be the average of the daily closing prices, per
share, of such Common Shares for the period which is the shorter of (a) 30
consecutive Trading Days immediately prior to the date in question or (b)
the number of consecutive Trading Days beginning on the Trading Day
immediately after the date of the first public announcement of the event
requiring a determination of the Market Value and ending on the Trading Day
immediately prior to the record date of such event; PROVIDED, HOWEVER,
that, in the event that the Market Value of such Common Shares is to be
determined in whole or in part during a period following the announcement
by the issuer of such Common Shares of any action of the type described in
Section 12(a) that would require an adjustment thereunder, then, and in
each such case, the Market Value of such Common Shares shall be
appropriately adjusted to reflect the effect of such action on the market
price of such Common Shares. The closing price for each Trading Day shall
be the closing price quoted on the principal United States securities
exchange registered under the Exchange Act (or any recognized foreign stock
exchange) on which such securities are listed, or, if such securities are
not listed on any such exchange, the average of the closing bid and asked
quotations with respect to a share of such securities on any National
Association of Securities Dealers, Inc. quotations system, or if no such
quotations are available, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in such
securities selected by the Board of Directors of the Company. If on any
such Trading Day no market maker is making a market in such securities, the
closing price of such securities on such Trading Day shall be deemed to be
the fair value of such securities as determined in good faith by the Board
of Directors of the Company (whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights
Agent, the holders of Rights and all other Persons); PROVIDED, HOWEVER,
that for the purpose of determining the closing price of the Preferred
Shares for any Trading Day on which there is no such market maker for the
Preferred Shares the closing price on such Trading Day shall be deemed to
be the Formula Number (as defined in the Articles of Amendment) times the
closing price of the Common Shares of the Company on such Trading Day.
"PERSON" shall mean an individual, corporation, partnership,
limited liability company, joint venture, association, trust,
unincorporated organization or other entity.
"PREFERRED SHARES" shall have the meaning set forth in the
introductory paragraph of this Rights Agreement. Any reference in this
Rights Agreement to Preferred Shares shall be deemed to include any
authorized fraction of a Preferred Share, unless the context otherwise
requires.
"PRINCIPAL PARTY" shall mean the Surviving Person in a Business
Combination; PROVIDED, HOWEVER, that, if such Surviving Person is a direct
or indirect Subsidiary of any other Person, "Principal Party" shall mean
the Person which is the ultimate parent of such Surviving Person and which
is
not itself a Subsidiary of another Person. In the event ultimate control
of such Surviving Person is shared by two or more Persons, "Principal
Party" shall mean that Person that is immediately controlled by such two or
more Persons.
"PURCHASE PRICE" with respect to each Right shall mean $140, as
such amount may from time to time be adjusted as provided herein. All
references herein to the Purchase Price shall mean the Purchase Price as in
effect at the time in question.
"RECORD DATE" shall have the meaning set forth in the
introductory paragraph of this Rights Agreement.
"REDEMPTION DATE" shall have the meaning set forth in Section
24(a).
"REDEMPTION PRICE" with respect to each Right shall mean $.01, as
such amount may from time to time be adjusted in accordance with Section
12. All references herein to the Redemption Price shall mean the Redemption
Price as in effect at the time in question.
"REGISTERED COMMON SHARES" shall mean Common Shares which are, as
of the date of consummation of a Business Combination, and have
continuously been for the 12 months immediately preceding such date,
registered under Section 12 of the Exchange Act.
"RIGHT CERTIFICATE" shall mean a certificate evidencing a Right
or Rights in substantially the form attached as Exhibit B.
"RIGHTS" shall mean the rights to purchase Preferred Shares (or
other securities) as provided in this Rights Agreement.
"SECURITIES ACT" shall mean the Securities Act of 1933, as in
effect on the date in question, unless otherwise specifically provided.
"SUBSIDIARY" shall mean a Person, at least a majority of the
total outstanding voting power (being the power under ordinary
circumstances (and not merely upon the happening of a contingency) to vote
in the election of directors of such Person (if such Person is a
corporation) or to participate in the management and control of such Person
(if such Person is not a corporation)) of which is
owned, directly or indirectly, by another Person or by one or more other
Subsidiaries of such other Person or by such other Person and one or more
other Subsidiaries of such other Person.
"SURVIVING PERSON" shall mean (a) the Person which is the
continuing or surviving Person in a consolidation or merger or share
exchange specified in Section 11(c)(i)(A) or 11(c)(i)(B) or (b) the Person
to which the Major Part of the assets of the Company and its Subsidiaries
is sold, leased, exchanged or otherwise transferred or disposed of in one
or more transactions specified in Section 11(c)(i)(C); PROVIDED, HOWEVER,
that, if the Major Part of the assets of the Company and its Subsidiaries
is sold, leased, exchanged or otherwise transferred or disposed of in one
or more transactions specified in Section 11(c)(i)(C) to more than one
Person, the "Surviving Person" in such case shall mean the Person that
acquired assets of the Company and/or its Subsidiaries with the greatest
fair market value in such transaction or transactions.
"TRADING DAY" shall mean a day on which the principal national
securities exchange (or principal recognized foreign stock exchange, as the
case may be) on which any securities or Rights, as the case may be, are
listed or admitted to trading is open for the transaction of business or,
if the securities or Rights in question are not listed or admitted to
trading on any national securities exchange (or recognized foreign stock
exchange, as the case may be), a Business Day.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance
with the terms and conditions hereof, and the Rights Agent hereby accepts
such appointment. The Company may from time to time appoint one or more
co-Rights Agents as it may deem necessary or desirable upon notice to the
Rights Agent (the term "Rights Agent" being used herein to refer,
collectively, to the Rights Agent together with any such co-Rights Agents).
In the event the Company appoints one or more co-Rights Agents, the
respective duties of the Rights Agent and any co-Rights Agents shall be set
forth in an amendment to this Rights Agreement.
SECTION 3. ISSUE OF RIGHTS AND RIGHT CERTIFICATES. (a) One Right
shall be associated with each Common Share outstanding on the Record Date,
each additional
Common Share that shall become outstanding between the Record Date and the
earliest of the Distribution Date, the Redemption Date or the Expiration
Date and each additional Common Share with which Rights are issued after
the Distribution Date but prior to the earlier of the Redemption Date or
the Expiration Date as provided in Section 23; PROVIDED, HOWEVER, that, if
the number of outstanding Rights are combined into a smaller number of
outstanding Rights pursuant to Section 12(a), the appropriate fractional
Right determined pursuant to such Section shall thereafter be associated
with each such Common Share.
(b) Until the earlier of (i) such time as the Company learns that
a Person has become an Acquiring Person or (ii) the Close of Business on
such date, if any, as may be designated by the Board of Directors of the
Company following the commencement of, or first public disclosure of an
intent to commence, a tender or exchange offer by any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any of its Subsidiaries, or any Person holding Common
Shares for or pursuant to the terms of any such employee benefit plan) for
outstanding Common Shares, if upon consummation of such tender or exchange
offer such Person could be the Beneficial Owner of more than 15% of the
outstanding Common Shares (the Close of Business on the earlier of such
dates being the "Distribution Date"), (x) the Rights will be evidenced by
the certificates or other evidences of ownership of Common Shares
registered in the names of the holders thereof and not by separate Right
Certificates and (y) the Rights, including the right to receive Right
Certificates, will be transferable only in connection with the transfer of
Common Shares. As soon as practicable after the Distribution Date, the
Rights Agent will send, by first-class, postage-prepaid mail, to each
record holder of Common Shares as of the Distribution Date, at the address
of such holder shown on the records of the Company, a Right Certificate
evidencing one whole Right for each Common Share (or for the number of
Common Shares with which one whole Right is then associated if the number
of Rights per Common Share held by such record holder has been adjusted in
accordance with the proviso in Section 3(a)). If the number of Rights
associated with each Common Share has been adjusted in accordance with the
proviso in Section 3(a), at the time of distribution of the Right
Certificates the Company may make any necessary and appropriate rounding
adjustments so that Right Certificates representing only whole numbers of
Rights are distributed and cash is paid in lieu of any fractional Right in
accordance with Section 15(a). As of and after the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
(c) Until the earliest of the Distribution Date, the Redemption
Date or the Expiration Date, the Rights associated with Common Shares shall
be evidenced by the evidence of ownership of such Common Shares alone, the
registered holders of the Common Shares shall also be the registered
holders of the associated Rights, and the transfer of any Common Shares
shall also constitute the transfer of the Rights associated with such
Common Shares.
(d) Certificates issued for Common Shares after the Record Date
(including, without limitation, upon transfer or exchange of outstanding
Common Shares), but prior to the earliest of the Distribution Date, the
Redemption Date or the Expiration Date, shall have printed on, written on
or otherwise affixed to or attached to them the following legend:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Rights Agreement
dated as of May 16, 1996, as it may be amended from time to
time (the "Rights Agreement"), between Ashland Inc. (the
"Company") and Harris Trust and Savings Bank, as Rights
Agent (the "Rights Agent"), the terms of which are hereby
incorporated herein by reference and a copy of which is on
file at the principal executive offices of the Company.
Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. The Rights Agent will mail to the holder of
this certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor. Rights
beneficially owned by Acquiring Persons or their Affiliates
or Associates (as such terms are defined in the Rights
Agreement) and by any subsequent holder of such Rights are
null and void and nontransferable.
Notwithstanding this paragraph (d), neither the omission of a
legend nor the existence of a legend which refers to a rights agreement
other than the Rights Agreement shall affect the enforceability of any part
of this Rights Agreement or the rights of any holder of Rights.
SECTION 4. FORM OF RIGHT CERTIFICATES. The Right Certificates
(and the form of election to purchase and form of assignment to be printed
on the reverse side thereof) shall be in substantially the form set forth
as Exhibit B and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the Company may
deem appropriate and as are not inconsistent with the provisions of this
Rights Agreement, or as may be required to comply with any applicable law
or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Rights may from time to time
be listed, or to conform to usage. Subject to the provisions of Sections 7,
11 and 23, the Right Certificates, whenever issued, shall be dated as of
the Distribution Date, and on their face shall entitle the holders thereof
to purchase such number of Preferred Shares as shall be set forth therein
for the Purchase Price set forth therein, subject to adjustment from time
to time as herein provided.
SECTION 5. EXECUTION, COUNTERSIGNATURE AND REGISTRATION. (a) The
Right Certificates shall be executed on behalf of the Company by the
Chairman of the Board, the Chief Executive Officer, the President, the
Chief Operating Officer, the Chief Financial Officer, the Treasurer or a
Vice President (whether preceded by any additional title) of the Company,
either manually or by facsimile signature, and have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned
by the Rights Agent and shall not be valid or obligatory for any purpose
unless so countersigned. In case any officer of the Company who shall have
signed any of the Right Certificates shall cease to be such an officer of
the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates may nevertheless be
countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such an officer of the Company; and any
Right Certificate may be signed on behalf of the Company by any person who,
at the actual date of execution of such Right Certificate, shall be a
proper officer of the Company to sign such Right Certificate, although at
the date of execution of this Rights Agreement any such person was not such
an officer of the Company.
(b) Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its principal office in Chicago, Illinois, books
for registration and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of
the Right Certificates, the number of Rights evidenced by each of the Right
Certificates, the certificate number of each of the Right Certificates and
the date of each of the Right Certificates.
SECTION 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES;
UNCERTIFICATED RIGHTS. (a) Subject to the provisions of Sections 7(e) and
15, at any time after the Distribution Date, and at or prior to the Close
of Business on the earlier of the Redemption Date or the Expiration Date,
any Right Certificate or Right Certificates may be transferred, split-up,
combined or exchanged for another Right Certificate or Right Certificates
representing, in the aggregate, the same number of Rights as the Right
Certificate or Right Certificates surrendered then represented. Any
registered holder desiring to transfer, split-up, combine or exchange any
Right Certificate shall make such request in writing delivered to the
Rights Agent and shall surrender the Right Certificate or Right
Certificates to be transferred, split- up, combined or exchanged at the
principal office of the Rights Agent; PROVIDED, HOWEVER, that neither the
Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any Right Certificate
surrendered for transfer until the registered holder shall have completed
and signed the certification contained in the form of assignment on the
reverse side of such Right Certificate and shall have provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request. Thereupon the Rights Agent shall, subject to Sections
7(e) and 15, countersign and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer,
split-up, combination or exchange of Right Certificates.
(b) Upon receipt by the Company or the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a valid Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancelation of the Right Certificate if mutilated, the Company will make a
new Right Certificate of like tenor and deliver such new Right Certificate
to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
(c) Notwithstanding any other provision hereof, the Company and
the Rights Agent may amend this Rights Agreement to provide for
uncertificated Rights in addition to or in place of Rights evidenced by
Right Certificates.
SECTION 7. EXERCISE OF RIGHTS; EXPIRATION DATE OF RIGHTS. (a)
Subject to Section 7(e) and except as otherwise provided herein (including
Section 11), each Right shall entitle the registered holder thereof, upon
exercise thereof as provided herein, to purchase for the Purchase Price, at
any time after the Distribution Date and at or prior to the earlier of (i)
the Close of Business on the 10th anniversary of the date of this Rights
Agreement (the Close of Business on such date being the "Expiration Date")
or (ii) the Redemption Date, one-thousandth (1/1,000) of a Preferred Share,
subject to adjustment from time to time as provided in Sections 11 and 12.
(b) The registered holder of any Right Certificate may exercise
the Rights evidenced thereby (except as otherwise provided herein) in whole
or in part at any time after the Distribution Date, upon surrender of the
Right Certificate, with the form of election to purchase on the reverse
side thereof duly executed, to the Rights Agent at the principal office of
the Rights Agent in Chicago, Illinois, together with payment of the
Purchase Price for each one-thousandth (1/1,000) of a Preferred Share as to
which the Rights are exercised, at or prior to the earlier of (i) the
Expiration Date or (ii) the Redemption Date.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the Preferred Shares to be purchased
together with an amount equal to any applicable transfer tax, in lawful
money of the United States of America, in
cash or by certified check or money order payable to the order of the
Company, the Rights Agent shall thereupon (i) either (A) promptly
requisition from any transfer agent of the Preferred Shares (or make
available, if the Rights Agent is the transfer agent) certificates for the
number of Preferred Shares to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests
or (B) if the Company shall have elected to deposit the Preferred Shares
with a depositary agent under a depositary arrangement, promptly
requisition from the depositary agent depositary receipts representing the
number of thousandths (1/1,000s) of a Preferred Share to be purchased (in
which case certificates for the Preferred Shares to be represented by such
receipts shall be deposited by the transfer agent with the depositary
agent) and the Company will direct the depositary agent to comply with all
such requests, (ii) when appropriate, promptly requisition from the Company
the amount of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 15, (iii) promptly after receipt of such
certificates or depositary receipts, cause the same to be delivered to or
upon the order of the registered holder of such Right Certificate,
registered in such name or names as may be designated by such holder and
(iv) when appropriate, after receipt promptly deliver such cash to or upon
the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise fewer than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be countersigned by the Rights Agent and delivered to the
registered holder of such Right Certificate or to his duly authorized
assigns, subject to the provisions of Section 15.
(e) Notwithstanding anything in this Rights Agreement to the
contrary, any Rights that are at any time beneficially owned by an
Acquiring Person or any Affiliate or Associate of an Acquiring Person shall
be null and void and nontransferable, and any holder of any such Right
(including any purported transferee or subsequent holder) shall not have
any right to exercise or transfer any such Right.
(f) Notwithstanding anything in this Rights Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder of any Right
Certificates
upon the occurrence of any purported exercise as set forth in this Section
7 unless such registered holder shall have (i) completed and signed the
certificate contained in the form of election to purchase set forth on the
reverse side of the Right Certificate surrendered for such exercise and
(ii) provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof as
the Company shall reasonably request.
(g) The Company may temporarily suspend, for a period of time not
to exceed 90 calendar days after the Distribution Date, the exercisability
of the Rights in order to prepare and file a registration statement under
the Securities Act, on an appropriate form, with respect to the Preferred
Shares purchasable upon exercise of the Rights and permit such registration
statement to become effective; PROVIDED, HOWEVER, that no such suspension
shall remain effective after, and the Rights shall without any further
action by the Company or any other Person become exercisable immediately
upon, the effectiveness of such registration statement. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended and shall issue
a further public announcement at such time as the suspension is no longer
in effect. Notwithstanding any provision herein to the contrary, the Rights
shall not be exercisable in any jurisdiction if the requisite qualification
under the blue sky or securities laws of such jurisdiction shall not have
been obtained or the exercise of the Rights shall not be permitted under
applicable law.
SECTION 8. CANCELATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered or presented for the purpose of exercise,
transfer, split-up, combination or exchange shall, and any Right
Certificate representing Rights that have become null and void and
nontransferable pursuant to Section 7(e) surrendered or presented for any
purpose shall, if surrendered or presented to the Company or to any of its
agents, be delivered to the Rights Agent for cancelation or in canceled
form, or, if surrendered or presented to the Rights Agent, shall be
canceled by it, and no Right Certificates shall be issued in lieu thereof
except as expressly permitted by this Rights Agreement. The Company shall
deliver to the Rights Agent for cancelation and retirement, and the Rights
Agent shall so cancel and retire, any Right Certificate purchased or
acquired by the Company. The Rights Agent shall deliver all
canceled Right Certificates to the Company so that the Company is able to
maintain such certificates for such period of time as may be required by
law, or shall, at the written request of the Company, destroy such canceled
Right Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES. (a)
The Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued Preferred Shares, free from
preemptive rights or any right of first refusal, a number of Preferred
Shares sufficient to permit the exercise pursuant to Section 7 or exchange
pursuant to Section 11 in full of all outstanding Rights.
(b) In the event that there shall not be sufficient authorized
but unissued Preferred Shares to permit the exercise or exchange of Rights
in accordance with Section 11, the Company covenants and agrees that it
will take all such action as may be necessary to authorize additional
Preferred Shares for issuance upon the exercise or exchange of Rights
pursuant to Section 11; PROVIDED, HOWEVER, that if the Company is unable to
cause the authorization of additional Preferred Shares, then the Company
shall, or in lieu of seeking any such authorization, the Company may, to
the extent necessary and permitted by applicable law and any agreements or
instruments in effect prior to the Distribution Date to which it is a
party, (i) upon surrender of a Right, pay cash equal to the Purchase Price
in lieu of issuing Preferred Shares and requiring payment therefor, (ii)
upon due exercise of a Right and payment of the Purchase Price for each
Preferred Share as to which such Right is exercised, issue equity
securities having a value equal to the value of the Preferred Shares which
otherwise would have been issuable pursuant to Section 11, which value
shall be determined by a nationally recognized investment banking firm
selected by the Board of Directors of the Company or (iii) upon due
exercise of a Right and payment of the Purchase Price for each Preferred
Share as to which such Right is exercised, distribute a combination of
Preferred Shares, cash and/or other equity and/or debt securities having an
aggregate value equal to the value of the Preferred Shares which otherwise
would have been issuable pursuant to Section 11, which value shall be
determined by a nationally recognized investment banking firm selected by
the Board of Directors of the Company. To the extent that any legal or
contractual
restrictions (pursuant to agreements or instruments in effect prior to the
Distribution Date to which it is party) prevent the Company from paying the
full amount payable in accordance with the foregoing sentence, the Company
shall pay to holders of the Rights as to which such payments are being made
all amounts which are not then restricted on a pro rata basis as such
payments become permissible under such legal or contractual restrictions
until such payments have been paid in full.
(c) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares delivered
upon exercise or exchange of Rights shall, at the time of delivery of the
certificates for such Preferred Shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.
(d) So long as the Preferred Shares issuable upon the exercise or
exchange of Rights are to be listed on any national securities exchange,
the Company covenants and agrees to use its best efforts to cause, from and
after such time as the Rights become exercisable or exchangeable, all
Preferred Shares reserved for such issuance to be listed on such securities
exchange upon official notice of issuance upon such exercise or exchange.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all Federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery of
Right Certificates or of any Preferred Shares or Common Shares or other
securities upon the exercise or exchange of the Rights. The Company shall
not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Right Certificates to a Person other
than, or in respect of the issuance or delivery of certificates or other
evidences of ownership of the Preferred Shares or Common Shares or other
securities, as the case may be, in a name other than that of, the
registered holder of the Right Certificate evidencing Rights surrendered
for exercise or exchange or to issue or deliver any certificates or other
evidences of ownership of Preferred Shares or Common Shares or other
securities, as the case may be, upon the exercise or exchange of any Rights
until any such tax shall have been paid (any such tax being payable by the
holder of such Right Certificate at the time of surrender) or until it has
been
established to the Company's satisfaction that no such tax is due.
SECTION 10. PREFERRED SHARES RECORD DATE. Each Person in whose
name any certificate or other evidence of ownership of Preferred Shares or
Common Shares or other securities is issued upon the exercise or exchange
of Rights shall for all purposes be deemed to have become the holder of
record of the Preferred Shares or Common Shares or other securities, as the
case may be, represented thereby on, and such certificate or other evidence
of ownership shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of any Purchase
Price (and any applicable transfer taxes) was made; PROVIDED, HOWEVER,
that, if the date of such surrender and payment is a date upon which the
transfer books of the Company for the Preferred Shares or Common Shares or
other securities, as the case may be, are closed, such Person shall be
deemed to have become the record holder of such Preferred Shares or Common
Shares or other securities, as the case may be, on, and such certificate or
other evidence of ownership shall be dated as of, the next succeeding
Business Day on which the transfer books of the Company for the Preferred
Shares or Common Shares or other securities, as the case may be, are open.
SECTION 11. ADJUSTMENTS IN RIGHTS AFTER THERE IS AN ACQUIRING
PERSON; EXCHANGE OF RIGHTS FOR SHARES; BUSINESS COMBINATIONS. (a) Upon a
Person becoming an Acquiring Person, proper provision shall be made so that
each holder of a Right, except as provided in Section 7(e), shall
thereafter have a right to receive, upon exercise thereof for the Purchase
Price in accordance with the terms of this Rights Agreement, such number of
thousandths (1/1,000s) of a Preferred Share as shall equal the result
obtained by multiplying the Purchase Price by a fraction, the numerator of
which is the number of thousandths (1/1,000s) of a Preferred Share for
which a Right is then exercisable and the denominator of which is 50% of
the Market Value of the Common Shares on the date on which a Person becomes
an Acquiring Person. As soon as practicable after a Person becomes an
Acquiring Person (provided the Company shall not have elected to make the
exchange permitted by Section 11(b)(i) for all outstanding Rights), the
Company covenants and agrees to use its best efforts to:
(i) prepare and file a registration statement under the
Securities Act, on an appropriate form, with
respect to the Preferred Shares purchasable upon exercise of the
Rights;
(ii) cause such registration statement to become effective
as soon as practicable after such filing;
(iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements
of the Securities Act) until the Expiration Date; and
(iv) qualify or register the Preferred Shares purchasable
upon exercise of the Rights under the blue sky or securities laws
of such jurisdictions as may be necessary or appropriate.
(b)(i) The Board of Directors of the Company may, at its option,
at any time after a Person becomes an Acquiring Person, mandatorily
exchange all or part of the then outstanding and exercisable Rights (which
shall not include Rights that shall have become null and void and
nontransferable pursuant to the provisions of Section 7(e)) for
consideration per Right consisting of either (x) one-half of the securities
that would be issuable at such time upon the exercise of one Right in
accordance with Section 11(a) or, if applicable, Section 9(b)(ii) or (iii)
or, (y) if applicable, the cash consideration specified in Section 9(b)(i)
(the consideration issuable per Right pursuant to this Section 11(b)(i)
being the "Exchange Consideration"). The Board of Directors of the Company
may, at its option, issue, in substitution for Preferred Shares, Common
Shares in an amount per Preferred Share equal to the Formula Number (as
defined in the Articles of Amendment) if there are sufficient authorized
but unissued Common Shares. If the Board of Directors of the Company elects
to exchange all or part of the Rights for the Exchange Consideration
pursuant to this Section 11(b)(i) prior to the physical distribution of the
Rights Certificates, the Corporation may distribute the Exchange
Consideration in lieu of distributing Right Certificates, in which case for
purposes of this Rights Agreement holders of Rights shall be deemed to have
simultaneously received and surrendered for exchange Right Certificates on
the date of such distribution.
(ii) Any action of the Board of Directors of the Company ordering
the exchange of any Rights pursuant to Section 11(b)(i) shall be
irrevocable and, immediately upon the taking of such action and without any
further action and
without any notice, the right to exercise any such Right pursuant to
Section 11(a) shall terminate and the only right thereafter of a holder of
such Right shall be to receive the Exchange Consideration in exchange for
each such Right held by such holder or, if the Exchange Consideration shall
not have been paid or issued, to exercise any such Right pursuant to
Section 11(c)(i). The Company shall promptly give public notice of any such
exchange; PROVIDED, HOWEVER, that the failure to give, or any defect in,
such notice shall not affect the validity of such exchange. The Company
promptly shall mail a notice of any such exchange to all holders of such
Rights at their last addresses as they appear upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the registry books
of the transfer agent for the Common Shares. Any notice which is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the method by
which the exchange of the Rights for the Exchange Consideration will be
effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which shall have become
null and void and nontransferable pursuant to the provisions of Section
7(e)) held by each holder of Rights.
(c)(i) In the event that, following a Distribution Date, directly
or indirectly, any transactions specified in the following clause (A), (B)
or (C) of this Section 11(c) (each such transaction being a "Business
Combination") shall be consummated:
(A) the Company shall consolidate with, merge with and
into, or enter into a share exchange with any Acquiring Person or
any Affiliate or Associate of an Acquiring Person;
(B) any Acquiring Person or any Affiliate or Associate of
an Acquiring Person shall merge with and into or enter into a
share exchange with the Company and, in connection with such
merger or share exchange, all or part of the Common Shares shall
be changed into or exchanged for capital stock or other securities
of the Company or of any Acquiring Person or Affiliate or
Associate of an Acquiring Person or cash or any other property; or
(C) the Company shall sell, lease, exchange or otherwise
transfer or dispose of (or one or more of its Subsidiaries shall
sell, lease, exchange or otherwise transfer or dispose of), in one
or more transactions, the Major Part of the assets of the Company
and its Subsidiaries (taken as a whole) to any Acquiring Person
or any Affiliate or Associate of an Acquiring Person;
then, in each such case, proper provision shall be made so that each holder
of a Right, except as provided in Section 7(e), shall thereafter have the
right to receive, upon the exercise thereof for the Purchase Price in
accordance with the terms of this Rights Agreement, the securities
specified below (or, at such holder's option, the securities specified in
Section 11(a)):
(x) if the Principal Party in such Business Combination has
Registered Common Shares outstanding, each Right shall thereafter
represent the right to receive, upon the exercise thereof for the
Purchase Price in accordance with the terms of this Rights
Agreement, such number of Registered Common Shares of such
Principal Party, free and clear of all liens, encumbrances or
other adverse claims, as shall have an aggregate Market Value
equal to the result obtained by multiplying the Purchase Price by
two; or
(y) if the Principal Party involved in such Business Combination
does not have Registered Common Shares outstanding, each Right
shall thereafter represent the right to receive, upon the exercise
thereof for the Purchase Price in accordance with the terms of
this Rights Agreement, at the election of the holder of such Right
at the time of the exercise thereof, any of:
(1) such number of Common Shares of the Surviving Person
in such Business Combination as shall have an aggregate Book Value
immediately after giving effect to such Business Combination equal
to the result obtained by multiplying the Purchase Price by two;
(2) such number of Common Shares of the Principal Party
in such Business Combination (if the Principal Party is not also
the Surviving Person in such Business Combination) as shall have
an aggregate Book Value immediately after giving effect to such
Business Combination equal to the result obtained by multiplying
the Purchase Price by two; or
(3) if the Principal Party in such Business Combination
is an Affiliate of one or more Persons which has Registered Common
Shares outstanding, such number of Registered Common Shares of
whichever of such Affiliates of the Principal Party has Registered
Common Shares with the greatest aggregate Market Value on the date
of consummation of such Business Combination as shall have an
aggregate Market Value on the date of such Business Combination
equal to the result obtained by multiplying the Purchase Price by
two.
(ii) The Company shall not consummate any Business Combination
unless each issuer of Common Shares for which Rights may be exercised, as
set forth in this Section 11(c), shall have sufficient authorized Common
Shares that have not been issued or reserved for issuance (and which shall,
when issued upon exercise thereof in accordance with this Rights Agreement,
be validly issued, fully paid and nonassessable and free of preemptive
rights, rights of first refusal or any other restrictions or limitations on
the transfer or ownership thereof) to permit the exercise in full of the
Rights in accordance with this Section 11(c) and unless prior thereto:
(A) a registration statement under the Securities Act on
an appropriate form, with respect to the Rights and the Common
Shares of such issuer purchasable upon exercise of the Rights,
shall be effective under the Securities Act; and
(B) the Company and each such issuer shall have:
(1) executed and delivered to the Rights Agent a
supplemental agreement providing for the assumption by
such issuer of the obligations set forth in this Section
11(c) (including the obligation of such issuer to issue
Common Shares upon the exercise of Rights in accordance
with the terms set forth in Sections 11(c)(i) and
11(c)(iii)) and further providing that such issuer, at
its own expense, will use its best efforts to:
(x) cause a registration statement
under the Securities Act on an appropriate form,
with respect to the Rights and the Common Shares
of such issuer purchasable upon exercise of the
Rights, to remain effective
(with a prospectus at all times meeting the
requirements of the Securities Act) until the
Expiration Date;
(y) qualify or register the Rights and
the Common Shares of such issuer purchasable
upon exercise of the Rights under the blue sky
or securities laws of such jurisdictions as may
be necessary or appropriate; and
(z) list the Rights and the Common
Shares of such issuer purchasable upon exercise
of the Rights on each national securities
exchange on which the Common Shares were listed
prior to the consummation of the Business
Combination or, if the Common Shares were not
listed on a national securities exchange prior
to the consummation of the Business Combination,
on a national securities exchange;
(2) furnished to the Rights Agent a written
opinion of independent counsel stating that such
supplemental agreement is a valid, binding and
enforceable agreement of such issuer; and
(3) filed with the Rights Agent a certificate of
a nationally recognized firm of independent accountants
setting forth the number of Common Shares of such issuer
which may be purchased upon the exercise of each Right
after the consummation of such Business Combination.
(iii) After consummation of any Business Combination and subject
to the provisions of Section 11(c)(ii), (A) each issuer of Common Shares
for which Rights may be exercised as set forth in this Section 11(c) shall
be liable for, and shall assume, by virtue of such Business Combination,
all the obligations and duties of the Company pursuant to this Rights
Agreement, (B) the term "Company" shall thereafter be deemed to refer to
such issuer, (C) each such issuer shall take such steps in connection with
such consummation as may be necessary to assure that the provisions hereof
(including the provisions of Sections 11(a) and 11(c)) shall thereafter be
applicable, as nearly as reasonably may be, in relation to its Common
Shares thereafter deliverable upon the exercise of the Rights and (D) the
number of Common Shares of each such
issuer thereafter receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions of Sections 11 and 12 and the provisions
of Section 7, 9 and 10 with respect to the Preferred Shares shall apply, as
nearly as reasonably may be, on like terms to any such Common Shares.
SECTION 12. CERTAIN ADJUSTMENTS. (a) To preserve the actual or
potential economic value of the Rights, if at any time after the date of
this Rights Agreement there shall be any change in the Common Shares or the
Preferred Shares, whether by reason of share dividends, share splits,
recapitalizations, mergers, consolidations, combinations or exchanges of
securities, split-ups, split-offs, spin-offs, liquidations, other similar
changes in capitalization, any distribution or issuance of cash, assets,
evidences of indebtedness or subscription rights, options or warrants to
holders of Common Shares or Preferred Shares, as the case may be (other
than distribution of the Rights or regular quarterly cash dividends) or
otherwise, then, in each such event the Board of Directors of the Company
shall make such appropriate adjustments in the number of Preferred Shares
(or the number and kind of other securities) issuable upon exercise of each
Right, the Purchase Price and Redemption Price in effect at such time and
the number of Rights outstanding at such time (including the number of
Rights or fractional Rights associated with each Common Share) such that
following such adjustment such event shall not have had the effect of
reducing or limiting the benefits the holders of the Rights would have had
absent such event.
(b) If, as a result of an adjustment made pursuant to Section
12(a), the holder of any Right thereafter exercised shall become entitled
to receive any securities other than Preferred Shares, thereafter the
number of such securities so receivable upon exercise of any Right shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions of Sections 11 and 12 and the
provisions of Sections 7, 9 and 10 with respect to the Preferred Shares
shall apply, as nearly as reasonably may be, on like terms to any such
other securities.
(c) All Rights originally issued by the Company subsequent to any
adjustment made to the amount of Preferred Shares or other securities
relating to a Right shall
evidence the right to purchase, for the Purchase Price, the adjusted number
and kind of securities purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided
herein.
(d) Irrespective of any adjustment or change in the Purchase
Price or the number of Preferred Shares or number or kind of other
securities issuable upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express the terms which
were expressed in the initial Right Certificates issued hereunder.
(e) In any case in which action taken pursuant to Section 12(a)
requires that an adjustment be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of
such event the issuing to the holder of any Right exercised after such
record date the Preferred Shares and/or other securities, if any, issuable
upon such exercise over and above the Preferred Shares and/or other
securities, if any, issuable before giving effect to such adjustment;
PROVIDED, HOWEVER, that the Company shall deliver to such holder a due bill
or other appropriate instrument evidencing such holder's right to receive
such additional securities upon the occurrence of the event requiring such
adjustment.
SECTION 13. CERTIFICATE OF ADJUSTMENT. Whenever an adjustment is
made as provided in Section 11 or 12, the Company shall (a) promptly
prepare a certificate setting forth such adjustment and a brief statement
of the facts accounting for such adjustment, (b) promptly file with the
Rights Agent and with each transfer agent for the Preferred Shares a copy
of such certificate and (c) mail a brief summary thereof to each holder of
a Right Certificate (or, prior to the Distribution Date, of the Common
Shares) in accordance with Section 25. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained.
SECTION 14. ADDITIONAL COVENANTS. (a) Notwithstanding any other
provision of this Rights Agreement, no adjustment to the number of
Preferred Shares (or fractions of a share) or other securities for which a
Right is exercisable or the number of Rights outstanding or associated with
each Common Share or any similar or other adjustment shall be made or be
effective if such adjustment would have the effect of reducing or limiting
the benefits the holders
of the Rights would have had absent such adjustment, including, without
limitation, the benefits under Sections 11 and 12, unless the terms of this
Rights Agreement are amended so as to preserve such benefits.
(b) The Company covenants and agrees that, after the Distribution
Date, except as permitted by Section 26, it will not take (or permit any
Subsidiary of the Company to take) any action if at the time such action is
taken it is intended or reasonably foreseeable that such action will reduce
or otherwise limit the benefits the holders of the Rights would have had
absent such action, including, without limitation, the benefits under
Sections 11 and 12. Any action taken by the Company during any period after
any Person becomes an Acquiring Person but prior to the Distribution Date
shall be null and void unless such action could be taken under this Section
14(b) from and after the Distribution Date. The Company shall not
consummate any Business Combination if any issuer of Common Shares for
which Rights may be exercised after such Business Combination in accordance
with Section 11(c) shall have taken any action that reduces or otherwise
limits the benefits the holders of the Rights would have had absent such
action, including, without limitation, the benefits under Sections 11 and
12.
SECTION 15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The
Company may, but shall not be required to, issue fractions of Rights or
distribute Right Certificates which evidence fractional Rights. In lieu of
such fractional Rights, the Company may pay to the registered holders of
the Right Certificates with regard to which such fractional Rights would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Right. For purposes of this Section 15(a),
the current market value of a whole Right shall be the closing price of the
Rights (as determined pursuant to the second and third sentences of the
definition of Market Value contained in Section 1) for the Trading Day
immediately prior to the date on which such fractional Rights would have
been otherwise issuable.
(b) The Company may, but shall not be required to, issue
fractions of Preferred Shares upon exercise or exchange of the Rights or
distribute certificates which evidence fractional Preferred Shares. In lieu
of fractional Preferred Shares, the Company may elect to (i) utilize a
depository arrangement as provided by the terms of the
Preferred Shares or (ii) in the case of a fraction of a Preferred Share
(other than one-thousandth (1/1,000) of a Preferred Share or any integral
multiple thereof), pay to the registered holders of Right Certificates at
the time such Rights are exercised or exchanged as herein provided an
amount in cash equal to the same fraction of the current market value of
one Preferred Share, if any are outstanding and publicly traded (or the
Formula Number times the current market value of one Common Share if the
Preferred Shares are not outstanding and publicly traded). For purposes of
this Section 15(b), the current market value of a Preferred Share (or
Common Share) shall be the closing price of a Preferred Share (or Common
Share) (as determined pursuant to the second and third sentences of the
definition of Market Value contained in Section 1) for the Trading Day
immediately prior to the date of such exercise or exchange. If, as a result
of an adjustment made pursuant to Section 12(a), the holder of any Right
thereafter exercised shall become entitled to receive any securities other
than Preferred Shares, the provisions of this Section 15(b) shall apply, as
nearly as reasonably may be, on like terms to such other securities.
(c) The Company may, but shall not be required to, issue
fractions of Common Shares upon exchange of Rights pursuant to Section
11(b), or to distribute certificates or other evidences of ownership which
evidence fractional Common Shares. In lieu of such fractional Common
Shares, the Company may pay to the registered holders of the Right
Certificates with regard to which such fractional Common Shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current Market Value of one Common Share as of the date on which a Person
became an Acquiring Person.
(d) The holders of Rights by the acceptance of the Right
Certificates (or, prior to the Distribution Date, of the Common Shares)
expressly waives the right to receive any fractional Rights or any
fractional shares upon exercise of a Right except as provided in this
Section 15.
SECTION 16. RIGHTS OF ACTION. (a) All rights of action in respect
of this Rights Agreement are vested in the respective registered holders of
the Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Shares),
without the consent of the Rights Agent
or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares) may, in his own behalf and for his
own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of,
his right to exercise the Rights evidenced by such Right Certificate in the
manner provided in such Right Certificate and in this Rights Agreement.
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would
not have an adequate remedy at law for any breach of this Rights Agreement
and shall be entitled to specific performance of the obligations of any
Person under, and injunctive relief against actual or threatened violations
of the obligations of any Person subject to, this Rights Agreement.
(b) Any holder of Rights who prevails in an action to enforce the
provisions of this Rights Agreement shall be entitled to recover the
reasonable costs and expenses, including attorneys' fees, incurred in such
action.
SECTION 17. TRANSFER AND OWNERSHIP OF RIGHTS AND RIGHT
CERTIFICATES. (a) Prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares and
the Rights associated with the Common Shares shall be automatically
transferred upon the transfer of the Common Shares.
(b) After the Distribution Date, the Right Certificates will be
transferable, subject to Section 7(e), only on the registry books of the
Rights Agent if surrendered at the principal office of the Rights Agent,
duly endorsed or accompanied by a proper instrument of transfer.
(c) The Company and the Rights Agent may deem and treat the
Person in whose name a Right Certificate (or, prior to the Distribution
Date, the associated certificate or other evidence of ownership of Common
Shares) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on
the Right Certificates or the associated certificate or other evidence of
ownership of Common Shares made by anyone other than the Company or the
Rights Agent) for all purposes whatsoever, and neither the Company nor the
Rights Agent shall be affected by any notice to the contrary.
SECTION 18. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote or
receive dividends or be deemed, for any purpose, the holder of the
Preferred Shares or of any other securities of the Company which may at any
time be issuable on the exercise or exchange of the Rights represented
thereby, nor shall anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as such, any
of the rights of a shareholder of the Company, including, without
limitation, any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting shareholders, or to receive dividends or other
distributions or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised or
exchanged in accordance with the provisions hereof.
SECTION 19. CONCERNING THE RIGHTS AGENT. (a) The Company agrees
to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder from time to time and its reasonable expenses and
counsel fees and other disbursements incurred in the administration and
execution of this Rights Agreement and the exercise and performance of its
duties hereunder.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it
in connection with its administration of this Rights Agreement in reliance
upon any Right Certificate or certificate or other evidence of ownership of
the Common Shares or for other securities of the Company, instrument of
assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.
SECTION 20. MERGER OR CONSOLIDATION OR CHANGE OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the stock transfer or corporate
trust business of the Rights Agent or any successor Rights Agent, shall be
the successor to the Rights Agent under this Rights Agreement without the
execution or filing of any paper or any further act on the part of any of
the parties hereto; PROVIDED that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 22.
In case, at the time such successor Rights Agent shall succeed to the
agency created by this Rights Agreement, any of the Right Certificates
shall have been countersigned but not delivered, any such successor Rights
Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Right Certificates so countersigned; and, in case at that time
any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in
the name of the predecessor Rights Agent or in the name of the successor
Rights Agent; and in all such cases such Right Certificates shall have the
full force provided in the Right Certificates and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and, in case at that time any of the Right Certificates
shall not have been countersigned, the Rights Agent may countersign such
Right Certificates either in its prior name or in its changed name; and in
all such cases such Right Certificates shall have the full force provided
in the Right Certificates and in this Rights Agreement.
SECTION 21. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes
the duties and obligations imposed by this Rights Agreement upon the
following terms and conditions, by all of which the Company and the holders
of Right Certificates (or, prior to the Distribution Date, of the Common
Shares), by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel satisfactory
to it (who may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection to the
Rights Agent as to any action taken, suffered or omitted by it in good
faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it
necessary or desirable that any fact or matter (including, without
limitation, the identity of any Acquiring Person) be proved or established
by the Company prior to taking, refraining from taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chairman
of the Board, the Chief Executive Officer, the President, the Chief
Operating Officer, the Chief Financial Officer, a Vice President (whether
preceded by any additional title), the Treasurer or the Secretary of the
Company and delivered to the Rights Agent; and such certificate shall be
full authorization to the Rights Agent for any action taken or suffered in
good faith by it under the provisions of this Rights Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or wilful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Rights Agreement or
in the Right Certificates (except as to its countersignature thereof) or be
required to verify the same, but all such statements and recitals are and
shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Rights Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this Rights Agreement
or in any Right Certificate; nor shall it have any responsibility with
respect to any of exercise of Rights by an Acquiring Person in whose hands
the Rights are null and void and nontransferable unless the Company shall
have given actual notice to the Rights Agent of the identity of any such
Acquiring Person; nor shall it be responsible for any adjustment required
under the provisions of Section 11 or 12 or responsible for the manner,
method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with
respect to the exercise of Rights evidenced by Right Certificates after
actual notice of any such adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any Preferred Shares or Common Shares
to be issued pursuant to this Rights Agreement or any Right Certificate or
as to whether any Preferred Shares or Common Shares will, when so issued,
be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Operating Officer, the Chief Financial Officer, a Vice
President (whether preceded by any additional title), the Secretary or the
Treasurer of the Company, and to apply to such officers for advice and
instructions in connection with its duties and it shall not be liable for
any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer,
employee or affiliate of the Rights Agent may buy, sell or deal in any of
the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or
contract with or lend money to the Company or otherwise act as fully and
freely as though it were not the Rights Agent under this Rights Agreement.
Nothing herein shall preclude the Rights Agent from acting in any other
capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company resulting from
any such act, default, neglect or misconduct provided reasonable care was
exercised in the selection and continued employment thereof.
(j) The Company agrees to indemnify and to hold the Rights Agent
harmless against any loss, liability, damage or expense (including
reasonable fees and expenses of legal counsel) which the Rights Agent may
incur resulting from its actions as Rights Agent pursuant to this Rights
Agreement; PROVIDED, HOWEVER, that the Rights Agent shall not be
indemnified or held harmless with respect to any such loss, liability,
damage or expense incurred by the Rights Agent as a result of, or arising
out of, its own negligence, bad faith or wilful misconduct. The Rights
Agent shall notify the Company, by letter or by facsimile confirmed by
letter, of the assertion of any action, proceeding, suit or claim against
the Rights Agent, promptly after the Rights Agent shall have notice of any
such assertion of an action, proceeding, suit or claim or have been served
with the summons or other first legal process giving information as to the
nature and basis of the action, proceeding, suit or claim. The Company
shall not be liable with respect to any such action, proceeding, suit or
claim to the extent that any failure of the Rights Agent so to notify
promptly the Company prejudices the rights of the Company with respect to
such action, proceeding, suit or claim. The Company shall at its own
expense assume the defense of any such action, proceeding, suit or claim.
In the event that the Company assumes such defense, the Company shall not
thereafter be liable for the fees and expenses of any additional counsel
retained by the Rights Agent, so long as the Company shall retain counsel
satisfactory to the Rights Agent, in the exercise of its reasonable
judgment, to defend such action, proceeding, suit or claim. In the event
the Company fails so to defend, the Rights Agent agrees not to settle any
litigation in connection with any action, proceeding, suit or claim with
respect to which it may seek indemnification from the Company without the
prior written consent of the Company.
(k) The Rights Agent shall be under no obligation to institute
any action, suit or legal proceeding or to take any other action likely to
involve expense unless the Company or one or more registered holders of
Right Certificates shall furnish the Rights Agent with security and
indemnity to its satisfaction for any costs and expenses which may be
incurred.
(l) The Rights Agent shall not be liable for failure to perform
any duties except as specifically set forth herein and no implied covenants
or obligations shall be read into this Agreement against the Rights Agent,
whose
duties and obligations are ministerial and shall be determined solely by
the express provisions hereof.
SECTION 22. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Rights Agreement upon 30 days' notice in writing mailed to the Company
and to each transfer agent of the Common Shares and the Preferred Shares by
registered or certified mail, and to the holders of the Right Certificates
(or, prior to the Distribution Date, of the Common Shares) by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon 30 days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common
Shares and the Preferred Shares by registered or certified mail, and to the
holders of the Right Certificates (or, prior to the Distribution Date, of
the Common Shares) by first-class mail. If the Rights Agent shall resign or
be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of 30 days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder
of a Right Certificate (or, prior to the Distribution Date, of the Common
Shares) who shall, with such notice, submit his Right Certificate (or,
prior to the Distribution Date, the certificate or other evidence of
ownership of his Common Shares) for inspection by the Company, then the
registered holder of any Right Certificate (or, prior to the Distribution
Date, of the Common Shares) may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be
a corporation organized and doing business under the laws of the United
States or of any state of the United States, in good standing, having a
principal office in the United States, which is authorized under such laws
to exercise stock transfer or corporate trust powers and is subject to
supervision or examination by Federal or state authority and which has at
the time of its appointment as Rights Agent a combined capital and surplus
of at least $50,000,000; PROVIDED that the principal transfer agent for the
Common Shares shall in any event be qualified to be the Rights Agent. After
appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predeces-
sor Rights Agent shall deliver and transfer to the successor Rights Agent
any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment, the Company shall
file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Shares and the Preferred Shares, and mail a
notice thereof in writing to the registered holders of the Right
Certificates (or, prior to the Distribution Date, of the Common Shares).
Failure to give any notice provided for in this Section 22, however, or any
defect therein shall not affect the legality or validity of the resignation
or removal of the Rights Agent or the appointment of the successor Rights
Agent, as the case may be.
SECTION 23. ISSUANCE OF ADDITIONAL RIGHTS AND RIGHT CERTIFICATES.
Notwithstanding any of the provisions of this Rights Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its Board
of Directors to reflect any adjustment or change made in accordance with
the provisions of this Rights Agreement. In addition, in connection with
the issuance or sale of Common Shares following the Distribution Date and
prior to the earlier of the Redemption Date and the Expiration Date, the
Company (a) shall, with respect to Common Shares so issued or sold pursuant
to the exercise of stock options or under any employee plan or arrangement,
or upon the exercise, conversion or exchange of securities, notes or
debentures issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company, issue
Rights and distribute Right Certificates representing the appropriate
number of Rights in connection with such issuance or sale; PROVIDED,
HOWEVER, that (x) no such Rights shall be issued if, and to the extent
that, the Company shall be advised by counsel that such issuance would
create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Rights would be issued, and (y) no such
Rights shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
SECTION 24. REDEMPTION AND TERMINATION. (a) The Board of
Directors of the Company may, at its option, at any time prior to the
earlier of (i) such time as a Person becomes an Acquiring Person and (ii)
the Expiration Date,
order the redemption of all, but not fewer than all, the then outstanding
Rights at the Redemption Price (the date of such redemption being the
"Redemption Date"), and the Company, at its option, may pay the Redemption
Price either in cash or Common Shares or other securities of the Company
deemed by the Board of Directors of the Company, in the exercise of its
sole discretion, to be at least equivalent in value to the Redemption
Price.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, and without any further
action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be
to receive the Redemption Price. Within 10 Business Days after the action
of the Board of Directors of the Company ordering the redemption of the
Rights, the Company shall give notice of such redemption to the holders of
the then outstanding Rights by mailing such notice to all such holders at
their last addresses as they appear upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Shares. Each such notice of redemption will
state the method by which payment of the Redemption Price will be made. The
notice, if mailed in the manner herein provided, shall be conclusively
presumed to have been duly given, whether or not the holder of Rights
receives such notice. In any case, failure to give such notice by mail, or
any defect in the notice, to any particular holder of Rights shall not
affect the sufficiency of the notice to other holders of Rights.
SECTION 25. NOTICES. Subject to the provisions of Section 22,
notices or demands authorized by this Agreement to be given or made by the
Rights Agent or by the holder of a Right Certificate (or, prior to the
Distribution Date, of the Common Shares) to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights Agent)
as follows:
Ashland Inc.
P.O. Box 391
Ashland, KY 41114
Attention of General Counsel
Subject to the provisions of Section 22, any notice or demand authorized by
this Rights Agreement to be given or
made by the Company or by the holder of a Right Certificate (or, prior to
the Distribution Date, of the Common Shares) to or on the Rights Agent
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the
Company) as follows:
Harris Trust and Savings Bank
311 West Monroe
P.O. Box 755
Chicago, IL 60606
Attention: Tod C. Shafer
Notices or demands authorized by this Rights Agreement to be given or made
by the Company or the Rights Agent to any holder of a Right Certificate
(or, prior to the Distribution Date, of the Common Shares) shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the
registry books of the Rights Agent or, prior to the Distribution Date, on
the registry books of the transfer agent for the Common Shares.
SECTION 26. SUPPLEMENTS AND AMENDMENTS. At any time prior to the
Distribution Date and subject to the last sentence of this Section 26, the
Company may, and the Rights Agent shall if the Company so directs,
supplement or amend any provision of this Rights Agreement (including,
without limitation, the date on which the Distribution Date shall occur or
the time during which the Rights may be redeemed pursuant to Section 24)
and the Company may amend any provision of the Articles of Amendment
without the approval of any holder of the Rights. From and after the
Distribution Date and subject to applicable law, the Company may, and the
Rights Agent shall if the Company so directs, amend this Rights Agreement
without the approval of any holders of Right Certificates (a) to cure any
ambiguity or to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provision of this Rights
Agreement or (b) to make any other provisions in regard to matters or
questions arising hereunder which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders
of Right Certificates (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person). Any supplement or amendment adopted
during any period after any Person has become an Acquiring Person but prior
to the Distribution Date shall be null and void unless such
supplement or amendment could have been adopted under the prior
sentence from and after the Distribution Date. Any supplement or amendment
to this Rights Agreement duly approved by the Company that does not amend
Sections 19, 20, 21 or 22 in a manner adverse to the Rights Agent shall
become effective immediately upon execution by the Company, whether or not
also executed by the Rights Agent. In addition, notwithstanding anything to
the contrary contained in this Rights Agreement, no supplement or amendment
to this Rights Agreement shall be made which (x) reduces the Redemption
Price (except as required by Section 12(a)), or (y) provides for an earlier
Expiration Date or (z) charges the rights or duties of the Rights Agent
without the consent of the Rights Agent.
SECTION 27. SUCCESSORS. All the covenants and provisions of this
Rights Agreement by or for the benefit of the Company or the Rights Agent
shall bind and inure to the benefit of their respective successors and
assigns hereunder.
SECTION 28. BENEFITS OF RIGHTS AGREEMENT; DETERMINATIONS AND
ACTIONS BY THE BOARD OF DIRECTORS, ETC. (a) Nothing in this Rights
Agreement shall be construed to give to any Person other than the Company,
the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, of the Common Shares) any legal or
equitable right, remedy or claim under this Rights Agreement; but this
Rights Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, of the Common Shares).
(b) Except as explicitly otherwise provided in this Rights
Agreement, the Board of Directors of the Company shall have the exclusive
power and authority to administer this Rights Agreement and to exercise all
rights and powers specifically granted to the Board of Directors of the
Company or to the Company, or as may be necessary or advisable in the
administration of this Rights Agreement, including, without limitation, the
right and power to (i) interpret the provisions of this Rights Agreement
and (ii) make all determinations deemed necessary or advisable for the
administration of this Rights Agreement (including, without limitation, a
determination to redeem or not redeem the Rights or to amend this Rights
Agreement and whether there is an Acquiring Person).
(c) Nothing contained in this Rights Agreement shall be deemed to
be in derogation of the obligation of the Board of Directors of the Company
to exercise its fiduciary duty. Without limiting the foregoing, nothing
contained herein shall be construed to suggest or imply that the Board of
Directors shall not be entitled to reject any tender offer, or to recommend
that holders of Common Shares reject any tender offer, or to take any other
action (including, without limitation, the commencement, prosecution,
defense or settlement of any litigation and the submission of additional or
alternative offers or other proposals) with respect to any tender offer
that the Board of Directors believes is necessary or appropriate in the
exercise of such fiduciary duty.
SECTION 29. SEVERABILITY. If any term, provision, covenant or
restriction of this Rights Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this
Rights Agreement shall remain in full force and effect and shall in no way
be affected, impaired or invalidated.
SECTION 30. GOVERNING LAW. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under
the law of the Commonwealth of Kentucky and for all purposes shall be
governed by and construed in accordance with the law of such State
applicable to contracts to be made and performed entirely within such
State.
SECTION 31. COUNTERPARTS; EFFECTIVENESS. This Rights Agreement
may be executed in any number of counterparts and each of such counterparts
shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.
This Rights Agreement shall be effective as of the Close of Business on the
date hereof.
SECTION 32. DESCRIPTIVE HEADINGS. Descriptive headings of the
several Sections of this Rights Agreement are inserted for convenience only
and shall not control or
affect the meaning or construction of any of the provisions of this Rights
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed as of the day and year first above written.
ASHLAND INC.,
by /s/ Paul W. Chellgren
------------------------------
Name: Paul W. Chellgren
Title: President, Chief Operating Officer
HARRIS TRUST AND SAVINGS BANK,
as Rights Agent,
by /s/ Tod C. Shafer
------------------------------
Name: Tod C. Shafer
Title: Vice President
EXHIBIT A
ARTICLES OF AMENDMENT
TO
SECOND RESTATED ARTICLES OF INCORPORATION
OF
ASHLAND INC.
AMENDMENT NO. 5
Pursuant to the provisions of Section 271B.10-060 of the Kentucky Business
Corporation Act, the undersigned corporation adopts the following articles
of amendment to set forth the preferences, limitations and relative rights
of a series of shares of its Cumulative Preferred Stock, without par value,
under Article IV of its Second Restated Articles of Incorporation.
FIRST: The name of the Corporation is Ashland Inc.
SECOND: The text of the amendment determining the terms of the series
of shares of the Cumulative Preferred Stock is as follows:
I. DESIGNATION AND NUMBER OF SHARES. This series of the Cumulative
Preferred Stock shall be designated as "Series A Participating Cumulative
Preferred Stock" (the "Series A Preferred Stock"). The number of shares
initially issuable as the Series A Preferred Stock shall be 500,000;
provided, however, that, if more than a total of 500,000 shares of Series A
Preferred Stock shall be issuable upon the exercise of Rights (the
"Rights") issued pursuant to the Rights Agreement dated as of May 16, 1996,
between the Corporation and Harris Trust and Savings Bank, as Rights Agent
(the "Rights Agreement"), the Board of Directors of the Corporation,
pursuant to Section 271B.10-060 of the Kentucky Business Corporation Act,
shall direct by resolution or resolutions that Articles of Amendment of the
Articles of Incorporation of the Corporation be properly executed and filed
with the Secretary of State of Kentucky providing for the total number of
shares issuable as Series A Preferred Stock to be increased (to the extent
that the Articles of Incorporation then permit) to the largest number of
whole shares (rounded up to the nearest whole number) issuable upon
exercise of such Rights.
II. DIVIDENDS OR DISTRIBUTIONS. (a) Subject to the prior and superior
rights of the holders of shares of any other series of Preferred Stock or
other class of capital stock of the Corporation ranking prior and superior
to the shares of Series A Preferred Stock with respect to dividends, the
holders of shares of the Series A Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors, out of the
assets of the Corporation legally available therefor, (i) quarterly
dividends payable in cash on the last day of each fiscal quarter in each
year, or such other dates as the Board of Directors of the Corporation
shall approve (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment
Date after the first issuance of a share or a fraction of a share of Series
A Preferred Stock, in the amount of $.01 per whole share (rounded to the
nearest cent), less the amount of all cash dividends declared on the Series
A Preferred Stock pursuant to the following clause (ii) since the
immediately preceding Quarterly Dividend Payment Date or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock (the total of
which shall not, in any event, be less than zero) and (ii) dividends
payable in cash on the payment date for each cash dividend declared on the
Common Stock in an amount per whole share (rounded to the nearest cent)
equal to the Formula Number (as hereinafter defined) then in effect times
the cash dividends then to be paid on each share of Common Stock. In
addition, if the Corporation shall pay any dividend or make any
distribution on the Common Stock payable in assets, securities or other
forms of non-cash consideration (other than dividends or distributions
solely in shares of Common Stock), then, in each such case, the Corporation
shall simultaneously pay or make on each outstanding whole share of Series
A Preferred Stock a dividend or distribution in like kind equal to the
Formula Number then in effect times such dividend or distribution on each
share of the Common Stock. As used herein, the "Formula Number" shall be
1,000; PROVIDED, HOWEVER, that, if at any time after May 16, 1996, the
Corporation shall (x) declare or pay any dividend on the Common Stock
payable in shares of Common Stock or make any distribution on the Common
Stock in shares of Common Stock, (y) subdivide (by a stock split or
otherwise) the outstanding shares of Common Stock into a larger number of
shares of Common Stock or (z) combine (by a
reverse stock split or otherwise) the outstanding shares of Common Stock
into a smaller number of shares of Common Stock, then, in each such event,
the Formula Number shall be adjusted to a number determined by multiplying
the Formula Number in effect immediately prior to such event by a fraction,
the numerator of which is the number of shares of Common Stock that are
outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that are outstanding immediately prior
to such event (and rounding the result to the nearest whole number); and
PROVIDED FURTHER, that, if at any time after May 16, 1996, the Corporation
shall issue any shares of its capital stock in a merger, share exchange,
reclassification, or change of the outstanding shares of Common Stock,
then, in each such event, the Formula Number shall be appropriately
adjusted to reflect such merger, share exchange, reclassification or change
so that each share of Preferred Stock continues to be the economic
equivalent of a Formula Number of shares of Common Stock prior to such
merger, share exchange, reclassification or change.
(b) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in Section 2(a) immediately prior to
or at the same time it declares a dividend or distribution on the Common
Stock (other than a dividend or distribution solely in shares of Common
Stock); PROVIDED, HOWEVER, that, in the event no dividend or distribution
(other than a dividend or distribution in shares of Common Stock) shall
have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $.01 per share on the Series A Preferred Stock
shall nevertheless be payable on such subsequent Quarterly Dividend Payment
Date. The Board of Directors may fix a record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive a
dividend or distribution declared thereon, which record date shall be the
same as the record date for any corresponding dividend or distribution on
the Common Stock.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from and after the Quarterly Dividend
Payment Date next preceding the date of original issue of such shares of
Series A Preferred Stock; PROVIDED, HOWEVER, that dividends on such shares
that are originally issued after the record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive a
quarterly dividend and on or prior to the next succeeding Quarterly
Dividend Payment Date shall begin to accrue and be cumulative from and
after such Quarterly Dividend Payment Date. Notwithstanding the foregoing,
dividends on shares of Series A Preferred Stock that are originally issued
prior to the record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive a quarterly dividend on the
first Quarterly Dividend Payment Date shall be calculated as if cumulative
from and after the last day of the fiscal quarter next preceding the date
of original issuance of such shares. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such dividends at the time accrued
and payable on such shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding and entitled to receive
such dividends.
(d) So long as any shares of the Series A Preferred Stock are
outstanding, no dividends or other distributions shall be declared, paid or
distributed, or set aside for payment or distribution, on the Common Stock,
unless, in each case, the dividend required by this Section 2 to be
declared on the Series A Preferred Stock shall have been declared and paid.
(e) The holders of the shares of Series A Preferred Stock shall not be
entitled to receive any dividends or other distributions, except as
provided herein.
III. VOTING RIGHTS. The holders of shares of Series A Preferred Stock
shall have the following voting rights:
(a) Each holder of Series A Preferred Stock shall be entitled to a
number of votes equal to the Formula Number then in effect, for each share
of Series A Preferred Stock held of record on each matter on which holders
of the Common Stock or shareholders generally are entitled to vote,
multiplied by the maximum number of votes per share which any holder of the
Common Stock or shareholders generally then have with respect to such
matter (assuming any holding period or other requirement to vote a greater
number of shares is satisfied).
(b) Except as otherwise provided herein or by applicable law, the
holders of shares of Series A Preferred
Stock and the holders of shares of Common Stock shall vote together as
one voting group for the election of directors of the Corporation and on
all other matters submitted to a vote of shareholders of the Corporation.
(c) If, at the time of any annual meeting of shareholders for the
election of directors, the equivalent of six quarterly dividends (whether
or not consecutive) payable on any share or shares of Series A Preferred
Stock are in default, the number of directors constituting the Board of
Directors of the Corporation shall be increased by two. In addition to
voting together with the holders of Common Stock for the election of other
directors of the Corporation, the holders of record of the Series A
Preferred Stock, voting separately as a voting group to the exclusion of
the holders of Common Stock, shall be entitled at said meeting of
shareholders (and at each subsequent annual meeting of shareholders),
unless all dividends in arrears have been paid or declared and set apart
for payment prior thereto, to vote for the election of two directors of the
Corporation, the holders of any Series A Preferred Stock being entitled to
cast a number of votes per share of Series A Preferred Stock equal to the
Formula Number. Until the default in payments of all dividends that
permitted the election of said directors shall cease to exist, any director
who shall have been so elected pursuant to the next preceding sentence may
be removed at any time, either with or without cause, only by the
affirmative vote of the holders of the shares of Series A Preferred Stock
at the time entitled to cast such number of votes as are required by law
for the election of any such director at a special meeting of such holders
called for that purpose, and any vacancy thereby created may be filled only
by the vote of such holders. If and when such default shall cease to exist,
the holders of the Series A Preferred Stock shall be divested of the
foregoing special voting rights, subject to revesting in the event of each
and every subsequent like default in payments of dividends. Upon the
termination of the foregoing special voting rights, the terms of office of
all persons who may have been elected directors pursuant to said special
voting rights shall forthwith terminate to the extent permitted by law, and
the number of directors constituting the Board of Directors shall be
reduced by two. The voting rights granted by this Section 3(c) shall be in
addition to any other voting rights granted to the holders of the Series A
Preferred Stock in this Section 3.
(d) Except as provided herein, in Section 11 or by applicable law,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled
to vote with holders of Common Stock as set forth herein) for authorizing
or taking any corporate action.
IV. CERTAIN RESTRICTIONS. (a) Whenever quarterly dividends or other
dividends or distributions payable on the Series A Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of
Series A Preferred Stock outstanding shall have been paid in full, the
Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except dividends paid ratably
on the Series A Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with
the Series A Preferred Stock; PROVIDED that the Corporation may at
any time redeem, purchase or otherwise acquire shares of any such
parity stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred
Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking
on a parity with the Series A Preferred Stock, except in
accordance with a purchase offer made in writing or by publication
(as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates
and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result
in fair and equitable treatment among the respective series or
classes.
(b) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of
the Corporation unless the Corporation could, under paragraph (a) of this
Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
V. LIQUIDATION RIGHTS. Upon the liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, no distribution shall
be made (a) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock, unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received an amount equal to the accrued and
unpaid dividends and distributions thereon, whether or not declared, to the
date of such payment, plus an amount equal to the greater of (i) $.01 per
whole share or (ii) an aggregate amount per share equal to the Formula
Number then in effect times the aggregate amount to be distributed per
share to holders of Common Stock or (b) to the holders of stock ranking on
a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except distributions made
ratably on the Series A Preferred Stock and all other such parity stock in
proportion to the total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up.
VI. CONSOLIDATION, MERGER, ETC. In case the Corporation shall enter
into any consolidation, merger, share exchange, combination or other
transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash or any other property, then,
in any such case, the then outstanding shares of Series A Preferred Stock
shall at the same time be similarly exchanged or changed into an amount per
share equal to the Formula Number then in effect times the aggregate amount
of stock, securities, cash or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is
exchanged or changed. In the event both this Section 6 and Section 2 appear
to apply to a transaction, this Section 6 will control.
VII. NO REDEMPTION; NO SINKING FUND. (a) The shares of Series A
Preferred Stock shall not be subject to redemption by the Corporation or at
the option of any holder of Series A Preferred Stock; provided, however,
that the Corporation may purchase or otherwise acquire outstanding shares
of Series A Preferred Stock in the open market or by offer to any holder or
holders of shares of Series A Preferred Stock.
(b) The shares of Series A Preferred Stock shall not be subject to or
entitled to the operation of a retirement or sinking fund.
VIII. Ranking. The Series A Preferred Stock shall rank junior to all
other series of Preferred Stock of the Corporation, unless the Board of
Directors shall specifically determine otherwise in fixing the powers,
preferences and relative, participating, optional and other special rights of
the shares of such series and the qualifications, limitations and restrictions
thereof.
IX. FRACTIONAL SHARES. The Series A Preferred Stock shall be issuable
upon exercise of the Rights issued pursuant to the Rights Agreement in
whole shares or in any fraction of a share that is one-thousandth (1/1,000)
of a share or any integral multiple of such fraction which shall entitle
the holder, in proportion to such holder's fractional shares, to receive
dividends, exercise voting rights, participate in distributions and have
the benefit of all other rights of holders of Series A Preferred Stock. In
lieu of fractional shares, the Corporation, prior to the first issuance of
a share or a fraction of a share of Series A Preferred Stock, may elect (a)
to make a cash payment as provided in the Rights Agreement for fractions of
a share other than one-thousandth (1/1,000) of a share or any integral
multiple thereof or (b) to issue depository receipts evidencing such
authorized fraction of a share of Series A Preferred Stock pursuant to an
appropriate agreement between the Corporation and a depository selected by
the Corporation; PROVIDED that such agreement shall provide that the
holders of such depository receipts shall have all the rights, privileges
and preferences to which they are entitled as holders of the Series A
Preferred Stock.
X. REACQUIRED SHARES. Any shares of Series A Preferred Stock purchased
or otherwise acquired by the Corporation in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancelation become authorized but unissued shares
of Preferred Stock, without par value, of the Corporation, undesignated as
to series, and may thereafter be reissued as part of a new series of such
Preferred Stock as permitted by law.
XI. AMENDMENT. None of the powers, preferences and relative,
participating, optional and other special rights of the Series A Preferred
Stock as provided herein or in the Articles of Incorporation shall be
amended in any manner that would alter or change the powers, preferences,
rights or privileges of the holders of Series A Preferred Stock so as to
affect such holders adversely without the affirmative vote of the holders
of at least 66-2/3% of the outstanding shares of Series A Preferred Stock,
voting as a separate voting group; PROVIDED, HOWEVER, that no such
amendment approved by the holders of at least 66-2/3% of the outstanding
shares of Series A Preferred Stock shall be deemed to apply to the powers,
preferences, rights or privileges of any holder of shares of Series A
Preferred Stock originally issued upon exercise of a Right after the time
of such approval without the approval of such holder.
THIRD: This amendment was duly adopted by the Board of Directors of
the Corporation without shareholder action on May 16, 1996. Shareholder
action was not required.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Amendment as of this 16th day of May, 1996.
ASHLAND INC.
by
----------------------------------
COMMONWEALTH OF KENTUCKY)
COUNTY OF GREENUP )
The foregoing instrument was acknowledged before me this 16th day of
May, 1996, by , of ASHLAND INC., a Kentucky corporation, on behalf of the
corporation.
----------------------------------
Notary Public
Prepared by Thomas L. Feazell
1000 Ashland Drive
Russell, Kentucky 41114
- - -------------------------
EXHIBIT B
[Form of Right Certificate]
Certificate No. [R]-
___________ Rights
NOT EXERCISABLE AFTER MAY 16, 2006, OR EARLIER, IF
REDEEMED OR MANDATORILY EXCHANGED BY THE COMPANY. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.01 PER RIGHT, ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) AND BY ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
ARE NULL AND VOID AND NONTRANSFERABLE.
Right Certificate
ASHLAND INC.
This certifies that , or registered
assigns, is the registered owner of the number of Rights set forth above,
each of which entitles the owner thereof, subject to the terms, provisions
and conditions of the Rights Agreement dated as of May 16, 1996 (the
"Rights Agreement"), between Ashland Inc., a Kentucky corporation (the
"Company"), and Harris Trust and Savings Bank, an Illinois banking
corporation, as Rights Agent (the "Rights Agent"), unless the Rights
evidenced hereby shall have been previously redeemed or mandatorily
exchanged by the Company, to purchase from the Company at any time after
the Distribution Date (as defined in the Rights Agreement) and prior to
5:00 p.m., New York City time, on the 10th anniversary of the date of the
Rights Agreement (the "Expiration Date"), at the principal office of the
Rights Agent, or its successors as Rights Agent, in Chicago, Illinois,
one-thousandth (1/1,000) of a fully paid, nonassessable share of Series A
Participating Cumulative Preferred Stock, without par value, of the Company
(the "Preferred Shares"), at a purchase price per one-thousandth (1/1,000)
of a share equal to $140 (the "Purchase Price"), payable in cash, upon
presentation and surrender of this
2
Right Certificate with the Form of Election to Purchase duly executed.
The Purchase Price and the number and kind of shares which may be
purchased upon exercise of each Right evidenced by this Right Certificate,
as set forth above, are the Purchase Price and the number and kind of
shares which may be so purchased as of May 16, 1996. As provided in the
Rights Agreement, the Purchase Price and the number and kind of shares
which may be purchased upon the exercise of each Right evidenced by this
Right Certificate are subject to modification and adjustment upon the
happening of certain events.
If the Rights evidenced by this Right Certificate are at any time
beneficially owned by an Acquiring Person or an Affiliate or Associate of
an Acquiring Person (as such terms are defined in the Rights Agreement),
such Rights shall be null and void and nontransferable and the holder of
any such Right (including any purported transferee or subsequent holder)
shall not have any right to exercise or transfer any such Right.
This Right Certificate is subject to all the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof, and
reference to the Rights Agreement is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the Right
Certificates. Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent and are also available from the
Company upon written request.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal stock transfer or corporate trust office of the
Rights Agent, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder
to purchase a like aggregate number and kind of shares as the Rights
evidenced by the Right Certificate or Right Certificates surrendered shall
have entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof another Right Certificate or Right Certificates for the number of
whole Rights not exercised.
3
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Right Certificate may be redeemed by the Company at its
option at a redemption price (in cash or shares of Common Stock or other
securities of the Company deemed by the Board of Directors to be at least
equivalent in value) of $.01 per Right (which amount shall be subject to
adjustment as provided in the Rights Agreement) at any time prior to the
earlier of (a) such time as a Person becomes an Acquiring Person and (b)
the Expiration Date.
The Company may, but shall not be required to, issue fractions of
Preferred Shares or distribute certificates which evidence fractions of
Preferred Shares upon the exercise of any Right or Rights evidenced hereby.
In lieu of issuing fractional shares, the Company may elect to make a cash
payment as provided in the Rights Agreement for fractions of a share other
than one-thousandth (1/1,000) of a share or any integral multiple thereof
or to issue certificates or to utilize a depositary arrangement as provided
in the terms of the Rights Agreement and the Preferred Shares.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such,
any of the rights of a shareholder of the Company, including, without
limitation, any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting shareholders (except as provided in the Rights
Agreement), or to receive dividends or other distributions or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in accordance with the
provisions of the Rights Agreement.
4
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of:
ASHLAND INC.,
by
-----------------------------------------
Name:
Title:
Attest:
- - -------------------------
Name:
Title:
Countersigned:
HARRIS TRUST AND SAVINGS BANK,
as Rights Agent,
by
---------------------
Authorized Officer
5
[On Reverse Side of Right Certificate]
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed by the registered holder if
such holder desires to exercise the Rights
represented by this Right Certificate.)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise ________________
Rights represented by this Right Certificate to purchase the Preferred
Shares (or other shares) issuable upon the exercise of such Rights and
requests that certificates for such shares be issued in the name of:
Please insert social security
or other identifying number
- - ---------------------------------------------------------------------------
(Please print name and address)
- - ---------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of
such Rights shall be registered in the name of and delivered to:
6
Please insert social security
or other identifying number
- - ----------------------------------------------------------------------------
(Please print name and address)
- - ----------------------------------------------------------------------------
Dated:____________,____
---------------------------------
Signature
Signature Guaranteed:
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the Right
Certificate.)
FOR VALUE RECEIVED ________________________________ hereby sells,
assigns and transfers unto
- - ---------------------------------------------------------------------------
(Please print name and address of transferee)
- - ---------------------------------------------------------------------------
this Right Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint ______________
Attorney, to transfer the within Right Certificate on the books of the
within-named Corporation, with full power of substitution.
Dated: ____________, ____
------------------------------
Signature
Signature Guaranteed:
The undersigned hereby certifies that (a) the Rights evidenced by this
Right Certificate are not being sold, assigned or transferred by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
7
Associate thereof (as such terms are defined in the Rights Agreement), (b)
this Rights Certificate is not being sold, assigned or transferred to or on
behalf of any such Acquiring Person, Affiliate or Associate, and (c) after
inquiry and to the best knowledge of the undersigned, the undersigned did
not acquire the Rights evidenced by this Right Certificate from any Person
who is or was an Acquiring Person or an Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement).
------------------------------
Signature
NOTICE
------
The signature on the foregoing Form of Election to Purchase or Form of
Assignment must correspond to the name as written upon the face of this
Right Certificate in every particular, without alteration or enlargement or
any change whatsoever.
Exhibit 10.5
ASHLAND OIL INC.
SALARY CONTINUATION PLAN
The Ashland Oil, Inc. Salary Continuation Plan (the "Plan"), effective
July 21, 1988, is an employee benefit plan which provides eligible salaried
employees of Ashland Oil, Inc. and its majority-owned subsidiaries
(collectively referred to herein as the "Company") with certain severance
benefits if the individual's employment with the Company is terminated
under defined circumstances after a "change in control of the Company." The
details and purpose of the Plan are more fully explained below.
SECTION 1. PURPOSE
The purpose of the Plan is to reduce employee concerns about the
possibility of a "change in control of the Company." It is important that
each employee be able to focus his or her full attention and energy toward
the goals and objectives of the Company. The Plan is also designed to
permit the Company to retain its high quality work force by increasing
stability and improving moral and productivity. In addition, the Plan will
allow the Company to attract and retain new qualified employees.
SECTION 2. ADMINISTRATION
Ashland Oil, Inc. ("Ashland") shall be the Plan Administrator and
shall administer the Plan. Any determinations by the Vice President of
Corporate Human Resources in carrying out, administering, or interpreting
this Plan shall be final and binding for all purposes and upon all
interested persons and their heirs, successors, and personal
representatives. All costs associated with the Plan shall be borne by the
Company.
SECTION 3. ELIGIBILITY
An employee who is classified on the records of the Company as a
regular, full-time salaried employee, whether exempt or nonexempt as
specified in the Fair Labor Standards Act, as from time to time amended,
(excluding hourly employees; employees covered by collective bargaining
agreements; employees of subsidiaries, entities, or partnerships in which
the Company has a 50% or less ownership interest; and international
employees, except foreign nationals who are located in Canada or those who
are U.S. expatriates) will be entitled to participate in the Plan,
regardless of length of service. Employees who have entered into employment
contracts with the Company will not be eligible to participate in the Plan.
At any time prior to a "change in control of the Company" as defined
in Section 4(b), Ashland reserves, in its complete discretion, the right to
amend the eligible classes of employees.
SECTION 4. CONDITIONS FOR BENEFIT PAYMENTS
(a) A participant shall not be entitled to receive benefits under this
Plan prior to a "change in control of the Company," as hereinafter defined.
Participation in the Plan does not create a contract of employment between
the Company and its employees. The Company reserves the right to terminate
employees at any time for any reason, just as employees have the right to
terminate their employment at any time for any reason.
(b) For purposes of the Plan, a change in control of Ashland Oil, Inc.
(herein a "change in control of the Company") shall be deemed to have
occurred if:
(i) there shall be consummated (A) any consolidation or merger
involving the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of the Company's common
stock would be converted into cash, securities, or other property, other
than a merger of the Company in which the individual holders of the
Company's common stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (B) any sale, lease, exchange, or transfer
(in one transaction or a series of related transactions) of all or
substantially all the assets of the Company; or
(ii) the shareholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the Company; or
(iii) any "person" (as such term is used in Sections 13(d) and 14(d)
(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), other than the Company or a subsidiary thereof or any employee
benefit plan sponsored by the Company or a subsidiary thereof, shall become
the beneficial owner (within the meaning of Rule 13d-3 under the Exchange
Act) of securities of Ashland representing 50% or more of the combined
voting power of Ashland's then outstanding securities ordinarily (and apart
from rights accruing in special circumstances) having the right to vote in
the election of directors, as a result of a tender or exchange offer, open
market purchases, privately-negotiated purchases or otherwise; or
(iv) at any time during a period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors of
Ashland shall cease for any reason to constitute at least a majority
thereof, unless the election or the nomination for election by
Ashland's shareholders of each new director during such two-year period was
approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of such two-year period.
SECTION 5. AMOUNT OF BENEFITS
Following a "change in control of the Company" and a participant's
termination of employment within two (2) years thereafter without "cause,"
a participant shall be entitled to receiver benefits under the Plan as
described below:
(a) A participant shall be entitled to be paid in an undiscounted lump
sum within ten (10) business days after such participant's termination of
employment without "cause," an amount equal to a specified portion of his
or her current base compensation (excluding any bonus compensation) based
upon such participant's aggregate years and months of service (whether or
not continuous) with the Company as follows:
Length of Service Payment
Up to 5 full years 3 months base compensation
More than 5 and up to 10 full years 6 months base compensation
More than 10 and up to 15 full years 1 year's base compensation
More than 15 and up to 20 full years 1-1/2 years base compensation
More than 0 full years 2 years base compensation
(b) At the sole expense of the Company, a participant shall be
entitled to the continuation of his or her medical, dental, and group life
benefits in effect at the time of such participant's termination of
employment without "cause" for a period of six (6) months following such
participant's termination of employment.
(c) A participant shall be reimbursed for any legal fees or expenses
incurred by the participant to enforce the payment of Plan benefits within
ten (10) business days of providing copies of applicable invoices to the
Company.
(d) A participant shall be entitled to interest on the amount of any
payments due under the plan (but not timely paid) in an amount equivalent
to the prime rate of interest (quoted by Citibank, N.A. as its prime
commercial lending rate) on the latest date practicable prior to the date
such payments should have been made, to and including the date it is made.
(e) Within ten (10) business days of the participant's termination of
employment following a "change in control of the Company," the Company
shall provide, at no cost to the participant, individual outside assistance
in finding other employment. Such obligation may be fulfilled by the
Company through the retention of an outplacement service for use by
individual participants.
(f) Participants shall be entitled to receive any pension, disability,
workers' compensation, other Company benefit plan distribution, payment for
vacation accrued but not taken, statutory employment termination benefit,
or any other compensation plan payment otherwise independently due;
however, in no event shall a participant who receives benefit under the
Plan be entitled to additional severance payment pursuant to any other
existing severance policy of the Company.
SECTION 6. ACCEPTANCE OF BENEFITS
If a participant receives and accepts all of the benefits provided
under Section 5 of the Plan, he or she shall be deemed thereby to have
waived any right or cause of action against the Company and its directors,
officers, or employees arising from the termination of the participant's
employment.
SECTION 7. CLAIMS PROCEDURE
(a) Following a "change in control of the Company" and a participant's
termination of employment, the benefits described in Section 5 of the Plan
shall be paid as described therein without any required action on the part
of such participant.
(b) If any participant believes that he or she is entitled to benefits
provided under the Plan and has not received such benefits within the time
prescribed by the Plan, such participant may submit a written claim for
payment of such benefits to the Company. If such claim for benefits is
wholly or partially denied, the Company shall, within thirty (30) business
days after receipt of the claim, notify the participant of the denial of
the claim. Such notice of denial (i) shall be in writing, (ii) shall be
written in a manner calculated to be understood by the participant, and
(iii) shall contain (A) the specific reason or reasons for denial of the
claim, (B) a specific reference to the pertinent Plan provisions upon which
the denial is based, (C) a description of any additional material or
information necessary to perfect the claim, along with an explanation of
why such material or information is necessary, and (D) an explanation of
the claim review procedure, in accordance with the provisions of this
Section 7.
(c) Within sixty (60) business days after the receipt by the
participant of a written notice of denial of the claim, or such later time
as shall be deemed reasonable taking into account the nature of the benefit
subject to the claim and any other attendant circumstances, the participant
may file a written request with the Company that it conduct a full and fair
review of the denial of the claim for benefits. As a part of such full and
fair review, the participant (or such participant's duly authorized
representative) may review and photocopy pertinent documents (including but
not limited to the participant's personal history file) and submit issues
and comments to the Company in writing. The Company shall make its
determination in accordance with the documents governing the Plan insofar
as such documents are consistent with the provisions of the Employee
Retirement Income Security Act of 1974 (herein "ERISA").
The Company shall promptly deliver to the participant its written
decision on the claim (in no even later than thirty (30) business days
after the receipt of the aforesaid request for review, except that if there
are special circumstances (such as a conference with the participant or his
or her representative) which require an extension of time, the aforesaid
thirty (30) business day period shall be extended to a reasonable period of
time not to exceed sixty (60) business days). Such decision shall (i) be
written in a manner calculated to be understood by the participant, (ii)
include the specific reason or reasons for the decision, and (iii) contain
a specific reference to the pertinent Plan provisions upon which the
decision is based. If the decision on review is not furnished within the
time prescribed by this Section 7(c), the claim shall be deemed granted on
review.
SECTION 8. AMENDMENTS AND TERMINATIONS
Ashland's Board of Directors shall have plenary authority to
terminate, modify, or amend this Plan in such respects as it shall deem
advisable at any time prior to a "change in control of the Company" as
defined in Section 4(b).
SECTION 9. SUCCESSORS BINDING AGREEMENT
(i) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by
agreement in form and substance satisfactory to eligible participants,
expressly to assume and agree to provide benefits pursuant to this Plan in
the same manner and to the same extent that the Company would be required
to perform its obligations under the Plan if no such succession had taken
place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a violation of this Plan and
shall entitle eligible participants to compensation from the Company in the
same amount and on the same terms as the participant would be entitled
pursuant to Section 5, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the date of the participant's termination of employment without
"cause." As used in this Plan, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this
Section 9 or which otherwise becomes bound by all the terms and provisions
of this Plan by operation of law.
(ii) This Plan shall inure to the benefit of and be enforceable by a
participant's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees, and legatees. If a participant
should die while any amounts would still be payable to him or her hereunder
if he or she had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Plan to
such participant's devisee, legatee, or other designee or, if there be no
such designee, to his or her estate.
SECTION 10. WITHHOLDING TAXES
The Company is authorized to withhold any tax required to be withheld
from the amounts payable to a participant pursuant to this Plan which are
considered taxable compensation to the participant.
SECTION 11. GOVERNING LAW
The Plan shall be governed by the laws of the Commonwealth of
Kentucky.
Exhibit 10.7
SEPARATION AGREEMENT AND GENERAL RELEASE
THIS SEPARATION AGREEMENT AND GENERAL RELEASE ("Agreement") is made
and entered into this ____day of _______________, 2002 by and between James
R. Boyd (the "Employee") and Ashland Inc. (herein the "Company" or
"Ashland").
W I T N E S S E T H:
WHEREAS, Employee has been employed by the Company from December 31,
1981 to the present; and
WHEREAS, Employee and the Company desire to settle fully and finally
all matters between them, including, but in no way limited to, any issues
that might arise out of Employee's employment with and retirement from the
Company;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, Employee and the Company agree as follows:
1. This Separation Agreement and General Release (the "Agreement")
shall not in any way be construed as an admission by the Company that it
has acted wrongfully with respect to Employee or any other person, or that
Employee has any rights whatsoever against the Company, and the Company
specifically disclaims any liability to or wrongful acts against Employee
or any other person, on the part of itself, its employees or its agents.
2. Employee represents, understands, and agrees that on January 31,
2002 ("Release Date"), he will be released from active employment with
Ashland Inc. His employment will terminate on January 31, 2004
("Termination Date"), and he will be eligible to retire from the Company on
February 1, 2004 ("Retirement Date").
3. Employee represents that he has not filed any complaints or charges
or lawsuits against the Company with any governmental agency or any court,
and that he will not do so at any time hereafter; provided, however, this
shall not limit Employee from filing a lawsuit for the sole purpose of
enforcing Employee's rights under this Agreement.
4. In order to assist Employee in the transition into other endeavors,
and as mutual consideration for the covenants expressed herein, the Company
will provide Employee with the Severance Benefits more fully described in
Attachment I (Summary of Benefits), which is hereby incorporated by
reference.
5. Employee understands and agrees that the consideration described
above is more than Employee would otherwise be entitled to under the
Company's existing policies and any current agreement with Employee.
Employee Initials:________
Page 1
6. Employee understands and agrees that, effective as of his Release
Date, he is no longer authorized to incur any expenses or obligations or
liabilities on behalf of the Company. However, Ashland may, from time to
time during the Payroll Continuation Period (as defined in Attachment I),
request Employee to perform services of the nature and type he performed
during his service with Ashland, and Employee will be responsive on a
reasonable basis to the requests of Ashland.
7. As of his Release Date, Employee will return to the Company all
Company Information and related reports, maps, files, memoranda, and
records; credit cards, cardkey passes; door and file keys; computer access
codes; software; and other physical or personal property which Employee
received or prepared or helped prepare in connection with his employment.
Employee has not retained and will not retain any copies, duplicates,
reproductions, or excerpts thereof. The term "Company Information" as used
in this Agreement means (a) confidential information including, without
limitation, information received from third parties under confidential
conditions; and (b) other technical, business, or financial information,
the use or disclosure of which might reasonably be construed to be contrary
to the interests of the Company.
8. Employee agrees that during the course of his employment with the
Company he has acquired Company Information as defined in Paragraph 7.
Employee understands and agrees that such Company Information has been
disclosed to Employee in confidence and for Company use only. Employee
understands and agrees that he (i) will keep such Company Information
confidential at all times during and after his employment with the Company,
(ii) will not disclose or communicate Company Information to any third
party, and (iii) will not make use of Company Information on Employee's own
behalf, or on behalf of any third party. In view of the nature of
Employee's employment and the nature of Company Information which Employee
has received during the course of his employment, Employee agrees that any
unauthorized disclosure to third parties of Company Information or other
violation, or threatened violation, of this Agreement would cause
irreparable damage to the trade secret status of Company Information and to
the Company. When Company Information becomes generally available to the
public other than by Employee's acts or omissions, it is no longer subject
to these restrictions. However, Company Information shall not be deemed to
come under this exception merely because it is embraced by more general
information that is or becomes generally available to the public. It is
understood that, if requested by Employee, the Company may review and
approve the Employee's resume to assure there is no violation of this
Paragraph 8, which approval shall not be unreasonably withheld.
9. During the Payroll Continuation Period and for a period of one year
after Employee's Termination Date (the "non-compete period"), Employee
shall not, without Ashland's prior written consent, accept a directorship
or employment with, engage in consulting for or otherwise render services
for, make investments in, or otherwise engage in any other business
activity with, any corporation, partnership, firm or other form of business
enterprise which competes, both as to the type of activity and geographical
location, with any business of the Company. However, Employee's
Employee Initials:________
Page 2
ownership, directly or indirectly, of issued and outstanding stock or
debt obligations of any corporation, which are regularly traded on a
national securities exchange or in the over-the-counter market, shall not
be deemed to be a violation of this Agreement so long as such ownership
does not, directly or indirectly, permit Employee to control the business
and affairs of such corporation. Employee further agrees that for the
non-compete period, Employee will not interfere with or disrupt the
relationship, contractual or otherwise, with respect to the business or
employment relationship between the Company or its successors and any other
party, including other employees of the Company or its successors. Employee
agrees that these restrictions are reasonable, and that they do not
unreasonably preclude Employee from being gainfully employed.
Notwithstanding, Employee shall also be subject to the non-compete
provisions of paragraph 4.04 of Ashland's Supplemental Early Retirement
Plan.
10. This Agreement shall immediately and automatically terminate if
(a) Employee breaches the confidentiality provisions of paragraph (8)
above, (b) Employee engages in competitive activity as set forth in
paragraph (9) above, or (c) Employee takes any other action inconsistent
with this Agreement. In the case of such termination of this Agreement, the
Company may cease further payments and benefits to Employee, and may recoup
previous amounts paid to Employee, and other damages, under this Agreement.
The covenants set forth in paragraphs (8), (9), and (15) shall survive the
term of this Agreement.
11. Employee acknowledges and agrees that the remedy of the Company at
law for any breach of the covenants and agreements of paragraphs (8) and
(9) of this Agreement will be inadequate, and that the Company will be
entitled to injunctive relief against any such breach or any threatened,
imminent, probable or possible breach.
12. The provisions of this Agreement are severable, and if any part of
it is found to be unenforceable, the other paragraphs shall remain fully
valid and enforceable.
13. Employee represents and agrees that he will keep the terms of this
Agreement completely confidential, and that he will not hereafter disclose
any information concerning this Agreement to anyone except his immediate
family, financial advisor and attorney; provided, they agree to keep said
information confidential and not disclose it to others.
14. Employee represents and agrees that he has carefully read and
fully understands all of the provisions of this Agreement, that he is
voluntarily entering into this Agreement, and that he has had sufficient
time before signing this Agreement to consult with counsel.
15. As a material inducement to the Company to enter into this
Agreement, Employee hereby irrevocably and unconditionally releases,
acquits, and forever discharges Company and each of the Company's owners,
stockholders, predecessors, successors, assigns, agents, directors,
officers, employees, representatives, attorneys,
Employee Initials:________
Page 3
divisions, subsidiaries, affiliates, and all persons acting by,
through, under, or in concert with any of them (collectively "Releasees"),
jointly and individually, from any and all charges, complaints, claims,
liabilities, obligations, promises, agreements, controversies, damages,
actions, causes of action, suits, rights, demands, costs, losses, debts,
and expenses (including attorneys' fees and costs actually incurred) of any
nature whatsoever, including, but not limited to, any claims of wrongful
discharge or any other claim related to Employee's employment or to acts or
omissions of the Company involving Employee or of rights under federal,
state, or local laws prohibiting age or other forms of discrimination,
claims growing out of any legal restrictions on Company's right to
terminate its employees ("Claim" or "Claims") arising out of any actions or
events occurring before the date of Employee's execution of this Release
against each or any of the Releasees. Examples of such federal, state, or
local law, rule, or regulation regarding discrimination include, but are
not limited to, any claims arising under Title VII of the Civil Rights Act
of 1964, 42 U.S.C. Section 2000e et seq., the Age Discrimination in
Employment Act, 29 U.S.C. Section 621 et seq., or the Workers' Adjustment
and Retraining Notification (WARN) Act, 29 U.S.C. Section 2101 et seq.
These examples shall not limit the scope of this Release. This Release is
intended to be a broad release and shall apply to any relief, no matter how
denominated, including, but not limited to, claims for future employment,
rights or causes of action for wages, backpay, front pay, compensatory
damages, or punitive damages. Employee also agrees that he will not file or
permit to be filed on his behalf any such claim and Employee hereby agrees
to indemnify and hold Releasees harmless from any such claim.
Notwithstanding anything to the contrary in this paragraph 15, Employee
does not release any claim he may have under any employee benefit plan in
which he was a participant during his employment with the Company for the
payment of a benefit thereunder to which he would be entitled in accordance
with its terms in the ordinary course of the administration of the Plan.
Further, Employee does not release any rights of indemnification as
provided under the Company's By-laws or policies.
16. As a further material inducement to the Company to enter into this
Agreement, Employee hereby agrees to indemnify and hold each and all of the
Releasees harmless from and against any and all loss, costs, damages, or
expenses, including, without limitation, attorneys' fees incurred by
Releasees, or any of them, arising out of any breach of this Agreement by
Employee or the fact that any representation made herein by Employee was
false when made, except that this provision shall not apply to any alleged
breach due to a challenge of the validity of the ADEA waiver contained
herein.
17. Employee understands and agrees that Employee has been given
through February 8, 2002 (the "Review Period"), which is at least
twenty-one (21) days, to review and consider this General Release. Employee
understands that Employee may use as much or as little of the Review Period
as Employee wishes to prior to reaching a decision regarding the signing of
this General Release. However, Employee acknowledges that under no
circumstances may Employee sign and date this General Release prior to
Employee's Release Date. Accordingly, Employee understands that if Employee
does not sign, date, and return this General Release during that portion of
Employee Initials:________
Page 4
the Review Period falling after Employee's Release Date and prior to
the expiration of the Review Period, the General Release will not be valid
and Employee will not receive the special severance benefits under the
terms of this special severance offer.
18. In accordance with federal law, Employee may revoke this Agreement
at any time within seven (7) calendar days of the date of execution noted
below. To be effective, the revocation must be in writing and delivered to
Philip W. Block, Administrative Vice President, Human Resources, 50 E.
RiverCenter Boulevard, Covington, either by hand or mail within a seven (7)
day period following Employee's execution of this Agreement. If delivered
by mail, the rescission must be:
1. Postmarked within the seven (7) day period;
2. Properly addressed as noted above; and
3. Sent by Certified Mail, Return Receipt Requested.
This Agreement shall not become effective or enforceable until this
7-day revocation period has expired.
19. This Agreement constitutes the full, complete, and entire
agreement between the parties and supercedes all prior agreements between
the parties and Employee's signature indicates that he has not relied upon
any statements or representations or other matters from the Company, its
agents, officers, or employees. Any future alteration, modification, or
waiver, to be binding on the parties, must be reduced to writing and
attached hereto.
20. Upon execution by both parties, this Agreement shall terminate all
prior employment and severance agreements between the Employee and the
Company and its divisions or subsidiaries.
21. This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
22. It is agreed that this Separation Agreement and Release shall be
interpreted in accordance with the laws of the State of Kentucky.
-----------------------------------------------------------
Employee Initials:________
Page 5
IMPORTANT NOTICE
BY SIGNING THIS AGREEMENT, YOU, JAMES R. BOYD, AFFIRM THAT YOU HAVE
READ AND UNDERSTAND THIS AGREEMENT; THAT YOU HAVE HAD A MINIMUM OF
TWENTY-ONE (21) DAYS TO CONSIDER THE AGREEMENT AND USED AS MUCH OF THIS
21-DAY PERIOD AS YOU WISHED PRIOR TO SIGNING; THAT YOU HAVE NOT SIGNED AND
DATED THIS AGREEMENT BEFORE YOUR RELEASE DATE; THAT YOU UNDERSTAND FULLY
ITS FINAL AND BINDING EFFECT; THAT THE ONLY PROMISES MADE TO INDUCE YOU TO
SIGN THIS AGREEMENT ARE THOSE STATED HEREIN AND THAT YOU ARE SIGNING THIS
AGREEMENT VOLUNTARILY WITH THE FULL INTENT OF RELEASING THE COMPANY AND ALL
ASSOCIATED ENTITIES AND INDIVIDUALS FROM ANY AND ALL CLAIMS, KNOWN OR
UNKNOWN, RELATING TO OR ARISING OUT OF YOUR EMPLOYMENT WITH ASHLAND; THAT
YOU HAVE BEEN ADVISED THAT IT IS IN YOUR BEST INTEREST TO HAVE AN ATTORNEY,
HIRED BY YOU, LOOK AT THE AGREEMENT AND GIVE YOU ADVICE ABOUT IT; THAT YOU
WERE GIVEN A CHANCE TO REFUSE TO SIGN THIS AGREEMENT; AND THAT YOU ARE
AWARE THAT YOU HAVE AN ADDITIONAL SEVEN (7) DAYS IN WHICH TO REVOKE YOUR
ACCEPTANCE OF THIS AGREEMENT.
ASHLAND INC.
By: __________________________
Title: __________________________
--------------------------
JAMES R. BOYD
--------------------------
Date of Execution
Employee Initials:________
Page 6
Name: JAMES R. BOYD
Date of Presentation:
Attachment 1
RETIREMENT ELIGIBLE
SUMMARY OF PAYROLL CONTINUATION BENEFITS,
EMPLOYEE BENEFITS AND MISCELLANEOUS PROVISIONS
SPECIAL PAYROLL CONTINUATION BENEFITS
On January 31, 2002 (your "Release Date"), your active employment will
end and you will become an employee without regularly assigned duties.
After your Release Date, you will receive payroll continuation
payments based on your current rate of base pay commencing on the first
regularly scheduled pay date of Ashland employees occurring after the
effective date of this Agreement, and ending on January 31, 2004 (your
Termination Date). You will then be eligible to retire on February 1, 2004
(your "Retirement Date").
The length of your payroll continuation payments is called your
"Payroll Continuation Period."
During your Payroll Continuation Period you will receive bi-weekly
payments of your base pay, less applicable withholding of taxes, etc. If
you should die during this period, all remaining payroll continuation
payments will be made in a lump sum to your estate. During your Payroll
Continuation Period, your participation in the Company's employee benefit
plans (except as otherwise stated herein) will continue as if you were a
regular, active employee. Your employment termination date will be the last
day of your Payroll Continuation Period (your "Termination Date").
The following provisions summarize the terms and conditions of the
employee benefit plans available to you during your Payroll Continuation
Period. The actual terms of these plans are in their plan documents. You
should refer to the relevant summary plan description for more information
on a particular plan.
SEPARATION AGREEMENT AND GENERAL RELEASE
Program benefits will not begin until you have executed the Separation
Agreement and Release and it becomes valid. If you do not execute the
Separation Agreement and Release, you will not receive any payroll
continuation payments and your Termination Date from employment with the
company will be your Release Date.
Employee Initials:________
Page 7
PENSION PLAN
Your rights under the Pension Plan will be determined based on your
age, years of plan participation, and final average salary on your
Termination Date. Therefore, you will receive service credit during your
Payroll Continuation Period and this service will count towards the
computation of your pension benefit. You will be eligible for an immediate
pension benefit commencing as of the first day of the month coincident with
or next following your Termination Date if either of the following applies:
on your Termination Date you are at least age 55; or on your Termination
Date the sum of your age and years of continuous service is at least 80.
Payment of your pension benefit cannot begin before your Payroll
Continuation Period ends.
LIFE INSURANCE
If you have not waived your coverage, your non-contributory life
insurance (equal to your annual base salary rate on your Release Date) will
continue during your payroll continuation period. If you waived your life
insurance coverage before your Release Date, you will continue to receive
the credit for waiving that coverage through your Payroll Continuation
Period. You will not be allowed to reinstate your non-contributory coverage
should an annual enrollment occur during your Payroll Continuation Period.
If you are in this situation, you will not be eligible for group life
coverage as a retiree.
The level of your contributory life coverage in effect on your Release
Date will also continue during your payroll continuation period at the
contribution rate for active employees of your age. You will not be allowed
to increase the level of your contributory life coverage. If you did not
have contributory life coverage before your Release Date you will not be
allowed to elect any such coverage after your Release Date.
The level of any spouse and dependent child life insurance coverage
you had on your Release Date will also continue during your payroll
continuation period at the contribution rate for active employees of your
age. You will not be allowed to increase the level of such spouse or
dependent child life insurance coverage. You also will not be able to add
any spouse or dependent child life coverage after your Release Date if you
did not have that coverage before your Release Date.
You also have accidental death and dismemberment insurance equal to
the amount of non-contributory and contributory life insurance during your
payroll continuation period.
If you want to decrease or cancel your contributory, spouse or
dependent child coverage, call the Benefits Counselors at (800) 782-4669.
You can make this kind of change within 45 days of your Release Date. You
can reduce your coverage as previously described at other times if allowed
under the terms of the plan.
If you are at least age 55 or the sum of your age and years of
continuous service is at least 80, you have 5 years of service, and you had
plan coverage on your Termination
Employee Initials:________
Page 8
Date, you will be eligible for company-paid retiree life coverage
equal to $10,000. Contributory coverage, spouse coverage, dependent child
coverage and accidental death and dismemberment coverage end at your
Termination Date.
MEDICAL AND DENTAL
If you are enrolled in the Medical or Dental plan on your Release
Date, you will be eligible to continue your participation during your
Payroll Continuation Period at the same contribution rates which apply to
regular, active employees. If you waived your medical or dental coverage
before your Release Date, you will continue to receive the applicable
credit for waiving that coverage through your Payroll Continuation Period.
You will be allowed to enroll in the plan or plans for which you had waived
coverage during your Payroll Continuation Period on the same basis as an
active employee. This could happen if an annual enrollment occurred and you
were still on Payroll Continuation during the next year. This could also
occur if you experience an election change event during your Payroll
Continuation Period. You should refer to the relevant summary plan
description for more information.
If you are at least age 55 or the sum of your age and years of
continuous service is at least 80, and you have 5 years of service on your
Termination Date, you may be eligible for retiree coverage under the
Medical Plan and the Dental Plan. Dental coverage during retirement is only
available if you were covered by the plan on your Termination Date. Your
dental coverage during retirement also must end on the last day of the
month in which you attain age 65. Medical coverage during retirement is
generally only available if you were covered by the plan on your
Termination Date. The exceptions to this general rule are described in the
summary plan description.
If you elect retiree coverage, it would begin at the end of your
Payroll Continuation Period. Your retiree contributions would be determined
using your service to your Termination Date.
Although you may be eligible to elect retiree coverage, federal law
requires that COBRA continuation coverage also be offered for the plan or
plans in which you were covered. If the amount you have to pay for retiree
coverage is greater than what you paid for the same coverage as an active
employee, you can choose to elect the COBRA continuation coverage instead
of the retiree coverage. You will receive a written summary of your
options. If you choose the COBRA continuation coverage you need to be aware
of two items. First, coverage during your Payroll Continuation Period
counts towards your maximum period of continued coverage under COBRA. That
maximum period is 18 months for a reduction in working hours, which is what
occurred on your Release Date. Therefore, if your Payroll Continuation
Period is equal to or greater than 18 months, you will not have the
opportunity to elect COBRA. Second, elected COBRA coverage is for a limited
duration, while retiree medical coverage may last for life and retiree
dental coverage may last until the end of the month in which you reach age
65.
Employee Initials:________
Page 9
REIMBURSABLE ACCOUNTS PLAN
During your Payroll Continuation Period you may participate in both
the Dependent Day and Health Care Accounts under the Reimbursable Accounts
Plan on the same basis as an active employee. Your participation only
continues for the remainder of the calendar year in which your Release Date
occurs. Your participation will end earlier if your Termination Date occurs
before the end of that calendar year. In that event, though, you will be
eligible to elect COBRA continuation coverage for the remainder of that
calendar year. A COBRA continuation of coverage election may only be made
with respect to a Health Care Account election.
Any amount you have remaining in the Dependent Care Account and/or the
Health Care Account is available to reimburse you for covered services
incurred before the end of the month in which your coverage under the
particular account ends. Claims for services performed after this time are
not eligible for reimbursement. Claims for reimbursement must be filed by
June 30 in the calendar year following your Release Date. Any amounts in
your accounts that are not used will be forfeited according to IRS rules.
SAVINGS PLAN
During your Payroll Continuation Period, to the extent you are
eligible, you may continue participation in the Savings Plan as if you were
an active employee. You may continue to contribute to the Plan by payroll
deduction and continue to receive Company matching contributions according
to Plan rules.
Upon your Termination Date, you have a number of withdrawal options.
If you have an unpaid loan, you may continue to make monthly payments after
your Termination Date. Fidelity will send you payment instructions
approximately 4 weeks following your Termination Date. To receive Savings
Plan information, call Fidelity Investments at (800) 827-4526. You may also
access Savings Plan information on the Internet by clicking "Access My
Account" under NetBenefits at www.401k .com.
Employee Initials:_________
Page 10
LESOP
During your Payroll Continuation Period you will continue
participation in the LESOP as if you were an active employee. The last
allocation under the LESOP occurred on March 31, 1996. Therefore, if you
were not a participant in the LESOP at that time, you do not have any
benefit in that plan. Upon your Termination Date, you may elect to receive
a distribution of your entire LESOP account in cash or shares (if your
spouse consents) or you may elect to transfer 50% of your account to the
Pension Plan and receive the remaining 50% in shares. If there are fewer
than 100 shares in your account after the transfer, then you may elect to
have them distributed in cash. LESOP distributions are usually made 3 to 4
weeks from the Friday that the Employee Benefits Department processes your
withdrawal form.
LONG TERM DISABILITY
You are not eligible to participate in the Long Term Disability Plan
during your Payroll Continuation Period. Therefore, if you were enrolled in
that plan, your coverage ends on your Release Date.
VOLUNTARY AD&D
If enrolled, you will continue to be eligible for voluntary AD&D
coverage during your Payroll Continuation Period. Your participation will
end on your Termination Date.
The level of your coverage on your Release Date will continue during
your payroll continuation period at the contribution rate for active
employees of your age. You will not be allowed to increase the coverage. If
you did not have this coverage before your Release Date you will not be
allowed to elect any such coverage after your Release Date.
You may decrease or cancel your coverage as allowed under the terms of
the plan.
OCCUPATIONAL ACCIDENTAL DEATH AND DISMEMBERMENT AND TRAVEL ACCIDENT INSURANCE
PLAN
Your coverage under the Occupational Accidental Death and
Dismemberment Plan and the Travel Accident Insurance Plan ends on your
Release Date.
VISION COST ASSISTANCE PLAN
You will remain eligible for the Vision Plan during your Payroll
Continuation Period. If you are enrolled for this coverage, it will end on
your Termination Date, although you may be able to elect COBRA continuation
of coverage at that time. The COBRA qualifying event is the occurrence of
your Release Date, which constitutes a reduction in working hours.
Therefore, coverage during your Payroll Continuation Period counts towards
your maximum period of continued coverage under COBRA. That maximum
Employee Initials:_________
Page 11
period is 18 months for a reduction in working hours. Therefore, if
your Payroll Continuation Period is equal to or greater than 18 months, you
will not have the opportunity to elect COBRA.
LEGAL PLAN
You remain eligible for the Legal Plan for the remainder of the
calendar year that contains your Release Date if you were enrolled in that
plan at the time of your Release Date. You may retain your enrollment or
initiate enrollment during an annual enrollment effective for the next
calendar year if your Payroll Continuation Period extends into that next
calendar year. Your participation ends on your Termination Date. You may be
eligible for coverage for covered legal matters that are not completed as
of your Termination Date. Consult your summary plan description for
details.
GROUP AUTO AND HOMEOWNERS INSURANCE; LONG TERM CARE
You will remain eligible for the group auto and homeowners insurance
and the long term care insurance during your Payroll Continuation Period.
You may continue the relevant coverage after your Termination Date on the
same basis as any other former employee. Continuing that coverage, though,
is strictly between you and the applicable insurance company that provides
the coverage.
ADOPTION ASSISTANCE PROGRAM
You remain eligible for the Adoption Assistance Program during your
Payroll Continuation Period. Expenses that arise on or after your
Termination Date are not covered.
GROUP FINANCIAL SERVICES
You remain eligible for the group financial services in which you are
enrolled during your Payroll Continuation Period. You may retain your
enrollment or initiate enrollment during an annual enrollment effective for
the next calendar year if your Payroll Continuation Period extends into
that next calendar year. If you are enrolled for these services at the time
of your Termination Date, you may continue them for the remainder of the
calendar year if you make appropriate arrangements with the provider to
make any required payments then remaining for the services.
Employee Initials:__________
Page 12
MISCELLANEOUS PROVISIONS
UNUSED VACATION/SICK PAY
You will be paid for any unused earned and accrued vacation in
bi-weekly payments following your Release Date based on the amount earned
and accrued as of your Release Date. You will not receive additional
vacation or sick pay accruals during your Payroll Continuation Period and
you will not be paid for any unused sick pay.
CREDIT UNION
If you are currently a member, you will continue to be eligible to
fully participate in the Credit Union during your Payroll Continuation
Period. Upon your Termination Date, you will be eligible to participate in
the Credit Union to the same extent as other retirees.
EDUCATIONAL REIMBURSEMENT
If the course has been approved for reimbursement prior to your
Release Date and will be completed within six months of your Release Date,
you will be reimbursed for approved costs provided you complete the course
within policy guidelines.
To be reimbursed, you must provide the following:
1. Your name, social security number, complete mailing address
and phone number;
2. An itemized receipt for tuition and fees issued by the
educational institution; and
3. A grade report from the educational institution.
All of the above information should be sent to: Employee Services,
Corporate Human Resources, Ashland Inc., 3499 Blazer Parkway, Lexington, KY
40509.
ASHLAND SCHOLARS PROGRAM
You are eligible to participate in the Ashland Scholars Program during
your Payroll Continuation Period and after your Termination Date in
accordance with the program.
SERVICE AWARDS
If at the time of your Release Date you are within 6 months of the
date on which you would have received a Service Award, the Service Award
will be provided to you on your regularly scheduled date.
Employee Initials:__________
Page 13
MATCHING GIFTS
You are eligible to participate in the Matching Gifts Program during
your Payroll Continuation Period and after your Termination Date in
accordance with the program.
FITNESS CENTER
During the Payroll Continuation Period, you are eligible to continue
to access the facility. Upon your Termination Date, you will be eligible to
continue to access the facility and participate to the same extent as other
retirees.
UNEMPLOYMENT COMPENSATION
State laws control whether you are eligible to receive unemployment
compensation. If you decide to file for unemployment compensation, the
Company is obligated to inform the state's unemployment commission of the
nature of your termination.
EXPENSES
If you have incurred any expenses that are reimbursable by the
Company, you should submit an approved Expense Report, along with required
receipts, to your supervisor prior to your Release Date.
VERIFICATION OF EMPLOYMENT
The Company will only verify dates of employment and last job title,
department and work location. The Company will only release other
information concerning your employment as required by Company policy or
law.
EMPLOYEE ASSISTANCE PROGRAM
Family Enterprises, Inc. will continue to be available for personal
counseling through your Payroll Continuation Period should you have the
need. They can be contacted by calling (800) 522-6330.
FUTURE CORRESPONDENCE
Any future information from the Company will be sent to the address
you currently have on file (i.e. employee benefit information, W-2's, etc.)
Should your address change in the near future you should contact Corporate
Human Resources at (800) 782-4669.
Employee Initials:__________
Page 14
IMPORTANT NOTE ABOUT THIS SUMMARY
DETAILS ON THE BENEFITS FROM THE EMPLOYEE BENEFIT PLANS DISCUSSED
ABOVE ARE PROVIDED IN THE SUMMARY PLAN DESCRIPTION BOOKLET FOR EACH PLAN.
IN ALL EVENTS, THE RIGHTS AND OBLIGATIONS OF THE COMPANY AND ALL COVERED
EMPLOYEES, BENEFICIARIES OR OTHER CLAIMANTS ARE GOVERNED SOLELY BY THE
TERMS OF THE OFFICIAL DOCUMENTS UNDER WHICH EACH PARTICULAR PLAN, POLICY OR
PROGRAM IS OPERATED.
Employee Initials:_________
Page 15
ASHLAND INC.
ADDENDUM TO RETIREMENT ELIGIBLE
SUMMARY OF PAYROLL CONTINUATION BENEFITS,
EMPLOYEE BENEFITS AND MISCELLANEOUS PROVISIONS
STOCK OPTIONS
Your Ashland Inc. stock options shall continue to vest through your
Payroll Continuation Period. Upon your Termination Date, all vested options
may be exercised for the remaining term of the options.
INCENTIVE COMPENSATION
You will be eligible to earn incentive compensation under the Ashland
Inc. Incentive Compensation Plan through your Release Date. If and when
payments are made, you shall receive payment in cash of any pro-rata
portion of Ashland's incentive compensation bonus based on Ashland's
performance through the fiscal year and your current individual performance
rating.
PUP/LTIP
If and when payments are made, if eligible, you shall receive payment
in cash of any pro-rata portion of the amount(s) you would have received
under Ashland's performance unit/share plans for the 1999-2002 cycle, and
the Long Term Incentive Plan for the 2001-2003 cycle and the 2002-2004
cycle. Payments shall be pro-rated through your Release Date, and based on
actual Ashland Inc. measures (as specified in the plans and your awards
under the plans) through the entire three or four-year plan cycles
(including adjustments for unusual items).
Deferred Compensation
During your Payroll Continuation Period, you may continue to elect to
defer your salary and any IC, PUP, LTIP and ERISA forfeiture payments (if
applicable). Please note fiscal year 2003 and 2004 salary payments and
ERISA forfeiture payments will be deferred in accordance with your fiscal
year 2002 deferred compensation plan ("DCP") elections.
Upon your Termination Date, you shall receive distribution of your
"DCP" account(s) in accordance with your DCP election(s). Any changes
regarding the distribution of your DCP account(s) must be made by the
earlier of (i) six months prior to the first day of the month following
your Termination Date; or (ii) December 31 preceding the first day of the
month following your Termination Date.
Employee Initials:__________
Page 16
Financial Planning
You shall be reimbursed for eligible financial planning expenses,
including eligible expenses for services provided by ACO, incurred through
the end of calendar year 2004.
OUTPLACEMENT ASSISTANCE
You shall be eligible to receive outplacement assistance from Lee
Hecht Harrison as provided in Attachment II to this Agreement.
Administrative ASSISTANCE
During the Payroll Continuation Period, and for a three year period
thereafter, you will receive an annual payment of Thirty-Thousand ($30,000)
Dollars for your use in securing office space, equipment and personnel as
you deem appropriate for your personal and professional use. These payments
shall be in lieu of any such space, equipment or administrative assistance
being provided to you directly by the Company.
Executive Physicals
You shall be eligible for an Executive Physical during calendar years
2002 and 2003.
Pension Plan, Non-qualified Pension Plan and SERP
If eligible, you shall receive benefits under these plans as if you
remained actively employed up through the earlier of your death or your
Termination Date. For purposes of determining your benefits under the
Pension Plan or, if approved, the Non-qualified Pension Plan, your
compensation history will be determined as of your Termination Date. For
purposes of determining your benefits under the SERP, if approved, your
compensation history will be determined as of your Release Date.
Employee Initials:__________
Page 17
INDEMNIFICATION AGREEMENT
This Agreement is made this _____ day of ______, _______ between
ASHLAND INC., a Kentucky corporation ("Company"), and the undersigned
individual ("Director").
WITNESSETH:
WHEREAS, Director is a member of the Board of Directors of Company and
in such capacity is performing a valuable service for Company; and
WHEREAS, Article X of the Second Restated Articles of Incorporation of
Company (the "Article") authorizes Company to indemnify directors of
Company to the maximum extent permitted by law; and
WHEREAS, the Article authorizes Company to enter into contracts with
members of its Board of Directors with respect to indemnification of such
directors; and
WHEREAS, recent developments with respect to the applications and
enforcement of indemnification provisions and the availability of insurance
to protect directors against liabilities generally have raised questions
concerning the adequacy and reliability of the protection afforded to
directors thereby; and
WHEREAS, to provide greater certainty with respect to Director's right
to indemnification and the payment thereof, and thereby induce Director to
serve as a member of the Board of Directors of Company, Company has
determined and agreed to enter into this Agreement with Director.
Now, THEREFORE, in consideration of Director's agreement to serve as a
Director after the date of this Agreement, Company and Director agree as
follows:
1. INDEMNITY OF DIRECTOR. Subject only to the exclusions set forth in
Sections 2 and 12 of this Agreement, Company hereby agrees to hold harmless
and indemnify Director against any and all reasonable costs and expenses
(including, but not limited to, attorneys' fees) and any liabilities
(including, but not limited to, judgments, fines, penalties and reasonable
settlements) paid by or on behalf of, or imposed against, Director in
connection with any threatened, pending or completed claim, action, suit or
proceeding, whether civil, criminal, administrative, legislative,
investigative or other (including any appeal relating thereto) and whether
made or brought by or in the right of Company or otherwise, in which
Director is, was or at any time becomes a party or witness, or is
threatened to be made a party or witness, or otherwise, by reason of the
fact that Director is, was or at any time becomes a director, officer,
employee or agent of Company or a director, officer, partner, trustee,
employee or agent of an Affiliate of Company, as hereafter defined, or any
employee benefit plan maintained by Company or any Affiliates of Company.
As used in this Agreement, an Affiliate of Company means any corporation,
partnership or other entity which, directly or indirectly, controls, is
controlled by or is under common control with Company.
2. LIMITATIONS ON INDEMNITY. No indemnity pursuant to Section 1 of
this Agreement shall be paid by Company:
A. if a court of competent jurisdiction renders a final adjudication
on the merits, in an action, suit or proceeding in which Director is a
party, that such indemnification is prohibited by law; or
B. in connection with any transaction with respect to which a court of
competent jurisdiction renders a final adjudication on the merits, in an
action, suit or proceeding in which Director is a party, [i] that
Director's personal financial interest was in conflict with the financial
interests of Company or its shareholders, or [ii] that Director derived an
improper personal benefit; or
C. on account of acts or omissions of Director to the extent a court
of competent jurisdiction renders a final adjudication on the merits, in an
action, suit or proceeding in which Director is a party, that such acts or
omissions [i] were not in good faith, or [ii] involved intentional
misconduct, or [iii] were known to Director to be a violation of law; or
D. in respect of any liability to Company to the extent that a court
of competent jurisdiction renders a final adjudication on the merits, in an
action, suit or proceeding in which Director is a party, that such
liability to Company arises under any federal or state statute providing
for liability directly to Company by reason of the fact that Director is or
was a director of Company, including, by way of example and not limitation,
liability under Section 16(b) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"); or
E. to the extent and only to the extent that, prior to a Change of
Control, as hereinafter defined, a majority of the Board of Directors of
Company or a duly designated committee thereof, in either case consisting
of directors who are not at the time parties to the claim, action, suit or
proceeding against Director, determines that the amount of expenses and/or
settlements for which indemnification is sought is unreasonable; or
F. in connection with any claim, suit, action or proceeding [i] if
such claim, action, suit or proceeding was initiated by Director or his or
her personal or legal representative, or involved the voluntary
solicitation or intervention by Director or his or her personal or legal
representative (other than an action to enforce indemnification rights or
an action initiated with the approval of a majority of the Board of
Directors), or [ii] to the extent that such claim, action, suit or
proceeding arose as a result of acts or omissions of Director occurring
prior to the date of this Agreement.
For purposes of this Agreement, a "Change in Control" shall be deemed
to have occurred if [i] any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than a trustee or other
fiduciary holding securities under an employee benefit plan of Company or a
corporation owned, directly or indirectly, by the shareholders of Company
in substantially the same proportions as their ownership of stock of
Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly of securities of Company
representing 20% or more of the combined voting power of Company's then
outstanding voting securities; or [ii] during any period of twenty-four
(24) consecutive months (not including any period prior to the date of this
Agreement), individuals who at the beginning of such period constituted the
Board of Directors of Company and any new director (other than a director
designated by a person who has entered into an agreement with Company to
effect a transaction described in clauses [ii or [iii] of this Paragraph)
whose election by the Board of Directors or nomination for election by
Company's shareholders was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority of
the Board of Directors or [iii] the shareholders of Company approve a
merger or consolidation of Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of
Company outstanding or by being converted into voting securities of the
surviving entity) at least 70% of the combined voting power of the voting
securities of Company or such surviving entity outstanding immediately
after such merger of consolidation; or [iv] the shareholders of Company
approve a plan of complete liquidation of Company or an agreement for the
sale or disposition by Company of all or substantially all of the assets
owned by Company, whether directly or indirectly.
3. CONTINUATION OF INDEMNITY. All agreements and obligations of
Company contained in this Agreement shall continue during the period
Director serves in any capacity entitling Director to indemnification under
this Agreement and shall continue thereafter so long as Director shall be
subject to any possible claim or threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative, legislative or
investigative, or other, arising as a result of acts or omissions occurring
during the period Director served as a director of Company.
4. NOTIFICATION OF CLAIM. It shall be a condition precedent to
indemnification under this Agreement that, within twenty days after receipt
by Director of actual notice that Director is or will be a party, witness
or otherwise involved in any threatened or pending action, suit or
proceeding described in Section 1 of this Agreement, Director shall have
notified Company in writing of the assertion or commencement thereof; but
the omission to so notify Company will not relieve it from any liability
which it may have to Director otherwise than under this Agreement.
5. ADVANCEMENT OF COSTS AND EXPENSES. The costs and expenses incurred
by Director in investigating, defending or appealing any threatened or
pending claim or any threatened or pending action, suit or proceeding
described in Section 1 of this Agreement shall, at the written request of
Director, be paid by Company in advance of final judgment or settlement
with the understanding, undertaking and agreement hereby made and entered
into by Director and Company, that Director shall, if it is ultimately
determined in accordance with Section 2 or pursuant to Section 12 that
Director is not entitled to be indemnified, or was not entitled to be fully
indemnified, repay to Company such amount, or the appropriate portion
thereof, so paid or advanced. Such advancements shall be made at least
quarterly.
6. ENFORCEMENT. If a claim for payment under this Agreement is not
paid in full by Company within ninety days after a written demand has been
delivered by Director to Company, or within thirty days after delivery of a
written demand by Director to Company based upon a final and unappealable
judgment of a court of competent jurisdiction, Director may at any time
thereafter bring suit against Company to recover the unpaid amount of the
claim and, if successful in whole or in part, Director shall also be
entitled to be paid all costs and expenses (including but not limited to
attorneys' fees) incurred by Director in prosecuting such suit. In any suit
brought by Director to enforce this Agreement, the burden of proof shall be
on Company to establish that Director is not entitled to the relief sought
under this Agreement.
7. ESTABLISHMENT OF SECURITY. In the event of a Potential Change in
Control, as hereafter defined, Company shall, upon written request of
Director, obtain an irrevocable letter of credit issued by a commercial
bank, satisfactory to Director, which letter of credit shall be in the
amount of $10,000,000, shall have a term of ten years, shall name Director,
and Director's spouse, heirs and personal and legal representatives as
beneficiary and shall permit Director, and Director's heirs and personal
and legal representatives to draw thereunder from time to time such amounts
as are due and owing to Director under this Agreement, whether in the form
of an advancement or indemnification or otherwise, upon delivery of
Director's certificate to the effect that Director is entitled to be paid
such amounts pursuant to the terms of this Agreement. The issuer of the
letter of credit shall be chosen by Director and all expenses, fees and
other disbursements incurred in connection with the issuance and
enforcement of such letter of credit shall be paid by Company. Obtaining a
letter of credit shall not relieve Company of any of its obligations under
this Agreement.
The parties acknowledge that Director will have no adequate remedy at
law if Company breaches its obligations under this Section 7, and agree
that, in addition to any other remedies which may be available, Director
shall be entitled to the equitable remedy of specific performance in the
event of a breach or threatened breach by Company of its obligations
hereunder.
For purposes of this Agreement, a "Potential Change in Control" shall
be deemed to have occurred if [i] Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in
Control; [i] any person (including Company) publicly announces an intention
to take or to consider taking actions which, if consummated, would
constitute a Change in Control; [iii] any person, other than a trustee or
other fiduciary holding securities under an employee benefit plan of
Company or a corporation owned, directly or indirectly, by the stockholders
of Company in substantially the same proportions as their ownership of
stock of Company, who is on the date hereof, or hereafter becomes, the
beneficial owner, directly or indirectly, of securities of Company
representing 9.5% or more of the combined voting power of Company's then
outstanding voting securities, hereafter or thereafter increases Director's
beneficial ownership of such securities by one-half percent (.5%) or more
over the percentage so owned by such person on the date hereof or on the
date of becoming such a beneficial owner; or [iv] the Board of Directors of
Company adopts a resolution to the effect that, for purposes of this
Agreement, a Potential Change in Control has occurred.
8. CONTRIBUTION. If the full indemnity provided in Section 1 of this
Agreement may not be paid to Director because of any exclusion in Section 2
of this Agreement, then in respect of any actual or threatened claim,
action, suit or proceeding in which Company is jointly liable with Director
(or would be if joined in such claim) Company shall contribute to the
amount of expenses and liabilities incurred by Director in such proportion
as is appropriate to reflect [i] the relative benefits received by Company
on the one hand and Director on the other hand from the acts or omissions
from which such claim, action, suit or proceeding arose and [ii] the
relative fault of Company, including its other directors, officers, agents,
employees and other representatives, on the one hand and of Director on the
other hand in connection with the acts or omissions which resulted in such
claim, action, suit or proceeding, as well as any other relevant equitable
considerations. The relative fault of Company, including its other
directors, officers, agents, employees and other representatives, on the
one hand and of Director on the other hand shall be determined by reference
to, among other things, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent the circumstances
resulting in such claim, action, suit or proceeding. Company agrees that it
would not be just and equitable if contribution pursuant to this Section 8
were determined by pro rata allocation or any other method of allocation
which does not take into account the foregoing equitable considerations.
9. PARTIAL INDEMNITY. If Director is entitled under any provision of
this Agreement to indemnification by Company for some or a portion of the
costs, expenses, judgments, fines, penalties and amounts paid in
settlement, but not for the total amount thereof, Company shall
nevertheless indemnify Director for the portion thereof to which Director
is entitled.
10. NON-EXCLUSIVITY. The rights of Director under this Agreement shall
be in addition to any other rights Director may have under the Second
Restated Articles of Incorporation or By-laws of Company, both as amended,
agreement, vote of shareholders or disinterested directors, as a matter of
law or otherwise.
11. SUBROGATION. In the event of any payment under this Agreement,
Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Director, who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including
the execution of such documents necessary to enable Company effectively to
bring suit to enforce such rights.
12. NO DUPLICATION OF PAYMENTS. Company shall not be liable under this
Agreement to make any payment to the extent Director has otherwise actually
received payment (under any insurance policy, By-law or otherwise) of the
amounts otherwise payable by Company under this Agreement. Director shall
use best efforts to collect from all third parties any amounts otherwise
payable by Company under this Agreement. If Director is entitled to but has
not received payment from a third party (under any insurance policy or
otherwise) of amounts otherwise payable by the Company under this
Agreement, Company shall nevertheless pay Director such amounts with the
understanding, undertaking and agreement hereby made and entered into by
Director and Company that Director will repay to Company such amounts to
the extent they are ultimately paid to Director by such third party.
13. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and their
respective successors and assigns, including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of Company, heirs, and
personal and legal representatives; provided, however, that this Agreement
is personal to Director and may not be transferred or encumbered by
Director in any way.
14. SEVERABILITY. The provisions of this Agreement shall be severable
in the event that any of the provisions hereof (including any provision
within a single section, paragraph or sentence) are held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable, and
the remaining provisions shall remain enforceable to the fullest extent
permitted by law.
15. GOVERNING LAW; AMENDMENT.
A. This Agreement shall be interpreted and enforced in accordance with
the laws of the Commonwealth of Kentucky.
B. No amendment, modification, termination or cancellation of this
Agreement shall be effective unless in writing signed by both parties
hereto.
16. NOTICES. Any notice to Company or Director under this Agreement
shall be in writing and shall be delivered personally or sent by overnight
courier service or certified mail:
If to Company: Ashland Inc.
50 E. RiverCenter Blvd.
P.O. Box 391
Covington, Kentucky 41012-0391
Attn: Secretary
If to Director:
-------------------------------
-------------------------------
-------------------------------
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.
ASHLAND INC.
By:
---------------------------------
Title: Chairman of the Board and
Chief Executive Officer
Director:
------------------------------------
[Director Name]
EXHIBIT 12
ASHLAND INC.
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
AND EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
(In millions)
Years Ended September 30
-------------------------------------------------------------
1997 1998 1999 2000 2001
---------- ---------- ---------- ---------- ----------
EARNINGS
- --------
Income from continuing operations $ 169 $ 178 $ 291 $ 292 $ 406
Income taxes 125 114 193 191 275
Interest expense 148 133 141 189 160
Interest portion of rental expense 48 40 35 39 41
Amortization of deferred debt expense 1 1 1 2 2
Undistributed earnings of unconsolidated affiliates (6) (62) (11) (112) (90)
Earnings of significant affiliates* 7 - - - -
---------- ---------- ---------- ---------- ----------
$ 492 $ 404 $ 650 $ 601 $ 794
========== ========== ========== ========== ==========
FIXED CHARGES
- -------------
Interest expense $ 148 $ 133 $ 141 $ 189 $ 160
Interest portion of rental expense 48 40 35 39 41
Amortization of deferred debt expense 1 1 1 2 2
Capitalized interest 1 - - - -
Fixed charges of significant affiliates* 5 - - - -
---------- ---------- ---------- ---------- ----------
$ 203 $ 174 $ 177 $ 230 $ 203
========== ========== ========== ========== ==========
COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
- -------------------------
Preferred dividend requirements $ 9 $ - $ - $ - $ -
Ratio of pretax to net income** 1.74 - - - -
---------- ---------- ---------- ---------- ----------
Preferred dividends on a pretax basis 17 - - - -
Fixed charges 203 174 177 230 203
---------- ---------- ---------- ---------- ----------
$ 220 $ 174 $ 177 $ 230 $ 203
========== ========== ========== ========== ==========
RATIO OF EARNINGS TO FIXED CHARGES 2.42 2.32 3.67 2.61 3.91
RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS 2.24 2.32 3.67 2.61 3.91
* Significant affiliates are companies accounted for on the equity
method that are 50% or greater owned or whose indebtedness has
been directly or indirectly guaranteed by Ashland or its
consolidated subsidiaries.
** Computed as income from continuing operations before income taxes
divided by income from continuing operations, which adjusts
dividends on preferred stock to a pretax basis.
Ashland Inc. and Consolidated Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS
Years Ended September 30
(In millions) 2001 2000 1999
SALES AND OPERATING REVENUES
APAC $2,624 $2,505 $1,678
Ashland Distribution 2,849 3,214 2,925
Ashland Specialty Chemical 1,248 1,283 1,263
Valvoline 1,092 1,077 1,059
Intersegment sales (94) (118) (124)
---------------------------------------------------------
$7,719 $7,961 $6,801
=========================================================
OPERATING INCOME (1)
APAC $ 55 $ 140 $ 108
Ashland Distribution 35 70 37
Ashland Specialty Chemical 58 95 107
Valvoline 81 78 74
Refining and Marketing(2) 707 361 323
Corporate (85) (73) (24)
---------------------------------------------------------
$ 851 $ 671 $ 625
=========================================================
OPERATING INFORMATION
APAC
Construction backlog at September 30 (millions) $1,629 $1,397 $ 948
Hot-mix asphalt production (million tons) 36.7 35.0 25.8
Aggregate production (million tons) 28.7 27.8 20.7
Ready-mix concrete production (thousand cubic yards) 2,262 2,620 1,412
Ashland Distribution(3)
Sales per shipping day (millions) $ 11.2 $ 12.8 $ 11.6
Gross profit as a percent of sales 15.9% 15.6% 16.0%
Ashland Specialty Chemical(3)
Sales per shipping day (millions) $ 5.0 $ 5.1 $ 5.0
Gross profit as a percent of sales 33.8% 34.7% 35.9%
Valvoline lubricant sales (thousand barrels per day) 11.9 12.3 12.6
Refining and Marketing(4)
Crude oil refined (thousand barrels per day) 912 892 898
Refined products sold (thousand barrels per day)(5) 1,302 1,309 1,231
Refining and wholesale marketing margin (per barrel)(6) $ 5.17 $ 2.63 $ 1.57
Speedway SuperAmerica (SSA)(7)
Retail outlets at September 30 2,145 2,288 2,178
Gasoline and distillate sales (millions of gallons) 3,587 3,742 3,604
Gross margin - gasoline and distillates (per gallon) $.1218 $.1284 $.1346
Merchandise sales (millions) $2,186 $2,143 $1,857
Merchandise margin (as a percent of sales) 23.3% 24.5% 26.2%
=========================================================
(1) See Page 29 for a discussion of unusual items.
(2) Includes Ashland's equity income from Marathon Ashland Petroleum
LLC (MAP), amortization of Ashland's excess investment in MAP, and
other activities associated with refining and marketing.
(3) Sales are defined as sales and operating revenues. Gross profit is
defined as sales and operating revenues, less cost of sales and
operating expenses, less depreciation and amortization relative to
manufacturing assets.
(4) Amounts represent 100% of MAP's operations, in which Ashland owns
a 38% interest.
(5) Total average daily volume of all refined product sales to MAP's
wholesale, branded and retail (SSA) customers.
(6) Sales revenue less cost of refinery inputs, purchased products and
manufacturing expenses, including depreciation.
(7) Excludes travel centers contributed to Pilot Travel Centers LLC.
Periods prior to September 1, 2001, have been restated.
/28/
RESULTS OF OPERATIONS
Ashland's net income amounted to $417 million in 2001, $70 million in 2000
and $290 million in 1999. Such earnings include unusual items that
significantly affected year-to-year comparisons. The following table shows
the effects of unusual items on Ashland's operating and net income for each
of the last three years.
Operating income Net income
------------------------------------ ----------------------------------
(In millions) 2001 2000 1999 2001 2000 1999
INCOME BEFORE UNUSUAL ITEMS $851 $671 $496 $406 $292 $217
Discontinued operations - - - 19 (218) (1)
Reversal of inventory market valuation reserve - - 117 - - 71
Environmental insurance recoveries - - 43 - - 26
Asset impairment charges - - (21) - - (17)
Severance and relocation charges - - (10) - - (6)
Extraordinary loss on early retirement
of debt - - - (3) (4) -
Cumulative effect of accounting change - - - (5) - -
----------------------------------------------------------------------------------
INCOME AS REPORTED $851 $671 $625 $417 $ 70 $290
==================================================================================
UNUSUAL ITEMS
During 2000, Ashland spun-off the majority of its shares of Arch Coal
common stock to Ashland's shareholders. Ashland subsequently sold its
remaining Arch Coal shares in a public offering during February 2001.
Accordingly, net income (loss) associated with Arch Coal (including costs
of the spin-off) are shown as discontinued operations. The loss of $218
million in 2000 associated with Arch Coal included $203 million related to
asset impairment and restructuring costs. The net gain of $19 million in
2001 represents an after tax gain of $33 million on the sale of the Arch
Coal shares, less after-tax charges of $14 million from reserves related to
other discontinued operations.
When Marathon Ashland Petroleum LLC (MAP) was formed, MAP valued its crude
oil and petroleum product inventories at the lower of LIFO (last-in,
first-out) cost or market, and recorded an inventory market valuation
reserve to reduce the LIFO carrying costs to their net realizable values.
MAP reviews its reserve and makes quarterly adjustments as necessary based
on changes in the values of refined products. During 1999, MAP reversed its
remaining reserve resulting in an increase of $117 million in Ashland's
equity income. No reserves have been required since 1999, as the net
realizable values of MAP's inventories have been well in excess of their
carrying costs.
During 1999, Ashland entered into settlement agreements with certain of its
insurance carriers over the coverage provided under historical insurance
policies with respect to environmental liabilities. Under those
settlements, the carriers paid lump sum amounts to Ashland in exchange for
releases of their present and future obligations associated with
environmental liabilities. As a result of those settlements, Ashland
recorded pretax income of $43 million.
Ashland recognized impairment charges of $21 million in 1999 principally
for goodwill write-downs related to its European plastics distribution
operations. Results from these operations consistently had been well below
the levels that were expected when they were acquired, necessitating the
impairment review and resulting write-downs.
As discussed in Note G to the Consolidated Financial Statements, Ashland's
early retirement of certain long-term debt resulted in after tax losses of
$3 million in 2001 and $4 million in 2000. In addition, the cumulative
effect of the change in the method of accounting for derivatives by MAP
resulted in an after tax charge for Ashland of $5 million (see Note A to
the Consolidated Financial Statements).
The following table compares operating income before unusual items by
segment for the three years ended September 30, 2001.
(In millions) 2001 2000 1999
OPERATING INCOME BEFORE UNUSUAL ITEMS
APAC $55 $140 $108
Ashland Distribution 35 70 58
Ashland Specialty Chemical 58 95 107
Valvoline 81 78 74
Refining and Marketing 707 361 216
Corporate (85) (73) (67)
-------------------------------------------
$851 $671 $496
===========================================
/29/
APAC
Operating income from the APAC construction companies amounted to $55
million in 2001, compared to $140 million in 2000. The decline resulted
principally from unusually severe winter weather in most of APAC's
operating regions, weak construction margins and a charge of $18 million to
correct improper recognition of construction contract earnings at its
Manassas, Virginia division. Net construction job revenue (total revenue
less subcontract costs) was about flat, while production of hot-mix asphalt
and aggregate were both up modestly. The sale of certain operations in
September 2000 resulted in a decline in the production of ready-mix
concrete. More important than the levels of construction activity and
material production, however, was that the conditions under which the work
took place (extreme cold and precipitation) made the processes highly
inefficient. Construction contract margins were also depressed as many
low-margin jobs obtained through recent acquisitions worked their way
through the backlog, and the level of higher-margin private work declined
as a result of the economic slowdown.
During an internal investigation of financial activities at APAC's Manassas
division in the March 2001 quarter, it was discovered that the division's
earnings had been intentionally overstated, and local management of the
division was replaced. Independent investigations confirmed that the
problems related primarily to the improper recognition of revenues and
failure to recognize certain costs over a period of about two years. No
evidence of any impact on, or involvement by, outside parties, customers or
suppliers was discovered. APAC is evaluating and implementing various
recommendations for improvement in overall business processes, accounting
controls and procedures.
(APAC OPERATING INCOME BAR CHART)
APAC achieved record results in 2000 with operating income of $140 million,
compared to $108 million in 1999. Reflecting the acquired construction
operations of Superfos, as well as significant growth in its prior
operations, net construction job revenue increased 52%. Similarly, APAC's
production of construction materials continued to expand with increases in
hot-mix asphalt (up 36%), crushed aggregate (up 34%) and ready-mix concrete
(up 86%). The improvement in operating income also reflected a $21 million
reduction in depreciation expense resulting from changes in the estimated
useful lives and salvage values of APAC's construction equipment, as well
as a gain of $7 million on the sale of certain concrete block operations.
Operating income for 2000 would have been even greater if it had not been
for the significantly higher costs of liquid asphalt, fuel and power that
APAC incurred during the year. APAC's costs of liquid asphalt increased
from $117 a ton in 1999 to $156 a ton in 2000, while its fuel and power
costs were up 14%.
ASHLAND DISTRIBUTION
Operating income from Ashland Distribution amounted to $35 million in 2001,
compared to $70 million in 2000. Overall sales declined 11%, principally
reflecting the challenging economic environment and a slowdown in key
customer markets. However, a "quality of business" initiative designed to
either improve gross profits or forgo sales to marginal accounts also
contributed to the reduction in revenues. The unfavorable economic
conditions also led to higher credit losses, particularly for the North
American plastics distribution and energy services divisions. However, the
effects of these declines were partially offset by expense reduction and
various margin improvement efforts, such as the "quality of business"
initiative. Such efforts resulted in higher earnings from three
distribution business units - industrial chemicals, fine ingredients and
European plastics distribution. Results of Ashland Distribution for 2001
reflect a goodwill write-off of $6 million and other asset impairment
charges, the combination of which was largely offset by the proceeds from a
favorable litigation settlement.
(ASHLAND DISTRIBUTION OPERATING INCOME BAR CHART)
Ashland Distribution generated operating income of $70 million during 2000,
compared to $58 million in 1999, excluding unusual items. The improvement
was led by better results from the European plastics distribution business
and higher sales of fiber-reinforced plastics and fine ingredients. These
improvements more than offset a decline from the chemical distribution
business, which was adversely affected by rising hydrocarbon costs. Results
of Ashland Distribution for 2000 also reflected a gain of $3 million on the
sale of its plastics compounding business in Italy.
ASHLAND SPECIALTY CHEMICAL
Ashland Specialty Chemical's operating income amounted to $58 million in
2001, compared to $95 million in 2000. Earnings from marine and water
treatment chemicals were up, but these improvements were more than offset
by significant declines in other business units that are more sensitive to
a weak economy, including foundry products, specialty adhesives, maleic
anhydride and polyester resins. Profits from electronic chemicals also
deteriorated sharply as the year progressed, reflecting the worldwide
downturn in the semiconductor manufacturing industry. Results of Ashland
Specialty Chemical for 2001 reflect a goodwill write-down of $4 million and
minor asset impairment charges.
(ASHLAND SPECIALTY CHEMICAL OPERATING INCOME BAR CHART)
/30/
Operating income from Ashland Specialty Chemical declined from $107 million
in 1999 to $95 million in 2000. Stronger fundamentals led to record results
from electronic chemicals, adhesives and the water treatment businesses, as
well as higher earnings from marine chemicals. However, significantly
higher styrene and other raw material costs led to margin compression in
the polyester resins business, which is the largest specialty chemical
business. Maleic anhydride also felt the adverse effects on its margins
from significant increases in the cost of butane. Results of Ashland
Specialty Chemical for 2000 also included charges of $8 million associated
with the closing of two manufacturing facilities.
VALVOLINE
Valvoline's operating income increased from $78 million in 2000 to $81
million in 2001. Results from the core lubricants business and Eagle One
were up, offsetting declines from other businesses. Although domestic sales
of Valvoline branded motor oil were comparable to last year, sales of
premium motor oils, such as MaxLife, continued to grow at a rapid rate.
Sales of Eagle One products were up 16%, and its operating income amounted
to more than 10% of its revenues. Results from international operations
were down as sales volumes fell, with Europe experiencing the largest
decline. Results from Valvoline Instant Oil Change (VIOC) improved during
the September 2001 quarter, but were down slightly from last year, which
included gains on the sale of certain company-owned service centers.
Earnings from automotive chemicals and antifreeze suffered from lower
margins.
(VALVOLINE OPERATING INCOME BAR CHART)
At September 30, 2001, VIOC operated 364 company-owned service centers,
compared to 358 centers in 2000 and 377 centers in 1999. The net reduction
since 1999 resulted from sales of company-owned centers to franchisees, as
well as the closing of certain unprofitable centers. The VIOC franchising
program continues to expand, with 311 centers open at September 30, 2001,
compared to 272 centers in 2000 and 207 centers in 1999. VIOC's future
growth will continue to focus principally on expanding the number of
franchised rather than company-owned centers.
Operating income from Valvoline was $78 million in 2000, compared to $74
million in 1999. The improvement reflected record results from VIOC and
significantly better results from international operations. VIOC's results
reflected increased franchising royalties, better car counts, higher
revenues per car serviced and gains on the sale of certain company-owned
service centers. The lubricant operations performed well despite a
difficult market. Multiple base stock cost increases were incurred that
were difficult to pass through, resulting in margin compression. However,
the adverse effects of that compression were largely offset by stringent
controls over advertising and other costs. In addition, antifreeze margins
suffered from a price spike in ethylene glycol, the chief raw material in
antifreeze.
REFINING AND MARKETING
Operating income from Refining and Marketing, which consists primarily of
equity income from Ashland's 38% ownership interest in MAP, amounted to a
record $707 million in 2001, compared to $361 million in 2000. Ashland's
equity income from MAP's refining and wholesale marketing operations was up
$404 million, reflecting the net effects of strong refining margins, a
slight reduction in refined product sales and higher operating and
administrative expenses. The increase of $2.54 a barrel in MAP's refining
and wholesale marketing margin reflected tight product supplies during much
of the year in its primary Midwest market. However, equity income from
MAP's retail operations declined by $40 million. The decline principally
reflects lower product margins and volumes, reduced earnings from
merchandise sales and higher operating expenses.
(REFINING AND MARKETING OPERATING INCOME BAR CHART)
Operating income from Refining and Marketing totaled $361 million for 2000,
compared to $216 million in 1999 before unusual items. MAP's refining and
wholesale marketing operations were responsible for an improvement of $186
million in Ashland's equity income. MAP's refining margins improved $1.06 a
barrel from their depressed levels in 1999. However, retail markets were
not nearly as favorable as retail gasoline prices failed to keep pace with
the higher level of wholesale gasoline costs. Ashland's equity income from
SSA declined $24 million, reflecting the net effects of lower retail
margins, increased product sales and higher earnings from merchandise
sales. Merchandise sales were up 15%, in part reflecting MAP's acquisition
of certain Michigan retail properties in December 1999.
CORPORATE
Excluding unusual items, Corporate expenses were $85 million in 2001, $73
million in 2000 and $67 million in 1999. The increase since 1999
principally reflects higher incentive and deferred compensation costs.
/31/
NET INTEREST AND OTHER FINANCIAL COSTS
Net interest and other financial costs amounted to $170 million in 2001,
$188 million in 2000 and $140 million in 1999. The fluctuations in interest
costs resulted principally from changes in debt levels over the three-year
period. Debt levels increased $380 million during 2000, principally as a
result of the indebtedness associated with the acquisition of the
construction operations of Superfos. Reflecting strong cash flows from
operations, debt levels were reduced by $355 million during 2001.
FINANCIAL POSITION
LIQUIDITY
Ashland's financial position has enabled it to obtain capital for its
financing needs and to maintain investment grade ratings on its senior debt
of Baa2 from Moody's and BBB from Standard & Poor's. Ashland has two
revolving credit agreements providing for up to $425 million in borrowings,
neither of which has been used. Under a shelf registration, Ashland can
also issue an additional $600 million in debt and equity securities should
future opportunities or needs arise. Furthermore, Ashland has access to
various uncommitted lines of credit and commercial paper markets. While the
revolving credit agreements contain a covenant limiting new borrowings
based on its stockholders' equity, Ashland could have increased its
borrowings (including any borrowings under these agreements) by up to $1.5
billion at September 30, 2001. Additional permissible borrowings are
increased (decreased) by 150% of any increases (decreases) in Ashland's
stockholders' equity.
Cash flows from operations, a major source of Ashland's liquidity, amounted
to $829 million in 2001, $484 million in 2000 and $383 million in 1999.
Such amounts include after tax cash flows from Ashland's investment in MAP
of $501 million in 2001, $225 million in 2000 and $255 million in 1999.
Cash flows from operations for 2001 also include the favorable effects of a
reduction of $111 million in operating assets and liabilities, while the
amount for 2000 includes an increase of $150 million from sales of
receivables (reflected as part of the change in operating assets and
liabilities). Those sales were under a program that provides for the sale
of up to a $200 million undivided interest in a designated pool of
receivables. Since 1998, cash flows from operations have exceeded Ashland's
capital requirements for net property additions and dividends by nearly
$900 million, providing additional funds for debt repayments, stock
purchases and acquisitions.
Earnings before interest, taxes, depreciation and amortization (EBITDA) is
a widely accepted financial indicator of a company's ability to incur and
service debt. Ashland's EBITDA, which represents operating income plus
depreciation, depletion and amortization (each excluding unusual items),
amounted to $1.1 billion in 2001, $908 million in 2000 and $705 million in
1999. EBITDA should not be considered in isolation or as an alternative to
net income, operating income, cash flows from operations, or a measure of a
company's profitability, liquidity or performance under generally accepted
accounting principles.
At September 30, 2001, working capital (excluding debt due within one year)
amounted to $801 million, compared to $759 million at the end of fiscal
2000. Ashland's working capital is affected by its use of the LIFO method
of inventory valuation. That method valued inventories below their
replacement costs by $70 million at September 30, 2001, and $71 million at
September 30, 2000. Liquid assets (cash, cash equivalents and accounts
receivable) amounted to 95% of current liabilities at September 30, 2001,
compared to 77% at the end of fiscal 2000.
CAPITAL RESOURCES
Property additions amounted to $685 million during the last three years and
are summarized in the Information by Industry Segment on Page 55. For that
period, APAC accounted for 43% of Ashland's capital expenditures, while
Ashland Specialty Chemical accounted for an additional 31%. Capital used
for acquisitions (including assumed debt and companies acquired through the
issuance of common stock) amounted to $852 million during the last three
years, of which $774 million was invested in APAC and $78 million in
Ashland Specialty Chemical. A summary of the capital employed in Ashland's
continuing operations at the end of the last three fiscal years follows.
(In millions) 2001 2000 1999
CAPITAL EMPLOYED
APAC $1,047 $1,156 $663
Ashland Distribution 470 574 527
Ashland Specialty Chemical 612 597 566
Valvoline 389 333 346
Refining and Marketing 1,654 1,679 1,646
-------------------------------------------------
$4,172 $4,339 $3,748
=================================================
Capital employed in APAC increased considerably since 1999, as Ashland's
acquisitions were principally focused in the construction business. Capital
employed in Ashland's wholly owned businesses increased from 56% of the
total at the end of fiscal 1999 to 60% at September 30, 2001.
/32/
Long-term borrowings provided cash flows of nearly $1.2 billion during the
last three years, including the issuance of $600 million in debt related to
the acquisition of the construction operations of Superfos and $552 million
of medium-term notes. The proceeds from these long-term borrowings were
used in part to retire $903 million of long-term debt, including the $600
million of Superfos-related debt. Debt retirements included scheduled
maturities, as well as prepayments or refundings to reduce interest costs.
Cash flows were supplemented as necessary by the issuance of short-term
notes and commercial paper.
Reflecting strong cash flows from operations, Ashland reduced its total
debt by $355 million to $1.9 billion at September 30, 2001. In addition,
stockholders' equity increased by $261 million during the year to $2.2
billion. As a result, debt as a percent of capital employed was reduced
from 53% at the end of fiscal 2000 to 46% at September 30, 2001.
At September 30, 2001, Ashland's long-term debt included $139 million of
floating-rate obligations, and the interest rates on an additional $60
million of fixed-rate, medium-term notes were effectively converted to
floating rates through interest rate swap agreements. In addition,
Ashland's costs under its sale of receivables program and various operating
leases are based on the floating-rate interest costs on $258 million of
third-party debt underlying those transactions. As a result, Ashland was
exposed to fluctuations in short-term interest rates on $457 million of
debt obligations at September 30, 2001.
From time to time, Ashland's Board of Directors has authorized the purchase
of shares of Ashland common stock in the open market. At September 30,
2001, Ashland could purchase an additional 3.9 million shares under
previous authorizations. The number of shares ultimately purchased and the
prices Ashland will pay for its stock are subject to periodic review by
management.
During fiscal 2002, Ashland expects capital expenditures of approximately
$270 million, with nearly 80% of the increase over capital expenditures
during 2001 invested in APAC. Ashland anticipates meeting its capital
requirements during 2002 for property additions, dividends and scheduled
debt repayments of $85 million from internally generated funds. However,
external financing may be necessary to provide funds for acquisitions or
purchases of common stock.
ENVIRONMENTAL MATTERS
Federal, state and local laws and regulations relating to the protection of
the environment have resulted in higher operating costs and capital
investments by the industries in which Ashland operates. Because of the
continuing trends toward greater environmental awareness and ever
increasing regulations, Ashland believes that expenditures for
environmental compliance will continue to have a significant effect on its
businesses. Although it cannot accurately predict how such trends will
affect future operations and earnings, Ashland believes the nature and
significance of its ongoing compliance costs will be comparable to those of
its competitors.
Environmental remediation reserves are subject to numerous inherent
uncertainties that affect Ashland's ability to estimate its share of the
ultimate costs of required remediation efforts. Such uncertainties involve
the nature and extent of contamination at each site, the extent of required
cleanup efforts under existing environmental regulations, widely varying
costs of alternate cleanup methods, changes in environmental regulations,
the potential effect of continuing improvements in remediation technology,
and the number and financial strength of other potentially responsible
parties at multiparty sites. Reserves are regularly adjusted as
environmental remediation continues.
Ashland does not believe that any liability resulting from environmental
matters, after taking into consideration expected recoveries from insurers,
contributions by other responsible parties and amounts already provided
for, will have a material adverse effect on its consolidated financial
position, cash flows or liquidity. Although environmental remediation could
have a material effect on results of operations if a series of adverse
developments occurs in a particular quarter or fiscal year, Ashland
believes that the chance of such developments occurring in the same quarter
or fiscal year is remote.
DERIVATIVE INSTRUMENTS
Ashland regularly uses commodity-based and foreign currency derivative
instruments to manage its exposure to price fluctuations associated with
the purchase and sale of natural gas in its energy services business and
certain transactions denominated in foreign currencies. In addition,
Ashland opportunistically enters into petroleum crackspread futures to
economically hedge or enhance its equity earnings and cash distributions
from Refining and Marketing. Although certain of these instruments could be
designated as qualifying for hedge accounting treatment, Ashland has not
elected to do so. Therefore, the fair value of the derivatives is recorded
on the balance sheet, with the offsetting gain or loss recognized in
earnings during the period of change. The potential loss from a
hypothetical 10% adverse change in commodity prices or foreign currency
rates on Ashland's open commodity-based and foreign currency derivative
instruments at September 30, 2001, would not significantly affect Ashland's
consolidated financial position, results of operations, cash flows or
liquidity.
/33/
Ashland selectively uses unleveraged interest rate swap agreements to
obtain greater access to the lower borrowing costs normally available on
floating-rate debt, while minimizing refunding risk through the issuance of
long-term, fixed-rate debt. Ashland's intent is to maintain its
floating-rate exposure between 25% and 45% of total interest-bearing
obligations. At September 30, 2001, Ashland had interest rate swaps
outstanding that effectively convert $60 million of fixed-rate, medium-term
notes to floating rates. The swaps have been designated as fair value
hedges, and because the critical terms of the debt instruments and the
swaps match, the hedges are assumed to be perfectly effective, with the
changes in fair value of the debt and swaps offsetting.
MAP uses commodity-based futures, forwards, swaps and options to reduce the
effects of price fluctuations related to the purchase and sale of crude
oil, natural gas and refined products. MAP has not elected to designate
these derivative instruments as qualifying for hedge accounting treatment.
As a result, the changes in fair value of these derivatives are recognized
in earnings during the period of change, impacting Ashland's equity income
from MAP accordingly.
OUTLOOK
Currently, the economic and energy outlook is uncertain. A slowing
worldwide economy has put downward pressure on energy prices and the U.S.
economy has stalled. Although it is unlikely to match its record results of
2001, Ashland still expects its earnings for 2002 will be good.
At September 30, 2001, APAC's construction backlog amounted to $1.6
billion, compared to $1.4 billion at the end of fiscal 2000. Such backlog
includes a 21% increase in public sector work from $1.22 billion at the end
of last fiscal year to $1.48 billion at September 30, 2001. In addition,
the public funding outlook is positive because infrastructure spending
historically rises during economic downturns, there is a well-demonstrated
need for infrastructure construction and repair, and expected increases in
highway travel should generate higher dedicated tax revenues. Private
contract work in the backlog declined from $179 million at the end of last
year to $149 million this year, reflecting the weaker economy. On balance,
APAC is expected to have a much better year in 2002. Many low-margin jobs
obtained through recent acquisitions have been working their way through
the backlog, and the internal restructuring and improvement initiatives
that are underway should result in improved margins. While the construction
business has many uncertainties due to factors such as weather, energy and
asphalt costs, competition and economic conditions, APAC is expected to
generate operating income in the range of $150 million to $170 million in
2002. This estimate includes a $25 million positive impact from the
adoption of Financial Accounting Standards Board Statement No. 142 (FAS
142), "Goodwill and Other Intangible Assets," under which amortization of
goodwill will be discontinued.
Earnings from Ashland Distribution and Ashland Specialty Chemical should
rebound as the economy recovers. Although the outlook remains uncertain for
industrial production, the key driver for Ashland's chemical businesses,
they are well positioned and improving their relative competitive strength.
Ashland Distribution is consolidating operations, and focusing on
e-commerce and service-related areas that are less capital intensive.
Ashland Specialty Chemical is aggressively seeking to develop new markets,
both geographically and in terms of product applications, for existing
product lines. The acquisition during 2001 of the former business of Neste
Polyester, a producer of gelcoats that compliments the composite polymers
business, was an example of that strategy.
Valvoline's profits should be comparable with or perhaps slightly below its
strong performance during 2001. Valvoline generated gross profit of roughly
$14 million in each of the last three years from sales of R-12 refrigerant.
Based on its remaining inventories, Valvoline's gross profit from R-12
refrigerant is expected to be around half of that amount in 2002 before its
inventories are depleted.
While MAP should have another strong year in 2002, Ashland does not expect
MAP's earnings to equal the record results it achieved in 2001. U. S.
petroleum demand is lower as a result of the slowing economy, and product
supply is currently ample. As a result, refining margins are expected to
soften and approximate the average levels experienced during the 1998 to
2000 timeframe. However, MAP should benefit from recent profit-enhancing
projects, including the October start-up of a new coker at its Garyville,
Louisiana refinery and the travel center joint venture with Pilot
Corporation that was formed in September. The combined impact of these
projects should contribute at least $100 million to MAP's operating income
in 2002.
Ashland adopted FAS 142 as of October 1, 2001, the beginning of its fiscal
2002. Application of the nonamortization provisions of FAS 142 is expected
to increase Ashland's operating income in 2002 by about $43 million ($35
million after income taxes). Amortization recognized by each of the
divisions should be reduced to some extent, with expected reductions of $25
million for APAC, $1 million for Ashland Distribution, $6 million for
Ashland Specialty Chemical, $1 million for Valvoline and $10 million for
Refining and Marketing. Because most of the goodwill amortization was not
deductible for income tax purposes, Ashland's effective income tax rate is
expected to decline from an average of 40% during the last three years to
about 38.5% in 2002. During 2002, Ashland will also perform the first of
the required impairment tests on goodwill as of October 1, 2001. Although
those tests and other transitional issues have not yet been finalized,
Ashland does not believe that the initial adoption of FAS 142 will have a
significant effect on its consolidated financial position or results of
operations.
/34/
Ashland's sales and operating revenues are normally subject to seasonal
variations. Although APAC tends to enjoy a relatively long construction
season, most of its operating income is generated during the construction
period of May to October. In addition, MAP experiences demand increases for
gasoline during the summer driving season, for propane and distillate
during the winter heating season and for asphalt during the construction
season. The following table compares operating income before unusual items
by quarter for the three years ended September 30, 2001 (amounts for each
quarter do not necessarily total to results for the year due to rounding).
(In millions) 2001 2000 1999
QUARTERLY OPERATING INCOME BEFORE UNUSUAL ITEMS
December 31 $144 $111 $109
March 31 87 90 44
June 30 369 268 173
September 30 251 203 170
=================================
CONVERSION TO THE EURO
On January 1, 1999, certain members of the European Economic and Monetary
Union (EMU) established fixed conversion rates between their existing
currencies and the EMU's common currency, the Euro. Entities in the
participating countries can conduct their business operations in either
their currencies or the Euro until December 31, 2001. After that date, all
non-cash transactions will be conducted in Euros and circulation of Euro
notes and coins for cash transactions will commence. National notes and
coins will be withdrawn no later than June 30, 2002.
Ashland conducts business in most of the participating countries and is
addressing the issues associated with the Euro. The more important issues
include converting information technology systems and processing accounting
and tax records. Based on the progress to date, Ashland believes that its
conversion to the Euro will be accomplished successfully and that the use
of the Euro will not have a significant impact on the manner in which it
does business and processes its accounting records. Accordingly, the use of
the Euro is not expected to have a material effect on Ashland's
consolidated financial position, results of operations, cash flows or
liquidity.
EFFECTS OF INFLATION AND CHANGING PRICES
Ashland's financial statements are prepared on the historical cost method
of accounting and, as a result, do not reflect changes in the purchasing
power of the U.S. dollar. Although annual inflation rates have been low in
recent years, Ashland's results are still affected by the cumulative
inflationary trend from prior years.
In the capital-intensive industries in which Ashland operates, replacement
costs for its properties would generally exceed their historical costs.
Accordingly, depreciation, depletion and amortization expense would be
greater if it were based on current replacement costs. However, since
replacement facilities would reflect technological improvements and changes
in business strategies, such facilities would be expected to be more
productive than existing facilities, mitigating part of the increased
expense.
Ashland uses the LIFO method to value a substantial portion of its
inventories to provide a better matching of revenues with current costs.
However, LIFO values such inventories below their replacement costs.
Monetary assets (such as cash, cash equivalents and accounts receivable)
lose purchasing power as a result of inflation, while monetary liabilities
(such as accounts payable and indebtedness) result in a gain, because they
can be settled with dollars of diminished purchasing power. Ashland's
monetary liabilities exceed its monetary assets, which results in net
purchasing power gains and provides a hedge against the effects of future
inflation.
FORWARD-LOOKING STATEMENTS
Management's Discussion and Analysis (MD&A) contains forward-looking
statements, within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934, with respect to
various information in the sections entitled Capital Resources, Derivative
Instruments, Outlook and Conversion to the Euro. Estimates as to operating
performance and earnings are based on a number of assumptions, including
those mentioned in MD&A. Such estimates are also based upon internal
forecasts and analyses of current and future market conditions and trends,
management plans and strategies, weather, operating efficiencies and
economic conditions, such as prices, supply and demand, and cost of raw
materials. Although Ashland believes its expectations are based on
reasonable assumptions, it cannot assure the expectations reflected in MD&A
will be achieved. This forward-looking information may prove to be
inaccurate and actual results may differ significantly from those
anticipated if one or more of the underlying assumptions or expectations
proves to be inaccurate or is unrealized, or if other unexpected conditions
or events occur. Other factors and risks affecting Ashland are contained in
Risks and Uncertainties in Note A to the Consolidated Financial Statements
and in Ashland's Form 10-K for the fiscal year ended September 30, 2001.
Ashland undertakes no obligation to subsequently update or revise these
forward-looking statements.
/35/
Ashland Inc. and Consolidated Subsidiaries
STATEMENTS OF CONSOLIDATED INCOME
Years Ended September 30
(In millions except per share data) 2001 2000 1999
REVENUES
Sales and operating revenues $7,719 $7,961 $6,801
Equity income - Note F 754 394 351
Other income 74 81 101
------------------------------------------------------------
8,547 8,436 7,253
COSTS AND EXPENSES
Cost of sales and operating expenses 6,319 6,434 5,346
Selling, general and administrative expenses 1,127 1,094 1,054
Depreciation, depletion and amortization 250 237 228
------------------------------------------------------------
7,696 7,765 6,628
------------------------------------------------------------
OPERATING INCOME 851 671 625
Net interest and other financial costs - Note G (170) (188) (140)
------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 681 483 485
Income taxes - Note E (275) (191) (194)
------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS 406 292 291
Results from discontinued operations
(net of income taxes) - Note B 19 (218) (1)
------------------------------------------------------------
INCOME BEFORE EXTRAORDINARY LOSS AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE 425 74 290
Extraordinary loss on early retirement of debt
(net of income taxes) - Note G (3) (4) -
Cumulative effect of accounting change
(net of income taxes) - Note A (5) - -
------------------------------------------------------------
NET INCOME $ 417 $ 70 $ 290
============================================================
EARNINGS PER SHARE - NOTE A
Basic
Income from continuing operations $ 5.83 $ 4.11 $ 3.95
Results from discontinued operations .27 (3.07) (.01)
Extraordinary loss (.04) (.05) -
Cumulative effect of accounting change (.07) - -
------------------------------------------------------------
Net income $ 5.99 $ .99 $ 3.94
============================================================
Diluted
Income from continuing operations $ 5.77 $ 4.10 $ 3.90
Results from discontinued operations .26 (3.07) (.01)
Extraordinary loss (.04) (.05) -
Cumulative effect of accounting change (.06) - -
------------------------------------------------------------
Net income $ 5.93 $ .98 $ 3.89
============================================================
See Notes to Consolidated Financial Statements.
/37/
Ashland Inc. and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
September 30
(In millions) 2001 2000
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 236 $ 67
Accounts receivable (less allowances for doubtful accounts of
$34 million in 2001 and $25 million in 2000) 1,185 1,243
Inventories - Note A 495 488
Deferred income taxes - Note E 126 135
Other current assets 171 198
---------------------------------------
2,213 2,131
INVESTMENTS AND OTHER ASSETS
Investment in Marathon Ashland Petroleum LLC (MAP) - Note F 2,387 2,295
Goodwill (less accumulated amortization of $142 million in 2001
and $101 million in 2000) 528 537
Investment in Arch Coal - discontinued operations - Note B - 35
Other noncurrent assets 377 351
---------------------------------------
3,292 3,218
PROPERTY, PLANT AND EQUIPMENT
Cost
APAC 1,290 1,220
Ashland Distribution 359 356
Ashland Specialty Chemical 887 835
Valvoline 374 354
Corporate 120 114
---------------------------------------
3,030 2,879
Accumulated depreciation, depletion and amortization (1,590) (1,457)
---------------------------------------
1,440 1,422
---------------------------------------
$6,945 $6,771
=======================================
See Notes to Consolidated Financial Statements.
/38/
(In millions) 2001 2000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Debt due within one year
Notes payable to financial institutions $ - $ 180
Commercial paper - 65
Current portion of long-term debt 85 82
Trade and other payables 1,392 1,330
Income taxes 20 42
----------------------------------
1,497 1,699
NONCURRENT LIABILITIES
Long-term debt (less current portion) - Note G 1,786 1,899
Employee benefit obligations - Note O 412 383
Deferred income taxes - Note E 440 288
Reserves of captive insurance companies 173 179
Other long-term liabilities and deferred credits 411 358
Commitments and contingencies - Notes J and M
----------------------------------
3,222 3,107
STOCKHOLDERS' EQUITY - Notes G, K and L
Preferred stock, no par value, 30 million shares authorized
Common stockholders' equity
Common stock, par value $1.00 per share
Authorized - 300 million shares
Issued - 69 million shares in 2001 and 70 million shares in 2000 69 70
Paid-in capital 363 388
Retained earnings 1,920 1,579
Accumulated other comprehensive loss (126) (72)
----------------------------------
2,226 1,965
----------------------------------
$6,945 $6,771
==================================
/39/
Ashland Inc. and Consolidated Subsidiaries
STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
Accumulated
other
Common Paid-in Retained comprehensive
(In millions) stock capital earnings loss Total
BALANCE AT OCTOBER 1, 1998 $76 $602 $1,501 $(42) $2,137
Total comprehensive income(1) 290 (4) 286
Cash dividends, $1.10 per common share (81) (81)
Issued common stock under
Stock incentive plans 7 7
Acquisitions of other companies 2 77 79
Repurchase of common stock (6) (222) (228)
-------------------------------------------------------------------------
BALANCE AT SEPTEMBER 30, 1999 72 464 1,710 (46) 2,200
Total comprehensive income(1) 70 (26) 44
Dividends
Cash, $1.10 per common share (78) (78)
Spin-off of Arch Coal shares (123) (123)
Issued common stock under
Stock incentive plans 8 8
Acquisitions of other companies 3 3
Repurchase of common stock (2) (87) (89)
-------------------------------------------------------------------------
BALANCE AT SEPTEMBER 30, 2000 70 388 1,579 (72) 1,965
Total comprehensive income(1) 417 (54) 363
Cash dividends, $1.10 per common share (76) (76)
Issued common stock under
stock incentive plans 1 22 23
Repurchase of common stock (2) (47) (49)
-------------------------------------------------------------------------
BALANCE AT SEPTEMBER 30, 2001 $69 $363 $1,920 $(126) $2,226
=========================================================================
(1) Reconciliations of net income to total comprehensive income
follow.
(In millions) 2001 2000 1999
NET INCOME $417 $70 $290
Minimum pension liability adjustment (57) 2 13
Related tax benefit (expense) 22 (1) (5)
Unrealized translation losses (21) (37) (11)
Related tax benefit 2 10 3
Unrealized losses on securities - - (6)
Related tax benefit - - 2
---------------------------------------------
TOTAL COMPREHENSIVE INCOME $363 $44 $286
=============================================
At September 30, 2001, the accumulated other comprehensive loss of $126
million (after tax) was comprised of net unrealized translation losses of
$83 million and a minimum pension liability of $43 million.
See Notes to Consolidated Financial Statements.
/40/
Ashland Inc. and Consolidated Subsidiaries
STATEMENTS OF CONSOLIDATED CASH FLOWS
Years Ended September 30
(In millions) 2001 2000 1999
CASH FLOWS FROM OPERATIONS
Income from continuing operations $406 $292 $ 291
Expense (income) not affecting cash
Depreciation, depletion and amortization 250 237 228
Deferred income taxes 152 111 103
Equity income from affiliates (754) (394) (351)
Distributions from equity affiliates 664 282 339
Other items - (19) (2)
Change in operating assets and liabilities(1) 111 (25) (225)
--------------------------------------------
829 484 383
CASH FLOWS FROM FINANCING
Proceeds from issuance of long-term debt 52 988 150
Proceeds from issuance of common stock 15 5 4
Repayment of long-term debt (169) (675) (59)
Repurchase of common stock (49) (89) (228)
Increase (decrease) in short-term debt (245) 63 98
Dividends paid (76) (78) (81)
--------------------------------------------
(472) 214 (116)
CASH FLOWS FROM INVESTMENT
Additions to property, plant and equipment (205) (232) (248)
Purchase of operations - net of cash acquired (91) (590) (67)
Proceeds from sale of operations 9 50 24
Other - net 13 71 98
--------------------------------------------
(274) (701) (193)
--------------------------------------------
CASH PROVIDED (USED) BY CONTINUING OPERATIONS 83 (3) 74
Cash provided (used) by discontinued operations 86 (40) 2
--------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 169 (43) 76
Cash and cash equivalents - beginning of year 67 110 34
--------------------------------------------
CASH AND CASH EQUIVALENTS - END OF YEAR $236 $ 67 $ 110
============================================
DECREASE (INCREASE) IN OPERATING ASSETS(1)
Accounts receivable $ 82 $ 68 $ (90)
Inventories 5 - (25)
Deferred income taxes 5 (25) 1
Other current assets 30 (28) (20)
Investments and other assets (55) (101) (53)
INCREASE (DECREASE) IN OPERATING LIABILITIES(1)
Trade and other payables 43 105 (79)
Income taxes 4 (11) 2
Noncurrent liabilities (3) (33) 39
---------------------------------------------
CHANGE IN OPERATING ASSETS AND LIABILITIES $111 $(25) $(225)
=============================================
(1) Excludes changes resulting from operations acquired or sold.
See Notes to Consolidated Financial Statements.
/41/
Ashland Inc. and Consolidated Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Ashland and
its majority owned subsidiaries. Investments in joint ventures and 20% to
50% owned affiliates are accounted for on the equity method.
RISKS AND UNCERTAINTIES
The preparation of Ashland's consolidated financial statements in
conformity with accounting principles generally accepted in the United
States requires Ashland's management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses,
and the disclosures of contingent assets and liabilities. Significant items
subject to such estimates and assumptions include the carrying value of
long-lived and intangible assets, inventory and receivable valuation
allowances, environmental, self-insurance and litigation reserves, employee
benefit obligations, income recognized under construction contracts, and
the ultimate realization of deferred tax assets. Actual results could
differ from the estimates and assumptions used.
Ashland's results, including those of Marathon Ashland Petroleum LLC (MAP),
are affected by domestic and international economic, political,
legislative, regulatory and legal actions, as well as weather conditions.
Economic conditions, such as recessionary trends, inflation, interest and
monetary exchange rates, and changes in the prices of crude oil, petroleum
products and petrochemicals, can have a significant effect on operations.
Political actions may include changes in the policies of the Organization
of Petroleum Exporting Countries or other developments involving or
affecting oil-producing countries, including military conflict, embargoes,
internal instability or actions or reactions of the U.S. government in
anticipation of, or in response to, such actions. While Ashland maintains
reserves for anticipated liabilities and carries various levels of
insurance, Ashland could be affected by civil, criminal, regulatory or
administrative actions, claims or proceedings relating to the environment
or other matters. In addition, climate and weather can significantly affect
Ashland's results from several of its operations, such as APAC's
construction activities and MAP's sales volumes of asphalt, propane and
heating oil.
INVENTORIES
(In millions) 2001 2000
Chemicals and plastics $374 $375
Construction materials 74 80
Petroleum products 54 52
Other products 57 45
Supplies 6 7
Excess of replacement costs over LIFO carrying values (70) (71)
--------------------
$495 $488
====================
Chemicals, plastics, petroleum products and supplies with a replacement
cost of $330 million at September 30, 2001, and $327 million at September
30, 2000, are valued using the last-in, first-out (LIFO) method. The
remaining inventories are stated generally at the lower of cost (using the
first-in, first-out [FIFO] or average cost method) or market.
LONG-LIVED AND INTANGIBLE ASSETS
The cost of plant and equipment is depreciated by the straight-line method
over the estimated useful lives of the assets. Through September 30, 2001,
goodwill was amortized by the straight-line method over periods generally
ranging from 15 to 40 years, with an average remaining life of 16 years.
Long-lived and intangible assets are periodically reviewed for
recoverability when impairment indicators are present. Recorded values that
are not expected to be recovered through undiscounted future cash flows are
written down to current fair value, which is generally determined from
estimated discounted future net cash flows (assets held for use) or net
realizable value (assets held for sale).
Goodwill amortization amounted to $42 million in 2001, $29 million in 2000
and $34 million in 1999. Such amounts included charges of $10 million in
2001 and $19 million in 1999 for goodwill write-downs related to certain
operations. Results from these operations consistently had been well below
the levels that were expected when they were acquired, necessitating the
impairment review and resulting write-downs. In addition to these amounts,
equity income includes the amortization of the excess of Ashland's
investment over its underlying equity in the net assets of MAP. At
September 30, 2001, such excess amounted to $359 million. Straight-line
amortization of this excess, which includes a goodwill component, amounted
to $26 million in 2001 and 2000 and $27 million in 1999.
In June 2001, the Financial Accounting Standards Board issued Statement No.
142 (FAS 142), "Goodwill and Other Intangible Assets." Under FAS 142,
goodwill and intangible assets with indefinite lives will no longer be
amortized but will be subject to annual impairment tests. Other intangible
assets will continue to be amortized over their useful lives. As permitted,
Ashland adopted the statement as of October 1, 2001, the beginnning of its
fiscal year. Application of the nonamortization provisions of FAS 142 is
expected to increase Ashland's net income by approximately $35 million
($.50 per share) each year. During 2002, Ashland will perform the first of
the required
/42/
impairment tests of goodwill and indefinite lived intangible assets as of
October 1, 2001. Although those tests and other transitional issues have
not yet been finalized, Ashland does not believe that the initial adoption
of FAS 142 will have a significant effect on its consolidated financial
position or results of operations.
ENVIRONMENTAL COSTS
Accruals for environmental costs are recognized when it is probable that a
liability has been incurred and the amount of that liability can be
reasonably estimated. Such costs are charged to expense if they relate to
the remediation of conditions caused by past operations or are not expected
to mitigate or prevent contamination from future operations. Accruals are
recorded at undiscounted amounts based on experience, assessments and
current technology, without regard to any third-party recoveries and are
regularly adjusted as environmental assessments and remediation efforts
continue.
EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share (EPS) from continuing operations.
(In millions except per share data) 2001 2000 1999
NUMERATOR
Numerator for basic and diluted EPS - Income from
continuing operations $ 406 $ 292 $ 291
=============================================
DENOMINATOR
Denominator for basic EPS - Weighted average
common shares outstanding 69 71 74
Common shares issuable upon
exercise of stock options 1 - 1
---------------------------------------------
Denominator for diluted EPS - Adjusted weighted
average shares and assumed conversions 70 71 75
=============================================
BASIC EPS FROM CONTINUING OPERATIONS $5.83 $4.11 $3.95
DILUTED EPS FROM CONTINUING OPERATIONS $5.77 $4.10 $3.90
=============================================
DERIVATIVE INSTRUMENTS
In June 1998, the Financial Accounting Standards Board issued Statement No.
133 (FAS 133), "Accounting for Derivative Instruments and Hedging
Activities." FAS 133 was amended by two other statements and was required
to be adopted in years beginning after June 15, 2000. Because of Ashland's
minimal use of derivatives, FAS 133 did not have a significant effect on
Ashland's consolidated financial position or results of operations when it
was adopted on October 1, 2000. MAP's adoption of FAS 133 on January 1,
2001, resulted in a $20 million pretax loss from the cumulative effect of
this accounting change. Ashland's share of the pretax loss amounted to $8
million which, net of income tax benefits of $3 million, resulted in a loss
of $5 million from the cumulative effect of this accounting change.
In accordance with FAS 133, Ashland recognizes all of its derivative
instruments as either current assets or current liabilities on the balance
sheet at fair value. The accounting for changes in the fair value (i.e.,
gains or losses) of a derivative instrument depends on whether it has been
designated and qualifies as part of a hedging relationship and further, on
the type of hedging relationship. For derivative instruments that are
designated and qualify as a fair value hedge (i.e., hedging the exposure to
changes in the fair value of an asset or liability that is attributable to
a particular risk), the gain or loss on the derivative instrument, as well
as the offsetting loss or gain on the hedged item attributable to the
hedged risk are recognized in earnings during the period of the change in
fair values. For derivative instruments not designated as hedging
instruments, the gain or loss on the derivative is recognized in earnings
during the period of change.
Ashland selectively uses unleveraged interest rate swap agreements to
obtain greater access to the lower borrowing costs normally available on
floating-rate debt, while minimizing refunding risk through the issuance of
long-term, fixed-rate debt. Ashland's intent is to maintain its
floating-rate exposure between 25% and 45% of total interest-bearing
obligations. In 2001, Ashland executed two interest rate swaps that
effectively convert $60 million of fixed-rate, medium-term notes to
floating rates based upon three-month LIBOR. The swaps have been designated
as fair value hedges, and since the critical terms of the debt instruments
and the swaps match, the hedges are assumed to be perfectly effective, with
the changes in fair value of the debt and swaps offsetting.
Ashland regularly uses commodity-based and foreign currency derivative
instruments to manage its exposure to price fluctuations associated with
the purchase and sale of natural gas in its energy services business and
certain transactions denominated in foreign currencies. In addition,
Ashland opportunistically enters into petroleum crackspread futures to
economically hedge or enhance its equity earnings and cash distributions
from Refining and Marketing. Although certain of these instruments could be
designated as qualifying for hedge accounting treatment, Ashland has not
elected to do so. Therefore, the fair value of the derivatives is recorded
on the balance sheet, with the offsetting gain or loss recognized in
earnings during the period of change.
/43/
NOTE A - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DERIVATIVE INSTRUMENTS (CONTINUED)
MAP uses commodity-based futures, forwards, swaps and options to reduce the
effects of price fluctuations related to the purchase and sale of crude
oil, natural gas and refined products. MAP has not elected to designate
these derivative instruments as qualifying for hedge accounting treatment.
As a result, the changes in fair value of these derivatives are recognized
in earnings during the period of change, impacting Ashland's equity income
from MAP accordingly.
STOCK INCENTIVE PLANS
Ashland accounts for its stock options using the intrinsic value method
prescribed by Accounting Principles Board Opinion No. 25 (APB 25),
"Accounting for Stock Issued to Employees," and related Interpretations.
The disclosure requirements of Financial Accounting Standards Board
Statement No. 123 (FAS 123), "Accounting for Stock-Based Compensation," are
included in Note L.
OTHER
Cash equivalents include highly liquid investments maturing within three
months after purchase.
Income related to construction contracts is generally recognized by the
units-of-production method, which is a variation of the
percentage-of-completion method. Any anticipated losses on such contracts
are charged against operations as soon as such losses are estimable.
Research and development costs are expensed as incurred ($36 million in
2001, $33 million in 2000 and $30 million in 1999).
Effective October 1, 1999, APAC changed the estimated useful lives and
salvage values for its construction equipment, resulting in a decrease in
depreciation expense of approximately $21 million in 2000.
Certain prior year amounts have been reclassified in the consolidated
financial statements and accompanying notes to conform with 2001
classifications.
NOTE B - DISCONTINUED OPERATIONS
On March 16, 2000, Ashland's Board of Directors approved a spin-off of 17.4
million shares of its Arch Coal Common Stock to Ashland's shareholders of
record on March 24, 2000, in the form of a taxable dividend. The shares
were distributed on the basis of .246097 of a share of Arch Coal for each
Ashland share outstanding. The spin-off resulted in a charge to retained
earnings of $123 million, with no gain or loss recorded. Ashland sold its
remaining 4.7 million Arch Coal shares in a public offering during February
2001 for $86 million (after underwriting commissions). Ashland's net income
(loss) associated with Arch Coal and other discontinued operations are
summarized in the following table.
(In millions) 2001 2000 1999
INCOME (LOSS) FROM DISCONTINUED OPERATIONS
Arch Coal
Equity loss $ - $(246)(1) $(2)
Administrative expenses - (1) (1)
Reserves related to other discontinued operations (23) - -
GAIN (LOSS) ON DISPOSAL OF ARCH COAL
Gain on sale of stock 49 - -
Costs related to the spin-off - (5) -
----------------------------------
INCOME (LOSS) BEFORE INCOME TAXES 26 (252) (3)
INCOME TAXES
Income (loss) from discontinued operations 9 32 2
Gain (loss) on disposal of Arch Coal (16) 2 -
----------------------------------
RESULTS FROM DISCONTINUED OPERATIONS $19 $(218) $(1)
==================================
(1) Includes a net loss of $203 million related to asset impairment
and restructuring costs, largely due to the write-down of assets
at Arch's Dal-Tex and Hobet 21 mining operations and certain coal
reserves in central Appalachia.
/44/
NOTE C - INFORMATION BY INDUSTRY SEGMENT
Ashland's operations are conducted primarily in the United States and are
managed along industry segments, which include APAC, Ashland Distribution,
Ashland Specialty Chemical, Valvoline, and Refining and Marketing.
Information by industry segment is shown on Pages 54 and 55.
The APAC group of companies performs contract construction work, such as
paving, repairing and resurfacing highways, streets, airports, residential
and commercial developments, sidewalks, and driveways; grading and base
work; and excavation and related activities in the construction of bridges
and structures, drainage facilities and underground utilities in 14
southern and midwestern states. APAC also produces and sells construction
materials, such as hot-mix asphalt and ready-mix concrete, crushed stone
and other aggregate.
Ashland Distribution distributes chemicals, plastics, fiber reinforcements
and fine ingredients in North America and plastics in Europe.
Ashland Specialty Chemical manufactures and supplies specialty chemical
products and services to industries including the adhesives, automotive,
composites, foundry, merchant marine, paint, paper, plastics, semiconductor
fabrication, watercraft and water treatment industries.
Valvoline is a marketer of premium-branded automotive and industrial oils,
automotive chemicals, appearance products and services, with sales in more
than 140 countries. Valvoline is engaged in the "fast oil change" business
through owned and franchised service centers operating under the Valvoline
Instant Oil Change name.
The Refining and Marketing segment includes Ashland's 38% ownership
interest in Marathon Ashland Petroleum LLC (MAP) and other activities
associated with refining and marketing. MAP was formed January 1, 1998,
combining the major elements of the refining, marketing and transportation
operations of Ashland and Marathon Oil Company. MAP has seven refineries
with a combined crude oil refining capacity of 935,000 barrels per day, 91
light products and asphalt terminals in the Midwest and Southeast United
States, more than 5,900 retail marketing outlets in 18 states and
significant pipeline holdings. Ashland accounts for its interest in MAP
using the equity method.
Information about Ashland's domestic and foreign operations follows.
Ashland has no material operations in any individual foreign country.
Property, plant
Revenues from external customers and equipment
---------------------------------- ----------------------
(In millions) 2001 2000 1999 2001 2000
United States $7,526 $7,348 $6,185 $1,299 $1,300
Foreign 1,021 1,088 1,068 141 122
---------------------------------------------------------------------
$8,547 $8,436 $7,253 $1,440 $1,422
=====================================================================
NOTE D - RELATED PARTY TRANSACTIONS
Ashland sells chemicals and lubricants to Marathon Ashland Petroleum LLC
(MAP) and purchases petroleum products from MAP. Such transactions are in
the ordinary course of business at negotiated prices comparable to those of
transactions with other customers and suppliers. In addition, Ashland
leases certain facilities to MAP, and provides certain information
technology and administrative services to MAP. For the year ended September
30, 2001, Ashland's sales to MAP amounted to $22 million, its purchases
from MAP amounted to $258 million, and its costs charged to MAP amounted to
$6 million. Comparable amounts for the year ended September 30, 2000, were
$15 million, $261 million, and $8 million, and for the year ended September
30, 1999, were $8 million, $185 million, and $16 million. Ashland's
transactions with other affiliates and related parties were not
significant.
Ashland has entered into revolving credit agreements providing for
short-term loans, at Ashland's discretion, to and from MAP at competitive
rates. Under MAP's borrowing agreement, Ashland may loan up to $190 million
to MAP. Under Ashland's borrowing agreement, MAP could invest up to 38% of
its surplus cash balances with Ashland. No loans were outstanding under
either agreement at September 30, 2001, and 2000. Under these agreements,
Ashland paid interest expense to MAP of $4 million in 2001, $5 million in
2000 and $3 million in 1999. Interest income received from MAP was not
significant.
/45/
NOTE E - INCOME TAXES
A summary of the provision for income taxes related to continuing
operations follows.
(In millions) 2001 2000 1999
Current(1)
Federal $ 90 $ 57 $ 63
State 14 6 17
Foreign 19 17 11
---------------------------------
123 80 91
Deferred 152 111 103
---------------------------------
$275 $191 $194
=================================
(1) Income tax payments amounted to $103 million in 2001, $114 million
in 2000 and $142 million in 1999.
Deferred income taxes are provided for income and expense items recognized
in different years for tax and financial reporting purposes. Temporary
differences that give rise to significant deferred tax assets and
liabilities follow.
(In millions) 2001 2000
Employee benefit obligations $177 $167
Environmental, self-insurance and litigation reserves 148 140
Compensation accruals 61 58
Uncollectible accounts receivable 20 13
Other items 59 78
---------------------
Total deferred tax assets 465 456
---------------------
Property, plant and equipment 173 156
Investment in unconsolidated affiliates 606 453
---------------------
Total deferred tax liabilities 779 609
---------------------
Net deferred tax liability $314 $153
=====================
The U.S. and foreign components of income from continuing operations before
income taxes and a reconciliation of the statutory federal income tax with
the provision for income taxes follow.
(In millions) 2001 2000 1999
Income from continuing operations before income taxes
United States $617 $428 $461
Foreign 64 55 24
-------------------------------
$681 $483 $485
===============================
Income taxes computed at U.S. statutory rate (35%) $238 $169 $169
Increase (decrease) in amount computed resulting from
State income taxes 22 14 17
Net impact of foreign results 3 - 6
Nondeductible goodwill amortization 12 7 2
Other items - 1 -
-------------------------------
Income taxes $275 $191 $194
===============================
/46/
NOTE F - UNCONSOLIDATED AFFILIATES
Affiliated companies accounted for on the equity method include Marathon
Ashland Petroleum LLC (MAP) and various other companies. See Note C for a
description of MAP. Summarized financial information reported by these
affiliates and a summary of the amounts recorded in Ashland's consolidated
financial statements follow. MAP is organized as a limited liability
company that has elected to be taxed as a partnership. Therefore, the
parents are responsible for income taxes applicable to their share of MAP's
taxable income. The net income reflected below for MAP does not include any
provision for income taxes that will be incurred by its parents. At
September 30, 2001, Ashland's retained earnings included $169 million of
undistributed earnings from unconsolidated affiliates accounted for on the
equity method.
Other
(In millions) MAP affiliates Total
SEPTEMBER 30, 2001
Financial position
Current assets $ 3,485 $ 80
Current liabilities (2,214) (55)
----------------------------
Working capital 1,271 25
Noncurrent assets 4,431 77
Noncurrent liabilities (364) (15)
-----------------------------
Stockholders' equity $ 5,338 $ 87
=============================
Results of operations
Sales and operating revenues $28,865 $207
Income from operations 2,042 21
Net income 2,022 12
Amounts recorded by Ashland
Investments and advances 2,387(1) 45 $2,432
Equity income 749 5 754
Distributions received 658 6 664
=============================================
SEPTEMBER 30, 2000
Financial position
Current assets $ 3,641 $ 82
Current liabilities (2,249) (48)
-----------------------------
Working capital 1,392 34
Noncurrent assets 3,974 92
Noncurrent liabilities (310) (22)
-----------------------------
Stockholders' equity $ 5,056 $104
=============================
Results of operations
Sales and operating revenues $27,657 $181
Income from operations 1,084 21
Net income 1,092 13
Amounts recorded by Ashland
Investments and advances 2,295 57 $2,352
Equity income 389 5 394
Distributions received 279 3 282
============================================
SEPTEMBER 30, 1999
Results of operations
Sales and operating revenues $18,965 $163
Income from operations 976 23
Net income 977 13
Amounts recorded by Ashland
Equity income 345 6 $ 351
Distributions received 333 6 339
============================================
(1) At September 30, 2001, Ashland's investment exceeded its
underlying equity in the net assets of MAP by $359 million.
Straight-line amortization of this excess against equity income
amounted to $26 million in 2001 and 2000 and $27 million in 1999.
Amortization of the portion of this excess representing goodwill
(approximately $10 million annually) ceased on October 1, 2001,
when Ashland adopted FAS 142 (see Note A).
/47/
NOTE G - LONG-TERM DEBT
(In millions) 2001 2000
Medium-term notes, due 2002-2025, interest at a weighted
average rate of 7.6% at September 30, 2001 (3.2% to 10.4%) $ 845 $ 917
8.80% debentures, due 2012 250 250
7.83% medium-term notes, Series J, due 2005 229 250
Pollution control and industrial revenue bonds, due
2002-2022, interest at a weighted average rate of 5.8%
at September 30, 2001 (2.2% to 7.2%) 201 217
6.86% medium-term notes, Series H, due 2009 150 150
6.625% senior notes, due 2008 150 150
Other 46 47
---------------------
1,871 1,981
Current portion of long-term debt (85) (82)
---------------------
$1,786 $1,899
=====================
Aggregate maturities of long-term debt are $85 million in 2002, $191
million in 2003, $68 million in 2004, $396 million in 2005 and $60 million
in 2006. Certain floating-rate pollution control and industrial revenue
bonds amounting to $38 million are subject to early redemptions at the
holders' option, but not before October 1, 2002. These bonds are due
between 2003 and 2009, and are included in maturities based on their
ultimate due date.
Ashland has two revolving credit agreements providing for up to $425
million in borrowings, neither of which has been used. The agreement
providing for $250 million in borrowings expires on June 2, 2004. The
agreement providing for $175 million in borrowings expires on May 28, 2002.
Both agreements contain a covenant limiting new borrowings. Based on
Ashland's financial position at September 30, 2001, borrowings (including
any borrowings under these agreements) could be increased by up to $1.5
billion. Additional permissible borrowings are increased (decreased) by
150% of any increases (decreases) in stockholders' equity.
Interest payments on all indebtedness amounted to $167 million in 2001,
$189 million in 2000 and $136 million in 1999. The weighted average
interest rate on short-term borrowings outstanding was 6.8% at September
30, 2000. No short-term borrowings were outstanding at September 30, 2001.
NET INTEREST AND OTHER FINANCIAL COSTS
(In millions) 2001 2000 1999
Interest expense $162 $191 $141
Expenses on sales of accounts receivable (see Note H) 8 6 -
Other financial costs 2 1 -
Interest income (2) (10) (1)
----------------------------------------
$170 $188 $140
========================================
EXTRAORDINARY LOSS
During 2001, Ashland repurchased $71 million of Series J medium-term notes.
The repurchase premium and write-off of unamortized deferred debt issuance
expenses resulted in pretax charges totaling $5 million which, net of
income tax benefits of $2 million, resulted in an extraordinary loss on
early retirement of debt of $3 million.
During 2000, Ashland refunded $36 million of pollution control revenue
bonds and prepaid $600 million of floating-rate debt used to fund the
acquisition of the U.S. construction operations of Superfos a/s. The
write-off of unamortized deferred debt issuance expenses and a redemption
premium on the bonds resulted in pretax charges totaling $6 million which,
net of income tax benefits of $2 million, resulted in an extraordinary loss
on early retirement of debt of $4 million.
/48/
NOTE H - SALE OF ACCOUNTS RECEIVABLE
On March 15, 2000, Ashland entered into a five-year agreement to sell, on
an ongoing basis and without recourse, up to a $200 million undivided
interest in a designated pool of accounts receivable. Under the terms of
the agreement, new receivables are added to the pool and collections reduce
the pool. Since inception, interests totaling $150 million have been sold
on a continuous basis. The proceeds from the initial sale were reflected as
a reduction of accounts receivable on Ashland's balance sheet and as cash
flows from operations (included in change in operating assets and
liabilities) on Ashland's cash flow statement. The costs of these sales are
based on the buyer's short-term borrowing rates and approximated 3.5% at
September 30, 2001, and 6.9% at September 30, 2000.
NOTE I - FINANCIAL INSTRUMENTS
DERIVATIVE INSTRUMENTS
Ashland uses interest rate swaps and commodity-based and foreign currency
derivative instruments as described in Note A. The fair value of open
contracts was not significant at September 30, 2001, and 2000.
FAIR VALUES
The carrying amounts and fair values of Ashland's significant financial
instruments at September 30, 2001, and 2000, are shown below. The fair
values of cash and cash equivalents, investments of captive insurance
companies, notes payable to financial institutions and commercial paper
approximate their carrying amounts. The fair values of long-term debt are
based on quoted market prices or, if market prices are not available, the
present values of the underlying cash flows discounted at Ashland's
incremental borrowing rates.
2001 2000
------------------------------- -------------------------------
Carrying Fair Carrying Fair
(In millions) amount value amount value
Assets
Cash and cash equivalents $ 236 $ 236 $ 67 $ 67
Investments of captive insurance companies(1) 20 20 28 28
Liabilities
Notes payable to financial institutions - - 180 180
Commercial paper - - 65 65
Long-term debt (including current portion) 1,871 2,025 1,981 2,014
=========================================================================
(1) Included in other noncurrent assets in the Consolidated Balance
Sheets.
NOTE J - LEASES
Ashland and its subsidiaries are lessees in noncancelable leasing
agreements for office buildings, warehouses, transportation equipment,
storage facilities, retail outlets, manufacturing facilities and other
equipment and properties which expire at various dates. Capitalized lease
obligations are not significant and are included in long-term debt. Future
minimum rental payments at September 30, 2001, and rental expense under
operating leases follow.
(In millions)
Future minimum rental payments Rental expense 2001 2000 1999
- ------------------------------------ -------------------------------------------------------------------------------
2002 $ 46
2003 40 Minimum rentals
2004 32 (including rentals under
2005 28 short-term leases) $119 $115 $103
2006 21 Contingent rentals 5 5 5
Later years 103 Sublease rental income (2) (2) (3)
- ------------------------------------ -------------------------------------------------------------------------------
$270 $122 $118 $105
==================================== ===============================================================================
/49/
NOTE K - CAPITAL STOCK
From time to time, Ashland's Board of Directors has authorized the purchase
of shares of Ashland common stock in the open market. As of September 30,
2001, Ashland could purchase an additional 3.9 million shares under
previous authorizations.
Under Ashland's Shareholder Rights Plan, each common share is accompanied
by one right to purchase one-thousandth share of preferred stock for $140.
Each one-thousandth share of preferred stock will be entitled to dividends
and to vote on an equivalent basis with one common share. The rights are
neither exercisable nor separately transferable from the common shares
unless a party acquires or tenders for more than 15% of Ashland's common
stock. If any party acquires more than 15% of Ashland's common stock or
acquires Ashland in a business combination, each right (other than those
held by the acquiring party) will entitle the holder to purchase preferred
stock of Ashland or the acquiring company at a substantial discount. The
rights expire on May 16, 2006, and Ashland's Board of Directors can amend
certain provisions of the Plan or redeem the rights at any time prior to
their becoming exercisable.
At September 30, 2001, 500,000 shares of cumulative preferred stock are
reserved for potential issuance under the Shareholder Rights Plan and 6.7
million common shares are reserved for issuance under outstanding stock
options.
NOTE L - STOCK INCENTIVE PLANS
Ashland has stock incentive plans under which key employees or directors
can purchase shares of common stock under stock options or restricted stock
awards. Stock options are granted to employees at a price equal to the fair
market value of the stock on the date of grant and become exercisable over
periods of one to four years. Unexercised options lapse 10 years after the
date of grant. Restricted stock awards entitle employees or directors to
purchase shares at a nominal cost, to vote such shares and to receive any
dividends thereon. However, such shares are subject to forfeiture upon
termination of service before the restriction period ends.
As discussed in Note A, Ashland accounts for its stock incentive plans in
accordance with APB 25. Ashland has not recognized compensation expense for
stock options, because the exercise price of the options equals the market
price of the underlying stock on the date of grant, which is the
measurement date. If the alternative method of accounting for stock
incentive plans prescribed by FAS 123 had been followed, Ashland's net
income and earnings per share would have been reduced to the pro forma
amounts shown in the following table. The weighted average fair value of
options granted was determined using the Black-Scholes option pricing model
with the indicated assumptions.
2001 2000 1999
Pro forma
Net income (in millions) $ 414 $ 66 $ 286
Basic earnings per share 5.94 .93 3.88
Diluted earnings per share 5.88 .92 3.84
--------------------------------------------
Weighted average fair value per share of options granted $7.38 $7.26 $7.97
--------------------------------------------
Assumptions (weighted average)
Risk-free interest rate 4.1% 6.1% 6.0%
Expected dividend yield 3.0% 3.3% 3.0%
Expected volatility 24.4% 22.9% 21.0%
Expected life (in years) 5.0 5.0 5.0
============================================
A progression of activity and various other information relative to stock
options is presented in the following table.
2001 2000 1999
----------------------- --------------------- --------------------------
Weighted avg. Weighted avg. Weighted avg.
Common option price Common option price Common option price
(In thousands except per share data) shares per share shares per share shares per share
Outstanding - beginning of year(1) 6,380 $38.01 6,381 $38.34 4,965 $38.82
Granted 1,001 36.38 506 32.96 1,590 36.97
Exercised (572) 30.06 (195) 30.75 (120) 34.55
Canceled (74) 41.04 (312) 41.26 (54) 49.75
------------------------------------------------------------------------------------
Outstanding - end of year(1) 6,735 $38.41 6,380 $38.01 6,381 $38.34
====================================================================================
Exercisable - end of year 4,803 $39.36 4,684 $38.53 4,348 $37.65
====================================================================================
(1) Shares of common stock available for future grants of options or
awards amounted to 4,812,000 at September 30, 2001, and 3,670,000
at September 30, 2000. Exercise prices per share for options
outstanding at September 30, 2001, ranged from $23.88 to $33.88
for 1,745,000 shares, from $35.88 to $43.13 for 3,704,000 shares,
and from $48.00 to $53.38 for 1,286,000 shares. The weighted
average remaining contractual life of the options was 6.4 years.
/50/
NOTE M - LITIGATION, CLAIMS AND CONTINGENCIES
Ashland is subject to various federal, state and local environmental laws
and regulations that require environmental assessment or remediation
efforts (collectively environmental remediation) at multiple locations. At
September 30, 2001, such locations included 99 waste treatment or disposal
sites where Ashland has been identified as a potentially responsible party
under Superfund or similar state laws, approximately 130 current and former
operating facilities (including certain operating facilities conveyed to
MAP) and about 1,200 service station properties. Ashland's reserves for
environmental remediation amounted to $176 million at September 30, 2001,
and $163 million at September 30, 2000. Such amounts reflect Ashland's
estimates of the most likely costs that will be incurred over an extended
period to remediate identified conditions for which the costs are
reasonably estimable, without regard to any third-party recoveries.
Environmental remediation reserves are subject to numerous inherent
uncertainties that affect Ashland's ability to estimate its share of the
ultimate costs of the required remediation efforts. Such uncertainties
involve the nature and extent of contamination at each site, the extent of
required cleanup efforts under existing environmental regulations, widely
varying costs of alternate cleanup methods, changes in environmental
regulations, the potential effect of continuing improvements in remediation
technology, and the number and financial strength of other potentially
responsible parties at multiparty sites. Reserves are regularly adjusted as
environmental remediation continues.
None of the remediation locations is individually material to Ashland as
its largest reserve for any site is under $10 million. As a result,
Ashland's exposure to adverse developments with respect to any individual
site is not expected to be material, and these sites are in various stages
of the ongoing environmental remediation process. Although environmental
remediation could have a material effect on results of operations if a
series of adverse developments occurs in a particular quarter or fiscal
year, Ashland believes that the chance of such developments occurring in
the same quarter or fiscal year is remote.
During 1999, Ashland entered into settlement agreements with certain of its
insurance carriers over the coverage provided under historical insurance
policies with respect to environmental liabilities. Under those
settlements, the carriers paid lump sum amounts to Ashland in exchange for
releases of their present and future obligations associated with
environmental liabilities. As a result of those agreements, Ashland
recorded pretax income of $43 million.
In addition to the environmental matters described above, there are pending
or threatened against Ashland and its current and former subsidiaries
various claims, lawsuits and administrative proceedings. Such actions are
with respect to commercial matters, product liability, toxic tort
liability, numerous asbestos claims, and other environmental matters, which
seek remedies or damages some of which are for substantial amounts. While
these actions are being contested, their outcome is not predictable with
assurance and could be material to results of operations in the period they
are recognized. However, Ashland does not believe that any liability
resulting from these actions and environmental remediation after taking
into consideration expected recoveries from insurers, contributions by
other responsible parties and amounts already provided for, will have a
material adverse effect on its consolidated financial position, cash flows
or liquidity.
NOTE N - ACQUISITIONS AND DIVESTITURES
ACQUISITIONS
In October 1999, Ashland completed its tender offer for Superfos a/s, a
Denmark based industrial company. In November 1999, in a series of
transactions, Ashland sold the businesses of Superfos, other than its U.S.
construction operations, to a unit of Industri Kapital, a European private
equity fund. Ashland's net cost for the U.S. construction business of
Superfos was approximately $533 million, of which $315 million was assigned
to goodwill and was being amortized on a straight-line basis over a 20-year
period through September 30, 2001. Prior to Ashland's acquisition, these
operations generated sales and operating revenues of $557 million and
operating income of $30 million during the year ended September 30, 1999.
In addition, several smaller acquisitions were made by APAC and Ashland
Specialty Chemical in 2000, two of which included the issuance of $3
million in Ashland common stock.
During 2001, Ashland Specialty Chemical acquired Neste Polyester's
unsaturated polyester resins and gelcoats business and assets from Dynea
Oy. Several smaller acquisitions were also completed by APAC and Ashland
Specialty Chemical in 2001. During 1999, APAC acquired 14 construction
businesses, six of which included the issuance of $79 million in Ashland
common stock. These acquisitions were accounted for as purchases and did
not have a significant effect on Ashland's consolidated financial
statements.
DIVESTITURES
During 2001, APAC sold certain grading and utilities construction
operations. During 2000, APAC sold certain concrete and block plants and
Ashland Distribution sold its plastics compounding business in Italy. In
1999, Valvoline sold its used oil collection business. None of these
divestitures had a significant effect on Ashland's consolidated financial
statements.
/51/
NOTE O - EMPLOYEE BENEFIT PLANS
PENSION AND OTHER POSTRETIREMENT PLANS
Ashland and its subsidiaries sponsor noncontributory, defined benefit
pension plans that cover substantially all employees. Benefits under these
plans are generally based on employees' years of service and compensation
during the years immediately preceding their retirement. For certain plans,
50% of employees' leveraged employee stock ownership plan (LESOP) accounts
are coordinated with and used to fund their pension benefits. Ashland
determines the level of contributions to its pension plans annually and
contributes amounts within the limitations imposed by Internal Revenue
Service regulations.
Ashland and its subsidiaries also sponsor unfunded postretirement benefit
plans, which provide health care and life insurance benefits for eligible
employees who retire or are disabled. Retiree contributions to Ashland's
health care plans are adjusted periodically, and the plans contain other
cost-sharing features, such as deductibles and coinsurance. Life insurance
plans are generally noncontributory for base level coverage, and fully
contributory for any additional coverage elected by employees. Ashland
funds the costs of benefits as they are paid.
Summaries of the changes in the benefit obligations and plan assets
(primarily listed stocks and debt securities) and of the funded status of
the plans follow.
Pension benefits
------------------------------------------------------
2001 2000 Other postretirement
------------------------ -------------------------- benefits
Qualified Nonqualified Qualified Nonqualified -----------------------
(In millions) plans plans plans plans 2001 2000
CHANGE IN BENEFIT OBLIGATIONS
Benefit obligations at October 1 $595 $ 87 $529 $88 $269 $262
Service cost 35 2 35 2 11 9
Interest cost 46 7 40 7 22 19
Retiree contributions - - - - 7 5
Benefits paid (28) (5) (24) (7) (28) (25)
Other-primarily actuarial loss (gain) 67 12 15 (3) 52 (1)
-------------------------------------------------------------------------------------
Benefit obligations at September 30 $715 $103 $595 $87 $333 $269
=====================================================================================
CHANGE IN PLAN ASSETS
Value of plan assets at October 1 $506 $ - $429 $ - $ - $ -
Actual return on plan assets (40) - 50 - - -
Employer contributions 76 5 46 7 21 20
Retiree contributions - - - - 7 5
Benefits paid (28) (5) (24) (7) (28) (25)
Other 4 - 5 - - -
------------------------------------------------------------------------------------
Value of plan assets at September 30 $518 $ - $506 $ - $ - $ -
====================================================================================
FUNDED STATUS OF THE PLANS
Under (over) funded accumulated
obligation $ 53 $ 91 $(29) $73 $333 $269
Provision for future salary increases 144 12 118 14 - -
------------------------------------------------------------------------------------
Excess of obligations over plan assets 197 103 89 87 333 269
Unrecognized actuarial loss (186) (44) (35) (27) (56) (6)
Unrecognized prior service
credit (cost) (3) - (4) - 24 31
------------------------------------------------------------------------------------
Net liability recognized $ 8 $ 59 $50 $60 $301 $294
====================================================================================
BALANCE SHEET LIABILITIES (ASSETS)
Prepaid benefit costs $ (4) $ (3) $ - $ -
Accrued benefit liabilities 144 127 301 294
Intangible assets (2) - - -
Accumulated other
comprehensive loss (71) (14) - -
------------------------------------------------------------------------------------
Net liability recognized $ 67 $110 $301 $294
====================================================================================
ASSUMPTIONS AS OF SEPTEMBER 30
Discount rate 7.25% 7.75% 7.25% 7.75%
Rate of compensation increase 5.00 5.00 5.00 5.00
Expected return on plan assets 9.00 9.00 - -
====================================================================================
/52/
The following table details the components of pension and other
postretirement benefit costs.
Pension benefits Other postretirement benefits
----------------------------------- ---------------------------------------
(In millions) 2001 2000 1999 2001 2000 1999
Service cost $37 $37 $34 $11 $ 9 $ 8
Interest cost 53 47 41 22 19 18
Expected return on plan assets (48) (39) (34) - - -
Other amortization and deferral 4 5 5 (6) (9) (7)
------------------------------------------------------------------------------------------
$46 $50 $46 $27 $19 $19
==========================================================================================
Ashland amended nearly all of its retiree health care plans in 1992 to
place a cap on its contributions and to adopt a cost-sharing method based
upon years of service. The cap limits Ashland's contributions to base year
per capita costs, plus annual increases of up to 4.5% per year. These
amendments reduced Ashland's obligations under its retiree health care
plans, with the reduction amortized to income over approximately 12 years.
The remaining credit at September 30, 2001, amounted to $22 million, and
will be amortized over approximately three years in declining amounts from
$8 million in 2002 to $6 million in 2004.
OTHER PLANS
Ashland sponsors a qualified savings plan to assist eligible employees in
providing for retirement or other future needs. Under that plan, Ashland
contributes up to 4.2% of a participating employee's earnings. Company
contributions amounted to $16 million in 2001 and $15 million in both 2000
and 1999.
NOTE P - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The following table presents quarterly financial information and per share
data relative to Ashland's common stock.
Quarters ended December 31 March 31 June 30 September 30
---------------- ---------------- ----------------- ------------------
(In millions except per share data) 2000 1999 2001 2000 2001 2000 2001 2000
Sales and operating revenues $1,878 $1,897 $1,659 $1,822 $2,053 $2,103 $2,129 $2,140
Operating income 144 111 87 90 369 268 251 203
Income from continuing operations $ 59 $ 40 $ 26 $ 25 $ 197 $ 129 $ 125 $ 97
Results from discontinued operations - (206) 25 (12) - - (6) -
Extraordinary loss - - - (2) - - (3) (1)
Cumulative effect of accounting change - - (5) - - - - -
--------------------------------------------------------------------------------
Net income (loss) $ 59 $ (166) $ 46 $ 11 $ 197 $ 129 $ 116 $ 96
Basic earnings (loss) per share
Continuing operations $ .84 $ .56 $ .37 $ .35 $ 2.82 $ 1.83 $ 1.79 $ 1.38
Discontinued operations - (2.88) .35 (.16) - - (.09) -
Extraordinary loss - - - (.03) - - (.04) (.02)
Cumulative effect of accounting change - - (.06) - - - - -
--------------------------------------------------------------------------------
Net income (loss) $ .84 $(2.32) $ .66 $ .16 $ 2.82 $ 1.83 $ 1.66 $ 1.36
Diluted earnings (loss) per share
Continuing operations $ .84 $ .55 $ .37 $ .35 $ 2.79 $ 1.83 $ 1.77 $ 1.38
Discontinued operations - (2.87) .35 (.16) - - (.09) -
Extraordinary loss - - - (.03) - - (.04) (.02)
Cumulative effect of accounting change - - (.06) - - - - -
--------------------------------------------------------------------------------
Net income (loss) $ .84 $(2.32) $ .66 $ .16 $ 2.79 $ 1.83 $ 1.64 $ 1.36
Common cash dividends per share $ .275 $ .275 $ .275 $ .275 $ .275 $ .275 $ .275 $ .275
Market price per common share
High 36.24 35.94 41.35 35.63 44.25 37.06 44.05 37.19
Low 30.63 30.31 34.39 28.63 37.15 31.19 35.53 31.44
================================================================================
/53/
Ashland Inc. and Consolidated Subsidiaries
INFORMATION BY INDUSTRY SEGMENT
Years Ended September 30
(In millions) 2001 2000 1999
REVENUES
Sales and operating revenues
APAC $2,624 $2,505 $1,678
Ashland Distribution 2,849 3,214 2,925
Ashland Specialty Chemical 1,248 1,283 1,263
Valvoline 1,092 1,077 1,059
Intersegment sales(1)
Ashland Distribution (26) (38) (35)
Ashland Specialty Chemical (66) (78) (84)
Valvoline (2) (2) (5)
-----------------------------------------------------
7,719 7,961 6,801
Equity income
Ashland Specialty Chemical 4 4 5
Valvoline 1 1 1
Refining and Marketing 749 389 345
-----------------------------------------------------
754 394 351
Other income
APAC 13 21 12
Ashland Distribution 15 9 6
Ashland Specialty Chemical 27 30 19
Valvoline 6 7 6
Refining and Marketing 7 6 8
Corporate 6 8 50
-----------------------------------------------------
74 81 101
-----------------------------------------------------
$8,547 $8,436 $7,253
=====================================================
OPERATING INCOME
APAC $ 55 $ 140 $ 108
Ashland Distribution 35 70 37 (2)
Ashland Specialty Chemical 58 95 107
Valvoline 81 78 74
Refining and Marketing(3) 707 361 206 (4)
Inventory valuation adjustments(5) - - 117
Corporate (85) (73) (24)(6)
-----------------------------------------------------
$ 851 $ 671 $ 625
=====================================================
ASSETS
APAC $1,574 $1,654 $ 996
Ashland Distribution 961 1,047 917
Ashland Specialty Chemical 944 888 878
Valvoline 642 573 561
Refining and Marketing 2,452 2,352 2,229
Corporate(7) 372 257 843
-----------------------------------------------------
$6,945 $6,771 $6,424
=====================================================
/54/
(In millions) 2001 2000 1999
INVESTMENT IN EQUITY AFFILIATES
APAC $ - $ 10 $ 10
Ashland Specialty Chemical 36 40 33
Valvoline 9 7 6
Refining and Marketing 2,387 2,295 2,172
-----------------------------------------------------
$2,432 $2,352 $2,221
=====================================================
EXPENSE (INCOME) NOT AFFECTING CASH
Depreciation, depletion and amortization
APAC $ 133 $ 129 $ 89
Ashland Distribution 27 23 44(8)
Ashland Specialty Chemical 56 49 53
Valvoline 23 23 26
Corporate 11 13 16
-----------------------------------------------------
250 237 228
Other noncash items(9)
APAC 14 9 -
Ashland Distribution (1) (3) (6)
Ashland Specialty Chemical 5 3 8
Valvoline 4 - (1)
Refining and Marketing 21 (17) 93
Corporate 19 (12) (5)
-----------------------------------------------------
62 (20) 89
-----------------------------------------------------
$ 312 $ 217 $ 317
=====================================================
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT
APAC $ 92 $ 98 $ 104
Ashland Distribution 15 18 30
Ashland Specialty Chemical 57 82 70
Valvoline 29 25 26
Corporate 12 9 18
-----------------------------------------------------
$ 205 $ 232 $ 248
=====================================================
(1) Intersegment sales are accounted for at prices that approximate
market value.
(2) Includes a $21 million charge for asset impairment related to
European plastics distribution operations.
(3) Includes Ashland's equity income from MAP, amortization of
Ashland's excess investment in MAP, and other activities
associated with refining and marketing.
(4) Includes a $10 million charge for severance and other costs
related to the formation of MAP.
(5) Represents Ashland's share of inventory adjustments due to changes
in MAP's inventory market valuation reserve. The reserve reflects
the excess of the LIFO cost of MAP's crude oil and refined product
inventories over their net realizable values.
(6) Includes $43 million in environmental insurance recoveries.
(7) Includes principally cash, cash equivalents, investments of
captive insurance companies and investment in discontinued
operations.
(8) Includes a charge of $19 million to write down goodwill related to
European plastics distribution operations.
(9) Includes deferred taxes, equity income from affiliates net of
distributions, and other items not affecting cash.
/55/
Ashland Inc. and Consolidated Subsidiaries
FIVE-YEAR SELECTED FINANCIAL INFORMATION
Years Ended September 30
(In millions except per share data) 2001 2000 1999 1998 1997
SUMMARY OF OPERATIONS
Revenues
Sales and operating revenues
(including excise taxes) $7,719 $7,961 $6,801 $6,534 $12,833
Equity income 754 394 351 304 14
Other income 74 81 101 70 89
Costs and expenses
Cost of sales and operating expenses (6,319) (6,434) (5,346) (5,299) (9,810)
Excise taxes on products and merchandise - - - - (992)
Selling, general and administrative expenses (1,127) (1,094) (1,054) (1,006) (1,350)
Depreciation, depletion and amortization (250) (237) (228) (181) (348)
-------------------------------------------------------------------------
Operating income 851 671 625 422 436
Net interest and other financial costs (170) (188) (140) (130) (142)
-------------------------------------------------------------------------
Income from continuing operations
before income taxes 681 483 485 292 294
Income taxes (275) (191) (194) (114) (125)
-------------------------------------------------------------------------
Income from continuing operations 406 292 291 178 169
Results from discontinued operations 19 (218) (1) 25 119
-------------------------------------------------------------------------
Income before extraordinary loss and
cumulative effect of accounting change 425 74 290 203 288
Extraordinary loss on early retirement of debt (3) (4) - - (9)
Cumulative effect of accounting change (5) - - - -
-------------------------------------------------------------------------
Net income $ 417 $ 70 $ 290 $ 203 $ 279
=========================================================================
BALANCE SHEET INFORMATION
Working capital
Current assets $2,213 $2,131 $2,059 $1,828 $ 2,720
Current liabilities 1,497 1,699 1,396 1,361 2,028
-------------------------------------------------------------------------
$ 716 $ 432 $ 663 $ 467 $ 692
-------------------------------------------------------------------------
Total assets $6,945 $6,771 $6,424 $6,082 $ 6,462
-------------------------------------------------------------------------
Capital employed
Debt due within one year $ 85 $ 327 $ 219 $ 125 $ 49
Long-term debt (less current portion) 1,786 1,899 1,627 1,507 1,356
Stockholders' equity 2,226 1,965 2,200 2,137 2,024
-------------------------------------------------------------------------
$4,097 $4,191 $4,046 $3,769 $ 3,429
=========================================================================
CASH FLOW INFORMATION
Cash flows from operations $ 829 $ 484 $ 383 $ 354 $ 552
Additions to property, plant and equipment 205 232 248 274 356
Cash dividends 76 78 81 84 86
=========================================================================
COMMON STOCK INFORMATION
Diluted earnings per share
Income from continuing operations $ 5.77 $ 4.10 $ 3.90 $ 2.31 $ 2.23
Net income 5.93 .98 3.89 2.63 3.64
Cash dividends per share 1.10 1.10 1.10 1.10 1.10
=========================================================================
/56/
EXHIBIT 21
LIST OF SUBSIDIARIES
Subsidiaries of Ashland Inc. ("AI") at October 1, 2001, included the
companies listed below. Ashland has numerous unconsolidated affiliates,
which are primarily accounted for on the equity method, and majority-owned
consolidated subsidiaries in addition to the companies listed below. Such
affiliates and subsidiaries are not listed below since they would not
constitute a significant subsidiary considered in the aggregate as a single
entity.
Jurisdiction of Immediate
Company Incorporation Parent*
------- ------------- -----------
APAC-Alabama, Inc......................................... Delaware AHI
APAC-Arkansas, Inc........................................ Delaware AHI
APAC-Carolina, Inc........................................ Delaware AHI
APAC-Florida, Inc......................................... Delaware AHI
APAC-Georgia, Inc......................................... Georgia AHI
APAC Holdings, Inc. ("AHI")............................... Delaware AI
APAC-Kansas, Inc.......................................... Delaware AHI
APAC-Mississippi, Inc..................................... Delaware AHI
APAC-Missouri, Inc........................................ Delaware AHI
APAC-Oklahoma, Inc........................................ Delaware AHI
APAC-Tennessee, Inc....................................... Delaware AHI
APAC-Texas, Inc........................................... Delaware AHI
APAC-Virginia, Inc........................................ Delaware AHI
ASH GP LLC ("ASH GP")..................................... Delaware AIHI
Ashland Canada Corp. ..................................... Nova Scotia, Canada ACHBV
Ashland Canada Holdings B.V. ("ACHBV").................... Netherlands AHBV
Ashland Chemical Hispania, S.L............................ Spain AI
Ashland France SAS........................................ France AHBV 99% - ASBV 1%
Ashland Holdings B.V. ("AHBV")............................ Netherlands ATCV
Ashland International Holdings, Inc. ("AIHI")............. Delaware AI
Ashland Italia S.p.A...................................... Italy ATCV 95% - AOCV 5%
Ashland Nederland B.V..................................... Netherlands AHBV
Ashland Services B.V. ("ASBV")............................ Netherlands AHBV
Ashland UK Limited........................................ United Kingdom AHBV
Ashmont Insurance Company, Inc. .......................... Vermont AI
AshOne C.V. ("AOCV") ..................................... Netherlands AI 10% - AIHI 89% - ASH GP 1%
AshTwo C.V. ("ATCV")...................................... Netherlands AIHI 10% - AOCV 89% - ASH GP 1%
Marathon Ashland Petroleum LLC............................ Delaware AI 38%
Valvoline (Australia) Pty. Ltd............................ Australia AHBV
- ---------------
*100% of the voting securities are owned by the immediate parent except as
otherwise indicated.
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 33-52125) pertaining to the Ashland Inc. Deferred
Compensation and Stock Incentive Plan for Non-Employee Directors, in the
Registration Statement (Form S-8 No. 2-95022) pertaining to the Ashland
Inc. Amended Stock Incentive Plan for Key Employees, in the Registration
Statement (Form S-8 No. 33-32612) pertaining to the Ashland Inc. Employee
Savings Plan, in the Registration Statement (Form S-8 No. 33-26101)
pertaining to the Ashland Inc. Long-Term Incentive Plan, in the
Registration Statement (Form S-8 No. 33-55922) pertaining to the Ashland
Inc. 1993 Stock Incentive Plan, in the Registration Statement (Form S-8 No.
33-49907) pertaining to the Ashland Inc. Leveraged Employee Stock Ownership
Plan, in the Registration Statement (Form S-8 No. 33-62901) pertaining to
the Ashland Inc. Deferred Compensation Plan, in the Registration Statement
(Form S-8 No. 333-33617) pertaining to the Ashland Inc. 1997 Stock
Incentive Plan, in the Registration Statement (Form S-3 No. 333-78675)
pertaining to the registration of 68,925 shares of Ashland Inc. Common
Stock, in the Registration Statement (Form S-3 No. 333-36842) pertaining to
the registration of 96,600 shares of Ashland Inc. Common Stock, in the
Registration Statement (Form S-3 No. 333-54762) pertaining to the
registration of 149,300 shares of Ashland Inc. Common Stock and in the
Registration Statement (Form S-3 No. 333-69138) pertaining to the offering
of $600,000,000 of Debt Securities, Preferred Stock, Depository Shares,
Common Stock and/or Warrants of Ashland Inc., of our report dated October
31, 2001, with respect to the consolidated financial statements and
schedule of Ashland Inc. and consolidated subsidiaries included in this
Annual Report (Form 10-K) for the year ended September 30, 2001.
Cincinnati, Ohio
November 28, 2001
Exhibit 24
ASHLAND INC.
Certificate of Assistant Secretary
The undersigned hereby certifies that she is an Assistant Secretary of
Ashland Inc., a Kentucky corporation (the "Corporation"), and that, as
such, she is authorized to execute this Certificate on behalf of the
Corporation and further certifies that:
(a) Attached hereto as Exhibit A is a true and correct copy of an
excerpt from the minutes of the meeting of the Board of Directors of the
Corporation held on November 1, 2001, setting forth certain actions taken
at such meeting, and the powers and authorities granted pursuant to such
actions have at all times been in effect without amendment, waiver,
rescission or modification since November 1, 2001.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal
of the Corporation on this 30th day of November, 2001.
/s/ Linda L. Foss
--------------------------------------
Linda L. Foss
Assistant Secretary
[SEAL]
Exhibit A
Annual Report on Form 10-K
RESOLVED, that the Corporation's Annual Report to the Securities and
Exchange Commission (the "SEC") on Form 10-K (the "Form 10-K") in the form
previously circulated to the Board in preparation for this meeting be, and
it hereby is, approved with such changes as the Chief Executive Officer,
any Vice President, the Secretary or the Corporation's counsel ("Authorized
Persons") shall approve, the execution and filing of the Form 10-K with the
SEC to be conclusive evidence of such approval; provided, however, that
without derogating from the binding effect of the above, it is understood
that an Authorized Person shall cause the distribution prior to the filing
with the SEC, of a copy of such Form 10-K to the directors in substantially
that form which is to be filed with the SEC and that each director shall
have the opportunity to review with and comment to an Authorized Person
prior to such filing;
FURTHER RESOLVED, that the Authorized Persons be, and each of them
hereby is, authorized to file with the SEC the Form 10-K and any amendments
thereto on Form 10-K/A and/or any other applicable form; and
FURTHER RESOLVED, that the Authorized Persons be, and each of them
hereby is, authorized to take all such further actions as in their judgment
may be necessary or advisable to accomplish the purposes of the foregoing
resolutions.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned Directors
and Officers of ASHLAND INC., a Kentucky corporation, which is about to
file an Annual Report on Form 10-K with the Securities and Exchange
Commission under the provisions of the Securities Exchange Act of 1934, as
amended, hereby constitutes and appoints PAUL W. CHELLGREN, DAVID L.
HAUSRATH and LINDA L. FOSS, and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power to act without the others to
sign and file such Annual Report and the exhibits thereto and any and all
other documents in connection therewith, and any such amendments thereto,
with the Securities and Exchange Commission, and to do and perform any and
all acts and things requisite and necessary to be done in connection with
the foregoing as fully as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any
of them, may lawfully do or cause to be done by virtue hereof.
Dated: November 1, 2001
/s/ Paul W. Chellgren /s/ Roger W. Hale
- ---------------------------- -----------------------------
Paul W. Chellgren, Roger W. Hale, Director
Chairman of the Board
and Chief Executive Officer
/s/ J. Marvin Quin /s/ Bernadine P. Healy
- ---------------------------- -----------------------------
J. Marvin Quin, Bernadine P. Healy, Director
Senior Vice President
and Chief Financial Officer
/s/ Kenneth L. Aulen /s/ Mannie L. Jackson
- ---------------------------- ------------------------------
Kenneth L. Aulen, Mannie L. Jackson, Director
Administrative Vice President,
Controller and
Principal Accounting Officer
/s/ Samuel C. Butler /s/ Patrick F. Noonan
- ---------------------------- -------------------------------
Samuel C. Butler, Director Patrick F. Noonan, Director
/s/ Frank C. Carlucci /s/ Jane C. Pfeiffer
- ---------------------------- -------------------------------
Frank C. Carlucci, Director Jane C. Pfeiffer, Director
/s/ Ernest H. Drew /s/ William L. Rouse
- ---------------------------- -------------------------------
Ernest H. Drew, Director William L. Rouse, Jr., Director
/s/ James B. Farley /s/ Theodore M. Solso
- ---------------------------- -------------------------------
James B. Farley, Director Theodore M. Solso, Director
/s/ Ralph E. Gomory /s/ Michael J. Ward
- ---------------------------- -------------------------------
Ralph E. Gomory, Director Michael J. Ward, Director