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AMENDED AND RESTATED DECLARATION OF TRUST
OF
POGO TRUST I
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Dated as of June 2, 1999
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TABLE OF CONTENTS
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PAGE
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions...........................................................2
Affiliate.....................................................................2
Book Entry Interest...........................................................2
Business Day..................................................................2
Business Trust Act............................................................3
Certificate...................................................................3
Certificate of Trust..........................................................3
Clearing Agency...............................................................3
Clearing Agency Participant...................................................3
Closing Date..................................................................3
Code .......................................................................3
Commission....................................................................3
Common Securities.............................................................3
Common Security Certificate...................................................3
Common Stock..................................................................3
Conversion Agent..............................................................3
Covered Person................................................................3
Creditor......................................................................3
Debenture Trustee.............................................................4
Debentures....................................................................4
Definitive Preferred Security Certificates....................................4
Delaware Trustee..............................................................4
Depositary Agreement..........................................................4
Distribution..................................................................4
DTC .......................................................................4
Event of Default..............................................................4
Exchange......................................................................4
Exchange Act..................................................................4
Fiscal Year...................................................................4
Global Certificate............................................................4
Holder .......................................................................4
Holder Direct Action..........................................................4
Indemnified Person............................................................4
Indenture.....................................................................4
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*This Table of Contents does not constitute part of the Amended and Restated
Declaration of Trust and should not have any bearing upon the interpretation of
any of its terms or provisions.
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PAGE
Indenture Event of Default....................................................5
Investment Company............................................................5
Investment Company Act........................................................5
Legal Action..................................................................5
Liquidation Distribution......................................................5
List of Holders...............................................................5
Majority in liquidation amount of the Securities..............................5
NASD .......................................................................5
Nasdaq .......................................................................5
1933 Act Registration Statement...............................................5
1934 Act Registration Statement...............................................5
Officers' Certificate.........................................................5
Opinion of Counsel............................................................6
Original Declaration..........................................................6
Paying Agent..................................................................6
Payment Amount................................................................6
Person .......................................................................6
Pogo .......................................................................6
Preferred Securities Guarantee................................................6
Preferred Securities..........................................................6
Preferred Security Beneficial Owner...........................................6
Preferred Security Certificate................................................6
Property Trustee..............................................................7
Property Account..............................................................7
Quorum .......................................................................7
Regular Trustee...............................................................7
Related Party.................................................................7
Resignation Request...........................................................7
Responsible Officer...........................................................7
Rule 3a-7.....................................................................7
Securities....................................................................7
Securities Act................................................................7
Special Event.................................................................7
Sponsor or Pogo...............................................................7
Successor Delaware Trustee....................................................7
Successor Entity..............................................................7
Successor Property Trustee....................................................8
Successor Securities..........................................................8
Super Majority................................................................8
Supplemental Indenture........................................................8
10% in liquidation amount of the Securities...................................8
Treasury Regulations..........................................................8
Trust .......................................................................8
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PAGE
Trustee.......................................................................8
Trustees......................................................................8
Trust Indenture Act...........................................................8
Underwriting Agreement........................................................8
ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.01. Trust Indenture Act; Application......................................9
SECTION 2.02. Lists of Holders of Preferred Securities..............................9
SECTION 2.03. Reports by the Property Trustee.......................................9
SECTION 2.04. Periodic Reports to the Property Trustee.............................10
SECTION 2.05. Evidence of Compliance with Conditions Precedent.....................10
SECTION 2.06. Events of Default; Waiver............................................10
SECTION 2.07. Disclosure of Information............................................12
ARTICLE 3
ORGANIZATION
SECTION 3.01. Name.................................................................12
SECTION 3.02. Office...............................................................12
SECTION 3.03. Issuance of the Securities...........................................12
SECTION 3.04. Purchase of Debentures...............................................13
SECTION 3.05. Purpose..............................................................13
SECTION 3.06. Authority............................................................13
SECTION 3.07. Title to Property of the Trust.......................................14
SECTION 3.08. Powers and Duties of the Regular Trustees............................14
SECTION 3.09. Prohibition of Actions by the Trust and the Trustees.................16
SECTION 3.10. Powers and Duties of the Property Trustee............................17
SECTION 3.11. Delaware Trustee.....................................................20
SECTION 3.12. Certain Rights and Duties of the Property Trustee....................20
SECTION 3.13. Registration Statement and Related Matters...........................23
SECTION 3.14. Filing of Amendments to Certificate of Trust.........................24
SECTION 3.15. Execution of Documents by the Regular Trustees.......................24
SECTION 3.16. Trustees Not Responsible for Recitals or Issuance of Securities......24
SECTION 3.17. Duration of the Trust................................................24
SECTION 3.18. Mergers..............................................................24
SECTION 3.19. Property Trustee May File Proofs of Claim............................26
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PAGE
ARTICLE 4
SPONSOR
SECTION 4.01. Purchase of Common Securities by the Sponsor.........................27
SECTION 4.02. Expenses.............................................................27
ARTICLE 5
TRUSTEES
SECTION 5.01. Number of Trustees; Qualifications...................................28
SECTION 5.02. Appointment, Removal and Resignation of the Trustees.................30
SECTION 5.03. Vacancies among the Trustees.........................................31
SECTION 5.04. Effect of Vacancies..................................................31
SECTION 5.05. Meetings.............................................................32
SECTION 5.06. Delegation of Power..................................................32
SECTION 5.07. Merger, Conversion, Consolidation or Succession to Business..........32
ARTICLE 6
DISTRIBUTIONS
SECTION 6.01. Distributions........................................................33
ARTICLE 7
ISSUANCE OF THE SECURITIES
SECTION 7.01. General Provisions Regarding the Securities..........................33
SECTION 7.02. Conversion Agent.....................................................35
ARTICLE 8
DISSOLUTION OF THE TRUST
SECTION 8.01. Dissolution of the Trust.............................................35
ARTICLE 9
TRANSFER OF INTERESTS
SECTION 9.01. Transfer of Securities...............................................36
SECTION 9.02. Transfer of Certificates.............................................36
SECTION 9.03. Deemed Security Holders..............................................36
SECTION 9.04. Book Entry Interests.................................................37
SECTION 9.05. Notices to Holders of Certificates...................................38
SECTION 9.06. Appointment of Successor Clearing Agency.............................38
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PAGE
SECTION 9.07. Definitive Preferred Securities Certificates.........................38
SECTION 9.08. Mutilated, Destroyed, Lost or Stolen Certificates....................38
ARTICLE 10
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 10.01. Exculpation.........................................................39
SECTION 10.02. Indemnification.....................................................39
SECTION 10.03. Outside Business....................................................40
ARTICLE 11
ACCOUNTING
SECTION 11.01. Fiscal Year.........................................................40
SECTION 11.02. Certain Accounting Matters..........................................40
SECTION 11.03. Banking.............................................................41
SECTION 11.04. Withholding.........................................................41
ARTICLE 12
AMENDMENTS AND MEETINGS
SECTION 12.01. Amendments..........................................................42
SECTION 12.02. Meetings of the Holders of Securities; Action by Written Consent....43
ARTICLE 13
REPRESENTATIONS OF THE PROPERTY TRUSTEE AND THE DELAWARE TRUSTEE
SECTION 13.01. Representations and Warranties of the Property Trustee..............44
SECTION 13.02. Representations and Warranties of the Delaware Trustee..............45
ARTICLE 14
MISCELLANEOUS
SECTION 14.01. Notices.............................................................46
SECTION 14.02. Undertaking for Costs...............................................47
SECTION 14.03. Governing Law.......................................................47
SECTION 14.04. Headings............................................................47
SECTION 14.05. Partial Enforceability..............................................48
SECTION 14.06. Counterparts........................................................48
SECTION 14.07. Intention of the Parties............................................48
SECTION 14.08. Successors and Assigns..............................................48
SECTION 14.09. No Recourse.........................................................48
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SIGNATURES AND SEALS
EXHIBIT A: CERTIFICATE OF TRUST
EXHIBIT B: TERMS OF THE PREFERRED SECURITIES
EXHIBIT C: TERMS OF THE COMMON SECURITIES
vi
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
POGO TRUST I
AMENDED AND RESTATED DECLARATION OF TRUST (this "Declaration") dated and
effective as of June 2, 1999 by John O. McCoy, Jr., an individual, John W.
Elsenshans, an individual, and Gerald A. Morton, an individual, as Regular
Trustees (the "Regular Trustees"), Wilmington Trust Company, as Property Trustee
(the "Property Trustee") and Wilmington Trust Company, as Delaware Trustee (the
"Delaware Trustee") (together with all other Persons from time to time duly
appointed and serving as trustees in accordance with the provisions of this
Declaration, the "Trustees"), Pogo Producing Company, a Delaware corporation, as
trust sponsor ("Pogo" or the "Sponsor"), and by the holders, from time to time,
of undivided beneficial interests in the assets of the Trust to be issued
pursuant to this Declaration.
WHEREAS, the Sponsor and certain of the Trustees entered into a
Declaration of Trust dated as of March 17, 1999 (the "Original Declaration") in
order to establish Pogo Trust I, a statutory business trust (the "Trust"), under
the Business Trust Act (as hereinafter defined);
WHEREAS, the Certificate of Trust (the "Certificate of Trust") of the
Trust was filed with the office of the Secretary of State of the State of
Delaware on March 18, 1999; and
WHEREAS, the Trustees and the Sponsor desire to continue the Trust
pursuant to the Business Trust Act for the purpose of, as described more fully
in Sections 3.03 and 3.04 hereof, (i) issuing and selling Preferred Securities
(as hereinafter defined) representing preferred undivided beneficial interests
in the assets of the Trust for cash and investing the proceeds thereof in
Debentures (as hereinafter defined) of Pogo issued under the Indenture (as
hereinafter defined) to be held as assets of the Trust and (ii) issuing and
selling Common Securities (as hereinafter defined) representing common undivided
beneficial interests in the assets of the Trust to Pogo in exchange for cash and
investing the proceeds thereof in additional Debentures issued under the
Indenture to be held as assets of the Trust;
NOW, THEREFORE, it being the intention of the parties hereto that the
Trust constitute a business trust under the Business Trust Act, that the
Original Declaration be amended and restated in its entirety as provided herein
and that this Declaration constitute the governing instrument of such business
trust, the Trustees declare that all Debentures referred to in clauses (i) and
(ii) of the previous paragraph purchased by the Trust will be held for the
benefit of the Holders (as hereinafter defined) from time to time, of the
Certificates (as hereinafter defined) representing undivided beneficial
interests in the assets of the Trust issued hereunder, subject to the provisions
of this Declaration.
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions.
(a) Capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.01;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to this
Amended and Restated Declaration of Trust (including Exhibits A, B and C hereto
(the "Exhibits")) as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles, Sections and Exhibits
are to Articles and Sections of and Exhibits to this Declaration unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Declaration unless otherwise defined in this Declaration or unless
the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Affiliate" means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control," when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. For purposes of this definition, beneficial ownership of 10% or more
of the voting common equity (on a fully diluted basis) or options or warrants to
purchase such equity (but only if exercisable at the date of determination or
within 60 days thereof) of a Person shall be deemed to constitute control of
such Person. No Person shall be deemed an Affiliate of an oil and gas royalty
trust solely by virtue of ownership of units of beneficial interest in such
trust.
"Book Entry Interest" means a beneficial interest in a Global
Certificate registered in the name of a Clearing Agency or a nominee thereof,
ownership and transfers of which shall be maintained and made through book
entries by such Clearing Agency as described in Section 9.04.
"Business Day" means any day other than a Saturday or Sunday or a day on
which banking institutions in the Borough of Manhattan, The City and State of
New York, Wilmington, Delaware or Houston, Texas are authorized or required by
law or executive order to close.
2
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code,
12 Del. Code ss. 3801 et seq., as it may be amended from time to time, or any
successor legislation.
"Certificate" means a Common Security Certificate or a Preferred
Security Certificate.
"Certificate of Trust" has the meaning set forth in the second WHEREAS
clause above.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depository
for the Preferred Securities and in whose name or in the name of a nominee of
that organization shall be registered a Global Certificate and which shall
undertake to effect book entry transfers and pledges of the Preferred
Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means June 2, 1999, which date is also the date of
execution and delivery of this Declaration.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation. A reference to a specific section (Sec.) of
the Code refers not only to such specific section but also to any corresponding
provision of any Federal tax statute enacted after the date of this Declaration,
as such specific section or corresponding provision is in effect on the date of
application of the provisions of this Declaration containing such reference.
"Commission" means the Securities and Exchange Commission.
"Common Securities" has the meaning specified in Section 7.01(b).
"Common Security Certificate" means a definitive certificate in fully
registered form representing a Common Security substantially in the form of
Annex I to Exhibit C.
"Common Stock" means the common stock, par value $1.00 per share, of
Pogo including associated preferred share purchase rights, or any other class of
stock, other securities, cash or other assets into which the Debentures are then
convertible.
"Conversion Agent" has the meaning specified in Section 7.02.
"Covered Person" means (i) any officer, director, shareholder, partner,
member, representative, employee or agent of the Trust or of any of its
Affiliates, (ii) any officer, director, shareholder, employee, representative or
agent of Pogo or of any of its Affiliates and (iii) the Holders from time to
time of the Securities.
"Creditor" has the meaning specified in Section 4.02(c).
3
"Debenture Trustee" means Wilmington Trust Company, a Delaware banking
corporation, as trustee under the Indenture until a successor is appointed
thereunder and thereafter means such successor trustee.
"Debentures" means the series of junior subordinated debentures issued
by Pogo under the Indenture to the Property Trustee and entitled the "6.50%
Junior Subordinated Convertible Debentures, Series A due 2029".
"Definitive Preferred Security Certificates" has the meaning set forth
in Section 9.04.
"Delaware Trustee" has the meaning set forth in Section 5.01(a)(3).
"Depositary Agreement" means the agreement among the Trust, the Property
Trustee and DTC dated as of the Closing Date, as the same may be amended or
supplemented from time to time.
"Distribution" means a distribution payable to Holders of Securities in
accordance with Section 6.01.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Event of Default" in respect of the Securities means that an Indenture
Event of Default has occurred and is continuing with respect to the Debentures.
"Exchange" has the meaning specified in Section 3.13.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Fiscal Year" has the meaning specified in Section 11.01.
"Global Certificate" has the meaning set forth in Section 9.04.
"Holder" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Business Trust Act.
"Holder Direct Action" has the meaning specified in Section 3.10(e).
"Indemnified Person" means any Trustee, any Affiliate of any Trustee,
any Conversion Agent, any Paying Agent, any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Trustee,
Conversion Agent or Paying Agent, or any employee or agent of the Trust or of
any of its Affiliates.
"Indenture" means the Junior Subordinated Indenture dated as of June 1,
1999 between Pogo and the Debenture Trustee as supplemented by Supplemental
Indenture No. 1 thereto dated as of June 1, 1999, pursuant to which the
Debentures are to be issued.
4
"Indenture Event of Default" means that an event or condition defined as
an "Event of Default" with respect to the Debentures under Section 6.01(a) of
the Indenture has occurred and is continuing.
"Investment Company" means an "investment company" as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
"Legal Action" has the meaning specified in Section 3.08(g).
"Liquidation Distribution" has the meaning set forth in Exhibits B and C
hereto establishing the terms of the Securities.
"List of Holders" has the meaning specified in Section 2.02(a).
"Majority in liquidation amount of the Securities" means, except as
otherwise required by the Trust Indenture Act and except as provided in the
penultimate paragraph of section 6 of Exhibit B hereto, Holder(s) of outstanding
Securities voting together as a single class or, as the context may require,
Holder(s) of outstanding Preferred Securities or Common Securities voting
separately as a class, who are the record owners of a relevant class of
Securities whose liquidation amount (including the stated amount that would be
paid on redemption, liquidation or otherwise, plus accumulated and unpaid
Distributions to the date upon which the voting percentages are determined)
represents more than 50% of the liquidation amount of all outstanding Securities
of such class.
"NASD" has the meaning specified in Section 3.13.
"Nasdaq" has the meaning specified in Section 3.13.
"1933 Act Registration Statement" has the meaning specified in Section
3.13.
"1934 Act Registration Statement" has the meaning specified in Section
3.13.
"Officers' Certificate" means a certificate signed by the Chairman of the Board,
the Chief Executive Officer, the President or a Vice President, and by the
Treasurer, an Associate Treasurer, an Assistant Treasurer, the Controller, the
Secretary or an Assistant Secretary of the Sponsor, and delivered to the
appropriate Trustee. One of the officers signing an Officers' Certificate given
pursuant to Section 2.04 shall be the principal executive, financial or
accounting officer of the Sponsor. Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for in this
Declaration shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;
5
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Trust, the Property Trustee or the Sponsor, which may be an
employee of the Sponsor but not an employee of the Trust or the Property
Trustee, and who shall be reasonably acceptable to the Property Trustee. Any
Opinion of Counsel pertaining to federal income tax matters may rely on
published rulings of the Internal Revenue Service.
"Original Declaration" has the meaning set forth in the first WHEREAS
clause above.
"Paying Agent" has the meaning specified in Section 3.10(i).
"Payment Amount" has the meaning specified in Section 6.01.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, government or any agency
or political subdivision thereof, or any other entity of whatever nature.
"Pogo" or "Sponsor" means Pogo Producing Company, a Delaware
corporation, or any successor entity resulting from any merger, consolidation,
amalgamation or other business combination, in its capacity as sponsor of the
Trust.
"Preferred Securities Guarantee" means the Guarantee Agreement dated as
of June 2, 1999 of Pogo and Wilmington Trust Company as initial guarantee
trustee thereunder, in respect of the Preferred Securities.
"Preferred Securities" has the meaning specified in Section 7.01(b).
"Preferred Security Beneficial Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
"Preferred Security Certificate" means a definitive certificate in fully
registered form representing a Preferred Security substantially in the form of
Annex I to Exhibit B.
6
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.01(c) and having the duties set forth for
the Property Trustee herein.
"Property Account" has the meaning specified in Section 3.10(c)(i).
"Quorum" means a majority of the Regular Trustees or, if there are only
two Regular Trustees, both such Regular Trustees.
"Regular Trustee" means any Trustee other than the Property Trustee and
the Delaware Trustee.
"Related Party" means any direct or indirect wholly owned subsidiary of
Pogo or any other Person which owns, directly or indirectly, 100% of the
outstanding voting securities of Pogo.
"Resignation Request" has the meaning specified in Section 5.02(d).
"Responsible Officer" means, when used with respect to the Property
Trustee, any officer within the corporate department of the Property Trustee,
including any vice president, assistant vice president, assistant secretary,
assistant treasurer, trust officer or any other officer of the Property Trustee
who customarily performs functions similar to those performed by the Persons who
at the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of such Person's knowledge of and familiarity with
the particular subject and who shall have direct responsibility for the
administration of this Declaration.
"Rule 3a-7" means Rule 3a-7 under the Investment Company Act or any
successor rule thereunder.
"Securities" means the Common Securities and the Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, or any successor legislation.
"Special Event" has the meaning set forth in the terms of the Securities
as set forth in section 4 of Exhibits B and C hereto.
"Sponsor or Pogo" Pogo Producing Company, a Delaware corporation, or any
successor entity resulting from any merger, consolidation, amalgamation or other
business combination, in its capacity as sponsor of the Trust.
"Successor Delaware Trustee" has the meaning specified in Section
5.02(b)(ii).
"Successor Entity" has the meaning specified in Section 3.18(b)(i).
7
"Successor Property Trustee" has the meaning specified in Section
5.02(b)(i).
"Successor Securities" has the meaning specified in Section
3.18(b)(i)(B).
"Super Majority" has the meaning specified in Section 2.06(a)(ii).
"Supplemental Indenture" means Supplemental Indenture No. 1 dated as of
June 1, 1999 between Pogo and the Debenture Trustee, pursuant to which the
Debentures are to be issued.
"10% in liquidation amount of the Securities" means, except as otherwise
required by the Trust Indenture Act and except as provided in the penultimate
paragraph of section 6 of Exhibit B hereto, Holder(s) of outstanding Securities
voting together as a single class or, as the context may require, Holder(s) of
outstanding Preferred Securities or Common Securities, voting separately as a
class, who are the record owners of a relevant class of Securities whose
liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accumulated and unpaid Distributions
to the date upon which the voting percentages are determined) represents 10% or
more of the liquidation amount of all outstanding Securities of such class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trust" has the meaning set forth in the first WHEREAS clause above.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
from time to time, or any successor legislation.
"Underwriting Agreement" means the Underwriting Agreement dated as of
May 26, 1999 among the Trust, the Sponsor and Goldman Sachs & Co., Credit Suisse
First Boston and Merrill Lynch, Pierce, Fenner & Smith Incorporated.
8
ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.01. Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust Indenture
Act that are required to be part of this Declaration and shall, to the extent
applicable, be governed by such provisions;
(b) if and to the extent that any provision of this Declaration limits,
qualifies or conflicts with the duties imposed by ss.ss. 310 to 317, inclusive,
of the Trust Indenture Act, such imposed duties shall control;
(c) the Property Trustee, to the extent permitted by applicable law
and/or the rules and regulations of the Commission, shall be the only Trustee
which is a trustee for the purposes of the Trust Indenture Act; and
(d) the application of the Trust Indenture Act to this Declaration shall
not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.02. Lists of Holders of Preferred Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide the Property Trustee unless the Property Trustee is registrar for
the Securities, (i) on each regular record date for payment of Distributions, a
list, in such form as the Property Trustee may reasonably require, of the names
and addresses of the Holders ("List of Holders") as of such record date,
provided that neither the Sponsor nor the Regular Trustees on behalf of the
Trust shall be obligated to provide such List of Holders at any time that the
List of Holders does not differ from the most recent List of Holders given to
the Property Trustee by the Sponsor and the Regular Trustees on behalf of the
Trust, and (ii) at any other time, within 30 days of receipt by the Trust of a
written request for a List of Holders as of a date no more than 15 days before
such List of Holders is given to the Property Trustee. The Property Trustee
shall preserve, in as current a form as is reasonably practicable, all
information contained in Lists of Holders given to it or which it receives in
the capacity as Paying Agent (if acting in such capacity) provided that the
Property Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under ss.ss.
310(b), 311 and 312(b) of the Trust Indenture Act.
SECTION 2.03. Reports by the Property Trustee.
Within 60 days after May 15 of each year, commencing May 15, 2000, the
Property Trustee shall provide to the Holders of the Securities such reports as
are required by ss. 313 of the Trust Indenture Act, if any, in the form, in the
manner and at the times provided by ss. 313 of the Trust
9
Indenture Act. The Property Trustee shall also comply with the requirements of
ss. 313(d) of the Trust Indenture Act. A copy of each such report shall, at the
time of such transmission to Holders, be filed by the Property Trustee with the
Company, with each stock exchange upon which any Preferred Securities are listed
(if so listed) and also with the Commission. The Company agrees to notify the
Property Trustee when any Preferred Securities become listed on any stock
exchange and of any delisting thereof.
SECTION 2.04. Periodic Reports to the Property Trustee.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee, the Commission and the Holders of the
Securities, as applicable, such documents, reports and information as required
by ss. 314(a)(1)-(3) (if any) of the Trust Indenture Act and the compliance
certificates required by ss. 314(a)(4) and (c) of the Trust Indenture Act, any
such certificates to be provided in the form, in the manner and at the times
required by ss. 314(a)(4) and (c) of the Trust Indenture Act (provided that any
certificate to be provided pursuant to ss. 314(a)(4) of the Trust Indenture Act
shall be provided within 120 days of the end of each Fiscal Year).
SECTION 2.05. Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent provided for in this Declaration which relate to any of the
matters set forth in ss. 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to ss. 314(c) may be given
in the form of an Officers' Certificate.
SECTION 2.06. Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default in respect of the Preferred
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, the Event of Default under
this Declaration shall also not be waivable; or
(ii) requires the consent or vote of the holders of greater than a
majority in aggregate principal amount of the Debentures (a "Super
Majority") to be waived under the Indenture, the Event of Default under
this Declaration may only be waived by the vote of the Holders of at
least the proportion in aggregate liquidation amount of the Preferred
Securities that the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding.
The foregoing provisions of this Section 2.06(a) shall be in lieu of ss.
316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of the Trust
Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any
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such default shall cease to exist, and any Event of Default with respect to the
Preferred Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or an Event of Default with respect to the Preferred
Securities or impair any right consequent thereon. Any waiver by the Holders of
the Preferred Securities of an Event of Default with respect to the Preferred
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote or
consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where the Holders
of the Common Securities are deemed to have waived such Event of Default
under this Declaration as provided above in Section 2.06(a) or below in
this Section 2.06(b), the Event of Default under this Declaration shall
also not be waivable; or
(ii) requires the consent or vote of a Super Majority to be waived,
except where the Holders of the Common Securities are deemed to have
waived such Event of Default under this Declaration as provided above in
Section 2.06(a) or below in this Section 2.06(b), the Event of Default
under this Declaration may only be waived by the vote of the Holders of
at least the proportion in aggregate liquidation amount of the Common
Securities that the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding;
provided, further, that the Holders of Common Securities will be deemed to have
waived any such Event of Default and all Events of Defaults with respect to the
Common Securities and their consequences until all Events of Default with
respect to the Preferred Securities have been cured, waived or otherwise
eliminated, and until such Events of Default have been so cured, waived or
otherwise eliminated, the Property Trustee will be deemed to be acting solely on
behalf of the Holders of the Preferred Securities and only the Holders of the
Preferred Securities will have the right to direct the Property Trustee in
accordance with the terms of the Securities. The foregoing provisions of this
Section 2.06(b) shall be in lieu of ss.ss. 316(a)(1)(A) and 316(a)(1)(B) of the
Trust Indenture Act and such ss.ss. 316(a)(1)(A) and 316(a)(1)(B) of the Trust
Indenture Act are hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. In the event that any Event
of Default with respect to the Preferred Securities is waived by the Holders of
Preferred Securities as provided in this Declaration, the Holders of Common
Securities agree that such waiver shall also constitute the waiver of such Event
of Default with respect to the Common Securities for all purposes under this
Declaration without any further act, vote or consent of the Holders of the
Common Securities. Subject to the foregoing provisions of this Section 2.06(b),
upon waiver, any such default shall cease to exist and any Event of Default with
respect to the Common Securities arising therefrom shall be deemed to have been
cured for every purpose of
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this Declaration, but no such waiver shall extend to any subsequent or other
default or Event of Default with respect to the Common Securities or impair any
right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the Property
Trustee, at the direction of the Holders of Preferred Securities, constitutes a
waiver of the corresponding Event of Default under this Declaration. The
foregoing provisions of this Section 2.06(c) shall be in lieu of ss.
316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of the Trust
Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act.
SECTION 2.07. Disclosure of Information.
The disclosure of information as to the names and addresses of the
Holders of the Securities in accordance with ss. 312 of the Trust Indenture Act,
regardless of the source from which such information was derived, shall not be
deemed to be a violation of any existing law, or any law hereafter enacted which
does not specifically refer to ss. 312 of the Trust Indenture Act, nor shall the
Property Trustee be held accountable by reason of mailing any material pursuant
to a request made under ss. 312(b) of the Trust Indenture Act.
ARTICLE 3
ORGANIZATION
SECTION 3.01. Name.
The Trust continued by this Declaration is named "Pogo Trust I" as such
name may be modified from time to time by the Regular Trustees following written
notice to the Holders of the Securities. The Trust's activities may be conducted
under the name of the Trust or any other name deemed advisable by the Regular
Trustees.
SECTION 3.02. Office.
The address of the principal office of the Trust is c/o Pogo Producing
Company, 5 Greenway Plaza, Suite 2700, Houston, Texas 77046. Upon ten days'
written notice to the Holders, the Regular Trustees may change the location of
the Trust's principal office.
SECTION 3.03. Issuance of the Securities.
On May 26, 1999 the Sponsor, on behalf of the Trust and pursuant to the
Original Declaration, executed and delivered the Underwriting Agreement. On the
Closing Date and contemporaneously with the execution and delivery of this
Declaration, the Regular Trustees, on behalf of the Trust, shall execute and
deliver (i) one or more Global Certificates, registered in the name of the
nominee of the initial Clearing Agency as specified in Section 9.04 for the
benefit of the
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underwriters named in the Underwriting Agreement, in an aggregate amount of
3,000,000 Preferred Securities having an aggregate liquidation amount of
$150,000,000, against receipt of the aggregate purchase price of such Preferred
Securities of $150,000,000, and (ii) to the Sponsor, one or more Common
Securities Certificates, registered in the name of the Sponsor, in an aggregate
amount of 92,800 Common Securities having an aggregate liquidation amount of
$4,640,000, against receipt of the aggregate purchase price of such Common
Securities of $4,640,000.
SECTION 3.04. Purchase of Debentures.
On the Closing Date and contemporaneously with the execution and
delivery of this Declaration, the Regular Trustees, on behalf of the Trust,
shall purchase from the Sponsor with the proceeds received by the Trust from the
sale of the Securities on such date pursuant to Section 3.03, at a purchase
price of 100% of the principal amount thereof, Debentures, registered in the
name of the Property Trustee and having an aggregate principal amount equal to
$154,640,000, and, in satisfaction of the purchase price for such Debentures,
the Property Trustee, on behalf of the Trust, shall deliver or cause to be
delivered to the Sponsor the sum of $154,640,000.
SECTION 3.05. Purpose.
The exclusive purposes and functions of the Trust are: (a)(i) to issue
and sell Preferred Securities for cash and use the proceeds of such sales to
acquire from Pogo Debentures issued under the Indenture having an aggregate
principal amount equal to the aggregate liquidation amount of the Preferred
Securities so issued and sold; (ii) to enter into such agreements and
arrangements as may be necessary in connection with the sale of Preferred
Securities to the initial purchasers thereof (including the Underwriting
Agreement) and to take all action, and exercise such discretion, as may be
necessary or desirable in connection therewith and to file such registration
statements or make such other filings under the Securities Act, the Exchange Act
or state securities or "Blue Sky" laws as may be necessary or desirable in
connection therewith and the issuance of the Preferred Securities; and (iii) to
issue and sell Common Securities to Pogo for cash and use the proceeds of such
sale to purchase as trust assets an equal aggregate principal amount of
Debentures issued under the Indenture; and (b) except as otherwise limited
herein, to engage in only those other activities necessary, convenient or
incidental thereto, including such other activities specifically authorized in
this Declaration. The Trust shall not borrow money, issue debt or reinvest
proceeds derived from investments, mortgage or pledge any of its assets or at
any time while the Securities are outstanding, otherwise undertake (or permit to
be undertaken) any activity that would result in or cause the Trust not to be
classified for United States Federal income tax purposes as a grantor trust.
SECTION 3.06. Authority.
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Property Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the Trustees
acting on behalf of the Trust, no Person shall be required to inquire into
13
the authority of the Trustees to bind the Trust. Persons dealing with the Trust
are entitled to rely conclusively on the power and authority of the Trustees as
set forth in this Declaration.
SECTION 3.07. Title to Property of the Trust.
Except as provided in Section 3.10 with respect to the Debentures and
the Property Account or unless otherwise provided in this Declaration, legal
title to all assets of the Trust shall be vested in the Trust. The Holders shall
not have legal title to any part of the assets of the Trust, but shall have
undivided beneficial interests in the assets of the Trust.
SECTION 3.08. Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, authority and duty
to cause the Trust, and shall cause the Trust, to engage in the following
activities:
(a) to issue Preferred Securities and Common Securities, in each case in
accordance with this Declaration; provided, however, that the Trust may issue no
more than one series of Preferred Securities and no more than one series of
Common Securities, and, provided further, that there shall be no interests in
the Trust other than the Securities and the issuance of Securities shall be
limited to a one-time, simultaneous issuance of both Preferred Securities and
Common Securities on the Closing Date.
(b) in connection with the issuance of the Preferred Securities, at the
direction of the Sponsor, to effect or cause to be effected the filings, and to
execute or cause to be executed, the documents, set forth in Section 3.13 and to
execute, deliver and perform on behalf of the Trust the Depositary Agreement;
(c) to acquire as trust assets Debentures with the proceeds of the sale
of the Preferred Securities and the Common Securities; provided, however, that
the Regular Trustees shall cause legal title to all of the Debentures to be
vested in, and the Debentures to be held of record in the name of, the Property
Trustee for the benefit of the Holders of the Preferred Securities and the
Common Securities;
(d) if and to the extent that the Sponsor on behalf of the Trust has not
already done so, to cause the Trust to enter into the Underwriting Agreement and
such other agreements and arrangements as may be necessary or desirable in
connection with the sale of the Preferred Securities to the initial purchasers
thereof and the consummation thereof, and to take all action, and exercise all
discretion, as may be necessary or desirable in connection with the consummation
thereof;
(e) to give the Sponsor and the Property Trustee prompt written notice of
the occurrence of a Special Event;
(f) to establish a record date with respect to all actions to be taken
hereunder that require a record date be established, including for the purposes
of ss. 316(c) of the Trust Indenture Act and with respect to Distributions,
voting rights, redemptions, and exchanges, and to issue relevant notices
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to Holders of the Preferred Securities and Common Securities as to such actions
and applicable record dates;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort to
legal action or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.10(e), the Property Trustee has
the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under the
Trust Indenture Act;
(j) to give the certificate to the Property Trustee required by ss.
314(a)(4) of the Trust Indenture Act, which certificate may be executed by any
Regular Trustee;
(k) to incur expenses which are necessary or incidental to carrying out
any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities, the Regular Trustees hereby initially
appointing the Property Trustee for such purposes;
(m) to take all actions and perform such duties as may be required of the
Regular Trustee pursuant to the terms of the Securities set forth in Exhibits B
and C hereto;
(n) to take all actions which may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Securities or
to enable the Trust to effect the purposes for which the Trust has been created;
(o) to take all actions, not inconsistent with this Declaration or with
applicable law, which the Regular Trustees determine in their discretion to be
necessary or desirable in carrying out the purposes of the Trust and the
activities of the Trust as set out in this Section 3.08, including, but not
limited to:
(i) causing the Trust not to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States Federal
income tax purposes as a grantor trust; and
(iii) cooperating with the Sponsor to ensure that the Debentures
will be treated as indebtedness of the Sponsor for United States Federal
income tax purposes;
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(p) to take all actions necessary to cause all applicable tax returns and
tax information reports that are required to be filed with respect to the Trust
to be duly prepared and filed by the Regular Trustees, on behalf of the Trust,
and to comply with any requirements imposed by any taxing authority on holders
of instruments treated as indebtedness for United States Federal income tax
purposes;
(q) subject to the requirements of Rule 3a-7 (if the Trust is excluded
from the definition of an Investment Company solely by reason of Rule 3a-7) and
ss. 317(b) of the Trust Indenture Act, to appoint one or more Paying Agents in
addition to the Property Trustee; and
(r) to execute all documents or instruments, perform all duties and
powers and do all things for and on behalf of the Trust in all matters necessary
or incidental to the foregoing.
The Regular Trustees must exercise the powers set forth in this Section
3.08 in a manner which is consistent with the purposes and functions of the
Trust set out in Section 3.05, and the Regular Trustees shall not take any
action which is inconsistent with the purposes and functions of the Trust set
forth in Section 3.05.
Subject to this Section 3.08, the Regular Trustees shall have none of
the powers or any of the authority of the Property Trustee set forth in Section
3.10.
The Regular Trustees shall take all actions on behalf of the Trust that
are not specifically required by this Declaration to be taken by any other
Trustee.
Any expenses incurred by the Regular Trustees pursuant to this Section
3.08 shall be reimbursed by the Sponsor.
SECTION 3.09. Prohibition of Actions by the Trust and the Trustees.
The Trust shall not, and the Trustees (including the Property Trustee)
shall cause the Trust not to, engage in any activity other than in connection
with the purposes of the Trust or other than as required or authorized by this
Declaration. In particular, the Trust shall not and the Trustees (including the
Property Trustee) shall not cause the Trust to:
(a) invest any proceeds received by the Trust from holding the Debentures
but shall promptly distribute from the Property Account all such proceeds to
Holders of Securities pursuant to the terms of this Declaration and of the
Securities;
(b) acquire any assets other than as expressly provided herein;
(c) possess Trust property for other than a Trust purpose;
(d) make any loans, other than loans represented by the Debentures;
16
(e) possess any power or otherwise act in such a way as to vary the Trust
assets or the terms of the Securities in any way whatsoever, except as otherwise
expressly provided herein;
(f) issue any securities or other evidences of beneficial ownership of,
or beneficial interests in, the Trust other than the Securities;
(g) incur any indebtedness for borrowed money;
(h) (i) direct the time, method and place of conducting any proceeding
for any remedy available to the Debenture Trustee or exercising any trust or
power conferred upon the Debenture Trustee with respect to the Debentures, (ii)
waive any past default that is waivable under Section 6.06 of the Indenture, or
(iii) exercise any right to rescind or annul a declaration of acceleration of
the maturity of the principal of the Debentures, without, in each case,
obtaining the prior approval of the Holders of a Majority in liquidation amount
of all outstanding Securities;
(i) revoke any action previously authorized or approved by a vote of the
Holders of Preferred Securities except by subsequent vote of such Holders;
(j) consent to any amendment, modification or termination of the
Indenture or the Debentures, where such consent shall be required, unless in the
case of this clause (j) the Property Trustee shall have received an Opinion of
Counsel experienced in such matters to the effect that such amendment,
modification or termination will not cause more than an insubstantial risk that
for United States Federal income tax purposes the Trust will not be classified
as a grantor trust;
(k) take or consent to any action that would result in the placement of a
lien, pledge, charge, mortgage or other encumbrance on any of the Trust
property;
(l) vary the investment (within the meaning of Treasury Regulation
Section 301.7701-4(c)) of the Trust or of the Holders of Securities; or
(m) after the date hereof, enter into any contract or agreement (other
than any depositary agreement or any agreement with any securities exchange or
automated quotation system) that does not expressly provide that the Holders of
Preferred Securities, in their capacities as such, have limited liability (in
accordance with the provisions of the Business Trust Act) for the liabilities
and obligations of the Trust, which express provision shall be in substantially
the following form, "The Holders of the Preferred Securities, in their
capacities as such, shall not be personally liable for any liabilities or
obligations of the Trust arising out of this Agreement, and the parties hereto
hereby agree that the Holders of the Preferred Securities, in their capacities
as such, shall be entitled to the same limitation of personal liability extended
to stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware."
SECTION 3.10. Powers and Duties of the Property Trustee.
(a) The legal title to the Debentures shall be owned by and held of
record in the name of the Property Trustee in trust for the benefit of the
Holders of the Securities. The right, title and
17
interest of the Property Trustee to the Debentures shall vest automatically in
each Person who may hereafter be appointed as Property Trustee in accordance
with Article 5. Such vesting and cessation of title shall be effective whether
or not conveyancing documents with regard to the Debentures have been executed
and delivered.
(b) The Property Trustee shall not transfer its right, title and interest
in the Debentures to the Regular Trustees or, if the Property Trustee does not
also act as the Delaware Trustee, the Delaware Trustee.
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing bank
account (the "Property Account") in the name of and under the exclusive
control of the Property Trustee on behalf of the Holders of the
Securities and on the receipt of payments of funds made in respect of the
Debentures held by the Property Trustee, deposit such funds into the
Property Account and, without any further acts of the Property Trustee or
the Regular Trustees, promptly make payments to the Holders of the
Preferred Securities and Common Securities from the Property Account in
accordance with Section 6.01. Funds in the Property Account shall be held
uninvested, and without liability for interest thereon, until disbursed
in accordance with this Declaration. The Property Account shall be an
account which is maintained with a banking institution whose long term
unsecured indebtedness is rated by a "nationally recognized statistical
rating organization", as such term is defined for purposes of Rule
436(g)(2) under the Securities Act, at least investment grade;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect promptly the redemption of the Preferred Securities
and the Common Securities to the extent the Debentures are redeemed or
mature;
(iii) upon notice of distribution issued by the Regular Trustees in
accordance with the terms of the Preferred Securities and the Common
Securities, engage in such ministerial activities as shall be necessary
or appropriate to effect promptly pursuant to terms of the Securities the
distribution of Debentures to Holders of Securities upon the election of
the Holder of Common Securities to distribute the Debentures to Holders
of Securities and dissolve the Trust; and
(iv) have the legal power to exercise all of the rights, powers and
privileges of a holder of the Debentures under the Indenture and, if an
Event of Default occurs and is continuing, the Property Trustee, subject
to Section 3.10(e), shall for the benefit of the Holders of the
Securities, enforce its rights as holder of the Debentures under the
Indenture, subject to the rights of the Holders of the Preferred
Securities pursuant to the terms of this Declaration, the Business Trust
Act and the Trust Indenture Act.
(d) The Property Trustee shall take all actions and perform such duties
as may be specifically required of the Property Trustee pursuant to the terms of
the Securities set forth in Exhibits B and C hereto.
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(e) If an Event of Default has occurred and is continuing, then the
Holders of a Majority in liquidation amount of the Preferred Securities will
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Property Trustee or to direct the exercise of
any trust or power conferred upon the Property Trustee under this Declaration,
including the right to direct the Property Trustee to exercise the remedies
available to it as a holder of the Debentures. If the Property Trustee fails to
enforce its rights under the Debentures, a Holder of Preferred Securities, to
the extent permitted by applicable law, may, after a period of 30 days has
elapsed since such Holder's written request to the Property Trustee to enforce
such rights, institute a legal proceeding directly against the Sponsor to
enforce the Property Trustee's rights under the Debentures without first
instituting any legal proceeding against the Property Trustee or any other
Person; provided further, that, if an Event of Default has occurred and is
continuing and such event is attributed to the failure of the Sponsor to pay
interest or principal on the Debentures on the date such interest or principal
is otherwise payable (or in the case of redemption, on the redemption date),
then a Holder of Preferred Securities may directly institute a proceeding for
enforcement of payment to such Holder of the principal of or interest on the
Debentures having a principal amount equal to the aggregate liquidation amount
of the Preferred Securities of such Holder (a "Holder Direct Action") on or
after the respective due date specified in the Debentures. In connection with
such Holder Direct Action, the Sponsor will be subrogated to the rights of such
Holder of Preferred Securities to the extent of any payment made by the Sponsor
to such Holders of Preferred Securities in such Holder Direct Action. Except as
provided in the preceding sentences, the Holders of Preferred Securities will
not be able to exercise directly any other remedy available to the Holders of
the Debentures.
(f) All moneys deposited in the Property Account and all Debentures held
by the Property Trustee for the benefit of the Holders of the Securities will
not be subject to any right, charge, security interest, lien or claim of any
kind in favor of, or for the benefit of the Property Trustee or its agents or
their creditors.
(g) The Property Trustee shall, within 90 days after the occurrence of a
default with respect to the Securities actually known to a Responsible Officer
of the Property Trustee, transmit by mail, first class postage prepaid, to the
holders of the Securities, as their names and addresses appear upon the
register, notice of such defaults with respect to the Securities known to the
Property Trustee, unless such defaults shall have been cured before the giving
of such notice (the term "defaults" for the purposes of this Section 3.10(g)
being hereby defined to be an Indenture Event of Default, not including any
periods of grace provided for in the Indenture and irrespective of the giving of
any notice provided therein); provided, that, except in the case of default in
the payment of the principal of (or premium, if any) or interest on any of the
Debentures, the Property Trustee shall be protected in withholding such notice
if and so long as the board of directors, the executive committee or a trust
committee of directors and/or Responsible Officers, of the Property Trustee in
good faith determines that the withholding of such notice is in the interests of
the Holders of the Securities. The Property Trustee shall not be deemed to have
knowledge of any default, except (i) a default in the payment of principal,
premium or interest on the Debentures or (ii) any default as to which the
Property Trustee shall have received written notice or a Responsible Officer
charged with the administration of this Declaration shall have obtained written
notice.
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(h) The Property Trustee shall continue to serve as a Trustee until
either:
(i) the Trust has been completely liquidated and the proceeds
thereof distributed to the Holders of Securities pursuant to the terms of
the Securities; or
(ii) a Successor Property Trustee has been appointed and accepted
that appointment in accordance with Article 5.
(i) The Property Trustee shall act as paying agent in respect of the
Common Securities and, if the Preferred Securities are not in book entry only
form, the Preferred Securities and, subject to Section 3.08(q), may authorize
one or more Persons (each, a "Paying Agent") to pay Distributions, redemption
payments or liquidation payments on behalf of the Trust with respect to the
Preferred Securities. Any such Paying Agent shall comply with ss. 317(b) of the
Trust Indenture Act. Any Paying Agent may be removed by the Property Trustee,
after consultation with the Regular Trustees, at any time and a successor Paying
Agent or additional Paying Agents may be appointed at any time by the Property
Trustee, subject to Section 3.08(q).
(j) The Property Trustee shall give prompt written notice to the Holders
of the Securities of any notice received by it from Pogo of its election to
defer payments of interest on the Debentures by extending the interest payment
period with respect thereto.
(k) Subject to this Section 3.10, the Property Trustee shall have none of
the powers or the authority of the Regular Trustees set forth in Section 3.08.
(l) The Property Trustee shall exercise the powers, duties and rights set
forth in this Section 3.10 and Section 3.12 in a manner which is consistent with
the purposes and functions of the Trust set out in Section 3.05, and the
Property Trustee shall not take any action which is inconsistent with the
purposes and functions of the Trust set forth in Section 3.05.
SECTION 3.11. Delaware Trustee.
Notwithstanding any other provision of this Declaration other than
Section 5.01(a)(3), the Delaware Trustee shall not be entitled to exercise any
powers, nor shall the Delaware Trustee have any of the duties and
responsibilities of the Trustees described in this Declaration. Except as set
forth in Section 5.01(a)(3), the Delaware Trustee shall be a Trustee for the
sole and limited purpose of fulfilling the requirements of ss. 3807(a) of the
Business Trust Act. No implied covenants or obligations shall be read into this
Declaration against the Delaware Trustee.
SECTION 3.12. Certain Rights and Duties of the Property Trustee.
(a) The Property Trustee, before the occurrence of an Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Declaration, and no implied covenants shall be read into this Declaration
against the Property Trustee. In case an Event of Default has occurred (that has
not been cured or
20
waived pursuant to Section 2.06), the Property Trustee shall exercise such of
the rights and powers vested in it by this Declaration, and use the same degree
of care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Property Trustee shall be
determined solely by the express provisions of this Declaration,
and the Property Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set
forth in this Declaration, and no implied covenants or obligations
shall be read into this Declaration against the Property Trustee;
and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to
the Property Trustee and conforming to the requirements of this
Declaration; provided, however, that in the case of any such
certificates or opinions that by any provision hereof are
specifically required to be furnished to the Property Trustee, the
Property Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the Property Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a Majority in
liquidation amount of the Securities relating to the time, method and
place of conducting any proceeding for any remedy available to the
Property Trustee hereunder or under the Indenture, or exercising any
trust or power conferred upon the Property Trustee under this
Declaration; and
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that the repayment of such funds or liability is
not reasonably assured to it under the terms of this Declaration or
adequate indemnity against such risk or liability is not reasonably
assured to it.
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(c) Subject to the provisions of Section 3.12(a) and (b):
(i) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action hereunder,
the Property Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part and, if the
Trust is excluded from the definition of Investment Company solely by
means of Rule 3a-7, subject to the requirements of Rule 3a-7, request and
rely upon an Officers' Certificate which, upon receipt of such request,
shall be promptly delivered by the Sponsor or the Regular Trustees;
(ii) the Property Trustee (A) may consult with counsel (which may
be counsel to the Sponsor or any of its Affiliates and may include any of
its employees) selected by it in good faith and with due care and the
written advice or opinion of such counsel with respect to legal matters
shall be full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon and in accordance with such advice and opinion and (B)
shall have the right at any time to seek instructions concerning the
administration of this Declaration from any court of competent
jurisdiction;
(iii) the Property 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 Property Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed by it in good faith and with due care;
(iv) the Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Declaration at the
request or direction of any Holder, unless such Holder shall have offered
to the Property Trustee security and indemnity satisfactory to the
Property Trustee against the costs, expenses (including attorneys' fees
and expenses) and liabilities that might be incurred by it in complying
with such request or direction; provided that nothing contained in this
clause (iv) shall relieve the Property Trustee of the obligation, upon
the occurrence of an Event of Default (which has not been cured or
waived) to exercise such of the rights and powers vested in it by this
Declaration, and to use the same degree of care and skill in this
exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs; and
(v) any action taken by the Property Trustee or its agents
hereunder shall bind the Holders of the Securities, and the signature of
the Property Trustee or its agents alone shall be sufficient and
effective to perform any such action; and no third party shall be
required to inquire as to the authority of the Property Trustee to so
act, or as to its compliance with any of the terms and provisions of this
Declaration, both of which shall be conclusively evidenced by the
Property Trustee's or its agent's taking such action.
(d) The Property Trustee, in its individual or any other capacity, may
become the owner or pledgee of Preferred Securities and may otherwise deal with
the Sponsor with the same rights it would have if it were not the Property
Trustee.
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(e) All moneys received by the Property Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by law. The Property Trustee shall be under no liability for interest
on any moneys received by it hereunder except such as it may agree in writing to
pay thereon.
(f) Whether or not expressly stated, every provision of this Declaration
pertaining to the Property Trustee shall be subject to this Section 3.12.
SECTION 3.13. Registration Statement and Related Matters.
In accordance with the Original Declaration, Pogo, as the sponsor of the
Trust, was authorized (i) to file with the Commission and execute, in each case
on behalf of the Trust, (a) the Registration Statement on Form S-3 (Registration
Nos. 333-75105, 333-75105-01 and 333-75105-02) (the "1933 Act Registration
Statement") including any pre-effective or post-effective amendments thereto,
relating to the registration under the Securities Act of the Preferred
Securities and (b) if Pogo shall deem it desirable, a Registration Statement on
Form 8-A or other appropriate form (the "1934 Act Registration Statement")
(including all pre-effective and post-effective amendments thereto) relating to
the registration of the Preferred Securities under Section 12 of the Exchange
Act; (ii) if Pogo shall deem it desirable, to prepare and file with the New York
Stock Exchange or one or more national securities exchange(s) (each, an
"Exchange") or the National Association of Securities Dealers, Inc. (the "NASD")
and execute on behalf of the Trust a listing application or applications and all
other applications, statements, certificates, agreements and other instruments
as shall be necessary or desirable to cause the Preferred Securities to be
listed on any such Exchange or the NASD's Nasdaq National Market ("Nasdaq");
(iii) to file and execute on behalf of the Trust such applications, reports,
surety bonds, irrevocable consents, appointments of attorney for service of
process and all other papers and documents as Pogo, on behalf of the Trust, may
deem necessary or desirable to register the Preferred Securities under the
securities or "Blue Sky" laws of such jurisdictions as Pogo on behalf of the
Trust, may deem necessary or desirable; and (iv) to negotiate the terms and
execute on behalf of the Trust the Underwriting Agreement. In the event that any
filing referred to in clauses (i)-(iii) above is required by the rules and
regulations of the Commission, any Exchange, Nasdaq, the NASD or state
securities or blue sky laws, to be executed on behalf of the Trust by the
Trustees, the Regular Trustees, in their capacities as Trustees of the Trust,
and Pogo are hereby authorized and directed to join in any such filing and to
execute on behalf of the Trust any and all of the foregoing, it being understood
that the Property Trustee and the Delaware Trustee, in their capacities as
Trustees of the Trust, shall not be required to join in any such filing or
execute on behalf of the Trust any such document unless required by the rules
and regulations of the Commission, any Exchange, Nasdaq, the NASD or state
securities or blue sky laws. In connection with all of the foregoing, Pogo and
each Trustee, solely in its capacity as Trustee of the Trust, by execution of
this Declaration have constituted and appointed, and hereby confirm the
appointment of, John O. McCoy, Jr., John W. Elsenshans and Gerald A. Morton and
each of them, as his, her or its, as the case may be, true and lawful
attorneys-in-fact, and agents, with full power of substitution and
resubstitution, for Pogo or such Trustee or in Pogo's or such Trustee's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-
23
effective amendments) to the 1933 Act Registration Statement and the 1934 Act
Registration Statement and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as Pogo or such Trustee might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
SECTION 3.14. Filing of Amendments to Certificate of Trust.
The Certificate of Trust as filed with the Secretary of State of the
State of Delaware on March 18, 1999 is attached hereto as Exhibit A. On or after
the date of execution of this Declaration, the Trustees shall cause the filing
with the Secretary of State of the State of Delaware of such amendments, if any,
to the Certificate of Trust as the Trustees shall deem necessary or desirable.
SECTION 3.15. Execution of Documents by the Regular Trustees.
Except as otherwise required by the Business Trust Act with respect to
the Certificate of Trust or otherwise and except as provided in Sections 7.01(c)
and 9.08, any Regular Trustee, or if there is only one, such Regular Trustee is
authorized to execute and deliver on behalf of the Trust any documents which the
Regular Trustees have the power and authority to execute or deliver pursuant to
this Declaration.
SECTION 3.16. Trustees Not Responsible for Recitals or Issuance of
Securities.
The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.17. Duration of the Trust.
The Trust, absent dissolution pursuant to the provisions of Article 8
hereof, shall continue without dissolution until December 31, 2053.
SECTION 3.18. Mergers.
(a) The Trust may not merge with or into, convert into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, except as described in
Section 3.18(b) and (c) of this Declaration.
(b) The Trust may, at the request of the Sponsor, with the consent of the
Regular Trustees or, if there are more than two, a majority of the Regular
Trustees and without the consent of the Holders, the Delaware Trustee or the
Property Trustee, merge with or into, convert into, consolidate,
24
amalgamate, or be replaced by, or convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to, a trust organized as
such under the laws of any State; provided that:
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust
under the Securities and this Declaration; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Securities (the "Successor
Securities") so long as the Successor Securities rank the same as
the Securities rank with respect to Distributions and payments upon
liquidation, redemption and otherwise;
(ii) the Sponsor expressly appoints a trustee of the Successor
Entity that possesses the same powers and duties as the Property Trustee
as the holder of the Debentures;
(iii) the Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any national
securities exchange or with another organization in which the Preferred
Securities are then listed or quoted, if any;
(iv) if the Preferred Securities (including any Successor
Securities) are rated by any nationally recognized statistical rating
organization prior to such transaction, such merger, conversion,
consolidation, amalgamation, replacement, conveyance, transfer or lease
does not cause the Preferred Securities (including any Successor
Securities), or if the Debentures are so rated, the Debentures, to be
downgraded by any nationally recognized statistical rating organization;
(v) such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the Holders (including the holders
of any Successor Securities) in any material respect (other than with
respect to any dilution of such Holders' interests in the new entity);
(vi) such Successor Entity has purposes substantially identical to
those of the Trust;
(vii) prior to such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Sponsor has
received an Opinion of Counsel experienced in such matters that:
(A) such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the Holders
(including the holders of any Successor Securities) in any material
respect (other than with respect to any dilution of the Holders'
interest in the new entity);
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(B) following such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer or lease, neither
the Trust nor the Successor Entity will be required to register as
an Investment Company under the Investment Company Act; and
(C) following such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Trust
(or the Successor Entity) will continue to be classified as a
grantor trust for United States Federal income tax purposes;
(viii) the Sponsor or any permitted successor or assignee owns all
of the common securities of such Successor Entity and guarantees the
obligations of such Successor Entity under the Successor Securities at
least to the extent provided by the Preferred Securities Guarantee; and
(ix) there shall have been furnished to the Property Trustee an
Officers' Certificate and an Opinion of Counsel, each to the effect that
all conditions precedent in this Declaration to such transaction have
been satisfied.
(c) Notwithstanding Section 3.18(b), the Trust shall not, except with the
consent of Holders of 100% in liquidation amount of the Securities, consolidate,
amalgamate, merge with or into, convert into, or be replaced by, or convey,
transfer or lease its properties and assets as an entirety or substantially as
an entirety to, any other Person or permit any other Person to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, conversion, replacement, conveyance, transfer or lease
would cause the Trust or the Successor Entity not to be classified as a grantor
trust for United States Federal income tax purposes or would cause the Holders
of the Securities not to be treated as owning an undivided interest in the
Debentures.
SECTION 3.19. Property Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
similar judicial proceeding relative to the Trust or any other obligor upon the
Securities or the property of the Trust or of such other obligor or their
creditors, the Property Trustee (irrespective of whether any Distributions on
the Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Property Trustee shall
have made any demand on the Trust for the payment of any past due Distributions)
shall be entitled and empowered, to the fullest extent permitted by law, by
intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of any Distributions
owing and unpaid in respect of the Securities (or, if the Securities are
original issue discount Securities, such portion of the liquidation amount as
may be specified in the terms of such Securities) and to file such other papers
or documents as may be necessary or advisable in order to have the claims of the
Property Trustee (including any claim for the reasonable compensation, expenses,
disbursements and
26
advances of the Property Trustee, its agents and counsel) and of the Holders
allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Property Trustee and, in the event the
Property Trustee shall consent to the making of such payments directly to the
Holders to pay to the Property Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel, and any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or compensation affecting
the Securities or the rights of any Holder thereof to authorize the Property
Trustee to vote in respect of the claim of any Holder in any such proceeding.
ARTICLE 4
SPONSOR
SECTION 4.01. Purchase of Common Securities by the Sponsor.
On the Closing Date, the Sponsor will purchase all of the Common
Securities issued by the Trust at the same time as the Preferred Securities to
be issued on such date are issued, such purchase to be in an amount equal to or
greater than 3% of the total capital of the Trust.
SECTION 4.02. Expenses.
(a) In connection with the purchase of the Debentures by the Trust, the
Sponsor, in its capacity as Sponsor and not as a Holder, shall be responsible
for and shall pay for all debts and obligations (other than with respect to the
Securities) and all costs and expenses of the Trust (including, but not limited
to, costs and expenses relating to the organization of the Trust, the issuance
of the Preferred Securities to initial purchasers thereof, the fees and expenses
(including reasonable counsel fees and expenses) of the Trustees (including any
amounts payable under Article 10), the costs and expenses relating to the
operation of the Trust, including, without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, paying agent(s),
registrar(s), transfer agent(s), duplicating, travel and telephone and other
telecommunications expenses and costs and expenses incurred in connection with
the disposition of Trust assets).
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(b) In connection with the purchase of the Debentures by the Trust, the
Sponsor, in its capacity as Sponsor and not as a Holder, shall pay any and all
taxes (other than United States withholding taxes attributable to the Trust or
its assets) and all liabilities, costs and expenses with respect to such taxes
of the Trust.
(c) The Sponsor's obligations under this Section 4.02 shall be for the
benefit of, and shall be enforceable by, any Person to whom any such debts,
obligations, costs, expenses and taxes are owed (a "Creditor") whether or not
such Creditor has received notice hereof. Any such Creditor may enforce the
Sponsor's obligations under this Section 4.02 directly against the Sponsor and
the Sponsor irrevocably waives any right or remedy to require that any such
Creditor take any action against the Trust or any other Person before proceeding
against the Sponsor.
(d) The Sponsor shall be subrogated to all (if any) rights of the Trust
in respect of any amounts paid to any Creditor by the Sponsor under this Section
4.02.
ARTICLE 5
TRUSTEES
SECTION 5.01. Number of Trustees; Qualifications.
(a) The number of Trustees initially shall be five (5). At any time (i)
before the issuance of the Securities, the Sponsor may, by written instrument,
increase or decrease the number of, and appoint, remove and replace, the
Trustees, and (ii) after the issuance of the Securities the number of Trustees
may be increased or decreased solely by, and Trustees may be appointed, removed
or replaced solely by, vote of Holders of Common Securities representing a
Majority in liquidation amount of the Common Securities voting as a class;
provided that in any case:
(1) the number of Trustees shall be at least five (5) unless the
Trustee that acts as the Property Trustee also acts as the Delaware
Trustee, in which case the number of Trustees shall be at least four (4);
(2) at least a majority of the Trustees shall at all times be
officers, directors or employees of Pogo;
(3) if required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be either a natural person who is a resident of
the State of Delaware or, if not a natural person, an entity which has
its principal place of business in the State of Delaware and otherwise is
permitted to act as a Trustee hereunder under the laws of the State of
Delaware, except that if the Property Trustee has its principal place of
business in the State of Delaware and otherwise is permitted to act as a
Trustee hereunder under the
28
laws of the State of Delaware, then the Property Trustee shall also be
the Delaware Trustee and Section 3.11 shall have no application; and
(4) there shall at all times be a Property Trustee hereunder which
shall satisfy the requirements of Section 5.01(c).
Each Trustee shall be either a natural person at least 21 years of age or a
legal entity which shall act through one or more duly appointed representatives.
(b) The initial Regular Trustees shall be:
John O. McCoy, Jr.
John W. Elsenshans
Gerald A. Morton
c/o POGO PRODUCING COMPANY
5 Greenway Plaza, Suite 2700
Houston, Texas 77046
(c) There shall at all times be one Trustee which shall act as the
Property Trustee. In order to act as the Property Trustee hereunder, such
Trustee shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation or national banking association organized and
doing business under the laws of the United States of America or any
State or Territory thereof or of the District of Columbia, or a
corporation, national banking association or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least $50,000,000, and
subject to supervision or examination by Federal, State, Territorial or
District of Columbia authority. If such corporation or national banking
association publishes reports of condition at least annually, pursuant to
law or to the requirements of the supervising or examining authority
referred to above, then for the purposes of this Section 5.01(c)(ii), the
combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent report
of condition so published; and
(iii) if the Trust is excluded from the definition of an Investment
Company solely by reason of Rule 3a-7 and to the extent Rule 3a-7
requires a trustee having certain qualifications to hold title to the
"eligible assets" (as defined in Rule 3a-7) of the Trust, the Property
Trustee shall possess those qualifications.
If at any time the Property Trustee shall cease to satisfy the
requirements of clauses (i)-(iii) above, the Property Trustee shall immediately
resign in the manner and with the effect set out in Section 5.02(d). If the
Property Trustee has or shall acquire any "conflicting interest" within the
29
meaning of ss. 310(b) of the Trust Indenture Act, the Property Trustee and the
Holders of the Common Securities (as if such Holders were the obligor referred
to in ss. 310(b) of the Trust Indenture Act) shall in all respects comply with
the provisions of ss. 310(b) of the Trust Indenture Act. The Preferred
Securities Guarantee and the Indenture shall be deemed to be specifically
described in this Declaration for the purposes of clause (i) of the first
proviso contained in ss. 310(b) of the Trust Indenture Act.
The initial Trustee which shall serve as the Property Trustee is
Wilmington Trust Company, whose address is as set forth in Section 14.01(b).
(d) The initial Trustee which shall serve as the Delaware Trustee is
Wilmington Trust Company, whose address is as set forth in Section 14.01(c).
(e) Any action taken by the Holders of Common Securities pursuant to this
Article 5 shall be taken at a meeting of the Holders of Common Securities
convened for such purpose or by written consent as provided in Section 12.02.
(f) No amendment may be made to this Section 5.01 which would change any
rights with respect to the number, existence or appointment and removal of
Trustees, except with the consent of each Holder of Common Securities.
SECTION 5.02. Appointment, Removal and Resignation of the Trustees.
(a) Subject to Section 5.02(b), Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of the Securities, by written instrument
executed by the Sponsor; and
(ii) after the issuance of the Securities by vote of the Holders of
a Majority in liquidation amount of the Common Securities voting as a
class.
(b) (i) The Trustee that acts as the Property Trustee shall not be
removed in accordance with Section 5.02(a) until a Successor Trustee possessing
the qualifications to act as the Property Trustee under Section 5.01(c) (a
"Successor Property Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Property Trustee
and delivered to the Regular Trustees, the Sponsor and the Property Trustee
being removed; and
(ii) the Trustee that acts as the Delaware Trustee shall not be
removed in accordance with Section 5.02(a) until a successor Trustee
possessing the qualifications to act as the Delaware Trustee under
Section 5.01(a)(3) (a "Successor Delaware Trustee") has been appointed
and has accepted such appointment by written instrument executed by such
Successor Delaware Trustee and delivered to the Regular Trustees, the
Sponsor and the Delaware Trustee being removed.
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(c) A Trustee appointed to office shall hold such office until his
successor shall have been appointed or until his death, removal or resignation.
(d) Any Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument (a "Resignation Request") in writing
signed by the Trustee and delivered to the Sponsor and the Trust, which
resignation shall take effect upon such delivery or upon such later date as is
specified therein; provided, however, that:
(i) no such resignation of the Trustee that acts as the Property
Trustee shall be effective until:
(A) a Successor Property Trustee has been appointed and has
accepted such appointment by instrument executed by such Successor
Property Trustee and delivered to the Regular Trustees, the Sponsor
and the resigning Property Trustee; or
(B) if the Trust is excluded from the definition of an
Investment Company solely by reason of Rule 3a-7, until the assets
of the Trust have been completely liquidated and the proceeds
thereof distributed to the Holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by
such Successor Delaware Trustee and delivered to the Regular Trustees,
the Sponsor and the resigning Delaware Trustee.
(e) If no Successor Property Trustee or Successor Delaware Trustee shall
have been appointed and accepted appointment as provided in this Section 5.02
within 60 days after delivery of a notice of removal or a Resignation Request,
the Property Trustee or Delaware Trustee being removed of resigning as the case
may be may petition any court of competent jurisdiction for appointment of a
Successor Property Trustee or Successor Delaware Trustee, as the case may be.
Such court may thereupon after prescribing such notice, if any, as it may deem
proper and prescribe, appoint a Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
SECTION 5.03. Vacancies among the Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.01 or if the number of Trustees is
increased pursuant to Section 5.01, a vacancy shall occur. A resolution
certifying the existence of such vacancy by a majority of the Regular Trustees
shall be conclusive evidence of the existence of such vacancy. The vacancy shall
be filled with a Trustee appointed in accordance with the requirements of this
Article 5.
SECTION 5.04. Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee, or
any one of them, shall not operate
31
to dissolve, terminate or annul the Trust. Whenever a vacancy in the number of
Regular Trustees shall occur until such vacancy is filled as provided in this
Article 5, the Regular Trustees in office, regardless of their number, shall
have all the powers granted to the Regular Trustees and shall discharge all the
duties imposed upon the Regular Trustees by this Declaration.
SECTION 5.05. Meetings.
Meetings of the Regular Trustees shall be held from time to time upon
the call of any Regular Trustee. Regular meetings of the Regular Trustees may be
held at a time and place fixed by resolution of the Regular Trustees. Notice of
any in-person meeting of the Regular Trustees shall be hand delivered or
otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 48 hours before such meeting. Notice of any
telephonic meeting of the Regular Trustees or any committee thereof shall be
hand delivered or otherwise delivered in writing (including by facsimile, with a
hard copy by overnight courier) not less than 24 hours before such meeting.
Notices shall contain a brief statement of the time, place and anticipated
purposes of the meeting. The presence (whether in person or by telephone) of a
Regular Trustee at a meeting shall constitute a waiver of notice of such meeting
except where a Regular Trustee attends a meeting for the express purpose of
objecting to the transaction of any activity on the ground that the meeting has
not been lawfully called or convened. Unless otherwise provided in this
Declaration, any action of the Regular Trustees may be taken at a meeting by
vote of a majority of the Regular Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter, provided that a
Quorum is present, or without a meeting by the unanimous written consent of the
Regular Trustees.
SECTION 5.06. Delegation of Power.
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any registration statement or amendment
thereto or other document or schedule filed with the Commission or making any
other governmental filing (including, without limitation, the filings referred
to in Section 3.13).
(b) The Regular Trustees shall have power to delegate from time to time
to such of their number or to officers of the Trust the doing of such things and
the execution of such instruments either in the name of the Trust or the names
of the Regular Trustees or otherwise as the Regular Trustees may deem expedient,
to the extent such delegation is not prohibited by applicable law or contrary to
the provisions of the Trust, as set forth herein.
SECTION 5.07. Merger, Conversion, Consolidation or Succession to
Business.
Any Person into which the Property Trustee or the Delaware Trustee or
any Regular Trustee that is not a natural person, as the case may be, may be
merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Property
Trustee or the Delaware Trustee or the Regular Trustees, as the case may be,
shall be a party, or any Person succeeding to all or substantially all of the
corporate trust business of the
32
Property Trustee or the Delaware Trustee or any Regular Trustee, as the case may
be, shall be the successor of the Property Trustee or the Delaware Trustee or
that Regular Trustee, as the case may be, hereunder, provided that such Person
shall be otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto.
ARTICLE 6
DISTRIBUTIONS
SECTION 6.01. Distributions.
Holders shall receive periodic distributions, redemption payments and
liquidation distributions in accordance with the applicable terms of the
relevant Holder's Securities as set forth in Exhibits B and C hereto
("Distributions"). If and to the extent that Pogo makes a payment of interest
(including Additional Interest and/or Compounded Interest (as defined in the
Indenture)), premium and/or principal on the Debentures held by the Property
Trustee (the amount of any such payment being a "Payment Amount"), the Property
Trustee shall and is directed, to the extent funds are available for that
purpose, to promptly make a Distribution of the Payment Amount to Holders in
accordance with the terms of the Securities as set forth in Exhibits B and C
hereto. The record dates and payment dates for Distributions shall be the same
as the record dates and payment dates for the Debentures held by the Property
Trustee.
ARTICLE 7
ISSUANCE OF THE SECURITIES
SECTION 7.01. General Provisions Regarding the Securities.
(a) The Regular Trustees shall on behalf of the Trust issue Securities in
fully registered form representing undivided beneficial interests in the assets
of the Trust in accordance with Section 7.01(b) and for the consideration
specified in Section 3.03.
(b) The Regular Trustees shall issue on behalf of the Trust one class of
preferred securities representing preferred undivided beneficial interests in
the assets of the Trust having such terms as are set forth in Exhibit B (the
"Preferred Securities") hereto, which terms are incorporated by reference in,
and made a part of, this Declaration as if specifically set forth herein, and
one class of common securities representing common undivided beneficial
interests in the assets of the Trust having such terms as are set forth in
Exhibit C (the "Common Securities") hereto, which terms are incorporated by
reference in, and made a part of, this Declaration as if specifically set forth
herein. The Trust shall have no securities or other interests in the assets of
the Trust other than the Preferred Securities and the Common Securities.
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(c) The Certificates shall be signed on behalf of the Trust by the
Regular Trustees (or if there are more than two Regular Trustees by any two of
the Regular Trustees). Such signatures may be the manual or facsimile signatures
of the present or any future Regular Trustee. Typographical and other minor
errors or defects in any such reproduction of any such signature shall not
affect the validity of any Certificate. In case any Regular Trustee who shall
have signed any of the Certificates shall cease to be such Regular Trustee
before the Certificate so signed shall be delivered by the Trust, such
Certificate nevertheless may be delivered as though the person who signed such
Certificate had not ceased to be such Regular Trustee; and any Certificate may
be signed on behalf of the Trust by such persons as, at the actual date of the
execution of such Certificate, shall be the Regular Trustees, although at the
date of the execution and delivery of this Declaration any such person was not a
Regular Trustee. Certificates shall be typewritten, printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Regular Trustees, as evidenced by their execution thereof, and may have such
letters, numbers or other marks of identification or designation and such
legends or endorsements as the Regular Trustees may deem appropriate, or as may
be required to comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or automated
quotation system on which Securities may be listed or traded, or with any rule
or regulation of the Clearing Agency, or to conform to usage. Pending the
preparation of definitive Certificates, the Regular Trustees on behalf of the
Trust may execute temporary Certificates (printed, lithographed or typewritten),
in substantially the form of the definitive Certificates in lieu of which they
are issued, but with such omissions, insertions and variations as may be
appropriate for temporary Certificates, all as may be determined by the Regular
Trustees. Each temporary Certificate shall be executed by the Regular Trustees
(or, if there are more than two Regular Trustees, by any two of the Regular
Trustees) on behalf of the Trust upon the same conditions and in substantially
the same manner, and with like effect, as definitive Certificates. Without
unnecessary delay, the Regular Trustees on behalf of the Trust will execute and
furnish definitive Certificates and thereupon any or all temporary Certificates
may be surrendered to the transfer agent and registrar in exchange therefor
(without charge to the Holders). Each Preferred Security Certificate whether in
temporary or definitive form shall be countersigned upon receipt of a written
order of the Trust signed by one Regular Trustee, by the manual signature of an
authorized signatory of the Person acting as registrar and transfer agent for
the Preferred Securities, which shall initially be the Property Trustee.
(d) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(e) Upon issuance of the Securities as provided in this Declaration, the
Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable.
(f) Every Person, by virtue of having become a Holder or a Preferred
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by this Declaration.
(g) Upon issuance of the Securities as provided in this Declaration, the
Regular Trustees on behalf of the Trust shall return to Pogo the $10
constituting initial trust assets as set forth in the Original Declaration.
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SECTION 7.02. Conversion Agent.
The Trust shall maintain an office or agency where Preferred Securities
may be presented for conversion into Common Stock in accordance with the terms
of the Preferred Securities as set forth in Exhibit B hereto ("Conversion
Agent"). The Trust may appoint the Conversion Agent and may appoint one or more
additional Conversion Agents in such other locations as it may determine. The
term "Conversion Agent" includes any additional Conversion Agent. The Trust may
change any Conversion Agent without prior notice to any Holders. If the Trust
fails to appoint or maintain another entity as Conversion Agent, the Property
Trustee will act as such. The Trust or any of its Affiliates may act as
Conversion Agent. The Conversion Agent shall be entitled to the rights and
protections extended to the Property Trustee when acting in such capacity.
The Property Trustee is hereby initially appointed as the Conversion
Agent for the Preferred Securities.
ARTICLE 8
DISSOLUTION OF THE TRUST
SECTION 8.01. Dissolution of the Trust.
The Trust shall dissolve:
(i) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders of the Securities in accordance with the terms
of the Securities; or
(ii) when all of the Debentures shall have been distributed to the
Holders of the Securities in exchange for all of the Securities in
accordance with the terms of the Securities; or
(iii) upon the expiration of the term of the Trust as set forth in
Section 3.17; or
(iv) upon a decree of judicial dissolution; or
(v) upon the distribution of Common Stock to all Securities Holders
upon conversion of all outstanding Securities.
Upon dissolution and the completion of the winding up of the affairs of the
Trust, the Trust and this Declaration shall terminate when a certificate of
cancellation is filed by the Trustees with the Secretary of State of the State
of Delaware. The Trustees shall so file such a certificate as soon as
practicable after the occurrence of an event referred to in this Section 8.01.
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The provisions of Sections 3.12 and 4.02 and Article 10 shall survive
the dissolution and termination of the Trust and this Declaration.
ARTICLE 9
TRANSFER OF INTERESTS
SECTION 9.01. Transfer of Securities.
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. To the fullest extent permitted by law, any
transfer or purported transfer of any Security not made in accordance with this
Declaration shall be null and void.
(b) Subject to this Article 9, Preferred Securities shall be freely
transferable.
(c) The Holder of the Common Securities may not transfer the Common
Securities except (a) in connection with transactions permitted under Section
10.01 of the Indenture, or (b) to the Sponsor or an Affiliate thereof in
compliance with applicable law (including the Securities Act and applicable
state securities and blue sky laws). To the fullest extent permitted by law, any
attempted transfer of the Common Securities other than as set forth in the
immediately preceding sentence shall be null and void.
SECTION 9.02. Transfer of Certificates.
The Regular Trustees shall provide for the registration of Certificates
and of transfers of Certificates, which will be effected without charge but only
upon payment (with such indemnity as the Regular Trustees may require) in
respect of any tax or other government charges which may be imposed in relation
to it. Upon surrender for registration of transfer of any Certificate, the
Regular Trustees shall cause one or more new Certificates to be issued in the
name of the designated transferee or transferees. Every Certificate surrendered
for registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Regular Trustees duly executed by the
Holder or such Holder's attorney duly authorized in writing. Each Certificate
surrendered for registration of transfer shall be canceled by the Regular
Trustees. A transferee of a Certificate shall be entitled to the rights and
subject to the obligations of a Holder hereunder upon the receipt by such
transferee of a Certificate. By acceptance of a Certificate, each transferee
shall be deemed to have agreed to be bound by this Declaration.
SECTION 9.03. Deemed Security Holders.
The Trustees may treat the Person in whose name any Certificate shall be
registered on the books and records of the Trust as the sole holder of such
Certificate and of the Securities represented by such Certificate for purposes
of receiving Distributions and for all other purposes whatsoever and,
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accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trustees shall have
actual or other notice thereof.
SECTION 9.04. Book Entry Interests.
Unless otherwise specified in the terms of the Preferred Securities, the
Preferred Security Certificates, on original issuance will be issued in the form
of one or more, fully registered, global Preferred Security Certificates (each a
"Global Certificate"), to be delivered to DTC, the initial Clearing Agency, by,
or on behalf of, the Trust. Such Global Certificates shall initially be
registered on the books and records of the Trust in the name of Cede & Co., the
nominee of DTC, and no Preferred Security Beneficial Owner will receive a
definitive Preferred Security Certificate representing such Preferred Security
Beneficial Owner's interests in such Global Certificates, except as provided in
Section 9.07. Unless and until definitive, fully registered Preferred Security
Certificates (the "Definitive Preferred Security Certificates") have been issued
to the Preferred Security Beneficial Owners pursuant to Section 9.07:
(i) the provisions of this Section 9.04 shall be in full force and
effect;
(ii) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the
payment of Distributions on the Global Certificates and receiving
approvals, votes or consents hereunder) as the Holder of the Preferred
Securities and the sole holder of the Global Certificates and, except as
set forth herein in Section 9.07 or in Rule 3a-7 (if the Trust is
excluded from the definition of an Investment Company solely by reason of
Rule 3a-7) with respect to the Property Trustee, shall have no obligation
to the Preferred Security Beneficial Owners;
(iii) to the extent that the provisions of this Section 9.04
conflict with any other provisions of this Declaration, the provisions of
this Section 9.04 shall control; and
(iv) the rights of the Preferred Security Beneficial Owners shall
be exercised only through the Clearing Agency and shall be limited to
those established by law and agreements between such Preferred Security
Beneficial Owners and the Clearing Agency and/or the Clearing Agency
Participants. DTC will make book entry transfers among the Clearing
Agency Participants and receive and transmit payments of Distributions on
the Global Certificates to such Clearing Agency Participants, provided,
that solely for the purposes of determining whether the Holders of the
requisite amount of Preferred Securities have voted on any matter
provided for in this Declaration, so long as definitive Preferred
Security Certificates have not been issued (pursuant to Section 9.07
hereof), the Trustees may conclusively rely on, and shall be protected in
relying on, any written instrument (including a proxy) delivered to the
Trustees by the Clearing Agency setting forth the Preferred Security
Beneficial Owners' votes or assigning the right to vote on any matter to
any other Persons either in whole or in part.
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SECTION 9.05. Notices to Holders of Certificates.
Whenever a notice or other communication to the Holders is required to
be given under this Declaration, unless and until Definitive Preferred Security
Certificates shall have been issued pursuant to Section 9.07, the relevant
Trustees shall give all such notices and communications, specified herein to be
given to Holders of Preferred Securities, to the Clearing Agency and, with
respect to any Preferred Security Certificate registered in the name of a
Clearing Agency or the nominee of a Clearing Agency, the Trustees shall, except
in Rule 3a-7 (if the Trust is excluded from the definition of an Investment
Company solely by reason of Rule 3a-7) with respect to the Property Trustee,
have no notice obligations to the Preferred Security Beneficial Owners.
SECTION 9.06. Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as securities
depository with respect to the Preferred Securities, the Regular Trustees may,
in their sole discretion, appoint a successor Clearing Agency with respect to
the Preferred Securities.
SECTION 9.07. Definitive Preferred Securities Certificates.
If (i) a Clearing Agency elects to discontinue its services as
securities depository with respect to the Preferred Securities and a successor
Clearing Agency is not appointed within 90 days after such discontinuance
pursuant to Section 9.06 or (ii) the Regular Trustees elect after consultation
with the Sponsor to terminate the book entry system through the Clearing Agency
with respect to the Preferred Securities, then (x) Definitive Preferred Security
Certificates shall be prepared by the Regular Trustees on behalf of the Trust
with respect to such Preferred Securities and (y) upon surrender of the Global
Certificates by the Clearing Agency, accompanied by registration instructions,
the Regular Trustees shall cause Definitive Preferred Security Certificates to
be delivered to Preferred Security Beneficial Owners in accordance with the
instructions of the Clearing Agency. Neither the Trustees nor the Trust shall be
liable for any delay in delivery of such instructions and each of them may
conclusively rely on, and shall be protected in relying on, such instructions.
SECTION 9.08. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and (b) there
shall be delivered to the Regular Trustees such security or indemnity as may be
required by them to keep each of them and the Trust harmless, then in the
absence of notice that such Certificate shall have been acquired by a bona fide
purchaser, the Regular Trustees (or if there are more than two Regular Trustees
by any two of the Regular Trustees) on behalf of the Trust shall execute and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like denomination. In connection with
the issuance of any new Certificate under this Section 9.08, the Regular
Trustees may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this section shall constitute conclusive evidence
of an
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ownership interest in the relevant Securities, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
ARTICLE 10
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 10.01. Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Trust or any Covered Person for any loss, damage or
claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's gross negligence (or, in the
case of the Property Trustee, negligence) or willful misconduct with respect to
such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses or any other facts
pertinent to the existence and amount of assets from which Distributions to
Holders of Securities might properly be paid.
(c) Pursuant to ss. 3803(a) of the Business Trust Act, the Holders of
Securities, in their capacities as Holders, shall be entitled to the same
limitation of liability that is extended to stockholders of private corporations
for profit organized under the General Corporation Law of the State of Delaware.
SECTION 10.02. Indemnification.
(a) To the fullest extent permitted by applicable law, the Sponsor shall
indemnify and hold harmless each Indemnified Person from and against any loss,
damage or claim incurred by such Indemnified Person by reason of any act or
omission performed or omitted by such Indemnified Person in good faith on behalf
of the Trust and in a manner such Indemnified Person reasonably believed to be
within the scope of authority conferred on such Indemnified Person by this
Declaration, except that no Indemnified Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such Indemnified
Person by reason of gross negligence (or, in the case of the Property Trustee,
negligence) or willful misconduct with respect to such acts or omissions.
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(b) The provisions of this Section 10.02 shall survive the termination of
this Declaration or the resignation or removal of any Trustee.
SECTION 10.03. Outside Business.
The Sponsor and any Trustee (in the case of the Property Trustee,
subject to Section 5.01(c)) may engage in or possess an interest in other
business ventures of any nature or description, independently or with others,
similar or dissimilar to the business of the Trust, and the Trust and the
Holders of Securities shall have no rights by virtue of this Declaration in and
to such independent ventures or the income or profits derived therefrom, and the
pursuit of any such venture, even if competitive with the business of the Trust,
shall not be deemed wrongful or improper. Neither the Sponsor nor any Trustee
shall be obligated to present any particular investment or other opportunity to
the Trust even if such opportunity is of a character that, if presented to the
Trust, could be taken by the Trust, and the Sponsor or any Trustee shall have
the right to take for its own account (individually or as a partner or
fiduciary) or to recommend to others any such particular investment or other
opportunity. Any Trustee may engage or be interested in any financial or other
transaction with the Sponsor or any Affiliate of the Sponsor or may act as
depository for, trustee or agent for, or act on any committee or body of holders
of, securities or other obligations of the Sponsor or any of its Affiliates.
ARTICLE 11
ACCOUNTING
SECTION 11.01. Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar year,
or such other year as is required by the Code.
SECTION 11.02. Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Regular Trustees
shall keep, or cause to be kept, full books of account, records and supporting
documents, which shall reflect in reasonable detail each transaction of the
Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States Federal income tax purposes.
(b) If required by applicable law, the Regular Trustees shall, as soon as
available after the end of each Fiscal Year of the Trust, cause to be prepared
and mailed to each Holder of Securities unaudited financial statements of the
Trust for such Fiscal Year, prepared in accordance with generally accepted
accounting principles; provided that if the Trust is required to comply with the
periodic reporting requirements of Section 13(a) or 15(d) of the Exchange Act,
such financial
40
statements for such Fiscal Year shall be examined and reported on by a firm of
independent certified public accountants selected by the Regular Trustees (which
firm may be the firm used by the Sponsor).
(c) The Regular Trustees shall cause to be duly prepared and mailed to
each Holder of Securities any annual United States Federal income tax
information statement required by the Code, containing such information with
regard to the Securities held by each Holder as is required by the Code and the
Treasury Regulations. Notwithstanding any right under the Code to deliver any
such statement at a later date, the Regular Trustees shall endeavor to deliver
all such statements within 30 days after the end of each Fiscal Year of the
Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed with
the appropriate taxing authority an annual United States Federal income tax
return, on such form as is required by the Code, and any other annual income tax
returns required to be filed by the Regular Trustees on behalf of the Trust with
any state or local taxing authority.
SECTION 11.03. Banking.
The Trust shall maintain one or more bank accounts in the name and for
the sole benefit of the Trust; provided, however, that all payments of funds in
respect of the Debentures held by the Property Trustee shall be made directly to
the Property Account and no other funds from the Trust shall be deposited in the
Property Account. The sole signatories for such accounts shall be designated by
the Regular Trustees; provided, however, that the Property Trustee shall
designate the sole signatories for the Property Account.
SECTION 11.04. Withholding.
The Trust and the Trustees shall comply with all withholding
requirements under United States Federal, State and local law. The Regular
Trustees shall request, and the Holders shall provide to the Trust, such forms
or certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably be
requested by the Regular Trustees to assist them in determining the extent of,
and in fulfilling, the Trust's withholding obligations. The Trust shall file
required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Trust is required to withhold and pay over any amounts to any authority with
respect to Distributions or allocations to any Holder, the amount withheld shall
be deemed to be a Distribution in the amount of the withholding to the Holder.
In the event of any claimed overwithholding, Holders shall be limited to an
action against the applicable jurisdiction. If the amount to be withheld was not
withheld from a Distribution, the Trust may reduce subsequent Distributions by
the amount of such withholding.
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ARTICLE 12
AMENDMENTS AND MEETINGS
SECTION 12.01. Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may be amended by, and only
by, a written instrument executed by a majority of the Regular Trustees;
provided, however, that (i) no amendment or modification to this Declaration
shall be made, and any such purported amendment shall be void and ineffective:
(A) unless the Property Trustee shall have first received: (x) an Officers'
Certificate that such amendment is permitted by, and conforms to, the terms of
this Declaration; and (y) an Opinion of Counsel that such amendment is permitted
by, and conforms to, the terms of this Declaration and that all conditions
precedent, if any, in this Declaration to the execution and delivery of such
amendment have been satisfied; and (B) to the extent the result of such
amendment would be to: (x) cause the Trust to fail to continue to be classified
for purposes of United States Federal income taxation as a grantor trust; (y)
reduce or otherwise adversely affect the rights or powers of the Property
Trustee in contravention of the Trust Indenture Act; or (z) cause the Trust to
be deemed to be an Investment Company required to be registered under the
Investment Company Act; (ii) at such time after the Trust has issued any
Securities which remain outstanding, any amendment which would adversely affect
the rights, privileges or preferences of any Holder of Securities may be
effected only with such additional requirements as may be set forth in the terms
of such Securities; (iii) Section 4.02, Section 9.01(c), this Section 12.01 and
the distribution rate and conversion provisions of the Securities as set forth
in Exhibits B and C hereto shall not be amended without the consent of all of
the Holders of the Securities; (iv) no amendment which adversely affects the
rights, powers and privileges of the Property Trustee or the Delaware Trustee
shall be made without the consent of the Property Trustee or the Delaware
Trustee, respectively; (v) Article 4 shall not be amended without the consent of
the Sponsor; and (vi) the rights of the Holders of Common Securities under
Article 5 to increase or decrease the number of, and to appoint, replace or
remove, Trustees shall not be amended without the consent of each Holder of
Common Securities.
(b) Notwithstanding Section 12.02(a), this Declaration may be amended
without the consent of the Holders of the Securities to (i) cure any ambiguity,
(ii) correct or supplement any provision in this Declaration that may be
defective or inconsistent with any other provision of this Declaration, (iii)
add to the covenants, restrictions or obligations of the Sponsor, (iv) conform
to any changes in Rule 3a-7 (if the Trust is excluded from the definition of an
Investment Company solely by reason of Rule 3a-7) or any change in
interpretation or application of Rule 3a-7 (if the Trust is excluded from the
definition of an Investment Company solely by reason of Rule 3a-7) by the
Commission, (v) make any other provisions with respect to matters or questions
arising under this Declaration which shall not be inconsistent with the other
provisions of this Declaration, (vi) modify, eliminate or add to any provisions
of this Declaration to such extent as shall be necessary to ensure that the
Trust will be classified for United States federal income tax purposes as a
grantor trust at all times that any Securities are outstanding or to ensure that
the Trust will not be required to register as an Investment Company under the
Investment Company Act, and (vii) pursuant to Section 5.02, evidence the
acceptance of the appointment of a successor Trustee or fill a vacancy created
by an
42
increase in the number of Regular Trustees, in each case which amendment does
not adversely affect in any material respect the rights, preferences or
privileges of the Holders.
SECTION 12.02. Meetings of the Holders of Securities; Action by Written
Consent.
(a) Meetings of the Holders of Preferred Securities and/or Common
Securities may be called at any time by the Regular Trustees (or as provided in
the terms of the Securities) to consider and act on any matter on which the
Holders of such class of Securities are entitled to act under the terms of this
Declaration, the terms of the Securities or the rules of any stock exchange or
automated quotation system on which the Preferred Securities are then listed,
traded or quoted. The Regular Trustees shall call a meeting of the Holders of
Preferred Securities or Common Securities, if directed to do so by Holders of at
least 10% in liquidation amount of such class of Securities. Such direction
shall be given by delivering to the Regular Trustees one or more notices in
writing stating that the signing Holders of Securities wish to call a meeting
and indicating the general or specific purpose for which the meeting is to be
called. Any Holders of Securities calling a meeting shall specify in writing the
Certificates held by the Holders of Securities exercising the right to call a
meeting and only those specified Certificates shall be counted for purposes of
determining whether the required percentage set forth in the second sentence of
this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provision shall apply to meetings of the Holders of
Securities:
(i) Notice of any such meeting shall be given by mail to all the
Holders of Securities having a right to vote thereat not less than seven
(7) days nor more than sixty (60) days prior to the date of such meeting.
Whenever a vote, consent or approval of the Holders of Securities is
permitted or required under this Declaration or the rules of any stock
exchange or automated quotation system on which the Preferred Securities
are then listed, traded or quoted, such vote, consent or approval may be
given at a meeting of the Holders of Securities. Any action that may be
taken at a meeting of the Holders of Securities may be taken without a
meeting and without prior notice if a consent in writing setting forth
the action so taken is signed by Holders of Securities owning not less
than the minimum aggregate liquidation amount of Securities that would be
necessary to authorize or take such action at a meeting at which all
Holders of Securities having a right to vote thereon were present and
voting. Prompt notice of the taking of action without a meeting shall be
given to the Holders of Securities entitled to vote who have not
consented in writing. The Regular Trustees may specify that any written
ballot submitted to the Holders of Securities for the purpose of taking
any action without a meeting shall be returned to the Trust within the
time specified by the Regular Trustees.
(ii) Each Holder of a Security may authorize any Person to act for
it by proxy on all matters in which a Holder of a Security is entitled to
participate, including waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid after the expiration
of 11 months from the date thereof unless otherwise provided in the
proxy. Every proxy shall be revocable at the pleasure of the Holder of
the Security executing it. Except as otherwise provided herein or in the
terms of the Securities, all matters relating to the
43
giving, voting or validity of proxies shall be governed by the General
Corporation Law of the State of Delaware relating to proxies, and
judicial interpretations thereunder, as if the Trust were a Delaware
corporation and the Holders of the Securities were stockholders of a
Delaware corporation.
(iii) Each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other Person that the
Regular Trustees may designate.
(iv) Unless otherwise provided in the Business Trust Act, this
Declaration or the rules of any stock exchange or automated quotation
system on which the Preferred Securities are then listed, traded or
quoted, the Regular Trustees, in their sole discretion, shall establish
all other provisions relating to meetings of Holders of Securities,
including notice of the time, place or purpose of any meeting at which
any matter is to be voted on by any Holders of Securities, waiver of any
such notice, action by consent without a meeting, the establishment of a
record date, quorum requirements, voting in person or by proxy or any
other matter with respect to the exercise of any such right to vote.
ARTICLE 13
REPRESENTATIONS OF THE PROPERTY TRUSTEE AND THE DELAWARE TRUSTEE
SECTION 13.01. Representations and Warranties of the Property Trustee.
The Trustee which acts as the initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as the Property Trustee that:
(i) The Property Trustee is a national banking association or a
banking corporation with trust powers, duly organized, validly existing
and in good standing under the laws of the United States or the laws of
the state of its incorporation, with trust power and authority to execute
and deliver, and to carry out and perform its obligations under the terms
of, this Declaration.
(ii) The execution, delivery and performance by the Property
Trustee of this Declaration have been duly authorized by all necessary
corporate action on the part of the Property Trustee. This Declaration
has been duly executed and delivered by the Property Trustee, and
constitutes a legal, valid and binding obligation of the Property
Trustee, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium, insolvency and other
similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in
equity or at law).
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(iii) The execution, delivery and performance of this Declaration
by the Property Trustee does not conflict with or constitute a breach of
the charter or by-laws of the Property Trustee.
(iv) No consent, approval or authorization of, or registration with
or notice to, any banking authority which supervises or regulates the
Property Trustee is required for the execution, delivery or performance
by the Property Trustee of this Declaration.
(v) The Property Trustee satisfies the qualifications set forth in
Section 5.01(c).
SECTION 13.02. Representations and Warranties of the Delaware Trustee.
The Trustee which acts as the initial Delaware Trustee represents and
warrants to the Trust and the Sponsor at the date of this Declaration, and each
Successor Delaware Trustee represents and warrants to the Trust and the Sponsor
at the time of the Successor Delaware Trustee's acceptance of its appointment as
the Delaware Trustee, that:
(i) The Delaware Trustee is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
with corporate power and authority to execute and deliver, and to carry
out and perform its obligations under the terms of, this Declaration.
(ii) The execution, delivery and performance by the Delaware
Trustee of this Declaration have been duly authorized by all necessary
corporate action on the part of the Delaware Trustee. This Declaration
has been duly executed and delivered by the Delaware Trustee and
constitutes a legal, valid and binding obligation of the Delaware
Trustee, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium, insolvency and other
similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in
equity or at law).
(iii) No consent, approval or authorization of, or registration
with or notice to, any banking authority which supervises or regulates
the Delaware Trustee, if any, is required for the execution, delivery or
performance by the Delaware Trustee of this Declaration.
(iv) The Delaware Trustee is a natural person who is a resident of
the State of Delaware or, if not a natural person, an entity which has
its principal place of business in the State of Delaware and is a Person
that satisfies for the Trust ss. 3807(a) of the Business Trust Act.
45
ARTICLE 14
MISCELLANEOUS
SECTION 14.01. Notices.
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the Trust's
mailing address set forth below (or such other address as the Regular Trustees
on behalf of the Trust may give notice of to the Holders of the Securities):
Pogo Trust I
c/o Pogo Producing Company
5 Greenway Plaza, Suite 2700
Houston, Texas 77046
Attention: Corporate Secretary
Telecopy: (713) 297-4970
(b) if given to the Property Trustee, at the mailing address of the
Property Trustee set forth below (or such other address as the Property Trustee
may give notice of to the Holders of the Securities):
Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware 19810
Attention: Corporate Trust Administration
Telecopy: (302) 651-8882
(c) if given to the Delaware Trustee, at the mailing address of the
Delaware Trustee set forth below (or such other address as the Delaware Trustee
may give notice of to the Holders of the Securities):
Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware 19810
Attention: Corporate Trust Administration
Telecopy: (302) 651-8882
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give notice of to the Trust):
46
Pogo Producing Company
5 Greenway Plaza, Suite 2700
Houston, Texas 77046
Attention: Corporate Secretary
Telecopy: (713) 297-4970
(e) if given to any other Holder, at the address set forth on the books
and records of the Trust.
A copy of any notice to the Property Trustee or the Delaware Trustee
shall also be sent to the Trust. All notices shall be deemed to have been given,
when received in person, telecopied with receipt confirmed, or mailed by first
class mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 14.02. Undertaking for Costs.
All parties to this Declaration agree, and each Holder of any Securities
by his or her acceptance thereof shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of any right or
remedy under this Declaration, or in any suit against the Property Trustee for
any action taken or omitted by it as Property Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses made by such
party litigant; but the provisions of this Section 14.02 shall not apply to any
suit instituted by the Property Trustee, to any suit instituted by any Holder of
Preferred Securities, or group of Holders of Preferred Securities, holding more
than 10% in aggregate liquidation amount of the outstanding Preferred
Securities, or to any suit instituted by any Holder of Preferred Securities for
the enforcement of the payment of the principal of (or premium, if any) or
interest on the Debentures, on or after the respective due dates expressed in
such Debentures.
SECTION 14.03. Governing Law.
This Declaration, the Securities and the rights of the parties hereunder
shall be governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 14.04. Headings.
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
47
SECTION 14.05. Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to Persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.06. Counterparts.
This Declaration may contain more than one counterpart of the signature
pages and this Declaration may be executed by the affixing of the signature of
the Sponsor and each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
SECTION 14.07. Intention of the Parties.
It is the intention of the parties hereto that the Trust not be
classified for United States Federal income tax purposes as an association
taxable as a corporation or partnership but that the Trust be treated as a
grantor trust for United States federal income tax purposes. The provisions of
this Declaration shall be interpreted to further this intention of the parties.
SECTION 14.08. Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 14.09. No Recourse.
The Trust's obligations hereunder are intended to be the obligations of
the Trust and no recourse for the payment of Distributions, or for any claim
upon the Securities or otherwise in respect thereof, shall be had against any
Holder of Securities or any Affiliate of a Holder of Securities, solely by
reason of such Person's being a Holder of Securities or an Affiliate of a Holder
of Securities, it being understood that the Holder of Securities, solely by
reason of being a Holder of Securities, has limited liability (in accordance
with the provisions of the Business Trust Act) for the liabilities and
obligations of the Trust. Nothing contained in this Section 14.09 shall be
construed to limit the exercise or enforcement, in accordance with the terms of
this Declaration, the Preferred Guarantee and the Indenture, of the rights and
remedies against the Trust or the Sponsor.
48
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
POGO PRODUCING COMPANY,
as Sponsor
By: __________________________________
Name:
Title:
_______________________________________
John O. McCoy, Jr.,
as Regular Trustee
_______________________________________
John W. Elsenshans,
as Regular Trustee
_______________________________________
Gerald A. Morton,
as Regular Trustee
WILMINGTON TRUST COMPANY,
not in its individual capacity,
but solely as Property Trustee
By: ___________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity,
but solely as Delaware Trustee
By: ___________________________________
Name:
Title:
49
EXHIBIT A
CERTIFICATE OF TRUST
OF
POGO TRUST I
THIS CERTIFICATE OF TRUST of Pogo Trust I (the "Trust"), dated as of
March 17, 1999, is being duly executed and filed by the undersigned, as
trustees, with the Secretary of State of the State of Delaware to form a
business trust under the Delaware Business Trust Act (12 Del. Code ss. 3801 et
seq.).
1. Name. The name of the business trust being formed hereby is Pogo Trust
I.
2. Delaware Trustee. The name and business address of the trustee of the
Trust with a principal place of business in the State of Delaware are Wilmington
Trust Company, 1100 North Market Street, Wilmington, Delaware 19810.
3. Effective Date. This Certificate of Trust shall be effective at the time
of its filing with the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, being all of the trustees of the Trust
at the time of filing this Certificate of Trust, have executed this Certificate
of Trust as of the date first above written.
WILMINGTON TRUST COMPANY,
as Delaware Trustee
By: _______________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
as Property Trustee
By: _______________________________
Name:
Title:
GERALD A. MORTON,
as Regular Trustee
By: _______________________________
A-1
EXHIBIT B
TERMS OF
PREFERRED SECURITIES
Pursuant to Section 7.01(b) of the Amended and Restated Declaration of
Trust of Pogo Trust I dated as of June 2, 1999 (as amended from time to time,
the "Declaration"), the designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities are set
forth below (each capitalized term used but not defined herein having the
meaning set forth in the Declaration):
1. Designation and Number. Three million (3,000,000) Preferred
Securities of the Trust with an aggregate liquidation amount at any time
outstanding with respect to the assets of the Trust of One Hundred Fifty Million
Dollars ($150,000,000), and each with a liquidation amount with respect to the
assets of the Trust of $50 per Preferred Security, are hereby designated as
"6.50% Cumulative Quarterly Income Convertible Preferred Securities, Series A".
The Preferred Security Certificates evidencing the Preferred Securities shall be
substantially in the form attached hereto as Annex I, with such changes and
additions thereto or deletions therefrom as may be required by ordinary usage,
custom or practice or to conform to the rules of any stock exchange or automated
quotation system on which the Preferred Securities are then listed, traded or
quoted. In connection with the issuance and sale of the Preferred Securities and
the Common Securities, the Trust will purchase as trust assets Debentures of
Pogo having an aggregate principal amount equal to the aggregate liquidation
amount of the Preferred Securities and the Common Securities so issued and
bearing interest at an annual rate equal to the annual Distribution rate on the
Preferred Securities and the Common Securities and having payment and redemption
provisions which correspond to the payment and redemption provisions of the
Preferred Securities and the Common Securities.
2. Distributions. (a) Distributions payable on each Preferred Security
will be fixed at a rate per annum of 6.50% (the "Coupon Rate") of the stated
liquidation amount of $50 per Preferred Security, such rate being the rate of
interest payable on the Debentures to be held by the Property Trustee.
Distributions in arrears for more than one calendar quarter will accumulate
additional distributions thereon at the Coupon Rate per annum (to the extent
permitted by applicable law), compounded quarterly. The term "Distributions" as
used herein means such periodic cash distributions and any such additional
distributions payable unless otherwise stated. A Distribution will be made by
the Property Trustee only to the extent that interest payments are made in
respect of the Debentures held by the Property Trustee and to the extent the
Trust has funds on hand legally available therefor. The amount of Distributions
payable for any period will be computed for any full quarterly Distribution
period on the basis of a 360-day year of twelve 30-day months, and for any
period shorter than a full quarterly Distribution period for which Distributions
are computed, Distributions will be computed on the basis of the actual number
of days elapsed per 90-day quarter.
(b) Distributions on the Preferred Securities will accumulate from
June 2, 1999 and will be payable quarterly in arrears, on March 1, June 1,
September 1 and December 1 of each year, commencing on September 1, 1999,
except as otherwise described below, but only if and to the extent that
interest payments are made in respect of the Debentures held by the
Property Trustee. So long as Pogo shall not be in default in the payment of
interest on the
Debentures, Pogo has the right under the Indenture for the Debentures to
defer payments of interest on the Debentures by extending the interest
payment period at any time and from time to time on the Debentures for a
period not exceeding 20 consecutive quarterly interest periods (each, an
"Extension Period"), during which Extension Period no interest shall be due
and payable on the Debentures. As a consequence of such deferral,
Distributions shall also be deferred. Despite such deferral, Distributions
will continue to accumulate with additional distributions thereon (to the
extent permitted by applicable law but not at a rate greater than the rate
at which interest is then accruing on the Debentures) at the Coupon Rate
compounded quarterly during any such Extension Period; provided that no
Extension Period shall extend beyond the stated maturity of the Debentures
or the date on which Debentures are redeemed. Prior to the termination of
any such Extension Period, Pogo may further extend such Extension Period;
provided that such Extension Period together with all such previous and
further extensions thereof may not exceed 20 consecutive quarterly interest
periods. Upon the termination of any Extension Period and the payment of
all amounts then due, Pogo may commence a new Extension Period, subject to
the above requirements. On the Distribution payment date at the end of an
Extension Period, payments of accumulated Distributions will be payable to
Holders of Preferred Securities as they appear on the books and records of
the Trust (regardless of who the Holders may have been on other dates
during the Extension Period) on the record date for such Distribution
payment date.
(c) Distributions on the Preferred Securities will be payable promptly
by the Property Trustee (or other Paying Agent) upon receipt of immediately
available funds to the Holders thereof as they appear on the books and
records of the Trust on the relevant record dates. While the Preferred
Securities remain in book-entry only form, the relevant record dates shall
be one business day prior to the relevant Distribution date, and if the
Preferred Securities are no longer in book-entry only form, the relevant
record dates will be the fifteenth (15th) day of the month prior to the
relevant Distribution date, which record and payment dates correspond to
the record and interest payment dates on the Debentures. Distributions
payable on any Preferred Securities that are not punctually paid on any
Distribution payment date as a result of Pogo's having failed to make the
corresponding interest payment on the Debentures will forthwith cease to be
payable to the person in whose name such Preferred Security is registered
on the relevant record date, and such defaulted Distribution will instead
be payable to the person in whose name such Preferred Security is
registered on the special record date established by the Regular Trustees,
which record date shall correspond to the special record date or other
specified date determined in accordance with the Indenture; provided,
however, that Distributions shall not be considered payable on any
Distribution payment date falling within an Extension Period unless Pogo
has elected to make a full or partial payment of interest accrued on the
Debentures on such Distribution payment date. Subject to any applicable
laws and regulations and the provisions of the Declaration, each payment in
respect of the Preferred Securities will be made as described in section 9
hereof. If any date on which Distributions are payable on the Preferred
Securities is not a Business Day, then payment of the Distribution payable
on such date will be made on the next succeeding day that is a Business Day
(and without any interest or other payment in respect of any such delay)
except that, if such Business Day is in the next succeeding calendar year,
such payment shall be made on the immediately preceding
B-2
Business Day, in each case with the same force and effect as if made on the
date such payment was originally payable. Notwithstanding anything herein
to the contrary, the record dates and payment dates for Distributions shall
be the same as the record dates and payment dates for the Debentures.
(d) All Distributions paid with respect to the Preferred Securities
and the Common Securities will be paid Pro Rata (as defined below) to the
Holders thereof entitled thereto. If an Event of Default has occurred and
is continuing, the Preferred Securities shall have a priority over the
Common Securities with respect to Distributions.
(e) In the event of an election by the Holder to convert its Preferred
Securities through the Conversion Agent into Common Stock pursuant to the
terms of the Preferred Securities as set forth in this Exhibit B to the
Declaration, no payment, allowance or adjustment shall be made with respect
to accumulated and unpaid Distributions on such Preferred Securities, or be
required to be made; provided, however, that if a Preferred Security is
surrendered for conversion after the close of business on any regular
record date for payment of a Distribution and before the opening of
business on the corresponding Distribution date, then, notwithstanding such
conversion, the Distribution payable on such Distribution date will be paid
in cash to the person in whose name the Preferred Security is registered at
the close of business on such record date.
(f) In the event that there is any money or other property held by or
for the Trust that is not accounted for under the Declaration, such money
or property shall be distributed Pro Rata among the Holders of the
Preferred Securities and the Common Securities.
3. Liquidation Distribution Upon Dissolution. (a) In the event of any
voluntary or involuntary dissolution of the Trust, the Holders of the Preferred
Securities and the Common Securities will be entitled to receive Pro Rata solely
out of the assets of the Trust legally available for distribution to Holders of
Preferred Securities and Common Securities after satisfaction of liabilities to
the creditors of the Trust, an amount equal to the aggregate of the stated
liquidation amount of $50 per Preferred Security and Common Security plus
accumulated and unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution"), unless, in connection with such
dissolution and after satisfaction of liabilities to the creditors of the Trust,
Debentures in an aggregate principal amount equal to the aggregate stated
liquidation amount of such Preferred Securities and the Common Securities and
bearing accrued and unpaid interest in an amount equal to the accumulated and
unpaid Distributions on, such Preferred Securities and the Common Securities,
shall be distributed Pro Rata to the Holders of the Preferred Securities and the
Common Securities in exchange for such Securities.
If, upon any such dissolution, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets on hand legally available
to pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Preferred Securities and the Common Securities
shall be paid, subject to the next paragraph, on a Pro Rata basis.
B-3
Holders of Common Securities will be entitled to receive Liquidation
Distributions upon any such dissolution Pro Rata with Holders of Preferred
Securities, except that if an Event of Default has occurred and is continuing,
the Preferred Securities shall have a priority over the Common Securities with
respect to such Liquidation Distribution.
(b) The Holder of the Common Securities shall have the right to direct
the Property Trustee in writing at any time to dissolve the Trust and to
distribute Debentures to Holders in exchange for Securities (which direction is
optional and wholly within the discretion of the Holder of the Common
Securities). Upon the receipt of any such written direction, the Property
Trustee shall promptly (i) distribute Debentures in an aggregate principal
amount equal to the aggregate stated liquidation amount of the Preferred
Securities and the Common Securities held by each Holder, which Debentures bear
accrued and unpaid interest in an amount equal to the accumulated and unpaid
Distributions on the Preferred Securities and the Common Securities of such
Holder, in exchange for the Preferred Securities and Common Securities of such
Holder and (ii) dissolve the Trust.
(c) On the date fixed for any distribution of Debentures, upon
dissolution of the Trust, (i) the Preferred Securities will no longer be deemed
to be outstanding and may be canceled by the Regular Trustees, and (ii)
Certificates representing Preferred Securities will be deemed to represent
beneficial interests in the Debentures having an aggregate principal amount
equal to the stated liquidation amount of, and bearing accrued and unpaid
interest equal to accumulated and unpaid Distributions on, such Preferred
Securities until such Certificates are presented to Pogo or its agent for
transfer or reissuance.
(d)If Debentures are distributed to Holders of the Preferred Securities,
Pogo, pursuant to the terms of the Indenture, will use its best efforts to have
the Debentures listed on the New York Stock Exchange or on such other exchange
as the Preferred Securities were listed immediately prior to the distribution of
the Debentures.
4. Redemption or Special Event Exchange of Debentures. The Preferred
Securities may be redeemed only if Debentures having an aggregate principal
amount equal to the aggregate liquidation amount of the Preferred Securities and
the Common Securities are repaid or redeemed as set forth below:
(a) Upon the repayment of the Debentures, in whole or in part,
whether at maturity, upon redemption at any time or from time to time on
or after June 1, 2002, the proceeds of such repayment will be promptly
applied to redeem Pro Rata Preferred Securities and Common Securities
having an aggregate liquidation amount equal to the aggregate principal
amount of the Debentures so repaid or redeemed, upon not less than 30
nor more than 60 days' notice, at the Optional Redemption Price (as such
term is defined in the Supplemental Indenture). The date of any such
repayment or redemption of Preferred Securities and Common Securities
shall be established to coincide with the repayment or redemption date
of the Debentures.
(b) If fewer than all the outstanding Preferred Securities and
Common Securities are to be so redeemed, the Preferred Securities and
the Common Securities will be redeemed
B-4
Pro Rata and the Preferred Securities will be redeemed as described in
section 4(f)(ii) below. If a partial redemption would result in the
delisting of the Preferred Securities by any national securities
exchange or other organization on which the Preferred Securities are
then listed or traded, Pogo pursuant to the Indenture will redeem
Debentures only in whole and, as a result, the Trust may redeem the
Preferred Securities only in whole.
(c) (i) If a Special Event shall occur and be continuing, the
Regular Trustees shall give notice of such Special Event to the Property
Trustee and shall direct the Conversion Agent to exchange all
outstanding Preferred Securities for Debentures having a principal
amount equal to the aggregate liquidation amount of the Preferred
Securities to be exchanged and with accrued interest (including
Additional Interest and Compounded Interest, if any) in an amount equal
to any unpaid Distributions on the Preferred Securities; provided,
however, that, in the case of a Tax Event, the Sponsor shall have the
right to (i) direct that less than all, or none, as appropriate, of the
Preferred Securities be so exchanged if and for so long as the Depositor
shall have elected to pay any Additional Interest (as defined in the
Supplemental Indenture) such that the net amounts received by Holders of
Preferred Securities not so exchanged in respect of Distributions and
other distributions are not reduced as a result of such Tax Event, and
shall not have revoked any such election or failed to make such payments
or (ii) cause the Preferred Securities to be redeemed in the manner set
forth below. If a Tax Event shall occur or be continuing, the Sponsor
shall have the right, upon not less than 30 nor more than 60 days'
notice, to redeem the Debentures, in whole but not in part, for cash at
the Tax Redemption Price (as defined in the Supplemental Indenture),
plus accrued and unpaid interest thereon (including Additional Interest
and Compounded Interest, if any). Promptly following such redemption,
Preferred Securities with an aggregate liquidation amount equal to the
aggregate principal amount of the Debentures so redeemed will be
redeemed by the Trust at the Tax Redemption Price, plus accrued and
unpaid Distributions thereon to the Redemption Date on a pro rata basis.
(ii) Notice of any exchange pursuant to this Section
4(c) (an "Exchange Notice") of the Preferred Securities, which
Exchange Notice shall be irrevocable, will be given by the
Property Trustee by first-class mail to the Sponsor and to each
record Holder of Trust Securities to be exchanged not fewer than
30 nor more than 60 days prior to the date fixed for exchange
thereof. For purposes of the calculation of the date of exchange
and the dates on which notices are given pursuant to this
paragraph (b), an Exchange Notice shall be deemed to be given on
the day such notice is first mailed by first-class mail, postage
prepaid, to each Holder. Each Exchange Notice shall be addressed
to each Holder of Preferred Securities at the address of such
Holder appearing in the books and records of the Trust. Each
Exchange Notice shall state: (A) the exchange date; (B) the
aggregate liquidation amount and any unpaid Distributions on the
Trust Securities to be exchanged and the aggregate principal
amount and any accrued interest on the Debentures to be
exchanged therefor; (C) that on the exchange date the Preferred
Securities to be so exchanged shall be exchanged for Debentures
and that Distributions on the Preferred Securities so exchanged
will cease to accumulate on and after said date; and (D) the
identity of the Conversion Agent, if any, and the place or
places where each Preferred Securities Certificate to be
exchanged is to be surrendered
B-5
in exchange for Debentures. No defect in the Exchange Notice or
in the mailing thereof with respect to any Preferred Security
shall affect the validity of the exchange proceedings for any
other Preferred Security.
(iii) In the event that fewer than all the outstanding
Preferred Securities are to be exchanged, then, on the exchange
date, (i) if all of the outstanding Preferred Securities are
represented by Definitive Preferred Securities Certificates, the
particular Preferred Securities to be exchanged will be selected
by the Property Trustee from the outstanding Preferred
Securities not previously called for redemption or exchange on a
pro rata basis, (ii) if all of the outstanding Preferred
Securities are represented by Book-Entry Preferred Securities
Certificates, the Property Trustee shall provide for the
selection for exchange of a portion of the Global Certificate
representing the Book-Entry Preferred Securities Certificates on
a pro rata basis and (iii) if outstanding Preferred Securities
are represented by both Definitive Preferred Securities
Certificates and Book-Entry Preferred Securities Certificates,
the Property Trustee shall select the portion of the Global
Certificate representing the Book-Entry Preferred Securities
Certificates and the particular outstanding Preferred Securities
represented by Definitive Preferred Securities Certificates to
be exchanged on a pro rata basis. In the case of clause (ii) or
(iii) above, the particular Book-Entry Preferred Securities
Certificates to be exchanged shall be selected in accordance
with the applicable rules and procedures for the Clearing Agency
in whose name, or whose nominee's name, such Global Certificate
is then held. Any Preferred Securities Certificate that is to be
exchanged only in part shall be surrendered with due endorsement
or by a written instrument of transfer fully executed by the
Holder thereof (or its attorney duly authorized in writing) and
the Trust shall prepare and deliver to such Holder, without
service charge, a new Preferred Securities Certificate or
Certificates in aggregate stated liquidation amount equal to,
and in exchange for, the unredeemed portion of the Preferred
Securities Certificate so surrendered. The Common Securities
shall be exchanged in a similar manner.
(iv) In the event of an exchange pursuant to this
Section 4(c), on the date fixed for any such exchange, (i) if
the Preferred Securities are represented by Book-Entry Preferred
Securities Certificates, the Clearing Agency or its nominee, as
the record Holder of such Preferred Securities, will exchange
through the Conversion Agent the Global Certificate representing
the Preferred Securities to be exchanged for a registered Global
Certificate or certificates representing the Debentures to be
delivered upon such exchange, (ii) if the Preferred Securities
are represented by Definitive Preferred Securities Certificates,
the certificates representing the Preferred Securities to be so
exchanged will be deemed to represent Debentures having a
principal amount equal to the aggregate stated Liquidation
Preference of such Preferred Securities until such certificates
are presented to the Conversion Agent for exchange for
definitive certificates representing Debentures and (iii) all
rights of the Holders of the Preferred Securities so exchanged
will cease, except for the right of such Holders to receive
Debentures. The Common Securities shall be exchanged in a
similar manner.
B-6
(v) Each Holder, by becoming a party to the Declaration,
will be deemed to have agreed to be bound by these exchange
provisions in regard to the exchange of Preferred Securities for
Debentures pursuant to the terms described above.
(vi) "Tax Event" means that the Sponsor and the Regular
Trustees shall have received an Opinion of Counsel experienced
in such matters to the effect that on or after May 26, 1999 as a
result of (a) any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, (b) any amendment to, or
change in, an interpretation or application of any such laws or
regulations by any legislative body, court, governmental agency
or regulatory authority (including the enactment of any
legislation or the publication of any judicial decision or
regulatory determination), (c) any interpretation or
pronouncement by any legislative body, court, governmental
agency or regulatory authority that provides for a position with
respect to such laws or regulations that differs from its
previous position or a theretofore commonly accepted position or
(d) any action taken by any governmental agency or regulatory
authority, which amendment or change is enacted, promulgated,
issued or announced or which interpretation or pronouncement is
issued or announced or which action is taken, in each case on or
after May 26, 1999, there is more than a remote risk that (i)
the Trust is, or will be within 90 days of the date thereof,
subject to United States federal income tax with respect to
income accrued or received on the Debentures, (ii) the Trust is,
or will be within 90 days of the date thereof, subject to more
than a de minimis amount of taxes, duties or other governmental
charges or (iii) interest payable by Pogo to the Trust on the
Debentures is not, or within 90 days of the date thereof will
not be, deductible by Pogo for United States Federal income tax
purposes.
(vii) "Investment Company Event" means that the Sponsor
received an Opinion of Counsel experienced in practice under the
Investment Company Act that, as a result of the occurrence of a
change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court,
governmental agency or regulatory authority (a "Change in
Investment Company Act Law"), there is more than an
insubstantial risk that the Trust is or will be considered an
Investment Company which is required to be registered under the
Investment Company Act, which Change in Investment Company Act
Law becomes effective on or after May 26, 1999.
(d) The Trust may not redeem fewer than all the outstanding
Preferred Securities unless all accumulated and unpaid Distributions
have been paid on all Preferred Securities for all quarterly
Distribution periods terminating on or prior to the date of redemption.
(e) [Intentionally omitted.]
(f) (i) Notice of any redemption of, or notice of distribution
of Debentures in exchange for, the Preferred Securities and the Common
Securities (a "Redemption/Distribution Notice") will be given by the
Regular Trustees on behalf of the Trust by mail to each Holder of
Preferred Securities and Common Securities to be redeemed
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or exchanged not less than 30 nor more than 60 days prior to the date
fixed for redemption or exchange thereof. For purposes of the
calculation of the date of redemption or exchange and the dates on which
notices are given pursuant to this section 4(f)(i), a
Redemption/Distribution Notice shall be deemed to be given on the day
such notice is first mailed by first-class mail, postage prepaid, to
Holders of Preferred Securities and Common Securities. Each
Redemption/Distribution Notice shall be addressed to the Holders of
Preferred Securities and Common Securities at the address of each such
Holder appearing in the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing of either thereof with
respect to any Holder shall affect the validity of the redemption or
exchange proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding
Preferred Securities are to be redeemed, the Preferred
Securities to be redeemed will be redeemed Pro Rata from each
Holder of Preferred Securities, it being understood that, in
respect of Preferred Securities registered in the name of and
held of record by DTC (or successor Clearing Agency) or any
other nominee, the Preferred Securities will be redeemed from,
and the distribution of the proceeds of such redemption will be
made to, DTC (or successor Clearing Agency).
(iii) Subject to section 9 hereof, if the Trust gives a
Redemption/Distribution Notice in respect of a redemption of
Preferred Securities as provided in this section 4 (which notice
will be irrevocable) then (A) while the Preferred Securities are
in book-entry only form, with respect to the Preferred
Securities, by 12:00 noon, New York City time, on the redemption
date, provided that Pogo has paid the Property Trustee, in
immediately available funds, a sufficient amount of cash in
connection with the related redemption or maturity of the
Debentures, the Property Trustee will deposit irrevocably with
DTC (or successor Clearing Agency) funds sufficient to pay the
applicable Redemption Price with respect to the Preferred
Securities and will give DTC (or successor Clearing Agency)
irrevocable instructions and authority to pay the Redemption
Price to the Holders of the Preferred Securities and (B) if the
Preferred Securities are issued in definitive form, with respect
to the Preferred Securities and provided that Pogo has paid the
Property Trustee, in immediately available funds, a sufficient
amount of cash in connection with the related redemption or
maturity of the Debentures, the Property Trustee will pay the
relevant Redemption Price to the Holders of such Preferred
Securities by check mailed to the address of the relevant Holder
appearing on the books and records of the Trust on the
redemption date. If a Redemption/Distribution Notice shall have
been given and funds deposited as required, if applicable, then
immediately prior to the close of business on the redemption
date, Distributions will cease to accumulate on the Preferred
Securities called for redemption, such Preferred Securities will
no longer be deemed to be outstanding and all rights of Holders
of such Preferred Securities so called for redemption will
cease, except the right of the Holders of such Preferred
Securities to receive the Redemption Price, but without interest
on such Redemption Price. Neither the Trustees nor the Trust
shall be required to register or cause to be registered the
transfer of any Preferred Securities which have been so called
for
B-8
redemption. If any date fixed for redemption of Preferred
Securities is not a Business Day, then payment of the Redemption
Price payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such
Business Day falls in the next calendar year, such payment will
be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date fixed for
redemption. If payment of the Redemption Price in respect of
Preferred Securities is improperly withheld or refused and not
paid either by the Property Trustee or by Pogo pursuant to the
Preferred Securities Guarantee, Distributions on such Preferred
Securities will continue to accumulate, from the original
redemption date to the date of payment, in which case the actual
payment date will be considered the date fixed for redemption
for purposes of calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by
the Regular Trustees on behalf of the Trust to DTC or its
nominee (or any successor Clearing Agency or its nominee) if the
Global Certificates have been issued or, if Definitive Preferred
Security Certificates have been issued, to the Holders of the
Preferred Securities.
(v) Subject to the foregoing and applicable law
(including, without limitation, United States Federal securities
laws), Pogo or any of its Affiliates may at any time and from
time to time purchase outstanding Preferred Securities by
tender, in the open market or by private agreement.
5. Conversion Rights. The Holders of Preferred Securities shall have the
right at any time prior to the close of business on May 31, 2029 or, in the case
of Preferred Securities called for redemption, prior to the close of business on
the Business Day prior to the redemption date, at their option, to cause the
Conversion Agent to convert Preferred Securities, on behalf of the converting
Holders, into shares of Common Stock in the manner described herein on and
subject to the following terms and conditions:
(a) The Preferred Securities will be convertible at the office
of the Conversion Agent maintained for such purpose in the Borough of
Manhattan, The City of New York, into fully paid and nonassessable
shares of Common Stock pursuant to the Holder's direction to the
Conversion Agent to exchange such Preferred Securities for a portion of
the Debentures theretofore held by the Trust on the basis of one
Preferred Security per $50 principal amount of Debentures, and
immediately convert such amount of Debentures into fully paid and
nonassessable shares of Common Stock at an initial rate of 2.1053 shares
of Common Stock per $50 principal amount of Debentures (which is
equivalent to a conversion price of $23.75 per share of Common Stock,
subject to certain adjustments set forth in Sections 5.03 and 5.04 of
the Supplemental Indenture (as so adjusted, "Conversion Price")).
(b) In order to convert Preferred Securities into Common Stock,
the Holder shall submit to the Conversion Agent at the office referred
to above an irrevocable request to convert Preferred Securities on
behalf of such Holder (the "Conversion Request"), together, if the
Preferred Securities are in certificated form, with such Preferred
Security Certificates.
B-9
The Conversion Request shall (i) set forth the number of Preferred
Securities to be converted and the name or names, if other than the
Holder, in which the shares of Common Stock should be issued and (ii)
direct the Conversion Agent (a) to exchange such Preferred Securities
for a portion of the Debentures held by the Trust (at the rate of
exchange specified in the preceding paragraph) and (b) to immediately
convert such Debentures on behalf of such Holder into Common Stock,
subject to certain adjustments set forth in the Supplemental Indenture
(at the conversion rate specified in the preceding paragraph). The
Conversion Agent shall notify the Trust of the Holder's election to
exchange Preferred Securities for a portion of the Debentures held by
the Trust and the Trust shall, upon receipt of such notice, deliver to
the Conversion Agent the appropriate principal amount of Debentures for
exchange in accordance with this Section. The Conversion Agent shall
thereupon notify the Sponsor of the Holder's election to convert such
Debentures into shares of Common Stock. If a Preferred Security is
surrendered for conversion after the close of business on any regular
record date for payment of a Distribution and before the opening of
business on the corresponding Distribution payment date, then,
notwithstanding such conversion, the Distribution payable on such
Distribution payment date will be paid in cash to the person in whose
name the Preferred Security is registered at the close of business on
such record date. Except as provided above, neither the Trust nor the
Sponsor will make, or be required to make, any payment, allowance or
adjustment upon any conversion on account of any accumulated and unpaid
Distributions accumulated on the Preferred Securities surrendered for
conversion, or on account of any accumulated and unpaid dividends on the
shares of Common Stock issued upon such conversion, and the delivery of
Common Stock upon conversion of the Preferred Securities shall be deemed
to constitute full payment for all accumulated and unpaid Distributions
on the Preferred Securities. Preferred Securities shall be deemed to
have been converted immediately prior to the close of business on the
day on which a Conversion Request relating to such Preferred Securities
is received by the Trust in accordance with the foregoing provision (the
"Conversion Date"). The Person or Persons entitled to receive Common
Stock issuable upon conversion of the Debentures shall be treated for
all purposes as the record holder or holders of such Common Stock at
such time. As promptly as practicable on or after the Conversion Date,
the Sponsor shall issue and deliver at the office of the Conversion
Agent a certificate or certificates for the number of full shares of
Common Stock issuable upon such conversion, together with the cash
payment, if any, in lieu of any fraction of any share to the Person or
Persons entitled to receive the same calculated in the manner set forth
in Section 5.02(e) of the Supplemental Indenture, unless otherwise
directed by the Holder in the Conversion Request, and the Conversion
Agent shall distribute such certificate or certificates, together with
the applicable cash payment, if any, to such Person or Persons.
(c) Each Holder of a Preferred Security by his acceptance
thereof appoints Wilmington Trust Company as the "Conversion Agent" for
the purpose of effecting the conversion of Preferred Securities in
accordance with this Section. In effecting the conversion and
transactions described in this Section, the Conversion Agent shall be
acting as agent of the Holders of Preferred Securities directing it to
effect such conversion transactions. The Conversion Agent is hereby
authorized (i) to exchange Preferred Securities from time to time for
Debentures held by the Trust in connection with the conversion of such
B-10
Preferred Securities in accordance with this Section and (ii) to convert
all or a portion of the Debentures into Common Stock and thereupon to
deliver such shares of Common Stock in accordance with the provisions of
this Section and to deliver to the Trust a new Debenture or Debentures
for any resulting unconverted principal amount.
(d) No fractional shares of Common Stock will be issued as a
result of conversion, but in lieu thereof, such fractional interest will
be paid by the Sponsor in cash (based upon the Closing Price (as defined
in the Supplemental Indenture) of Common Stock on the Conversion Date,
which in turn will make such payment to the Holder or Holders of
Preferred Securities so converted, or, if such day is not a day on which
any securities are traded on the national securities exchange or
quotation system used to determine the Closing Price, on the next such
trading day.
(e) The Sponsor shall at all times reserve and keep available
out of its authorized and unissued Common Stock, solely for issuance
upon the conversion of the Debentures, such number of shares of Common
Stock as shall from time to time be issuable upon the conversion of
all the Debentures then outstanding. Notwithstanding the foregoing,
the Sponsor shall be entitled to deliver upon conversion of
Debentures, shares of Common Stock reacquired and held in the treasury
of the Sponsor (in lieu of the issuance of authorized and unissued
shares of Common Stock), so long as any such treasury shares are free
and clear of all liens, charges, security interests or encumbrances.
Any shares of Common Stock issued upon conversion of the Debentures
shall be duly authorized, validly issued and fully paid and
nonassessable. The Conversion Agent shall deliver the shares of Common
Stock received upon conversion of the Debentures to the converting
Holder of Preferred Securities free and clear of all liens, charges,
security interests and encumbrances, except for United States
withholding taxes. Whenever the Company issues shares of Common Stock
upon conversion of Debentures and the Company has in effect at such
time a share purchase rights agreement under which holders of Common
Stock are issued rights ("Rights") entitling the holders under certain
circumstances to purchase an additional share or shares of Common
Stock or other capital stock of the Company, the Company will issue,
together with each such share of Common Stock, such number of Rights
(which number may be a fraction) as shall at that time be issuable
with a share of Common Stock pursuant to such share purchase rights
agreement. Each of the Sponsor and the Trust shall prepare and shall
use its best efforts to obtain and keep in force such governmental or
regulatory permits or other authorizations as may be required by law,
and shall comply with all applicable requirements as to registration
or qualification of Common Stock (and all requirements to list Common
Stock issuable upon conversion of Debentures that are at the time
applicable), in order to enable the Sponsor to lawfully issue Common
Stock to the Trust upon conversion of the Debentures and the Trust to
lawfully deliver Common Stock to each Holder of Preferred Securities
upon conversion of the Preferred Securities.
(f) The Sponsor will pay any and all taxes that may be payable
in respect of the issue or delivery of shares of Common Stock excluding
United States withholding taxes on conversion of Debentures and the
delivery of the shares of Common Stock by the Trust upon conversion of
the Preferred Securities. The Sponsor shall not, however, be required to
pay
B-11
any tax which may be payable in respect of any transfer involved in the
issue and delivery of shares of Common Stock in a name other than that
in which the Preferred Securities so converted were registered, and no
such issue or delivery shall be made unless and until the Person
requesting such issue has paid to the Conversion Agent the amount of any
such tax, or has established to the satisfaction of the Trust that such
tax has been paid.
(g) Nothing in the preceding paragraph (f) shall limit the
requirement of the Trust to withhold taxes pursuant to the terms of the
Preferred Securities or set forth in this Exhibit B to the Declaration
or to the Declaration itself or otherwise require the Property Trustee
or the Trust to pay any amounts on account of such withholdings.
6. Voting Rights. (a) Except as provided under paragraph 6(b) below and
as otherwise required by law and the Declaration, the Holders of the Preferred
Securities will have no voting rights.
(b) If any proposed amendment to the Declaration provides for,
or the Regular Trustees otherwise propose to effect, (i) any action that
would adversely affect the powers, preferences or special rights of the
Securities, whether by way of amendment to the Declaration, other than
as described in Section 12.01(b) of the Declaration or section 3 of
Exhibit B, or otherwise, or (ii) the dissolution, winding-up or
termination of the Trust, other than as described in Section 8.01 of the
Declaration, then the Holders of outstanding Securities will be entitled
to vote on such amendment or proposal as a single class and such
amendment or proposal shall not be effective except with the approval of
the Holders of Securities of at least a Majority in liquidation amount
of the Securities, voting together as a single class; provided, however,
that (A) if any amendment or proposal referred to in clause (i) above
would adversely affect only the Preferred Securities or the Common
Securities, then only the affected class of Securities will be entitled
to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of at least a Majority
in liquidation amount of such class of Securities and (B) amendments to
the Declaration shall be subject to such further requirements as are set
forth in Sections 12.01 and 12.02 of the Declaration.
In the event the consent of the Property Trustee, as the holder of the
Debentures, is required under the Indenture with respect to any amendment,
modification or termination of the Indenture or the Debentures, the Property
Trustee shall request the written direction of the Holders of the Securities
with respect to such amendment, modification or termination. The Property
Trustee shall vote with respect to such amendment, modification or termination
as directed by a Majority in liquidation amount of the Securities voting
together as a single class; provided, however, that where such amendment,
modification or termination of the Indenture requires the consent or vote of (1)
holders of Debentures representing a specified percentage greater than a
majority in principal amount of the Debentures or (2) each holder of Debentures,
the Property Trustee may only vote with respect to that amendment, modification
or termination as directed by, in the case of clause (1) above, the vote of
Holders of Securities representing such specified percentage of the aggregate
liquidation amount of the Securities, or, in the case of clause (2) above, each
Holder of Securities; and provided, further, that the Property Trustee shall be
under no obligation to take any action in accordance with
B-12
the directions of the Holders of Securities unless the Property Trustee shall
have received, at the expense of the Sponsor, an Opinion of Counsel experienced
in such matters to the effect that the Trust will not be classified for United
States Federal income tax purposes as other than a grantor trust on account of
such action.
So long as any Debentures are held by the Property Trustee, the Trustees
shall not (i) direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee of the Indenture (the "Debenture Trustee"),
or exercising any trust or power conferred on the Debenture Trustee with respect
to the Debentures, (ii) waive any past default that is waivable under Section
6.06 of the Indenture or (iii) exercise any right to rescind or annul a
declaration of acceleration of the maturity of the principal of the Debentures,
without, in each case, obtaining the prior approval of the Holders of a Majority
in liquidation amount of all outstanding Preferred Securities and Common
Securities. The Trustees shall not revoke any action previously authorized or
approved by a vote of the Holders of the Preferred Securities except by
subsequent vote of such Holders. The Property Trustee shall notify each Holder
of Preferred Securities of any notice of default with respect to the Debentures.
If an Event of Default has occurred and is continuing, then the Holders
of a Majority in liquidation amount of the Preferred Securities will have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Property Trustee or to direct the exercise of any trust
or power conferred upon the Property Trustee under the Declaration, including
the right to direct the Property Trustee to exercise the remedies available to
it as a holder of the Debentures. If the Property Trustee fails to enforce its
rights under the Debentures, a Holder of Preferred Securities, to the extent
permitted by applicable law, may, after a period of 30 days has elapsed since
such Holder's written request to the Property Trustee to enforce such rights,
institute a legal proceeding directly against the Sponsor to enforce the
Property Trustee's rights under the Debentures without first instituting any
legal proceeding against the Property Trustee or any other Person; provided
further, that, if an Event of Default has occurred and is continuing and such
event is attributed to the failure of the Sponsor to pay interest or principal
on the Debentures on the date such interest or principal is otherwise payable
(or in the case of redemption, on the redemption date), then a Holder of
Preferred Securities may directly institute a proceeding for enforcement of
payment to such Holder of the principal of or interest on the Debentures having
a principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such Holder (a "Holder Direct Action") on or after the respective
due date specified in the Debentures. In connection with such Holder Direct
Action, the Sponsor will be subrogated to the rights of such Holder of Preferred
Securities to the extent of any payment made by the Sponsor to such Holders of
Preferred Securities in such Holder Direct Action. Except as provided in the
preceding sentences, the Holders of Preferred Securities will not be able to
exercise directly any other remedy available to the Holders of the Debentures.
A waiver of an Indenture Event of Default by the Property Trustee at the
direction of the Holders of the Preferred Securities will constitute a waiver of
the corresponding Event of Default under the Declaration in respect of the
Securities.
B-13
Any required approval or direction of Holders of Preferred Securities
may be given at a separate meeting of Holders of Preferred Securities convened
for such purpose, at a meeting of all of the Holders of Securities or pursuant
to written consent. The Regular Trustees will cause a notice of any meeting at
which Holders of Preferred Securities are entitled to vote to be mailed to each
Holder of record of Preferred Securities. Each such notice will include a
statement setting forth (i) the date of such meeting, (ii) a description of any
resolution proposed for adoption at such meeting on which such Holders are
entitled to vote and (iii) instructions for the delivery of proxies.
No vote or consent of the Holders of Preferred Securities will be
required for the Trust to redeem and cancel Preferred Securities or to
distribute the Debentures in accordance with the Declaration.
Notwithstanding that Holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities at such time that are owned by Pogo or by any Affiliate of
Pogo shall not be entitled to vote or consent and shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
Holders of the Preferred Securities have no rights to increase or
decrease the number of Trustees or to appoint, remove or replace a Trustee,
which voting rights are vested exclusively in the Holders of the Common
Securities.
7. Pro Rata Treatment. A reference in these terms of the Preferred
Securities to any payment, Distribution or treatment as being "Pro Rata" shall
mean pro rata to each Holder of Securities according to the aggregate
liquidation amount of the Securities held by the relevant Holder in relation to
the aggregate liquidation amount of all Securities outstanding unless, in
relation to a payment, an Event of Default has occurred and is continuing, in
which case any funds available to make such payment shall be paid first to each
Holder of the Preferred Securities pro rata according to the aggregate
liquidation amount of Preferred Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Preferred Securities outstanding, and
only after satisfaction of all amounts owed to the Holders of the Preferred
Securities, to each Holder of Common Securities pro rata according to the
aggregate liquidation amount of Common Securities held by the relevant Holder
relative to the aggregate liquidation amount of all Common Securities
outstanding.
8. Ranking. The Preferred Securities rank pari passu and payment thereon
will be made Pro Rata with the Common Securities, except that when an Event of
Default occurs and is continuing, the rights of Holders of Preferred Securities
to payment in respect of Distributions and payments upon liquidation, redemption
or otherwise rank in priority to the rights of Holders of the Common Securities.
9. Transfer, Exchange, Method of Payments. Payment of Distributions and
payments on redemption of the Preferred Securities will be payable, the transfer
of the Preferred Securities will be registrable, and Preferred Securities will
be exchangeable for Preferred Securities of other denominations of a like
aggregate liquidation amount, at the corporate trust office of the Property
Trustee in The City of New York; provided that payment of Distributions may be
made at the option of the Regular Trustees on behalf of the Trust by check
mailed to the address of the persons entitled
B-14
thereto and that the payment on redemption of any Preferred Security will be
made only upon surrender of such Preferred Security to the Property Trustee.
10. Acceptance of Indenture and Preferred Securities Guarantee. Each
Holder of Preferred Securities, by the acceptance thereof, agrees to the
provisions of (i) the Preferred Securities Guarantee, including the
subordination provisions therein, and (ii) the Indenture and the Debentures,
including the subordination provisions of the Indenture.
11. No Preemptive Rights. The Holders of Preferred Securities shall have
no preemptive or similar rights to subscribe to any additional Preferred
Securities or Common Securities.
12. Miscellaneous. These terms shall constitute a part of the
Declaration. The Trust will provide a copy of the Declaration and the Indenture
to a Holder of Preferred Securities without charge on written request to the
Trust at its principal place of business.
B-15
Annex I
FORM OF PREFERRED SECURITY CERTIFICATE
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT This
Preferred Security is a Global Certificate within the meaning of the Declaration
hereinafter referred to and is registered in the name of The Depository Trust
Company ("DTC") or a nominee of DTC. This Preferred Security is exchangeable for
Preferred Securities registered in the name of a person other than DTC or its
nominee only in the limited circumstances described in the Declaration and no
transfer of this Preferred Security (other than a transfer of this Preferred
Security as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or
another nominee of DTC) may be registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to Pogo Trust I or its agent for registration of transfer, exchange or
payment, and any Preferred Security issued is registered in the name of Cede &
Co. or such other name as requested by an authorized representative of The
Depository Trust Company and any payment hereon is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.]
Certificate Number Number of Preferred Securities: ____________
-----------
Aggregate Liquidation Amount: $____________
CUSIP NO. 73044P208
Certificate Evidencing Preferred Securities
of
Pogo Trust I
6.50% Cumulative Quarterly Income Convertible Preferred Securities, Series A
(liquidation amount $50 per Preferred Security)
Pogo Trust I, a statutory business trust created under the laws of the
State of Delaware (the "Trust"), hereby certifies that ________ (the "Holder")
is the registered owner of _____ (______) preferred securities of the Trust
representing preferred undivided beneficial interests in the assets of
B-16
the Trust and designated the 6.50% Cumulative Quarterly Income Convertible
Preferred Securities, Series A (liquidation amount $50 per Preferred Security)
(the "Preferred Securities"). The Preferred Securities are transferable on the
books and records of the Trust, in person or by a duly authorized attorney, upon
surrender of this Certificate duly endorsed and in proper form for transfer. The
designations, rights, privileges, restrictions, preferences and other terms and
provisions of the Preferred Securities are set forth in, and this Certificate
and the Preferred Securities represented hereby are issued and shall in all
respects be subject to the terms and provisions of, the Amended and Restated
Declaration of Trust of the Trust dated as of June 2, 1999, as the same may be
amended from time to time (the "Declaration") including the designation of the
terms of Preferred Securities as set forth in Exhibit B thereto. The Preferred
Securities and the Common Securities issued by the Trust pursuant to the
Declaration represent undivided beneficial interests in the assets of the Trust,
including the Debentures (as defined in the Declaration) issued by Pogo
Producing Company, a Delaware corporation ("Pogo"), to the Trust pursuant to the
Indenture referred to in the Declaration. The Holder is entitled to the benefits
of the Guarantee Agreement of Pogo dated as of June 2, 1999 (the "Guarantee") to
the extent provided therein. The Trust will furnish a copy of the Declaration,
the Guarantee and the Indenture to the Holder without charge upon written
request to the Trust at its principal place of business or registered office.
The Holder of this Certificate, by accepting this Certificate, is deemed
to have (i) agreed to the terms of the Indenture and the Debentures, including
that the Debentures are subordinate and junior in right of payment to all Senior
Debt (as defined in the Indenture or Supplemental Indenture thereto) as and to
the extent provided in the Indenture or Supplemental Indenture thereto, and (ii)
agreed to the terms of the Guarantee, including that the Guarantee is
subordinate and junior in right of payment to all other liabilities of Pogo,
including the Debentures, except those made pari passu or subordinate by their
terms, and senior to all capital stock (other than the most senior preferred
stock issued, from time to time, if any, by Pogo, which preferred stock will
rank pari passu with the Guarantee) now or hereafter issued by Pogo and to any
guarantee now or hereafter entered into by Pogo in respect of any of its capital
stock (other than the most senior preferred stock issued, from time to time, if
any, by Pogo).
Upon receipt of this Certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.
B-17
IN WITNESS WHEREOF, Trustees of the Trust have executed this
Certificate.
POGO TRUST I
By: ________________________, as Regular Trustee
Name: John W. Elsenshans
Title: Regular Trustee
By: ________________________, as Regular Trustee
Name: Gerald A. Morton
Title: Regular Trustee
Dated:
Countersigned and Registered:
Transfer Agent and Registrar
By:___________________________
Authorized Signatory
B-18
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Preferred Security will be fixed at a rate
per annum of 6.50% (the "Coupon Rate") of the stated liquidation amount of $50
per Preferred Security, such rate being the rate of interest payable on the
Debentures to be held by the Property Trustee. Distributions in arrears for more
than one quarter will accumulate additional distributions thereon at the Coupon
Rate per annum (to the extent permitted by applicable law), compounded
quarterly. The term "Distributions" as used herein means such periodic cash
distributions and any such additional distributions payable unless otherwise
stated. A Distribution is payable only to the extent that payments are made in
respect of the Debentures held by the Property Trustee and to the extent the
Trust has funds on hand legally available therefor. The amount of Distributions
payable for any period will be computed for any full quarterly Distribution
period on the basis of a 360-day year of twelve 30-day months, and for any
period shorter than a full quarterly Distribution period for which Distributions
are computed, Distributions will be computed on the basis of the actual number
of days elapsed per 90-day quarter.
Distributions on the Preferred Securities will accumulate from June 2,
1999, and will be payable quarterly in arrears, on March 1, June 1, September 1
and December 1 of each year, commencing on September 1, 1999, but only if and to
the extent that interest payments are made in respect of the Debentures held by
the Property Trustee. So long as Pogo shall not be in default in the payment of
interest on the Debentures, Pogo has the right under the Indenture for the
Debentures to defer payments of interest on the Debentures by extending the
interest payment period at any time and from time to time on the Debentures for
a period not exceeding 20 consecutive quarterly interest periods (each an
"Extension Period"), during which Extension Period no interest shall be due and
payable on the Debentures. As a consequence of such deferral, Distributions
shall also be deferred. Despite such deferral, Distributions will continue to
accumulate with additional distributions thereon (to the extent permitted by
applicable law but not at a rate greater than the rate at which interest is then
accruing on the Debentures) at the Coupon Rate compounded quarterly during any
such Extension Period; provided that no Extension Period shall extend beyond the
stated maturity of the Debentures. Prior to the termination of any such
Extension Period, Pogo may further extend such Extension Period; provided that
such Extension Period together with all such previous and further extensions
thereof may not exceed 20 consecutive quarterly interest periods. Upon the
termination of any Extension Period and the payment of all amounts then due,
Pogo may commence a new Extension Period, subject to the above requirements. On
the Distribution payment date at the end of the Extension Period, payments of
accumulated Distributions will be payable to Holders of Preferred Securities as
they appear on the books and records of the Trust (regardless of who the Holders
may have been on other dates during the Extension Period) on the record date for
such Distribution payment date.
The Preferred Securities shall be redeemable or subject to mandatory
exchange upon the occurrence of a Special Event as provided in the Declaration.
The Preferred Securities shall be convertible into shares of Common
Stock (as defined in the Declaration), through (i) the exchange of Preferred
Securities for a portion of the Debentures and (ii) the immediate conversion of
such Debentures into Common Stock, in the manner and according to
B-19
the terms set forth in the Declaration upon submission of a Conversion Request
(as defined in the Declaration) to the Conversion Agent (as defined in the
Declaration). A form of Conversion Request is provided at the end of this
Preferred Securities Certificate.
B-20
CONVERSION REQUEST
To: Wilmington Trust Company, as Property Trustee of Pogo Trust I
The undersigned owner of these Preferred Securities hereby irrevocably
exercises the option to convert these Preferred Securities, or the portion below
designated, into Common Stock (as that term is defined in the Amended and
Restated Declaration of Trust, dated as of June 2, 1999 (as amended from time to
time, the "Declaration"), by John O. McCoy, Jr., John W. Elsenshans and Gerald
A. Morton as Regular Trustees, Wilmington Trust Company, as the Delaware
Trustee, Wilmington Trust Company, as the Property Trustee, Pogo Producing
Company, as Sponsor, and by the Holders, from time to time, of undivided
beneficial interests in the assets of the Trust to be issued pursuant to the
Declaration) in accordance with and subject to the terms and conditions of the
Declaration. Pursuant to the aforementioned exercise of the option to convert
these Preferred Securities, the undersigned hereby directs the Conversion Agent
(as that term is defined in the Declaration) to (i) exchange such Preferred
Securities for a portion of the Debentures (as that term is defined in the
Declaration) held by Pogo Trust I (at the rate of exchange specified in the
terms of the Preferred Securities set forth as Exhibit B to the Declaration) and
(ii) immediately convert such Debentures on behalf of the undersigned into
Common Stock (at the conversion rate specified in the terms of the Preferred
Securities set forth as Exhibit B to the Declaration, subject to certain
adjustments set forth in the Supplemental Indenture (as that term is defined in
the Declaration)).
The undersigned does also hereby direct the Conversion Agent that the
shares of Common Stock issuable and deliverable upon conversion, together with
any check in payment for fractional shares, be issued in the name of and
delivered to the undersigned, unless a different name has been indicated in the
assignment below. If shares of Common Stock are to be issued in the name of a
person other than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto.
B-21
Date: _______________, _____
in whole ___ in part ___
Number of Preferred Securities to be converted:
-----------------------
If a name or names other than the undersigned,
please indicate in the spaces below the name or
names in which the shares of Common Stock are
to be issued, along with the address or
addresses of such person or persons:
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
Signature (for conversion only)
Please Print or Type Name and Address, Including Zip Code, and
Social Security or Other Identifying Number
----------------------------------
----------------------------------
----------------------------------
Signature Guarantee:(2) _________
- --------
**(Signature must be guaranteed by an institution which is a member of one or
the following recognized Signature Guaranty Programs: (i) The Securities
Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange
Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP); or
(iv) in such other guarantee programs acceptable to the Trustee.)
B-22
ASSIGNMENT
FOR VALUE RECEIVED,
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
(INSERT ASSIGNEE'S SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER)
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
(INSERT ADDRESS AND ZIP CODE OF ASSIGNEE)
AND IRREVOCABLY APPOINTS
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
AGENT TO TRANSFER THIS PREFERRED SECURITY CERTIFICATE ON THE BOOKS OF THE
TRUST. SUBSTITUTE ANOTHER TO ACT FOR HIM OR HER.
DATE: _________________________
SIGNATURE: ____________________
NOTICE: THE FACE OF THIS PREFERRED SECURITY CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
B-23
EXHIBIT C
TERMS OF
COMMON SECURITIES
Pursuant to Section 7.01(b) of the Amended and Restated Declaration of
Trust of Pogo Trust I dated as of June 2, 1999 (as amended from time to time,
the "Declaration"), the designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities are set
forth below (each capitalized term used but not defined herein having the
meaning set forth in the Declaration):
1. Designation and Number. Ninety-two thousand eight hundred (92,800)
Common Securities of the Trust with an aggregate liquidation amount at any time
outstanding with respect to the assets of the Trust of Four Million Six Hundred
Forty Thousand Dollars ($4,640,000), and each with a liquidation amount with
respect to the assets of the Trust of $50 per Common Security, are hereby
designated as "6.50% Cumulative Quarterly Income Convertible Common Securities,
Series A". The Common Security Certificates evidencing the Common Securities
shall be substantially in the form attached hereto as Annex I, with such changes
and additions thereto or deletions therefrom as may be required by ordinary
usage, custom or practice. In connection with the issuance and sale of the
Preferred Securities and the Common Securities, the Trust will purchase as trust
assets Debentures of Pogo having an aggregate principal amount equal to the
aggregate liquidation amount of the Preferred Securities and the Common
Securities so issued, and bearing interest at an annual rate equal to the annual
Distribution rate on the Preferred Securities and the Common Securities and
having payment and redemption provisions which correspond to the payment and
redemption provisions of the Preferred Securities and the Common Securities.
2. Distributions. (a) Distributions payable on each Common Security will
be fixed at a rate per annum of 6.50% (the "Coupon Rate") of the stated
liquidation amount of $50 per Common Security, such rate being the rate of
interest payable on the Debentures to be held by the Property Trustee.
Distributions in arrears for more than one calendar quarter will accumulate
additional distributions thereon at the Coupon Rate per annum (to the extent
permitted by applicable law), compounded quarterly. The term "Distributions" as
used herein means such periodic cash distributions and any such additional
distributions payable unless otherwise stated. A Distribution will be made by
the Property Trustee only to the extent that interest payments are made in
respect of the Debentures held by the Property Trustee and to the extent the
Trust has funds on hand legally available therefor. The amount of Distributions
payable for any period will be computed for any full quarterly Distribution
period on the basis of a 360-day year of twelve 30-day months, and for any
period shorter than a full quarterly Distribution period for which Distributions
are computed, Distributions will be computed on the basis of the actual number
of days elapsed per 90-day quarter.
(b) Distributions on the Common Securities will accumulate from
June 2, 1999 and will be payable quarterly in arrears, on March 1, June
1, September 1 and December 1 of each year commencing on September 1,
1999, except as otherwise described below, but only if and to the extent
that interest payments are made in respect of the Debentures held by the
C-1
Property Trustee. So long as Pogo shall not be in default in the payment
of interest on the Debentures, Pogo has the right under the Indenture
for the Debentures to defer payments of interest on the Debentures by
extending the interest payment period at any time and from time to time
on the Debentures for a period not exceeding 20 consecutive quarterly
interest periods (each, an "Extension Period"), during which Extension
Period no interest shall be due and payable on the Debentures. As a
consequence of such deferral, Distributions shall also be deferred.
Despite such deferral, Distributions will continue to accumulate with
additional distributions thereon (to the extent permitted by applicable
law but not at a rate greater than the rate at which interest is then
accruing on the Debentures) at the Coupon Rate compounded quarterly
during any such Extension Period; provided that no Extension Period
shall extend beyond the stated maturity of the Debentures or the date on
which Debentures are redeemed. Prior to the termination of any such
Extension Period, Pogo may further extend such Extension Period;
provided that such Extension Period together with all such previous and
further extensions thereof may not exceed 20 consecutive quarterly
interest periods. Upon the termination of any Extension Period and the
payment of all amounts then due, Pogo may commence a new Extension
Period, subject to the above requirements. On the Distribution payment
date at the end of the Extension Period, payments of accumulated
Distributions will be payable to Holders of Common Securities as they
appear on the books and records of the Trust (regardless of who the
Holders may have been on other dates during the Extension Period) on the
record date for such Distribution payment date.
(c) Distributions on the Common Securities will be payable
promptly by the Property Trustee (or other Paying Agent) upon receipt of
immediately available funds to the Holders thereof as they appear on the
books and records of the Trust on the relevant record dates. While the
Preferred Securities remain in book-entry only form, the relevant record
dates for the Common Securities shall be one business day prior to the
relevant Distribution date, and if the Preferred Securities are no
longer in book-entry only form, the relevant record dates for the Common
Securities will be the fifteenth (15th) day of the month prior to the
relevant Distribution date, which record and payment dates correspond to
the record and interest payment dates on the Debentures. Distributions
payable on any Common Securities that are not punctually paid on any
Distribution payment date as a result of Pogo's having failed to make
the corresponding interest payment on the Debentures will forthwith
cease to be payable to the person in whose name such Common Security is
registered on the relevant record date, and such defaulted Distribution
will instead be payable to the person in whose name such Common Security
is registered on the special record date established by the Regular
Trustees, which record date shall correspond to the special record date
or other specified date determined in accordance with the Indenture;
provided, however, that Distributions shall not be considered payable on
any Distribution payment date falling within an Extension Period unless
Pogo has elected to make a full or partial payment of interest accrued
on the Debentures on such Distribution payment date. Subject to any
applicable laws and regulations and the provisions of the Declaration,
each payment in respect of the Common Securities will be made as
described in section 9 hereof. If any date on which Distributions are
payable on the Common Securities is not a Business Day, then payment of
the Distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such Business Day
is in the next succeeding calendar year, such payment shall be
C-2
made on the immediately preceding Business Day, in each case with the
same force and effect as if made on the date such payment was originally
payable. Notwithstanding anything herein to the contrary, the record
dates and payment dates for Distributions shall be the same as the
record dates and payment dates for the Debentures.
(d) All Distributions paid with respect to the Common Securities
and the Preferred Securities will be paid Pro Rata (as defined below) to
the Holders thereof entitled thereto. If an Event of Default has
occurred and is continuing, the Preferred Securities shall have a
priority over the Common Securities with respect to Distributions.
(e) In the event that there is any money or other property held
by or for the Trust that is not accounted for under the Declaration,
such money or property shall be distributed Pro Rata among the Holders
of the Preferred Securities and the Common Securities.
3. Liquidation Distribution Upon Dissolution. (a) In the event of any
voluntary or involuntary dissolution of the Trust, the Holders of the Preferred
Securities and the Common Securities will be entitled to receive Pro Rata solely
out of the assets of the Trust legally available for distribution to Holders of
Preferred Securities and Common Securities after satisfaction of liabilities to
the creditors of the Trust, an amount equal to the aggregate of the stated
liquidation amount of $50 per Preferred Security and Common Security plus
accumulated and unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution"), unless, in connection with such
dissolution, and after satisfaction of liabilities to the creditors of the
Trust, Debentures in an aggregate principal amount equal to the aggregate stated
liquidation amount of such Preferred Securities and the Common Securities and
bearing accrued and unpaid interest in an amount equal to the accumulated and
unpaid Distributions on, such Preferred Securities and the Common Securities,
shall be distributed Pro Rata to the Holders of the Preferred Securities and the
Common Securities in exchange for such Securities.
If, upon any such dissolution, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets on hand legally available
to pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Preferred Securities and the Common Securities
shall be paid, subject to the next paragraph, on a Pro Rata basis.
Holders of Common Securities will be entitled to receive Liquidation
Distributions upon any such dissolution Pro Rata with Holders of Preferred
Securities, except that if an Event of Default has occurred and is continuing,
the Preferred Securities shall have a priority over the Common Securities with
respect to such Liquidation Distribution.
(b) The Holder of the Common Securities shall have the right to direct
the Property Trustee in writing at any time to dissolve the Trust and to
distribute Debentures to Holders in exchange for Securities (which direction is
optional and wholly within the discretion of the Holder of the Common
Securities). Upon the receipt of any such written direction, the Property
Trustee shall promptly (i) distribute Debentures in an aggregate principal
amount equal to the aggregate stated liquidation amount of the Preferred
Securities and the Common Securities held by each Holder, which Debentures bear
accrued and unpaid interest in an amount equal to the accumulated and unpaid
Distributions on the Preferred Securities and the Common Securities of such
Holder, in
C-3
exchange for the Preferred Securities and Common Securities of such Holder and
(ii) dissolve the Trust.
(c) On the date fixed for any distribution of Debentures, upon
dissolution of the Trust, (i) the Common Securities will no longer be deemed to
be outstanding and may be canceled by the Regular Trustees and (ii) Certificates
representing Common Securities will be deemed to represent beneficial interests
in the Debentures having an aggregate principal amount equal to the stated
liquidation amount of, and bearing accrued and unpaid interest equal to
accumulated and unpaid Distributions on, such Common Securities until such
Certificates are presented to Pogo or its agent for transfer or reissuance.
4. Redemption of Debentures. The Common Securities may be redeemed only
if Debentures having an aggregate principal amount equal to the aggregate
liquidation amount of the Preferred Securities and the Common Securities are
repaid or redeemed as set forth below:
(a) Upon the repayment of the Debentures, in whole or in part,
whether at maturity, upon redemption at any time or from time to time on
or after June 1, 2002, the proceeds of such repayment will be promptly
applied to redeem Pro Rata Preferred Securities and Common Securities
having an aggregate liquidation amount equal to the aggregate principal
amount of the Debentures so repaid or redeemed, upon not less than 30
nor more than 60 days' notice, at the Optional Redemption Price (as such
term is defined in the Supplemental Indenture). The date of any such
repayment or redemption of Preferred Securities and Common Securities
shall be established to coincide with the repayment or redemption date
of the Debentures.
(b) If fewer than all the outstanding Preferred Securities and
Common Securities are to be so redeemed, the Preferred Securities and
the Common Securities will be redeemed Pro Rata and the Common
Securities will be redeemed as described in section 4(e)(ii) below. If a
partial redemption would result in the delisting of the Preferred
Securities by any national securities exchange or other organization on
which the Preferred Securities are then listed or traded, Pogo pursuant
to the Indenture will redeem Debentures only in whole and, as a result,
the Trust may redeem the Common Securities only in whole.
(c) (i) If a Special Event shall occur and be continuing, the
Regular Trustees shall give notice of such Special Event to the Property
Trustee and shall direct the Conversion Agent to exchange all
outstanding Common Securities for Debentures having a principal amount
equal to the aggregate liquidation amount of the Common Securities to be
exchanged and with accrued interest (including Additional Interest and
Compounded Interest, if any) in an amount equal to any unpaid
Distributions on the Common Securities; provided, however, that, in the
case of a Tax Event, the Sponsor shall have the right to (i) direct that
less than all, or none, as appropriate, of the Common Securities be so
exchanged if and for so long as the Depositor shall have elected to pay
any Additional Interest (as defined in the Supplemental Indenture) such
that the net amounts received by Holders of Common Securities not so
exchanged in respect of Distributions and other distributions are not
reduced as a result of such Tax Event, and shall not have revoked any
such election or failed to make such payments or (ii) cause the Common
Securities to be redeemed in the manner
C-4
set forth below. If a Tax Event shall occur or be continuing, the
Sponsor shall have the right, upon not less than 30 nor more than 60
days' notice, to redeem the Debentures, in whole but not in part, for
cash at the Tax Redemption Price (as defined in the Supplemental
Indenture), plus accrued and unpaid interest thereon (including
Additional Interest and Compounded Interest, if any). Promptly following
such redemption, Common Securities with an aggregate liquidation amount
equal to the aggregate principal amount of the Debentures so redeemed
will be redeemed by the Trust at the Tax Redemption Price, plus accrued
and unpaid Distributions thereon to the Redemption Date on a pro rata
basis.
(ii) Notice of any exchange pursuant to this Section
4(c) (an "Exchange Notice") of the Common Securities, which
Exchange Notice shall be irrevocable, will be given by the
Property Trustee by first-class mail to the Sponsor and to each
record Holder of Trust Securities to be exchanged not fewer than
30 nor more than 60 days prior to the date fixed for exchange
thereof. For purposes of the calculation of the date of exchange
and the dates on which notices are given pursuant to this
paragraph (b), an Exchange Notice shall be deemed to be given on
the day such notice is first mailed by first-class mail, postage
prepaid, to each Holder. Each Exchange Notice shall be addressed
to each Holder of Common Securities at the address of such
Holder appearing in the books and records of the Trust. Each
Exchange Notice shall state: (A) the exchange date; (B) the
aggregate liquidation amount and any unpaid Distributions on the
Trust Securities to be exchanged and the aggregate principal
amount and any accrued interest on the Debentures to be
exchanged therefor; (C) that on the exchange date the Common
Securities to be so exchanged shall be exchanged for Debentures
and that Distributions on the Common Securities so exchanged
will cease to accumulate on and after said date; and (D) the
identity of the Conversion Agent, if any, and the place or
places where each Common Securities Certificate to be exchanged
is to be surrendered in exchange for Debentures. No defect in
the Exchange Notice or in the mailing thereof with respect to
any Common Security shall affect the validity of the exchange
proceedings for any other Common Security.
(iii) In the event that fewer than all the outstanding
Common Securities are to be exchanged, then, on the exchange
date, the particular Common Securities to be exchanged will be
selected by the Property Trustee from the outstanding Common
Securities not previously called for redemption or exchange on a
pro rata basis. Any Common Securities Certificate that is to be
exchanged only in part shall be surrendered with due endorsement
or by a written instrument of transfer fully executed by the
Holder thereof (or its attorney duly authorized in writing) and
the Trust shall prepare and deliver to such Holder, without
service charge, a new Common Securities Certificate or
Certificates in aggregate stated liquidation amount equal to,
and in exchange for, the unredeemed portion of the Common
Securities Certificate so surrendered. The Common Securities
shall be exchanged in a similar manner.
(iv) Each Holder, by becoming a party to the
Declaration, will be deemed to have agreed to be bound by these
exchange provisions in regard to the exchange of Common
Securities for Debentures pursuant to the terms described above.
C-5
(v) "Tax Event" means that the Sponsor and the Regular
Trustees shall have received an Opinion of Counsel experienced
in such matters to the effect that on or after May 26, 1999, as
a result of (a) any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, (b) any amendment to, or
change in, an interpretation or application of any such laws or
regulations by any legislative body, court, governmental agency
or regulatory authority (including the enactment of any
legislation or the publication of any judicial decision or
regulatory determination), (c) any interpretation or
pronouncement that provides for a position with respect to such
laws or regulations that differs from its previous position or a
theretofore commonly accepted position or (d) any action taken
by any governmental agency or regulatory authority, which
amendment or change is enacted, promulgated, issued or announced
or which interpretation or pronouncement by any legislative
body, court, governmental agency or regulatory authority is
issued or announced or which action is taken, in each case on or
after May 26, 1999, there is more than a remote risk that (i)
the Trust is, or will be within 90 days of the date thereof,
subject to United States federal income tax with respect to
income accrued or received on the Debentures, (ii) the Trust is,
or will be within 90 days of the date thereof, subject to more
than a de minimis amount of taxes, duties or other governmental
charges or (iii) interest payable by Pogo to the Trust on the
Debentures is not, or within 90 days of the date thereof will
not be, deductible by Pogo for United States Federal income tax
purposes.
(vi) "Investment Company Event" means that the Sponsor
and the Regular Trustees shall have received an Opinion of
Counsel experienced in practice under the Investment Company Act
that, as a result of the occurrence of a change in law or
regulation or a change in interpretation or application of law
or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in Investment Company
Act Law"), there is more than an insubstantial risk that the
Trust is or will be considered an Investment Company which is
required to be registered under the Investment Company Act,
which Change in Investment Company Act Law becomes effective on
or after May 26, 1999.
(d) The Trust may not redeem fewer than all the outstanding
Common Securities unless all accumulated and unpaid Distributions have
been paid on all Common Securities for all quarterly Distribution
periods terminating on or prior to the date of redemption.
(e) (i) Notice of any redemption of, or notice of distribution
of Debentures in exchange for, the Preferred Securities and the Common
Securities (a "Redemption/Distribution Notice") will be given by the
Regular Trustees on behalf of the Trust by mail to each Holder of
Preferred Securities and Common Securities to be redeemed or exchanged
not less than 30 nor more than 60 days prior to the date fixed for
redemption or exchange thereof. For purposes of the calculation of the
date of redemption or exchange and the dates on which notices are given
pursuant to this section 4(e)(i) a Redemption/Distribution Notice shall
be deemed to be given on the day such notice is first mailed by
first-class mail, postage prepaid, to Holders of Preferred Securities
and Common Securities. Each Redemption/Distribution Notice shall be
addressed to the Holders of
C-6
Preferred Securities and Common Securities at the address of each such
Holder appearing in the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing of either thereof with
respect to any Holder shall affect the validity of the redemption or
exchange proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding
Common Securities are to be redeemed, the Common Securities to
be redeemed will be redeemed Pro Rata from each Holder of Common
Securities (subject to adjustment to eliminate fractional Common
Securities).
(iii) If the Trust gives a Redemption/Distribution
Notice in respect of a redemption of Common Securities as
provided in this section 4 (which notice will be irrevocable),
then immediately prior to the close of business on the
redemption date, provided that Pogo has paid to the Property
Trustee in immediately available funds a sufficient amount of
cash in connection with the related redemption or maturity of
the Debentures, Distributions will cease to accumulate on the
Common Securities called for redemption, such Common Securities
will no longer be deemed to be outstanding and all rights of
Holders of such Common Securities so called for redemption will
cease, except the right of the Holders of such Common Securities
to receive the Redemption Price, but without interest on such
Redemption Price. Neither the Trustees nor the Trust shall be
required to register or cause to be registered the transfer of
any Common Securities which have been so called for redemption.
If any date fixed for redemption of Common Securities is not a
Business Day, then payment of the Redemption Price payable on
such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in
respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on
the immediately preceding Business Day, in each case with the
same force and effect as if made on such date fixed for
redemption. If payment of the Redemption Price in respect of
Common Securities is improperly withheld or refused and not paid
by the Property Trustee, Distributions on such Common Securities
will continue to accumulate, from the original redemption date
to the date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of
calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by
the Regular Trustees on behalf of the Trust to Holders of the
Common Securities.
5. Conversion Rights.
The Holders of Common Securities shall have the right at any time prior
to the close of business on May 31, 2029 or, in the case of Common Securities
called for redemption, prior to the close of business on the Business Day prior
to the redemption date, at their option, to cause the Conversion Agent to
convert Common Securities, on behalf of the converting Holders, into shares of
Common Stock in the manner described herein on and subject to the following
terms and conditions:
C-7
(a) The Common Securities will be convertible at the office of
the Conversion Agent into fully paid and nonassessable shares of Common
Stock pursuant to the Holder's direction to the Conversion Agent to
exchange such Common Securities for a portion of the Debentures
theretofore held by the Trust on the basis of one Common Security per
$50 principal amount of Debentures, and immediately convert such amount
of Debentures into fully paid and nonassessable shares of Common Stock
at an initial rate of 2.1053 shares of Common Stock per $50 principal
amount of Debentures (which is equivalent to a conversion price of
$23.75 per share of Common Stock, subject to certain adjustments set
forth in Sections 5.03 and 5.04 of the Supplemental Indenture (as so
adjusted, "Conversion Price")).
(b) In order to convert Common Securities into Common Stock, the
Holder shall submit to the Conversion Agent at the office referred to
above an irrevocable request to convert Common Securities on behalf of
such Holder (the "Conversion Request"), together, if the Common
Securities are in certificated form, with such Common Security
Certificates. The Conversion Request shall (i) set forth the number of
Common Securities to be converted and the name or names, if other than
the Holder, in which the shares of Common Stock should be issued and
(ii) direct the Conversion Agent (a) to exchange such Common Securities
for a portion of the Debentures held by the Trust (at the rate of
exchange specified in the preceding paragraph) and (b) to immediately
convert such Debentures on behalf of such Holder, into Common Stock,
subject to certain adjustments set forth in the Supplemental Indenture
(at the conversion rate specified in the preceding paragraph). The
Conversion Agent shall notify the Trust of the Holder's election to
exchange Common Securities for a portion of the Debentures held by the
Trust, and the Trust shall, upon receipt of such notice, deliver to the
Conversion Agent the appropriate principal amount of Debentures for
exchange in accordance with this Section. The Conversion Agent shall
thereupon notify the Sponsor of the Holder's election to convert such
Debentures into shares of Common Stock. If a Common Security is
surrendered for conversion after the close of business on any regular
record date for payment of a Distribution and before the opening of
business on the corresponding Distribution payment date, then,
notwithstanding such conversion, the Distribution payable on such
Distribution payment date will be paid in cash to the person in whose
name the Common Security is registered at the close of business on such
record date. Except as provided above, neither the Trust nor the Sponsor
will make, or be required to make, any payment, allowance or adjustment
upon any conversion on account of any accumulated and unpaid
Distributions accumulated on the Common Securities surrendered for
conversion, or on account of any accumulated and unpaid dividends on the
shares of Common Stock issued upon such conversion, and the delivery of
Common Stock upon conversion of the Common Securities shall be deemed to
constitute full payment for all accumulated and unpaid Distributions on
the Common Securities. Common Securities shall be deemed to have been
converted immediately prior to the close of business on the day on which
a Conversion Request relating to such Common Securities is received by
the Trust in accordance with the foregoing provision (the "Conversion
Date"). The Person or Persons entitled to receive Common Stock issuable
upon conversion of the Debentures shall be treated for all purposes as
the record holder or holders of such Common Stock at such time. As
promptly as practicable on or after the Conversion Date, the Sponsor
shall issue and deliver at the office of the Conversion Agent a
certificate or certificates for the number of full shares of Common
Stock issuable upon such conversion, together with the cash payment, if
C-8
any, in lieu of any fraction of any share to the Person or Persons
entitled to receive the same calculated in the manner set forth in
Section 5.02(e) of the Supplemental Indenture, unless otherwise directed
by the Holder in the Conversion Request, and the Conversion Agent shall
distribute such certificate or certificates, together with the
applicable cash payment, if any, to such Person or Persons.
(c) Each Holder of a Common Security by his acceptance thereof
appoints Wilmington Trust Company as the "Conversion Agent" for the
purpose of effecting the conversion of Common Securities in accordance
with this Section. In effecting the conversion and transactions
described in this Section, the Conversion Agent shall be acting as agent
of the Holders of Common Securities directing it to effect such
conversion transactions. The Conversion Agent is hereby authorized (i)
to exchange Common Securities from time to time for Debentures held by
the Trust in connection with the conversion of such Common Securities in
accordance with this Section and (ii) to convert all or a portion of the
Debentures into Common Stock and thereupon to deliver such shares of
Common Stock in accordance with the provisions of this Section and to
deliver to the Trust a new Debenture or Debentures for any resulting
unconverted principal amount.
(d) No fractional shares of Common Stock will be issued as a
result of conversion, but in lieu thereof, such fractional interest will
be paid by the Sponsor in cash (based upon the Closing Price (as defined
in the Supplemental Indenture) of Common Stock on the Conversion Date,
which in turn will make such payment to the Holder or Holders of Common
Securities so converted, or, if such day is not a day on which any
securities are traded on the national securities exchange or quotation
system used to determine the Closing Price, on the next such trading
day.
(e) The Sponsor shall at all times reserve and keep available
out of its authorized and unissued Common Stock, solely for issuance
upon the conversion of the Debentures, such number of shares of Common
Stock as shall from time to time be issuable upon the conversion of all
the Debentures then outstanding. Notwithstanding the foregoing, the
Sponsor shall be entitled to deliver upon conversion of Debentures,
shares of Common Stock reacquired and held in the treasury of the
Sponsor (in lieu of the issuance of authorized and unissued shares of
Common Stock), so long as any such treasury shares are free and clear of
all liens, charges, security interests or encumbrances. Any shares of
Common Stock issued upon conversion of the Debentures shall be duly
authorized, validly issued and fully paid and nonassessable. The
Conversion Agent shall deliver the shares of Common Stock received upon
conversion of the Debentures to the converting Holder of Common
Securities free and clear of all liens, charges, security interests and
encumbrances, except for United States withholding taxes. Whenever the
Company issues shares of Common Stock upon conversion of Debentures and
the Company has in effect at such time a share purchase rights agreement
under which holders of Common Stock are issued rights ("Rights")
entitling the holders under certain circumstances to purchase an
additional share or shares of Common Stock or other capital stock of the
Company, the Company will issue, together with each such share of Common
Stock, such number of Rights (which number may be a fraction) as shall
at that time be issuable with a share of Common Stock pursuant to such
share purchase rights agreement. Each of the Sponsor and the Trust shall
prepare and shall use its best
C-9
efforts to obtain and keep in force such governmental or regulatory
permits or other authorizations as may be required by law, and shall
comply with all applicable requirements as to registration or
qualification of Common Stock (and all requirements to list Common Stock
issuable upon conversion of Debentures that are at the time applicable),
in order to enable the Sponsor to lawfully issue Common Stock to the
Trust upon conversion of the Debentures and the Trust to lawfully
deliver Common Stock to each Holder of Common Securities upon conversion
of the Securities.
(f) The Sponsor will pay any and all taxes that may be payable
in respect of the issue or delivery of shares of Common Stock excluding
United States withholding taxes on conversion of Debentures and the
delivery of the shares of Common Stock by the Trust upon conversion of
the Common Securities. The Sponsor shall not, however, be required to
pay any tax which may be payable in respect of any transfer involved in
the issue and delivery of shares of Common Stock in a name other than
that in which the Common Securities so converted were registered, and no
such issue or delivery shall be made unless and until the Person
requesting such issue has paid to the Conversion Agent the amount of any
such tax, or has established to the satisfaction of the Trust that such
tax has been paid.
(g) Nothing in the preceding section 5(f) shall limit the
requirement of the Trust to withhold taxes pursuant to the terms of the
Common Securities or set forth in this Exhibit C to the Declaration or
to the Declaration itself or otherwise require the Property Trustee or
the Trust to pay any amounts on account of such withholdings.
6. Voting Rights. (a) Except as provided under section 6(b) below and as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) Holders of Common Securities have the sole right under the
Declaration to increase or decrease the number of Trustees, and to
appoint, remove or replace a Trustee, any such increase, decrease,
appointment, removal or replacement to be approved by Holders of Common
Securities representing a Majority in liquidation amount of the Common
Securities.
If any proposed amendment to the Declaration provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration, other than as described in
Section 12.01(b) of the Declaration, or otherwise, or (ii) the dissolution,
winding-up or termination of the Trust, other than as described in Section 8.01
of the Declaration or section 3 of this Exhibit C, then the Holders of
outstanding Securities will be entitled to vote on such amendment or proposal as
a single class and such amendment or proposal shall not be effective except with
the approval of the Holders of Securities of at least a Majority in liquidation
amount of the Securities, voting together as a single class; provided, however,
that (A) if any amendment or proposal referred to in clause (i) above would
adversely affect only the Preferred Securities or the Common Securities, then
only the affected class of Securities will be entitled to vote on such amendment
or proposal and such amendment or proposal shall not be effective except with
the approval of at least a Majority in liquidation amount of such class of
Securities, (B) the rights of Holders of Common Securities under Section 5.02 of
the Declaration to increase or decrease the number of, and to appoint, replace
or
C-10
remove, Trustees shall not be amended without the consent of each Holder of
Common Securities, and (C) amendments to the Declaration shall be subject to
such further requirements as are set forth in Sections 12.01 and 12.02 of the
Declaration.
In the event the consent of the Property Trustee, as the holder of the
Debentures, is required under the Indenture with respect to any amendment,
modification or termination of the Indenture or the Debentures, the Property
Trustee shall request the written direction of the Holders of the Securities
with respect to such amendment, modification or termination. The Property
Trustee shall vote with respect to such amendment, modification or termination
as directed by a Majority in liquidation amount of the Securities voting
together as a single class; provided, however, that where such amendment,
modification or termination of the Indenture requires the consent or vote of (1)
holders of Debentures representing a specified percentage greater than a
majority in principal amount of the Debentures or (2) each holder of Debentures,
the Property Trustee may only vote with respect to that amendment, modification
or termination as directed by, in the case of clause (1) above, the vote of
Holders of Securities representing such specified percentage of the aggregate
liquidation amount of the Securities, or, in the case of clause (2) above, each
Holder of Securities; and provided, further, that the Property Trustee shall be
under no obligation to take any action in accordance with the directions of the
Holders of Securities unless the Property Trustee shall have received, at the
expense of the Sponsor, an Opinion of Counsel experienced in such matters to the
effect that the Trust will not be classified for United States Federal income
tax purposes as other than a grantor trust on account of such action.
So long as any Debentures are held by the Property Trustee, the Trustees
shall not (i) direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee of the Indenture (the "Debenture Trustee"),
or exercising any trust or power conferred on such Debenture Trustee with
respect to the Debentures, (ii) waive any past default that is waivable under
Section 6.06 of the Indenture or (iii) exercise any right to rescind or annul a
declaration of acceleration of the maturity of the principal of the Debentures,
without, in each case, obtaining the prior approval of the Holders of a Majority
in liquidation amount of all outstanding Common Securities and Preferred
Securities. The Trustees shall not revoke any action previously authorized or
approved by a vote of the Holders of the Common Securities except by subsequent
vote of such Holders. The Property Trustee shall notify each Holder of Common
Securities of any notice of default with respect to the Debentures.
Notwithstanding any other provision of these terms, each Holder of
Common Securities will be deemed to have waived any Event of Default with
respect to the Common Securities and its consequences until all Events of
Default with respect to the Preferred Securities have been cured, waived by the
Holders of Preferred Securities as provided in the Declaration or otherwise
eliminated, and until all Events of Default with respect to the Preferred
Securities have been so cured, waived by the Holders of Preferred Securities or
otherwise eliminated, the Property Trustee will be deemed to be acting solely on
behalf of the Holders of Preferred Securities and only the Holders of the
Preferred Securities will have the right to direct the Property Trustee in
accordance with the terms of the Declaration or of the Securities. In the event
that any Event of Default with respect to the Preferred Securities is waived by
the Holders of Preferred Securities as provided in the Declaration, the Holders
of Common Securities agree that such waiver shall also constitute the waiver of
such
C-11
Event of Default with respect to the Common Securities for all purposes under
the Declaration without any further act, vote or consent of the Holders of the
Common Securities.
A waiver of an Indenture Event of Default by the Property Trustee at the
direction of the Holders of the Preferred Securities will constitute a waiver of
the corresponding Event of Default under the Declaration in respect of the
Securities.
Any required approval or direction of Holders of Common Securities may
be given at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of all of the Holders of Securities or pursuant to written
consent. The Regular Trustees will cause a notice of any meeting at which
Holders of Common Securities are entitled to vote to be mailed to each Holder of
record of Common Securities. Each such notice will include a statement setting
forth (i) the date of such meeting, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
and (iii) instructions for the delivery of proxies.
No vote or consent of the Holders of Common Securities will be required
for the Trust to redeem and cancel Common Securities or to distribute the
Debentures in accordance with the Declaration.
7. Pro Rata Treatment. A reference in these terms of the Common
Securities to any payment, Distribution or treatment as being "Pro Rata" shall
mean pro rata to each Holder of Securities according to the aggregate
liquidation amount of the Securities held by the relevant Holder in relation to
the aggregate liquidation amount of all Securities outstanding unless, in
relation to a payment, an Event of Default has occurred and is continuing, in
which case any funds available to make such payment shall be paid first to each
Holder of the Preferred Securities pro rata according to the aggregate
liquidation amount of Preferred Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Preferred Securities outstanding, and
only after satisfaction of all amounts owed to the Holders of the Preferred
Securities, to each Holder of Common Securities pro rata according to the
aggregate liquidation amount of Common Securities held by the relevant Holder
relative to the aggregate liquidation amount of all Common Securities
outstanding.
8. Ranking. The Common Securities rank pari passu and payment thereon
will be made Pro Rata with the Preferred Securities, except that when an Event
of Default occurs and is continuing, the rights of Holders of Common Securities
to payment in respect of Distributions and
payments upon liquidation, redemption or otherwise are subordinate to the rights
of Holders of the Preferred Securities.
9. Transfer, Exchange, Method of Payments. Payment of Distributions and
payments on redemption of the Common Securities will be payable, the transfer of
the Common Securities will be registrable, and Common Securities will be
exchangeable for Common Securities of other denominations of a like aggregate
liquidation amount, at the principal corporate trust office of the Property
Trustee in The City of New York; provided that payment of Distributions may be
made at the option of the Regular Trustees on behalf of the Trust by check
mailed to the address of the persons entitled thereto and that the payment on
redemption of any Common Security will be made only upon surrender of such
Common Security to the Property Trustee. Notwithstanding the
C-12
foregoing, transfers of Common Securities are subject to conditions set forth in
Section 9.01(c) of the Declaration.
10. Acceptance of Indenture. Each Holder of Common Securities, by the
acceptance thereof, agrees to the provisions of Indenture and the Debentures,
including the subordination provisions of the Indenture.
11. No Preemptive Rights. The Holders of Common Securities shall have no
preemptive or similar rights to subscribe to any additional Common Securities or
Preferred Securities.
12. Miscellaneous. These terms shall constitute a part of the
Declaration. The Trust will provide a copy of the Declaration and the Indenture
to a Holder of Common Securities without charge on written request to the Trust
at its principal place of business.
C-13
ANNEX I
FORM OF COMMON SECURITY CERTIFICATE
TRANSFER OF THIS CERTIFICATE
IS SUBJECT TO THE CONDITIONS
SET FORTH IN THE DECLARATION
REFERRED TO BELOW
CERTIFICATE NUMBER NUMBER OF COMMON SECURITIES
------ ----------
CERTIFICATE EVIDENCING COMMON SECURITIES
OF
POGO TRUST I
6.50% CUMULATIVE QUARTERLY INCOME CONVERTIBLE COMMON SECURITIES, SERIES A
(LIQUIDATION AMOUNT $50 PER COMMON SECURITY)
POGO TRUST I, A STATUTORY BUSINESS TRUST CREATED UNDER THE LAWS OF THE
STATE OF DELAWARE (THE "TRUST"), HEREBY CERTIFIES THAT ______________ (THE
"HOLDER") IS THE REGISTERED OWNER OF ____________________________ (_________)
COMMON SECURITIES OF THE TRUST REPRESENTING COMMON UNDIVIDED BENEFICIAL
INTERESTS IN THE ASSETS OF THE TRUST AND DESIGNATED THE "6.50% CUMULATIVE
QUARTERLY INCOME CONVERTIBLE COMMON SECURITIES, SERIES A" (LIQUIDATION AMOUNT
$50 PER COMMON SECURITY) (THE "COMMON SECURITIES"). THE COMMON SECURITIES ARE
TRANSFERABLE ON THE BOOKS AND RECORDS OF THE TRUST, IN PERSON OR BY A DULY
AUTHORIZED ATTORNEY, UPON SURRENDER OF THIS CERTIFICATE DULY ENDORSED AND IN
PROPER FORM FOR TRANSFER AND SATISFACTION OF THE OTHER CONDITIONS SET FORTH IN
THE DECLARATION (AS DEFINED BELOW) INCLUDING, WITHOUT LIMITATION, SECTION
9.01(C) THEREOF. THE DESIGNATIONS, RIGHTS, PRIVILEGES, RESTRICTIONS, PREFERENCES
AND OTHER TERMS AND PROVISIONS OF THE COMMON SECURITIES ARE SET FORTH IN, AND
THIS CERTIFICATE AND THE COMMON SECURITIES REPRESENTED HEREBY ARE ISSUED AND
SHALL IN ALL RESPECTS BE SUBJECT TO THE TERMS AND PROVISIONS OF, THE AMENDED AND
RESTATED DECLARATION OF TRUST OF THE TRUST DATED AS OF JUNE 2, 1999, AS THE SAME
MAY BE AMENDED FROM TIME TO TIME (THE "DECLARATION") INCLUDING THE DESIGNATION
OF THE TERMS OF COMMON SECURITIES AS SET FORTH IN EXHIBIT C THERETO. THE COMMON
SECURITIES AND THE PREFERRED SECURITIES ISSUED BY THE TRUST PURSUANT TO THE
DECLARATION REPRESENT UNDIVIDED BENEFICIAL INTERESTS IN THE ASSETS OF THE TRUST,
INCLUDING THE DEBENTURES (AS DEFINED IN THE DECLARATION) ISSUED BY POGO
PRODUCING COMPANY, A DELAWARE CORPORATION ("POGO"), TO THE TRUST PURSUANT TO THE
INDENTURE REFERRED TO IN THE DECLARATION. THE TRUST WILL FURNISH A COPY OF
C-14
THE DECLARATION AND THE INDENTURE TO THE HOLDER WITHOUT CHARGE UPON WRITTEN
REQUEST TO THE TRUST AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE.
THE HOLDER OF THIS CERTIFICATE, BY ACCEPTING THIS CERTIFICATE, IS DEEMED
TO HAVE AGREED TO THE TERMS OF THE INDENTURE AND THE DEBENTURES, INCLUDING THAT
THE DEBENTURES ARE SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT TO ALL SENIOR DEBT
(AS DEFINED IN THE INDENTURE OR THE SUPPLEMENTAL INDENTURE) AS AND TO THE EXTENT
PROVIDED IN THE INDENTURE OR THE SUPPLEMENTAL INDENTURE.
UPON RECEIPT OF THIS CERTIFICATE, THE HOLDER IS BOUND BY THE DECLARATION
AND IS ENTITLED TO THE BENEFITS THEREUNDER.
IN WITNESS WHEREOF, THE TRUSTEES OF THE TRUST HAVE EXECUTED THIS
CERTIFICATE THIS ___ DAY OF _____________, ____.
POGO TRUST I
BY________________________, AS REGULAR TRUSTEE
NAME: JOHN W. ELSENSHANS
TITLE: REGULAR TRUSTEE
BY_________________________, AS REGULAR TRUSTEE
NAME: GERALD A. MORTON
TITLE: REGULAR TRUSTEE
C-15
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a rate
per annum of 6.50% (the "Coupon Rate") of the stated liquidation amount of $50
per Common Security, such rate being the rate of interest payable on the
Debentures to be held by the Property Trustee. Distributions in arrears for more
than one calendar quarter will accumulate additional distributions thereon at
the Coupon Rate per annum (to the extent permitted by applicable law) compounded
quarterly. The term "Distributions" as used herein means such periodic cash
distributions and any such additional distributions payable unless otherwise
stated. A Distribution is payable only to the extent that payments are made in
respect of the Debentures held by the Property Trustee and to the extent the
Trust has funds on hand legally available therefor. The amount of Distributions
payable for any period will be computed for any full quarterly Distribution
period on the basis of a 360-day year of twelve 30-day months, and for any
period shorter than a full quarterly Distribution period for which Distributions
are computed, Distributions will be computed on the basis of the actual number
of days elapsed per 90-day quarter.
Distributions on the Common Securities will accumulate from June 2, 1999
and will be payable quarterly in arrears, on March 1, June 1, September 1 and
December 1 of each year, commencing on September 1, 1999, but only if and to the
extent that interest payments are made in respect of the Debentures held by the
Property Trustee. So long as Pogo shall not be in default in the payment of
interest on the Debentures, Pogo has the right under the Indenture for the
Debentures to defer payments of interest on the Debentures by extending the
interest payment period at any time and from time to time on the Debentures for
a period not exceeding 20 consecutive quarterly interest periods (each an
"Extension Period"), during which Extension Period no interest shall be due and
payable on the Debentures. As a consequence of such deferral, Distributions
shall also be deferred. Despite such deferral, Distributions will continue to
accumulate with additional distributions thereon (to the extent permitted by
applicable law but not at a rate greater than the rate at which interest is then
accruing on the Debentures) at the Coupon Rate compounded quarterly during any
such Extension Period; provided that no Extension Period shall extend beyond the
stated maturity of the Debentures. Prior to the termination of any such
Extension Period, Pogo may further extend such Extension Period; provided that
such Extension Period together with all such previous and further extensions
thereof may not exceed 20 consecutive quarterly interest periods. Upon the
termination of any Extension Period and the payment of all amounts then due,
Pogo may commence a new Extension Period, subject to the above requirements. On
the Distribution payment date at the end of the Extension Period, payments of
accumulated Distributions will be payable to Holders of Common Securities as
they appear on the books and records of the Trust (regardless of who the Holders
may have been on other dates during the Extension Period) on the record date for
such Distribution payment date.
The Common Securities shall be redeemable or subject to mandatory
exchange upon the occurrence of a Special Event as provided in the Declaration.
The Common Securities shall be convertible into shares of Common Stock
(as defined in the Declaration), through (i) the exchange of Common Securities
for a portion of the Debentures and (ii) the immediate conversion of such
Debentures into Common Stock, in the manner and according to the terms set
forth in the Declaration upon submission of a Conversion Request (as defined
in the
C-16
Declaration) to the Conversion Agent (as defined in the Declaration). A form of
Conversion Request is provided at the end of this Preferred Securities
Certificate.
C-17
CONVERSION REQUEST
To: Wilmington Trust Company,
as Property Trustee of Pogo Trust I
The undersigned owner of these Common Securities hereby irrevocably
exercises the option to convert these Common Securities, or the portion below
designated, into Common Stock (as that term is defined in the Amended and
Restated Declaration of Trust dated as of June 2, 1999 (as amended from time to
time, the "Declaration"), by John O. McCoy, John W. Elsenshans and Gerald A.
Morton, as Regular Trustees, Wilmington Trust Company, as the Delaware Trustee,
Wilmington Trust Company, as the Property Trustee, Pogo Producing Company, as
Sponsor, and by the Holders, from time to time, of undivided beneficial
interests in the assets of the Trust to be issued pursuant to the Declaration)
in accordance with and subject to the terms and conditions of the Declaration.
Pursuant to the aforementioned exercise of the option to convert these Common
Securities, the undersigned hereby directs the Conversion Agent (as that term is
defined in the Declaration) to (i) exchange such Common Securities for a portion
of the Debentures (as that term is defined in the Declaration) held by Pogo
Trust I (at the rate of exchange specified in the terms of the Common Securities
set forth as Exhibit C to the Declaration) and (ii) immediately convert such
Debentures on behalf of the undersigned, into Common Stock (at the conversion
rate specified in the terms of the Common Securities set forth as Exhibit C to
the Declaration), subject to certain adjustments set forth in the Supplemental
Indenture (as that term is defined in the Declaration).
The undersigned does also hereby direct the Conversion Agent that the
shares of Common Stock issuable and deliverable upon conversion, together with
any check in payment for fractional shares, be issued in the name of and
delivered to the undersigned, unless a different name has been indicated in the
assignment below. If shares of Common Stock are to be issued in the name of a
person other than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto.
C-18
Date: _____________, _____
in whole ___ in part ___
Number of Common Securities to be converted:
-----------------------
If a name or names other than the
undersigned, please indicate in the spaces
below the name or names in which the shares
of Common Stock are to be issued, along with
the address or addresses of such person or
persons:
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
Signature (for conversion only)
Please Print or Type Name and Address, Including Zip Code,
and Social Security or Other Identifying Number
----------------------------------
----------------------------------
----------------------------------
Signature Guarantee:(1) ___________
- --------
*(Signature must be guaranteed by an institution which is a member of one or the
following recognized Signature Guaranty Programs: (i) The Securities Transfer
Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion
Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) in
such other guarantee programs acceptable to the Trustee.)
C-19
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
- ------------------------------------------------------------
- ------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- ------------------------------------------------------------
- ------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- ------------------------------------------------------------
- ------------------------------------------------------------
_____________________________________________________ agent to transfer this
Common Security Certificate on the books of the Trust. The agent may substitute
another to act for him or her.
Date: ________________________
Signature: _________________________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
C-20