-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CYpmdvcgXp44EE15+CYcm1UxqF1iM8O1Pgfb3yqxoJS480ya77+7cLaIRxR2o6gK EE8XxvrJtYbH9cAEnfYbWg== 0000950129-00-002593.txt : 20000524 0000950129-00-002593.hdr.sgml : 20000524 ACCESSION NUMBER: 0000950129-00-002593 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000523 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KINDER MORGAN INC CENTRAL INDEX KEY: 0000054502 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION & DISTRIBUTION [4923] IRS NUMBER: 480290000 STATE OF INCORPORATION: KS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 001-06446 FILM NUMBER: 641699 BUSINESS ADDRESS: STREET 1: 370 VAN GORDON STREET CITY: LAKEWOOD STATE: CO ZIP: 80228-8304 BUSINESS PHONE: 7138449500 MAIL ADDRESS: STREET 1: 1301 MCKINNEY STREET 2: SUITE 3400 CITY: HOUSTON STATE: TX ZIP: 77010 FORMER COMPANY: FORMER CONFORMED NAME: K N ENERGY INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: KN ENERGY INC DATE OF NAME CHANGE: 19920430 FORMER COMPANY: FORMER CONFORMED NAME: KANSAS NEBRASKA NATURAL GAS CO INC DATE OF NAME CHANGE: 19830403 10-K/A 1 KINDER MORGAN, INC. - AMENDMENT NO. 1 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. FORM 10-K/A (AMENDMENT NO. 1) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to __________ Commission File Number 1-6446 KINDER MORGAN, INC. ------------------- (Exact name of issuer as specified in its charter)
Kansas ------ 48-0290000 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number) 1301 McKinney, Suite 3400, Houston, Texas 77010 ----------------------------------------- ----- (Address of principal executive offices) (Zip Code)
(713) 844-9500 -------------- Registrant's telephone number, including area code: Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of each exchange on which registered ------------------- ----------------------------------------- Common Stock, par value $5 per share New York Stock Exchange Preferred share purchase rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: Preferred Stock, Class A $5 cumulative series --------------------------------------------- (Title of class) 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 Regulations S-K is not contained herein, and will not be contained to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by referenced in Part III of this Form 10-K or any amendment to this Form 10-K.[ ]. The aggregate market value of the voting stock held by nonaffiliates of the registrant was $2,168,755,111 as of March 10, 2000. The number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date was: Common stock, $5 par value; authorized 150,000,000 shares; outstanding 113,035,166 shares as of March 10, 2000. Documents Incorporated by Reference ----------------------------------- Part III of this report incorporates by reference specific portions of the Registrant's Proxy Statement relating to the 2000 Annual Meeting of Stockholders. 2 KINDER MORGAN, INC. FORM 10-K/A AMENDMENT NO. 1 This Report on Form 10-K/A (Amendment No. 1) is filed by Kinder Morgan, Inc. (the "Registrant") for the purposes of (i) revising certain sections of Item 14 to the Report on Form 10-K for the year ended December 31, 1999 previously filed by the Registrant, and (ii) filing certain exhibits including exhibits which were previously incorporated by reference on the Form 10-K. ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. Subsections (a)(1) and (a)(2) of Item 14 which were previously filed with the Form 10-K are hereby incorporated by reference from the Form 10-K without any changes or amendments. The section of Item 14 entitled "Executive Compensation Plans and Arrangements" is hereby amended and supplemented by replacing the current text of that section in its entirety with the following: Executive Compensation Plans and Arrangements 1987 Directors' Deferred Fee Plan As Amended and Form of Participation Agreement regarding the Plan (Exhibit 10(h) to the Annual Report on Form 10-K for the year ended December 31, 1995) Kinder Morgan, Inc. Amended and Restated 1992 Stock Option Plan for Nonemployee Directors (Appendix C to the Kinder Morgan, Inc. 2000 Proxy Statement on Schedule 14-A) 1994 Amended and Restated Kinder Morgan, Inc. Long-term Incentive Plan (Appendix A to the Kinder Morgan, Inc. 2000 Proxy Statement on Schedule 14A) K N Energy, Inc. Nonqualified Deferred Compensation Plan* Letter Agreement dated December 4, 1995 between K N Energy, Inc. and Charles W. Battey (Exhibit 10(q) to the Annual Report on Form 10-K for the year ended December 31, 1995) Form of Incentive Stock Option Agreement (Exhibit 10(v) to the Annual Report on Form 10-K for the year ended December 31, 1996) Form of Restricted Stock Agreement (Exhibit 10(w) to the Annual Report on Form 10-K for the year ended December 31, 1996) Directors and Executives Deferred Compensation Plan effective January 1, 1998 for executive officers and directors of K N Energy, Inc. (Exhibit 10(aa) to the Annual Report on Form 10-K for the year ended December 31, 1998) Management Deferred Compensation Plan effective January 1, 1998 for senior management of K N Energy, Inc. (Exhibit 10(bb) to the Annual Report on Form 10-K for the year ended December 31, 1998) Confidentiality Agreement and General Release between Larry D. Hall and KN Energy, Inc. dated October 4, 1999* Employment Agreement dated October 7, 1999, between the Company and Richard D. Kinder (incorporated by reference to Exhibit 99.D of the Schedule 13D filed by Mr. Kinder on October 8, 1999) Kinder Morgan, Inc. Amended and Restated 1999 Stock Option Plan (Appendix B to the Kinder Morgan, Inc. 2000 Proxy Statement on Schedule 14A) -2- 3 Kinder Morgan, Inc. Employees Stock Purchase Plan (Appendix E to the Kinder Morgan, Inc. 2000 Proxy Statement on Schedule 14A) 2000 Annual Incentive Plan of Kinder Morgan, Inc. (Appendix D to the Kinder Morgan, Inc. 2000 Proxy Statement on Schedule 14A) *Filed herewith. Subsection (b) of Item 14 entitled "Reports on Form 8-K" which was previously filed with the Form 10-K is hereby amended and supplemented by adding the following paragraph at the end of the subsection: Current Report on Form 8-K dated April 5, 2000, was filed on April 20, 2000, pursuant to Item 2 and Item 7 of that form. Pursuant to Item 2 of that form, Kinder Morgan disclosed that Kinder Morgan and certain of its subsidiaries had completed the disposition of certain assets to ONEOK, Inc. pursuant to an agreement dated as of February 8, 2000 with ONEOK, Inc., as amended on April 5, 2000. The agreement provided for the sale to ONEOK, Inc. of (i) all of Kinder Morgan's natural gas gathering and processing business in Oklahoma, Kansas and West Texas, (ii) Kinder Morgan's marketing and trading business, and (iii) certain of Kinder Morgan's storage and transmission pipelines in the mid-continent region. According to the agreement, ONEOK (i) paid approximately $108 million plus an amount equal to net working capital at closing, (ii) assumed the operating lease associated with the Bushton, Kansas gas processing plant and (iii) assumed long-term capacity commitments on NGPL and on KMIGT. Also, Kinder Morgan disclosed that on April 5, 2000, Kinder Morgan issued a press release. Pursuant to Item 7 of that form, the amendment to the agreement with ONEOK and the press release were filed as exhibits. The Exhibit Index previously filed with the Form 10-K is hereby amended and supplemented by replacing the current text in its entirety and substituting the Exhibit Index filed herein. -3- 4 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. KINDER MORGAN, INC. (Registrant) Date: May 22, 2000 By: /s/ Joseph Listengart -------------------------------------- Joseph Listengart Vice President, General Counsel and Secretary Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the Registrant and in the capacities and on the date indicated. * Director - -------------------------------------------- Edward H. Austin, Jr. * Director - -------------------------------------------- Charles W. Battey * Director - -------------------------------------------- Stewart A. Bliss * Director - -------------------------------------------- Ted A. Gardner * Director - -------------------------------------------- William J. Hybl * - -------------------------------------------- Chairman, Chief Executive Officer and Richard D. Kinder and Director (Principal Executive Officer) * Vice Chairman, President and Director - -------------------------------------------- William V. Morgan * Director - -------------------------------------------- Edward Randall, III * Director - -------------------------------------------- Fayez Sarofim * - -------------------------------------------- Vice President and Chief Financial Officer C. Park Shaper (Principal Financial and Accounting Officer) * Director - -------------------------------------------- H. A. True, III *By: /s/ Joseph Listengart ------------------------------------------ Joseph Listengart (Attorney-in-fact for persons indicated)
-4- 5 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION - ------- ----------- List of Executive Compensation Plans and Arrangements.........2-3 Exhibit 2(a) - Agreement and Plan of Merger, dated as of July 8, 1999, by and among K N Energy, Inc., Rockies Merger Corp., and Kinder Morgan, Inc., (Annex A-1 of Registration Statement on Form S-4 (File No. 333-85747)) Exhibit 2(b) - First Amendment to Agreement and Plan of Merger, dated as of August 20, 1999, by and among K N Energy, Inc., Rockies Merger Corp., and Kinder Morgan, Inc., (Annex A-2 of Registration Statement on Form S-4 (File No. 333-85747)) Exhibit 2(c) - Contribution Agreement, dated as of December 30, 1999, by and among Kinder Morgan, Inc., Natural Gas Pipeline Company of America, K N Gas Gathering, Inc., Kinder Morgan G.P., Inc. and Kinder Morgan Energy Partners, L.P. (Exhibit 99.1 to Current Report on Form 8-K filed on January 14, 2000) Exhibit 3(a) - Restated Articles of Incorporation of Kinder Morgan, Inc.* Exhibit 3(b) - Certificate of Amendment to the Restated Articles of Incorporation of Kinder Morgan, Inc. as filed on October 7, 1999, with the Secretary of State of Kansas (Exhibit 3.1 to Kinder Morgan, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999) Exhibit 3(c) - Bylaws of Kinder Morgan, Inc., as amended to October 7, 1999 (Exhibit 3.2 to Kinder Morgan, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999) Exhibit 4(a) - Indenture dated as of September 1, 1988, between K N Energy, Inc. and Continental Illinois National Bank and Trust Company of Chicago* Exhibit 4(b) - First supplemental indenture dated as of January 15, 1992, between K N Energy, Inc. and Continental Illinois National Bank and Trust Company of Chicago (Exhibit 4.2, File No. 33-45091) Exhibit 4(c) - Second supplemental indenture dated as of December 15, 1992, between K N Energy, Inc. and Continental Bank, National Association* Exhibit 4(d) - Indenture dated as of November 20, 1993, between K N Energy, Inc. and Continental Bank, National Association (Exhibit 4.1, File No. 33-51115) Note - Copies of instruments relative to long-term debt in authorized amounts that do not exceed 10 percent of the consolidated total assets of Kinder Morgan and its subsidiaries have not been furnished. Kinder Morgan will furnish such instruments to the Commission upon request. Exhibit 4(e) - $600,000,000 364-Day Credit Agreement among K N Energy, Inc., certain banks listed therein and Morgan Guaranty Trust Company of New York as Administrative Agent (Exhibit 4(e) to the Annual Report on Form 10-K for the year ended December 31, 1997) Exhibit 4(f) - $400,000,000 Five-Year Credit Agreement among K N Energy, Inc., certain banks listed therein and Morgan Guaranty Trust Company of New York as Administrative Agent (Exhibit 4(f) to the Annual Report on Form 10-K for the year ended December 31, 1997)
6 Exhibit 4(g) - $2,100,000,000 364-Day Credit Agreement among K N Energy, Inc., certain banks listed therein and Morgan Guaranty Trust Company of New York as Administrative Agent (Exhibit 4(g) to the Annual Report on Form 10-K for the year ended December 31, 1997) Exhibit 4(h) - $1,394,846,122 Reimbursement Agreement among K N Energy, Inc., certain banks listed therein and Morgan Guaranty Trust Company of New York as Administrative Agent (Exhibit 4(e) to the Annual Report on Form 10-K for the year ended December 31, 1997) Exhibit 4(i) - Purchase Contract Agreement dated as of November 25, 1998, between K N Energy, Inc. and U.S. Bank Trust National Association, as Purchase Contract Agent for the PEPS Units (Exhibit 4.4 to the Current Report on Form 8-K dated November 24, 1998) Exhibit 4(j) - Amendment No. 1 to Credit Agreements dated as of November 6, 1998, among K N Energy, Inc., certain banks listed therein and Morgan Guaranty Trust Company of New York as Administrative Agent (Exhibit 4(j) to the Annual Report on Form 10-K for the year ended December 31, 1998) Exhibit 4(k) - $600,000,000 364-Day Credit Agreement dated as of January 8, 1999, among K N Energy, Inc., certain banks listed therein and Morgan Guaranty Trust Company of New York as Administrative Agent (Exhibit 4(k) to the Annual Report on Form 10-K for the year ended December 31, 1998) Exhibit 4(l) - Amendment No. 2 to the $400,000,000 Five-Year Credit Agreement, dated as of January 8, 1999, among K N Energy, Inc., certain banks listed therein and Morgan Guaranty Trust Company of New York as Administrative Agent (Exhibit 4(l) to the Annual Report on Form 10-K for the year ended December 31, 1998) Exhibit 4(m) - $550,000,000 364-day Credit Agreement, dated as of November 18, 1999, among Kinder Morgan, Inc., certain banks listed therein and Bank of America, N.A., as Administrative Agent (Exhibit 4(m) to the Annual Report on Form 10-K for the year ended December 31, 1999) Exhibit 4(n) - Rights Agreement between K N Energy, Inc. and the Bank of New York, as Rights Agent, dated as of August 21, 1995 (Exhibit 1 on Form 8-A dated August 21, 1995) Exhibit 4(o) - Amendment No. 1 to Rights Agreement between K N Energy, Inc. and the Bank of New York, as Rights Agent, dated as of September 8, 1998 (Exhibit 10(cc) to the Annual Report on Form 10-K for the year ended December 31, 1998) Exhibit 4(p) - Amendment No. 2 to Rights Agreement of Kinder Morgan, Inc. dated July 8, 1999, between Kinder Morgan, Inc. and First Chicago Trust Company of New York, as successor-in-interest to the Bank of New York, as Rights Agent (Exhibit 4.1 to Kinder Morgan, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999)
7 Exhibit 10(a) - 1987 Directors' Deferred Fee Plan As Amended and Form of Participation Agreement regarding the Plan (Exhibit 10(h) to the Annual Report on Form 10-K for the year ended December 31, 1995) Exhibit 10(b) - Kinder Morgan, Inc. Amended and Restated 1992 Stock Option Plan for Nonemployee Directors (Appendix C to the Kinder Morgan, Inc. 2000 Proxy Statement on Schedule 14A) Exhibit 10(c) - 1994 Amended and Restated Kinder Morgan, Inc. Long-term Incentive Plan (Appendix A to the Kinder Morgan, Inc. 2000 Proxy Statement on Schedule 14A) Exhibit 10(d) - K N Energy, Inc. Nonqualified Deferred Compensation Plan* Exhibit 10(e) - Letter Agreement dated December 4, 1995 between K N Energy, Inc. and Charles W. Battey (Exhibit 10(q) to the Annual Report on Form 10-K for the year ended December 31, 1995) Exhibit 10(f) - Kinder Morgan, Inc. Employees Stock Purchase Plan (Appendix E to the Kinder Morgan, Inc. 2000 Proxy Statement on Schedule 14A) Exhibit 10(g) - 2000 Annual Incentive Plan of Kinder Morgan, Inc. (Appendix D to the Kinder Morgan, Inc. 2000 Proxy Statement on Schedule 14A) Exhibit 10(h) - Confidentiality Agreement and General Release between Larry D. Hall and K N Energy, Inc. dated October 4, 1999* Exhibit 10(i) - Amended and Restated Basket Agreement dated as of June 30, 1990, by and between American Pipeline Company ("APC"), Cabot and Cabot Transmission Corporation* Exhibit 10(j) - First Amendment to Amended and Restated Omnibus Acquisition Agreement and Amended and Restated Basket Agreement dated as of March 31, 1992, by and among AOG, APC, Cabot and Cabot Transmission* Exhibit 10(k) - Form of Incentive Stock Option Agreement (Exhibit 10(v) to the Annual Report on Form 10-K for the year ended December 31, 1996) Exhibit 10(l) - Form of Restricted Stock Agreement (Exhibit 10(w) to the Annual Report on Form 10-K for the year ended December 31, 1996) Exhibit 10(m) - Intrastate Pipeline System Lease, dated December 31, 1996, between MidCon Texas Pipeline, L.P. and MidCon Texas Pipeline Operator, Inc. (Exhibit 10(y) to the Annual Report on Form 10-K for the year ended December 31, 1997) Exhibit 10(n) - Amendment Number One To Intrastate Pipeline System Lease, dated January 31, 1998, between MidCon Texas Pipeline, L.P. and MidCon Texas Pipeline Operator, Inc. (Exhibit 10(z) to the Annual Report on Form 10-K for the year ended December 31, 1997) Exhibit 10(o) - Directors and Executives Deferred Compensation Plan effective January 1, 1998 for executive officers and directors of K N Energy, Inc. (Exhibit 10(aa) to the Annual Report on Form 10-K for the year ended December 31, 1998)
8 Exhibit 10(p) - Management Deferred Compensation Plan effective January 1, 1998 for senior management of K N Energy, Inc. (Exhibit 10(bb) to the Annual Report on Form 10-K for the year ended December 31, 1998) Exhibit 10(q) - Kinder Morgan, Inc. Amended and Restated 1999 Stock Option Plan (Appendix B to the Kinder Morgan, Inc. 2000 Proxy Statement on Schedule 14A) Exhibit 10(r) - Stock Purchase Agreement, dated December 18, 1997, between K N Energy, Inc. and Occidental Petroleum Corporation (Exhibit 2.1, File No. 333-44421) Exhibit 10(s) - Amendment No. 1 to Stock Purchase Agreement, dated January 30,1998, between K N Energy, Inc. and Occidental Petroleum Corporation (Exhibit 2(b) to the Annual Report on Form 10-K for the year ended December 31, 1997) Exhibit 10(t) - Governance Agreement dated October 7, 1999, between Kinder Morgan, Inc. and Richard D. Kinder (Exhibit 99.C of the Schedule 13D filed by Mr. Kinder on October 8, 1999) Exhibit 10(u) - Governance Agreement dated October 7, 1999, between Kinder Morgan, Inc. and Morgan Associates, Inc. (Exhibit 99.C of the Schedule 13D filed by Morgan Associates, Inc. and William V. Morgan on October 8, 1999) Exhibit 10(v) - Employment Agreement dated October 7, 1999, between the Company and Richard D. Kinder (Exhibit 99.D of the Schedule 13D filed by Mr. Kinder on October 8, 1999) Exhibit 10(w) - Receivables Purchase Agreement dated September 28, 1999, among K N Receivables Corporation, as Seller, Falcon Asset Securitization Corporation, International Securitization Corporation and The Financial Institutions Party Hereto, as Investors and Bank One, NA, as agent (Exhibit 10.4 to Kinder Morgan, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999) Exhibit 10(x) - Receivables Sale Agreement dated September 28, 1999, between K N Energy, Inc., as the Originator, and other Originators specified herein and K N Receivables Corporation, as Buyer (Exhibit 10.5 to Kinder Morgan, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999) Exhibit 13 - 1999 Annual Report to Shareholders (Exhibit 13 to the Annual Report on Form 10-K for the year ended December 31, 1999) Exhibit 21 - Subsidiaries of the Registrant (Exhibit 21 to the Annual Report on Form 10-K for the year ended December 31, 1999) Exhibit 23.1 - Consent of Independent Accountants (Exhibit 23.1 to the Annual Report on Form 10-K for the year ended December 31, 1999) Exhibit 23.2 - Consent of Independent Public Accountants (Exhibit 23.2 to the Annual Report on Form 10-K for the year ended December 31, 1999) Exhibit 24.1 - Power of Attorney* Exhibit 27 - Financial Data Schedule (Exhibit 27 to the Annual Report on Form 10-K for the year ended December 31, 1999)
* Filed herewith. EX-3.A 2 RESTATED ARTICLES OF INCORPORATION 1 EXHIBIT 3(a) CERTIFICATE OF RESTATEMENT OF ARTICLES OF INCORPORATION OF K N ENERGY, INC. STATE OF KANSAS ) ) Section COUNTY OF PHILLIPS ) We, Larry D. Hall, President and William S. Garner, Jr., Secretary of K N Energy, Inc., a Kansas corporation (herein called the "Corporation"), whose registered office is in Phillipsburg, Phillips County, Kansas, DO HEREBY CERTIFY: That the Board of Directors of the Corporation, at a regular meeting duly held on the 23rd of May, 1989, adopted a resolution setting forth Restated Articles of Incorporation of the Corporation, and declared their advisability. Said Restated Articles of Incorporation were amended with approval of the Corporation's Shareholders on July 13, 1994, and are as follows, namely: K N, ENERGY, INC. -------------------- RESTATED ARTICLES OF INCORPORATION -------------------- The following are the Restated Articles of Incorporation of K N Energy, Inc., which corporation was originally incorporated under the name of Kansas Pipe Line & Gas Company in Articles filed with the Secretary of State of Kansas on May 18, 1927. These Restated Articles were duly adopted by the Board of Directors of the Company at their regular meeting on August 16, 1988 in accordance with the provisions of Section 17-6605 of the 2 Kansas Statutes Annotated. FIRST The name of the Corporation shall be K N ENERGY, INC. SECOND The nature of the business or purposes to be conducted or promoted by the Corporation is to engage in any lawful act or activity for which corporations may be organized under the Kansas General Corporation Code. THIRD The location of the principal place of business of the Corporation and its registered office in this state is 205 "F" Street, City of Phillipsburg, Phillips County, Kansas. The Corporation shall be its own Resident Agent and for such purpose its business office shall be its registered office. FOURTH That the term for which the Corporation is to exist is perpetual. FIFTH SECTION 1 Except as otherwise provided in Article Sixth, the number of directors which shall constitute the whole Board of Directors of the Corporation shall be the number from time to time fixed by the By-laws of the Corporation; provided that such number of directors shall not be less than nine, nor more than fifteen, each of whom shall be a stockholder of the Corporation; and 2 3 provided, further, that any change in such minimum or maximum number of directors shall be made only by amendment of this Article Fifth. Nominees for directorships receiving the highest number of votes shall be elected. The Board of Directors shall be divided into three classes: Class I, Class II, and Class III. Such classes shall be as nearly equal in number as possible. The term of office of the initial Class I directors shall expire at the annual meeting of the stockholders in 1976; the term of office of the initial Class II directors shall expire at the annual meeting of stockholders in 1977; and the term of office of the initial Class III directors shall expire at the annual meeting of stockholders in 1978, or thereafter in each case when their respective successors are elected and qualified. At each annual election held thereafter, the directors chosen to succeed those whose terms have expired shall be identified as being of the same class as the directors that they succeed and shall be elected for a term expiring at the third succeeding annual meeting of stockholders or thereafter in each case when their respective successors are elected and qualified. When the number of directors is changed any increase or decrease in the number of directorships shall be apportioned among the classes so as to make all classes as nearly equal in number as possible. SECTION 2 No director of the Corporation shall be removed from his office as a director unless all other directors constituting the Board of Directors at the time unanimously vote in favor of such 3 4 removal, in which event his removal shall be considered accomplished. No director of the Corporation shall be removed from his office as a director by vote or other action of stockholders or otherwise unless the director to be removed has been convicted of a felony by a court of competent jurisdiction and such conviction has become no longer subject to direct appeal or unless the director to be removed has been adjudged to be liable for negligence or misconduct in the performance of his duty to the Corporation by a court of competent jurisdiction and such adjudication has become no longer subject to direct appeal. In the event of such conviction, or finding of negligence or misconduct a director may be removed by the stockholders in the manner provided in the By-laws of the Corporation. SIXTH SECTION 1 The minimum amount of capital with which the Corporation will commence business is $l,000.00. SECTION 2 1. That the total number of shares of all classes of stock which the Corporation shall have authority to issue shall be 27,200,000. 2. That the number of shares which are to have a par value shall be 50,000,000 of the par value of $5 each, all of which shares shall be one class of common stock (hereinafter referred to as the "Common Stock"). 3. That the number of shares that are to be without par 4 5 value shall be 2,200,000, of which 200,000 shall be Class A Preferred Stock (hereinafter referred to as the "Class A Preferred Stock"), and of which 2,000,000 shall be Class B Preferred Stock (hereinafter referred to as the "Class B Preferred Stock"). 5 6 SECTION 3 1. Definitions. As used in this Article Sixth or in any resolution adopted by the Board of Directors providing for the issue of any particular series of Class A Preferred Stock or Class B Preferred Stock authorized by these Articles of Incorporation or any amendment thereto, the following terms shall have the following meanings, respectively: (a) The term "arrearages", whenever used in connection with dividends on any share of Class A Preferred Stock or Class B Preferred Stock, shall refer to the condition that exists as to dividends, to the extent that they are cumulative (either unconditionally, or conditionally to the extent that the conditions have been fulfilled), on such shares which shall not have been paid or declared and set apart for payment to the date or for the period indicated; but the term shall not refer to the condition that exists as to dividends, to the extent that they are non-cumulative, on such shares which shall not have been paid or declared and set apart for payment. (b) The term "stock junior to the Class A Preferred Stock", whenever used with reference to the Class A Preferred Stock, shall mean the Class B Preferred Stock, Common Stock and any other stock of the Corporation over which the Class A Preferred Stock has preference or priority in the payment of dividends and in the distribution of assets on any dissolution, liquidation or winding up of the Corporation. 6 7 (c) The term "stock junior to the Class B Preferred Stock", whenever used with reference to the Class B Preferred Stock, shall mean the Common Stock and any other stock of the Corporation over which the Class B Preferred Stock has preference or priority in the payment of dividends and in the distribution of assets on any dissolution, liquidation or winding up of the Corporation. (d) The term "subsidiary" means any corporation of which at least a majority of the outstanding stock having by the terms thereof ordinary voting power to elect a majority of the 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, is, at the time of determination thereof, directly or indirectly owned by the Corporation, or by one or more subsidiaries of the Corporation, or by the Corporation and one or more subsidiaries. As used in this definition, the term "corporation" shall include comparable types of business organizations authorized under the laws of any state, territory or possession of the United States or any foreign country however designated. SECTION 4 That the voting powers (full or limited, or without voting powers) designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations 7 8 or restrictions thereof, of the shares of Class A Preferred Stock, Class B Preferred Stock and Common Stock and the authority of the Board of Directors of the Corporation to fix by resolution such of the voting powers, designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof (sometimes hereinafter referred to in this Article Sixth as "powers, preferences and rights"), are as follows: A. CLASS A PREFERRED STOCK 1. Authority of the Board of Directors of the Corporation to issue Class A Preferred Stock in Series. The Class A Preferred Stock consists of (i) shares constituting a series designated and hereinafter referred to as "Class A $5 Cumulative Preferred Stock", shares of which have heretofore been issued and designated as "$5 Cumulative Preferred Stock", (ii) shares constituting a series designated and hereinafter referred to as "Class A $5.65 Cumulative Preferred Stock", shares of which have heretofore been issued and designated as "$5.65 Cumulative Preferred Stock", and (iii) additional authorized shares the issuance of which may be provided for by the Board of Directors of the Corporation as set forth in this Subdivision A of Section 4. The voting powers (full or limited, or without voting powers), designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions, not inconsistent with the provisions of this Article Sixth, of the Class A $5 Cumulative Preferred Stock and of the Class A $5.65 Cumulative Preferred 8 9 Stock are respectively fixed by and set forth in paragraph 9 of this Subdivision A of Section 4 and in the Certificate of Resolutions adopted by the Board of Directors of the Corporation providing for the issuance of shares of the Class A $5.65 Cumulative Preferred Stock filed in the office of the Secretary of State of Kansas on September 28, 1953. The Class A Preferred Stock may be issued from time to time in one or more series. Subject to the provisions of these Articles of Incorporation or any amendment thereto, authority is expressly granted to the Board of Directors of the Corporation to authorize the issue of one or more series of Class A Preferred Stock, and to fix by resolutions providing for the issue of each such series the powers, preferences and rights thereof, to the full extent now or hereafter permitted by law, including but not be limited to the following: (a) The number of shares of such series (which may subsequently be increased by resolutions of the Board of Directors of the Corporation) and the distinctive designation thereof; (b) The dividend rate of such series and any limitations, restrictions or conditions on the payment of such dividends; (c) The terms and conditions, if any, on which, and the price or prices at which, the shares of such series may be redeemed; (d) The terms of any purchase, retirement or sinking fund to be provided for the shares of such series; 9 10 (e) Restrictions upon the declaration or payment of dividends or other distributions on, or the acquisition or retirement by the Corporation of, the Common Stock to take effect upon the occurrence of any default in the provisions for a sinking fund, if any, for the particular series and to remain in effect so long as such default continues; and provisions extending for the benefit of the particular series for so long as any shares thereof remain outstanding, similar restrictions with respect to the stock of the Corporation imposed by the terms of any of its funded indebtedness then outstanding; (f) The terms and conditions, if any, upon which the shares of such series shall be convertible into or exchangeable for shares of any other class or classes, or of any other series of the same or any class or classes of stock of the Corporation; (g) The voting powers, if any, of such series in addition to the voting powers provided in paragraphs 5 and 8 of Subdivision A of Section 4; and (h) Any other variance in the relative powers, preferences and rights as between different series not inconsistent with these Articles of Incorporation or any amendments thereto, to the full extent now or hereafter allowed by law. The Class A Preferred Stock of each series shall rank on a parity with the Class A Preferred Stock of every other series in 10 11 priority of payment of dividends and in the distribution of assets in the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, to the extent of the preferential amounts to which the Class A Preferred Stock of the respective series shall be entitled under the provisions of these Articles of Incorporation or any amendment thereto or the resolutions of the Board of Directors of the Corporation providing for the issue of such series. All shares of any one series of Class A Preferred Stock shall be identical except as to the dates of issue and the dates from which dividends on shares of the series issued on different dates shall accumulate (if cumulative). 2. Dividend rights. (a) The holders of shares of Class A Preferred Stock of each series shall be entitled to receive, when and as declared by the Board of Directors of the Corporation, preferential dividends, from the date fixed by the resolutions of the Board of Directors of the Corporation authorizing the issuance thereof, in cash payable at such rate, from such date, and on such quarterly dividend payment dates and, if cumulative, cumulative from such date or dates, as may be fixed by the provisions of these Articles of Incorporation or any amendment thereto or by the resolutions of the Board of Directors of the Corporation providing for the issue of such series. The holders of shares of Class A Preferred Stock shall not be entitled to receive any dividends thereon other than those specifically provided for by these Articles of Incorporation 11 12 or any amendment thereto, or such resolutions of the Board of Directors of the Corporation, nor shall any arrearages in dividends on the Class A Preferred Stock bear any interest. (b) So long as any of the Class A Preferred Stock is outstanding, no dividends (other than dividends payable in stock junior to the Class A Preferred Stock and cash in lieu of fractional shares in connection with any such dividend) shall be paid or declared in cash or otherwise, nor shall any other distribution be made, on any stock junior to the Class A Preferred Stock, unless (i) there shall be no arrearages in dividends on the Class A Preferred Stock for any past quarterly dividend period, and dividends in full for the current quarterly dividend period shall have been paid or declared on all of the Class A Preferred Stock (cumulative and non-cumulative); and (ii) the Corporation shall have paid or set aside all amounts, if any, then or theretofore required to be paid or set aside for all sinking funds, if any, for the Class A Preferred Stock of any series; and (iii) the Corporation shall not be in default on any of its obligations to redeem any of the Class A Preferred Stock. (c) So long as any of the Class A Preferred Stock is outstanding, no shares of any stock junior to the Class A Preferred Stock shall be purchased, redeemed or otherwise 12 13 acquired by the Corporation or by any subsidiary except (i) in connection with a reclassification or exchange of any stock junior to the Class A Preferred Stock through the issuance of other stock junior to the Class A Preferred Stock at the time outstanding, or (ii) in connection with the purchase, redemption or other acquisition of any stock junior to the Class A Preferred Stock with proceeds of a reasonably contemporaneous sale of other stock junior to the Class A Preferred Stock at the time outstanding or (iii) payments in cash in lieu of fractional shares upon the conversion of any convertible stock junior to the Class A Preferred Stock, nor shall any funds be set aside or made available for any sinking fund for the purchase or redemption of any stock junior to the Class A Preferred Stock, unless (i) there shall be no arrearages in dividends on Class A Preferred Stock for any past quarterly dividend period, and dividends in full for the current quarterly dividend period shall have been paid or declared on all of the Class A Preferred Stock (cumulative and non-cumulative); and (ii) the Corporation shall have paid or set aside all amounts, if any, then or theretofore required to be paid or set aside for all sinking funds, if any, for the Class A Preferred Stock of any series; and (iii) the Corporation shall not be in default on any of its obligations to redeem any of the Class A Preferred 13 14 Stock. (d) Subject to the foregoing provisions and not otherwise, such dividends (payable in cash, property or stock junior to the Class A Preferred Stock) as may be determined by the Board of Directors of the Corporation may be declared and paid on the shares of any stock junior to the Class A Preferred Stock from time to time, and in the event of the declaration and payment of any such dividends, the holders of shares of such junior stock shall be entitled, to the exclusion of holders of shares of Class A Preferred Stock, to share ratably therein according to their respective interests. (e) Dividends in full shall not be declared or paid or set apart for payment on any series of Class A Preferred Stock, unless there shall be no arrearages in dividends on any Class A Preferred Stock for any past quarterly dividend period and dividends in full for the current quarterly dividend period shall have been paid or declared on all Class A Preferred Stock to the extent that such dividends are cumulative, and any dividends paid or declared when dividends are not so paid or declared in full shall be shared ratably by the holders of all series of Class A Preferred Stock in proportion to such respective arrearages and unpaid and undeclared current quarterly dividends. 3. Liquidation rights. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or 14 15 involuntary, the holders of shares of Class A Preferred Stock of each series shall be entitled to receive in full out of the Corporation's assets the sum of One Hundred Dollars ($100) for each share of Class A Preferred Stock held by them, plus any arrearages in dividends thereon to the date fixed for the payment in liquidation, before any distribution shall be made to the holders of shares of any stock junior to the Class A Preferred Stock. After such payment in full to the holders of shares of the Class A Preferred Stock, the remaining assets of the Corporation shall then be distributable exclusively among the holders of shares of any stock junior to the Class A Preferred Stock, according to their respective interests. (b) If the assets of the Corporation are insufficient to permit the payment of the full preferential amounts payable to the holders of shares of Class A Preferred Stock of the respective series in the event of a liquidation, dissolution or winding up, then the assets available for distribution to holders of shares of Class A Preferred Stock shall be distributed ratably to such holders in proportion to the full preferential amounts payable on the respective shares. (c) A consolidation or merger of the Corporation with or into one or more other corporations or a sale of all or substantially all of the assets of the Corporation shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. 4. Redemption. 15 16 (a) The Corporation may, at the option of the Board of Directors, redeem the whole or any part of the Class A Preferred Stock, or of any series thereof, at any time or from time to time within the period during which such stock is, according to these Articles of Incorporation or any amendment thereto, or the resolutions of the Board of Directors of the Corporation providing for the issue thereof, redeemable at the option of the Board of Directors, by paying such redemption price thereof as shall have been fixed by these Articles of Incorporation or any amendment thereto or by the resolutions of the Board of Directors of the Corporation providing for the issue of the Class A Preferred Stock to be redeemed, including an amount in the case of each share so to be redeemed equal to any arrearages in dividends thereon to the date fixed for redemption (the total amount so to be paid being hereinafter referred to as the "redemption price"). The Class A $5 cumulative Preferred Stock and the Class A $5.65 Cumulative Preferred Stock shall be redeemable at any time at the option of the Board of Directors of the Corporation. (b) Unless expressly provided otherwise in the resolutions of the Board of Directors of the Corporation providing for the issue of the Class A Preferred Stock to be redeemed, (i) notice of each such redemption shall be mailed not less than thirty days nor more than ninety days prior to the date fixed for redemption to each holder of record of shares of the Class A Preferred Stock to be redeemed, at his 16 17 address as the same may appear on the books of the Corporation, and (ii) in case of a redemption of a part only of any series of the Class A Preferred Stock, the shares of such series to be redeemed shall be selected pro rata or by lot or in such other equitable manner as the Board of Directors of the Corporation may determine. The Board of Directors of the Corporation shall have full power and authority, subject to the limitations and provisions contained in these Articles of Incorporation or any amendment thereto or in the resolutions of the Board of Directors of the Corporation providing for the issue of the Class A Preferred Stock to be redeemed, to prescribe the manner in which and the terms and conditions upon which the Class A Preferred Stock may be redeemed from time to time. (c) If any such notice of redemption shall have been duly given, then on and after the date fixed in such notice of redemption (unless default shall be made by the Corporation in the payment or deposit of the redemption price pursuant to such notice) all arrearages in dividends, if any, on the shares of Class A Preferred Stock so called for redemption shall cease to accumulate, and on such date all rights of the holders of shares of Class A Preferred Stock so called for redemption shall cease and terminate except the right to receive the redemption price upon surrender of their certificates for redemption and such rights, if any, of conversion or exchange as may exist with respect to such 17 18 Class A Preferred Stock under the provisions of these Articles of Incorporation or any amendment thereto or in the resolutions of the Board of Directors of the Corporation providing for the issue of such Class A Preferred Stock. (d) If, before the redemption date specified in any notice of the redemption of any Class A Preferred Stock, the Corporation shall deposit the redemption price with a bank or trust company in the continental United States having a capital and surplus of at least $5,000,000 according to its last published statement of condition, in trust for payment on the redemption date to the holders of shares of Class A Preferred Stock to be redeemed, from and after the date of such deposit all rights of the holders of shares of Class A Preferred Stock so called for redemption shall cease and terminate except the right to receive the redemption price upon surrender of their certificates for redemption and such rights, if any, of conversion or exchange as may exist with respect to such Class A Preferred Stock under the provisions of these Articles of Incorporation or any amendment thereto or in the resolutions of the Board of Directors of the Corporation providing for the issue of such Class A Preferred Stock. Any funds so deposited which are not required for such redemption because of the exercise of any such right of conversion or exchange subsequent to the date of such deposit shall be returned to the Corporation forthwith. The Corporation shall be entitled to receive from the depositary, 18 19 from time to time, the interest, if any, allowed on such funds deposited with it, and the holders of the shares so redeemed shall have no claim to any interest. Any funds so deposited and remaining unclaimed at the end of six years from the redemption date shall, if thereafter requested by the Board of Directors of the Corporation, be repaid to the Corporation. (e) Shares of Class A Preferred Stock of any series may also be subject to redemption, in the manner hereinabove prescribed under this paragraph 4 of Subdivision A of Section 4, through operation of any sinking fund created therefor, at the redemption prices and under the terms and provisions contained in the resolutions of the Board of Directors of the Corporation providing for the issue of such series. (f) The Corporation shall not be required to register a transfer of any share of Class A Preferred Stock (i) within fifteen days preceding a selection for redemption of shares of the series of Class A Preferred Stock of which such share is a part or (ii) which has been selected for redemption. (g) During the continuance of any arrearages in dividends for any past quarterly dividend period or a failure in fulfillment of any sinking fund or redemption obligation on any series of Class A Preferred Stock, the Corporation shall not purchase or redeem less than all of the shares of Class A Preferred Stock or of any other stock ranking on a parity with the Class A Preferred Stock as to dividends and upon 19 20 liquidation, nor permit any subsidiary to do so without the consent given in writing or affirmative vote given in person or by proxy at a meeting called for the purpose, by the holders of at least fifty per- cent (50%) of all the shares of Class A Preferred Stock then outstanding; provided that (i) to meet the requirements of any purchase, retirement or sinking fund provisions with respect to any series, the Corporation may use shares of such series acquired by it prior to such arrearages in dividends or failure of payment and then held by it as treasury stock, valued at the redemption price, and (ii) the Corporation may complete the purchase or redemption of shares of Class A Preferred Stock or of any other stock ranking on a parity with the Class A Preferred Stock as to dividends and upon liquidation for which a purchase contract was entered into for any purchase, retirement or sinking fund purposes, or the notice of redemption of which was initially mailed, prior to such arrearages in dividends or failure of payment. (h) If any obligation to retire shares of Class A Preferred Stock is not paid in full on all series as to which such obligation exists, the number of shares of each such series to be retired pursuant to any such obligation shall be in proportion to the respective amounts which would be payable if all amounts payable for the retirement of such series were discharged in full. 5. Restrictions on certain action affecting Class A 20 21 Preferred Stock. The Corporation will not, without the consent given in writing or affirmative vote given in person or by proxy at a meeting held for the purpose, (a) by the holders of at least fifty percent (50%) of the shares of Class A Preferred Stock then outstanding, 21 22 (i) amend, alter or repeal any of the provisions of these Articles of Incorporation, or any amendment thereto, or By-laws of the Corporation, so as to affect adversely the voting powers, rights or preferences of the holders of shares of Class A Preferred Stock or to reduce the time for any notice to which the holders of shares of Class A Preferred Stock may be entitled; provided, however, that the amendment of the provisions of these Articles of Incorporation, as amended, so as to increase the authorized amount of Common Stock, Class B Preferred Stock, Class A Preferred Stock, any other class of stock junior to the Class A Preferred Stock or any stock of any class ranking on a parity with the Class A Preferred Stock shall not be deemed to affect adversely the powers, rights or preferences of the holders of shares of Class A Preferred Stock; (ii) create any other class or classes of stock or any security convertible into, or exchangeable for or evidencing the right to purchase any stock of a class ranking on a parity with the Class A Preferred Stock, either as to dividends or upon liquidation; 22 23 (iii) increase the authorized amount of or create any class or classes of stock ranking prior to the Class A Preferred Stock; or (iv) merge or consolidate with or into any other corporation, unless the corporation resulting from such merger or consolidation will have after such merger or consolidation no class of stock either authorized or outstanding ranking prior to the Class A Preferred Stock, and no securities either authorized or outstanding which are convertible or exchangeable into stock ranking prior to the Class A Preferred Stock except the same number of shares of prior stock and the same amount of such convertible securities with the same rights and preferences as the prior stock and such convertible securities of the Corporation, respectively, authorized and outstanding immediately preceding such merger or consolidation, and unless each holder of shares of Class A Preferred Stock, immediately preceding such a merger or consolidation shall receive the same number of shares, with substantially the same rights and preferences, of the resulting corporation; 23 24 provided, however, that no such consent of the holders of shares of Class A Preferred Stock then outstanding shall be required if, at or prior to the taking effect of the event which would otherwise require such consent, provision shall be made for the redemption of all shares of Class A Preferred Stock. (b) by the holders of at least fifty percent (50%) of the shares of any series of Class A Preferred Stock then outstanding, amend, alter or repeal any of the provisions of these Articles of Incorporation or any amendment thereto or of the resolutions of the Board of Directors of the Corporation providing for the issue of such series so as to affect adversely the powers, preferences or rights of the holders of shares of Class A Preferred Stock of such series; provided, however, that no such consent of the holders of shares of any series of Class A Preferred Stock shall be required if, at or prior to the taking effect of the event which would otherwise require such consent, provision shall have been made for the redemption of all shares of such series. 6. Status of Class A Preferred Stock purchased, redeemed or converted. Shares of Class A Preferred Stock purchased, redeemed or converted into or exchanged for shares of any other class or series shall be deemed to be authorized but unissued shares of Class A Preferred Stock undesignated as to series. 7. Voting Rights. On all matters upon which the holders of shares of Common Stock of the Corporation are entitled to vote, 24 25 unless otherwise provided in these Articles of Incorporation or any amendment thereto or the resolutions of the Board of Directors of the Corporation providing for the issuance of shares of one or more series of Class A Preferred Stock, each holder of shares of Class A Preferred Stock shall have the right to vote upon a share-for-share basis with the holders of shares of Common Stock. 8. Election of Directors by holders of shares of Class A Preferred Stock in event of Nondeclaration of Dividends. (a) The provisions of this paragraph 8 shall apply only to the Class A $5 Cumulative Preferred Stock, Class A $5.65 Cumulative Preferred Stock and to those other series of Class A Preferred Stock to which such provisions are expressly made applicable by these Articles of Incorporation or any amendment thereto or resolutions of the Board of Directors of the Corporation providing for the issue of such series (hereinafter referred to as the applicable Class A Preferred Stock). (b) If 30 days prior to the date of any annual meeting of the stockholders declarations of dividends (including non-cumulative dividends) on the shares of any series of applicable Class A Preferred Stock shall be omitted (i) in an aggregate amount equal to 3 (but less than 6) full quarterly dividends, the number of authorized directorships shall be increased by six if twelve directorships are authorized immediately prior to such meeting, or by that number of full directorships which will represent at least one-third of the total number of directorships giving effect 25 26 to the increase (but no more) if other than twelve directorships are authorized immediately prior to such meeting, and the holders of shares of applicable Class A Preferred Stock shall have the exclusive and special right, voting separately as a class and without regard to series, to elect at such annual meeting of stockholders or special meeting held in place thereof, directors to fill such vacancies so created, which directors shall not be included in the classes created by Article Fifth or (ii) in an aggregate amount equal to 6 full quarterly dividends, the number of authorized directorships shall be increased by the number of authorized directorships in existence immediately prior to such meeting plus one additional directorship, and the holders of shares of applicable Class A Preferred Stock shall have the exclusive and special right, voting separately as a class and without regard to series, to elect at such annual meeting of stockholders or special meeting held in place thereof, directors to fill such vacancies so created, which directors shall not be included in the classes created by Article Fifth, in each case until four consecutive quarterly dividends shall have been paid on or declared and set apart for payment on the shares of such series, if the shares of such series are non-cumulative, or until all arrearages in dividends and dividends in full for the current quarterly period shall have been paid on or declared and set apart for payment on the shares of such series, if the shares of such series are cumulative, whereupon 26 27 all voting rights as a class of the holders of shares of applicable Class A Preferred Stock provided for under this paragraph 8 Subdivision A of Section 4 shall be divested from the holders of shares of applicable Class A Preferred Stock (subject, however, to being at any time or from time to time similarly revived if declarations of dividends for subsequent quarterly periods shall be omitted). (c) At any meeting at which the holders of shares of applicable Class A Preferred Stock shall be entitled to vote as a class for the election of directors as above provided, the holders of a majority of the shares of applicable Class A Preferred Stock then outstanding present in person or by proxy shall constitute a quorum for the election of such directors and for no other purpose, and the vote of the holders of a majority of the shares of applicable Class A Preferred Stock so present at any such meeting at which there shall be such a quorum shall be sufficient to elect such directors. The persons so elected as directors by the holders of shares of applicable Class A Preferred Stock shall hold office until (i) their successors shall have been elected by such holders or (ii) until the annual meeting next following the divestiture of the right of the holders of shares of applicable Class A Preferred Stock to vote as a class in the election of directors as provided in subparagraph (b) of this paragraph 8 of Subdivision A of Section 4. If a vacancy occurs in a directorship elected by the holders of shares of applicable 27 28 Class A Preferred Stock voting as a class, a successor may be appointed by the remaining director or directors so elected by the holders of shares of applicable Class A Preferred Stock. Directors elected pursuant to this paragraph 8 of Subdivision A of Section 4 shall not be removed otherwise than as provided in Article Fifth. (d) At any such meeting or any adjournment thereof, (i)the absence of a quorum of the holders of shares of applicable Class A Preferred Stock shall not prevent the election of the directors other than those to be elected by holders of shares of applicable Class A Preferred Stock voting as a class, and the absence of a quorum of holders of the shares entitled to vote for directors other than those to be elected by the holders of shares of applicable Class A Preferred Stock voting as a class shall not prevent the election of the directors to be elected by the holders of shares of applicable Class A Preferred Stock voting as a class, and (ii) in the absence of a quorum of the holders of shares of applicable Class A Preferred Stock, the holders of a majority of the shares of applicable Class A Preferred Stock present in person or by proxy shall have power to adjourn from time to time the meeting for the election of the directors which they are entitled to elect voting as a class, without notice other than announcement at the meeting until a quorum shall be present. 9. Class A $5 Cumulative Preferred Stock. The preferences 28 29 and relative, participating, optional and other special rights, and qualifications, limitations or restrictions of said shares of the Class A $5 Cumulative Preferred Stock shall be as hereinafter set forth, namely: (a) The annual dividend rate upon the Class A $5 Cumulative Preferred Stock shall be $5; (b) The quarterly dividend payment dates of the Class A $5 Cumulative Preferred Stock shall be the first days of January, April, July and October in each year; (c) The Class A $5 Cumulative Preferred Stock may be redeemed at the price of $l05 per share, plus accrued and unpaid dividends. B. CLASS B PREFERRED STOCK 1. Authority of the Board of Directors of the Corporation to issue Class B Preferred Stock in Series. The Class B Preferred Stock may be issued from time to time in one or more series. Subject to the provisions of these Articles of Incorporation or any amendment thereto, authority is expressly granted to the Board of Directors of the Corporation to authorize the issue of one or more series of Class B Preferred Stock, and to fix by resolutions providing for the issue of each such series the powers, preferences and rights thereof, to the full extent now or hereafter permitted by law, including but not limited to the following: 29 30 (a) The number of shares of such series (which may subsequently be increased by resolutions of the Board of Directors of the Corporation) and the distinctive designation thereof. (b) The dividend rate of such series and any limitations, restrictions or conditions on the payment of such dividends; (c) The terms and conditions, if any, on which, and the price or prices at which, the shares of such series may be redeemed; (d) The amounts which the holders of the shares of such series are entitled to receive upon any liquidation, dissolution or winding up of the Corporation; (e) The terms of any purchase, retirement or sinking fund to be provided for the shares of such series; (f) Restrictions upon the declaration or payment of dividends or other distributions on, or the acquisition or retirement by the Corporation of, the Common Stock, to take effect upon the occurrence of any default in the provisions for a sinking fund, if any, for the particular series and to remain in effect so long as such default continues; and provisions extending for the benefit of the particular series for so long as any shares thereof remain outstanding, similar restrictions with respect to the stock of the Corporation imposed by the terms of any of its funded indebtedness then outstanding; (g) The terms and conditions, if any, upon which the 30 31 shares of such series shall be convertible into or exchangeable for shares of any other class or classes, or of any other series of the same or any other class or classes of stock of the Corporation; (h) The voting powers, if any, of such series in addition to the voting powers provided in paragraphs 5 and 8 of this subdivision B of Section 4; and (i) Any other variance in the relative powers, preferences and rights as between different series not inconsistent with these Articles of Incorporation or any amendments thereto, to the full extent now or hereafter allowed by law. The Class B Preferred Stock of each series shall rank on a parity with the Class B Preferred Stock of every other series in priority of payment of dividends and in the distribution of assets in the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, to the extent of the preferential amounts to which the Class B Preferred Stock of the respective series shall be entitled under the provisions of these Articles of Incorporation or any amendment thereto or the resolutions of the Board of Directors of the Corporation providing for the issue of such series. All shares of any one series of Class B Preferred Stock shall be identical except as to the dates of issue and the dates from which dividends on shares of the series issued on different dates shall accumulate (if cumulative). 2. Dividend rights. 31 32 (a) The holders of shares of Class B Preferred Stock of each series shall be entitled to receive, when and as declared by the Board of Directors of the Corporation, preferential dividends, from the date fixed by the resolutions of the Board of Directors of the Corporation authorizing the issuance thereof, in cash payable at such rate, from such date, and on such quarterly dividend payment dates and, if cumulative, cumulative from such date or dates, as may be fixed by the provisions of these Articles of Incorporation or any amendment thereto or by the resolutions of the Board of Directors of the Corporation providing for the issue of such series. The holders of shares of Class B Preferred Stock shall not be entitled to receive any dividends thereon other than those specifically provided for by these Articles of Incorporation or any amendment thereto, or such resolutions of the Board of Directors of the Corporation, nor shall any arrearages in dividends on the Class B Preferred Stock bear any interest. (b) So long as any of the Class B Preferred Stock is outstanding, no dividends (other than dividends payable in stock junior to the Class B Preferred Stock and cash in lieu of fractional shares in connection with any such dividend) shall be paid or declared in cash or otherwise, nor shall any other distribution be made, on any stock junior to the Class B Preferred Stock, unless (i) there shall be no arrearages in dividends on the Class B Preferred Stock for any past quarterly 32 33 dividend period, and dividends in full for the current quarterly dividend period shall have been paid or declared on all of the Class B Preferred Stock (cumulative and non-cumulative) and (ii) the Corporation shall have paid or set aside all amounts, if any, then or theretofore required to be paid or set aside for all sinking funds, if any, for the Class B Preferred Stock of any series; and 33 34 (iii) the Corporation shall not be in default on any of its obligations to redeem any of the Class B Preferred Stock. (c) So long as any of the Class B Preferred Stock is outstanding, no shares of any stock junior to the Class B Preferred Stock shall be purchased, redeemed or otherwise acquired by the Corporation or by any subsidiary except (i) in connection with a reclassification or exchange of any stock junior to the Class B Preferred Stock through the issuance of other stock junior to the Class B Preferred Stock at the time outstanding, or (ii) in connection with the purchase, redemption or other acquisition of any stock junior to the Class B Preferred Stock with proceeds of a reasonably contemporaneous sale of other stock junior to the Class B Preferred Stock at the time outstanding, or (iii) payments in cash in lieu of fractional shares upon the conversions of any convertible stock junior to the Class A Preferred Stock, nor shall any funds be set aside or made available for any sinking fund for the purchase or redemption of any stock junior to the Class B Preferred Stock, unless (i) there shall be no arrearages in dividends on Class B Preferred Stock for any past quarterly dividend period, and dividends in full for the current dividend period shall have been paid or declared on all of the Class B Preferred Stock (cumulative and non-cumulative); and 34 35 (ii) the Corporation shall have paid or set aside all amounts, if any, then or theretofore required to be paid or set aside for all sinking funds, if any, for the Class B Preferred Stock of any series; and (iii) the Corporation shall not be in default on any of its obligations to redeem any of the Class B Preferred Stock. (d) Subject to the foregoing provisions and not otherwise, such dividends (payable in cash, property or stock junior to the Class B Preferred Stock) as may be determined by the Board of Directors of the Corporation may be declared and paid on the shares of any stock junior to the Class B Preferred Stock from time to time, and in the event of the declaration and payment of any such dividends, the holders of shares of such junior stock shall be entitled, to the exclusion of holders of shares of Class B Preferred Stock, to share ratably therein according to their respective interests. (e) Dividends in full shall not be declared or paid or set apart for payment on any series of Class B Preferred Stock, unless there shall be no arrearages in dividends on any Class B Preferred Stock for any past quarterly dividend period and dividends in full for the current quarterly dividend period shall have been paid or declared on all Class B Preferred Stock to the extent that such dividends are cumulative and any dividends paid or declared when dividends 35 36 are not so paid or declared in full shall be shared ratably by the holders of shares of all series of Class B Preferred Stock in proportion to such respective arrearages and unpaid and undeclared current quarterly dividends. (f) Dividends shall not be declared or paid or set apart for payment on any series of Class B Preferred Stock, unless there shall be no arrearages in dividends on any series of Class A Preferred Stock entitled to cumulative dividends for any past quarterly dividend period and dividends in full for the current dividend period shall have been paid or declared or set apart for payment on all Class A Preferred Stock. 3. Liquidation rights. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of shares of Class B Preferred Stock of each series shall be entitled to receive, subject to the prior rights of the holders of shares of Class A Preferred Stock set forth in paragraph 3 of Subdivision A of Section 4, the full preferential amount fixed by these Articles of Incorporation or any amendment thereto, or by the resolutions of the Board of Directors of the Corporation providing for the issue of such series, including any arrearages in dividends thereon to the date fixed for the payment in liquidation, before any distribution shall be made to the holders of shares of any stock junior to the Class B Preferred Stock. After such payment in full to the holders of shares of the Class B 36 37 Preferred Stock, the remaining assets of the Corporation shall then be distributable exclusively among the holders of shares of any stock junior to the Class B Preferred Stock, according to their respective interests. (b) If the assets of the Corporation are insufficient to permit the payment of the full preferential amounts payable to the holders of shares of Class B Preferred Stock of the respective series in the event of a liquidation, dissolution or winding up, then the assets available for distribution to holders of shares of Class B Preferred Stock shall be distributed ratably to such holders in proportion to the full preferential amounts payable on the respective shares. (c) A consolidation or merger of the Corporation with or into one or more other corporations or a sale of all or substantially all of the assets of the Corporation shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. 4. Redemption. (a) The Corporation may, at the option of the Board of Directors, redeem the whole or any part of the Class B Preferred Stock, or of any series thereof, at any time or from time to time within the period during which such stock is, according to the resolutions of the Board of Directors of the Corporation providing for the issue thereof, redeemable at the option of the Board of Directors of the Corporation, by paying such redemption price thereof, as shall have been fixed 37 38 by these Articles of Incorporation or any amendment thereto or by the resolutions of the Board of Directors of the Corporation providing for the issue of the Class B Preferred Stock to be redeemed, including an amount in the case of each share so to be redeemed equal to any arrearages in dividends thereon to the date fixed for redemption (the total amount so to be paid being hereinafter referred to as the "redemption price"). (b) Unless expressly provided otherwise in the resolutions of the Board of Directors of the Corporation providing for the issue of the Class B Preferred Stock to be redeemed, (i) notice of each such redemption shall be mailed not less than thirty days nor more than ninety days prior to the date fixed for redemption to each holder of record of shares of the Class B Preferred Stock to be redeemed, at his address as the same may appear on the books of the Corporation, and (ii) in case of a redemption of a part only of any series of the Class B Preferred Stock, the shares of such series to be redeemed shall be selected pro rata or by lot or in such other equitable manner as the Board of Directors of the Corporation may determine. The Board of Directors of the Corporation shall have full power and authority, subject to the limitations and provisions contained in these Articles of Incorporation or any amendment thereto or in the resolutions of the Board of Directors of the Corporation providing for the issue of the Class B Preferred Stock to be redeemed, to prescribe the manner in which and the 38 39 terms and conditions upon which the Class B Preferred Stock may be redeemed from time to time. (c) If any such notice of redemption shall have been duly given, then on and after the date fixed in such notice of redemption (unless default shall be made by the Corporation in the payment or deposit of the redemption price pursuant to such notice) all arrearages in dividends, if any, on the shares of Class B Preferred Stock so called for redemption shall cease to accumulate, and on such date all rights of the holders of shares of the Class B Preferred Stock so called for redemption shall cease and terminate except the right to receive the redemption price upon surrender of their certificates for redemption and such rights, if any, of conversion or exchange as may exist with respect to such Class B Preferred Stock under the provisions of these Articles of Incorporation or any amendment thereto or in the resolutions of the Board of Directors of the Corporation providing for the issue of such Class B Preferred Stock. (d) If, before the redemption date specified in any notice of the redemption of any Class B Preferred Stock, the Corporation shall deposit the redemption price with a bank or trust company in the continental United States, having a capital and surplus of at least $5,000,000 according to its last published statement of condition, in trust for payment on the redemption date to holders of shares of Class B Preferred Stock to be redeemed, from and after the date of such deposit 39 40 all rights of the holders of shares of Class B Preferred Stock so called for redemption shall cease and terminate except the right to receive the redemption price upon surrender of their certificates for redemption and such rights, if any, of conversion or exchange as may exist with respect to such Class B Preferred Stock under the provisions of these Articles of Incorporation or any amendment thereto or in the resolutions of the Board of Directors of the Corporation providing for the issue of such Class B Preferred Stock. Any funds so deposited which are not required for such redemption because of the exercise of any such right of conversion or exchange subsequent to the date of such deposit shall be returned to the Corporation forthwith. The Corporation shall be entitled to receive from the depositary, from time to time, the interest, if any, allowed on such funds deposited with it, and the holders of the shares so redeemed shall have no claim to any interest. Any funds so deposited and remain unclaimed at the end of six years from the redemption date shall, if thereafter requested by the Board of Directors of the Corporation, be repaid to the Corporation. (e) Shares of Class B Preferred Stock of any series may also be subject to redemption, in the manner hereinabove prescribed under this paragraph 4 of Subdivision B of Section 4, through operation of any sinking fund created therefor, at the redemption prices and under the terms and provisions contained in the resolutions of the Board of Directors of the 40 41 Corporation providing for the issue of such series. (f) The Corporation shall not be required to register a transfer of any share of Class B Preferred Stock (i) within fifteen days preceding a selection for redemption of shares of the series of Class B Preferred Stock of which such share is a part or (ii) which has been selected for redemption. (g) During the continuance of any arrearages in dividends for any past quarterly dividend period or a failure in fulfillment of any sinking fund or redemption obligation on any series of Class B Preferred Stock, the Corporation shall not purchase or redeem less than all of the shares of Class B Preferred Stock or of any other stock ranking on a parity with the Class B Preferred Stock as to dividends and upon liquidation, nor permit any subsidiary to do so without the consent given in writing or affirmative vote given in person or by proxy at a meeting called for the purpose, by the holders of at least fifty per cent (50%) of all the shares of Class B Preferred Stock then outstanding; provided that (i) to meet the requirements of any purchase, retirement or sinking fund provisions with respect to any series, the Corporation may use shares of such series acquired by it prior to such arrearages in dividends or failure of payment and then held by it as treasury stock, valued at the redemption price, and (ii) the Corporation may complete the purchase or redemption of shares of Class B Preferred Stock or any other stock ranking on a parity with the Class B Preferred Stock as to dividends 41 42 and upon liquidation for which a purchase contract was entered into for any purchase, retirement or sinking fund purposes, or the notice of redemption of which was initially mailed, prior to such arrearages in dividends or failure of payment. (h) If any obligation to retire shares of Class B Preferred Stock is not paid in full on all series as to which such obligation exists, the number of shares of each such series to be retired pursuant to any such obligation shall be in proportion to the respective amounts which would be payable 42 43 if all amounts payable for the retirement of such series were discharged in full. 5. Restrictions on certain actions affecting Class B Preferred Stock. The Corporation will not, without the consent given in writing or affirmative vote given in person or by proxy at a meeting held for the purpose, (a) by the holders of at least fifty per cent (50%) of the shares of Class B Preferred Stock then outstanding, (i) amend, alter or repeal any of the provisions of these Articles of Incorporation, or any amendment thereto, or By-laws of the Corporation, so as to affect adversely the voting powers, rights or preferences of the holders of shares of Class B Preferred Stock or reduce the time for any notice to which the holders of shares of Class B Preferred Stock may be entitled; provided, however, that the amendment of the provisions of these Articles of Incorporation, as amended, so as to increase the authorized amount of Common Stock, Class B Preferred Stock, any other class of stock junior to the Class B Preferred Stock, any stock of any class ranking on a parity with the Class B Preferred Stock or the Class A Preferred Stock shall not be deemed to affect adversely the powers, rights or preferences of the holder of shares of Class B Preferred Stock; (ii) create any other class or classes of stock or any security convertible into, or exchangeable for or 43 44 evidencing the right to purchase any stock of a class ranking on a parity with the Class B Preferred Stock, either as to dividends or upon liquidation; (iii) create any class or classes of stock ranking prior to the Class B Preferred Stock; or (iv) merge or consolidate with or into any other corporation, unless the corporation resulting from such merger or consolidation will have after such merger or consolidation no class of stock either authorized or outstanding ranking prior to the Class B Preferred Stock, and no securities either authorized or outstanding which are convertible into or exchangeable for stock ranking prior to the Class B Preferred Stock except the same number of shares of prior stock and the same amount of such convertible securities with the same rights and preferences as the prior stock and such convertible securities of the Corporation, respectively, authorized and outstanding immediately preceding such merger or consolidation, and unless each holder of shares of Class B Preferred Stock immediately preceding such a merger or consolidation shall receive the same number of shares, with substantially the same rights and preferences, of the resulting corporation; provided, however, that no such consent of the holders of shares of Class B Preferred Stock then outstanding shall be required if, at or prior to the taking effect of the event 44 45 which would otherwise require such consent, provision shall be made for the redemption of all shares of Class B Preferred Stock. (b) by the holders of at least fifty per cent (50%) of the shares of any series of Class B Preferred Stock then outstanding, amend, alter or repeal any of the provisions of these Articles of Incorporation or any amendment thereto or of the resolutions of the Board of Directors of the Corporation providing for the issue of such series so as to affect adversely the powers, preferences or rights of the holders of shares of Class B Preferred Stock of such series; provided, however, that no such consent of the holders of shares of any series of Class B Preferred Stock shall be required if, at or prior to the taking effect of the event which would otherwise require such consent, provision shall have been made for the redemption of all shares of such series. 6. Status of Class B Preferred Stock purchased, redeemed or converted. Shares of Class B Preferred Stock purchased, redeemed or converted into or exchanged for shares of any other class or series shall be deemed to be authorized but unissued shares of Class B Preferred Stock undesignated as to series. 7. Voting Rights. On all matters upon which the holders of shares of Common Stock of the Corporation are entitled to vote, unless otherwise provided in these Articles of Incorporation or any amendment thereto or the resolutions of the Board of Directors providing for the issuance of shares of one or more series of Class 45 46 B Preferred Stock, each holder of shares of Class B Preferred Stock shall have the right to vote upon a share-for-share basis with the holders of shares of Common Stock. 8. Election of Directors by holders of shares of Class B Preferred Stock in event of Nondeclaration of Dividends. (a) The provisions of this paragraph 8 of Subdivision B of Section 4 shall apply only to those series of Class B Preferred Stock to which such provisions are expressly made applicable by these Articles of Incorporation or any amendment thereto or resolutions of the Board of Directors of the Corporation providing for the issue of such series (hereinafter referred to as the applicable Class B Preferred Stock), subject to the rights of the holders of Class A Preferred Stock. (b) If 30 days prior to the date of any annual meeting of the stockholders, holders of shares of Class A Preferred Stock are not entitled to exclusive and special voting rights in the election of directors pursuant to paragraph 8 of Subdivision A of Section 4 and declarations of dividends (including non-cumulative dividends) on the shares of any series of applicable Class B Preferred Stock shall be omitted (i) in an aggregate amount equal to 3 (but less than 6) full quarterly dividends, the number of authorized directorships shall be increased by six, if twelve directorships are authorized immediately prior to such meeting, or by the number of full directorships which will represent at least one-third 46 47 of the total number of directorships giving effect to the increase (but no more) if other than twelve directorships are authorized immediately prior to such meeting, and the holders of shares of applicable Class B Preferred Stock shall have the exclusive and special right, voting separately as a class and without regard to series, to elect at such annual meeting of stockholders or special meeting held in place thereof, directors to fill such vacancies so created, which directors shall not be included in the classes created by Article Fifth or (ii) in an aggregate amount equal to 6 full quarterly dividends, the number of authorized directorships shall be increased by the number of authorized directorships in existence immediately prior to such meeting plus one additional directorship, and the holders of shares of applicable Class B Preferred Stock shall have the exclusive and special right, voting separately as a class and without regard to series, to elect at such annual meeting of stockholders or special meeting held in place thereof, directors to fill such vacancies so created, which directors shall not be included in the classes created by Article Fifth, in each case until four consecutive quarterly dividends shall have been paid on or declared and set apart for payment on the shares of such series, if the shares of such series are non-cumulative, or until all arrearages in dividends and dividends in full for the current quarterly period shall have been paid on or declared and set apart for payment on the shares of such 47 48 series, if the shares of such series are cumulative whereupon all voting rights as a class of the holders of shares of applicable Class B Preferred Stock provided for under this paragraph 8 Subdivision B of Section 4 shall be divested from the holders of shares of applicable Class B Preferred Stock (subject, however, to being at any time or from time to time similarly revived if declarations of dividends for subsequent quarterly periods shall be omitted). (c) At any meeting at which the holders of shares of applicable Class B Preferred Stock shall be entitled to vote as a class for the election of such directors as above provided, the holders of a majority of the shares of applicable Class B Preferred Stock then outstanding present in person or by proxy shall constitute a quorum for the election of such directors and for no other purpose, and the vote of the holders of a majority of the shares of applicable Class B Preferred Stock so present at any such meeting at which there shall be such a quorum shall be sufficient to elect such directors. The persons so elected as directors by the holders of shares of applicable Class B Preferred Stock shall hold office until (i) their successors shall have been elected by such holders or (ii) until the annual meeting next following the divestiture of the right of the holders of shares of applicable Class B Preferred Stock to vote as a class in the election of directors as provided in subparagraph (b) of this paragraph 8 of Subdivision B of Section 4. If a vacancy 48 49 occurs in a directorship elected by the holders of shares of applicable Class B Preferred Stock voting as a class, a successor may be appointed by the remaining director or directors so elected by the holders of shares of applicable Class B Preferred Stock. Directors elected pursuant to this paragraph 8 of Subdivision B of Section 4 shall not be removed otherwise than as provided in Article Fifth. (d) At any such meeting or any adjournment thereof, (i) the absence of a quorum of the holders of shares of applicable Class B Preferred Stock shall not prevent the election of the directors other than those to be elected by holders of shares of applicable Class B Preferred Stock voting as a class, and the absence of a quorum of holders of the shares entitled to vote for directors other than those to be elected by the holders of shares of applicable Class B Preferred Stock voting as a class shall not prevent the election of the directors to be elected by the holders of shares of applicable Class B Preferred Stock voting as a class, and (ii) in the absence of a quorum of the holders of shares of applicable Class B Preferred Stock, the holders of a majority of the shares of applicable Class B Preferred Stock present in person or by proxy shall have power to adjourn from time to time the meeting for the election of the directors which they are entitled to elect voting as a class, without notice other than announcement at the meeting until a quorum shall be present. 49 50 C. COMMON STOCK 1. Dividends rights. Subject to provisions of law and the preferences of the Class A Preferred Stock and the Class B Preferred Stock, the holders of shares of the Common Stock of the Corporation shall be entitled to receive dividends at such time and in such amounts as may be determined by the Board of Directors of the Corporation. 2. Voting rights. The holders of shares of the Common Stock of the Corporation shall have one vote for each share on each matter submitted to a vote of the stockholders of the Corporation. 3. Liquidation rights. In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, after payment or provision for payment of the debts and other liabilities of the Corporation and the preferential amounts to which the holders of shares of Class A Preferred Stock and Class B Preferred Stock shall be entitled, the holders of shares of the Common Stock shall be entitled to share ratably in the remaining assets of the Corporation. D. GENERAL PROVISIONS 1. Authority to authorize additional shares. The authorized number of shares of the Common Stock, Class A Preferred Stock and Class B Preferred Stock of the Corporation may be increased at any time and from time to time upon affirmative vote of the holders of a majority of all the shares of stock of the Corporation at the time outstanding. 50 51 2. Authority for issuance of shares. The Board of Directors of the Corporation shall have authority to authorize the issuance, from time to time without any vote or other action by the holders of shares of stock of the Corporation, of shares of Common Stock, Class A Preferred Stock and Class B Preferred Stock and any authorized shares of Common Stock into which such shares of stock are convertible to such persons and for such consideration and on such terms as the Board of Directors of the Corporation from time to time in its discretion lawfully may determine. Shares of Common Stock, Class A Preferred Stock and Class B Preferred Stock so issued, for which the consideration has been paid to the Corporation, shall be full paid stock, and the holders of shares of such stock shall not be liable to any further call or assessments thereon. Authorized shares of Common Stock issued upon the conversion of any other stock of the Corporation shall be full paid stock, and the holders of such stock shall not be liable to any further call or assessments thereon. 3. Abandonment of dividends and distributions. Anything herein contained to the contrary notwithstanding any and all right, title, interest, and claim in or to any dividends declared, or other distributions made, by the Corporation, whether in cash, stock or otherwise, on the Stock of the Corporation which are unclaimed by the stockholder entitled thereto for a period of six years after the close of business on the payment date, shall be and be deemed to be extinguished and abandoned; and such unclaimed dividends or other distributions in the possession of the 51 52 Corporation, its transfer agents or other agents or depositaries, shall at such time become the absolute property of the Corporation free and clear of any and all claims of any persons whatsoever. 4. No stockholder of this Corporation and no holder of any other security issued by this Corporation shall, by reason of his holding any of its shares of stock or other securities have any preemptive or preferential right to purchase or subscribe for any shares of stock of this Corporation, now or hereafter to be authorized, or any notes, debentures, bonds or other securities convertible into or carrying options or warrants to purchase any of its shares of stock now or hereafter to be authorized, whether or not the issuance of any such shares, or such notes, debentures, bonds or other securities would adversely affect the dividend, voting or other rights of such stockholder or other security holders, other than such rights, if any, as the Board of Directors, in its discretion from time to time may grant, and at such price as the Board of Directors in its discretion may fix and the Board of Directors may issue shares of stock of this Corporation, or any notes, debentures, bonds, or other securities convertible into or carrying options or warrants to purchase any of its shares of stock without offering any such shares, either in whole or in part, to existing stockholders of the Corporation. SEVENTH SECTION 1 For the purposes of this Article Seventh: (i) the term "Person" shall include any individual, corporation, partnership, 52 53 trust, unincorporated organization or other entity, any syndicate or group or any two or more of the foregoing that have any agreement or understanding (or, with or without an agreement or understanding, act in concert) with respect to acquiring, holding, voting or disposing of securities of the Corporation, and shall include also any "affiliate" or "associate" (as those terms are defined in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934 as in effect on January 1, 1975) of any Person: (ii) any Person shall be deemed to be the beneficial owner of any securities of the Corporation which such Person has the right to acquire pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise; (iii) the term "Substantial Part" shall mean any assets having a then fair market value, in the aggregate, of more than $5,000,000; (iv) the term "Subsidiary" shall mean any corporation in which the Corporation owns, directly or indirectly, more than 50% of the voting securities; (v) the term "Substantial Amount" shall mean any securities of the Corporation having a then fair market value of more than $5,000,000; (vi) the outstanding securities of any class of the Corporation shall include securities deemed owned through application of the preceding clauses of this Section 2 of this Article Seventh, but shall not include any other securities which may be issuable pursuant to any agreement or upon exercise of conversion rights, warrants or options, or otherwise; and (vii) a "Required Vote" shall mean the affirmative vote of at least the holders of two-thirds (2/3) of all of the securities of the 53 54 Corporation then entitled to vote at a meeting of stockholders, considered for the purposes of this Article Seventh as one class. SECTION 2 Except as set forth in Section 4 of this Article Seventh, a Required Vote shall be necessary (i) for the adoption of any agreement for the merger or consolidation of the Corporation with or into any other Person, or (ii) to authorize any sale, lease, exchange, mortgage, pledge or other disposition of all, or substantially all, or any Substantial Part of the assets of the Corporation or any Subsidiary to any other Person, or (iii) to authorize the issuance or transfer by the Corporation of any Substantial Amount of securities of the Corporation in exchange for the securities or assets of any other Person, if, in any such case, as of the record date for the determination of security holders entitled to notice thereof and to vote thereon, such other Person is the beneficial owner, directly or indirectly, of more than 5% of the outstanding securities of the Corporation then entitled to vote at a meeting of stockholders, considered for the purposes of this Article Seventh as one class. The Required Vote shall be in lieu of any lesser vote of the holders of the voting securities of the Corporation voting as one class otherwise required by law or by agreement, but shall be in addition to any class vote or other vote otherwise required by law, these Articles of Incorporation or by any agreement or contract to which the Corporation is a party. SECTION 3 The Board of Directors of the Corporation shall have the power 54 55 and duty to determine for the purposes of this Article Seventh, on the basis of information known to the Corporation, whether this Article Seventh applies to any transaction, including but not limited to whether (i) such transaction involves a Substantial Part of the assets of the Corporation and its subsidiaries, (ii) one or more Persons are to be deemed to be a single Person, (iii) a Person is an "affiliate" or "associate" (as defined above) of another, (iv) any Person beneficially owns more than 5% of the outstanding securities of the Corporation then entitled to vote at a meeting of stockholders, (v) a Person has an agreement or understanding, or is acting in concert, with respect to acquiring, holding, voting or disposing of securities of the Corporation, and (vi) the memorandum of understanding referred to in Section 4 of this Article Seventh is substantially consistent with the transaction covered thereby. Determinations of the Board of Directors of the Corporation shall be conclusive and binding for all purposes of this Article Seventh. 55 56 SECTION 4 The provisions of this Article Seventh shall not be applicable to (i) any agreement or transaction referred to in Section 2 of this Article Seventh, if the Board of Directors of the Corporation shall by resolution have approved a memorandum of understanding with the other Person who is a party to such agreement or transaction with respect to, and substantially consistent with, such transaction and such resolution shall have been approved either (A) prior to the time that such Person shall have become a holder of more than 5% of the outstanding securities of the Corporation then entitled to vote at a meeting of stockholders, or (B) by sufficient members of the Board of Directors who were directors prior to the time that such Person shall have become a holder of more than 5% of the outstanding securities of the Corporation then entitled to vote at a meeting of stockholders, to constitute a majority of the total number of directorships (including vacant directorships), or (ii) any merger or consolidation of the Corporation with or into any Person, or any sale, lease or exchange of any of the assets of any Person to the Corporation or any subsidiary thereof if a majority of the outstanding shares of all classes of stock then entitled to vote at 56 57 a meeting of stockholders of such Person is owned by the Corporation and its Subsidiaries. EIGHTH The power to make, alter or repeal the By-laws of the Corporation shall be vested exclusively in the Board of Directors of the Corporation. NINTH SECTION 1 The Corporation shall indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, other than an action by or in the right of the Corporation, by reason of the fact that he is or was a director or officer of the Corporation, or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding, including attorneys' fees, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation; and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo 57 58 contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe, that his conduct was unlawful. SECTION 2 The Corporation shall indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director or officer of the Corporation, or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against expenses actually and reasonably incurred by him in connection with the defense or settlement of such action or suit including attorneys' fees if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably 58 59 entitled to indemnity for such expenses which the court shall deem proper. SECTION 3 The Board of Directors of the Corporation shall have the power, in its discretion, to cause the Corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding referred to in Sections 1 or 2 of this Article Ninth by reason of the fact that (although not a director or officer of the Corporation) he is or was an employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise to the extent that any such person would have been entitled to be indemnified under Sections 1 and 2 had he at all times been a director or officer of the Corporation. SECTION 4 To the extent that a person who is or was a director or officer of the Corporation, or, while a director or officer of the Corporation, of any other corporation, partnership, joint venture, trust or other enterprise with which he is or was serving in such capacity at the request of the Corporation, has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 1 and 2 of this Article, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses actually and reasonably incurred by 59 60 him in connection therewith, including attorneys' fees. SECTION 5 Any indemnification under Sections 1, 2 or 3 of this Article Ninth, unless ordered by a court, shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Sections 1 or 2. Such determination shall be made (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (ii) if such a quorum is not obtainable, or even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders. SECTION 6 Expenses incurred by a director or officer in defending a civil, criminal, administrative or investigative action, suit or proceeding, or threat thereof, may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that he shall not be entitled to be indemnified by the Corporation as authorized by this Article Ninth. Such expenses incurred by other employees and agents may be so paid upon such term and condition, if any, as the Board of Directors deems appropriate. SECTION 7 60 61 The indemnification and advancement of expenses provided by, or granted pursuant to, the other sections of this Article shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any By-law, agreement, vote of stockholders or disinterested directors, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue unless otherwise provided when authorized or ratified, as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors, and administrators of such a person. SECTION 8 For purposes of this Article, references to "the corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this Article with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. 61 62 SECTION 9 For purposes of this Article, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Article. SECTION 10 The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article Ninth. 62 63 TENTH Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them, secured or unsecured, or between this Corporation and its stockholders, or any class of them, any court, state or federal, of competent jurisdiction with the state of Kansas may on the application in a summary way of this Corporation, or of any creditor, secured or unsecured, or stockholders thereof, or on the application of trustees in dissolution, or on the application of any receiver or receivers appointed for this Corporation by any Court, state or federal, of competent jurisdiction, order a meeting of the creditors or class of creditors, secured or unsecured, or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation. ELEVENTH The Corporation may voluntarily liquidate and dissolve only if 63 64 the proposed liquidation and dissolution is approved by the affirmative vote of at least the holders of two-thirds (2/3) of all of the securities of the Corporation then entitled to vote at a meeting of stockholders, considered for the purposes of this Article Eleventh as one class. TWELFTH The Corporation reserves the right to amend, alter, change or repeal any provision contained in these Articles of Incorporation, in any manner now or hereafter prescribed by statute; provided that no amendment to these Articles of Incorporation shall amend, alter, change or repeal any of the provisions of Article Fifth, Article Seventh, Article Eighth, Article Eleventh or this Article Twelfth; unless the amendment effectuating such amendment, alteration, change or repeal shall have received the affirmative vote of the holders of at least two-thirds (2/3) of all the securities of the Corporation then entitled to vote on such amendment, alteration, change or repeal, considered as one class. Such two-thirds (2/3) affirmative vote shall be in addition to any vote of the holders of securities of the Corporation otherwise required by law, these Articles of Incorporation, or any agreement or contract to which the Corporation is a party. THIRTEENTH SECTION 1 For the purpose of this Article Thirteenth: (i) the term "Person" shall include any individual, corporation, partnership, trust, unincorporated organization or other entity, any syndicate 64 65 or group of any two or more of the foregoing that have any agreement or understanding (or, with or without an agreement or understanding, act in concert) with respect to acquiring, holding, voting or disposing of voting securities of the Corporation, and shall include also any affiliate or associate of any Person; (ii) any Person shall be deemed to be the beneficial owner of any voting securities of the Corporation (a) which such Person beneficially owns, as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of l934 as in effect on January 1, l985, and (b) which such Person has the right to acquire pursuant to any agreement or upon exercise of conversion rights, warrants or options, or otherwise; (iii) the term "Substantial Part" shall mean any assets having a then fair market value, in the aggregate, of more than $5,000,000; (iv) the term "Subsidiary" shall mean any corporation in which the Corporation owns, directly or indirectly, more than 50% of the voting securities; (v) the term "Substantial Amount" shall mean any voting securities of the Corporation having a then fair market value of more than $5,000,000; (vi) the outstanding voting securities of any class of the Corporation shall include voting securities deemed owned through application of the preceding clauses of this Section 1 of this Article Thirteenth, but shall not include any other voting securities which may be issuable pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise; (vii) the term "Related Person" shall mean and include any Person which is the beneficial owner, directly or indirectly, 65 66 of 10% or more of the outstanding voting securities of the Corporation (considered for the purposes of this Article Thirteenth as one class); (viii) the term "Related Person Director" shall mean and include each director of the Corporation who is himself or herself a Related Person or an affiliate or associate of a Related Person or an officer, director, employee or agent of a Related Person or of an affiliate or associate of a Related Person; (ix) the term "Interested Related Person" shall mean and include a Related Person that is a party to, or is an affiliate or associate of a party to, or will experience an increase in its proportionate interest in the outstanding voting securities of any class of the Corporation as a result of, an agreement, authorization or transaction referred to in Section 2 of this Article Thirteenth; (x) the term "Required Vote" shall mean the affirmative vote or consent of the holders of 80% of the outstanding voting securities of all classes of the Corporation entitled to vote in elections of directors (considered for the purposes of this Article Thirteenth as one class); (xi) the terms "affiliate" and "associate" shall have the meanings ascribed to them in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934 as in effect on January 1, 1985; and (xii) the term "Fair Market Price" of any voting security of any class shall mean the highest sale price reported during the 30-day period immediately preceding the date in question of such security (a) on the Composite Tape of the New York Stock Exchange-Listed Stocks, or (b) if such voting security is not quoted on such Composite Tape, on the New York 66 67 Stock Exchange, or (c) if such voting security is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which such voting security is listed, or (d) if such voting security is not listed on any such exchange, the highest asked quotation for such voting security reported during the 30-day period preceding the date in question on the National Association of Securities Dealers, Inc. Automated Quotations Systems or any system then in use. If no such quotations are available, the "Fair Market Price" of any voting security of any class shall mean the fair value on the date in question of such voting security as determined by a majority of the directors who are not Related Person Directors. SECTION 2 Except as set forth in Section 4 of this Article Thirteenth, a Required Vote shall be necessary (i) for the adoption of any agreement for the merger or consolidation of the Corporation or any of its subsidiaries with or into any Related Person; or (ii) to authorize any sale, lease, exchange, mortgage, pledge, transfer or other disposition of all, or substantially all, or any Substantial Part of the assets of the Corporation or of any Subsidiary to any Related Person; or (iii) to authorize the issuance or transfer by the Corporation and its subsidiaries of any Substantial Amount of voting securities of the Corporation in exchange for the securities or assets of any Related Person; or (iv) to authorize any recapitalization of the Corporation or any Subsidiary, or merger or consolidation of the Corporation with any Subsidiary, which has the 67 68 effect, directly or indirectly, of increasing the proportionate interest of any Related Person in the outstanding voting securities of any class of the Corporation or any Subsidiary. The Required Vote shall be in lieu of any lesser vote of the holders of the voting securities of the Corporation voting as one class otherwise required by law or by agreement, but shall be in addition to any class vote or other vote otherwise required by law, these Articles of Incorporation or by any agreement or contract to which the Corporation is a party. SECTION 3 The Board of Directors of the Corporation, acting by resolution adopted by a majority of those members of the Board of Directors who are not themselves Related Person Directors, shall have the power and duty to determine for the purposes of this Article Thirteenth on the basis of information known to the Corporation, whether this Article Thirteenth applies to any transaction, including but not limited to whether (i) such transaction involves a Substantial Part of the assets of the Corporation or any Subsidiary, (ii) such transaction involves a Substantial Amount of the voting securities of the Corporation, (iii) one or more Persons are to be deemed to be a single Person, (iv) a Person is an affiliate or associate of another, (v) any Person beneficially owns more than 10% of the outstanding voting securities of the Corporation, (vi) any Person has the right to acquire voting securities of the Corporation, (vii) any Person has any agreement or understanding with respect to acquiring, 68 69 holding, voting or disposing of voting securities of the Corporation, (viii) any Person is acting in concert with any Person, (ix) an amount equals or exceeds the highest per share price paid or payable by an Interested Related Person for voting securities of the Corporation or (x) an amount equals or exceeds the Fair Market Price of the voting securities of the Corporation, (xi) a form of consideration other than cash is the same form as that used by an Interested Related Person to acquire the largest number of voting securities of the Corporation previously acquired by an Interested Related Person, (xii) an investment banking firm is a major investment banking firm of national reputation, (xiii) a fee to be paid by investment banking firm is reasonable, or (xiv) an investment banking firm has been previously associated with an Interested Related Person within the three years immediately preceding its selection. Determinations of the Board of Directors 69 70 of the Corporation shall be conclusive and binding for all purposes of this Article Thirteenth. SECTION 4 The provisions of this Article Thirteenth shall not be applicable to any agreement or transaction referred to in Section 2 of this Article Thirteenth if either: (i) such agreement or transaction shall have been approved by a resolution adopted by three-fourths of those members of the Board of Directors of the Corporation holding office at the time such resolution is adopted who are not themselves Related Person Directors; or (ii) all of the following conditions have been met: (a) the aggregate amount of the cash and the fair market value (as determined by the investment banking firm referred to in clause (d) below) of consideration other than cash to be received per voting security in the transaction by holders of voting securities of the Corporation is not less than the higher of (1) the highest price per voting security (including any brokerage commissions, transfer taxes, soliciting dealer's fees, dealer-management compensation and similar expenses) paid or payable by any Interested Related Person in connection with the acquisition of beneficial ownership of any voting securities within the three-year period immediately prior to the record date for the 70 71 determination of stockholders of the Corporation entitled to vote on or consent to the transaction, and (2) the Fair Market Price per voting security on such record date; (b) the consideration to be received by holders of voting securities of the Corporation other than any Interested Related Person shall be either in cash or in the form used by any Interested Related Person in connection with the acquisition of the largest number of voting securities of the Corporation previously acquired by any interested Related Person; (c) at the record date for the determination of stockholders of the Corporation entitled to vote on the proposed transaction, there shall be one or more directors of the Corporation who are not Related Person Directors; and (d) a proxy or information statement describing the proposed transaction and complying with the requirements of the Securities Exchange Act of l934 and the rules and regulations thereunder (or any subsequent provisions replacing such Act, rules or regulations) shall be mailed to the holders of outstanding voting securities of the Corporation entitled to vote in elections of directors as of the record date for the determination of stockholders of the Corporation entitled to vote on such proposed transaction, at least 30 days prior to the consummation of such transaction (whether or not such proxy or information statement is required to be mailed pursuant 71 72 to such Act or subsequent provisions), and such proxy or information statement shall contain in a prominent place (1) any recommendations as to the advisability (or inadvisability) of the proposed transaction that those members of the Board of Directors who are not Related Person Directors of the Corporation may choose to state, and (2) if deemed advisable by a majority of the directors of the Corporation who are not Related Person Directors, the opinion of an investment banking firm as to both (A) the fair market value of any consideration other than cash to be received in the proposed transaction by holders of voting securities of the Corporation (as required by clause (a) above), and (B) the fairness (or not) of the terms of the proposed transaction from the point of view of the financial interests of the holders of voting securities of the Corporation other than Interested Related Persons. Such investment banking firm shall be engaged solely on behalf of the holders of voting securities of the Corporation other than Interested Related Person Directors, shall be paid a reasonable fee for its services by the Corporation upon receipt of such opinion and shall be a major investment banking firm of national reputation that has not been associated with any Interested Related Person during the three year period immediately preceding its selection for this purpose. 72 73 For purposes of clause (a) above, the term "consideration other than cash to be received" shall include voting securities of the Corporation retained by its stockholders in the event of a transaction in which the Corporation is the surviving corporation. SECTION 5 In addition to any other requirements for amendments to these Articles of Incorporation, no amendment to these Articles of Incorporation shall amend, alter, change or repeal any of the provisions of this Article Thirteenth unless the amendment effectuating such amendment, alteration, change or repeal shall have received the affirmative vote of the holders of 80% of the outstanding voting securities of all classes of the Corporation entitled to vote in elections of directors (considered for the purposes of this Article Thirteenth as one class), provided that this Section 5 of Article Thirteenth shall not apply to any amendment to these Articles of Incorporation approved by a resolution adopted by three-fourths (3/4) of those members of the Board of Directors of the Corporation holding office at the time such resolution is adopted who are not themselves Related Person Directors. FOURTEENTH A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or 73 74 its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under the provisions of K.S.A. 17-6424 and amendments thereto, or (iv) for any transaction from which the director derived any improper personal benefit. If the Kansas General Corporation Code is amended, after approval by the stockholders of this article, to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Kansas General Corporation Code, as so amended. Any repeal or modification of the foregoing paragraph by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification. FIFTEENTH In the election of directors of the Corporation, the principle of cumulative voting shall not apply. Every shareholder entitled to vote at such election shall have the right to vote, in person or by proxy, the number of shares owned by him for as many persons as there are directors to be elected and for whose election he has a right to vote. K N ENERGY, INC. BY: /s/ Larry D. Hall Larry D. Hall, President BY: /s/ William S. Garner, Jr. William S. Garner, Jr., Secretary 74 EX-4.A 3 INDENTURE 1 EXHIBIT 4(a) ================================================================================ K N ENERGY, INC. TO CONTINENTAL ILLINOIS NATIONAL BANK AND TRUST COMPANY OF CHICAGO, TRUSTEE ------------- INDENTURE DATED AS OF SEPTEMBER 1, 1988 ------------- ================================================================================ 2 K N ENERGY, INC. CROSS-REFERENCE TABLE (This Cross Reference Sheet shows the location in the Indenture of the provisions inserted pursuant to the Trust Indenture Act of 1939)
TIA Indenture Section Section --------- --------- 310(a)(1) 7.10 (a)(2) 7.10 (a)(3) N.A. (a)(4) N.A. (b) 7.08, 7.10, 10.02 (c) N.A. 311(a) 7.11 (b) 7.11 (c) N.A. 312(a) 10.01, 10.02 (b) 10.03 (c) 10.03 313(a) 7.06 (b)(1) N.A. (b)(2) 7.06 (c) 10.03 (d) 7.06 314(a) 4.08, 10.04 (b) N.A. (c)(1) 10.04 (c)(2) 10.04 (c)(3) N.A. (d) N.A. (e) 14.05 (f) N.A. 315(a) 7.01(b) (b) 7.05, 10.02 (c) 7.01(a) (d) 7.01(c) (e) 6.11 316(a)(last sentence) 2.09 (a)(1) (A) 6.05 (a)(1) (B) 6.04 (a)(2) N.A. (b) 6.07 317(a)(1) 6.08 (a)(2) 6.09 (b) 4.03 318(a) 14.01
- ------------ N.A. means Not Applicable. This cross-reference table shall not, for any purpose, be deemed a part of this Indenture. 3 TABLE OF CONTENTS
Page ARTICLE ONE. DEFINITIONS AND INCORPORATION BY REFERENCE...........................................................1 Section 1.01. Definitions...................................................................1 Section 1.02. Rules of Construction........................................................10 ARTICLE TWO. THE SECURITIES......................................................................................11 Section 2.01. Amount Unlimited; Issuable in Series.........................................11 Section 2.02. Execution, Authentication, Delivery and Dating...............................13 Section 2.03. Denominations................................................................15 Section 2.04. Registration, Registration of Transfer and Exchange..........................16 Section 2.05. Mutilated, Destroyed, Lost and Stolen Securities.............................17 Section 2.06. Payment of Interest; Interest Rights Preserved...............................18 Section 2.07. Persons Deemed Owners........................................................20 Section 2.08. Cancellation.................................................................20 Section 2.09. Computation of Interest......................................................21 Section 2.10. Temporary Securities.........................................................21 Section 2.11. Payment to be in Proper Currency.............................................21 ARTICLE THREE. REDEMPTION........................................................................................22 Section 3.01. Applicability of Article.....................................................22 Section 3.02. Election to Redeem; Notices to Trustee.......................................22 Section 3.03. Selection of Securities to be Redeemed.......................................23 Section 3.04. Notice of Redemption.........................................................23 Section 3.05. Effect of Notice of Redemption...............................................24 Section 3.06. Deposit of Redemption Price..................................................25 Section 3.07. Securities Redeemed in Part..................................................25 ARTICLE FOUR. COVENANTS..........................................................................................25 Section 4.01. Payment of Securities........................................................25 Section 4.02. Maintenance of Office or Agency..............................................25 Section 4.03. Money for Securities Payments to be Held in Trust............................26 Section 4.04. Corporate Existence..........................................................28 Section 4.05. Maintenance of Properties....................................................28
-i- 4 Section 4.06. Payment of Taxes and Other Claims............................................28 Section 4.07. Limitation on Liens..........................................................28 Section 4.08. Compliance Certificate.......................................................36 Section 4.09. No Lien Created..............................................................37 Section 4.10. No Conflict..................................................................37 Section 4.11. Availability of Information..................................................37 Section 4.12. Waiver of Certain Covenants..................................................37 ARTICLE FIVE. SUCCESSOR COMPANY..................................................................................38 Section 5.01. When Company May Merge, etc..................................................38 Section 5.02. When Securities Must be Secured..............................................38 Section 5.03. Successor Substituted........................................................39 ARTICLE SIX. DEFAULTS AND REMEDIES...............................................................................39 Section 6.01. Events of Default............................................................39 Section 6.02. Acceleration.................................................................41 Section 6.03. Collection of Indebtedness and Suits for Enforcement by Trustee..............43 Section 6.04. Waiver of Past Defaults......................................................44 Section 6.05. Control by Majority..........................................................45 Section 6.06. Limitation on Suits..........................................................45 Section 6.07. Rights of Holders to Receive Payment.........................................46 Section 6.08. Trustee May Enforce Claims Without Possession of Securities..................46 Section 6.09. Trustee May File Proofs of Claim.............................................47 Section 6.10. Priorities...................................................................48 Section 6.11. Undertaking for Costs........................................................48 ARTICLE SEVEN. TRUSTEE...........................................................................................49 Section 7.01. Duties of Trustee............................................................49 Section 7.02. Rights of Trustee............................................................50 Section 7.03. Individual Rights of Trustee.................................................52 Section 7.04. Trustee's Disclaimer.........................................................52 Section 7.05. Notice of Default............................................................52 Section 7.06. Reports by Trustee to Holders................................................53 Section 7.07. Compensation and Indemnity...................................................53 Section 7.08. Replacement of Trustee.......................................................54 Section 7.09. Successor Trustee by Merger, etc.............................................56 Section 7.10. Eligibility..................................................................56
-ii- 5 Section 7.11. Preferential Claims Against Company..........................................57 Section 7.12. Conflicts of Interest........................................................62 Section 7.13. Acceptance of Appointment by Successor.......................................69 Section 7.14. Appointment of Authenticating Agent..........................................71 ARTICLE EIGHT. DISCHARGE OF INDENTURE............................................................................73 Section 8.01. Satisfaction and Discharge of Indenture......................................73 Section 8.02. Termination of Company's Obligations.........................................74 Section 8.03. Certain Obligations Survive..................................................76 Section 8.04. Condition to Discharge.......................................................76 Section 8.05. Application of Trust Money...................................................76 ARTICLE NINE. SUPPLEMENTAL INDENTURES............................................................................76 Section 9.01. Supplemental Indentures Without Consent of Holders...........................76 Section 9.02. Supplemental Indentures With Consent of Holders..............................78 Section 9.03. Execution of Supplemental Indentures.........................................80 Section 9.04. Effect of Supplemental Indentures............................................80 Section 9.05. Conformity with Trust Indenture Act..........................................80 Section 9.06. Reference in Securities to Supplemental Indentures...........................80 ARTICLE TEN. HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY...................................................81 Section 10.01. Company to Furnish Trustee Names and Addresses of Holders....................81 Section 10.02. Preservation of Information; Communications to Holders.......................81 Section 10.03. Reports by Trustee...........................................................83 Section 10.04. Reports by Company...........................................................84 ARTICLE ELEVEN. SECURITY FORMS...................................................................................85 Section 11.01. Forms Generally..............................................................85 Section 11.02. Form of Face of Security.....................................................86 Section 11.03. Form of Reverse of Security..................................................89 Section 11.04. Form of Trustee's Certificate of Authentication..............................94
-iii- 6 ARTICLE TWELVE. SINKING FUNDS....................................................................................94 Section 12.01. Applicability of Article.....................................................94 Section 12.02. Satisfaction of Sinking Fund Payments with Securities........................95 Section 12.03. Redemption of Securities for Sinking Fund....................................95 ARTICLE THIRTEEN. MEETINGS OF HOLDERS OF SECURITIES..............................................................96 Section 13.01. Purposes of Meetings.........................................................96 Section 13.02. Call, Notice and Place of Meetings...........................................96 Section 13.03. Persons Entitled to Vote at Meetings.........................................97 Section 13.04. Quorum; Action...............................................................97 Section 13.05. Determination of Voting Rights; Conduct and Adjournment of Meetings..........99 Section 13.06. Counting Votes and Recording Action of Meetings.............................100 Section 13.07. Written Consent in Lieu of Meeting of Holders...............................100 ARTICLE FOURTEEN. MISCELLANEOUS.................................................................................101 Section 14.01. Trust Indenture Act Controls................................................101 Section 14.02. Notices.....................................................................101 Section 14.03. No Recourse to Certain Persons..............................................102 Section 14.04. Certificate and Opinion as to Conditions Precedent..........................103 Section 14.05. Statements Required in Certificate or Opinion...............................103 Section 14.06. Form of Documents Delivered to Trustee......................................104 Section 14.07. Acts of Holders.............................................................104 Section 14.08. Governing Law...............................................................105 Section 14.09. No Adverse Interpretation of Other Agreements...............................106 Section 14.10. Effect of Headings and Table of Contents....................................106 Section 14.11. Legal Holidays..............................................................106 Section 14.12. Severability Clause.........................................................106 Section 14.13. Benefits of Indenture.......................................................106 Section 14.14. Successors..................................................................107 Section 14.15. Duplicate Originals.........................................................107
-iv- 7 INDENTURE, dated as of September 1, 1988, between K N Energy, Inc., a Kansas corporation (the "Company"), and Continental Illinois National Bank and Trust Company of Chicago, a national banking association (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 in this Indenture provided. 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 covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of series thereof, as follows: ARTICLE ONE. DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01. Definitions. "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. "Agent" means any Registrar or Paying Agent. "Authenticating Agent" means any Trust Officer or other Person authorized by the Trustee to act on behalf of the Trustee to authenticate Securities. "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 8 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, means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in that Place of Payment are authorized or obligated by law to close. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934 or, if at any time after the execution of this Indenture such Commission is not existing and performing the duties now assigned to it under the TIA, then the body performing such duties at such time. "Company" means the party named as such in the first paragraph of this instrument until a successor replaces it pursuant to the applicable provisions of this Indenture, and thereafter "Company" means the successor. "Company Request" or "Company Order" means a written request or order signed in the name of the Company by an Officer, and delivered to the Trustee. "Consolidated Net Tangible Assets" means the total amount of assets appearing on a consolidated balance sheet of the Company and its Subsidiaries less, without duplication, the following: (a) all current liabilities (excluding any thereof which are extendible or renewable by their terms or replaceable or refundable pursuant to enforceable commitments at the option of the obligor thereon without requiring the consent of the obligee to a time more than 12 months after the time as of which the amount thereof is being computed and excluding current maturities of long-term indebtedness and preferred stock); (b) all reserves for depreciation and other asset valuation reserves but excluding any reserves for deferred Federal income taxes arising from accelerated depreciation or otherwise; (c) all goodwill, trademarks, trade names, patents, unamortized debt discount and expense and other -2- 9 like intangible assets carried as an asset on said balance sheet; and (d) all appropriate adjustments on account of minority interests of other persons holding common stock in any Subsidiary. Consolidated Net Tangible Assets shall be determined in accordance with generally accepted accounting principles and as of a date not more than 90 days prior to the happening of the event for which such determination is being made. "Corporate Trust Office" means the principal office of the Trustee in Chicago, Illinois, at which at any particular time its corporate trust business shall be administered which office at the date of original execution of this Indenture is located at 30 North LaSalle Street, Chicago, Illinois 60697. "corporation" includes corporations, associations, companies and business trusts. "Default" means any event which is, or after notice or passage of time or both would become, an Event of Default with respect to Securities of a series. "Event of Default" has the meaning specified in section 6.01. "Funded Indebtedness" means any Indebtedness maturing by its terms (whether pursuant to a sinking fund, mandatory redemption or otherwise) more than one year from the date of determination. "Holder" or "Securityholder" means the person in whose name a Security is registered on the Security Register. "Indebtedness" of the Company or a Subsidiary means all items of indebtedness for borrowed funds (other than unamortized debt discount and premium), whether or not secured, which would be included in determining the total liabilities of such Person and would be classified as a liability on the balance sheet of such Person as of the date as of which Indebtedness is to be determined, and shall include, without limitation, (a) indebtedness secured by any mortgage, pledge or other lien or encumbrance of or upon, or any security interest in, any properties or assets owned by such Person -3- 10 and upon which indebtedness such Person customarily pays interest, whether or not the indebtedness secured thereby shall have been assumed, (b) indebtedness incurred by other Persons which is guaranteed as to payment of principal by such Person and (c) indebtedness which is in effect guaranteed by such Person through a contingent agreement to purchase such indebtedness; provided that the term "Indebtedness" of any Person shall not include (i) any indebtedness evidence of which is held in treasury (but the subsequent resale of such indebtedness shall be deemed to constitute the creation thereof), or (ii) any particular indebtedness if, upon or prior to the maturity thereof, there shall have been deposited with a depositary (or set aside and segregated, if permitted by the instrument creating such indebtedness as permitted by the instrument creating such indebtedness), in trust, money (or evidence of such indebtedness as permitted by the instrument creating such indebtedness) in the necessary amount to pay, redeem or satisfy such indebtedness, or (iii) any obligation, whether or not secured, which is payable, with respect to principal, premium, if any, and interest, solely from the proceeds of sales of gas, oil or other hydrocarbons or minerals to be produced, sold and delivered by the Company or a Subsidiary, or (iv) except as provided in clause (c) above, any contingent obligation of such Person in respect of indebtedness incurred by other Persons, including, without limitation, agreements to advance or supply funds to or invest in such other Persons, or (v) any guarantees with respect to lease or other similar periodic payments to be made by other Persons, or (vi) any indebtedness incurred to finance oil, gas, hydrocarbon or other mineral exploration or development to the extent that the issuer thereof has outstanding advances to finance oil, gas, hydrocarbon or other mineral exploration or development but only to the extent that such advances are not in default; -4- 11 provided, however, that, notwithstanding the foregoing, any liability or obligation described in clause (v) above incurred in connection with the issuance of debt securities the interest on which is excludable from gross income of the holder of such security pursuant to Section 103 of the Internal Revenue Code of 1986, or any successor section, shall be Indebtedness for the purpose of this Indenture. "Indenture" means this Indenture 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 2.01. "Interest," when used with respect to an Original Issue Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity. "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. "Officer" means the Chairman of the Board, the Vice Chairman, the President, any Vice President, the Treasurer or the Secretary of the Company. "Officers' Certificate" means a certificate signed by two Officers or by an Officer (other than the Secretary) and an Assistant Treasurer or Assistant Secretary of the Company. "Opinion of Counsel" means a written opinion from legal counsel who is acceptable to the Trustee, and who may be an employee of or counsel to the Company or the Trustee. "Original Issue Discount Security" means any Security which provides for an amount less than the principal amount -5- 12 thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 6.02. "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 cancelled by the Trustee or delivered to the Trustee for cancellation; (ii) Securities for whose payment or redemption, money in the necessary amount 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 2.05 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, (a) the principal amount of an Original Issue Discount Security that may be counted in making such determination or calculation and that may be deemed to be Outstanding for such purpose shall be equal to the amount of principal thereof that would be (or shall have been declared to be) due and payable, at the time of such determination, upon a declaration of acceleration of the maturity thereof pursuant to Section 6.02; -6- 13 (b) the principal amount of a Security denominated in a foreign currency or currencies or currencies as composite currencies shall be the U.S. dollar equivalent, determined by the Company on the date of original issuance of such Security and set forth in an Officers' Certificate, of the principal amount (or, in the case of an Original Issue Discount Security, the U.S. dollar equivalent determined by the Company on the date of original issuance of such security and set forth in an Officers' Certificate of the amount determined as provided in (a) above) of the Security; and (c) 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, 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 pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the 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 on any Securities on behalf of the Company. "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 the principal of (and premium, if any) and interest on the Securities of that series are payable as specified as contemplated by Section 2.01. "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, -7- 14 for the purposes of this definition, any Security authenticated and delivered under Section 2.05 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security. "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, as contemplated by Section 2.01. "Redemption Price," when used with respect to any security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture, as contemplated by Section 2.01. "Regular Record Date" for the interest payable on any Interest Payment Date on the Securities of any series means the date specified for that purpose as contemplated by Section 2.01. "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, 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 corporate 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 2.04. "Special Record Date" for the payment of any Defaulted -8- 15 Interest means a date fixed by the Trustee pursuant to Section 2.06. "Stated Maturity," when used with respect to any Security or any installment of principal thereof or interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such installment of principal or interest is due and payable. "Subordinated Indebtedness" means indebtedness which by its terms is inferior in right of payment to the Securities in that, among other terms, payment on account of principal of, premium, if any, or interest on, such indebtedness is prohibited (i) unless full payment of amounts then due for principal of, premium, if any, and interest on, the Securities has been made or duly provided for, (ii) if there shall have occurred and be continuing an Event of Default, or (iii) upon (x) any acceleration of payment of principal due on such indebtedness or (y) any payment or distribution of assets of the Company upon any dissolution, total or partial liquidation or reorganization of the Company, unless full payment of amounts then due for principal of, premium, if any, and interest on, the Securities shall first be made or duly provided for. "Subsidiary" means a corporation of which 80% or more of the outstanding shares of stock (other than directors' qualifying shares, if any) entitled to vote in the election of directors are owned directly or indirectly by the Company or by one or more of its other Subsidiaries or by the Company in conjunction with one or more of its other Subsidiaries; provided, however, that, notwithstanding the foregoing, such term shall not include any corporation, the principal business of which consists of finance, banking, credit, leasing, insurance, financial services or other similar operations, or any combination thereof. "TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) as in effect on the date of this Indenture, except as required by Section 9.05. "Trustee" means the Person named as the "Trustee" in the first paragraph of this Indenture 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 -9- 16 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 Officer" means the Chairman of the Board, the President or any other officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters. "United States" means the United States of America, including its territories and possessions. "U.S. Government Obligations" shall mean securities which are (i) direct obligations of the United States of America for the payment of which its full faith and credit is pledged; or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America. In either case such securities shall not be callable or redeemable at the option of the issuer thereof, and such securities may also include depository receipts issued by a bank or trust company as custodian with respect to any such U.S. Government Obligations or specific payments of interest on or principal of any such U.S. Government Obligations held by such custodian for the account of the holder of such depository receipts; provided, however, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of any 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. "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." Section 1.02. Rules of Construction. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) a term has the meaning assigned to it; -10- 17 (2) all other terms used herein which are defined in the TIA, 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; (4) "or" is not exclusive; (5) words in the singular include the plural, and in the plural include the singular; (6) the words "herein," "hereof" and "hereunder" and words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; and (7) provisions apply to successive events and transactions. ARTICLE TWO. THE SECURITIES Section 2.01. 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 limitation 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 -11- 18 lieu of, other Securities of the series pursuant to Section 2.04, 2.05, 2.10, 3.07 or 9.06); (3) the date or dates on which the principal of the Securities of the series is payable; (4) the rate or rates, or method by which the rate or rates are determined, at which 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 Interest Payment Date; (5) the place or places where the principal of (and premium, if any) and interest on Securities of the series shall be payable; (6) the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series may be redeemed, in whole or in part, at the option of the Company; (7) 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 terms and conditions upon which Securities of the series shall be redeemed or purchased, in whole or in part, pursuant to such obligation; (8) if other than denominations of $1,000 and any integral multiple thereof, the denominations in which Securities of the series shall be issuable; (9) if other than the principal amount thereof, the portion of the principal amount of Securities of the series which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 6.02; (10) the currency or currencies, including composite currencies, in which payment of the principal of and any premium and interest on the Securities of the -12- 19 series shall be payable if other than the currency of the United States of America; (11) if the amount of payments of principal of and any premium and interest on the Securities of the series may be determined with reference to an index, the manner in which such amounts shall be determined; and (12) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture) including any additional covenant or Event of Default with respect to the series. All Securities of any one series shall be substantially identical except as to denomination, interest rate and Maturity and except as may otherwise be provided in or pursuant to such Board Resolution and set forth in such Officers' Certificate or in any such indenture supplemental hereto. If any of the terms of the series are established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action 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 2.02. Execution, Authentication, Delivery and Dating. The Securities shall be executed on behalf of the Company by its Chairman of the Board of Directors, its Vice Chairman, its President or one of its Vice Presidents, under its corporate seal reproduced thereon attested by its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Securities may be manual or facsimile. Securities 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. -13- 20 At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series 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, with respect to Securities of a series constituting a medium term note program, the Trustee shall authenticate and deliver Securities of such series for original issue from time to time in the aggregate principal amount established for such series pursuant to such procedures acceptable to the Trustee and to such recipients as may be specified from time to time by a Company Order. The maturity date, original issue date, interest rate and any other terms of the Securities of such series shall be determined by or pursuant to such Company Order and procedures. If provided for in such procedures, such Company Order may authorize authentication and delivery pursuant to oral instructions from the Company or its duly authorized agent, which instructions shall be promptly confirmed in writing; provided, further, notwithstanding the provisions of Section 2.01 and of this Section, if all Securities of a series are not to be originally issued at one time, it shall not be necessary to deliver, the Officers' Certificate otherwise required pursuant to Section 2.01, or the Company Order and Opinion of Counsel otherwise required pursuant to this Section at or prior to the time of authentication of each Security of such series if such documents are delivered at or prior to the time of authentication upon original issuance of the first Security of such series. If the form or terms of the Securities of the series have been established in or pursuant to one or more Board Resolutions as permitted by Sections 2.01 and 11.01, 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 7.01) shall be fully protected in relying upon, an opinion of counsel stating (a) if the form of such Securities has been established by or pursuant to a Board Resolution as permitted by Section 11.01, that such form has been established in conformity with the provisions of this Indenture; -14- 21 (b) if the terms of such Securities have been established by or pursuant to a Board Resolution as permitted by Section 2.01, that such terms have been established in conformity with the provisions of this Indenture; and (c) that such Securities, 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, enforceable against the Company, subject 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 form 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. Each Security shall be dated the date of its authentication. No Security 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 and is entitled to the benefits of this Indenture. Section 2.03. Denominations. The Securities of each series shall be issuable in registered form without coupons in such denominations as shall be specified as contemplated by Section 11.01. In the absence of any such provisions with respect to the Securities of any series, the Securities of such series shall be issuable in denominations of $1,000 and any integral multiple thereof. -15- 22 Section 2.04. Registration, Registration of Transfer and Exchange. The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency of the Company in a Place of Payment being herein sometimes collectively referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfer of Securities. The Trustee is hereby appointed "Security Registrar" for the purpose of registering Securities and transfers of Securities as herein provided. Upon surrender for registration of transfer of any Security of any series at the office or agency of the Company in a Place of Payment for Securities of that 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 Securities of the same series and of like tenor, of any authorized denominations and of a like aggregate principal amount. At the option of the Holder, Securities of any series may be exchanged for other Securities of the same series and of like tenor, of any authorized denominations and of a like aggregate principal amount, upon surrender of the Securities to be exchanged at 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. 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 Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to -16- 23 the Company and the Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made 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 2.05, 3.07 or 9.06 not involving any transfer. The Company shall not be required (i) to issue, register the transfer 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 the date of the relevant mailing of notice of redemption, or (ii) to register the transfer or exchange of any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part. Section 2.05. Mutilated, Destroyed, Lost and Stolen Securities. If any mutilated Security 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 bearing a number not contemporaneously outstanding. 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 and (ii) such security of 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 has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, -17- 24 the Company in its discretion may, instead of issuing a new Security, pay such Security. Every new Security of any series issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original contractual obligation of the Company, whether or not the 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 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. Section 2.06. Payment of Interest; Interest Rights Preserved. Interest on any 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. Unless otherwise provided as contemplated by Section 2.01 with respect to any series of Securities, at the option of the Company, payment of interest on any Security may be, made by check mailed on or before the due date to the address of the Person entitled thereto as such address shall appear in the Security Register or by wire transfer to an account designated by such Person. Any interest on any Security of any series which is payable, but is not paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest 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 Securities of such series (or their respective Predecessor Securities) are registered at the close of -18- 25 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 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. -19- 26 Subject to the foregoing provisions of this Section, 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. Section 2.07. Persons Deemed Owners. Prior to due presentment of a 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 Security is registered as the owner of such Security for the purpose of receiving payments of principal of (and premium, if any) and (subject to Section 2.06) 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. Section 2.08. Cancellation. All Securities 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 and shall be promptly cancelled by it. 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 all Securities so delivered shall be promptly cancelled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Securities shall be destroyed by the Trustee and the Trustee shall deliver a certificate of such destruction to the Company unless by a Company Order, the Company shall direct that cancelled Securities be returned to it. If the Company shall acquire any of the Securities, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities unless and until the same are delivered to the Trustee for cancellation. -20- 27 Section 2.09. Computation of Interest. Except as otherwise specified as contemplated by Section 2.01 for Securities of any series, interest on the Securities of each series shall be computed on the basis of a year of twelve 30-day months. Section 2.10. Temporary Securities. Until definitive Securities of any series are ready for delivery, the Company may prepare and 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 and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities. 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 and of like tenor upon surrender of the temporary Securities of such series at the office or agency of the Company in a Place of Payment for that series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any series the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities of the same series of authorized denominations. Until so exchanged, the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series. Section 2.11. Payment to be in Proper Currency. In the case of any Securities denominated in any currency (the "Required Currency") other than U.S. dollars, except as otherwise provided therein, the obligation of the Company to make any payment of the principal, premium or interest thereon shall not be discharged or satisfied by any -21- 28 tender by the Company, or recovery by the Trustee, in any currency 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 in a currency other than the Required Currency, the Trustee may take such actions as it considers appropriate to exchange such currency for the Required Currency. The costs and risks of 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 Required currency then due and payable, and in no circumstances shall the Trustee be liable therefor except in the case of its negligence of willful misconduct. 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 Required Currency then due and payable. ARTICLE THREE. REDEMPTION Section 3.01. 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 2.01 for Securities of any series) in accordance with this Article. Section 3.02. Election to Redeem; Notices to Trustee. The election of the Company to redeem any Securities shall be evidenced by an Officers' Certificate. In case of any redemption at the election of the Company of less than all the Securities of any series, the Company shall, at least 45 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Securities of such series to be redeemed. In the case of any redemption of Securities prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an -22- 29 Officers' Certificate evidencing compliance with such restriction. Section 3.03. Selection of Securities to be Redeemed. If less than all the Securities of any series are to be redeemed, the Trustee shall select not more than 45 days prior to the Redemption Date from the Outstanding Securities of such series not previously called for redemption the Securities to be redeemed by a method the Trustee considers fair and appropriate and 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 3.04. Notice of Redemption. At least 30 days but not more than 45 days before a Redemption Date, a notice of redemption shall be mailed by first-class mail, postage prepaid, to each Holder of Securities to be redeemed at this address appearing in the Security Register. The notice shall identify the Securities to be redeemed and shall state: (1) the Redemption Date; (2) the Redemption Price; (3) the place or places where such Securities are to be surrendered for payment of the Redemption Price; -23- 30 (4) that the redemption is for a sinking fund, if such is the case; (5) that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed and, if applicable, that interest thereon will cease to accrue on and after the Redemption Date; and (6) if less than all the Outstanding Securities of any series are to be redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the particular Securities to be redeemed. Notice of redemption of securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, the Trustee shall give the notice of redemption in the Company's name and at the expense of the Company. Section 3.05. Effect of Notice of Redemption. 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. Upon surrender of any such Security for redemption in accordance with said notice, 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 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 Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security. -24- 31 Section 3.06. Deposit of Redemption Price. On or prior to 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 4.03) an amount of money 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 which are to be redeemed on that date. Section 3.07. Securities Redeemed in Part. Any Security 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 or Securities of the same series and of like tenor, 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 so surrendered. ARTICLE FOUR. COVENANTS Section 4.01. Payment of Securities. The Company covenants and agrees for the benefit of each series of Securities that it will duly and punctually pay the principal of (and premium, if any) and interest on the Securities of that series in accordance with the terms of such series of the Securities and this Indenture. Section 4.02. Maintenance of Office or Agency. The Company will maintain in each Place of Payment for any series of securities 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 -25- 32 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 of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies where 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 each Place of Payment for Securities of any series for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. Section 4.03. 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, prior to 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 -26- 33 is the Trustee) the Company will promptly notify the Trustee of its action or 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: (a) 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; (b) give the Trustee notice of any default by the Company (or any other obligor upon the Securities of that series) in the making of any payment of principal of (and premium, if any) or interest on the Securities of that series; and (c) 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 three years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security -27- 34 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 4.04. Corporate Existence. Subject to Article Five, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence. Section 4.05. Maintenance of Properties. The Company will cause all properties used or useful in the conduct of its business or the business of any Subsidiary to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent the Company from discontinuing the operation or maintenance of any of such properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business or the business of any Subsidiary and not disadvantageous in any material respect to the Holders. Section 4.06. Payment of Taxes and Other Claims. The Company will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, all taxes, assessments and governmental charges levied or imposed upon the Company or any Subsidiary or upon the income, profits or property of the Company or any Subsidiary; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax or charge for which the amount, applicability or validity is being contested in good faith by appropriate proceedings. Section 4.07. Limitation on Liens. Except as hereinafter in this Section 4.07 expressly permitted, so long as any of the Securities remain outstanding, -28- 35 the Company shall not at any time directly or indirectly create, assume or suffer to exist, and shall not cause, suffer or permit any Subsidiary to create, assume or suffer to exist, otherwise than in favor of the Company, any mortgage, pledge or other lien or encumbrance of or upon any of its properties or assets, real, personal or mixed, whether owned at the date of this Indenture or thereafter acquired, or of or upon any income or profits therefrom, without making effective provision, and the Company covenants that in any such case it shall make or cause to be made effective provision, whereby the Securities then outstanding and any other indebtedness of the Company then entitled thereto shall be secured by such mortgage, pledge, lien or encumbrance equally and ratably with any and all other obligations and indebtedness thereby secured, so long as any such other obligations or indebtedness shall be so secured. Nothing in this Section 4.07 shall be construed to prevent the Company or any Subsidiary from creating, assuming or suffering to exist mortgages, pledges, liens, or encumbrances evidencing or securing obligations or leases of the following character to which the provisions of the preceding paragraph shall not be applicable: (a) Any mortgage, pledge, lien or encumbrance: (i) existing on the date of this Indenture; or (ii) existing on any property of a Subsidiary at the time it becomes a Subsidiary; or (iii) existing on any property at the time of the acquisition thereof by the Company or a Subsidiary, whether or not assumed by the Company or such Subsidiary; or (iv) on any property acquired or constructed by the Company or a Subsidiary and created by the Company or such Subsidiary not later than 12 months after the date of such acquisition or the completion of such construction; or (v) arising by reason of deposits with or the giving of any form of security to any governmental agency or any other governmental body created or -29- 36 approved by law or governmental regulation for any purpose at any time in connection with the financing of the acquisition or construction of property to be used in the business of the Company or a Subsidiary; or (vi) created or assumed by the Company or a Subsidiary in connection with the issuance of debt securities the interest on which is excludable from gross income of the holder of such security pursuant to Section 103 of the Internal Revenue Code of 1986 or any successor section, for the purpose of financing, in whole or in part, the acquisition or construction of property to be used by the Company or a Subsidiary; or (vii) created or assumed by the Company or a Subsidiary on any contract for the sale of any product or service or any rights thereunder or any proceeds therefrom, including accounts and other receivables, related to the operation or use of any property acquired by the Company or a Subsidiary and created not later than 12 months after (x) the date of such acquisition or (y) commencement of full operation of such property, whichever is later; or (viii) created or assumed by the Company or a Subsidiary on oil, gas, hydrocarbon or mineral properties owned or leased by the Company or such Subsidiary to secure loans to the Company or such Subsidiary for the purpose of developing such properties, irrespective of whether the Company or a Subsidiary shall assume or guarantee such loans or otherwise be liable in respect thereof; or (ix) created to effect payments, both with respect to principal, premium, if any, and interest, solely out of the proceeds of gas, oil, hydrocarbons or other minerals to be produced from the property subject thereto and to be sold or delivered by the Company or a Subsidiary; or (x) created by the Company or a Subsidiary on any contract (or any rights thereunder or proceeds therefrom) providing for advance by the Company or -30- 37 such Subsidiary to finance oil, gas, hydrocarbon or other mineral exploration and development, which mortgage, pledge or encumbrance is created to secure indebtedness incurred to finance such advances; provided, however, that (A) any mortgage, pledge, lien or encumbrance referred to in clause (iii) or (iv) above shall be limited to the property described therein and any replacements thereof or improvements thereon, and (B) that the principal amount of the indebtedness secured by any mortgage, pledge, lien or encumbrance referred to in clauses (iii), (iv), (v) , (vi) and (vii) above, together with all other indebtedness secured by a lien on the property described therein, shall not exceed the purchase price (or the cost of construction, as the case may be) of the property acquired or constructed and any related financing costs; (b) Any refunding or extension of maturity, in whole or in part, of any mortgage, pledge, lien or encumbrance created or assumed in accordance with the provisions of clauses (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) and (x) of subdivision (a) above, provided that the principal amount of the indebtedness so secured shall not exceed the principal amount of the indebtedness to be refunded or extended outstanding at the time of such refunding or extension (except that, where an additional principal amount of indebtedness is incurred to provide funds for the completion of a specific project on such property, such additional principal amount, and any related financing costs, may be so secured), and that such refunding or extended mortgage, pledge, lien or encumbrance shall be limited in lien to the same property that secured the mortgage, pledge, lien or encumbrance so refunded or extended; (c) Leases (excluding leases arising out of sale and leaseback arrangements) now or hereafter existing and any renewals or extension thereof; (d) Any lease now or hereafter existing and any renewals or extensions thereof which arise out of the sale and leaseback of property if: -31- 38 (i) the term of such lease is for a temporary period (not exceeding 36 months) by the end of which it is intended that the use of such property by the lessee will be discontinued; or (ii) such lease is in connection with the issuance of debt securities, the interest on which is excludable from gross income of the holder of such security pursuant to Section 103 of the Internal Revenue Code of 1986 or any successor section for the purpose of financing, in whole or in part, the acquisition or construction of property to be used by or for the Company or a Subsidiary; or (iii) the net proceeds of such sale are at least equal to the fair value (as determined by the Board of Directors of the Company) of such property, and (A) the Company promptly gives notice of such sale to the Trustee, and (B) the Company shall, within 120 days after such sale, apply or cause a Subsidiary to apply an amount equivalent to the net proceeds of such sale (to the greatest extent possible) to the redemption of Securities in accordance with the provisions of Article Three and at the applicable Redemption Price, or to the repayment of other Funded Indebtedness of the Company (other than Subordinated Indebtedness), or in part to such redemption and in part to such repayment; provided that in lieu of applying an amount equivalent to all or any part of such net proceeds to such redemption, the Company may, within 75 days after such sale, deliver to the Trustee Securities for cancellation and thereby reduce the amount to be applied to any redemption of Securities by an amount equivalent to the aggregate principal amount of the Securities so delivered; or (iv) such lease arises out of a sale or transfer by a Subsidiary to the Company or to another Subsidiary; (e) Liens reserved in leases for rent and for compliance with the terms of the lease in the case of leasehold estates; -32- 39 (f) Liens arising by reason of deposits with or the giving of any form of security to any governmental agency or any other governmental body created or approved by law or governmental regulation for any purpose at any time as required by law or governmental regulation as a condition to the transaction of any business or the exercise of any privilege or license, or to enable the Company or a Subsidiary to maintain self-insurance or to participate in any fund for liability on any insurance risks or in connection with workmen's compensation, unemployment insurance, old age pensions or other social security or to share in the privileges or benefits required for companies participating in such arrangements; (g) Mechanics' or materialmen's liens or any lien or charge arising by reason of pledges or deposits to secure payment of workmen's compensation or other insurance, good faith deposits in connection with tenders or leases of real estate, bids or contracts (other than contracts for the payment of money), deposits to secure public or statutory obligations, deposits to secure or in lieu of surety, stay or appeal bonds and deposits as security for the payment of taxes or assessments or other similar charges; (h) Liens of taxes and assessments which are not at the time delinquent or which are being contested in good faith by appropriate proceedings by the Company or a Subsidiary; (i) Liens of any uninsured judgments in an aggregate amount not in excess of $500,000, or the lien of any uninsured judgment the execution of which has been stayed or which has been appealed and secured, if necessary, by the filing of an appeal bond; (j) Any obligations or duties, affecting the property of the Company or a Subsidiary, to any municipality or public authority with respect to any franchise, grant, license or permit; (k) Rights reserved to or vested in any municipality or governmental or other public authority or railroad by the terms of any right, power, franchise, -33- 40 grant, license, permit or by any provision of law, to terminate or to require annual or other periodic payments as a condition to the continuance of such right, power, franchise, grant, license or permit. (l) Rights reserved to or vested in any municipality or public authority to control or regulate any property of the Company or a Subsidiary, or to use such property in any manner which does not materially impair the use of such property for the purposes for which it is held by the Company or such Subsidiary; (m) Liens upon rights-of-way for pipeline purposes and undetermined liens and charges incidental to construction or maintenance; (n) Any irregularities in or deficiencies of title to any right-of-way or pipelines, telephone lines, power lines, water lines and/or appurtenances thereto or other improvements thereon, and to any real estate used or to be used primarily for right-of-way purposes, provided that the Company or a Subsidiary shall have obtained from the apparent owner of the lands or estates therein covered by any such right-of way a sufficient right, by the terms of the instrument granting such right-of-way, to the use thereof for the construction, operation or maintenance of such liens, appurtenances or improvements for which the same are or are to be used, or the Company or such Subsidiary has power under eminent domain or similar statutes to remove such irregularities or deficiencies; (o)(i) Zoning laws and ordinances and (ii) minor defects and irregularities in the titles to any property and liens securing indebtedness neither assumed nor guaranteed by the Company or a Subsidiary nor on which it customarily pays interest existing upon real estate or rights in or relating to real estate (including rights- of-way and easements) acquired by the Company or a Subsidiary for pipeline, metering station or right-of-way purposes, which defects, irregularities and liens do not materially impair the use of the property affected thereby for the purposes for which it is held by the Company or such Subsidiary; -34- 41 (p) Easements, exceptions or reservations in any property of the Company or a Subsidiary granted or reserved for the purpose of pipelines, roads, streets, alleys, highways, railroad purposes, and the removal of oil, gas, hydrocarbon, coal or other minerals, and other like purposes, or for the use of real property or interests therein, facilities and equipment, which do not materially impair the use thereof for the purposes for which it is held by the Company or such Subsidiary, and any and all rents, royalties, reservations, liens, encumbrances, and rights or interests of third parties arising by virtue of any lease or any exploration, development, drilling, unitization, communitization or operating agreement relating to or affecting any oil, gas, hydrocarbon, coal or other mineral properties in which the Company or any Subsidiary has an interest; and (q) Any mortgage, pledge, lien or encumbrance not permitted by clauses (a) through (p) above if at the time of, and after giving effect to, the creation or assumption of any such mortgage, pledge, lien or encumbrance, the sum of (i) all liabilities included on the consolidated balance sheet of the Company and its Subsidiaries representing capitalized lease obligations applicable to leases. arising from sale and leaseback transactions not permuted by clause (d), and (ii) the aggregate of all obligations of the Company and its Subsidiaries secured by any mortgages, pledges, liens or encumbrances not permitted by all other clauses of this Section 4.07 does not exceed 5% of Consolidated Net Tangible Assets. As used in this Section 4.07, the term "mortgage" or "lien" shall include any security interest, and the term "encumbrance" shall include any type of lease. If at any time the Company takes any action or a Subsidiary shall take any action to which the covenant in the first paragraph of this Section 4.07 is applicable, the Company shall promptly deliver to the Trustee an Officers' Certificate, stating that such covenant has been complied with, and an opinion of Counsel, stating that in his opinion such covenant has been complied with and that any instruments executed by the Company or a Subsidiary in the performance of such covenant complied with the requirements thereof. -35- 42 In the event that the Company or a Subsidiary shall hereafter secure the Securities equally and ratably with any other obligation or indebtedness pursuant to the provisions of this Section 4.07, the Trustee is hereby authorized to enter into an indenture supplemental hereto and to take such action, if any, as it may deem advisable to enable it to enforce effectively the rights of the holders of the Securities so secured, equally and ratably with such other obligation or indebtedness. Subject to the provisions of Section 7.01, the Trustee may receive an Opinion of Counsel as conclusive evidence that any such supplemental indenture or steps to secure the securities equally and ratably comply with the provisions of this Section 4.07. Section 4.08. Compliance Certificate. Annually, within 120 days after the close of each fiscal year beginning with the fiscal year ending December 31, 1988, the Company shall deliver to the Trustee a certificate (which shall not be deemed to be an Officers' Certificate within the meaning of this Indenture and need not conform to the provisions of Section 15.05) of an officer (other than the Secretary) and the Secretary or an Assistant Secretary, stating that a review of the activities of the Company and of its Subsidiaries during such year has been made under their supervision with a view to determining whether to the best knowledge of such officers the Company has kept, observed, performed and fulfilled all its covenants, agreements and obligations under Article Four of this Indenture, and that to the best of their knowledge the Company has kept, observed, performed and fulfilled each and every covenant, agreement and obligation on its part under Article Four of this Indenture and that to the best of their knowledge neither the Company nor any Paying Agent of the Company is in Default in the performance, observance or fulfillment of any of the terms, provisions and conditions hereof, and that no Default exists or, if the Company or any Paying Agent shall be so in Default or if any Default exists, specifying all such Defaults, and the nature thereof, of which they may have knowledge. -36- 43 Section 4.09. No Lien Created. This Indenture and the Securities do not create a lien, charge or encumbrance on the property of the Company or any Subsidiary. Section 4.10. No Conflict. The delivery and performance of this Indenture and the issuance of the Securities do not conflict with or violate any provisions of the Company's Articles of Incorporation, Bylaws or any other constituent document or agreement to which the Company is a party. Section 4.11. Availability of Information. From time to time, whenever reasonably requested by the Trustee, the Company will furnish or make available to the Trustee such information as may be necessary to permit the Trustee to carry out its duties hereunder in addition to any information which the Company is specifically required to furnish pursuant to this Indenture. Section 4.12. Waiver of Certain Covenants. The Company may omit in any particular instance to comply with any term, provision or condition set forth in Sections 4.01 to 4.11, inclusive, with respect to the Securities of any series if before the time for such compliance the Holders of at least 66 2/3% in aggregate principal amount of the Outstanding Securities of such series 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. -37- 44 ARTICLE FIVE. SUCCESSOR COMPANY Section 5.01. When Company May Merge, etc. The Company may consolidate with or merge into, or transfer all or substantially all of its assets to, one or more other entities if: (1) the corporation or other successor entity formed by or surviving such transaction, in the case of a consolidation or merger, and the transferee, in the case of a transfer, assumes by supplemental indenture all the obligations of the Company under all of the Securities and this Indenture; (2) immediately after giving effect to the transaction, no Default would occur and be continuing; (3) the corporation or other successor entity formed by or surviving such transaction, in the case of a consolidation or merger, and the transferee, in the case of a transfer, is organized under the laws of the United States or any state thereof; and (4) the Company has delivered to the Trustee an Officers' Certificate and an opinion of Counsel, each stating that such consolidation, merger 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. Subject to the provision of Section 7.01, the Trustee may receive such opinion of Counsel and Officers' Certificate as conclusive evidence with respect to the matters therein set forth. Section 5.02. When Securities Must be Secured. If upon any consolidation, merger or transfer, any properties or assets of the Company would become subject to any mortgages, pledges, liens or encumbrances (other than mortgages, pledges, liens or encumbrances of the types which such other corporation would have been permitted to create or assume under any subdivisions (a)(v), (a)(vi), (a)(viii), (a) (x) and (c) to (p), inclusive, of Section 4.07), the -38- 45 Company by supplemental indenture shall secure the Securities equally and ratably with any other indebtedness of the Company entitled thereto by a direct lien on all such properties and assets of the Company prior to all liens other than theretofore existing thereon prior to such consolidation, merger or transfer. Section 5.03. Successor Substituted. Upon any consolidation by the Company with or merger by the Company into any other corporation or other entity or any transfer of the assets of the Company substantially as an entirety in accordance with Section 5.01, the successor corporation or other entity formed by such consolidation or into which the Company is merged or to which such transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor corporation or other entity had been named as the Company herein, and thereafter the predecessor shall be relieved of all obligations and covenants under this Indenture and the Securities and may liquidate and dissolve. ARTICLE SIX. DEFAULTS AND REMEDIES Section 6.01. Events of Default. "Event of Default," whenever used herein with respect to Securities of any series, means any one of the following events: (1) default in the payment of any interest on any Security of that series when the same becomes due and payable, and the default continues 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, upon redemption or otherwise; or (3) default in the payment of any sinking fund payment, when and as due by the terms of a Security of that series; or -39- 46 (4) the Company fails to observe and perform any other of the covenants or agreements on the part of the Company in respect of the Securities of that series in this Indenture for a period of 90 days after the date on which written notice specifying such failure, stating that such notice is a "Notice of Default" hereunder and demanding that the Company remedy the same, shall have been given to the Company by the Trustee, or to the Company and the Trustee by the Holders of not less than 25% in aggregate principal amount of the Securities of that series at the time Outstanding; or (5) an event of default, as defined in any mortgage, indenture or instrument under which there is or may be issued Funded Indebtedness of the Company or any Subsidiary in a principal amount exceeding $2,000,000, shall occur with the result that such Funded Indebtedness shall have been declared due and payable prior to the date on which it would otherwise become due and payable or the Company or any Subsidiary shall fail to pay or refund any Funded Indebtedness in a principal amount in excess of $2,000,000 within 60 days after the maturity or extended maturity of such Funded Indebtedness, but if any such default or failure is cured by the Company or such Subsidiary or is waived by the specified percentage of holders of such mortgage, indenture or instrument entitled to so waive, then the Event of Default under this Indenture by reason of such default shall be deemed to have been cured; or (6) 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 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 -40- 47 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 (7) 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 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 (8) any other Event of Default provided with respect to Securities of that series. Section 6.02. Acceleration. If an Event of Default described in clause (1), (2), (3), (4) or (8) of Section 6.01 with respect to Securities of any series at the time outstanding occurs and is continuing, then in every such case, the Trustee by notice to the Company, or the Holders of at least 25% in aggregate principal amount of the Outstanding Securities of that series may declare the principal amount of such Securities (or, if the Securities of that series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms thereof) and accrued interest, if any, -41- 48 on 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) and accrued interest, if any, shall become immediately due and payable. If an Event of Default described in clause (5), (6) or (7) of Section 6.01 occurs and is continuing, then in every such case the Trustee or the Holders of not less than 25% in aggregate principal amount of all the securities then Outstanding (treated as one class) may declare the principal amount (or, if any such Securities are original Issue Discount Securities, such portion of the principal amount as may be specified in the terms thereof) of and accrued interest, if any, or, all of the Securities to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the Holders) and upon any such declaration such principal amount (or specified portion thereof) and accrued interest, if any, 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 aggregate principal amount of the Securities of that series (or of all the Securities, as the case may be) then Outstanding, 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 (or of all the Securities, as the case may be); (B) the principal of (and premium, if any, on) any securities of that series (or of all the Securities, as the case may be) which have become due otherwise than by such declaration of acceleration and 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 -42- 49 at the rate or rates prescribed therefor in such Securities; and (D) 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 (2) all Events of Default, other than the non-payment 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 6.04. No such rescission shall affect any subsequent default or impair any right consequent thereon. Section 6.03. 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 of the Securities of any series when such interest becomes due and payable and such default continues for a period of 30 days, or (2) default is made in the payment of the principal of (or premium, if any, on) the Securities of such series at the Maturity thereof, the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of the Securities of such series, the whole amount then due and payable on all Securities of such series for principal (and premium, if any) or interest, as the case may be, 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, 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. -43- 50 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 collect the money 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, wherever situated. If an Event of Default with respect to Securities 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 Securities 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 6.04. Waiver of Past Defaults. Prior to the declaration of acceleration of the Securities of any series as provided in Section 6.02, the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities of such series may on behalf of the Holders of all the Securities of such series waive any past default or Event of Default described in clause (1), (2), (3), (4) or (8) of Section 6.01 (or, in the case of an Event of Default specified in clause (5), (6) or (7) of Section 6.01, the Holders of Securities of a majority in principal amount of all the Securities then Outstanding (treated as one class) may waive any such default or Event of Default), and its consequences, except a default (1) in the payment of the principal of (or premium, if any) or interest on any Security, 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 affected. -44- 51 Upon any such waiver, such default shall cease to exist, and any Event of Default 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 6.05. Control by Majority. The Holders of a majority in aggregate principal amount of the outstanding Securities of all series affected (treated as one class) 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 it 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, and (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. Section 6.06. Limitation on Suits. No Holder of any Security of any series shall have the 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) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that series; (2) the Holders of not less than 25% in aggregate principal amount of the Securities of that series (or, in the case of any proceeding relating to or arising under clause (5), (6) or (7) of Section 6.01, 25% in aggregate principal amount of all Securities) Outstanding 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 -45- 52 and liabilities to be incurred in compliance with such request; (4) the Trustee for 90 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 90-day period pursuant to Section 6.05; 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 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 6.07. Rights of Holders to Receive Payment. Notwithstanding any other provision of this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of, premium, if any, and (subject to Section 2.06) interest on such Security on the Stated Maturity or Maturities expressed in such Security, (or, in the case of redemption, on the Redemption Date) and to bring suit for the enforcement of any such payment, and such rights shall not be impaired or affected without the consent of such Holder. Section 6.08. Trustee May Enforce Claims Without Possession of Securities. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities 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, be -46- 53 for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. Section 6.09. 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 of 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 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 7.07. 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 -47- 54 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 6.10. Priorities. If the Trustee collects any money pursuant to this Article, it shall be applied in the following order, at the date or dates fixed by the Trustee and, in the 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 7.07; SECOND: to the payment of the amounts then due and unpaid for principal of, 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, premium, if any, and interest, respectively; and THIRD: to the payment of the remainder, if any, to the Company, its successors or assigns, or whomsoever may lawfully be entitled thereto, or as a court of competent jurisdiction may determine. The Trustee may fix a record date for any such payment to Holders of any Security. Section 6.11. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed that 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, a court in its discretion may require the filing by any party litigant in the suit, other than the Trustee, of an undertaking to pay the costs of the suit, and the court in -48- 55 its discretion may 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 the party litigant. This Section does not apply to any suit instituted by the Company, any suit instituted by the Trustee, any suit instituted by a Holder pursuant to Section 6.07 or any suit instituted by Holders of more than 25% in aggregate principal amount of Securities of any series (or, in the case of any suit relating to or arising under clause (5), (6) or (7) of Section 6.01, 25% in aggregate principal amount of all Securities) Outstanding. ARTICLE SEVEN. TRUSTEE Section 7.01. Duties of Trustee. (a) If an Event of Default with respect to Securities of any series has occurred and is continuing, the Trustee shall with respect to the Securities of such series exercise such of its rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default with respect to Securities of any series: (1) The Trustee undertakes to perform only such duties as are specifically set forth in this Indentures, and no implied covenants or obligations shall be read into this Indenture against the Trustee. (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. However, the Trustee shall be under a duty to examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent -49- 56 action, its own negligent failure to act, or its own willful misconduct, except that: (1) This paragraph (c) does not limit the effect of paragraph (b) 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 is proved that the Trustee was negligent in ascertaining the pertinent facts. (3) The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction of the Holders of a majority in aggregate principal amount of the Outstanding Securities of any series, determined as provided in Section 6.05 or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities of such series. (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) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section. (e) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. Section 7.02. Rights of Trustee. Subject to the provisions of Section 7.01: (a) the Trustee may relay and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, -50- 57 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 right 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; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not -51- 58 be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. Section 7.03. Individual Rights of Trustee. The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 7.11 and 7.12, may otherwise deal with the Company or an Affiliate with the same rights it would have if it were not Trustee. Section 7.04. Trustee's Disclaimer. The recitals contained herein and in the Securities, except in the Trustee's certificates of authentication, shall be taken as the statement of the Company, and the Trustee or any Authenticating Agent assumes no responsibility for their correctness. The Trustee makes no representation as to the validity or sufficiency of this Indenture or of the securities. The Trustee or any Authenticating Agent shall not be accountable for the Company's use or application of the proceeds from the Securities. Section 7.05. Notice of Default. Within 90 days after the occurrence of any default hereunder with respect to the Securities of any series, the Trustee shall transmit by mail to all Holders of Securities of such series, as their names and addresses appear in the Security Register, notice of such default hereunder known to the Trustee, 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; and provided, further, that in the case of any default of the character specified in clause (4) of Section 6.01 with respect to Securities of such series, no such notice to -52- 59 Holders shall be given until at least 30 days after the occurrence thereof. Section 7.06. Reports by Trustee to Holders. The Trustee shall prepare and forward reports to all Holders as provided in Section 10.03. Section 7.07. Compensation and Indemnity. The Company shall pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder. The Trustee's compensation shall not be limited by any law on compensation of a Trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture. Such expenses may include the reasonable compensation and out-of-pocket expenses of the Trustee's agents and counsel. Except as otherwise provided in this Section 7.07, the Company shall indemnify the Trustee against any loss, liability or expense 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. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement without its consent. The Company need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee through negligence or bad faith. To secure the Company's payment obligations in this Section 7.07, the Trustee shall have a lien prior to the Securities, on all money or property held or collected by the Trustee, except that held in trust to pay the principal of, premium, if any, and interest on, particular Securities. -53- 60 When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(6) or (7) occurs, such expenses and compensation of the Trustee for such services are intended to constitute expenses of administration under any Bankruptcy Law. Section 7.08. Replacement of Trustee. (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 7.13. (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 require by Section 7.13 shall not have been delivered to the 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 aggregate 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 7.12 (a) after written request therefor by the Company or by any Holder who has been a bona fide Holder of Security for at least six months, or (2) the Trustee shall cease to be eligible under Section 7.10 and shall fail to resign after written request therefor by the Company or by any such Holder, 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 -54- 61 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 6.11, 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 Trustee for any cause, with respect to the Securities of one or more series, the Company, by a Board Resolution, 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 7.13. 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 aggregate principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 7.13, 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 7.13, 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. -55- 62 (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 mailing written notice of such event by first-class mail, postage prepaid, to all Holders of Securities of such series as their names and addresses appear in the Security Register. 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. If at the time a successor to the Trustee succeeds to the trusts created by this Indenture any of the Securities shall have been authenticated but not delivered, the successor to the Trustee may adopt the certificate of authentication of any predecessor Trustee and deliver the Securities so authenticated. If at that time any of the Securities shall not have been authenticated, any successor to the Trustee may authenticate the Securities either in the name of any predecessor Trustee hereunder or in the name of the successor Trustee. In all such cases the certificate of authentication shall have the same force and effect which the provisions of the Securities or this Indenture provide that certificates of authentication of the Trustee shall have, except that the right to adopt the certificate of authentication of any predecessor Trustee or to authenticate Securities in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation. Section 7.09. Successor Trustee by Merger, etc. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all 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. Section 7.10. Eligibility. There shall at all times be a Trustee hereunder which shall be a corporation organized and doing business under the -56- 63 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 and having its Corporate Trust Office in the United States. 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 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 7.11. 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 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 months' 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 -57- 64 thereof, or otherwise, after the beginning of such four months' 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 months' 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 months' 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 months' period for property held as security at the time of such -58- 65 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 -59- 66 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 months' 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 months' 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 obligation to account, if such Trustee had continued as Trustee, occurred after the beginning of such four months' 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; -60- 67 (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 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 -61- 68 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 of Title 11 of the United States Code. Section 7.12. Conflicts of Interest. (a) If the Trustee has or shall acquire any conflicting interest, as defined in this Section, with respect to the Securities 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 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 by mail to all Holders of Securities of that series, as their names and addresses appear in the Security Register, notice of such failure. (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 -62- 69 (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 Indenture between the Company and Continental Illinois National dank and Trust Company of Chicago, as trustee, dated as of February 1, 1948, as supplemented by Supplemental Indentures dated as of January 1, 1975, January 1, 1976, April 1, 1978, and April 1, 1980, pursuant to which the Company issued its 9 7/8%, 9%, 8 1/2% and 12% Sinking Fund Debentures due January 1, 1995, January 1, 1996, April 1, 1998 and April 1, 2000, and the Indenture between the Company and Continental Illinois National Bank and Trust Company of Chicago, as trustee, dated as of October 1, 1982, pursuant to which the company issued its 13% Sinking Fund Debentures due October 1, 2002, or any other 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 TIA, unless the Commission shall have found and declared by order pursuant to Section 305 (b) or Section 307(c) of the TIA that differences exist between the provisions of this Indenture with respect to Securities of that series and one or sore 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 -63- 70 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 such 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 office, 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 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, -64- 71 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 -65- 72 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 -66- 73 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 a 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 incorporate 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. -67- 74 (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 a "person" in this paragraph) means such amount of the outstanding voting securities of such person as entitles 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; -68- 75 (ii) securities of an issuer 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 7.13. Acceptance of Appointment by Successor. (a) In case of the appointment hereunder of a successor Trustee with respect to all Securities, every such 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 -69- 76 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 co-trustees 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 -70- 77 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 is appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. Section 7.14. Appointment of Authenticating Agent. At any time when any of the Securities remain Outstanding 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 exchange, registration of transfer or partial redemption thereof or pursuant to Section 2.05, 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, 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. Each Authenticating Agent shall be acceptable to the Company and shall at all times 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 act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or State authority. 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 -71- 78 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 Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an 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 the 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 Securities 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 Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section, and the Trustee shall be entitled to be reimbursed for such payments, subject to the provisions of Section 7.07. 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 -72- 79 certificate of authentication, an alternate 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. CONTINENTAL ILLINOIS NATIONAL BANK AND TRUST COMPANY OF CHICAGO, as Trustee By -------------------------------------- as Authenticating Agent By -------------------------------------- Authorized Officer ARTICLE EIGHT. DISCHARGE OF INDENTURE Section 8.01. Satisfaction and Discharge of Indenture. This Indenture shall upon Company Request cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for), and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (1) either (A) all Securities theretofore authenticated and delivered (other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.05 and (ii) Securities 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 4.03) have been delivered to the Trustee for cancellation; or (B) all such Securities not theretofore delivered to the Trustee for cancellation -73- 80 (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 sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and interest to the date of such deposit (in the case of Securities 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, the obligations of the Company to the Trustee under Section 7.07, the obligations of the Trustee to any Authenticating Agent under Section 7.14 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 8.05 and the last paragraph of Section 4.03 shall survive. Section 8.02. Termination of Company's Obligations. Subject to Sections 8.03 and 8.04, the Company may terminate all of its obligations under this Indenture and the Securities with respect to the Securities of any series if -74- 81 the Company irrevocably deposits in trust with the Trustee money or U.S. Government Obligations the principal of and interest on which are sufficient (without reinvestment and assuming no tax liability will be imposed on the Trustee) to pay principal (and premium, if any) and interest on the Securities to Maturity or redemption, as the case may be. However, such termination shall not become effective until the later of the ninety-first day following such deposit or the first day on which there is not a continuing Event of Default described in Section 6.01(6) or 6.01(7) (without giving effect to the period of time set forth therein). Moreover, such termination shall not relieve the Company of its obligations under such Securities and this Indenture to pay when due the principal of (and premium, if any) and interest on the Securities if such Securities are not paid or not considered paid when due from the money or U.S. Government Obligations so deposited (and the proceeds thereof). The Company will make any necessary arrangements for the redemption of the Securities at a future date in accordance with Article Eleven. After a deposit is made in accordance with this Section 8.02 with respect to any series and the termination of obligations with respect to that series becomes effective: (a) the Trustee (with respect to that series only) and each Holder of the Securities of that series shall no longer be entitled to the benefit of and security under this Indenture except as provided in Section 8.03; and (b) the Trustee shall: (1) acknowledge in writing the termination of the Company's obligations with respect to the Securities of that series except for the surviving obligations provided in Section 8.03; and (2) execute, deliver and file any instrument necessary or appropriate to effect such termination and release of such obligations of the Company. -75- 82 Section 8.03. Certain Obligations Survive. The Company's obligations in Sections 2.03, 2.05, 2.06, 4.01, 4.02, 4.03, 7.07, 7.08, 7.09, 7.10 and Article Twelve shall survive until the Securities are no longer Outstanding. Thereafter, the Company's obligation in Section 7.07 shall survive. Section 8.04. Condition to Discharge. The Company shall not be entitled to deposit cash or U.S. Government Obligations with the Trustee and terminate its obligations with respect to any Securities in accordance with Section 8.02, unless the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that (i) the Holders of such Securities will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and termination and (ii) such Holders (and future Holders of such Securities) will be subject to tax in the same manner as if such deposit and termination had not occurred. Section 8.05. Application of Trust Money. Subject to the provisions of the last paragraph of Section 4.03, the Trustee shall hold in trust all money or U.S. Government Obligations deposited with it pursuant to this Article Eight. The Trustee shall apply the deposited money and the money from U.S. Government Obligations either directly or through any Paying Agent (including the Company acting as its own Paying Agent) and in accordance with this Indenture to the payment to the Persons entitled thereto of the principal of, premium, if any, and interest on, for whose payment such money has been deposited with the Trustee. The Trustee and each Paying Agent shall promptly pay to the Company upon Company Request any excess money or U.S. Government Obligations held by them at any time. ARTICLE NINE. SUPPLEMENTAL INDENTURES Section 9.01. Supplemental Indentures Without Consent of Holders. Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more -76- 83 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; or (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; or (3) to add any additional Events of Defaults; or (4) to add to or change any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the issuance of Securities in bearer form, registrable or not registrable as to principal, and with or without interest coupons; or (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 are no Securities outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision; or (6) to secure the Securities pursuant to the requirements of Section 4.07 or 5.02 or otherwise; or (7) to establish the form or terms of Securities of any series as permitted by Sections 11.01 and 2.01; or (8) 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 7.13(b); or -77- 84 (9) to cure any ambiguity, to correct or supplement any provision herein which may be 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 (10) to provide for the issuance under this Indenture of Securities of any series payable as to principal or premium, if any, or interest in any foreign currency or currencies (including without limitation European Currency Units), to provide for the payment for Securities of any series with any such currency or currencies and, if the currency for which Securities of any series may be purchased, or in which the principal of or any interest thereon may be payable, is at the purchaser's election, then to provide for the manner in which any such election may be made, and to make all appropriate changes for any such purpose. Section 9.02. Supplemental Indentures With Consent of Holders. With the consent of the Holders of not less than 66 2/3% in aggregate principal amount of the Outstanding Securities of all series affected by such supplemental indenture (treated as one class), by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by 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 each 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 reduce the amount of the principal of an original Issue Discount Security that -78- 85 would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 6.02, or change any Place of Payment where, or the coin or currency or composite currency 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), or (2) reduce the percentage in aggregate principal amount of the Outstanding Securities of any series or of all series (treated as one class), as the case may be, 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 the Indenture; or (3) modify any of the provisions of this Section, Section 4.12 or Section 6.04, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby, provided, however, that 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 4.12, or the deletion of this proviso, in accordance with the requirements of Sections 7.13(b) and 9.01(8). 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. -79- 86 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 7.01) 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 or immunities 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 TIA 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 and of like tenor. -80- 87 ARTICLE TEN. HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY Section 10.01. Company to Furnish Trustee Names and Addresses of Holders. The Company will furnish or cause to be furnished to the Trustee (a) semi-annually, not later than January 15 and July 15 of each year, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of the preceding January 1 or July 1, 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 as of a date not more than, 15 days prior to the time such list is furnished; provided that if and so long as the Trustee shall be the Security Registrar, such list need not be furnished. Section 10.02. 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 contained in the most recent list furnished to the Trustee as provided in Section 10.01 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar. The Trustee may destroy any list furnished to it as provided in Section 10.01 upon receipt of a new list so furnished. (b) If three or more Holders (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 for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders with respect to their rights under this Indenture or under the Securities and is accompanied by a copy of the form of proxy or other communication which such applicants proposed to transmit, then the Trustee shall, within five business -81- 88 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 10.02(a), or (ii) inform such applicants as to the approximate number of Holders whose names and addresses appear in the information preserved at the time by the Trustee in accordance with Section 10.02(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 whose name and address appear in the information preserved at the time by the Trustee in accordance with Section 10.02(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 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 to 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, by receiving and holding the same, agrees with the Company and the Trustee -82- 89 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 10.02(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 10.02(b). Section 10.03. Reports by Trustee. (a) On or before August 1 in each year following the date hereof, the Trustee shall transmit by mail to all Holders, as their names and addresses appear in the Security Register, a brief report dated as of the next preceding June 1 with respect to: (1) its eligibility under Section 7.10 and its qualifications under Section 7.12, 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 7.13(b)(2), (3), (4) or (6); -83- 90 (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 7.02. (b) The Trustee shall transmit by mail to all Holders, as their names and addresses appear in the Security Register, 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. Section 10.04. 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, -84- 91 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 all Holders, as their names and addresses appear in the Security Register, within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to paragraphs (1) and (2) of this Section as may be required by rules and regulations prescribed from time to time by the Commission ARTICLE ELEVEN. SECURITY FORMS Section 11.01. Forms Generally. The Securities of each series shall be in substantially the form set forth in this Article, or in such other 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 -85- 92 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, as evidenced by their execution of the Securities. If the form of Securities of any series is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action 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 2.02 for the authentication and delivery of such Securities. The Trustee's certificates of authentication shall be in substantially the form set forth in this Article. The definitive Securities 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, as evidenced by their execution of such Securities. Section 11.02. Form of Face of Security. [If the Security is an Original Issue Discount Security, insert -- FOR PURPOSES OF SECTIONS 1273 AND 1275 OF THE INTERNAL REVENUE CODE, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ON THIS SECURITY IS % OF ITS PRINCIPAL AMOUNT, THE ISSUE DATE IS , 19 . THE YIELD TO MATURITY IS %. THE METHOD USED TO DETERMINE THE YIELD IS THE METHOD AND THE AMOUNT OF ORIGINAL ISSUE DISCOUNT APPLICABLE TO THE SHORT ACCRUAL PERIOD FROM THE DATE OF ISSUANCE OF THIS SECURITY TO , 19 IS % OF THE PRINCIPAL AMOUNT OF THIS SECURITY.] K N ENERGY, INC. [Insert Title of Securities] No. $ K N Energy, Inc., a corporation duly organized and existing under the laws of Kansas (herein called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to , or registered assigns, the principal sum of -86- 93 Dollars on [if the Security is to bear interest prior to Maturity, insert -- , and to pay interest thereon from or from the most recent Interest Payment Date to which interest has been paid or duly provided for, [semi-annually in arrears on and in each year] [annually in arrears on in each year], commencing , at the rate of % per annum, until the principal hereof is paid or made available for payment [if applicable, insert -- , and (to the extent that the payment of such interest shall be legally enforceable) at the rate of % per annum on any overdue principal and premium, if any, and on any overdue installment of interest]. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be [ or ] (whether or not a Business Day) [,as the case may be,] next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture]. [If the Security is not to bear interest prior to Maturity insert -- The principal of this Security shall not bear interest except in the case of a default in payment of principal upon acceleration, upon redemption or at Stated maturity and in such case the overdue principal of this Security shall bear interest at the rate of % per annum (to the extent that the payment of such interest shall be legally enforceable), which shall accrue from the date of such default in payment to the date payment of such principal has been made or duly provided for. Interest on any overdue principal shall be payable on demand. Any such interest on -87- 94 any overdue principal that is not so paid on demand shall bear interest at the rate of % per annum (to the extent that the payment of such interest shall be legally enforceable), which shall accrue from the date of such demand for payment to the date payment of such interest has been made or duly provided for, and such interest shall also be payable on demand.] Payment of the principal of (and premium, if any) and if applicable insert -- any such] interest on this Security will be made at the office or agency of the Company maintained for that purpose in _______________, [insert place of payment and, if applicable, also insert -- or, at the option of the holder hereof, at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York, State of New York] in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts [if applicable, insert - -- ; provided however, that at the option of the Company payment of interest may be made by check mailed on or before the due date to the address of the Person entitled thereto as such address shall appear in the Security Register or by wire transfer to an account designated by such person.] Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. -88- 95 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. Dated: K N ENERGY, INC. By ---------------------------------- ATTEST: - -------------------------------- Secretary Section 11.03. Form of Reverse of Security. This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of September 1, 1988 (herein called the "Indenture"), between the Company and Continental Illinois National Bank and Trust Company of Chicago, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof [, limited in aggregate principal amount to $ ]. [If applicable, insert -- The Securities of this series are not redeemable, in whole or in part, prior to the Stated Maturity thereof.] [If applicable, insert -- The Securities of this series are subject to redemption upon not less than 30 days' notice by mail, [if applicable, insert -- (1) on in any year commencing with the year and ending with the year through operation of the sinking fund for this series at a Redemption Price equal to 100% of the principal amount, and (2)] at any time [on or after , 19 ], as a whole or in part, at the election of the Company, at the -89- 96 following Redemption Prices (expressed as percentages of the principal amount): If redeemed [on or before , %, and if redeemed] during the 12-month period beginning of the years indicated, Redemption Redemption Year Price Year Price - ---- ---------- ---- ---------- and thereafter at a Redemption Price equal to % of the principal amount, together in the case of any such redemption [if applicable, insert -- (whether through operation of the sinking fund or otherwise)] with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture.] [If applicable insert -- The Securities of this series are subject to redemption upon not less than 30 days' notice by mail, (1) on in any year commencing with the year and ending with the year through operation of the sinking fund for this series at the Redemption Prices for redemption through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below, and (2) at any time [on or after ], as a whole or in part, at the election of the Company, at the Redemption Prices for redemption otherwise than through operation of the sinking fund(expressed as percentages of the principal amount) set forth in the table below: If redeemed during the 12-month period beginning of the years indicated, -90- 97 Redemption Price Redemption Price For Redemption For Redemption Otherwise Through Operation Than Through Operation Year of the Sinking Fund of the Sinking Fund - ---- ------------------- ------------------------ and thereafter at a Redemption Price equal to % of the principal amount, together in the case of any such redemption (whether through operation of the sinking fund or otherwise) with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture.] [Notwithstanding the foregoing, the Company may not, prior to , redeem any Securities of this series as contemplated by [Clause (2) of] the preceding paragraph as a part of any refunding operation by the application of the proceeds of moneys borrowed having an interest cost to the Company (calculated in accordance with generally accepted financial practice) of less than % per annum.) [The sinking fund for this series provides for the redemption on in each year beginning with the year and ending with the year of [not less than] $ [("mandatory sinking fund") and not more than $ ] aggregate principal amount of Securities of this series. [Securities of this series acquired or redeemed by the Company otherwise than through (mandatory) sinking fund payments may be credited against subsequent [mandatory] sinking fund payments otherwise required to be made.] In the event of redemption of this Security in part only, a new Security or Securities of this series and of like -91- 98 tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. [If the Security is not an Original Issue Discount Security. -- If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of and accrued interest on the securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.] [If the Security is an Original Issue Discount Security. -- If an Event of Default with respect to securities of this series shall occur and be continuing, an amount of principal of and accrued interest on the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. Such amount shall be equal to -- insert formula for determining the amount.] Upon payment (i) of the amount of principal and accrued interest, if any, so declared due and payable and (ii) of interest on any overdue principal and overdue interest (in each case to the extent that the payment of such interest shall be legally enforceable), all of the Company's obligations in respect of the payment of the principal of and interest, if any, on the Securities of this series shall terminate. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of 66 2/3% in principal amount of the Securities at the time Outstanding of all series to be affected (treated as one class). The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series (or, in some cases, of all of the Securities) at the time Outstanding, on behalf of the Holders of all Securities of such series (or of all of the securities, as the case may be), to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in -92- 99 lieu hereof, whether or not notation of such consent or waiver is made upon this Security. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of (and premium, if any) and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Securities of this series are issuable only in registered form without coupons in denominations of $_______________ and any integral multiple thereof [except as such amounts may be adjusted following a partial redemption and related selections under Article Three of the Indenture]. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and -93- 100 neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. Section 11.04. Form of Trustee's Certificate of Authentication. This is one of the Securities of the series designated therein referred to in the within mentioned Indenture. CONTINENTAL ILLINOIS NATIONAL BANK AND TRUST COMPANY OF CHICAGO, as Trustee By ---------------------------- Authorized Officer 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 2.01 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. -94- 101 Section 12.02. Satisfaction of Sinking Fund Payments with Securities. The Company (1) may deliver Outstanding Securities 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 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 45 days prior to each sinking fund payment date for any series of Securities, the Company will deliver to the Trustee a Company Order specifying the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that series, if 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 of that series pursuant to Section 12.02 and will also deliver to the Trustee any Securities 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 3.03 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 3.04. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 3.06 and 3.07. -95- 102 ARTICLE THIRTEEN. MEETINGS OF HOLDERS OF SECURITIES Section 13.01. Purposes of Meetings. A meeting of Holders of Securities of any or all series, as the case may be, may be called at any time and from time to time pursuant to the terms of this Article Thirteen for any of the following purposes: (1) to give any notice to the Company or to the Trustee, or to give any directions to the Trustee, or to consent to the waiving of any default hereunder and its consequences, or to take any other action authorized to be taken by Holders of Securities of any or all series, as the case may be, pursuant to the provisions of Article Six; (2) to remove the Trustee and appoint a successor trustee pursuant to the provisions of Article Seven; (3) to consent to the execution of an indenture or indentures supplemental hereto pursuant to the provisions of Section 9.02; or (4) to take any other action authorized to be taken by or on behalf of the Holders of a percentage in aggregate principal amount of the Securities of any or all series, as the case may be, under any other provisions of this Indenture or under applicable law. 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 or all series, as the case may be, for any purpose specified in Section 13.01, to be held at such time and at such place in the United States as the Trustee shall determine. Notice of every meeting of Holders of Securities of any or all series, as the case may be, 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 14.02, not less than 21 nor more than 180 days prior to the date fixed for the meeting. -96- 103 (b) In case at any time the Company, pursuant to a Board Resolution, or the Holders of at least 10% in principal amount of the Outstanding Securities of any or all series, as the case may be, shall have requested the Trustee to call a meeting of the Holders of such Securities 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 mailed the notice of such meeting within 21 days after receipt of such request, then the Company or the Holders of such Securities in the amount above specified, as the case may be, may determine the time and the place in the United States 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 the entitled to vote at any meeting of Holders of Securities of any series, a Person shall be (1) a Holder of one or more Outstanding Securities of the series with respect to which the meeting is called or, should the meeting be called with respect to the Securities of all series, a Holder of one or more Securities of any series, or (2) a Person appointed by an instrument in writing as proxy for a Holder or Holders of one or more such Outstanding Securities. The only Persons who shall be entitled to be present or to speak at any meeting of Holders of Securities 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 Securities of a series (or of all the Securities, as the case may be) Outstanding 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 not less than 66 2/3% in principal amount of the Securities of a series (or of all the Securities, as the case may be) Outstanding, the Persons entitled to vote 66 2/3% in principal amount of the Securities of such series (or of all the Securities, as the case may be) Outstanding shall constitute a quorum. In the absence of a quorum within -97- 104 30 minutes of the time appointed for any such meeting, the meeting shall, if convened at the request of Holders of such Securities, 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 shall state expressly the percentage, as provided above, of the principal amount of the Securities of such series (or of all the Securities, as the case may be) Outstanding which shall constitute a quorum. Except as limited by the proviso to Section 9.02, any resolution presented to a meeting or adjourned meeting duly reconvened at which a quorum is present as aforesaid may be adopted only by the affirmative vote of the Holders of a majority in principal amount of the Securities of that series (or of all the Securities, as the case may be) Outstanding: provided, however, that, except as limited by the proviso to Section 9.02, any resolution with respect to any consent or waiver which this Indenture expressly provides may be given by the Holders of not less than 66 2/3% in principal amount of the Securities of a series (or of all the Securities, as the case may be) Outstanding may be adopted at a meeting or an adjourned meeting duly convened and at which a quorum is present as aforesaid only by the affirmative vote of the Holders of 66 2/3% in principal amount of such Outstanding securities; and provided, further, that, except as limited by the proviso to Section 9.02, 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, which is less than a majority, in principal amount of the Securities of a series (or of all the Securities, as the case may be) Outstanding 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 such Outstanding Securities. -98- 105 Any resolution passed or decision taken at any meeting of Holders of Securities of any or all series, as the case may be, duly held in accordance with this Section shall be binding on all the Holders of such Securities 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 in regard to proof of the holding of Securities of the series with respect to which the meeting is called 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 14.07 and the appointment of any proxy shall be proved in the manner specified in Section 14.07. 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 14.07 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 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 of 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 or proxy entitled to vote as provided in this Article shall be entitled to one vote for each $1,000 principal amount of Securities held or represented by him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and -99- 106 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 or proxy. (d) Any meeting of Holders of Securities 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 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 shall be by written ballots on which shall be subscribed the signatures of the Holders of Securities or proxies entitled to vote thereat and the principal amounts and serial numbers. of the Outstanding securities held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in triplicate of all votes cast at the meeting. A record, at least in triplicate, of the proceedings of each meeting of Holders of Securities 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. Section 13.07. Written Consent in Lieu of Meeting of Holders. The written authorization or consent of the requisite percentage of Holders herein provided, entitled to vote at -100- 107 any such meeting, evidenced as provided in Section 14.07 and filed with the Trustee, shall be effective in lieu of a meeting of Holders, with respect to any matter provided for in this Article Thirteen. ARTICLE FOURTEEN. MISCELLANEOUS Section 14.01. Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies, or conflicts with another provision hereof which is required to be included in this Indenture by the TIA, the required provision shall control. Section 14.02. Notices. (a) 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 sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, Attention: Corporate Trust Department, 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 P.O. Box 15265, Lakewood, Colorado 80215, or at any other address previously furnished in writing to the Trustee by the Company. The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. (b) Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date, and not earlier -101- 108 than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. (c) In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification, for every purpose hereunder. Section 14.03. No Recourse to Certain Persons. No recourse under or upon any obligation, covenant or agreement of this Indenture, or of any Security or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Issuer or of any successor corporation, either directly or through the Issuer or such successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that this Indenture and the obligations issued hereunder are solely corporate obligations, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, stockholders, officers or directors, as such, past, present or future, of the Issuer or of any successor corporation, or any of them, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Securities or implied therefrom: and that any and all such personal liability, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, stockholder, officer or director, as such, -102- 109 because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Securities or implied therefrom, are hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issue of such Securities. Section 14.04. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee: (1) an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with, and (2) 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. Section 14.05. Statements Required in Certificate or Opinion. Each Officers' Certificate or Opinion of Counsel with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that the Persons signing such certificate or opinion has read such covenant or condition and any 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; -103- 110 (3) a statement that, in the opinion of such Person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with. Section 14.06. 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. Section 14.07. 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 agents, duly appointed in writing; and, except as herein otherwise -104- 111 expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 7.01) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to 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 ownership of Securities shall be proved by the Security Register. (d) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security 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. Section 14.08. Governing Law. This Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of New York. -105- 112 Section 14.09. No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or a Subsidiary. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. Section 14.10. 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 14.11. Legal Holidays. 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) 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, provided that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be. Section 14.12. Severability Clause. In case any provision in this Indenture or in the Securities 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 14.13. Benefits of Indenture. Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture. -106- 113 Section 14.14. Successors. All covenants and agreements of the Company in this Indenture and the Securities shall bind its successors and assigns whether so expressed or not. Section 14.15. Duplicate Originals. The parties may sign any number of copies of this Indenture. One signed copy shall be enough to prove this Indenture. -107- 114 SIGNATURES Dated: K N ENERGY, INC. September 23, 1988 By /s/ E.W. LUNDHAGEN --------------------------- Vice President (SEAL) ATTEST: /s/ ROBERT C. MCHUGH - ---------------------- Secretary Dated: CONTINENTAL ILLINOIS NATIONAL BANK AND TRUST COMPANY OF CHICAGO, TRUSTEE September 23, 1988 By /s/ [ILLEGIBLE] ------------------------- Vice President (SEAL) ATTEST: /s/ [ILLEGIBLE] - ---------------------- Trust Officer ================================================================================ EX-4.C 4 SECOND SUPPLEMENTAL INDENTURE 1 EXHIBIT 4(c) - ------------------------------------------------------------------------------- K N ENERGY, INC. AND CONTINENTAL BANK, NATIONAL ASSOCIATION TRUSTEE. ---------- SECOND SUPPLEMENTAL INDENTURE ---------- Dated as of December 15, 1992 Supplementing the Indenture dated as of September 1, 1988 - ------------------------------------------------------------------------------- 2 THIS SECOND SUPPLEMENTAL INDENTURE, dated as of December 15, 1992, between K N Energy, Inc., a Kansas corporation (the "Company"), and Continental Bank, National Association, a national banking association (the "Trustee"), as Trustee under the Original Indenture referred to below, W I T N E S S E T H: WHEREAS, the Company has duly authorized the issuance from time to time of its unsecured debentures, notes or other evidences of indebtedness (the "Securities"), which are to be issued in one or more series; and the Company has heretofore made, executed and delivered to the Trustee its Indenture dated as of September 1, 1988 (such Indenture, as amended by the Trust Indenture Reform Act of 1990 and the First Supplemental Indenture dated as of January 15, 1992, being sometimes referred to herein as the "Original Indenture") pursuant to which the Securities are issuable; WHEREAS, Sections 2.01, 9.01(7) and 11.01 of the Original Indenture provide that the form or terms of any series of Securities may be established in an indenture supplemental thereto, and the Company desires to establish in this Second Supplemental Indenture both the form and terms of a series of Securities designated as its 7.27% Senior Notes due December 15, 2002 (the "Notes"); WHEREAS, Section 9.01 of Article Nine of the Original Indenture further provides that under certain conditions the Company and Trustee, may, without the consent of any Holders, from time to time and at any time, enter into an indenture or indentures supplemental thereto, for the purposes, inter alia, of adding to the covenants of the Company for the benefit of the Holders of all or any series of Securities, and adding any additional Events of Default, and the Company desires by means of this Second Supplemental Indenture to add to its covenants for the sole benefit of the Holders of the Notes and to add certain additional Events of Default, also solely for the benefit of such Holders; WHEREAS, all things necessary to authorize the execution and delivery of this Second Supplemental Indenture, to establish the Notes as provided for in this Second Supplemental Indenture, and to make the Original Indenture, as supplemented by this Second Supplemental Indenture (the Original Indenture, as so supplemented by this Second Supplemental Indenture, being sometimes referred to herein as the "Indenture"), a valid agreement of the Company, in accordance with its terms, have been done; NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH that for and in consideration of the premises and the purchase of the Notes by the Holders, the Company and the Trustee mutually covenant and agree, solely -2- 3 for the equal and proportionate benefit of the respective Holders from time to time of the Notes, as follows: ARTICLE 1 SUPPLEMENT OF THE ORIGINAL INDENTURE Section 1.1 SUPPLEMENT TO ARTICLE ONE OF THE ORIGINAL INDENTURE. Section 1.01 of the Original Indenture is supplemented by inserting therein, in alphabetical order, the following definitional paragraphs: "Assets" means any property of the Company or a Subsidiary used in businesses in which the Company and its Subsidiaries are engaged as of December 15, 1992. "Called Principal" means, with respect to any Note, the principal of such Note that is to be redeemed at the option of the Company or is declared to be immediately due and payable pursuant to the acceleration provisions of the Indenture, as the context requires. "Capitalization" means, with respect to any Material Subsidiary, the sum of (A) the total of the amounts set forth on the consolidated balance sheet of such Material Subsidiary and its Subsidiaries, prepared in accordance with generally accepted accounting principles as of the date of the most recent regularly prepared consolidated financial statements prior to the taking of any action for the purpose of which the determination is being made, as (a) the par or stated value of all outstanding capital stock of such Material Subsidiary, (b) capital in excess of par value, (c) retained earnings and (d) deferred income taxes and (B) the principal amount of Funded Indebtedness of such Material Subsidiary and its Subsidiaries computed on a consolidated basis as of the time of such determination. "Consolidated Assets" means the total amount of assets appearing on the consolidated balance sheet of the Company and its Subsidiaries, prepared in accordance with generally accepted accounting principles as of the date of the most recent regularly prepared consolidated financial statements prior to the taking of any action for the purposes of which the determination is being made. "Consolidated Capitalization" means the sum of (A) the total of the amounts set forth on the consolidated balance sheet of the Company and its Subsidiaries, prepared in accordance with generally accepted accounting principles as of the date of the most recent regularly prepared consolidated financial statements prior to the taking of any action for the purpose of which the determination is being made, as (a) the par or stated value of all outstanding capital stock of the Company, (b) capital in excess of par value, -3- 4 (c) retained earnings and (d) deferred income taxes and (B) the principal amount of Funded Indebtedness of the Company and its Subsidiaries computed on a consolidated basis as of the time of such determination. "Discounted Value" means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective Stated Maturities to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal. "Executive Officer" means the Chairman, any Vice Chairman, the President, the Chief Financial Officer and the General Counsel of the Company, and, to the extent not included in the foregoing, the chief executive officer, the chief operating officer and the chief accounting officer of the Company. "Material Subsidiary" means (i) any Subsidiary the assets of which constitute 15% or more of Consolidated Assets; (ii) Northern Gas Company, a Wyoming corporation; and (iii) Rocky Mountain Natural Gas Company, a Colorado corporation. "Notes" means the series of the Securities denominated as the 7.27% Senior Notes due December 15, 1992. "Note Agreement" means the Note Agreement dated as of December 15, 1992 among the Company, The Prudential Insurance Company of America and Prudential Reinsurance Company, as the same may be amended or supplemented from time to time. "Reinvestment Yield" means, with respect to the Called Principal of any Note, the yield to maturity implied by (i) the yields reported, as of 10:00 a.m. (New York City time) on the Business Day next preceding the Settlement Date with respect to such Called Principal, on the display designated as "Page 678" on the Telerate Service (or such other display as may replace Page 678 on the Telerate Service) for actively traded U.S. Treasury securities having a maturity equal to the Remaining Average life of such Called Principal as of such Settlement Date, or if such yields shall not be reported as of such time or the yields reported as of such time shall not be ascertainable, (ii) the Treasury Constant Maturity Series yields reported, for the latest day for which such yields shall have been so reported as of the Business Day next preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. Such implied yield shall be determined, if necessary, by (a) converting -4- 5 U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between yields reported for various maturities. "Remaining Average Life" means, with respect to the Called Principal of any Note, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) each Remaining Scheduled Payment of such Called Principal (but not of interest thereon) by (b) the number of years (calculated to the nearest one-twelfth year) which will elapse between the Settlement Date with respect to such Called Principal and the Stated Maturity of such Remaining Scheduled Payment. "Remaining Scheduled Payments" means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that would be due on or after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its Stated Maturity. "Settlement Date" means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be redeemed at the option of the Company or is declared to be immediately due and payable pursuant to the acceleration provisions of the Indenture, as the context requires. "Stock" means any capital stock of any corporation or any partnership interest of any partnership (limited or general), any joint venture interest in any joint venture, and any similar interests. "Tangible Net Worth" means the total assets of the Company and its Subsidiaries appearing on a consolidated balance sheet prepared in accordance with generally accepted accounting principles (exclusive of goodwill, patents, trademarks, trade names, organization expense, treasury stock, unamortized debt discount and premium, deferred charges and other like intangibles) less all liabilities (including deferred income taxes and subordinated liabilities). "Yield-Maintenance Amount" means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Called Principal of such Note over the sum of (i) such Called Principal plus (ii) interest accrued thereon as of (including interest due on) the Settlement Date with respect to such Called Principal. The Yield Maintenance Amount shall in no event be less than zero. -5- 6 Section 1.2 SUPPLEMENT TO ARTICLE FOUR OF THE ORIGINAL INDENTURE. Article Four of the Original Indenture is supplemented by inserting the following Sections at the end thereof: Section 4.13. Maintain Business. The Company will, and will cause each of its Subsidiaries to, carry on and conduct its respective business in substantially the same manner and in substantially the same general lines of business as it is presently conducted, including without limitation the transmission and retail distribution of natural gas. Section 4.14. Maintain Insurance. The Company will maintain or cause to be maintained with, in the good faith judgment of the Company, financially sound and reputable insurers, or through self-insurance, insurance with respect to its properties and business and the properties and businesses of its Subsidiaries against loss or damage of the kinds customarily insured against by corporations of established reputation engaged in the same or similar business and similarly situated, of such types and in such amounts as are customarily carried under similar circumstances by such other corporations. Such insurance may include self-insurance or be subject to co-insurance, deductibility or similar clauses which, in effect, result in self-insurance of certain losses, provided that such self-insurance is in accord with the approved practices of corporations similarly situated and adequate insurance reserves are maintained in connection with such self-insurance, and, notwithstanding the foregoing provisions of this Section 4.14 the Company or any Subsidiary may effect workers' compensation or similar insurance in respect of operations in any state or other jurisdiction either through an insurance fund operated by such state or other jurisdiction or by causing to be maintained a system or systems of self-insurance in accord with applicable laws. Section 4.15. Funded Indebtedness. The Company will not incur, and will not permit any Subsidiary to incur, any Funded Indebtedness unless the aggregate amount of Funded Indebtedness of the Company and its Subsidiaries computed on a consolidated basis immediately thereafter (after giving effect to the substantially concurrent use of proceeds of such Funded Indebtedness) will not exceed an amount equal to 65% of Consolidated Capitalization. Section 4.16. Subsidiary Debt. The Company will not permit any of its Material Subsidiaries to incur any Funded Indebtedness unless the aggregate amount of Funded Indebtedness of such Material Subsidiary and its Subsidiaries immediately thereafter (after giving effect to the -6- 7 substantially concurrent use of proceeds of such Funded Indebtedness) will not exceed an amount equal to 65% of such Material Subsidiary's Capitalization. Further, the Company will not permit any of its Subsidiaries to incur any Funded Indebtedness unless the aggregate amount of Funded Indebtedness of all of the Company's Subsidiaries immediately thereafter (after giving effect to the substantially concurrent use of proceeds of such Funded Indebtedness) will not exceed an amount equal to 51% of the aggregate amount of Funded Indebtedness of the Company and its Subsidiaries. For purposes of this Section 4.16, the term "Funded Indebtedness" excludes any Funded Indebtedness of the Company to its Subsidiaries or any Funded Indebtedness of a Subsidiary to the Company or another Subsidiary. Section 4.17. Net Worth. If at any time the rating of any of the long term senior debt of the Company is reduced by either Moody's Investors Service or Standard & Poor's Corporation to a rating below Baa2 or BBB+, as applicable (or in the absence of such a rating by either Standard & Poor's Corporation or Moody's Investors Service, a rating comparable to Baa2 by another nationally recognized statistical rating organization) (any such event, a "Downgrade"), then the Company will not permit its Tangible Net Worth to be less than the greater of (i) $150,000,000 or (ii) an amount equal to 90% of the Company's Tangible Net Worth as of the fiscal year end next preceding the date of the Downgrade. Section 4.18. Sale of Assets. The Company will not, and will not permit any Subsidiary to, sell, transfer or otherwise dispose of, in a transaction or a series of substantially related transactions, Stock of a Subsidiary, property or other assets (including without limitation a disposition of the Stock of a Subsidiary, property or other assets pursuant to an order, judgment or decree of a court or governmental authority) with a fair market value of 20% or more of Consolidated Assets (other than any such disposition by a Subsidiary to the Company or by the Company or a Subsidiary to another Subsidiary), unless (i) said Stock, property or other assets are sold, transferred or otherwise disposed of for a consideration at least equal to the fair value thereof (as determined by the Board of Directors of the Company) and (ii) the proceeds of such asset disposition are applied to the defeasance or the payment of Funded Indebtedness of the Company or any Subsidiary, or used within twelve months of such asset disposition to purchase or invest in Assets. Section 4.19. Sale of Subsidiary Stock. Issuance of Stock by Subsidiaries. The Company will not, and will not permit any Subsidiary to, issue, sell or otherwise dispose of any Stock (either directly, or indirectly by -7- 8 the issuance of rights or options for, or securities convertible into, such Stock) of any Material Subsidiary (other than directors' qualifying shares), except to the Company or another Material Subsidiary, if, as a result of such issuance, sale or disposition (giving full effect to the exercise of any such rights, options or conversion rights) such Material Subsidiary would no longer qualify as a Subsidiary. Section 4.20. Waiver of Certain Covenants. The Company may omit in any particular instance to comply with any term, provision or condition set forth in Sections 4.13 through 4.19, inclusive, with respect to the Notes if before the time for such compliance the holders of at least 66 2/3% in aggregate principal amount of the Outstanding Notes 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 4.21. Premium on Certain Defaults. The Company will pay a premium on each of the Outstanding Notes equal to the Yield-Maintenance Amount, if any, in the event the Notes are declared to be due and payable immediately pursuant to Article Six as a result of any of the Events of Default referred to either in clauses (1)-(5) of Section 6.01 or in subclauses (a)-(e) of clause (8) thereof. Section 1.3 SUPPLEMENT TO ARTICLE SIX OF THE ORIGINAL INDENTURE. Section 6.01 of the Original Indenture is supplemented by inserting, as part of clause (8) thereof, the following subclauses: (a) default in the payment of any interest on any Note for more than 10 days after the date due; or (b) the Company or any Subsidiary defaults (whether as primary obligor or as guarantor or other surety) in any payment of principal of or interest on any Indebtedness (other than the Notes) beyond any period of grace provided with respect thereto, or the Company or any Subsidiary fails to perform or observe any other agreement, term or condition contained in any agreement under which any such Indebtedness is created (or if any other event thereunder or under any such agreement shall occur and be continuing) and the effect of such failure or other event is to cause, or to permit the holder or holders of such Indebtedness (or a trustee on behalf of such holder or holders) to cause, such Indebtedness to become -8- 9 due (or to be repurchased by the Company or any Subsidiary) prior to any Stated Maturity, provided that the aggregate amount of all Indebtedness as to which such a payment default shall occur and be continuing or such a failure or other event causing or permitting acceleration (or resale to the Company or any Subsidiary) shall occur and be continuing exceeds $10,000,000; provided, however, if any such payment default, failure or other event is cured by the Company or such Subsidiary or is waived by the specified percentage of holders of such Indebtedness entitled to so waive, then this Event of Default under this Indenture by reason of such default, failure or other event shall be deemed to have been cured; or (c) any representation or warranty made by the Company in or pursuant to the Note Agreement shall be false in any material respect on the date as of which made; or (d) the Company fails to perform or observe (i) any covenant contained in Section 4.15 through Section 4.19 or (ii) its covenant contained in paragraph 5 of the Note Agreement to obtain the prior approval of certain holders of the Notes to any instrument equally and ratably securing the Notes and any other indebtedness of the Company under the circumstances described in the initial paragraph of Section 4.07, but if any such failure under the Note Agreement is cured by the Company or is waived by the specified percentage of Holders of the Notes entitled to so waive thereunder, then this Event of Default under this Indenture by reason of such failure shall be deemed to have been cured; or (e) the Company fails to perform or observe any other covenant or agreement contained in Section 4.13 or 4.14 or in the Note Agreement and such failure shall not be remedied within 30 days after any Executive Officer obtains actual knowledge thereof, but if any such failure under the Note Agreement is cured by the Company or is waived by the specified percentage of Holders of the Notes entitled to so waive thereunder, then this Event of Default under this Indenture by reason of such failure shall be deemed to have been cured; or (f) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of any Material Subsidiary 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 any Material Subsidiary bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of any Material Subsidiary under any applicable Federal or State law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of any Material Subsidiary or of any substantial part of its property, or ordering the -9- 10 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 (g) the commencement by any Material Subsidiary 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 bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of any Material Subsidiary 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 any Material Subsidiary 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 any Material Subsidiary in furtherance of any such action; or (h) a final judgment in an amount in excess of $50,000,000 is rendered against the Company or any Material Subsidiary and, within 30 days after entry thereof, such judgment is not discharged or execution thereof stayed pending appeal, or within 30 days after the expiration of any such stay, such judgment is not discharged. ARTICLE 2 THE NOTES Section 2.1 FORM AND TERMS. In lieu of any form set forth in Sections 11.02 and 11.03 of the Original Indenture, the Notes shall be in the form of Exhibit A hereto. The terms of the Notes set forth in Exhibit A shall be part of the terms and provisions of this Second Supplemental Indenture as fully as if set forth herein. Section 2.2 DENOMINATIONS. The Notes shall be issuable in registered form without coupons in denominations of $100,000 and any integral multiple thereof, except as such amounts may be adjusted following a partial redemption and related selections of the Notes pursuant to Section 2.3 of this Second Supplemental Indenture. -10- 11 Section 2.3 SELECTION OF SECURITIES FOR PARTIAL REDEMPTION. If less than all the Notes are to be redeemed pursuant to either Article Three or Twelve of the Indenture, then, in lieu of the selection procedures described in the initial paragraph of Section 3.03 of the Indenture, the Trustee shall select for redemption not more than 45 days prior to the Redemption Date an equal proportion of the respective principal amounts of each of the Outstanding Notes (including, for purposes of this provision only, any Notes owned by the Company or any other obligor upon the Notes or any Affiliate of the Company or of such other obligor that have been purchased or otherwise acquired by it other than by redemption pursuant to such Article Three or Twelve). ARTICLE 3 REPRESENTATIONS OF THE COMPANY Section 3.1 AUTHORITY OF THE COMPANY. The Company is duly authorized to execute and deliver this Second Supplemental Indenture, and all corporate action on its part required for the execution and delivery of this Second Supplemental Indenture has been duly and effectively taken. Section 3.2 TRUTH OF RECITALS AND STATEMENTS. The Company warrants that the recitals of fact and statements contained in this Second Supplemental Indenture are true and correct, and that the recitals of fact and statements contained in all certificates and other documents furnished thereunder will be true and correct. ARTICLE 4 CONCERNING THE TRUSTEE Section 4.1 ACCEPTANCE OF TRUSTS. The Trustee accepts the trusts hereunder and agrees to perform the same, but only upon the terms and conditions set forth in the Original Indenture and in this Second Supplemental Indenture, to all of which the Company and the respective Holders of the Notes at any time hereafter outstanding agree by their acceptance thereof. Section 4.2 NO RESPONSIBILITY OF TRUSTEE FOR RECITALS, ETC. The recitals and statements contained in this Second Supplemental Indenture shall be taken as the recitals and statements of the Company, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representations as to the validity or sufficiency of this Second Supplemental Indenture, except that the Trustee is duly authorized to execute and deliver this Second Supplemental Indenture. -11- 12 ARTICLE 5 MISCELLANEOUS PROVISIONS Section 5.1 RELATION TO THE INDENTURE. The provisions of this Second Supplemental Indenture shall become effective immediately upon the execution and delivery hereof. This Second Supplemental Indenture and all the terms and provisions herein contained shall form a part of the Indenture as fully and with the same effect as if all such terms and provisions had been set forth in the Original Indenture; provided, however, such terms and provisions shall be so included in the Indenture solely for the benefit of the Holders of the Notes. The Original Indenture is hereby ratified and confirmed and shall remain and continue in full force and effect in accordance with the terms and provisions thereof, as supplemented by this Second Supplemental Indenture, and the Original Indenture and this Second Supplemental Indenture shall be read, taken and construed together as one instrument. Section 5.2 MEANING OF TERMS. Any term used in this Second Supplemental Indenture which is defined in the Original Indenture shall have the meaning specified in the Original Indenture, unless the context shall otherwise require. Section 5.3 COUNTERPARTS OF SECOND SUPPLEMENTAL INDENTURE. This Second Supplemental Indenture may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one instruments. Section 5.4 GOVERNING LAW. This Second Supplemental Indenture and the Notes shall be governed by and construed in accordance with the laws of the State of New York. -12- 13 IN WITNESS WHEREOF, K N Energy, Inc. has caused this Second Supplemental Indenture to be executed in its corporate name by one of its Vice Presidents and Continental Bank, National Association, has caused this Second Supplemental Indenture to be executed in its corporate name by one of its Vice Presidents or Trust Officers, all as of the date first above written. K N ENERGY, INC. By: /s/ E. Wayne Lundhagen ----------------------------------------- E. Wayne Lundhagen Vice President -- Finance & Accounting CONTINENTAL BANK, NATIONAL ASSOCIATION, Trustee By: /s/ A. H. Lenters ---------------------------------------- A. H. Lenters Vice President -13- EX-10.D 5 NONQUALIFIED DEFERRED COMPENSATION PLAN 1 EXHIBIT 10(d) K N ENERGY, INC. NONQUALIFIED DEFERRED COMPENSATION PLAN 2 K N ENERGY, INC. NONQUALIFIED DEFERRED COMPENSATION PLAN TABLE OF CONTENTS
Article Section Page ------- ------- ---- I Purpose and Effective Date . . . . . . . . . . . . . . . . . . . . . 1 1.01 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.02 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.03 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 II Definitions and Construction of the Plan Document . . . . . . . . . . 1 2.01 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2.02 Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2.03 Bookkeeping Account . . . . . . . . . . . . . . . . . . . . . . . . . 1 2.04 Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2.05 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2.06 Deferral Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 1 2.07 Deferred Compensation . . . . . . . . . . . . . . . . . . . . . . . . 1 2.08 Election Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2.09 Executive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.10 Named Fiduciary . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.11 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.12 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.13 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.14 Termination of Service . . . . . . . . . . . . . . . . . . . . . . . 2 2.15 Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.16 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.17 Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 III Eligibility and Participation . . . . . . . . . . . . . . . . . . . . 2 3.01 Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3.02 Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 IV Deferral of Compensation . . . . . . . . . . . . . . . . . . . . . . 3 4.01 Salary Deferral . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 4.02 Incentive Compensation Deferral . . . . . . . . . . . . . . . . . . . 3 4.03 Deferral Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 3 4.04 No Deferral Without Agreement . . . . . . . . . . . . . . . . . . . . 3 4.05 Duration of Deferral Agreement . . . . . . . . . . . . . . . . . . . 3 V Deferral Account and Crediting . . . . . . . . . . . . . . . . . . . 3 5.01 Bookkeeping Account . . . . . . . . . . . . . . . . . . . . . . . . . 3 5.02 Account Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . 3 5.03 Transfer Among Funds . . . . . . . . . . . . . . . . . . . . . . . . 4 5.04 Statement of Account . . . . . . . . . . . . . . . . . . . . . . . . 4
3 TABLE OF CONTENTS (CONTINUED)
VI Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 6.01 Distribution of Account Balance . . . . . . . . . . . . . . . . . . . 4 6.02 Death Before Distribution of Account . . . . . . . . . . . . . . . . 5 6.03 Form of Distribution . . . . . . . . . . . . . . . . . . . . . . . . 5 VII Hardship Distributions . . . . . . . . . . . . . . . . . . . . . . . 5 7.01 Hardship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 VIII Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 8.01 Beneficiary Designation . . . . . . . . . . . . . . . . . . . . . . . 5 8.02 Proper Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . 5 8.03 Minor or Incompetent Beneficiary . . . . . . . . . . . . . . . . . . 5 IX Administration of the Plan . . . . . . . . . . . . . . . . . . . . . 6 9.01 Majority Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 9.02 Finality of Determination . . . . . . . . . . . . . . . . . . . . . . 6 9.03 Certificates and Reports . . . . . . . . . . . . . . . . . . . . . . 6 9.04 Indemnification and Exculpation . . . . . . . . . . . . . . . . . . . 6 9.05 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 X Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . 6 10.01 Written Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 10.02 Denied Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 10.03 Review Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . 7 10.04 Committee Review . . . . . . . . . . . . . . . . . . . . . . . . . . 7 XI Nature of Company's Obligation . . . . . . . . . . . . . . . . . . . 7 11.01 Company's Obligation . . . . . . . . . . . . . . . . . . . . . . . . 7 11.02 Creditor Status . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 XII Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 12.01 Written Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 12.02 Change of Address . . . . . . . . . . . . . . . . . . . . . . . . . . 8 12.03 Merger, Consolidation or Acquisition . . . . . . . . . . . . . . . . 8 12.04 Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . 8 12.05 Amendment and Termination . . . . . . . . . . . . . . . . . . . . . . 8 12.06 Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 12.07 Nontransferability . . . . . . . . . . . . . . . . . . . . . . . . . 8 12.08 Legal Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 12.09 Tax Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 12.10 Acceleration of Payment . . . . . . . . . . . . . . . . . . . . . . . 8 12.11 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4 ARTICLE I PURPOSE AND EFFECTIVE DATE 1.01 Title This Plan shall be known as the K N Energy, Inc. Nonqualified Deferred Compensation Plan (hereinafter referred to as the "Plan"). 1.02 Purpose The purpose of the Plan is to permit certain members of management and highly compensated employees to defer current salary and incentive compensation. 1.03 Effective Date The Effective Date of this Plan shall be January 1, 1995. ARTICLE II DEFINITIONS AND CONSTRUCTION OF THE PLAN DOCUMENT 2.01 Beneficiary "Beneficiary" shall mean the person or persons or the estate of a Participant entitled to receive any benefits under this Plan in the event of the Participant's death prior to distribution of his account value. 2.02 Board "Board" shall mean the Board of Directors of K N Energy, Inc. 2.03 Bookkeeping Account A "Bookkeeping Account" will be established only as a bookkeeping record for each Participant who elects to defer compensation under this Plan and may, at the discretion of the Committee, include one (1) or more subaccounts to reflect amounts credited to a Participant under the various terms of this Plan. 2.04 Committee "Committee" means the Compensation Committee of the Company who will manage and administer the Plan. 2.05 Company "Company" shall mean K N Energy, Inc., a Delaware corporation. 2.06 Deferral Agreement "Deferral Agreement" means the written form which is submitted to the Named Fiduciary before the relevant Election Date which indicates whether the Executive wishes to defer a portion of his compensation and indicates the portion of salary and/or incentive pay to be deferred. No Deferral Agreement shall be effective until acknowledged, in writing, by the Company. 2.07 Deferred Compensation "Deferred Compensation" means the portion of a Participant's salary for any calendar year and the portion of a Participant's incentive compensation for any calendar year that has been deferred pursuant to the Plan. 2.08 Election Date The "Election Date" is the date established by this Plan as the date before which an Executive must submit a valid Deferral Agreement to the Committee. The applicable Election Dates are as follows: (a) thirty (30) days after a newly eligible employee is notified of his right to participate in the Plan; or (b) December 31 of any calendar year if (a) above does not apply. 5 2.09 EXECUTIVE "Executive" shall mean any executive who participates in the K N Energy, Inc. Executive Incentive Plan or any other member of management or any highly compensated employee who has been recommended for participation in the Plan by the Chief Executive Officer of the Company and approved by the Committee. 2.10 NAMED FIDUCIARY "Named Fiduciary," for purposes of the claims procedure of this Plan, shall mean the Chairman of the Committee. 2.11 PARTICIPANT "Participant" means an Executive who has deferred a portion of salary or a portion of incentive compensation pursuant to the terms of this Plan and whose account balance has not yet been distributed. 2.12 PLAN "Plan" means the K N Energy, Inc. Nonqualified Deferred Compensation Plan as described in this instrument and as amended from time to time. 2.13 PLAN YEAR The "Plan Year" is the same as the calendar year. 2.14 TERMINATION OF SERVICE "Termination of Service" or similar expression means the termination of the Participant's employment as a regular employee of the Company and any division, subsidiary or affiliate thereof. 2.15 VALUATION DATE "Valuation Date" shall mean the last day of each calendar quarter. By appropriate action, the Committee may provide for Valuation Dates at such other times as it deems necessary or expedient. 2.16 GENDER AND NUMBER Wherever the context so requires, masculine pronouns include the feminine and singular words shall include the plural. 2.17 TITLES Titles of the Articles of this Plan are included for ease of reference only and are not to be used for the purpose of construing any portion or provision of this Plan document. ARTICLE III ELIGIBILITY AND PARTICIPATION 3.01 ELIGIBILITY Any Executive who participates in the K N Energy, Inc. Executive Incentive Plan shall be eligible to participate in this Plan. Additional eligibility for participation in this Plan shall be determined on an individual basis by recommendation from the Chief Executive Officer and approval by the Committee, but no Executive shall be selected for participation in this Plan unless he qualifies as a member of a select group of management or as a highly compensated employee of the Company. 3.02 PARTICIPATION An Executive, after having been selected for participation by the Committee, shall, as a condition to participation, annually complete and return to the Committee a duly executed Deferral Agreement. -2- 6 ARTICLE IV DEFERRAL OF COMPENSATION 4.01 SALARY DEFERRAL Each Participant in the Plan may elect to have either a percentage or dollar amount of his salary deferred in accordance with the terms and conditions of this Plan. Any election to defer salary must be for a minimum of $5,000 but no more than 20% (twenty percent) of base salary. 4.02 INCENTIVE COMPENSATION DEFERRAL Each Participant in the Plan may elect to have either a percentage or dollar amount of his incentive compensation earned, if any, during the Plan Year deferred in accordance with the terms and conditions of this Plan. Any election to defer incentive compensation must be for a minimum of $5,000 but no more than 85% of the incentive compensation earned for such Plan Year. 4.03 DEFERRAL AGREEMENT An eligible Executive electing to participate in the Plan must submit his written Deferral Agreement to the Named Fiduciary on or before the applicable Election Date. Valid Deferral Agreements filed by the applicable Election Date as provided in Section 2.08(a) shall cause compensation to be deferred in the Plan Year for which such Deferral Agreement is made. Deferral Agreements entered into under the conditions of Section 2.08(b) shall cause elected compensation to be deferred beginning January 1 of the next calendar year and elected incentive compensation to be deferred as of the time it otherwise would have been paid under the terms of the Incentive Plan. 4.04 NO DEFERRAL WITHOUT AGREEMENT A Participant who has not submitted a valid Deferral Agreement to the Named Fiduciary before the relevant Election Date may not defer any compensation under this Plan for the applicable Plan Year. 4.05 DURATION OF DEFERRAL AGREEMENT Deferral Agreements remain in effect for the Plan Year for which they apply. A Participant must file a new Deferral Agreement for any subsequent Plan Year. The terms of any Deferral Agreement may, but need not be, similar to the terms of any prior Deferral Agreement. ARTICLE V DEFERRAL ACCOUNT AND CREDITING 5.01 BOOKKEEPING ACCOUNT Salary and incentive compensation deferred by a Participant under a written Deferral Agreement shall be credited in a dollar amount to a separate Bookkeeping Account for each Participant. Salary deferred under subsequent written election agreements by a Participant shall be added to his Bookkeeping Account. The Company shall create as many subaccounts as it deems necessary to administer the terms of this Plan. 5.02 ACCOUNT VALUATION The value of the Bookkeeping Account and any subaccounts shall be based upon the performance of selected funds in which deferrals have been directed at the election of the Participant. The funds into which the Participant may elect that his deferrals will be credited will be based upon the funds and investment options available to employees -3- 7 participating in the K N Energy, Inc. 401(k) Retirement Savings Plan, as amended from time to time. Notwithstanding, the Company reserves the right to amend and to determine, in its sole discretion, the funds into which deferrals will be credited. Deferred amounts will be credited into subaccount funds in multiples of the total amounts deferred as elected by the Participants. All dividends and earnings paid with respect to an elected fund will be deemed to have been immediately reinvested in such fund. 5.03 TRANSFER AMONG FUNDS Amounts deferred into this Plan and credited to a fund within the Participant's Bookkeeping Account or subaccounts may be transferred between eligible funds pursuant to an election which may be made once per calendar quarter. Such election shall be effective, and the transfer shall be based on the value of the Participant's Bookkeeping Account or subaccount with respect to that fund as of the Valuation Date immediately following the date the election is received by the Company, provided, that the election is received no later than the Valuation Date. 5.04 STATEMENT OF ACCOUNT The Company shall provide periodically to each Participant (but not less frequently than once each calendar year) a statement setting forth the balances and funds to the Participant's credit. ARTICLE VI DISTRIBUTION 6.01 DISTRIBUTION OF ACCOUNT BALANCE Distribution of the value of a Participant's Bookkeeping Account balance shall be made according to the election of the Participant set forth in the Deferral Agreement and the terms of this Plan, as described in (a), (b) or (c) below. (a) If the Participant remains employed until a specified deferral year, all amounts relating to that Plan Year's deferral will be paid in a lump sum, less applicable withholding taxes, in the January of the deferral year elected. Any deferral to a year certain must be at least five years following the year of deferral. (b) In the event of Termination of Services for any reason before completion of the elected deferral period, payment shall be made in a lump sum, less applicable withholding taxes, as soon as practicable after the end of the quarter in which the Termination of Services occurred. (c) In the event of Retirement, payment shall be made either (i) in a lump sum, less applicable withholding taxes, as soon as practicable after the quarter in which the retirement occurs, or (ii) in annual cash installments in the five (5) or ten (10) successive calendar years (as selected by the Participant) beginning as soon as practicable after Retirement. Each installment shall be made as of the first working day of the applicable year. The amount of each installment shall equal the Participant's Bookkeeping Account divided by the number of remaining installments (including the installment being determined). -4- 8 6.02 DEATH BEFORE DISTRIBUTION OF ACCOUNT In the event of the Participant's death prior to the complete distribution of his Bookkeeping Account, payment of any remaining balance shall be made to the Participant's Beneficiary as soon as practicable after notification of the Participant's death. 6.03 FORM OF DISTRIBUTION All distributions of a Participant's Bookkeeping Account shall be made in cash only. ARTICLE VII HARDSHIP DISTRIBUTIONS 7.01 HARDSHIP At the request of a Participant before or after the Participant's retirement or Termination of Service, or at the request of any of the Participant's Beneficiaries after the Participant's death, the Committee may, in its sole discretion, accelerate and pay all or part of the value of a Participant's Bookkeeping Account due under this Plan. Accelerated distributions at the request of the Participant or the Participant's Beneficiaries may be allowed only due to an immediate and heavy financial need of the Participant (or Beneficiary). An accelerated distribution must be limited to only that amount necessary to relieve the financial need. ARTICLE VIII BENEFICIARY 8.01 BENEFICIARY DESIGNATION A Participant shall designate his Beneficiary to receive benefits under the Plan by completing the Beneficiary Designation accompanying the Deferral Agreement. If more than one (1) Beneficiary is named, the shares and/or percentage of each Beneficiary is named, the shares and/or percentage of each Beneficiary shall be indicated. A Participant shall have the right to change the Beneficiary by submitting to the Committee a Change of Beneficiary Form. However, no change of Beneficiary shall be effective until acknowledged, in writing, by the Committee. 8.02 PROPER BENEFICIARY If the Company has any doubt as to the proper Beneficiary to receive payments hereunder, the Company shall have the right to withhold such payments until the matter is finally adjudicated. However, any payment made by the Company, in good faith and in accordance with this Plan, shall fully discharge the Company from all further obligations with respect to that payment. 8.03 MINOR OR INCOMPETENT BENEFICIARY In making any payments to or for the benefit of any minor or an incompetent Beneficiary, the Committee, in its sole and absolute discretion, may make a distribution to a legal or natural guardian or other relative of a minor or court appointed committee of such incompetent. Or, it may make a payment to any adult with whom the minor or incompetent temporarily or permanently resides. The receipt by a guardian, committee, relative or other person shall be a complete discharge to the Company. Neither the Committee nor the Company shall have any responsibility to see to the proper application of any payments so made. -5- 9 ARTICLE IX ADMINISTRATION OF THE PLAN 9.01 MAJORITY VOTE All resolutions or other actions taken by the Committee shall be by vote of a majority of those present at a meeting at which a majority of the members are present, or in writing by all the members, at the time in office, if they act without a meeting. 9.02 FINALITY OF DETERMINATION Subject to the Plan, the Committee shall, from time to time, establish rules, forms and procedures for the administration of the Plan. Except as herein otherwise expressly provided, the Committee shall have the sole and absolute discretion to (a) construe and interpret the Plan, (b) decide all questions of eligibility to participate in the Plan, and (c) determine the amount, manner and time of payment of any benefits to any Participant or Beneficiary. The decisions, actions and records of the Committee shall be conclusive and binding upon the Company and all persons having or claiming to have any right or interest in or under the Plan. 9.03 CERTIFICATES AND REPORTS The members of the Committee and the officers and directors of the Company shall be entitled to rely on all certificates and reports made by any duly appointed accountants, and on all opinions given by any duly appointed legal counsel, which legal counsel may be counsel for the Company. 9.04 INDEMNIFICATION AND EXCULPATION The Company shall indemnify and hold harmless each member of the Committee against any and all expenses and liabilities arising out of his membership on the Committee. Expenses against which a member of the Committee shall be indemnified hereunder shall include, without limitation, the amount of any settlement or judgment, costs, counsel fees, and related charges reasonably incurred in connection with a claim asserted, or a proceeding brought or settlement thereof. The foregoing rights of indemnification shall be in addition to any other rights to which the any such member of the committee may be entitled as a matter of law. 9.05 EXPENSES The expenses of administering the Plan shall be borne by the Company. ARTICLE X CLAIMS PROCEDURE 10.01 WRITTEN CLAIM Benefits shall be paid in accordance with the provisions of this Plan. The Participant, or a designated recipient or any other person claiming through the Participant, shall make a written request for benefits under this Plan. This written claim shall be mailed or delivered to the Named Fiduciary. Such claim shall be reviewed by the Named Fiduciary or his delegate. -6- 10 10.02 DENIED CLAIM If the claim is denied, in full or in part, the Named Fiduciary shall provide a written notice within ninety (90) days setting forth the specific reasons for denial and any additional material or information necessary to perfect the claim and an explanation of why such material or information is necessary and appropriate information and explanation of the steps to be taken if a review of the denial is desired. 10.03 REVIEW PROCEDURE If the claim is denied and a review is desired, the Participant (or Beneficiary) shall notify the Named Fiduciary, in writing, within sixty (60) days (a claim shall be deemed denied if the Named Fiduciary does not take any action within the aforesaid ninety (90) day period) after receipt of the written notice of denial. In requesting a review, the Participant or his Beneficiary may request a review of the Plan document or other pertinent documents with regard to the employee benefit plan created under this agreement, may submit any written issues and comments, may request an extension of time for such written submission of issues and comments and may request that a hearing be held, but the decision to hold a hearing shall be within the sole discretion of the Committee. 10.04 COMMITTEE REVIEW The decision on the review of the denied claim shall be rendered by the Committee within sixty (60) days after the receipt of the request for review (if no hearing is held) or within sixty (60) days after the hearing if one is held. The decision shall be written and shall state the specific reasons for the decision including reference to the specific provisions of this Plan on which the decision is based. ARTICLE XI NATURE OF COMPANY'S OBLIGATION 11.01 COMPANY'S OBLIGATION The Company's obligations under this Plan shall be an unfunded and unsecured promise to pay. The Company shall not be obligated under any circumstances to fund its financial obligations under this Plan. However, the Company may choose to establish an irrevocable trust to settle its obligations under this Plan. The assets of such trust, if any, shall be subject to the claims of the Company's creditors as set forth in Section 11.02 below. 11.02 CREDITOR STATUS Any assets which the Company may acquire or set aside to help cover its financial liabilities are, and must, remain general assets of the Company subject to the claims of its creditors. Neither the Company nor this Plan gives the Participant any beneficial ownership interest in any asset of the Company. All rights of ownership in any such assets are, and remain, in the Company. ARTICLE XII MISCELLANEOUS 12.01 WRITTEN NOTICE Any notice which shall or may be given under this Plan or a Deferral Agreement shall be in writing and shall be mailed by United States mail, postage prepaid. If notice is to be given to the Company, such notice shall be addressed to the -7- 11 Company at 12055 West Second Place, Lakewood, Colorado 80228-9304 or, if notice is to an Executive, addressed to the address shown on such Executive's Deferral Agreement. 12.02 CHANGE OF ADDRESS Any party may, from time to time, change the address to which notices shall be mailed by giving written notice of such new address. 12.03 MERGER, CONSOLIDATION OR ACQUISITION The Plan shall be binding upon the Company, its assigns, and any successor company which shall succeed to substantially all of its assets and business through merger, acquisition or consolidation, and upon an Executive, his Beneficiary, assigns, heirs, executors and administrators. 12.04 CHANGE IN CONTROL In the event of a "change in control" of the Company, as defined in the K N Energy, Inc. Long- Term Executive Incentive Plan, all amounts credited to the Participant's Bookkeeping Account, as of the effective date of the change in control, will be distributed in a lump sum within 30 days of such change in control, less applicable withholding taxes. 12.05 AMENDMENT AND TERMINATION The Company retains the sole and unilateral right to terminate, amend, modify or supplement this Plan, in whole or in part, at any time. This right includes the right to make retroactive amendments. However, no Company action under this right shall reduce the Bookkeeping Account of any Participant or his Beneficiary as of the date of amendment or termination. 12.06 EMPLOYMENT This Plan does not provide a contract of employment between the Company and the Participant, and the Company reserves the right to terminate the Participant's employment, for any reason, at any time, notwithstanding the existence of this Plan. 12.07 NONTRANSFERABILITY Except insofar as prohibited by applicable law, no sale, transfer, alienation, assignment, pledge, collateralization or attachment of any benefits under this Plan shall be valid or recognized by the Company. Neither the Participant, his spouse, or designated Beneficiary, shall have any power to hypothecate, mortgage, commute, modify or otherwise encumber in advance of any of the benefits payable hereunder, nor shall any of said benefits be subject to seizure for the payment of any debts, judgments, alimony maintenance, owed by the Participant or his Beneficiary, or be transferable by operation of law in the event of bankruptcy, insolvency or otherwise. 12.08 LEGAL FEES All reasonable legal fees incurred by any Participant (or former Participant) to successfully enforce his valid rights under this Plan shall be paid by the Company in addition to sums due under this Plan. 12.09 TAX WITHHOLDING The Company may withhold from a payment any federal, state or local taxes required by law to be withheld with respect to such payment and such sum as the Company may reasonably estimate as necessary to cover any taxes for which the Company may be liable and which may be assessed with regard to such payment. The Company may either withhold from current salary and/or incentive compensation that has not been deferred or make other necessary arrangements with a Participant with respect to any FICA and Medicare taxes required. 12.10 ACCELERATION OF PAYMENT The Company reserves the right to accelerate the payment of any benefits payable under this Plan at any time without the consent of the Participant, his estate, his Beneficiary or any other person claiming through the Participant. -8- 12 12.11 APPLICABLE LAW This Plan shall be governed by the laws of the state of Colorado. IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its duly authorized officer on this _____ day of __________________, 1994. K N ENERGY, INC. By -------------------------------------- Chief Executive Officer ATTEST: By: ----------------------- [SEAL] -9- EX-10.H 6 CONFIDENTIALITY AGREEMENT - LARRY D. HALL 1 EXHIBIT 10(h) CONFIDENTIAL AGREEMENT AND GENERAL RELEASE THIS CONFIDENTIAL AGREEMENT AND GENERAL RELEASE (this "Agreement") is entered into by and between Larry D. Hall ("Hall") and KN Energy, Inc. ("KN"), a Kansas corporation headquartered in Lakewood, Colorado, because of the mutual agreement of KN and Hall that Hall to cease employment with KN. WHEREAS, the parties wish to settle and discharge all potential claims and disputes between them, known or unknown; NOW, THEREFORE, in consideration of the foregoing premises and the following promises, which the parties agree constitute good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows. 1. EFFECT OF THIS AGREEMENT. This Agreement shall supersede in all respects all letters, agreements or promises including but not limited to the Change of Control Severance Agreement dated as of October 19, 1996 and amended October 20, 1997 between KN and Hall, and once effective shall be the only agreement between KN and Hall relating to Hall's employment by KN and/or the cessation of that employment. 2. DEFINITIONS. (a) Confidential Information. The term Confidential Information shall include all non-public or proprietary information relating to (i) KN's customers, prospective customers, providers, suppliers, and other business affiliates; (ii) KN's policies, practices, operating information, financial information, business plans, and market approaches; and (iii) other information, techniques or approaches used by KN and not generally known in KN's industry. KN believes that some or all of this information constitutes trade secrets; however, the "Confidential Information" covered by this Agreement need not satisfy the legal definition or requirements of a "trade secret" to be protected from disclosure thereunder. Information shall not be Confidential if it is in the public domain at the time this Agreement is entered into or is thereafter communicated free of any obligation of confidence by KN to any other person or entity. (b) Effective Date of Termination of Active Employment. Hall's last day of active employment was July 8, 1999. (c) Effective Date of This Agreement. The "Effective Date of This Agreement" shall be the day of Hall's written acceptance of this Agreement excluding the Age Discrimination Provisions. 1 2 (d) Age Discrimination Provisions and Effective Date of Age Discrimination Provisions. The "Effective Date of Age Discrimination Provisions" shall be the eighth day following Hall's written acceptance of the Age Discrimination Provisions without revocation. Age Discrimination Provisions include the age discrimination amount, age discrimination release, and Older Worker Benefit Protection Act acknowledgement. (e) Effective Date of Termination of Employment. The effective date of termination of Hall's employment was September 10, 1999 except as set forth in paragraphs 3(c-e) of this Agreement. KN's employment records will state Hall resigned. (f) KN. "KN" means collectively KN Energy, Inc. a Kansas corporation, and its divisions and affiliates or the successors to any such entities. For purposes of this Agreement, the term "affiliates" shall have the same definition as the term "affiliated group" in Section 1504(a) of the Internal Revenue Code of 1986, as amended from time to time. 3. KN'S PROMISES. In consideration of Hall's promises recited herein: (a) Severance Amount. KN agrees to pay Hall or his heirs a gross amount of $1,468,661.41 (One Million Four Hundred Sixty-Eight Thousand Six Hundred Sixty-One Dollars and Forty-One Cents). Payments will be made in fifty-eight equal installments on regular KN paydays beginning with the first pay period after the Effective Date of this Agreement. (b) Age Discrimination Amount. KN agrees to pay Hall or his heirs a gross amount equal to $500,000 (Five Hundred Thousand Dollars). Payments will begin on regular KN paydays beginning with the first pay period after the payments required by paragraph 3(a) above and will be made in twenty equal installments. Hall agrees that he is not otherwise entitled to this money under any agreement with KN or policy or practice of KN. (c) Health Insurance Benefits, Bridge to Early Retirement and Unpaid Leave. (i) KN will continue Hall's present medical, dental, life insurance, and accidental death and dismemberment at the same coverage level and rate as is available to current employees of KN or its successor through November 8, 2000 when Hall will be eligible for COBRA, unless a triggering event has previously occurred, or retiree medical benefits. The coverage shall be for Hall and his spouse and dependent child. Hall will be considered to be on an unpaid leave of absence through November 8, 2000, for the purpose of bridging him to early retirement, which includes service credit under KN's qualified retirement plan and Nonqualified Retirement Income Restoration Plan, and the ability to file an Election Form under the Directors and Executives Deferred Compensation Plan but not to make any additional contributions to that Plan, with the understanding and agreement that he is being reinstated to KN's personnel systems solely for purposes of exercising rights to the benefits described above, including those benefits accruing to a qualified retiree, and is not considered a KN employee for any other purpose and may not represent himself to be an employee of KN or in any other way associated with KN during such leave, and with the 2 3 further understanding that he shall not be entitled to any other benefits other than those described in this paragraph. (ii) KN will also pay to a health care insurer designated by Hall an amount not to exceed Fifty Thousand Dollars. This payment shall not be required until after Hall ceases to be eligible for KN's group medical program. (d) Profit Sharing, Retirement Plans, 401(k), Deferred Compensation and Employee Stock Purchase Program (ESPP). Hall will not be eligible to continue to participate in the KN savings, deferred compensation except as provided in paragraph 3(c)(i) above, stock purchase, or retirement plans except as provided in paragraph 3(c)(i) above after August 29, 1999. KN acknowledges Hall is entitled to payment of Seventeen Thousand Three Hundred Seven Dollars and Fifty Four Cents ($17,307.54) which he has deposited in the Employee Stock Purchase Program subject to the terms of the ESPP. This Agreement does not affect any rights under these Plans. If Hall, on or before October 15, 1999, files an Election Form which changes his December 10, 1998 Election Form under the Directors and Executives Deferred Compensation Plan for the Plan year beginning January 1, 2000, KN will use its best efforts to secure approval from the Committee pursuant to Article 5.2 of the Plan. (e) Restricted Stock and Stock Options. (i) Restrictions on Restricted Stock awarded to Hall during his employment with KN including, if necessary, stock placed in a Directors and Executives Deferred Compensation Plan shall lapse on the fifth day after the Effective Date of his Agreement. All rights of such Restricted Stock shall immediately be awarded to Hall. Hall shall be solely responsible for any taxes or other expenses resulting from this acceleration, and hereby indemnifies and holds KN harmless for any such taxes or expenses. (ii) All stock options awarded to Hall during his employment with KN which are not vested as of August 29, 1999 shall terminate. Hall shall have three months from August 29, 1999 to exercise any options vested as of that date. To the extent Hall does not exercise any of such vested stock options within the three-month period, such options shall be forfeited. (f) Non-Disparagement. For a period of two years from the Effective Date of this Agreement, KN agrees that no one from its Board of Directors or its executive officer group shall disparage Hall, but KN expressly undertakes no obligation and refuses to be responsible for actions of employees at any level below its executive officer group that might be construed to be disparagement of Hall. (g) Director and Officer Insurance. KN will provide director and officer liability coverage to Hall on the same terms as it provides to other director or officers who served during 1999. Hall shall also have the same rights to indemnification and defense as other 3 4 directors or officers who served during 1999. Hall's coverage will terminate after the same period used to determine termination of coverage for other former directors and officers. (h) Financial Planning Expenses. KN will pay an invoice it received in September 1999 in the amount of $7,500 (Seven Thousand Five Hundred Dollars) for financial planning advice. KN will pay an additional $3,500 (Three Thousand Five Hundred Dollars) for financial planning advice provided invoices are received prior to January 31, 2000. Invoices should be submitted to James E. Street, Sr. V.P. Human Resources and Administration, Kinder-Morgan Energy Partners, L.P., 1301 McKinney Street, Suite 3400, Houston, TX 77010. (i) Office and Secretarial Assistance. KN will pay a provider selected by Hall a monthly amount not to exceed $1,200 (One Thousand Two Hundred Dollars) commencing the first month after the Effective Date of This Agreement and continuing to November 8, 2000. (j) Vacation Pay. Within five business days after the Effective Date of This Agreement, KN will pay Hall for his accrued vacation (192 hours). (k) Release. KN, its successors and assigns, release Hall from all claims, demands, and actions of any nature, known or unknown which arose on or prior to the Effective Date of This Agreement provided the representation by Hall in paragraph 4(h) below is true. KN has no present knowledge that Hall's representation is not true. 4. HALL'S PROMISES. In consideration of KN's promises recited herein: (a) Confidential Information. Hall shall not, for a period of two years from the Effective Date of This Agreement, directly or indirectly, (i) use or apply any Confidential Information, alone or with any other person or entity; or (ii) disclose or provide any Confidential Information to any person or entity not authorized by KN to receive such Confidential Information. (b) Warranty of Non-Removal of Confidential Information or Trade Secret Material and Information. Hall specifically warrants that, other than copies of information used in connection with his performance of his duties as CEO during his active employment with KN where KN has originals, he has not removed and will not remove from KN's premises, either directly or indirectly, any drawings, writings, prints, computer disks, documents or anything containing, embodying or disclosing any Confidential Information or proprietary information or any of KN's trade secrets. Any future removals require KN's express written permission by a member of KN's executive management. For purposes of this Agreement, the term trade secrets means any materials within the meaning of the Uniform Trade Secrets Act, C.R.S. Section 7-74-101 et seq. (c) Release. Hall for himself and his representatives, heirs, and assigns, hereby releases and discharges KN, any parent, sister or subsidiary company, and any present or former shareholders, officers, directors, employees, agents, representatives, legal 4 5 representatives, accountants, successors, and assigns, Kinder-Morgan Inc., and any parent, sister or subsidiary company, and any present or former shareholders, officers, directors, employees, agents, representatives, legal representatives, accountants, successors and assigns, Richard Kinder, and William Morgan, from all claims, demands, and actions of any nature, known or unknown, and specifically, but not limited to, those in any manner arising out of or involving any aspect of his employment with KN and his termination of employment, and including any rights or claims under the Colorado Anti-Discrimination Act; the Civil Rights Act of 1964, as amended, 42 U.S.C., Section 2000e, et seq.; the Vocational Rehabilitation Act, 29 U.S.C. Section 701 et seq.; the Americans with Disabilities Act, 42 U.S.C. Section 12101, et seq.; Executive Order 11246; the Civil Rights Act of 1871, 42 U.S.C. Section 1981; the National Labor Relations Act, as amended, 29 U.S.C. Section 141 et seq.; the Worker Adjustment and Retraining Notification Act, 29 U.S.C. Sections 2101-2109; and any and all other municipal, state, and/or federal statutory, executive order, or constitutional provisions pertaining to an employment relationship; provided, however, that this release and waiver shall not apply to any rights which, by law, may not be waived or to rights and claims that arise after the date of his execution of this Agreement. This release and waiver also specifically includes, but is not limited to, any claims in the nature of tort or contract claims, including specifically but not limited to any claim of wrongful discharge, intentional or negligent infliction of emotional distress, defamation, or other such claims in any manner arising out of or involving any aspect of Hall's employment with KN and termination of his employment. This release includes any and all claims concerning attorney fees, costs, and any and all other expenses related to the claims released herein. This release does not include claims for breach of this Agreement, indemnification, coverage or defense under any applicable directors and officers insurance policy or vested employee benefits. (d) Age Discrimination Release. Hall releases KN and all persons released in paragraph 4(c) above from any claims under the federal Age Discrimination in Employment Act, 29 U.S.C. Section 621, et seq. (e) Covenant Not to Sue. Hall warrants that he has not commenced and agrees not to commence any proceeding against KN or any person released in paragraph 4(c) above, whether administrative or judicial, asserting any claim arising out of his employment or the termination thereof, except to specifically enforce this Agreement. (f) Non-Disparagement Agreement. For a period of two years from the Effective Date of this Agreement, Hall specifically agrees that he will not in any way disparage any person released in paragraph 4(c) above, KN's consultants, agents, or KN's business operations or decisions. (g) Taxes Owed by Hall. Hall owes KN Thirty Seven Thousand Four Hundred Thirty Two Dollars and Fifty Cents ($37,432.50) for taxes paid by KN on Hall's behalf related to lapses of restrictions on restricted stock awards which occurred on February 10, 1999 and March 4, 1999. Hall will reimburse KN for all taxes owed ten days after the Effective Date of This Agreement. 5 6 (h) Representation. Hall represents that he knows of no representation or promise made by him on behalf of KN which is not known to either a director or senior manager or a person who held such a position at the time Hall made the representation or promise known to that person. Hall has made no representations or promises on behalf of KN since July 8, 1999. 5. OLDER WORKER BENEFIT PROTECTION ACT ACKNOWLEDGEMENT. Hall knowingly and voluntarily waives any and all claims under the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. Section 621, et seq., and agrees as follows: (a) Hall's termination is an individual termination and not part of "an exit incentive or other employment termination program offered to a group or class of employees," as that phrase is used at 29 U.S.C. Section 626(f)(1)(H). (b) This waiver is part of an Agreement that is written in a manner calculated to be understood by Hall. (c) This waiver specifically refers to rights and claims arising under the ADEA. (d) Hall does not waive any claims that may arise after the date this Agreement is executed. (e) Hall waives ADEA rights or claims only in exchange for consideration in addition to anything of value to which he is already entitled. (f) Hall has consulted with an attorney before executing this Agreement. (g) Hall shall have 21 days from the date he receives this Agreement within which to consider it insofar as it relates to claims under the ADEA, although he may accept this Agreement at any time within those 21 days. The parties agree that changes to this Agreement whether material or immaterial do not restart the running of the 21 day period. (h) Hall shall have seven days from the date he accepts and signs this Agreement with respect to age discrimination claims within which to revoke his acceptance of this Agreement insofar as it relates to waiver of claims under the ADEA. Those provisions are contained in paragraphs 2(d), 3(b), 4(d) and 5. To be effective, such revocation must be made in writing to Sr. Vice President - Human Resources and Administration, received by the close of business on the seventh day following acceptance. The effective date of the Age Discrimination Provisions of this Agreement shall be the eighth day after Hall's written acceptance of the Age Discrimination Provisions. 6. COOPERATION IN LITIGATION OR REGULATORY PROCEEDINGS. Hall will cooperate with KN or its successor in the prosecution or defense of any matters where KN or its successor believes Hall's participation might be useful by answering fully all questions about his work at KN. If Hall is contacted by any person representing interests adverse to KN or by any person employed by or acting on behalf of any regulatory body, he will immediately 6 7 notify the General Counsel of KN or its successor before speaking with any such person. Hall has had access to information subject to attorney-client privilege and/or work product protection. Hall will not divulge any such information without the consent of KN or its successor. 7. NON-DISCLOSURE OF TERMS OF THIS AGREEMENT. KN and Hall agree not to divulge, disclose or publicize in any manner to any third party, including current or former employees of KN, the terms and conditions of this Agreement, except (1) insofar as is necessary to enforce the Agreement or to respond to an order of a court or administrative agency for disclosure, (2) compliance with reporting obligations composed by regulatory authorities including but not limited to the Securities and Exchange Commission, and (3) that such terms may be disclosed to Hall's immediate family, tax, legal or financial advisors, if any, on condition that any such person to whom the terms or conditions of this Agreement are disclosed shall be instructed not to disclose the terms or conditions to anyone else. Should a third person inquire as to the status or resolution of any dispute between the parties, the parties may say only that the parties have resolved all differences. For purposes of this paragraph Kinder-Morgan, Inc., Richard Kinder and William Morgan are not third parties. 8. USE IN OTHER PROCEEDINGS. Each party agrees that this Agreement shall not be tendered or admissible as evidence in any proceeding by either party for any purpose, except, (i) that the Agreement shall be admissible as evidence in a proceeding involving the parties in which an alleged breach of the Agreement or the validity of any term of the Agreement is at issue, or (ii) that the Agreement may be used by either party provided the party gives written notice to the other party at least twenty days in advance of any such use and does not oppose the party's standing to file objections to such use. 9. REMEDIES. (a) In addition to any other remedies that may be available to KN or Hall, the parties, agree that, in the event a party breaches any of the promises set forth in this Agreement at paragraphs 3(f), 4(a), 4(b), or 4(f) and such breach is proven in a proceeding provided for in this Agreement, such party shall be liable for damages in the amount of $100,000 for each breach. The parties specifically agree that such damages are liquidated damages and not a penalty. Such damages shall not be available until notice of a breach of this Agreement is provided to the alleged breaching party in writing and the party is given a reasonable opportunity to cure such breach. The parties also agree that continuing harm would result to the affected party should the breaching party not cease and desist all conduct in violation of the Agreement, and that the affected party would be entitled to an injunction prohibiting such continuing conduct in addition to any liquidated damages awarded. (b) The rights and obligations of this section shall survive any expiration or termination of this Agreement. 10. NO ADMISSION OF LIABILITY. The entry into this Agreement by KN is not and shall not be construed to be an admission of any act, practice or policy by KN or any of its present or former officers, directors, agents, representatives or employees, in violation of any 7 8 statute, common law duty, constitution, or administrative rule or regulation, any such liability being expressly denied. 11. PLACE FOR RECEIPT OF THE MONTHLY PAYMENTS AND OTHER NOTICES. Payment of the Monthly Payments, if made by mail, and any other written notice, shall be made to: 1892 Sugarbush Drive, Evergreen, Colorado 80439. 12. ARBITRATION. All disputes arising between the parties in connection with this Agreement except claims for injunctive relief to enforce paragraphs 3(f), 4(a), (b), and (f), 6, or 7, or any underlying claim purportedly released pursuant to this Agreement shall be resolved by final and binding arbitration under the Colorado Uniform Arbitration Act by a single arbitrator. The arbitrator shall be mutually selected by the parties to this Agreement and shall have the following qualifications: (a) such person shall have no previous business or personal relationship with either of the parties, (b) such person shall reside in the greater metropolitan area of Denver, Colorado, (c) such person shall be a lawyer with at least 15 years of experience in commercial litigation which shall include (but not be limited to) experience in the areas of employment, labor, human resources or similar matters involving senior management, or (d) such person shall be a retired judge with at least 15 years of experience in civil matters within the State of Colorado. If the parties cannot reasonably agree on an arbitrator within 30 calendar days of the receipt of a notice of dispute by one party to the other, such arbitrator shall be chosen under the then prevailing commercial rules of the American Arbitration Association, as modified by this Agreement. The arbitrator shall award the prevailing party reasonable attorneys fees, the costs of the arbitration, and reasonable expert witness fees. 13. GOVERNING LAW. This Agreement shall be governed by and construed under the laws of Colorado. 14. ACKNOWLEDGMENT. Hall hereby certifies that he has read this Agreement and understands its terms and significance, and that he executes it voluntarily and with full knowledge of its effect. 15. SEVERABILITY. If any provision of this Agreement is found to be unenforceable, the remaining provisions shall remain in full force and effect. 16. SUCCESSORS AND ASSIGNMENT. This Agreement is binding on and inures to the benefit of the heirs, personal representatives, successors and assigns of both parties. This Agreement may not be assigned by Hall without the express written consent of KN. 17. PARAGRAPH HEADINGS. The headings or this Agreement are for convenience only and shall not control or affect the meaning or construction of any portion hereof. 18. ENTIRE AGREEMENT. This document constitutes the entire agreement of the parties and may not be expanded or amended except by express written agreement executed by both. 8 9 Accepted this 4th day of October, 1999. /s/ Larry D. Hall --------------------------------------------- LARRY D. HALL KN ENERGY, INC. By /s/ Stewart A. Bliss ------------------------------------------- Stewart A. Bliss Title: Chairman and CEO Witness: /s/ Michael S. Richards ------------------------------------- Title: Assistant General Counsel --------------------------------------- Acceptance of Age Discrimination Provisions /s/ Larry D. Hall --------------------------------------------- LARRY D. HALL Date: October 4, 1999 ---------------------------------------- 9 EX-10.I 7 AMENDED & RESTATED BASKET AGREEMENT 1 EXHIBIT 10(i) AMENDED AND RESTATED BASKET AGREEMENT THIS AGREEMENT made and entered into as of November 13, 1989 among American Oil and Gas Corporation, a Delaware corporation ("American"), its wholly-owned subsidiary, American Pipeline Company, a Delaware corporation ("Pipeline"), Cabot Corporation, a Delaware corporation ("Cabot") and its indirect wholly-owned subsidiary, Cabot Transmission Corporation, a Delaware corporation ("Transmission"), as amended and restated as of June 30, 1990; WHEREAS, pursuant to an Amended and Restated Omnibus Acquisition Agreement dated as of November 13, 1989 (the "Omnibus Agreement") by and among American, Cabot and Transmission, and certain additional agreements referred to therein, (i) American acquired from Transmission all of the capital stock of Cabot Gas Supply Corporation, a Delaware corporation ("CGSC") and (ii) by way of merger, the Merger Companies (as defined in the Omnibus Agreement) became wholly-owned subsidiaries of American (CGSC and the Merger Companies being collectively referred to herein as the "Acquired Companies"); WHEREAS, the capital stock of the Acquired Companies was assigned by American to Pipeline; WHEREAS, Cabot, Transmission, American and Pipeline originally entered into this Agreement in order to make special provisions for allocating the benefits, burdens and responsibilities for handling certain assets and liabilities of the Acquired Companies; WHEREAS, Cabot, Transmission, American and Pipeline desire to amend certain terms of this Agreement as of June 30,1990, but effective November 13,1989, by restating this Agreement, as amended in its entirety; NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties, agreements and indemnities contained herein and in the Omnibus Agreement, the parties hereto agree as follows: 2 1. Capitalized Terms. Capitalized terms not otherwise defined herein or in the preamble hereto shall have the same meaning ascribed to them in the Omnibus Agreement. 2. Definitions. 2.1 "Annual Replacement Gas Cost Differential" shall mean, with respect to each of the calendar years 1990 through 1993 an amount not less than zero equal to the lesser of (i) the sum of the Monthly Replacement Gas Cost Differential for each of the twelve calendar months in such year or (ii) $1,500,000; provided, however, that for 1993, the Annual Replacement Gas Cost Differential shall be the lesser of (a) the lesser of the amounts provided in clauses (i) and (ii) above or (b) the positive difference between $5,000,000 and the cumulative sum of Annual Replacement Gas Cost Differential for each of the prior years for which such a determination was made (it being understood that in no event shall the cumulative sum of Annual Replacement Gas Cost Differential exceed $5,000,000); and provided further, that the Annual Replacement Gas Cost Differential for the calendar year 1990 shall be annualized to include the Monthly Replacement Gas Cost Differential for the final two calendar months of 1989. 2.2 "Basket Advance" is defined in the Revolving Credit Note. 2.3 "Basket Collections" means the cumulative aggregate amount (without duplication) of cash collections realized by the Acquired Companies after September 30,1988 until the date of determination from: (i) the amortization in the actual weighted average cost of gas used in billing customers or liquidation or recovery in any other manner of prepaid gas assets of the Acquired Companies accrued in connection with the settlement, discharge, compromise or release of Take or Pay Claims (regardless of whether such prepaid gas assets existed as of September 30, 1988, or are created thereafter either prior to, on or after the Closing Date); (ii) the portion of repayment of intercompany exchange gas balances attributable to the exchange price differential of the Acquired Companies existing as of September 30,1988, as reflected on the combined balance sheet of the Acquired Companies as of such date, but only to the extent that such exchange price differential is amortized and realized in the manner specified in -2- 3 the penultimate paragraph of this Section 2.3 on or prior to March 31, 1990, which Basket Collections shall be deemed to be $9,242,000; and (iii) the recovery by flow-through to customers or liquidation or recovery in any other manner of other assets and costs (including, without limitation, payments for unused transportation services, costs of contract reformation and contract buy-downs, gas reservation fees, premiums on gas purchases and direct outside legal fees) regardless of whether such assets and costs existed as of September 30, 1988 or are created or incurred thereafter (either prior to, on or after the Closing Date) directly related to the settlement, discharge, compromise or release of Take or Pay Claims. For purposes of this Agreement, in the case of Basket Collections made by an Acquired Company whose sales price of gas is regulated by a governmental agency (a "Regulated Company"): (i) Basket Collections which can be realized by including such amounts in the cost of gas portion of such Regulated Company's rate shall be considered realized by such Regulated Company during the calendar month following the month in which funds related to the Basket Collections are included in the actual weighted average cost of gas utilized in billing its customers. If the rate mechanisms utilized in billing the customers of a Regulated Company for gas costs are changed, Basket Collections shall be considered realized by such Regulated Company in the calendar month following the month in which funds related to the Basket Collections are included in its calculation of rates to be charged to its customers for such month. The amount of the cash collection realized shall equal the amount included in the actual weighted average cost of gas or in the calculation of rates. (ii) In those instances where Basket Collections can be realized only by including amounts in the non-cost of gas portion of a Regulated Company's rates, Basket Collections shall be considered realized during any given month in an amount equal to (i) the sales volume of gas for such month multiplied by (ii) an incremental unit cost equal to the amount of costs related to Basket Payments included in the costs of such Regulated Company utilized in establishing the rates divided by the gas volumes utilized in establishing such rates. Notwithstanding any provision of this Section 2.3 to the contrary, an Acquired Company that is not a Regulated Company (an "Unregulated Company") shall realize Basket Collections only in the following manner and to the following extent: -3- 4 (a) With respect to the liquidation or recovery prior to July 1, 1990 of prepaid gas assets of the type referred to in clause (i) of the first paragraph of this Section 2.3, the dollar amount deemed collected as a Basket Collection with respect to a volume of such prepaid gas taken by such Unregulated Company during a calendar month and attributable to a Basket Payment shall be the product of (x) the number of units of volume (converted to MMBtu's) comprising such volume and (y) the lesser of (a) the contractual unit cost of gas specified or implied as one of the terms of such Basket Payment and (b) the weighted average unit sales price of gas of such Unregulated Company during such month, and such dollar amount shall be deemed to be collected during the following calendar month; and (b) with respect to the liquidation or recovery after June 30, 1990 of prepaid gas assets of the type referred to in clause (i) of the first paragraph of this Section 2.3, the dollar amount deemed collected as a Basket Collection with respect to a volume of such prepaid gas taken by such Unregulated Company during a calendar month and attributable to a Basket Payment shall be the product of (x) the number of units of volume (converted to MMBtu's) comprising such volume and (y) 80% of the Unregulated Monthly WASP calculated for such month, and such dollar amount shall be deemed to be collected during the following calendar month; and (c) with respect to the liquidation or recovery of fees or payments for the right to purchase gas in the future at a defined price accrued as Basket Payments and paid in connection with the settlement, discharge, compromise or release of Take or Pay Claims (regardless of whether such fees or payments were paid prior to September 30, 1988, or paid thereafter either prior to, on or after the Closing Date) (such fees or payments being herein referred to as "Gas Reservation Fees"), in the event a volume of gas is taken in a calendar month by an Unregulated Company and with respect to such volume a Gas Reservation Fee has been accrued as a Basket Payment, a Basket Collection shall be deemed collected in the calendar month following the month of such take in an amount equal to the lesser of (i) the aggregate Gas Reservation Fee with respect to such volume and (ii) the amount by which (A) the product of (x) the number of units of volume (converted to MMBtu's) comprising such volume and (y) 80% of the Unregulated Monthly WASP calculated for the calendar month of such take exceeds (B) the aggregate gas purchase price accrued or paid for such volume of gas (it being understood that in the event there is no such excess as determined -4- 5 under this clause (ii), then there shall be no deemed Basket Collection with respect to such Gas Reservation Fee); and (d) with respect to the recovery of other assets (other than prepaid gas assets of the type referred to in clause (i) of the first paragraph of this Section 2.3) and costs of the type referred to in clause (iii) of the first paragraph of this Section 2.3 (including, without limitation, any charge for Take or Pay Recovery Costs but excluding any deemed Basket Collection of gas reservation fees pursuant to clause (c) of this paragraph ), a Basket Collection shall be realized in the calendar month in which payment therefor is received and only to the extent and only in the event such asset is purchased, or cost is borne, by the purchaser of gas from the Unregulated Company under a gas purchase contract that expressly provides that such cost or asset shall be charged to, and paid by, the purchaser. For purposes of this Agreement, with respect to clause (ii) of the first paragraph of this Section 2.3: (i) It is hereby stipulated and agreed that the exchange price differential of the Acquired Companies existing as of September 30, 1988, and representing the dollar amount of gas owed by CEMCO (now Anthem Energy Company) to CGSC (now Westar Transmission Company) at such date was $12,310,000 (calculated on the basis of 14,319 MMcf of gas at $0.86 per Mcf). (ii) During each calendar month thereafter, beginning with October 1988 and ending with March 1990, if there has been a net reduction during such month in the volume of gas owed by CEMCO (now Anthem Energy Company) to CGSC (now Westar Transmission Company), the dollar amount attributable to such net reduction, which shall be determined by multiplying the number of Mcf's comprising such net reduction by $0.86, shall be deemed to be a Basket Collection of such dollar amount realized by the Acquired Companies during such calendar month, until the earlier of March 31, 1990 or such time as the aggregate amount of such deemed Basket Collections shall equal $12,310,000, at which time no further amounts shall be deemed to be Basket Collections attributable to the exchange price differential of the Acquired Companies. If any amount included in Basket Collections by virtue of its amortization in the actual weighted average cost of gas pursuant to clause (i) of the first paragraph of this Section 2.3 is thereafter disallowed by final and nonappealable order entered in any applicable rate proceeding or through good faith negotiations with customers, the amount so disallowed shall thereupon be deducted from Basket Collections, provided that after the Closing, American shall act in good faith in any such rate -5- 6 proceeding or negotiations in recognition of the intent of the parties to this Agreement that such amounts be included in Basket Collections to the extent practicable. To the extent, if any, any such disallowance results in an offsetting economic benefit to American, Pipeline or any of the Acquired Companies, the fair value of such benefit, when and as realized, shall be deemed to be a Basket Collection. 2.4 "Basket Collections Account" means an account maintained by Pipeline and the Acquired Companies pursuant to Section 3 hereof for the purpose of recording cumulative Basket Collections. 2.5 "Basket Deficit" is defined in Section 4.2 hereof. 2.6 "Basket Payments" means the cumulative sum (without duplication) as of the date of determination of (i) consideration paid or otherwise incurred by the Acquired Companies after September 30, 1988, in connection with the discharge, settlement, compromise or release of any Take or Pay Claims (including, without limitation, the value of prepayments for gas, payments for unused transportation services, costs of contract reformation and contract buy-downs, gas reservation fees and premiums on gas purchases), (ii) the amount of any direct outside legal fees and expenses incurred by the Acquired Companies after September 30, 1988, in connection with the discharge, settlement, compromise or release of Take or Pay Claims and (iii) the aggregate of the Annual Replacement Gas Cost Differentials for all calendar years ending prior to the March 31 occurring on or next preceding the date of determination. 2.7 "Basket Payments Account" means an account maintained by Pipeline and the Acquired Companies pursuant to Section 3 hereof for the purpose of recording cumulative Basket Payments. 2.8 "Basket Surplus" is defined in Section 4.1 hereof. 2.9 "Closing Date" and "Closing" are defined in the Omnibus Agreement. 2.10 "Determination Date" means October 31, 1989. 2.11 "Determination Date Basket Deficit" is defined in Section 3.2 hereof. 2.12 "Determination Date Basket Excess" is defined in Section 3.2 hereof. -6- 7 2.13 "El Paso" means E1 Paso Natural Gas Company, a Delaware corporation. 2.14 "FERC" means the Federal Energy Regulatory Commission. 2.15 "Future Basket Collections" means all cash collections reasonably estimated to be realized (as determined in accordance with Section 2.3 hereof) by the Acquired Companies after the Settlement Date from the matters described in clauses (i), (ii) and (iii) of the first paragraph of Section 2.3 hereof; provided that Future Basket Collections shall not include any future collections related to the recovery of Take or Pay Recovery Costs. 2.16 "Future Basket Payments" means all amounts described in clauses (i) and (ii) of Section 2.6 hereof reasonably estimated to be paid or incurred by the Acquired Companies after the Settlement Date; provided that Future Basket Payments shall not include any future payment of Take or Pay Recovery Costs. 2.17 "Guaranty" means a Guaranty Agreement substantially in the form attached hereto as Appendix C. 2.18 "Initial Settlement Date" means June 30,1994. 2.19 "Initial Take or Pay Account Statement" is defined in Section 3.1 hereof. 2.20 Monthly Minimum Residue Gas Volume" shall mean, for any given month, the gas volume (expressed in Mcf's) obtained by multiplying the number of days in such month by the following daily gas volumes applicable to such month: (i) for months prior to January 1991- 50,000 Mcf, (ii) for months during 1991- 47,500 Mcf, (iii) for months during 1992 - 45,000 Mcf and (iv) for months during 1993- 42,500 Mcf. 2.21 "Monthly Replacement Gas Cost Differential" shall mean, with respect to each calendar month commencing with November 1989 and ending with -7- 8 December 1993, a dollar amount equal to the product obtained by multiplying (i) the applicable Monthly Residue Gas Volume Shortfall by (ii) the difference (which may be positive or negative) obtained by subtracting the applicable Residue Gas Contract Price from the applicable Replacement Gas Price; provided, however, that if, in its good faith business judgment, American elects to make a payment of a cash basis loss reimbursement under Section 3.1 of either Residue Gas Contract (as hereinafter defined) so as to avoid the release of gas attributable to a particular plant in a particular calendar month and such payment is a lesser cost alternative to the release of the gas and the replacement thereof at the Replacement Gas Price, the portion of the Monthly Replacement Gas Cost Differential for such month attributable to such plant shall be deemed (in lieu of the product computed as aforesaid with respect to such plant) to be the amount of such cash basis loss reimbursement to the extent such payment is necessary to avoid or reduce a monthly Residue Gas Volume Shortfall. 2.22 "Monthly Residue Gas Volume Shortfall" shall mean, for any given calendar month, the amount (measured in Mcf's) by which the aggregate amount of residue gas available for purchase by the Acquired Companies from The Maple Gas Corporation, or any successor thereto ("Maple"), under those certain Residue Gas Purchase Agreements identified in Appendix D hereto (or any amendment or modification thereof to which Cabot has consented in its discretion) (the "Residue Gas Contracts") is less than the applicable Monthly Minimum Residue Gas Volume; provided, however, that the Monthly Residue Gas Volume Shortfall shall be zero for any month unless any portion of such shortfall below the Monthly Minimum Residue Gas Volume solely or partially resulted from the release of gas from the Residue Gas Contracts pursuant to Section 3.1 of either of the Residue Gas Contracts or the exercise by Maple of any other economic or market "outs" or similar rights which would have the effect of releasing residue gas under any amendment or modification of the Residue Gas Contracts to which Cabot has consented in its discretion; and provided further that in an event shall the Monthly Residue Gas Volume Shortfall exceed the aggregate amount (measured in Mcf's) of gas so released from the Residue Gas Contracts. 2.23 "Option Date" means the date of the closing of the acquisition by American of Gathering Company pursuant to the exercise of the Gathering Company Option. -8- 9 2.24 "Payment Date" is defined in Section 4.1 hereof. 2.25 "Replacement Gas Price" shall mean, for any given month, the weighted average cost of gas per Mcf (as adjusted for MMbtu content) of all gas purchased by CEMCO or its successor in such month from the alternative gas purchase sources listed in Appendix E hereto, as it may be amended from time to time by mutual agreement of American and Cabot. 2.26 "Residue Gas Contract Price" shall mean, for any given month, the lowest contract sales price per Mcf (as adjusted for MMbtu content) of residue gas in effect under the Residue Gas Purchase Contracts described in Appendix D hereto (or under any renewal, amendment or modification thereof to which Cabot has consented in its discretion); provided that if any of such contracts (or under any renewal, amendment or modification thereof to which Cabot has consented in its discretion) cease to be valid and enforceable against The Maple Gas Corporation, or any successor thereto, the last effective contract sales price of residue gas under such contract shall be considered in effect for the purpose of determining the lowest contract sales price. If such last effective contract price is stated by formula, then such formula shall be applied to the month in which a Monthly Residue Gas Volume Shortfall exists. 2.27 "Revolving Credit Note" means a promissory note substantially in the form attached hereto as Appendix B. 2.28 "Settlement Amount" is defined in Section 5(b) hereof. 2.29 "Settlement Date" means the Initial Settlement Date or any extension thereof which may occur pursuant to Section 3.3 hereof. 2.30 "Settlement Date Value" means the net present value as of the Settlement Date of each of (i) Future Basket Collections and (ii) Future Basket Payments. Future Basket Collections and Future Basket Payments, and the timing thereof, shall be based upon estimates of future deliverable supplies of gas, projections of market conditions, and prices based on market prices in effect as of the Settlement Date for similar gas. Estimates of Future Basket Collections shall take into consideration the reasonable probabilities of recovery of such costs through flow through under contracts, rules, orders and regulations in effect as of the Settlement -9- 10 Date and taking into account projections of market conditions. The Settlement Date Value shall be established using a discount rate, compounded semi-annually, equal to the weighted average cost of borrowed money of American as of the Settlement Date. 2.31 "Settlement Period" means the period from September 30, 1998 to the Settlement Date. 2.32 "Take or Pay Account Statement" is defined in Section 3.1 hereof. 2.33 "Take or Pay Claims" means (i) all claims, liabilities and losses resulting from (a) the failure or alleged failure of any of the Acquired Companies to take or pay (or take and pay) for minimum quantities of gas attributable to any period prior to the Closing Date including, without limitation, claims alleging violation of ratable take obligations and claims alleging damages for failure to take-gas (but excluding Take or Pay Recovery Costs included in clause (ii) hereof) or (b) the failure or alleged failure of Cabot Pipeline Corporation to take or pay (or take and pay) for minimum quantities of gas under the contracts specified in Appendix F hereto attributable to the period from September 29, 1984 through June 30, 1985 including, without limitation, claims alleging violation of ratable take obligations and claims alleging damages for failure to take gas (but excluding Take or Pay Recovery Costs included in clause (ii) hereof) and (ii) all costs resulting from the incurring by the Acquired Companies of any Take or Pay Recovery Costs, but excluding all claims, liabilities and losses relating to any of the matters described in Schedule 13.01(A) to the Omnibus Agreement. 2.34 "Take or Pay Recovery Costs" means any costs or other amounts paid to past or future gas suppliers or gas transporters by the Acquired Companies (whether in the form of a direct payment or billing or surcharge on future purchases or transportation or otherwise) after October 31, 1989 pursuant to filed tariffs, orders of a regulatory body or statute, under any program established primarily for the purpose of providing such suppliers or transporters with a mechanism to recover, or be reimbursed for, past take or pay liabilities, whether under Order 500 promulgated by the FERC or any other rule or order of any regulatory body, federal or state, having jurisdiction over gas pipelines, suppliers or transporters, or otherwise, and whether or not such cost or amount is determined with regard to the historical gas purchases or transportation of the Acquired Companies. -10- 11 2.35 "Unrecovered Take or Pay Recovery Costs" means the amount (if positive) obtained by subtracting $5 million from the aggregate Basket Payments made by the Acquired Companies as of the Settlement Date relating to Take or Pay Recovery Costs that have not been recouped or amortized by the Acquired Companies by the realization of corresponding Basket Collections prior to the Settlement Date. 2.36 "Unregulated Monthly WASP" means the weighted average unit sales price per MMBtu received by Anthem Energy Company (formerly CEMCO) ("Anthem") for all gas sold in the State of Texas in Texas Railroad Commission Districts 8, 8A and 10 under sales contracts with primary terms of less than 90 days, during a given calendar month by Anthem, excluding sales to Anthem's affiliates, determined by dividing the total number of MMbtu's of such gas sold by Anthem in such calendar month into the net proceeds received from such sales in such month after deducting any charges incurred by Anthem for third party transportation relating to such gas (including, without limitation, transportation on pipelines belonging to joint ventures or partnerships in which Anthem's affiliates have an interest, but excluding charges, if any, for transportation of the gas through facilities wholly owned by the Acquired Companies) and after adjusting for prior period adjustments. 3. Accounting. 3.1 Take or Pay Account Statement. Cabot and American shall jointly prepare, within 30 days after the Determination Date, a statement as of the Determination Date which reflects the Basket Payments paid or otherwise incurred by, and the Basket Collections realized by, the Acquired Companies since September 30, 1988 (the "Initial Take or Pay Account Statement"). If Cabot and American are unable to agree on the preparation of the Initial Take or Pay Account Statement within 30 days after the Determination Date, the Initial Take or Pay Account Statement shall be determined by an independent accounting firm selected by mutual agreement of Cabot and American. The determinations included in the Initial Take or Pay Account Statement prepared by such accounting firm shall be final and binding on Cabot and American, and the fees and expenses of such accounting firm shall be borne equally by Cabot and American. During the period prior to Closing, Cabot shall have caused the Acquired Companies to maintain, and, after Closing, American shall cause the Acquired Companies to maintain, their books -11- 12 and records in such a manner that Basket Collections, Basket Payments and potential flow-through costs incurred in the settlement, discharge, compromise or release of Take or Pay Claims can be clearly identified and calculated. During the Settlement Period, American shall cause the Acquired Companies to make adjustments to the Initial Take or Pay Account Statement (the Initial Take or Pay Account Statement and each successive adjusted statement delivered pursuant to the next succeeding sentence are each herein described as a "Take or Pay Account Statement") to reflect increases and decreases in the accounts on such Take or Pay Account Statement in accordance with the terms hereof. Within 30 days after the end of each calendar quarter occurring after the Closing Date, and ending with the last calendar quarter ending on a date prior to the Settlement Date, American shall deliver a quarterly interim Take or Pay Account Statement to Cabot reflecting such account adjustments made during the previous calendar quarter and the balance of each account as of the end of such calendar quarter. 3.2 Adjustments. If prior to Closing Cabot or any of the Acquired Companies shall have settled, released, compromised or discharged any Take or Pay Claims, or if after Closing American or any of the Acquired Companies settles, releases, compromises or discharges any Take or Pay Claims, the Basket Payments Account reflected on the then current Take or Pay Account Statement shall be adjusted to reflect the amount of Basket Payments incurred by any of the Acquired Companies. Basket Payments consisting of Annual Replacement Cost Differential for any of the calendar years 1990 through 1993 shall be reflected in Basket Payments on and as of the March 31 next following the end of such calendar year. The Basket Collections Account reflected on the then current Take or Pay Account Statement shall be adjusted to reflect the amount of Basket Collections. If the Initial Take or Pay Statement reflects an excess as of the Determination Date of the balance of the Basket Collections Account over the balance of the Basket Payments Account (the "Determination Date Basket Excess"), then the amount of such Determination Date Basket Excess shall be retained in the Acquired Companies through the Determination Date for the benefit of American and Pipeline and an amount equal to such Determination Date Basket Excess shall be excluded as of the Determination Date from the calculation of Working Capital (as defined in Section 13.01 of the Omnibus Agreement) of the Acquired Companies for the purpose of Section 13.01 of the Omnibus Agreement. If the Initial Take or Pay Statement reflects an excess as of the Determination Date of the balance of the Basket Payments Account over the balance of the Basket Collections Account (the "Determination Date Basket Deficit"), -12- 13 then the amount of such Determination Date Basket Deficit shall be deemed drawn as a Basket Advance on the Revolving Credit Note on the Determination Date and shall not be included in the calculation of Working Capital as of the Determination Date pursuant to Section 13.01 of the Omnibus Agreement. 3.3 Final Statement. Within 30 days after the Initial Settlement Date (and any subsequent Settlement Date in the event such date is extended pursuant to this Section 3.3), American shall submit to Cabot a proposed final Take or Pay Account Statement which shall reflect cumulative aggregate Basket Collections and Basket Payments during the Settlement Period and the respective balances of the Basket Collections Account and the Basket Payments Account as of the applicable Settlement Date. In addition, the proposed final Take or Pay Account Statement shall reflect American's estimate of Future Basket Collections, Future Basket Payments and the Settlement Date Value of each. Within 30 days after Cabot has received such proposed final Take or Pay Account Statement, Cabot shall notify American whether Cabot agrees or disagrees with all or a portion of such statement. If Cabot agrees with such statement in its entirety, the parties shall settle in accordance with Paragraph 4 hereof. If the parties are unable to agree on a final Take or Pay Account Statement within 30 days after Cabot has received American's proposed final Take or Pay Account Statement with regard to the Initial Settlement Date, the Settlement Date shall be extended to a date one year from the date of the Initial Settlement Date. At the end of such extended Settlement Period, Cabot and American shall follow the procedures set forth herein in an attempt to agree on a final Take or Pay Account Statement. If within 60 days after the end of the extended Settlement Period Cabot and American are unable to agree on a final Take or Pay Account Statement, then Cabot and American shall submit any and all disputes concerning the amounts reflected in the proposed final Take or Pay Account Statement to arbitration in accordance with the arbitration procedures set forth in Appendix A hereto. The decision of the arbitrators concerning the final Take or Pay Account Statement shall be binding upon the parties as further specified in Appendix A and, following any final decision rendered by the arbitrators, the parties shall settle in accordance with Section 4 hereof. 3.4 Limitation on Post-Closing Obligations. Except as otherwise provided in Section 5(a) hereof, nothing contained in this Agreement shall be construed to obligate American, Pipeline or the Acquired Companies to file any proceedings with any regulatory body or to institute litigation to attempt to recover -13- 14 any cost incurred in the settlement, discharge, compromise or release of any Take or Pay Claim; provided, however, that American and Pipeline shall, and American and Pipeline shall cause the Acquired Companies to, exert reasonable efforts in good faith to maintain rate recovery mechanisms existing as of the date of this Agreement for take-or-pay related costs. 3.5 Amendment Date Take or Pay Account Statement. Attached as Appendix G is a statement as of June 30, 1990 which reflects the Basket Payments paid or otherwise incurred by, and the Basket Collections realized by, the Acquired Companies since September 30, 1988. 4. Sharing of Basket Obligations. 4.1 Excess Net Assets. In the event that, as reflected in the final Take or Pay Account Statement, the sum of (a) the cumulative aggregate Basket Collections realized by the Acquired Companies during the Settlement Period plus (b) the Settlement Date Value of Future Basket Collections exceeds the sum of (i) the cumulative aggregate Basket Payments incurred by the Acquired Companies during the Settlement Period (less the amount of any Unrecovered Take or Pay Recovery Costs) plus (ii) the Settlement Date Value of Future Basket Payments (the amount of any such excess being referred to herein as the "Basket Surplus"), then American or Pipeline shall pay to Cabot an amount equal to the sum of (i) the aggregate Annual Replacement Gas Cost Differentials, if any, for the years 1990 through 1993 (but only to the extent of such Basket Surplus) plus (ii) one-half of the remainder of such Basket Surplus after payment of the amount specified in clause (i), if any, within the later of (A) three business days after agreement on the final Take or Pay Account Statement or (B) three business days after the date a final decision is rendered by the arbitrators regarding the final Take or Pay Account Statement which is submitted to arbitration pursuant to Section 3.3 hereof (the "Payment Date"). 4.2 Excess Net Liabilities. In the event, as reflected in the final Take or Pay Account Statement, the sum of (A) the cumulative aggregate Basket Payments incurred by the Acquired Companies during the Settlement Period (less the amount of any Unrecovered Take or Pay Recovery Costs) plus (B) the Settlement Date Value of Future Basket Payments exceeds the sum of (x) the cumulative aggregate Basket Collections realized by the Acquired Companies during the Settlement Period plus (y) the Settlement Date Value of Future Basket Collections (the amount of any such -14- 15 excess being referred to herein as the "Basket Deficit"), then Cabot shall pay to American or Pipeline, on the Payment Date, a portion of the Basket Deficit as follows: (1) In the event that the Basket Deficit is less than $40 million, Cabot shall pay an amount equal to one-half of the Basket Deficit, it being understood and agreed that American, Pipeline and the Acquired Companies shall be fully responsible for the other half. (2) In the event that the Basket Deficit is equal to or greater than $40 million, Cabot shall pay an amount equal to $20 million plus all of the Basket Deficit in excess of $40 million, it being understood and agreed that American, Pipeline and the Acquired Companies shall remain fully responsible for the remaining $20 million. 4.3 Interest on Sharing Payments. Any payment made by American or Pipeline pursuant to Section 4.1, or by Cabot pursuant to Section 4.2, shall bear interest from (and including) the applicable Settlement Date to (but excluding) the date of payment at an interest rate per annum equal to the rate per annum that such amount would bear if it was an amount outstanding at the time under the Revolving Credit Note. Payment of such interest shall be due when payment of the amount to which it relates is due. 4.4 Character of Sharing Payments. Any payments made by American or Pipeline pursuant to Section 4.1, or by Cabot pursuant to Section 4.2, shall be treated as adjustments to the cost of acquiring CGSC pursuant to the Stock Purchase Agreement. 5. Matters Concerning Gathering Company. (1) In the event American exercises the Gathering Company Option during the Settlement Period, the Acquired Companies and Pipeline shall pay over to Cabot, as collected, amounts paid by Gathering Company prior to the Option Date in settlement, discharge, compromise or release of take or pay and related claims against Gathering Company and collected after the Option Date by flow-through to El Paso or to the Acquired Companies. If, prior to the Option Date, Gathering Company shall have filed an application with the FERC pursuant to Order 500 of the FERC and related regulatory provisions to recover a portion of Gathering Company's take or pay buyout and buydown and related costs, then after the Option Date American and Pipeline shall cause -15- 16 Gathering Company to prudently prosecute such application before the FERC to recover for Gathering Company a portion of all recoverable costs to the extent permitted under FERC orders and regulations. If Gathering Company is granted authority by the FERC to recover a portion of take or pay and related costs, whether such authority is granted before or after the Option Date, American and Pipeline shall cause Gathering Company to pay over to Cabot, as collected, all amounts actually recovered from E1 Paso by Gathering Company pursuant to such authority. (b) Regardless of whether American exercises the Gathering Company Option, in full and final settlement of all take or pay and related claims of Gathering Company against CGSC, after the Closing Date, Pipeline shall cause CGSC to pay to Gathering Company (i) to the extent that Gathering Company remains subject to the jurisdiction of the FERC, any charges to CGSC made by Gathering Company (whether in the form of a direct payment or surcharge on future purchases or otherwise) pursuant to filed tariffs reflecting pass through or recovery of take-or-pay associated costs under any program established and authorized under Order 500 promulgated by the FERC in any Docket Number beginning with the prefix "RM 87-34-" or similar rule or order (whether in the form of a direct payment or surcharge on future purchases or otherwise) and (ii) to the extent Gathering Company ceases to be subject to the jurisdiction of the FERC, all amounts that may be owed by CGSC to Gathering Company under that certain Gas Sales Contract dated December 31, 1957 by and between Gathering Company, as Seller ("Seller'), and Pioneer Natural Gas Company, predecessor to CGSC, as Buyer ("Buyer"), as amended (the "Gas Sales Contract") for all claims, liabilities and losses sustained by Gathering Company as a result of the failure of CGSC to take or pay for minimum quantities of gas attributable to any period prior to the Closing Date. For purposes of paragraph 3 of that certain letter agreement dated August 11, 1977, between Buyer and Seller (the "Letter Agreement"), an amount equal to 18.12% of any settlements by or judgments against Seller for take-or-pay liabilities paid or incurred and unpaid, in either case, prior to Closing shall be considered "the amount necessary for Seller to prepay Seller's producer suppliers . . . ," and Buyer shall have the right to take from Seller as prepaid volumes only 18.12% of those volumes actually recouped or taken by Seller as prepaid volumes as a result of payment made by Seller to its producer suppliers pursuant to any judgment, settlement or other contractual obligation. To the extent recoupment by Seller from its producer suppliers is through a cash payment, Seller shall promptly pay over to Buyer 18.12% of such payment. The rights and obligations of the parties hereinabove set forth under the Letter -16- 17 Agreement shall survive the expiration date thereof. In no event, however, shall the aggregate of any amounts owing and paid to Gathering Company under this paragraph 5 and the Gas Sales Contract exceed $2,100,000 (the sum of all amounts owing by CGSC hereunder to Gathering Company being herein referred to as the "Settlement Amount"). Any payments made pursuant to (ii) of the next preceding sentence shall be adjusted, as appropriate, for amounts paid pursuant to (i) of such sentence so that the total amount paid thereunder shall not exceed the amount which would have been payable if Gathering Company had been non-jurisdictional at all times on and after the Closing Date. Except as provided in this Section 5 with respect to payment of the Settlement Amount, Gathering Company agrees to fully release and hold harmless CGSC, its predecessors, their officers, directors, agents and representatives from and against all take or pay, take and pay and related claims which Gathering Company may have, or is alleged to have. In the event that Gathering Company ceases to be subject to the jurisdiction of the FERC, Gathering Company agrees to execute and deliver to CGSC an amendment to the Gas Sales Contract, in form and substance satisfactory to Pipeline, providing in substance that there shall not be included in any component of the purchase and sales price of gas under the Gas Sales Contract (whether included in "Cost of Service" or otherwise) any cost associated with the settlement, discharge, compromise or release of any take or pay or related claims against Gathering Company attributable to any period prior to the date of final payment of the Settlement Amount. For all purposes of this Agreement, any payment of any portion of the Settlement Amount by CGSC shall constitute a Basket Payment, and, to the extent recovered by the Acquired Companies by flow-through to customers or liquidation or recovery in any other manner, a Basket Collection. (c) Except as otherwise provided in Section 5(a), nothing contained in this section shall be construed to obligate American, Pipeline or the Acquired Companies (or, in the event the Gathering Company Option is exercised, Gathering Company) to file any proceedings with any regulatory body or institute litigation to attempt to recover any cost incurred in the settlement, discharge, compromise or release of any take or pay and related claims of Gathering Company. 6. Revolving Credit Facility. Pipeline has executed and delivered to Cabot the Revolving Credit Note dated as of the date hereof and American and Cabot have executed and delivered the Guaranty. Cabot agrees to lend from time to time to Pipeline, and Pipeline agrees to pay, the respective amounts provided in the -17- 18 Revolving Credit Note in accordance with the terms thereof. Subject to the terms hereof, Cabot accepts and agrees to be bound by the terms of the Revolving Credit Note. 7. Settlement of Take or Pay Claims. After the Closing, the Acquired Companies shall have sole and complete authority to settle, discharge, compromise or release, or otherwise negotiate or resolve or attempt to resolve all controversies related to, any Take or Pay Claims; provided that (i) the Acquired Companies shall keep Cabot reasonably advised, and shall upon request consult with Cabot, from time to time during the Settlement Period on the status of the negotiations and proposed resolution of all matters related to Take or Pay Claims and (ii) with respect to the settlement of any Take or Pay Claim in an amount in excess of $1,000,000, Cabot shall have the right of prior written consent. If Cabot does not deliver a written objection to a proposed settlement in excess of such amount within 15 days after American has delivered a written proposal of settlement to Cabot, then Cabot shall be deemed to have consented to such proposal of settlement. 8. Governing Law. Except for the agreement to arbitrate and the other provisions respecting arbitration contained herein and in Appendix A, which shall be governed by and construed in accordance with the Federal Arbitration Act, 9 U.S.C.A. ss.ss. 1-14, as amended, and other applicable U.S. federal law in each case as in effect on the date hereof, this Agreement shall be governed by and construed in accordance with the laws of the State of Texas. 9. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, their respective successors and assigns. No assignment of this Agreement shall release any party of any obligations under this Agreement. 10. Notices. Notices required to be delivered hereunder shall be in writing and shall be deemed delivered when delivered in accordance with the notice provisions of the Revolving Credit Note. 11. Effect of Amendment. It is the intent of the parties hereto that the amendments to the original Basket Agreement effected by this Amended and Restated Basket Agreement are to be effected retroactively to November 13,1989. -18- 19 12. Approval of Certain Creditors. Notwithstanding any provision of this Amended and Restated Basket Agreement to the contrary, the amendment and restatement of this Agreement shall not be effective unless and until this Amended and Restated Basket Agreement is approved, or consented to, by The Prudential Insurance Company of America and Pruco Life Insurance Company, as holders of the 11.38% Senior Notes due September 30, 1999 and 12.69% Senior Subordinated Notes due September 30, 1999 of Pipeline under that certain Securities Purchase Agreement dated as of November 13, 1989. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above. AMERICAN OIL AND GAS AMERICAN PIPELINE COMPANY CORPORATION By:/s/ David M. Carmichael By:/s/ David M. Carmichael --------------------------------- ---------------------- David M. Carmichael David M. Carmichael President President CABOT CORPORATION CABOT TRANSMISSION CORPORATION CORPORATION By:/s/ John G. L. Cabot By:/s/ John G. L. Cabot --------------------------------- ------------------- John G. L. Cabot John G. L. Cabot Vice-Chairman President -19- 20 APPENDIX A TO BASKET AGREEMENT ARBITRATION PROCEDURES 1. Arbitration Period. The Arbitration Period shall begin 60 days from the extended Settlement Date, as provided in the Basket Agreement, if the parties have been unable to reach an agreement on the final Take or Pay Account Statement by such date; and it shall continue until the Arbitrators have rendered their decision or the parties have reached a final agreement with respect to such final Take or Pay Account Statement. 2. Selection of Arbitrators. Each of Cabot (on behalf of itself and Transmission) and American (on behalf of itself and Pipeline) shall designate an arbitrator within fourteen days after the beginning of the Arbitration Period and the two arbitrators so designated shall select a third arbitrator within thirty days after the beginning of the Arbitration Period. The panel of such three arbitrators (the "Arbitrators") shall decide any dispute between the parties with respect to the final Take or Pay Account Statement, as provided in Section 3.3 of the Basket Agreement, with a vote of two of the Arbitrators required to render a decision. 3. Location. The arbitration shall be conducted in Houston, Texas. 4. Decision. The decision of the Arbitrators shall be in writing and shall contain a reasonably complete description of the legal and factual bases of the award. Except to the extent otherwise provided by applicable law, the award of the Arbitrators shall be final, binding and unappealable, and such award shall receive recognition and enforcement in any court of competent jurisdiction. 5. Governing Rules and Law. The Arbitrators, American, Pipeline, Cabot and Transmission shall observe and be bound by the procedures set forth herein, as supplemented (to the extent of lack of conflict) by the Commercial Arbitration Rules of the American Arbitration Association as in effect on the effective date of the Basket Agreement. The agreement to arbitrate and the other provisions respecting arbitration contained herein and in the Basket Agreement shall be governed by and construed in accordance with the Federal Arbitration Act, 9, U.S.C.A. ss.ss. 1-14, as amended. and other applicable U.S. federal law in each case as in effect on the effective date of the Basket Agreement. 6. Costs and Expenses. The costs and expenses of the arbitration shall be borne and paid by the parties in equal shares and shall include compensation to the Arbitrators, which compensation shall be negotiated among the parties and the Arbitrators, plus out-of- pocket expenses. Each party shall bear and be responsible for the fees of its own counsel and other advisors and any costs associated with obtaining evidence or the testimony of witnesses or otherwise making such witnesses available to testify. If the testimony of a witness or other item of evidence is obtained by both parties, the costs associated with obtaining such testimony or evidence shall be borne equally between the parties. 21 APPENDIX B TO BASKET AGREEMENT Form of Revolving Credit Note REVOLVING CREDIT NOTE 22 REVOLVING CREDIT NOTE: $25,000,000.00 November 13, 1989 FOR VALUE RECEIVED, the undersigned, American Pipeline Company, a Delaware corporation ("Maker") hereby promises to pay to the order of Cabot Corporation, a Delaware corporation with its principal offices in Waltham, Massachusetts ("Lender"), on or before the Payment Date as defined in Section 4.1 of the Basket Agreement hereinafter referred to (the "Maturity Date"), the lesser of (i) Twenty Five Million Dollars ($25,000,000) and (ii) the aggregate unpaid principal amount of advances outstanding hereunder, plus all interest accrued and unpaid hereunder. Maker also agrees to make additional payments of principal under this Note as provided herein. This Note is the Revolving Credit Note provided for in, and is entitled to the benefits of, the Basket Agreement dated the date hereof among American Oil and Gas Corporation ("American"), American Pipeline Company ("Pipeline"), Cabot Transmission Corporation and Lender, as and if amended from time to time (the "Basket Agreement"). It is contemplated that by reason of prepayments hereon there may be times when no indebtedness is owing hereunder, but notwithstanding such occurrences, this Note shall remain valid and shall be in full force and effect as to Basket Advances (as hereinafter defined) and Working Capital Advances (as hereinafter defined) made pursuant hereto subsequent to each such occurrence. 1. Interest Rate. This Note shall bear interest on the unpaid principal amount hereof from time to time outstanding, until maturity (whether by acceleration or otherwise), at a rate per annum equal to the lesser of (i) the rate determined in accordance with Schedule I hereto (the "Floating Rate") and (ii) the 23 maximum non-usurious contract rate of interest permitted by applicable law (the "Highest Lawful Rate"). After maturity, the unpaid principal amount hereunder, and, to the extent permitted by law, accrued unpaid interest hereon, shall bear interest until paid in full at the rate per annum equal to the lesser of (x) the Floating Rate plus 5% per annum and (y) the Highest Lawful Rate. Interest charges will be calculated on amounts owing hereunder on the actual number of days said amounts are outstanding on the basis of a 360 day year. 2. Working Capital Advances. On any date prior to November 13, 1991, Maker may borrow and reborrow from time to time on a revolving credit basis for general working capital purposes (including, without limitation, to fund advances made by Maker to the Acquired Companies (as defined in the Basket Agreement) for general working capital purposes) an amount of principal hereunder upon prior written notice of at least two Business Days (as hereinafter defined) from Maker to Lender specifying the date and aggregate principal amount of such advance (such advances are herein referred to as "Working Capital Advances"); provided that at no time shall the aggregate amount of Working Capital Advances hereunder exceed $4,000,000 at any one time outstanding. Each Working Capital Advance to be made hereunder shall be in a principal amount of not less than $50,000, or any larger amount that is an integral multiple of $50,000. 3. Basket Advances. Maker may borrow and reborrow from time to time on a revolving credit basis for the purpose of funding, on a current basis, the excess of cumulative aggregate Basket Payments (including, for the purposes of this Note, advances from Maker to the Acquired Companies to fund any Basket Payments of the Acquired Companies) over cumulative aggregate Basket Collections (as such terms are defined in the Basket Agreement) an amount of principal as provided hereunder (such advances are herein referred to as "Basket Advances"). On the Determination Date, Maker shall be deemed to have drawn as a Basket Advance an B-2 24 amount of principal hereunder equal to the Determination Date Basket Deficit (as defined in the Basket Agreement), as such amount is derived from the Initial Take-or-Pay Account Statement (as defined in the Basket Agreement). Maker may at any time and from time to time, but solely for the purpose set forth in the first sentence of this paragraph, on or before November 13, 1994, borrow and reborrow an additional amount 0of principal hereunder as a Basket Advance upon at least two Business Days' prior written notice to Lender specifying the date and aggregate principal amount of such Basket Advance; provided, however, that at no time shall the total of aggregate outstanding Working Capital Advances and aggregate outstanding Basket Advances exceed Twenty-Five Million Dollars ($25,000,000). 4. Advance Procedures and Records. Lender shall deposit the proceeds of a requested Working Capital Advance or Basket Advance no later than 1:00 p.m. Houston time on the date so specified in any such notice of the requested advance to such demand deposit account maintained at a commercial bank as Maker shall have designated in such notice. Working Capital Advances or Basket Advances made by Lender to Maker and all prepayments or repayments thereof shall be recorded by Lender and, prior to any transfer hereof, endorsed by Lender on Schedule II attached hereto, or on a continuation of such Schedule II to be attached to and made a part hereof. The failure of Lender to so record any advance or repayment shall not affect Maker's liability for any Working Capital Advance or Basket Advance. 5. Mandatory Prepayments. (1) Within three Business Days following the delivery to Cabot of any quarterly interim Take-or-Pay Account Statement (as defined in the Basket Agreement), or if such statement is not delivered when required under the Basket Agreement, within three Business Days following the date upon which such statement is required to be delivered pursuant to Section 3.1 of the Basket Agreement, Maker shall prepay the outstanding principal related to Basket Advances in such amount, if any, as may be required so that the aggregate principal B-3 25 amount of all outstanding Basket Advances shall not exceed the sum of (i) the amount of the excess, if any, of the balance of the Basket Payments Account over the balance of the Basket Collections Account as of the end of the preceding calendar quarter and (ii) the aggregate amount of permitted Basket Advances loaned to Maker since the last day of such calendar quarter, together with accrued and unpaid interest on the principal amount being prepaid. (b) Maker shall prepay all outstanding principal related to Working Capital Advances together with accrued and unpaid interest on the principal amount thereof on November 13, 1991. 6. Optional Prepayments. Maker may on any Business Day prepay, without penalty, amounts of principal outstanding hereunder in whole at any time or in part from time to time in an aggregate principal amount of $50,000 (except in connection with prepayments made pursuant to paragraph 5 hereof) or any larger amount that is an integral multiple of $50,000, together with accrued and unpaid interest on the principal amount being prepaid to the date of prepayment; provided that Maker shall have given Lender at least one Business Day's prior written notice of such prepayment. Maker shall designate in such notice the date and the proposed principal amount being prepaid, in whole or in part, and whether such prepayment is to reduce outstanding Working Capital Advances or Basket Advances. Amounts prepaid by Maker as aforesaid shall be applied to prepay principal as designated. 7. Interest Payments. Interest accrued on all principal amounts remaining unpaid hereon shall be payable quarterly as it accrues on the last day of each calendar quarter and at maturity of the respective amounts to which such interest relates. 8. Procedures on Payments. Payments of both principal and interest are to be made in lawful money of the United States of America at the office of Lender or, at Lender's written direction, by wire transfer of such funds to a commercial bank B-4 26 account of Lender. If any payment of principal or interest on this Note shall become due on a day other than a Business Day, such payment shall be made on the next Business Day and such extension of time shall in such case be included in computing interest in connection with such payment. In this Note, the term "Business Day" shall mean any day other than a Saturday, a Sunday or a day on which national banks in Houston, Texas, are required or permitted by law to close. 9. Usury Savings. It is the intention of Maker and Lender to conform strictly to all applicable usury laws. It is therefore agreed that (i) in the event that the maturity hereof is accelerated by reason of an election by Lender, or if the same is prepaid prior to maturity, all unearned interest, if any, shall be canceled automatically or, if theretofore paid, shall be credited on the unpaid principal amount of this Note with the excess, if any, refunded to Maker, (ii) the aggregate of all interest and other consideration and charges constituting interest under applicable law and contracted for, chargeable or receivable under this Note or otherwise in connection with the transaction for which this Note is given shall never exceed the Highest Lawful Rate, nor produce a rate in excess of the Highest Lawful Rate that Lender may charge Maker under applicable law and in regard to which Maker may not successfully assert the claim or defense of usury, and (iii) if any interest above the Highest Lawful Rate is provided for, it shall be deemed a mistake and the same shall be credited on the unpaid principal amount of this Note with the excess thereof, if any, being refunded to Maker and this Note shall be automatically deemed reformed so as to permit only the collection of the Highest Lawful Rate and amount of interest allowed by applicable law. All sums paid or agreed to be paid to the holder or holders of this Note for the use, forbearance or detention of the indebtedness evidenced hereby shall, to the full extent permitted by applicable law, be amortized, prorated, allocated and spread through the fullest term of this Note. Lender and Maker further agree that insofar as the provisions of Article 1.04, Subtitle 1, Title 79, of the Revised B-5 27 Civil Statutes of Texas, 1925, as amended, are applicable to the determination of the Highest Lawful Rate with respect to this Note, the indicated rate ceiling computed from time to time pursuant to Section (a) of such Article shall apply to this Note; provided, however, that to the extent permitted by such Article, Lender may from time to time by notice from Lender to Maker revise the election of such interest rate ceiling as such ceiling affects the then current or future balances of the indebtedness outstanding under this Note. The provisions of Chapter 15 of Subtitle 3 of the said Title 79 do not apply to this Note. 10. Events of Default. Each of the following events shall constitute an event of default under this Note: (a) failure by Maker to pay any principal amounts becoming due and payable on this Note either (i) on the Maturity Date or (ii) pursuant to paragraph 5(b) hereof; or (b) failure by Maker to pay any amounts becoming due and payable on this Note (including principal and accrued and unpaid interest) other than the amounts referred to in paragraph 10(a) hereof, and continuation of such nonpayment for a period of 10 days; or (c) Maker or American makes an assignment for the benefit of creditors, admits in writing its inability to pay its debts as such debts become due or fails generally to pay its debts as such debts become due; or (d) Maker or American petitions or applies to any tribunal for or consents to the appointment of, or taking possession by, a trustee, receiver, custodian, liquidator or similar official, of it or any substantial part of its assets, or commences any proceedings relating to it under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or other liquidation law of any jurisdiction or takes corporate action in furtherance of any of the foregoing; or B-6 28 (e) any petition or application of the type referred to in clause (d) above is filed, or any such proceedings are commenced, against Maker or American, and such petition or application is not dismissed within 30 days of the date of such filing, or Maker or American by any act indicates its approval thereof, consent thereto or acquiescence therein, or an order for relief is entered in an involuntary case under the bankruptcy law of the United States, or an order, judgment or decree is entered appointing any such trustee, receiver, custodian, liquidator or similar official or adjudicating Maker or American bankrupt or insolvent, or approving the petition in any such proceedings, and such order, judgment or decree remains unstayed and in effect for more than 30 days; or (f) any order, judgment or decree is entered in any proceeding against any of Maker or American decreeing the dissolution or split-up of Maker or American, and such order, judgment or decree remains unstayed and in effect for more than 60 days; or (g) any of the Revolving Notes, the Senior Notes, or the Senior Subordinated Notes (as those terms are defined in Securities Purchase Agreement dated as of November 13, 1989 among American, Maker, The Prudential Insurance Company of America and Pruco Life Insurance Company (the "Securities Purchase Agreement")) shall become or be declared due prior to its stated maturity, or there is a default in the payment of any such indebtedness at the final stated maturity thereof, or Maker fails to make any payment required to be made under Section 5F of the Securities Purchase Agreement; or (h) any other obligation of Maker or American for money borrowed (or any capitalized lease obligation, any obligation under a conditional sale or other title retention agreement, any obligation issued or assumed as full or partial payment for property whether or not secured by a purchase money mortgage or any obligation under notes payable or drafts accepted representing extensions of credit) shall B-7 29 become or be declared due prior to its stated maturity, or there is a default in the payment of any such obligation at the final stated maturity thereof, provided in any case that the aggregate outstanding principal amount of all such obligations declared due prior to stated maturity or not paid at final stated maturity shall be $2,500,000 or more; or (i) Maker defaults in the performance or observance of paragraph 13 hereof. 11. Remedies Upon Default. Upon the occurrence of an event of default specified in clause (c), (d), (e), (f), (g), or, if the Senior Notes, Senior Subordinated Notes and Revolving Notes are no longer outstanding, clause (h) of paragraph 10 hereof, the unpaid principal of, and accrued and unpaid interest on, this Note shall automatically become immediately due and payable without any requirement of notice to Maker except as may be required by law. Upon the occurrence of any other event of default hereunder, Lender may, by notice to Maker, declare the unpaid principal of, and accrued and unpaid interest on, this Note to be due and payable and such principal and interest shall become due and payable upon the first to occur of (i) an acceleration under the Revolving Notes, the Senior Subordinated Notes or the Senior Notes (written notice of which Maker shall give to the Lender as promptly as practical after the occurrence thereof), (ii) the fifth Business Day after receipt by Maker and the holders of the Revolving Notes, the Senior Subordinated Notes and the Senior Notes of such declaration given hereunder and (iii) immediately upon such declaration if no Revolving Notes, Senior Subordinated Notes or Senior Notes are outstanding. In the event this Note is in default or its maturity may be brought about, and it is placed in the hands of an attorney for collection, or is collected through probate, bankruptcy or other proceedings, Maker promises to pay all costs and reasonable attorneys' fees incurred by Lender as a result thereof. B-8 30 12. Concerning Advances. Each request by any of Maker for an advance hereunder shall be deemed to include a representation and warranty by Maker that (i) Maker is authorized and entitled to obtain such advance hereunder, (ii) such advance is being requested solely for a purpose authorized hereunder, (iii) no event of default has recurred and is continuing nor has any event occurred and is continuing that with notice, lapse of time, or both, would constitute an event of default and (iv) no default by Maker or American in the payment when due (beyond any applicable grace period) of any principal or interest on any obligation referred to in clause (g) or any other obligation or obligations (aggregating $2,500,000 or more in principal amount) referred to in clause (h) of paragraph 10 hereof has occurred and is continuing. Notwithstanding any other provision of this Note or the Basket Agreement, Maker shall not be entitled to an advance hereunder, nor shall Lender be obligated to make an advance hereunder. upon the occurrence and continuation of an event of default or of an event that with notice, lapse of time, or both, would constitute an event of default or if Maker or American shall default in the payment when due (beyond any applicable grace period) of any principal or interest on any obligation referred to in clause (g) or any other obligation or obligations (aggregating $2,500,000 or more in principal amount) referred to in clause (h) of paragraph 10 hereof and such default shall be continuing. 13. Covenant to Secure or Guarantee this Note Equally: Etc. Maker covenants that if it or any of its Subsidiaries (as defined in the Securities Purchase Agreement) shall create any Lien (as defined in the Securities Purchase Agreement) upon any of its property to secure the payment of any Designated Indebtedness (as hereinafter defined), Maker will grant or will cause such Subsidiaries to grant (as applicable) a Lien on such property to secure equally and ratably the payment of this Note; provided that so long as any Designated Indebtedness is secured by such Lien Lender shall have no control over the sale or disposition of the property encumbered B-9 31 by any such Lien until such Designated Indebtedness has been paid in full; and provided further that the creation of any such security shall not in any way alter the rights of the holders of Senior Indebtedness in relation to, and the subordination of, this Note as provided in paragraph 14. Maker further covenants that if any of its Subsidiaries guarantees the payment of any Designated Indebtedness, Maker will cause such Subsidiary to guarantee payment of this Note pursuant to a guarantee containing provisions similar to paragraph 14 hereof with respect to the subordination of the obligations of Maker or such Subsidiary thereunder to Senior Indebtedness; provided that the making of any such guarantee shall not in any way alter the rights of the holders of Senior Indebtedness in relation to, and the subordination of, this Note as provided in paragraph 14. "Designated Indebtedness" means (a) the Senior Subordinated Notes so long as they are outstanding, (b) the Revolving Notes and the Senior Notes if the Senior Subordinated Notes are not outstanding and (c) any Debt (as defined in the Securities Purchase Agreement) if no Senior Subordinated Notes, Revolving Notes or Senior Notes are outstanding. 14. Subordination of this Note. (a) Subordination of Note. Anything in this Note or the Basket Agreement to the contrary notwithstanding, the indebtedness evidenced by this Note, both principal and interest, shall be subordinated and junior to the extent set forth in subparagraphs (i) to (v), inclusive, below to all Senior Indebtedness. (i) Upon the maturity of any Senior Indebtedness by lapse of time, acceleration or otherwise, then all principal of, premium, if any, and interest on all such matured Senior Indebtedness shall first be paid in full, or such payment shall have been provided for in cash or in a manner satisfactory to each of the holders, respectively, of such matured Senior Indebtedness, before any payment on account of principal or interest is made upon this Note or is made to acquire this Note. B-10 32 (ii) Upon the occurrence of an event of default with respect to any Senior Indebtedness, as such event of default is defined therein or in the instrument under which it is outstanding, which event of default may result in the acceleration of the maturity thereof, any holder or holders of the Senior Notes, the Senior Subordinated Notes or the Senior Revolving Notes may request (in writing specifying such event of default with a copy to Lender) that Maker cease payment of all amounts due on this Note (a "Subordination Notice") and, in the event such a Subordination Notice is delivered, the holder of this Note shall not be entitled to receive any amounts due on this Note during the period (the "Standstill Period") commencing the date of receipt by Lender of the Subordination Notice and ending the earliest of (a) the first date on which no such default shall be continuing, (b) the date on which the provisions of subparagraph (i) or (iii) of this paragraph 14(a) shall become applicable (and all Senior Indebtedness shall have been paid in full, or such payment shall have been provided for in cash or in a manner satisfactory to each of the holders, respectively, of the Senior Indebtedness) and (c) the 60th day after the receipt of such Subordination Notice (unless (x) another event of default shall have occurred and be continuing and another Subordination Notice shall have been received by Lender or (y) an existing event of default is continuing and another Subordination Notice with respect to such event of default shall have been received by Lender during such Standstill Period, provided that the period under this clause (c) during which the holder of this Note shall not be entitled to receive amounts due on this Note shall never exceed 120 days). Anything in this subparagraph (ii) to the contrary notwithstanding, there shall not be more than two Standstill Periods (each of which not to exceed 120 consecutive days) during any consecutive 365-day period. Anything in this subparagraph (ii) to the contrary notwithstanding, Lender shall be entitled to receive all amounts B-11 33 then accrued and unpaid in respect of this Note immediately upon the termination of the Standstill Period unless another Subordination Notice shall have been received by the Lender. (iii) In the event of any insolvency, bankruptcy, liquidation, reorganization or other similar proceedings, or any receivership proceedings in connection therewith, relative to Maker, and in the event of any proceedings for voluntary liquidation, dissolution or other winding up of Maker, whether or not involving insolvency or bankruptcy proceedings, then all principal of and interest on all Senior Indebtedness shall first be paid in full, or such payment shall have been provided for in cash or in a manner satisfactory to each of the holders, respectively, of such Senior Indebtedness, before any payment on account of principal or interest is made upon this Note or is made to acquire this Note. (iv) In any of the proceedings referred to in subparagraph (iii) above, any payment or distribution of any kind or character, whether in cash, property, stock, partnership interests or obligations, which may be payable or deliverable in respect of this Note shall be paid or delivered directly to the holders of Senior Indebtedness (or to a banking institution selected by the court or Person making the payment or delivery or designated by any holder of Senior Indebtedness) for application in payment thereof in accordance with the priorities existing among such holders, unless and until all principal of, premium, if any, and interest on all Senior Indebtedness shall have been paid in full, or such payment shall have been provided for in cash or in a manner satisfactory to each of the holders, respectively, of such Senior Indebtedness; provided, however, that: (a) in the event that payment or delivery of such cash, property, stock, partnership interests or obligations to the holder of this Note is B-12 34 authorized by an order or decree giving effect, and stating in such order or decree that effect is given, to the subordination of this Note to Senior Indebtedness, and made by a court of competent jurisdiction in a reorganization proceeding under any applicable bankruptcy or reorganization law, no payment or delivery of such cash, property, stock, interests or obligations payable or deliverable with respect to this Note shall be make to the holders of Senior Indebtedness, provided that this clause (a) shall cease to be applicable and shall be deemed no longer included herein if at any time the Senior Subordinated Notes are outstanding and a provision comparable to this clause (a) is no longer included in the subordination provisions thereof; and (b) no such delivery shall be made to holders of Senior Indebtedness of stock, partnership interests or obligations which are issued pursuant to reorganization proceedings or dissolution or liquidation proceedings, or upon any merger, consolidation, sale, lease, transfer or other disposal not prohibited by the provisions of the Securities Purchase Agreement, by Maker, as reorganized, or by the Person succeeding to Maker or acquiring its property and assets, if such stock, partnership interests or obligations are subordinate and junior at least to the extent provided in this paragraph to the payment of any stock or obligations which are issued in exchange or substitution for any Senior Indebtedness then outstanding. (v) If any payment or distribution of any character, whether in cash, securities or other properties, shall be received by Lender in contravention of this paragraph 14 and before all Senior Indebtedness shall have been paid in full, such payment or distribution shall be held in trust for the benefit of, and shall be forthwith paid over and delivered to, the holders of Senior B-13 35 Indebtedness, or their representative(s) or trustee(s) acting on their behalf (pro rata as to each such holder, representative or trustee on the basis of the respective amounts of unpaid Senior Indebtedness held or represented by each at the time of such payment), as their respective interests may appear, for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior Indebtedness in full in accordance with its terms, after giving effect to any concurrent payment or distribution or provision therefor to the holders of Senior Indebtedness. (b) Obligation of Maker Unconditional. The provisions of this paragraph 14 are for the purpose of defining the relative rights of the holders of Senior Indebtedness on the one hand, and Lender on the other hand, against Maker and its property, and nothing herein shall impair, as between Maker and Lender, the obligation of Maker, which is unconditional and absolute, to pay to the holder hereof the principal thereof and interest thereon in accordance with the provisions hereof (including, without limitation, all principal and interest payments due or accruing after any of the events described in subparagraph (iii) of paragraph 14(a) above), nor shall anything herein prevent Lender from exercising all remedies otherwise permitted by applicable law or hereunder upon default hereunder, subject to the right, if any, under this paragraph of holders of Senior Indebtedness to receive cash, property, stock, partnership interests or obligations otherwise payable or deliverable to Lender; provided, however, that upon the commencement and during the continuance of a Standstill Period, Lender (to the extent it is otherwise entitled to do so) will not accelerate the maturity of this Note or pursue any other remedy to enforce payment thereof (except with respect to an event of default specified in clause (i) of paragraph 10) or initiate any bankruptcy or insolvency proceeding relative to Maker unless and until the earlier of (i) the end of such Standstill Period, (ii) the acceleration of, or a default in the payment at the final stated maturity or when B-14 36 required to be repaid pursuant to Section 5F of the Securities Purchase Agreement of, any obligation referred to in clause (g) of paragraph 10 hereof or any other obligation or obligations (aggregating $2,500,000 or more in principal amount) referred to in clause (h) of paragraph 10 hereof. (c) Subrogation. Upon payment in full of Senior Indebtedness, Lender shall be subrogated to the rights of the holders of the Senior Indebtedness to receive payments or distributions of assets of Maker made on Senior Indebtedness until the principal of and interest on this Note shall be paid in full, and, for the purposes of such subrogation, no payments to the holders of Senior Indebtedness of any cash, property, stock, partnership interests or obligations to which Lender would be entitled except for the provisions of subparagraph (iv) of paragraph 14(a) above shall, as between Maker, its creditors (other than the holders of Senior Indebtedness) and Lender, be deemed to be a payment by Maker to or on account of Senior Indebtedness. (d) Rights of Holders of Senior Indebtedness. The provisions of this paragraph 14 shall be deemed a continuing offer to all holders of Senior Indebtedness to act in reliance on such provisions (but no such reliance shall be required to be proven to receive the benefits hereof) and may be enforced by such holders and no right of any present or future holders of any Senior Indebtedness to enforce subordination as provided herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of Maker or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by Maker with the terms of this Note, regardless of any knowledge thereof which any such holder may have or be otherwise charged with, and no purported change in the provisions of this paragraph 14 shall be effective as against any holder of Senior Indebtedness existing at the time of such change without the consent of such holder. Without in any way limiting the generality of the foregoing, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to Lender, and B-15 37 without impairing or releasing the subordination provided in this paragraph 14 or the obligations hereunder of Lender to the holders of Senior Indebtedness, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, or waive defaults under, or take additional guarantees or collateral for the benefit of, Senior Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness or any instrument evidencing the same or any agreement under which Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii) release any Person liable in any manner for the collection of Senior Indebtedness; and (iv) exercise or refrain from exercising any rights against Maker and any other Person. The provisions of this paragraph 14 shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of Senior Indebtedness is rescinded or must otherwise be restored or returned by the holders of Senior Indebtedness upon the insolvency, bankruptcy. dissolution. liquidation or reorganization of Maker or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, Maker or any substantial part of its property, or otherwise, all as though such payments had not been made. (e) Agreement to Effectuate Subordination. Lender agrees to take such reasonable action as may be requested by the holders of Senior Indebtedness to effectuate the subordination provided in this paragraph 14, at the expense of such holders of Senior Indebtedness, including, in the event of any dissolution, winding up, liquidation or reorganization of Maker (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise) tending toward liquidation of the business and assets of Maker, the immediate filing of a claim for the unpaid balance of this Note in the form required in said proceedings and the taking of all reasonable steps necessary to cause said claim B-16 38 to be approved. If any such holder does not file a proper claim or proof of debt in the form required in such proceedings prior to 30 days before the expiration of the time to file such claim or claims, then at any time 15 days after sending written notice to such holder (to its last known address, if any) by certified mail, postage prepaid, return receipt requested, the holders of Senior Indebtedness are hereby authorized to have the right to file and are hereby authorized to file an appropriate claim for and on behalf of Lender. (f) For the purpose of this Note: "Credit Agreement" shall mean the Credit Agreement dated as of even date herewith by and among the Company, as borrower, American, as guarantor, and The Prudential Insurance Company of America, as lender, or any agreement refunding, refinancing, renewing, or taking the place of the Credit Agreement; provided, however, that any such agreement refunding, refinancing, renewing or taking the place of the Credit Agreement shall be limited to a maximum principal amount which may be outstanding thereunder of $20,000,000, and provided further, that only one Credit Agreement may exist at one time and that (subject to the foregoing) any agreement providing for revolving credit borrowings entered into within 3 months subsequent to the expiration or termination of a prior Credit Agreement and designated by the Company as refunding, refinancing, renewing or taking the place of the Credit Agreement shall be conclusively presumed to be an agreement refunding, refinancing, renewing or taking the place of the Credit Agreement. "Senior Indebtedness" shall mean and include all obligations (whether now outstanding or hereafter incurred), for the payment of which Maker is responsible or liable as obligor, guarantor or otherwise in respect of (i) all payment obligations under or in respect of the Senior Notes and Senior Subordinated Notes and under the Securities Purchase Agreement, including, without limitation, B-17 39 principal, interest, premium, fees, expenses and indemnities, whether now owing or hereafter incurred (including any interest accruing subsequent to the commencement of a proceeding described in paragraph 14(a)(iii), regardless of whether the claims of holders of such payment obligations for such interest are allowed in any such proceeding), (ii) all payment obligations under or in respect of the Senior Revolving Notes and Credit Agreement, including, without limitation, principal, interest, fees, reimbursement obligations under letters of credit, expenses and indemnities, whether now owing or hereafter incurred (including any interest accruing subsequent to the commencement of a proceeding described in paragraph 14(a)(iii), regardless of whether the claims of holders of such payment obligations for such interest are allowed in any such proceeding), (iii) all obligations in respect of other Debt of Maker (including reimbursement obligations under letters of credit) incurred in compliance with the provisions of Section 6C(2)(vi) of the Securities Purchase Agreement and which is designated as Senior Indebtedness for the purposes of the Securities Purchase Agreement at the time of incurrence thereof, or the time of entering into the agreement providing for the same, as evidenced by a notice to such effect delivered to Lender and to the holders of the Senior Subordinated Notes within 30 days after such incurrence or the entering of any such agreement. 15. No Waiver. To the fullest extent permitted by applicable law, no failure to exercise and no delay on the part of Lender in exercising any power or right in connection herewith or any other document or instrument now or hereafter existing and executed as security herefor or otherwise in connection herewith shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. B-18 40 16. Notices. Any notice required or permitted to be delivered to Maker by Lender shall be deemed delivered upon receipt on a Business Day of such notice by American Oil and Gas Corporation at its corporate headquarters in Houston, Texas by certified mail or overnight courier delivery, or facsimile transmission, addressed to the attention of the General Counsel. Any notice required or permitted to be delivered to Lender by Maker or a holder of Senior Indebtedness shall be deemed delivered upon receipt on a Business Day of such notice by Cabot Corporation at its corporate headquarters in Waltham, Massachusetts by certified mail or overnight courier delivery, or facsimile transmission (Fax No.: (617) 622-3703 or -3704), addressed to the attention of the Treasurer, or at such other address as Cabot shall specify by notice to Maker as aforesaid and by like notice given to each holder of the Senior Notes, the Senior Subordinated Notes and the Senior Revolving Notes. For purposes of giving notice of a change of address to the holders of Senior Notes, Senior Subordinated Notes and Senior Revolving Notes as provided in the preceding sentence. Cabot shall be entitled to rely on a certificate of Maker as to the identity and addresses of such holders (which Maker agrees to supply to Cabot forthwith upon request). 17. Successors and Assigns. The terms and provisions hereof shall be binding upon and inure to the benefit of Maker and Lender and their respective successors and assigns. 18. Governing Law. THIS NOTE SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF TEXAS AND FOR ALL PURPOSES SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF SUCH STATE AND, WHEN APPLICABLE, THE UNITED STATES OF AMERICA. AMERICAN PIPELINE COMPANY By: _____________________________________ Title: __________________________________ B-19 41 SCHEDULE I TO REVOLVING CREDIT NOTE The "Floating Rate" under this Note shall be LIBOR plus an applicable margin as indicated on the following chart. The applicable LIBOR rate shall be floating, adjusting on the first day of each calendar month, based upon the one month LIBOR rate as quoted in the first Wall Street Journal of such month and such rate shall remain fixed for that month. The margin shall be adjusted on the first day of each month according to the rating given Cabot Corporation's senior unsecured debt by Standard & Poor's Corporation effective on such day and according to the passage of time as follows:
Standard & Poor's 1993- Rating 1989-1990 1991-1992 Forward - ----------------- --------- --------- ------- BBB + + 0.675% + 0.80% + 0.925% or higher BBB + 0.925% + 1.05% + 1.175% or BBB - BB + + 1.175% + 1.30% + 1.425% or less
If Cabot has no such rating on the first day of a calendar month, the rating used will be the last available published rating. With the exception of the requirements of Regulation D promulgated by the Federal Reserve Board, if Cabot Corporation is charged or has clear evidence that it would be charged for increased costs under a LIBOR-based revolving credit agreement to which it is now or becomes a party, it may pass on those costs to Maker to the extent it evidences same. 42 SCHEDULE II TO REVOLVING CREDIT NOTE
Nature of Advance or Unpaid Name of Repayment Principal Person Amount of Principal (Working Capital Balance of Making Date Advance Repaid or Basket) Note Notation - ---- --------- --------- -------------------- ---------- --------
43 Appendix C to Basket Agreement GUARANTY AGREEMENT This Guaranty Agreement, executed as of November 13, 1989, between AMERICAN OIL AND GAS CORPORATION, a Delaware corporation (the "Guarantor"), and CABOT CORPORATION, a Delaware corporation ("Cabot"); W I T N E S S E T H: WHEREAS, the Guarantor and Cabot have executed a Basket Agreement, dated as of November 13, 1989 (the "Basket Agreement"), by and among the Guarantor, American Pipeline Company, a Delaware corporation and wholly-owned subsidiary of the Guarantor ("Pipeline"), Cabot and Cabot Transmission Corporation, a Delaware corporation and an indirect wholly-owned subsidiary of Cabot ("Transmission"); WHEREAS, pursuant to its obligation under the Basket Agreement, Pipeline has executed and delivered a Revolving Credit Note in the principal amount of $25,000,000 (the "Revolving Credit Note"); WHEREAS, Pipeline is the maker (the "Maker") under the Revolving Credit Note; and 44 WHEREAS, this Guaranty Agreement is required as a condition to the extension of credit by Cabot to the Maker pursuant to the Revolving Credit Note. NOW, THEREFORE, the Guarantor and Cabot agree as follows: 1. Capitalized Terms. Capitalized terms not otherwise defined herein shall have the same meaning ascribed to them in the Revolving Credit Note. 2.1 The Guaranty. The Guarantor hereby unconditionally and irrevocably guarantees to Cabot the due and punctual payment when due, whether at stated maturity, by acceleration or otherwise, of all obligations of the Maker now or hereafter existing under, evidenced by or arising out of the Revolving Credit Note, whether for principal, interest or otherwise (such obligations being the "Obligations"). In case of failure by the Maker punctually to pay any of the obligations, the Guarantor hereby unconditionally agrees to cause such payment to be made punctually as and when the same shall become due and payable, whether at stated maturity, by acceleration or otherwise. 2.2 Guaranty Absolute. The Guarantor guarantees that the Obligations will be paid strictly in accordance with the terms of the Revolving Credit Note, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of Cabot with respect thereto. The obligations of the Guarantor hereunder are 2 45 independent of the Obligations, and, to the fullest extent permitted by law, a separate action or actions may be brought and prosecuted against the Guarantor to enforce this Guaranty Agreement, irrespective of whether any action is brought against the Maker or whether the Maker is joined in any such action or actions. To the fullest extent permitted by applicable law, the liability of the Guarantor hereunder shall be absolute and unconditional irrespective of: (a) any lack of validity or enforceability of the Revolving Credit Note or any other agreement or instrument relating thereto; or (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to departure from the Revolving Credit Note, including, without limitation, any increase in the Obligations resulting from the extension of additional credit to the Maker or any of its subsidiaries or otherwise; or (c) any taking, exchange, release or non-perfection of any collateral, or any taking, release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Obligations; or (d) any manner of application of collateral, or proceeds thereof, to all or any of the Obligations, or any manner of sale or other disposition of any collateral for all or any of the Obligations or any other assets of the Maker or any of its Subsidiaries; or 3 46 (e) any change, restructuring or termination of the corporate structure or existence of the Maker or any of its Subsidiaries; or (f) any other circumstance which might otherwise constitute a defense available to, or a discharge of, the Maker or a guarantor. If at any time any payment of any of the Obligations is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Maker or otherwise, the Guarantor's obligations hereunder with respect to such payment shall be reinstated at such time as though such payment had become due but had not been made at such time. 2.3 Subordination. (a) Anything in this Guaranty Agreement to the contrary notwithstanding, the indebtedness of the Guarantor evidenced by this Guaranty Agreement in respect of principal of and interest on the Revolving Credit Note (the "Subordinated Indebtedness") shall be subordinated and junior to the extent set forth in subparagraphs (b) to (f), inclusive, below to all obligations of the Guarantor (as a guarantor or otherwise) in respect of Senior Indebtedness (as defined in the Revolving Credit Agreement). (b) Upon any distribution to creditors of the Guarantor in a voluntary or involuntary liquidation or dissolution of the Guarantor or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Guarantor or its property: 4 47 (i) the holders of Senior Indebtedness shall be entitled to receive payment in full, in cash or in a manner satisfactory to each of the holders, respectively, of Senior Indebtedness, of all amounts on or in respect of the Senior Indebtedness before any holder of the Subordinated Indebtedness shall be entitled to receive any payment or distribution of any kind or character on account of the principal and interest on the Subordinated Indebtedness; and (ii) until the Senior Indebtedness is paid in full, in cash or cash equivalents, any payment or distribution, to which a holder of Subordinated Indebtedness would be entitled but for this Section 2.3(b) shall be made to the holders of Senior Indebtedness, as their interests may appear. Upon any distribution of assets of the Guarantor, the holders of Subordinated Indebtedness shall be entitled to rely upon any order or decree of a court of competent jurisdiction in which such proceedings are pending for the purposes of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Indebtedness, the amount thereof or payable thereon and all other facts pertinent thereto or to this Section 2.3(b), and the holders of Subordinated Indebtedness shall be entitled to rely upon a certificate of the liquidating trustee or agent or other person making any distribution to the holders of Subordinated Indebtedness for the purposes of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Indebtedness, the amount thereof or payable thereon, the 5 48 amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Section 2.3(b); provided, however, that the foregoing shall apply only if such court, trustee, liquidating trustee or other person has been fully apprized of the provisions of this Section 2.3(b) and of Section 2.3(c). In the event that a holder of Subordinated Indebtedness determines in good faith that further evidence is required with respect to the right of any person, as a holder of Senior Indebtedness, to participate in any payment or distribution pursuant to this Section 2.3(b), such holder of Subordinated Indebtedness may request such person (at the expense of such holder of Subordinated Indebtedness) to furnish evidence to the reasonable satisfaction of such holder of Subordinated Indebtedness as to the amount of such Senior Indebtedness held by such person, as to the extent to which such person is entitled to participate in such payment or distribution, and as to other facts pertinent to the rights of such person under this Section 2.3(b), and if such evidence is not furnished, such holder of Subordinated Indebtedness may defer any payment to such person, and will retain such amount in trust, pending judicial determination as to the right of such person to receive payment. (c) (i) Upon the maturity of any Senior Indebtedness by lapse of time, acceleration or otherwise, then all principal of, premium, if any, and interest on all such matured Senior Indebtedness shall first be paid is full, or such payment shall have been provided for in cash or in a manner satisfactory to each of the holders, respectively, of such matured Senior Indebtedness, before any payment on account of principal or interest is made by the Guarantor on the Subordinated Indebtedness. 6 49 (ii) No payment shall be made by the Guarantor on the Subordinated Indebtedness during the period in which paragraph 14(a)(iii) of the Revolving Credit Note shall be applicable or during any Standstill Period in effect under paragraph 14(a)(ii) of the Revolving Credit Note. (iii) In the event that notwithstanding the provisions of this Section 2.3(c), the Guarantor shall make any payment to a holder of Subordinated Indebtedness on account of this Guarantee Agreement in violation of Section 2.3(c)(i) or Section 2.3(c)(ii), then such payment shall be held in trust for the benefit of, and shall be forthwith paid over and delivered to, the holders of Senior Indebtedness, or their representative(s) or trustee(s) acting on their behalf (pro rata as to each such holder, representative or trustee on the basis of the respective amounts of unpaid Senior Indebtedness held or represented by each at the time of such payment), as their respective interests may appear, for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior Indebtedness in full in accordance with its terms, after giving effect to any concurrent payment or distribution or provision therefor to or for the holders of Senior Indebtedness. (d) Upon payment in full of Senior Indebtedness, the holders of Subordinated Indebtedness shall be subrogated to the rights against the Guarantor of the holders of Senior Indebtedness to receive payments from or distributions of assets of the Guarantor applicable to Senior Indebtedness to the extent that such payments or distributions otherwise payable to the holders of Subordinated Indebtedness have been paid or applied to the payment of Senior 7 50 Indebtedness. A payment or distribution made by the Guarantor under this Section 2.3 to the holders of Senior Indebtedness that otherwise (except for the provisions of this Section 2.3) would have been made to the holders of Subordinated Indebtedness is not, as between the Guarantor, its creditors (other than the holders of Senior Indebtedness) and the holders of the Subordinated Indebtedness, payment by the Guarantor under this Guaranty Agreement. (e) The provision of this Section 2.3 are for the purpose of defining the relative rights of the holders of Senior Indebtedness on the one hand, and the holders of Subordinated Indebtedness on the other hand with respect to the Guarantor, and nothing herein shall impair, as between the Guarantor and Cabot, the obligation of the Guarantor, which is unconditional and absolute, to pay the Subordinated Indebtedness in accordance with the terms of this Guaranty Agreement, nor shall anything herein prevent Cabot from exercising all remedies otherwise permitted by applicable law hereunder, subject to the provisions of Section 2.3(c)(ii) and provided, however, that upon the commencement and during the continuance of a Standstill Period in effect under Paragraph 14(a)(ii) of the Revolving Credit Note, Cabot (to the extent it is otherwise entitled to do so) will not pursue any remedy to enforce payment under this Guaranty Agreement (except with respect to an event of default specified in clause (i) of paragraph 10 of the Revolving Credit Note) or initiate any bankruptcy or insolvency proceeding relative to the Guarantor unless and until the earlier of (i) the end of such Standstill Period, (ii) the acceleration of, or a default in the payment at the final stated maturity or when required to be repaid pursuant to Section 5F of the Securities Purchase Agreement of, any obligation referred to in clause (g) of paragraph 10 of the Revolving Credit Note or any other obligation or obligations (aggregating 8 51 $2,500,000 or more in principal amount) referred to in clause (h) of paragraph 10 of the Revolving Credit Note. (f) The provisions of this Section 2.3 shall be deemed a continuing offer to all holders of Senior Indebtedness to act in reliance on such provisions (but no such reliance shall be required to be proven to receive the benefits hereof) and may be enforced by such holders and no right of any present or future holders of any Senior Indebtedness to enforce subordination as provided herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Guarantor or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Guarantor with the terms of this Guaranty Agreement, regardless of any knowledge thereof which any such holder may have or be otherwise charged with, and no purported change in the provisions of this Section 2.3 shall be effective as against any holder of Senior Indebtedness existing at the time of such change without the consent of such holder. Without in any way limiting the generality of the foregoing, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to Cabot, and without impairing or releasing the subordination provided in this Section 2.3 or the obligations hereunder of Cabot to the holders of Senior Indebtedness, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, or waive defaults under, or take additional guarantees or collateral for the benefit of, Senior Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness or any instrument evidencing the same or any agreement under which Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged 9 52 or otherwise securing Senior Indebtedness; (iii) release any person liable in any manner for the collection of Senior Indebtedness; and (iv) exercise or refrain from exercising any rights against the Maker and any other person. The provisions of this Section 2.3 shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of Senior Indebtedness by the Guarantor is rescinded or must otherwise be restored or returned by the holders of Senior Indebtedness upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Guarantor or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made. (g) Cabot agrees to take such reasonable action as may be requested by the holders of Senior Indebtedness to effectuate the subordination provided in this Section 2.3, at the expense of such holders of Senior Indebtedness, including, in the event of any dissolution, winding-up, liquidation or reorganization of the Guarantor (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise) tending toward liquidation of the business and assets of the Guarantor, the immediate filing of an appropriate claim for the maximum amount for which Cabot in good faith determines it is entitled to file under applicable law, is the form required in said proceedings and the taking of all reasonable steps necessary to cause said claim to be approved. If any such holder does not file a proper claim or proof of debt in the form required in such proceedings prior to 30 days before the expiration of the time to file such claim or claims, then at any time 15 days after sending written notice to such holder (to its last known address, if any) by certified mail, postage prepaid, return 10 53 receipt requested, the holders of Senior Indebtedness are hereby authorized to have the right to file and are hereby authorized to file an appropriate claim for and on behalf of Cabot. 2.4 Waiver. The Guarantor irrevocably waives promptness, diligence, notice of acceptance and to the fullest extent permitted by law, any other notice with respect to any of the Obligations and this Guaranty Agreement and any requirement that any holder of the Revolving Credit Note protect, secure, perfect or insure any security interest or lien or any property subject thereto or exhaust any right or take any action against the Maker or any other person or entity or any collateral. To the fullest extent permitted by applicable law, the Guarantor specifically waives any rights it may have pursuant to Rule 31, Texas Rules of Civil Procedure, Section 17.001 of the Texas Civil Practice and Remedies Code and any requirements imposed by Chapter 34 of the Texas Business and Commerce Code. 2.5 Subrogation. Upon the making by the Guarantor of any payment hereunder for the account of the Maker, the Guarantor shall be subrogated to the rights of the payee against the Maker with respect to such payment to the fullest extent permitted by law, provided that the Guarantor shall not enforce any payment by way of subrogation until all amounts of principal of and interest on the Revolving Credit Note have been paid in full. 2.6 Stay of Acceleration. If acceleration of the time for payment of any amount payable under the Revolving Credit Note is stayed upon the insolvency, bankruptcy or reorganization of the Maker, all such amounts otherwise subject to acceleration under the terms 11 54 of the Revolving Credit Note shall nonetheless by payable by the Guarantor hereunder forthwith on demand by Cabot. 3.1 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given (i) when delivered personally, (ii) when received if sent by registered or certified mail, return receipt requested, or delivery service or (iii) when received by facsimile transmission, in each case to the parties at the following addresses (or at such other address as a party may specify by like notice): (A) If to the Guarantor, to: American Oil and Gas Corporation 333 Clay Street, Suite 2000 Houston, Texas 77002 Attention: David M. Carmichael Fax: (713) 739-2963 Telephone confirmation: (713) 739-2910 (B) If to Cabot to: Cabot Corporation 950 Winter Street Waltham, MA 02254-9073 Attention: Perry O. Barber, Jr. Fax: (617) 622-3703 or -3704 Telephone confirmation: (617) 622-3879 3.2 Choice of Law. THIS GUARANTY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF TEXAS. 12 55 3.3 Headings. The headings contained in this Guaranty Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Guaranty Agreement. 3.4 Amendments, Etc. No amendment or waiver of any provision of this Guaranty Agreement nor consent to any departure by the Guarantor herefrom shall in any event be effective unless the same shall be in writing and signed by Cabot. 3.5 Assignment. The Guarantor shall not assign this Guaranty Agreement or any part thereof without the prior written consent of Cabot. This Guaranty Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. 3.6 Severability. If any term or other provision of this Guaranty Agreement is or shall become invalid, illegal or incapable of being enforced in any jurisdiction, all other conditions and provisions of this Guaranty Agreement shall nevertheless remain in full force and effect in such jurisdiction and such illegal, invalid or unenforceable provision shall be legal, valid and enforceable in all other jurisdictions. 3.7 Counterparts. This Guaranty Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together slsall constitute but one and the same agreement. 13 56 IN WITNESS WHEREOF, the undersigned have executed this Guaranty Agreement as of the date first written above. AMERICAN OIL AND GAS CORPORATION By: Name: Title: CABOT CORPORATION By: Name: Title: 14 57 Appendix D to Basket Agreement RESIDUE GAS PURCHASE AGREEMENTS 1. Residue Gas Purchase Agreement dated June 30, 1989 between Cabot Energy Marketing Corporation ("CEMCO") and Cabot Gas Processing Corporation. 2. Residue Gas Purchase Agreement dated June 30, 1989 between Cabot Gas Supply Corporation ("CGSC") and Cabot Gas Processing Corporation. 58 APPENDIX E ALTERNATIVE GAS PURCHASE SOURCES Ward Petroleum - State of Oklahoma Oklahoma Natural - State of Oklahoma Maxus Energy - McKee Plant, Moore County, Texas Kerr-McGee - Hobart Plant, Hemphill County, Texas Phillips Petroleum Co. - Goldsmith Plant, Ector County, Texas Headlee Unit - Ector County, Texas EX-10.J 8 FIRST AMEND.TO AMENDED OMNIBUS ACQUISITION AGRMT 1 EXHIBIT 10(j) FIRST AMENDMENT TO AMENDED AND RESTATED OMNIBUS ACQUISITION AGREEMENT AND AMENDED AND RESTATED BASKET AGREEMENT This First Amendment to Amended and Restated Omnibus Acquisition Agreement and Amended and Restated Basket Agreement dated March 31, 1992 is entered into among the parties to that certain Amended and Restated Omnibus Acquisition Agreement (the "Omnibus Agreement") dated November 13, 1989, by and among Cabot Corporation ("Cabot"), Cabot Transmission Corporation ("Seller") and American Oil and Gas Corporation ("AOG"), and that certain Amended and Restated Basket Agreement dated as of November 13, 1989, as amended and restated as of June 30, 1990, by and among Seller, Cabot, AOG and American Pipeline Company (the "Basket Agreement"); WHEREAS, the parties to the Omnibus Agreement and the Basket Agreement believe that it is mutually beneficial and desire to amend certain provisions of each such Agreement; NOW, THEREFORE, the parties hereto agree as follows: Section 1. Amendments to Omnibus Agreement. The Omnibus Agreement is hereby amended to delete Item No. 1 to Schedule 11.07 of the Omnibus Agreement. The effect of such deletion shall be that Cabot shall no longer indemnify AOG, the Acquired Companies (as defined in the Omnibus Agreement) and the other enumerated persons and entities under Section 11.07(A) of the Omnibus Agreement for those matters described in Item No. 1 to Schedule 11.07 of the Omnibus Agreement. Section 2. Amendments to Basket Agreement. (a) Section 2.6 of the Basket Agreement, which defines the term "Basket Payments," is hereby amended as follows: (i) by deleting the word "and" immediately prior to clause (iii) of Section 2.6 and inserting a comma in its place; (ii) by replacing the period at the end of Section 2.6 with a comma and inserting the following at the end of Section 2.6: "(iv) all payments made after March 31, 1992, with respect to all periods prior to November 13, 1989, by AOG or its subsidiaries or affiliates to potential claimants referenced in Schedule I to the First Amendment 2 to Amended and Restated Omnibus Acquisition Agreement and Amended and Restated Basket Agreement dated March 31, 1992 (the "First Amendment"), their subsidiaries, affiliates or successors in interest ("Schedule I Claimants") in respect of any potential claims (including possible claims for higher prices and potential claims for refund) described in such Schedule I (the "Schedule I Claims"), under the respective contracts described in Schedule I in excess of the prices previously paid to such Schedule I Claimants by AOG, its subsidiaries, affiliates or predecessors in interest, including payments arising out of any applicable tax reimbursements and/or royalty claims which may arise as a result of such payments of higher prices, (v) all payments made after March 31, 1992, with respect to all periods after November 12, 1989, by AOG, its subsidiaries or affiliates to Schedule I Claimants in respect of the Schedule I Claims for amounts in excess of (x) the Section l06(b)(1)(A) gas price in effect from time to time under the Natural Gas Policy Act of 1978 and related regulations through December 31, 1992 and (y) that price which is paid in good faith for periods after December 31, 1992 to the Schedule I Claimants under the respective gas contracts described in Schedule I, including any payment arising out of applicable tax reimbursement obligations and/or royalty claims which may arise as a result of such payments of higher prices, (vi) any payments arising out of royalty claims, which payments are made after March 31, 1992 by AOG, its subsidiaries or affiliates with respect to Schedule I Claims which were settled prior to March 31, 1992 with Cabot's approval but which settlements expressly did not resolve the royalty claim issues, (vii) all payments or refunds (including without limitation payments arising out of royalty claims related in any way to such payments) which AOG, its subsidiaries, or affiliates may become legally obligated to make in respect -2- 3 of the Schedule I Claims and not covered by clauses (iv) through (vi) hereof, and (viii) all outside legal, professional or other out-of-pocket expenses or costs incurred by AOG, its subsidiaries or affiliates after March 31, 1992, in connection with the investigation, analysis, negotiation, litigation, arbitration or settlement of any of the Schedule I Claims, potential Schedule I Claims or any and all of the matters identified in clauses (iv) through (vii) hereof, including without limitation the costs of preparing gas reserve reports covering gas production and reserves produced under the respective gas contracts described in Schedule I hereto. (b) Section 2.3 of the Basket Agreement, which defines the term "Basket Collections," is hereby amended as follows: (i) by deleting the word "and" at the end of the first clause (ii) of Section 2.3; (ii) by replacing the period at the end of the first clause (iii) of Section 2.3 with a semicolon followed by the word "and"; and (iii) adding the following immediately after the first clause (iii) of Section 2.3: "(iv) the amortization in the actual weighted average cost of gas used in billing customers or other recovery by flow-through to customers or liquidation or recovery in any other manner of the payments, refunds, expenses or costs described in clauses (iv) through (viii) of Section 2.6 hereof. (c) Section 7 of the Basket Agreement is hereby amended by inserting the following clause immediately following the term "Take or Pay Claims" in each place where such term appears in Section 7: "or Schedule I Claims (as such term is defined in Section 2.6), together with all related claims described in clauses (iv) through (viii) of Section 2.6 hereof" Section 3. Effect of Amendments. The respective amendments to the Omnibus Agreement and Basket Agreement set forth in this First Amendment (i) -3- 4 shall be effective as of the date hereof and (ii) shall remain subject to all other effective provisions of the agreement being amended hereby. Section 4. Counterparts. This First Amendment may be executed by the parties hereto in multiple counterparts, all of which counterparts, taken together, shall constitute one and the same agreement. CABOT CORPORATION By: ---------------------------------- Name: ---------------------------------- Title: ---------------------------------- CABOT TRANSMISSION CORPORATION By: /s/ Robert A. [NOT LEGIBLE] -------------------------------- Name: Robert A. [NOT LEGIBLE] ------------------------------- Title: Vice President ------------------------------- AMERICAN OIL AND GAS CORPORATION By: /s/ Thomas H. Fanning -------------------------------- Name: Thomas H. Fanning -------------------------------- Title: Vice President -------------------------------- AMERICAN PIPELINE COMPANY By: /s/ Thomas H. Fanning -------------------------------- Name: Thomas H. Fanning -------------------------------- Title: Vice President -------------------------------- -4- EX-24.1 9 POWER OF ATTORNEY 1 EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer or director of Kinder Morgan Inc., a Kansas corporation, (the "Company"), hereby constitutes and appoints Joseph Listengart and C. Park Shaper, and each of them (with full power to each of them to act alone), the undersigned's true and lawful attorney-in-fact and agent, for the undersigned and on the undersigned's behalf and in the undersigned's name, place and stead, in any and all capacities, to sign, execute and file with the Securities and Exchange Commission an amendment to the Company's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2000, together with all amendments thereto, with all exhibits and any and all documents required to be filed with respect thereto, including a Form S-3, with any regulatory authority, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises in order to effectuate the same as fully to all intents and purposes as the undersigned might or could do if personally present, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either of them, may lawfully do or cause to be done by virtue thereof. IN WITNESS WHEREOF, the undersigned has hereto signed this power of attorney this 20th day of April, 2000. /s/ William V. Morgan /s/ Ted A. Gardner - ------------------------------- ------------------------------- William V. Morgan Ted A. Gardner /s/ Richard D. Kinder /s/ William J. Hybl - ------------------------------- ------------------------------- Richard D. Kinder William J. Hybl /s/ C. Park Shaper /s/ Edward Randall, III - ------------------------------- ------------------------------- C. Park Shaper Edward Randall, III /s/ Edward H. Austin, Jr. /s/ Fayez Sarofim - ------------------------------- ------------------------------- Edward H. Austin, Jr. Fayez Sarofim /s/ Charles W. Battey /s/ H.A. True, III - ------------------------------- ------------------------------- Charles W. Battey H.A. True, III /s/ Stewart A. Bliss - ------------------------------- Stewart A. Bliss -----END PRIVACY-ENHANCED MESSAGE-----