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POGO PRODUCING COMPANY
AND
WILMINGTON TRUST COMPANY,
as Trustee
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SUPPLEMENTAL INDENTURE NO. 1
Dated as of June 1, 1999
TO
JUNIOR SUBORDINATED INDENTURE
Dated as of June 1, 1999
-------------------
6 1/2% Junior Subordinated Convertible Debentures, Series A due 2029
$154,640,000
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SUPPLEMENTAL INDENTURE NO. 1, dated as of the first day of June, 1999,
between Pogo Producing Company, a corporation duly organized and existing under
the laws of the State of Delaware (the "Company"), and Wilmington Trust Company,
a Delaware banking corporation, as trustee (the "Trustee").
RECITALS
The Company has heretofore executed and delivered to the Trustee a
Junior Subordinated Indenture, dated as of June 1, 1999 (the "Indenture"),
providing for the issuance from time to time of one or more series of its
unsecured junior subordinated debentures (the "Debentures").
Pursuant to the terms of the Indenture, the Company desires to provide
for the establishment of a new series of Debentures to be designated as the
6 1/2% Junior Subordinated Convertible Debentures, Series A due 2029 (the
"Series A Debentures"), the form and substance of such Series A Debentures and
the terms, provisions and conditions thereof to be as set forth or provided in
the Indenture and this Supplemental Indenture No. 1.
The Company has caused Pogo Trust I ("Pogo Trust I") to be created as
a statutory business trust under the Business Trust Act of the State of Delaware
(12 DEL. CODE Section 3801 ET SEQ.) pursuant to a Declaration of Trust, dated
as of March 17, 1999 (the "Original Declaration"), and the filing of a
Certificate of Trust with the Secretary of State of the State of Delaware on
March 18, 1999.
The Original Declaration is to be amended and restated in its entirety
pursuant to an Amended and Restated Declaration of Trust dated as of June 2,
1999 (such Amended and Restated Declaration of Trust, as amended from time to
time, the "Declaration of Trust").
Pogo Trust I desires to issue $150,000,000 aggregate liquidation
amount of its 6 1/2% Cumulative Quarterly Income Convertible Preferred
Securities, Series A (the "Preferred Securities") and sell such Preferred
Securities to the underwriters set forth in that certain Underwriting Agreement
dated May 26, 1999 (the "Underwriting Agreement") by and among the Company, Pogo
Trust I and the underwriters named therein.
In connection with such purchases of Preferred Securities and the
related purchases by the Company of the Common Securities (as defined in the
Declaration of Trust) of Pogo Trust I, Pogo Trust I will purchase and hold as
trust assets up to $154,640,000 aggregate principal amount of the Series A
Debentures.
Pursuant to the Declaration of Trust, the legal title to the Series A
Debentures shall be owned and held of record in the name of Wilmington Trust
Company or its successor under the Declaration of Trust, as Property Trustee
(the "Property Trustee"), in trust for the benefit of holders of the Preferred
Securities and the Common Securities.
1
Upon written direction of the Company or any subsequent holder of the
Common Securities, the Regular Trustees (as defined in the Declaration of Trust)
of Pogo Trust I shall, unless the Series A Debentures are redeemed as described
herein, dissolve Pogo Trust I and cause to be distributed to the holders of the
Preferred Securities and the Common Securities, on a Pro Rata basis (as defined,
and determined as provided, in the terms of the Preferred Securities and Common
Securities attached as Exhibits B and C to the Declaration of Trust), Series A
Debentures and, in connection with a Liquidation Distribution (as defined in the
Declaration of Trust), the Regular Trustees may cause to be distributed to
holders of Preferred Securities and Common Securities, on a Pro Rata basis,
Series A Debentures (each a "Dissolution Event").
Section 2.01 of the Indenture provides that various matters with
respect to any series of Debentures issued under the Indenture may be
established in an indenture supplemental to the Indenture.
Subparagraph (h) of Section 9.01 of the Indenture provides that the
Company and the Trustee may enter into an indenture supplemental to the
Indenture to establish the form or terms of Debentures of any series as
permitted by Section 2.01 of the Indenture.
For and in consideration of the premises and the issuance of the
Series A Debentures provided for herein, it is mutually covenanted and agreed,
for the equal and proportionate benefit of the holders of the Series A
Debentures, as follows:
ARTICLE ONE
Relation to Indenture; Additional Definitions
SECTION 1.01. Relation to Indenture. This Supplemental Indenture No.
1 constitutes an integral part of the Indenture.
SECTION 1.02. Additional Definitions. For all purposes of this
Supplemental Indenture No. 1:
(1) Capitalized terms used herein shall have the meanings specified
herein or in the Indenture, as the case may be;
(2) "Additional Interest" has the meaning set forth in Section
2.05(d) hereof;
(3) "Applicable Price" means (i) in the case of a Non-Stock
Fundamental Change in which the holders of the Common Stock received only
cash, the amount of cash received by the holder of one share of Common
Stock and (ii) in the event of any other Non-Stock Fundamental Change or
any Common Stock Fundamental Change, the average of the Closing Prices for
the Common Stock during the ten trading days prior to and
2
including the record date for the determination of the holders of Common
Stock entitled to receive such securities, cash, or other property in
connection with such Non-Stock Fundamental Change or Common Stock
Fundamental Change or, if there is no such record date, the date upon which
the holders of the Common Stock shall have the right to receive such
securities, cash, or other property, in each case as adjusted in good faith
by the Company to appropriately reflect any of the events referred to in
Section 5.03;
(4) "Change in Investment Company Act Law" has the meaning set forth
in the definition of Investment Company Event;
(5) "Closing Price" means for any day, the average of the highest and
lowest reported sale prices, regular way, of Common Stock on such day,
or, if no sales take place on such day, the average of the reported
closing bid and asked prices on such day, regular way, in either case as
reported on the NYSE Consolidated Transactions Tape, or, if the Common
Stock is not listed or admitted to trading on the NYSE, on the principal
national securities exchange on which the Common Stock is listed or
admitted to trading, if the Common Stock is listed on a national
securities exchange, or the Nasdaq National Market, or, if the Common
Stock is not quoted or admitted to trading on such quotation system, on
the principal quotation system on which the Common Stock may be listed or
admitted to trading or quoted, or, if not listed or admitted to trading
or quoted on any national securities exchange or quotation system, the
average of the highest and lowest bid and asked prices of the Common
Stock in the over-the-counter market on such day as reported by the
National Quotation Bureau Incorporated, or a similar generally accepted
reporting service, or, if not so available in such manner, as furnished
by any NYSE member firm selected from time to time by the Board of
Directors of the Company for that purpose or, if not so available in such
manner, as otherwise determined in good faith by the Board of Directors
of the Company;
(6) "Common Securities" has the meaning set forth in the Recitals
herein;
(7) "Common Stock" means the common stock, par value $1.00 per share,
of the Company including associated preferred share purchase rights;
(8) "Common Stock Fundamental Change" means any Fundamental Change in
which more than 50% of the value (as determined in good faith by the Board
of Directors) of the consideration received by holders of Common Stock
consisted of common stock that for each of the ten consecutive trading days
prior to the record date for the determination of the holders of Common
Stock entitled to receive such common stock or, if there is no such record
date, the date on which the holders of the Common Stock shall have the
right to receive such Common Stock, has been admitted for listing or
admitted for listing subject to notice of issuance on a national securities
exchange or quoted on the Nasdaq National Market; provided, however, that a
Fundamental Change shall not be a
3
Common Stock Fundamental Change unless either (i) the Company continues to
exist after the occurrence of such Fundamental Change and the outstanding
Preferred Securities continue to exist as outstanding Preferred Securities
or (ii) not later than the occurrence of such Fundamental Change, the
outstanding Series A Debentures are converted into or exchanged for
debentures of a corporation succeeding to the business of the Company,
which debentures shall have terms substantially similar to those of the
Series A Debentures;
(9) "Compounded Interest" has the meaning set forth in Section
2.05(a) hereof;
(10) "Conversion Agent" has the meaning set forth in Section 5.02(a)
hereof;
(11) "Conversion Date" has the meaning set forth in Section 5.02(a)
hereof;
(12) "Conversion Expiration Date" means the earlier of (i) the close
of business on May 31, 2029, or (ii) in the case of Series A Debentures
called for redemption, the close of business on the Business Day prior to
the redemption date;
(13) "Conversion Price" has the meaning specified in Section 5.01
hereof;
(14) "Debentures" has the meaning set forth in the Recitals herein;
(15) "Declaration of Trust" has the meaning set forth in the Recitals
herein;
(16) "Dissolution Event" has the meaning set forth in the Recitals
herein;
(17) "Expiration Time" has the meaning set forth in Section 5.03(e)
hereof;
(18) "Extended Interest Payment Period" has the meaning set forth in
Section 4.01(a) hereof;
(19) "Fractional Share Cash Payment Amount" has the meaning specified
in Section 5.02(e) hereof;
(20) "Fundamental Change" means the occurrence of any Transaction or
event in connection with a plan pursuant to which all or substantially all
of the Common Stock shall be exchanged for, converted into, acquired for,
or constitute solely the right to receive securities, cash, or other
property (whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization, or
otherwise), PROVIDED, that, in the case of a plan involving more than one
such Transaction or event, for purposes of adjustment of the Conversion
Price, such Fundamental Change shall be deemed to have occurred when
substantially all of the Common Stock shall be exchanged for, converted
into, or acquired for or constitute solely
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the right to receive securities, cash, or other property, but the
adjustment shall be based upon the consideration that a holder of Common
Stock received in such Transaction or event as a result of which more than
50% of the Common Stock shall have been exchanged for, converted into, or
acquired for or constitute solely the right to receive securities, cash, or
other property;
(21) "Guarantee Payments" has the meaning set forth in Section 6.01
hereof;
(22) "Indenture" has the meaning set forth in the Recitals herein;
(23) "Interest Payment Date" has the meaning set forth in Section
2.05(a) hereof;
(24) "Investment Company Act" means the Investment Company Act of
1940, as amended;
(25) "Investment Company Event" means that the Company and the
Regular Trustees shall have received an opinion of independent nationally
recognized counsel, who may be counsel for Pogo Trust I, the Trustee or
the Company, but who may not be an employee of the Company, Pogo Trust I
or the Trustee, and who shall be reasonably acceptable to the Trustee,
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 Pogo Trust I 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;
(26) "Liquidation Distribution" has the meaning set forth in the
Recitals herein;
(27) "Maturity Date" has the meaning set forth in Section 2.03 hereof;
(28) "Non Book-Entry Preferred Securities" has the meaning set forth
in Section 2.04(b)(ii) hereof;
(29) "Non-Stock Fundamental Change" means any Fundamental Change other
than a Common Stock Fundamental Change;
(30) "Notice of Conversion" means (i) the notice given by a holder of
Series A Debentures to the Conversion Agent directing the Conversion Agent
to exchange Series A Debentures of such holder into Common Stock on behalf
of such holder, or (ii) the notice given by a holder of Preferred
Securities to the Conversion Agent directing the Conversion Agent to
exchange Preferred Securities of such holder for Series A
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Debentures and to convert such Series A Debentures into Common Stock on
behalf of such holder, any such notice including the information specified
by Section 5.02 hereof;
(31) "NYSE" means the New York Stock Exchange, Inc.;
(32) "Optional Redemption Price" has the meaning set forth in Section
3.01(a) hereof;
(33) "Original Declaration" has the meaning set forth in the Recitals
herein;
(34) "Pogo Trust I" has the meaning set forth in the Recitals herein;
(35) "Preferred Securities" has the meaning set forth in the Recitals
herein;
(36) "Preferred Securities Guarantee" means the Guarantee Agreement,
dated as of June 2, 1999, between the Company and Wilmington Trust Company
as the initial Guarantee Trustee thereunder, in respect of the Preferred
Securities;
(37) "Property Account" has the meaning set forth in Section 2.04(a)
hereof;
(38) "Property Trustee" has the meaning set forth in the Recitals
herein;
(39) "Purchased Shares" has the meaning set forth in Section 5.03(e)
hereof;
(40) "Purchaser Stock Price" means, with respect to any Common Stock
Fundamental Change, the average of the Closing Prices for the common stock
received in such Common Stock Fundamental Change for the ten consecutive
trading days prior to and including the record date for the determination
of the holders of Common Stock entitled to receive such common stock or, if
there is no such record date, the date on which the holders of Common Stock
shall have the right to receive such common stock, as adjusted in good
faith by the Company to appropriately reflect any of the events referred to
in Section 5.03;
(41) "Regular Trustees" has the meaning set forth in the Recitals
herein;
(42) "Reference Market Price" initially means $12.67 (which is an
amount equal to 66 2/3% of the reported last sales price for the Common
Stock on the NYSE Consolidated Transactions Tape on May 26, 1999), and in
the event of any adjustment of the Conversion Price other than as a result
of a Non-Stock Fundamental Change, the Reference Market Price shall also be
adjusted so that the ratio of the Reference Market Price to the Conversion
Price after giving effect to any such adjustment shall always be the same
as the ratio of the initial Reference Market Price to the initial
Conversion Price of the Debentures;
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(43) "Rights" has the meaning specified in Section 5.02(h) hereof;
(44) "Series A Debentures" has the meaning set forth in the Recitals
herein and Section 2.01 hereof;
(45) "Special Event" means either a Tax Event or an Investment Company
Event;
(46) "Tax Event" means that the Company and the Regular Trustees
shall have received an opinion of counsel from independent nationally
recognized tax counsel experienced in such matters and who shall be
reasonably acceptable to the Trustee, 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)
Pogo Trust I is, or will be within 90 days of the date thereof, subject
to federal income tax with respect to income accrued or received on the
Series A Debentures, (ii) Pogo Trust I 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 the
Company to Pogo Trust I on the Series A Debentures is not, or within 90
days of the date thereof will not be, deductible by the Company for
United States federal income tax purposes;
(47) "Tax Redemption Price" means with respect to each $50 principal
amount of Series A Debentures (i) if the Series A Debentures are redeemed
as a result of the occurrence of a Tax Event prior to June 1, 2002, the
greater of (a) the total principal amount of such Series A Debenture or
the liquidation amount of the Preferred Securities, (b) the average of the
highest and lowest reported sale prices, regular way, of the Preferred
Securities over the five trading days immediately prior to the day on
which notice of such redemption is given, and (c) the average of the
highest and lowest reported sale prices, regular way, of Preferred
Securities on the trading day immediately prior to the day on which
notice of such redemption is given
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or (ii) if the Series A Debentures are redeemed as a result of the
occurrence of a Tax Event on or after June 1, 2002, the principal amount
of such Series A Debentures. For purposes of clauses (b) and (c) above,
if the Series A Debentures have been distributed in exchange for
Preferred Securites, the references to sales prices shall be deemed to
refer to the sale prices of the Series A Debentures.
(48) "Transaction" has the meaning set forth in Section 5.04(a)
hereof;
(49) All references herein to Articles and Sections, unless otherwise
specified, refer to the corresponding Articles and Sections of this
Supplemental Indenture No. 1; and
(50) The terms "herein," "hereof," "hereunder" and other words of
similar import refer to this Supplemental Indenture No. 1.
ARTICLE TWO
General Terms and Conditions of the Series A Debentures
SECTION 2.01. Title of Debentures. There shall be and is hereby
authorized a series of Debentures designated as the "6 1/2% Junior Subordinated
Convertible Debentures Series A due 2029" (the "Series A Debentures").
SECTION 2.02. Limitation on Aggregate Principal Amount. The
aggregate principal amount of the Series A Debentures shall be limited to
$154,640,000; PROVIDED, HOWEVER, that the authorized aggregate principal amount
of the Series A Debentures may be increased above such amount by a Board
Resolution to such effect. Each Series A Debenture shall be dated the date of
its authentication.
SECTION 2.03. Maturity Date. (a) The Series A Debentures shall
mature and the principal amount thereof shall be due and payable together
with all accrued and unpaid interest thereon, including Additional Interest
and Compounded Interest, if any, on June 1, 2029 (the "Maturity Date");
PROVIDED, if a Tax Event occurs, then the Company will have the right (a)
prior to the dissolution of Pogo Trust I, to shorten the Maturity Date of the
Series A Debentures, to the minimum extent required, but not earlier than
June 2, 2014, or (b) to direct the Property Trustee to dissolve Pogo Trust I
(if not previously dissolved) and shorten the Maturity Date of the Series A
Debentures, to the minimum extent required, but not earlier than June 2,
2014, in each case such that in the opinion of an independent nationally
recognized counsel to the Company, experienced in such matters, after
shortening the Maturity Date, interest paid on the Series A Debentures will
be deductible for federal income tax purposes.
(b) Whenever the Maturity Date is shortened in accordance with this
Section 2.03, a notice stating the Maturity Date has been adjusted and
setting forth the adjusted Maturity Date shall as soon as practicable be
mailed by the Company to all record holders of the Series A Debentures at
their last addresses as they appear on the Debenture Register.
SECTION 2.04. Place of Payment, Registration or Exchange.
(a) Except as provided in Section 2.04(b), the Series A Debentures
shall be issued in fully registered certificated form without interest coupons
in denominations of $50 or
8
integral multiples thereof. Principal and interest on the Series A Debentures
issued in certificated form will be payable, the transfer of such Series A
Debentures will be registrable and such Series A Debentures will be exchangeable
for Series A Debentures bearing identical terms and provisions at the Corporate
Trust Office of the Trustee; provided, however, that payment of interest may be
made at the option of the Company by check mailed to the registered holders at
such addresses as shall appear in the Debenture Register and that the payment of
principal with respect to the Series A Debentures will only be made upon
surrender of the Series A Debentures to the Trustee. Notwithstanding the
foregoing, so long as the Property Trustee is the legal owner and record holder
of the Series A Debentures, the payment of the principal of and interest
(including Additional Interest and Compounded Interest, if any) on the Series A
Debentures held by the Property Trustee will be made by the Company in
immediately available funds on the payment date therefor at such place and to
the Property Account (as defined in the Declaration of Trust) established and
maintained by the Property Trustee pursuant to the Declaration of Trust.
(b) In connection with a Dissolution Event:
(i) Series A Debentures in certificated form may be presented to the
Trustee by the Property Trustee in exchange for one or more
Global Debentures representing the Series A Debentures in an
aggregate principal amount equal to all outstanding Series A
Debentures, to be registered in the name of the Depositary, or
its nominee, and delivered by the Trustee to the Depositary for
crediting to the accounts of its participants pursuant to the
instructions of the Regular Trustees. The Company upon any such
presentation shall execute one or more Global Debentures
representing the Series A Debentures in such aggregate principal
amount and deliver the same to the Trustee for authentication and
delivery in accordance with the Indenture and this Supplemental
Indenture No. 1. Payments on the Series A Debentures issued as a
Global Debenture will be made to the Depositary; and
(ii) if any Preferred Securities are held in non book-entry
certificated form, any Definitive Preferred Security Certificate
(as defined in the Declaration of Trust) which represents
Preferred Securities other than Preferred Securities held by the
Clearing Agency (as defined in the Declaration of Trust) or its
nominee ("Non Book-Entry Preferred Securities") will be deemed to
represent beneficial interests in Series A Debentures presented
to the Trustee by the Property Trustee having an aggregate
principal amount equal to the aggregate liquidation amount of the
Non Book-Entry Preferred Securities until such Definitive
Preferred Security Certificate is presented to the Debenture
Registrar for transfer or reissuance at which time such Preferred
Security Certificate will be canceled and a Series A Debenture,
registered in the name of the holder of the Preferred Security
Certificate or the transferee of the holder of such Preferred
Security Certificate, as the case may be, with
9
an aggregate principal amount equal to the aggregate
liquidation amount of the Definitive Preferred Security
Certificate canceled will be executed by the Company and
delivered to the Trustee for authentication and delivery in
accordance with the Indenture and this Supplemental
Indenture No. 1. Upon issuance of such Series A Debentures,
Series A Debentures with an equivalent aggregate amount that
were presented by the Property Trustee to the Trustee will
be deemed to have been canceled.
SECTION 2.05. Interest and Interest Rates.
(a) Each Series A Debenture will bear interest at the rate of 6 1/2%
per annum from June 2, 1999 until the principal thereof becomes due and payable,
and on any overdue principal and (to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest at the
same rate per annum (6 1/2%), compounded quarterly ("Compounded Interest"),
payable (subject to the provisions of Article Four) quarterly in arrears on
March 1, June 1, September 1 and December 1 of each year (each an "Interest
Payment Date"), commencing on September 1, 1999, to the person in whose name
such Series A Debenture or any predecessor Series A Debenture is registered, at
the close of business on the regular record date for such interest installment,
which, except as set forth below, shall be, in respect of any Series A
Debentures of which the Property Trustee is the registered holder or a Global
Debenture, the close of business on the Business Day next preceding that
Interest Payment Date. Notwithstanding the foregoing sentence, if the Preferred
Securities are no longer in book-entry only form or if pursuant to the
provisions of Section 2.11(c) of the Indenture the Series A Debentures are not
represented by a Global Debenture, the regular record date for such interest
installment shall be the fifteenth day of the month preceding the month in which
that Interest Payment Date occurs.
(b) Any such interest installment not punctually paid or duly
provided for shall forthwith cease to be payable to the registered holders on
such regular record date, and shall instead be paid to the person in whose name
the Series A Debenture (or one or more Predecessor Debentures) is registered at
the close of business on a special record date to be fixed by the Trustee for
the payment of such defaulted interest, notice whereof shall be given to the
registered holders of the Series A Debentures not less than 10 days prior to
such special record date, or may be paid at any time in any other lawful manner
not inconsistent with the requirements of any securities exchange or quotation
system on which the Series A Debentures may be listed or traded, and upon such
notice as may be required by such exchange or quotation system, all as more
fully provided in Section 2.03 of the Indenture.
(c) The amount of interest payable for any full quarterly interest
period will be computed on the basis of a 360-day year of twelve 30-day months,
and for any period shorter than a full quarterly interest period for which
interest is computed, interest shall be computed on the basis of the actual
number of days elapsed per 90-day quarter. In the event that any date on which
interest is payable on the Series A Debentures is not a Business Day, then
10
payment of interest payable on such date shall be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on the date such payment was originally payable.
(d) If at any time Pogo Trust I shall be required to pay any taxes,
duties, assessments or governmental charges of any nature (other than
withholding taxes) imposed by the Internal Revenue Service or any other taxing
authority, then, in any such case, the Company shall pay as additional interest
("Additional Interest") on the Series A Debentures such additional amounts as
shall be required so that the net amounts received and retained by Pogo Trust I
after paying any such taxes, duties, assessments or other governmental charges
shall be equal to the amounts Pogo Trust I would have received had no such
taxes, duties, assessments or other governmental charges been imposed.
SECTION 2.06. Denomination of Debentures. The Series A Debentures
shall be in registered form without coupons and shall be issuable in
denominations of $50 and integral multiples thereof.
SECTION 2.07. Currency. Payment of principal and interest on the
Series A Debentures shall be payable in U.S. dollars.
SECTION 2.08. Paying Agent. The Trustee shall initially serve as
paying agent of the Series A Debentures.
SECTION 2.09. Sinking Fund Obligations. The Company has no
obligation to redeem or purchase any Series A Debentures pursuant to any sinking
fund or analogous provisions (including payments made in cash in anticipation of
future sinking fund obligations) or at the option of a holder thereof.
SECTION 2.10. Additional Events of Default.
(a) The Events of Default specified in Section 6.01(a) of the
Indenture shall constitute Events of Default with respect to the Series A
Debentures, except as modified below.
(b) The Company's failure to pay interest on the Series A Debentures
for 30 days, subject to Company's right to extend the interest payment period of
the Series A Debentures provided in Article IV hereof, shall constitute an Event
of Default under the Indenture.
(c) The Company's failure to deliver Shares of Common Stock in
accordance with the provisions of Article V hereof upon appropriate election by
a holder of Series A Debentures to convert such Series A Debentures into Common
Stock shall constitute an Event of Default under the Indenture.
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SECTION 2.11. Defeasance. Section 11.01(B) of the Indenture shall
not apply to the Series A Debentures.
ARTICLE THREE
Optional Redemption of the Series A Debentures
SECTION 3.01. Optional Redemption on or after June 1, 2002.
(a) Except as provided in Section 3.02 hereof and subject to the
provisions below, Series A Debentures shall not be redeemed by the Company prior
to June 1, 2002. Subject to the terms of Article 3 of the Indenture, the
Company shall have the right to redeem the Series A Debentures, in whole or in
part, at any time from time to time on or after June 1, 2002, upon not less than
30 nor more than 60 days' notice to each holder of the Series A Debentures,
during the twelve-month periods commencing June 1 in each of the following years
at the indicated redemption price (expressed as a percentage of the principal
amount of the Series A Debentures being redeemed), together with any accrued and
unpaid interest thereon, including Compounded Interest and Additional Interest,
if any, to, but excluding, the date of such redemption (the "Optional Redemption
Price"):
Redemption Price Redemption Price
---------------- ----------------
(% of (% of
principal principal
Year amount) Year amount)
---- ------ ---- ------
2002 . . . . . . 104.55% 2006 . . . . . . . . 101.95%
2003 . . . . . . 103.90% 2007 . . . . . . . . 101.30%
2004 . . . . . . 103.25% 2008 . . . . . . . . 100.65%
2005 . . . . . . 102.60% 2009 and thereafter . 100%
(b) If the Series A Debentures are redeemed on any Interest Payment
Date, accrued and unpaid interest shall be payable to holders of record on the
relevant record date.
(c) If the Series A Debentures are redeemed after a record date and
on or before the related Interest Payment Date, accrued and unpaid interest
shall be payable to holders of record on the relevant record date.
(d) The Company shall not redeem any Series A Debentures unless all
accrued and unpaid interest thereon, including Compounded Interest and
Additional Interest, if any, has been paid in full for all quarterly interest
periods terminating prior to and including the redemption date.
12
(e) If the Company gives a notice of redemption in respect of
Series A Debentures (which notice will be irrevocable), then by 12:00 noon, New
York City time, on the redemption date, the Company shall deposit irrevocably
with the Trustee funds sufficient to pay the applicable Optional Redemption
Price and shall give irrevocable instructions and authority to pay such Optional
Redemption Price to the holders of the Series A Debentures. If notice of
redemption shall have been given and funds deposited as required, then
immediately prior to the close of business on the redemption date interest shall
cease to accrue on the Series A Debentures called for redemption, such Series A
Debentures shall no longer be deemed to be outstanding and all rights of holders
of such Series A Debentures so called for redemption shall cease, except the
right of the holders of such Series A Debentures to receive the Optional
Redemption Price but without interest on such Optional Redemption Price.
(f) If any date fixed for redemption of any Series A Debentures is
not a Business Day, then payment of the Optional Redemption Price payable on
such date shall 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 calender 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 the Company fails to
repay the Series A Debentures on maturity or the date fixed for redemption or if
payment of the Optional Redemption Price in respect of the Series A Debentures
is improperly withheld or refused and not paid by the Company, interest on such
Series A Debentures shall continue to accrue from the original redemption date
to the date of payment, in which case the actual payment date shall be
considered the date fixed for redemption for purposes of calculating the
Optional Redemption Price.
(g) In the event of any redemption in part, the Company shall not be
required to (i) issue, register the transfer of or exchange any Series A
Debentures during a period beginning at the opening of business 15 days before
the mailing of a notice of redemption of Series A Debentures and ending at the
close of business on the date of such mailing and (ii) register the transfer of
or exchange any Series A Debentures so selected for redemption, in whole or in
part, except the unredeemed portion of any Series A Debentures being redeemed in
part.
SECTION 3.02. Optional Redemption upon the Occurrence of a Tax Event.
If a Tax Event shall occur and be continuing, the Company shall have
the right within 90 days following the occurrence of such Tax Event to redeem
the Series A Debentures in whole, but not in part, for cash at the Tax
Redemption Price, together with any accrued and unpaid interest thereon,
including Compounded Interest and Additional Interest, if any, to, but
excluding, the date of such redemption.
13
SECTION 3.03. Partial Redemption. If the Series A Debentures are
only partially redeemed pursuant to this Article Three, the Series A Debentures
will be redeemed pro rata or by lot or by any other method utilized by the
Trustee. Notwithstanding the foregoing, if a partial redemption of the Series A
Debentures 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, the Company shall not be permitted to
effect such partial redemption and will only redeem the Series A Debentures in
whole.
SECTION 3.04. Corresponding Redemption of Preferred Securities. So
long as the Preferred Securities are outstanding, the proceeds from the
redemption of the Series A Debentures will be used by Pogo Trust I to redeem
Preferred Securities having an aggregate liquidation amount equal to the
aggregate principal amount of the Series A Debentures so redeemed.
SECTION 3.05. Exchange of Preferred Securities for Series A
Debentures.
(a) At any time, the Company shall have the right to dissolve the
Trust and cause the Series A Debentures to be distributed to the holders of
the Preferred Securities in liquidation of Pogo Trust I after satisfaction of
liabilities to creditors of Pogo Trust I as provided by applicable law.
(b) If a Special Event in respect of Pogo Trust I shall occur, the
Company shall give the Property Trustee notice of the same. If a Special
Event in respect of Pogo Trust I shall occur and be continuing, the
Declaration of Trust requires the Property Trustee to direct the Conversion
Agent (as defined in the Declaration of Trust) to exchange all outstanding
Preferred Securities for the Series A Debentures having a principal amount
equal to the aggregate liquidation amount of the Preferred Securities to be
exchanged with accrued interest in an amount equal to any unpaid
distributions (including any Additional Interest) on the Preferred
Securities; PROVIDED, THAT, in the case of a Tax Event, the Company shall
have the right to direct the Property Trustee that less than all, or none of
the Preferred Securities be so exchanged (i) if and for so long as the
Company shall have elected to pay any Additional Interest such that the net
amounts received by holders of the Preferred Securities not so exchanged in
respect of 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) if the Company shall instead elect to redeem the Series A Debentures, in
whole or in part, in the manner set forth in Section 3.02.
ARTICLE FOUR
Extension of Interest Payment Period
SECTION 4.01. Option to Extend Interest Payment Period.
(a) So long as no Event of Default has occurred and is continuing,
the Company shall have the right to defer payments of interest on the Series A
Debentures by extending the interest payment period of the Series A Debentures
at any time from time to time for up to 20 consecutive quarterly interest
periods (each such period an "Extended Interest Payment Period"), at the end of
which period the Company shall pay all interest accrued at the interest rate
specified in Section 2.05(a) herein compounded quarterly and unpaid thereon
(together with Compounded Interest and Additional Interest, if any); PROVIDED
THAT no Extended Interest Payment Period may extend beyond the Maturity Date or
redemption date of the Series A Debentures.
(b) During any Extended Interest Payment Period, the Company shall
not (i) declare or pay any dividends on, or redeem, purchase, acquire or make a
distribution or liquidation payment with respect to, any of its capital stock,
other than:
(A) dividends or distributions in shares of, or options,
warrants, rights to subscribe for or purchase shares of, the
Common Stock;
14
(B) any declaration of a dividend in connection with the
implementation of a shareholders' rights plan, or the
issuance of stock under any such plan in the future, or the
redemption or repurchase of any such rights pursuant
thereto;
(C) as a result of a reclassification of the Company's capital
stock or the exchange or the conversion of one class or
series of the Company's capital stock for another class or
series of the Company's capital stock;
(D) the payment of accrued dividends and the purchase of
fractional interests in shares of the Company's capital
stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or
exchanged; or
(E) purchases of Common Stock related to the issuance of Common
Stock or rights under any of the Company's benefit plans for
its directors, officers, employees, any of the Company's
dividend reinvestment plans or stock purchase plans, or any
of the benefit plans of any of the Company's Affiliates for
such Affiliates' directors, officers or employees;
(ii) make any payment of principal or of interest or premium, if any, on or
repay, repurchase or redeem any debt security of the Company that, ranks PARI
PASSU with or junior in interest to the Series A Debentures; or (iii) make any
guarantee payments with respect to any guarantee by the Company of the debt
securities of any Subsidiary of the Company (other than the Preferred Securities
Guarantee) if such guarantee ranks PARI PASSU with or junior in interest to the
Series A Debentures.
(c) Prior to the termination of any Extended Interest Payment Period,
the Company may pay all or any portion of the interest accrued on the Series A
Debentures on any Interest Payment Date to holders of record on the regular
record date for such Interest Payment Date or from time to time further extend
such Extended Interest Payment Period; PROVIDED that such Extended Interest
Payment Period together with all such further extensions thereof shall not
exceed 20 consecutive quarterly interest periods. Upon the termination of any
Extended Interest Payment Period and the payment of all accrued and unpaid
interest, including any Additional Interest and Compounded Interest, the Company
may commence a new Extended Interest Payment Period, subject to the foregoing
requirements. No interest shall be due and payable during an Extended Interest
Payment Period, except at the end thereof. On the Interest Payment Date
occurring at the end of the Extended Interest Payment Period, the Company shall
pay all accrued and unpaid interest on the Series A Debentures, including any
Additional Interest and Compounded Interest, to the holders of the Series A
Debentures in whose names the Series A Debentures are registered in the
Debenture Register
15
(regardless of who the holders of record may have been on other dates during the
Extended Interest Payment Period) on the record date for such Interest Payment
Date.
SECTION 4.02. Notice of Extension of Interest Payment Period.
(a) So long as the Property Trustee is the legal owner and sole
holder of record of the Series A Debentures, at the time the Company elects to
begin an Extended Interest Payment Period, the Company shall give both the
Property Trustee and the Trustee notice of its election to begin such Extended
Interest Payment Period one Business Day prior to the earlier of (i) the next
succeeding date on which Distributions (as defined in the Declaration of Trust)
on the Preferred Securities are payable or (ii) the date Pogo Trust I is
required to give notice of the record date or the date such Distributions are
payable to the New York Stock Exchange or other applicable self-regulatory
organization or to holders of the Preferred Securities, but in any event not
less than one Business Day prior to such record date.
(b) If as a result of a Dissolution Event Series A Debentures have
been distributed to holders of Trust Securities, the Company shall give the
holders of the Series A Debentures and the Trustee notice of its election to
begin an Extended Interest Payment Period at least 10 Business Days prior to the
earlier of (i) the next succeeding Interest Payment Date or (ii) the date the
Company is required to give notice of the record or payment date of such related
interest payment to the New York Stock Exchange (if the Series A Debentures are
then listed thereon) or other applicable self-regulatory organization or to
holders of the Series A Debentures.
(c) The quarter in which any notice is given pursuant to Section 4.02
shall not be counted as one of the quarters permitted in the maximum Extended
Interest Payment Period permitted under this Article Four.
ARTICLE FIVE
Conversion of the Series A Debentures into Common Stock
SECTION 5.01. Conversion Rights.
Subject to and upon compliance with the provisions of this Article
Five, the Series A Debentures are convertible, at the option of the holder, at
any time prior to the Conversion Expiration Date, into fully paid and
nonassessable shares of Common Stock of the Company at an initial conversion
rate of 2.1053 shares of Common Stock for each $50 in aggregate principal amount
of Series A Debentures (equal to a conversion price of $23.75 per share of
Common Stock), subject to adjustment as described in this Article Five (as
adjusted the "Conversion Price"). A holder of Series A Debentures may convert
any portion of the principal amount of the Series A Debentures into that number
of fully paid and nonassessable shares of Common Stock (calculated as to each
conversion to the nearest 1/100th of a share)
16
obtained by dividing the principal amount of the Series A Debentures to be
converted by the Conversion Price.
SECTION 5.02. Conversion Procedures.
(a) NOTICE OF CONVERSION. In order to convert all or a portion of
the Series A Debentures, the holder thereof shall deliver to the Property
Trustee, as conversion agent or to such other agent appointed by the Company for
such purposes (the "Conversion Agent") an irrevocable Notice of Conversion
setting forth the principal amount of Series A Debentures to be converted,
together with the name or names, if other than the holder, in which the shares
of Common Stock should be issued upon conversion and directing the Conversion
Agent to convert such Series A Debentures, on behalf of such holder into Common
Stock pursuant to the provisions of this Article Five, and, if such Series A
Debentures are definitive Series A Debentures, surrender to the Conversion Agent
the Series A Debentures to be converted, duly endorsed or assigned to the
Company or in blank. In addition, a holder of Preferred Securities may exercise
its right under the Declaration of Trust to convert such Preferred Securities
into Common Stock by delivering to the Conversion Agent an irrevocable Notice of
Conversion setting forth the information called for by the preceding sentence
and directing the Conversion Agent (i) to exchange such Preferred Security for a
portion of the Series A Debentures held by the Trust (at an exchange rate of $50
principal amount of Series A Debentures for $50 liquidation amount Preferred
Security) and (ii) to immediately convert such Series A Debentures, on behalf of
such holder, into Common Stock pursuant to the provisions of this Article Five
and, if such Preferred Securities are in the form of Definitive Preferred
Security Certificates, surrendering such Definitive Preferred Security
Certificates, duly endorsed or assigned to the Company or in blank.
If a Notice of Conversion is delivered after the close of business on
any regular record date and prior to the opening of business on the subsequent
Interest Payment Date, the holder of record on the regular record date shall be
entitled to receive the interest paid on the subsequent Interest Payment Date on
the portion of Series A Debentures to be converted notwithstanding the
conversion thereof prior to such Interest Payment Date. Except as otherwise
provided in the immediately preceding sentence, in the case of any Debenture
which is converted, interest whose Interest Payment Date is on or after the date
of conversion of such Debenture shall not be payable, and the Company shall not
make nor be required to make any other payment, adjustment or allowance with
respect to accrued but unpaid interest on the Series A Debentures being
converted, which shall be deemed to be paid in full.
(b) CONVERSION DATE. Each conversion shall be deemed to have been
effected immediately prior to the close of business on the day on which the
Notice of Conversion was received (the "Conversion Date") by the Conversion
Agent from the Holder or from a holder of the Preferred Securities effecting a
conversion thereof pursuant to its conversion rights under the Declaration of
Trust, as the case may be. The Person or Persons entitled to receive the Common
Stock issuable upon such conversion shall be treated for all purposes as the
17
record holder or holders of such Common Stock as of the Conversion Date and such
Person or Persons will cease to be a record holder or record holders of the
Series A Debentures on that date.
(c) DELIVERY OF COMMON STOCK UPON CONVERSION. As promptly as
practicable on or after the Conversion Date, the Company shall issue and deliver
at the office of the Conversion Agent, unless otherwise directed by the holder
or holders of the Preferred Securities identified in the Notice of Conversion, a
certificate or certificates for the number of full shares of Common Stock
issuable upon such conversion, together with the Fractional Share Cash Payment
Amount to the Person or Persons entitled to receive the same. The Conversion
Agent shall deliver such certificate or certificates to such person or Persons.
(d) SATISFACTION OF OBLIGATIONS UNDER THE SERIES A DEBENTURES. The
Company's delivery upon conversion of the fixed number of shares of Common Stock
into which the Series A Debentures are convertible (together with the cash
payment, if any, in lieu of fractional shares) shall be deemed to satisfy the
Company's obligation to pay the principal amount at maturity of the portion of
Series A Debentures so converted and any unpaid interest (including Additional
Interest and Compounded Interest, if any) accrued on such Series A Debentures at
the time of such conversion.
(e) CASH IN LIEU OF FRACTIONAL SHARES. No fractional shares of
Common Stock will be issued as a result of conversion, but in lieu thereof, the
Company shall pay to the Conversion Agent a cash adjustment in an amount equal
to the same fraction of the Closing Price with respect to such fractional
interest on the Conversion Date (the "Fractional Share Cash Payment Amount"),
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, and the Conversion Agent in turn will make such
payment, if any, to the holder of the Series A Debentures or the holder of the
Preferred Securities so converted.
(f) ISSUANCE OF NEW DEBENTURES UPON PARTIAL CONVERSIONS. In the
event of the conversion of any Debenture in part only, a new Debenture or
Series A Debentures for the unconverted portion thereof will be issued in the
name of the holder thereof upon the cancellation of the Debenture converted in
part in accordance with Section 2.04.
(g) ROLE AND AUTHORITY OF THE CONVERSION AGENT. In effecting the
conversion transactions described in this Section, the Conversion Agent is
acting as agent of the holders of Preferred Securities (in the exchange of
Preferred Securities for Series A Debentures) and as agent of the holders of
Series A Debentures (in the conversion of Series A Debentures into Common
Stock), as the case may be, directing it to effect such conversion transactions.
The Conversion Agent is hereby authorized (i) to exchange Series A Debentures
held by the Trust from time to time for Preferred Securities in connection with
the conversion of such Preferred Securities in accordance with this Article Five
and (ii) to convert all or a portion of the Series A Debentures into Common
Stock and thereupon to deliver such shares of Common
18
Stock in accordance with the provisions of this Article Five and to deliver to
the Trust a new Debenture or Series A Debentures for any resulting unconverted
principal amount.
(h) COMMON STOCK TO BE ISSUED UPON CONVERSION OF SERIES A
DEBENTURES. The Company shall at all times reserve and keep available out of
its authorized and unissued Common Stock, solely for issuance upon the
conversion of the Series A Debentures, such number of shares of Common Stock
as shall from time to time be issuable upon the conversion of all the Series
A Debentures then outstanding. Notwithstanding the foregoing, the Company
shall be entitled to deliver upon conversion of Series A Debentures shares of
Common Stock reacquired and held in the treasury of the Company (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. Whenever the Company issues shares of Common Stock
upon conversion of Series A 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. Any shares of Common Stock
issued upon conversion of the Series A 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 Series A
Debentures to the converting holder free and clear of all liens, charges,
security interests and encumbrances, except for United States withholding
taxes. The Company 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 the Common Stock (and all requirements to
list the Common Stock issuable upon conversion of Series A Debentures that
are at the time applicable), in order to enable the Company to lawfully issue
Common Stock upon conversion of the Series A Debentures and to lawfully
deliver the Common Stock to each holder upon conversion of the Series A
Debentures.
(i) PAYMENT OF TAXES. The Company shall 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 Series A Debentures.
The Company 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 Series A Debentures 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 Conversion
Agent that such tax has been paid.
19
SECTION 5.03. Conversion Price Adjustments.
The Conversion Price shall be subject to adjustment (without
duplication) from time to time as follows:
(a) ADJUSTMENT UPON PAYMENT OF STOCK DIVIDENDS OR SUBDIVISIONS,
COMBINATIONS OR RECLASSIFICATIONS OF COMMON STOCK. In case the Company shall,
while any of the Series A Debentures are outstanding, (i) pay a dividend or make
a distribution with respect to its Common Stock in shares of Common Stock, (ii)
subdivide its outstanding shares of Common Stock, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares or (iv) issue by
reclassification of its shares of Common Stock any shares of capital stock of
the Company, the Conversion Price in effect immediately prior to such action
shall be adjusted by multiplying it by a fraction, the numerator of which is
equal to the total number of outstanding shares of Common Stock immediately
prior to such dividend, distribution, subdivision, combination or
reclassification, and the denominator of which is equal to the total number of
outstanding shares of Common Stock immediately following such dividend,
distribution, subdivision, combination or reclassification.
An adjustment made pursuant to this subsection (a) shall become
effective immediately after the record date in the case of a dividend or other
distribution and shall become effective immediately after the effective date in
case of a subdivision, combination or reclassification (or immediately after the
record date if a record date shall have been established for such event). If,
as a result of an adjustment made pursuant to this subsection (a), the holder of
any Debenture thereafter surrendered for conversion shall become entitled to
receive shares of two or more classes or series of capital stock of the Company,
the Board of Directors (whose determination shall be conclusive and shall be
described in a Board Resolution filed with the Trustee) shall determine the
allocation of the adjusted Conversion Price between or among shares of such
classes or series of capital stock. In the event that such dividend,
distribution, subdivision, combination or issuance is not so paid or made, the
Conversion Price shall again be adjusted to be the Conversion Price which would
then be in effect if such record date had not been fixed.
(b) ADJUSTMENT UPON ISSUANCE OF RIGHTS OR WARRANTS TO ACQUIRE COMMON
STOCK AT PRICES BELOW MARKET VALUE. In case the Company shall, while any of the
Series A Debentures are outstanding, issue rights or warrants to all holders of
its Common Stock entitling them (for a period expiring within 45 days after the
record date mentioned below) to subscribe for or purchase shares of Common Stock
at a price per share less than the Closing Price per share of Common Stock on
the record date mentioned below, the Conversion Price for the Series A
Debentures shall be adjusted so that the Conversion Price shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the date of issuance of such rights or warrants by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding on the date
fixed for the determination of stockholders entitled to receive such rights or
warrants plus the number of shares which the aggregate offering price
20
of the total number of shares so offered for subscription or purchase would
purchase at such Closing Price, and the denominator of which shall be the number
of shares of Common Stock outstanding on the date fixed for the determination of
stockholders entitled to receive such rights or warrants plus the number of
additional shares of Common Stock offered for subscription or purchase. Such
adjustment shall become effective immediately after the record date for the
determination of stockholders entitled to receive such rights or warrants. For
the purposes of this subsection, the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of the Company.
The Company agrees not to issue any rights or warrants in respect of
shares of Common Stock held in the treasury of the Company.
In case any rights or warrants referred to in this subsection in
respect of which an adjustment shall have been made shall expire unexercised
within 45 days after the same shall have been distributed or issued by the
Company, the Conversion Price shall be readjusted at the time of such expiration
to the Conversion Price that would have been in effect if no adjustment had been
made on account of the distribution or issuance of such expired rights or
warrants.
(c) ADJUSTMENT UPON DISTRIBUTION OF EVIDENCES OF INDEBTEDNESS,
CAPITAL STOCK, CASH OR ASSETS. Subject to the last sentence of this
subparagraph (c), in case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock evidences of its indebtedness,
shares of any class or series of capital stock, cash or assets (including
securities, but excluding (i) any rights or warrants referred to in
subparagraph (b), (ii) any dividend or distribution paid exclusively in cash
and (iii) any dividend or distribution referred to in subparagraph (a) of
this Section 5.03), the Conversion Price shall be reduced so that the
Conversion Price shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the effectiveness of the
Conversion Price reduction contemplated by this subparagraph (c) by a
fraction, the numerator of which shall be the Closing Price per share of the
Common Stock on the date fixed for the payment of such distribution (the
"Reference Date") less the fair market value (as determined in good faith by
the Board of Directors, whose determination shall be conclusive and described
in a resolution of the Board of Directors filed with the Trustee), on the
Reference Date, of the portion of the evidences of indebtedness, shares of
capital stock, cash and assets so distributed applicable to one share of
Common Stock, and the denominator of which shall be such Closing Price per
share of the Common Stock, such reduction to become effective immediately
prior to the opening of business on the day following the Reference Date.
In the event that such dividend or distribution is not so paid or
made, the Conversion Price shall again be adjusted to be the Conversion Price
which would then be in effect if such dividend or distribution had not occurred.
For purposes of this subparagraph (c), any dividend or distribution that
includes shares of Common Stock or rights or warrants to subscribe for or
purchase shares of Common Stock shall be deemed instead to be (i) a dividend or
21
distribution of the evidences of indebtedness, shares of capital stock, cash or
assets other than such shares of Common Stock or such rights or warrants (making
any Conversion Price reduction required by this subparagraph (c)) immediately
followed by (ii) a dividend or distribution of such shares of Common Stock or
such rights or warrants (making any further conversion price reduction required
by subparagraph (a) or (b)), except (A) the Reference Date of such dividend or
distribution as defined in this subparagraph shall be substituted as (x) "the
record date in the case of a dividend or other distribution," and (y) "the
record date for the determination of stockholders entitled to receive such
rights or warrants" and (z) "the date fixed for such determination" within the
meaning of subparagraphs (a) and (b) and (B) any shares of Common Stock included
in such dividend or distribution shall not be deemed outstanding for purposes of
computing any adjustment of the conversion price in subparagraph (a).
(d) ADJUSTMENT UPON ALL-CASH DISTRIBUTIONS. In case the Company
shall pay or make a dividend or other distribution on its Common Stock
exclusively in cash (excluding (i) any cash dividends on Common Stock to the
extent that the aggregate cash dividends per share of Common Stock in any
consecutive 12-month period do not exceed the greater of (x) the amount per
share of Common Stock of the cash dividends paid on Common Stock in the
immediately preceding 12-month period, to the extent that such dividends for the
immediately preceding 12-month period did not require an adjustment of the
Conversion Price, and (y) 12.5% of the average of the daily Closing Prices of
the Common Stock for the ten consecutive trading days immediately prior to the
date of declaration of such dividend, and (ii) a redemption of any Rights issued
under a rights agreement), the Conversion Price shall be reduced so that the
Conversion Price shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the effectiveness of the Conversion Price
reduction contemplated by this subparagraph (d) by a fraction, the numerator of
which shall be the Closing Price per share of the Common Stock on the date fixed
for the payment of such distribution less the amount of cash so distributed
(excluding that portion of such distribution that does not exceed 12.5% of the
Closing Price per share, determined as provided above) applicable to one share
of Common Stock and the denominator of which shall be such Closing Price per
share of the Common Stock, such reduction to become effective immediately prior
to the opening of business on the day following the date fixed for the payment
of such distribution; PROVIDED, HOWEVER, that in the event the portion of the
cash so distributed applicable to one share of Common Stock is equal to or
greater than the Closing Price per share of the Common Stock on the record date
mentioned above (excluding that portion of such distribution that does not
exceed 12.5% of the Closing Price per share, determined as provided above), in
lieu of the foregoing adjustment, adequate provision shall be made so that each
holder of Series A Debentures shall have the right to receive upon conversion
the amount of cash such holder would have received had such holder converted
each of the Series A Debentures immediately prior to the record date for the
distribution of the cash (less that portion of such distribution that does not
exceed 12.5% of the Closing Price per share, determined as provided above). In
the event that such dividend or distribution is not so paid
22
or made, the Conversion Price shall again be adjusted to be the conversion price
which would then be in effect if such record date had not been fixed.
(e) ADJUSTMENT UPON A TENDER OR EXCHANGE OFFER. In case a tender
or exchange offer (other than an odd-lot offer) made by the Company or any
Subsidiary of the Company for all or any portion of the Common Stock shall
expire and such tender or exchange offer shall involve the payment by the
Company or such Subsidiary of consideration per share of Common Stock having
a fair market value (as determined in good faith by the Board of Directors,
whose determination shall be conclusive and described in a resolution of the
Board of Directors) at the last time (the "Expiration Time") tenders or
exchanges may be made pursuant to such tender or exchange offer (as it shall
have been amended) that exceeds 110% of the Closing Price of the Common Stock
on the trading day next succeeding the Expiration Time, the Conversion Price
shall be reduced so that the Conversion Price shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the effectiveness of the Conversion Price reduction contemplated by this
subparagraph (e) by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding (including any tendered or exchanged
shares) at the Expiration Time (including the Purchased Shares) (as defined
below) multiplied by the Closing Price per share of the Common Stock on the
trading day next succeeding the Expiration Time and the denominator of which
shall be the sum of (x) the fair market value (determined as aforesaid) of
the aggregate consideration payable to stockholders based on the acceptance
(up to any maximum specified in the terms of the tender or exchange offer) of
all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum, being
referred to as the "Purchased Shares") (excluding that portion of such
consideration in excess of the Closing Price per share that does not exceed
110% of the Closing Price per share) and (y) the product of the number of
shares of Common Stock outstanding (less any Purchased Shares) at the
Expiration Time and the Closing Price per share of the Common Stock on the
trading day next succeeding the Expiration Time, such reduction to become
effective immediately prior to the opening of business on the day following
the Expiration Time. In the event that such tender or exchange offer is not
so made, the Conversion Price shall again be adjusted to be the Conversion
Price which would then be in effect if such record date had not been fixed.
(f) COMPANY'S OPTION TO REDUCE THE CONVERSION PRICE. The Company
shall have the right to reduce from time to time the Conversion Price by any
amount selected by the Company for any period of at least 20 Business Days,
provided, that the Company shall give at least 15 days' notice of such reduction
to the Trustee and the holders of the Series A Debentures. The Company may, at
its option, make such reductions in the Conversion Price, in addition to those
set forth above, as the Board of Directors deems advisable to avoid or diminish
any income tax to holders of Common Stock resulting from any dividend or
distribution of stock or issuance of rights or warrants to acquire stock or from
any event treated as such for tax purposes or for any other reasons.
23
(g) LIMITATION ON ADJUSTMENTS. If any action would require
adjustment of the Conversion Price pursuant to more than one of the
anti-dilution provisions described above, only one adjustment shall be made and
such adjustment shall be the amount of adjustment that has the highest absolute
value to the holders of the Series A Debentures. No adjustment in the
Conversion Price will be required unless such adjustment would require an
increase or decrease of at least 1% of the Conversion Price, but any adjustment
that would otherwise be required to be made shall be carried forward and taken
into account in any subsequent adjustment.
SECTION 5.04. Fundamental Change.
(a) In the event that the Company is a party to any transaction,
including, without limitation, a merger (other than a merger that does not
result in a reclassification, conversion, exchange or cancellation of Common
Stock), consolidation, sale of all or substantially all of the assets of the
Company, recapitalization or reclassification of Common Stock (other than a
change in par value, or from par value to no par value, or from no par value to
par value or as a result of a subdivision or combination of Common Stock) or any
compulsory share exchange (each of the foregoing being referred to as a
"Transaction"), in each case, as a result of which shares of Common Stock shall
be converted into the right to receive, or shall be exchanged for, (i) in the
case of any Transaction other than a Transaction involving a Common Stock
Fundamental Change (and subject to funds being legally available for such
purpose under applicable law at the time of such conversion), securities, cash
or other property, each Debenture shall thereafter be convertible into the kind
and, in the case of a Transaction which does not involve a Fundamental Change,
amount of securities, cash and other property receivable upon the consummation
of such Transaction by a holder of that number of shares of Common Stock into
which a Debenture was convertible immediately prior to such Transaction, or (ii)
in the case of a Transaction involving a Common Stock Fundamental Change, common
stock, each Debenture shall thereafter be convertible (in the manner described
herein) into common stock of the kind received by holders of Common Stock (but
in each case after giving effect to any adjustment discussed in paragraphs (b)
and (c) below relating to a Fundamental Change if such Transaction constitutes a
Fundamental Change). The holders of Series A Debentures or Preferred Securities
will have no voting rights with respect to any Transaction described in this
section.
(b) If any Fundamental Change occurs, then the Conversion Price in
effect will be adjusted immediately after such Fundamental Change as described
in paragraph (c) below. In addition, in the event of a Common Stock Fundamental
Change, each Debenture shall be convertible solely into common stock of the kind
received by holders of Common Stock as a result of such Common Stock Fundamental
Change.
(c) The Conversion Price in the case of any Transaction involving a
Fundamental Change will be adjusted immediately after such Fundamental Change
such that:
24
(1) in the case of a Non-Stock Fundamental Change, the
Conversion Price of the Series A Debentures will thereupon become the
lower of (A) the Conversion Price in effect immediately prior to such
Non-Stock Fundamental Change, but after giving effect to any other
prior adjustments, and (B) the result obtained by multiplying the
greater of the Applicable Price or the then applicable Reference
Market Price by a fraction, the numerator of which shall be $50 and
the denominator of which shall be (x) the amount of the Optional
Redemption Price for the Debenture if the redemption date were the
date of such Non-Stock Fundamental Change (or, for the period
commencing on the first date of original issuance of the Series A
Debentures and through May 31, 2000, and the twelve-month periods
commencing June 1, 2000 and June 1, 2001, the product of 106.50%,
105.85% and 105.20%, respectively, multiplied by $50) plus (y) any
then-accrued and unpaid interest on the Series A Debentures; and
(2) in the case of a Common Stock Fundamental Change, the
Conversion Price of the Series A Debentures in effect immediately
prior to such Common Stock Fundamental Change, but after giving effect
to any other prior adjustments, will thereupon be adjusted by
multiplying such Conversion Price by a fraction, the numerator of
which shall be the Purchaser Stock Price and the denominator shall be
the Applicable Price; provided, however, that in the event of a Common
Stock Fundamental Change in which (A) 100% of the value of the
consideration received by a holder of Common Stock is common stock of
the successor, acquirer, or other third party (and cash, if any, is
paid only with respect to any fractional interests in such common
stock resulting from such Common Stock Fundamental Change) and (B) all
of the Common Stock will have been exchanged for, converted into, or
acquired for common stock (and cash with respect to fractional
interests) of the successor, acquirer, or other third party, the
Conversion Price of the Series A Debentures in effect immediately
prior to such Common Stock Fundamental Change will thereupon be
adjusted by multiplying such Conversion Price by a fraction, the
numerator of which shall be one and the denominator of which shall be
the number of shares of common stock of the successor, acquirer, or
other third party received by a holder of one share of Common Stock as
a result of such Common Stock Fundamental Change.
SECTION 5.05. Notice of Adjustments of Conversion Price.
Whenever the Conversion Price is adjusted as herein provided:
(a) the Company shall compute the adjusted conversion price and shall
prepare a certificate signed by the Chief Financial Officer and the Controller
of the Company setting forth the adjusted conversion price and showing in
reasonable detail the facts upon which such adjustment is based, and such
certificate shall forthwith be filed with the Trustee, the Conversion Agent and
the Debenture Registrar; and
25
(b) a notice stating the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price shall as soon as practicable be
mailed by the Company to all record holders of the Series A Debentures at their
last addresses as they appear upon the Debenture Register.
SECTION 5.06. Dividend or Interest Reinvestment Plans.
Notwithstanding anything to the contrary in this Article Five, no
adjustment of the Conversion Price will be made upon the issuance of any shares
of Common Stock pursuant to any present or future plan providing for the
reinvestment of dividends or interest payable on securities of the Company. The
investment of additional optional amounts in shares of Common Stock under any
such plan, and the issuance of any shares of Common Stock or options or rights
to purchase such shares pursuant to any employee benefit plan or program of the
Company or any of its Subsidiaries or joint ventures currently existing or
adopted subsequent to May 26, 1999 or pursuant to any option, warrant, right or
exercisable, exchangeable or convertible security outstanding as of the date the
Series A Debentures were first issued, shall not be deemed to constitute an
issuance of Common Stock or exercisable, exchangeable or convertible securities
by the Company to which any of the adjustment provisions described above
applies. There shall also be no adjustment of the Conversion Price in case of
the issuance of any stock (or securities convertible into or exchangeable for
stock) of the Company except as specifically described in this Article Five.
SECTION 5.07. Trustee Not Responsible for Determining Conversion
Price or Adjustments.
Neither the Trustee nor any Conversion Agent shall at any time be
under any duty or responsibility to any holder of any Debenture or to any holder
of a Preferred Security to determine whether any facts exist which may require
any adjustment of the Conversion Price, or with respect to the nature or extent
of any such adjustment when made, or with respect to the method employed, or
herein or in any supplemental indenture provided to be employed, in making the
same or whether a supplemental indenture need be entered into. Neither the
Trustee nor any Conversion Agent shall be accountable with respect to the
validity or value (or the kind of account) of any shares of Common Stock or of
any securities or property, which may at any time be issued or delivered upon
the conversion of any Debenture; and neither the Trustee nor any Conversion
Agent makes any representation with respect thereto. Neither the Trustee nor
any Conversion Agent shall be responsible for any failure of the Company to make
any cash payment or to issue, transfer or deliver any shares of Common Stock or
stock certificates or other securities or property upon the surrender of any
Debenture for the purpose of conversion, or, except as expressly herein
provided, to comply with any of the covenants of the Company contained in this
Article Five.
26
ARTICLE SIX
Covenants Applicable to the Series A Debentures
SECTION 6.01. Prohibited Actions While Preferred Securities are
Outstanding. So long as any Preferred Securities issued by Pogo Trust I remain
outstanding, the Company shall not (i) declare or pay any dividends on, or
redeem, purchase, acquire or make a distribution or liquidation payment with
respect to, any of its capital stock (other than (a) dividends or distributions
in shares of, or options, warrants, rights to subscribe for or purchase shares
of, common stock of the Company, (b) any declaration of a dividend in connection
with the implementation of a stockholders' rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (c) as a result of a reclassification of the Company's
capital stock or the exchange or the conversion of one class or series of the
Company's capital stock for another class or series of the Company's capital
stock, (d) the payment of accrued dividends and the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, or (e) purchases of the Company's common stock related to the
issuance of the Company's common stock or rights under any of the Company's
benefit plans for its directors, officers, employees, any of the Company's
dividend reinvestment plans or stock purchase plans, or any of the benefit plans
of any of the Company's Affiliates for such Affiliates' directors, officers or
employees), (ii) make any payment of principal or of interest or premium, if
any, on or repay, repurchase or redeem any debt security of the Company that,
ranks PARI PASSU with or junior in interest to the Series A Debentures or (iii)
make any guarantee payments with respect to any guarantee by the Company of the
debt securities of any Subsidiary of the Company (other than pursuant to the
Preferred Securities Guarantee or a substantially similar guarantee agreement
relating to a series of trust preferred securities substantially similar to the
Preferred Securities) if such guarantee ranks PARI PASSU with or junior in
interest to the Series A Debentures, if at such time (x) the Company shall be in
default with respect to its Guarantee Payments (as defined in the Preferred
Securities Guarantee) or other payment obligations under the Preferred
Securities Guarantee, (y) there shall have occurred any Event of Default with
respect to the Series A Debentures or (z) the Company shall have given notice of
its election to defer payments of interest on the Series A Debentures by
extending the interest payment period in accordance with Article Four hereof.
SECTION 6.02. Listing on the NYSE. In connection with the
distribution of the Series A Debentures to the holders of the Preferred
Securities upon a Dissolution Event, the Company will use its best efforts to
list such Series A Debentures on the New York Stock Exchange or on such other
exchange or quotation system as the Preferred Securities are then listed and
traded.
SECTION 6.03. Compliance With the Declaration of Trust. The Company
covenants and agrees for the benefit of the holders of the Preferred Securities
to comply fully with all
27
of its obligations and agreements under the Declaration of Trust, including,
without limitation, its obligations under Article 4 thereof.
SECTION 6.04. Covenants With Respect to Pogo Trust I. Prior to the
distribution of Series A Debentures to the holders of Preferred Securities upon
a Dissolution Event, the Company covenants and agrees for the benefit of the
holders of the Preferred Securities (i) to remain the sole direct or indirect
owner of all of the outstanding Common Securities and not to cause or permit the
Common Securities to be transferred except as permitted by the Declaration of
Trust, provided that any permitted successor of the Company under the Indenture
may succeed to the Company's ownership of the Common Securities, and (ii) use
reasonable efforts to cause Pogo Trust I to continue to be treated as a grantor
trust for United States federal income tax purposes, except in connection with a
Dissolution Event.
ARTICLE SEVEN
Form of Series A Debentures
SECTION 7.01. The Series A Debentures and the Trustee's Certificate
of Authentication to be endorsed thereon are to be substantially in the
following forms:
(FORM OF FACE OF SERIES A DEBENTURE)
[IF THE SERIES A DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT - This
Debenture is a Global Debenture within the meaning of the Indenture hereinafter
referred to and is registered in the name of a Depositary or a nominee of a
Depositary. This Debenture is exchangeable for Debentures registered in the
name of a person other than the Depositary or its nominee only in the limited
circumstances described in the Indenture, and no transfer of this Debenture
(other than a transfer of this Debenture as a whole by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary) may be registered except in limited
circumstances.
Unless this Debenture is presented by an authorized representative to
The Depository Trust Company (55 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx) to the issuer
or its agent for registration of transfer, exchange or payment, and any
Debenture 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.]
28
No. $
CUSIP NO. 000000XX0
POGO PRODUCING COMPANY
6 1/2% JUNIOR SUBORDINATED CONVERTIBLE DEBENTURE, SERIES A DUE 2029
POGO PRODUCING COMPANY, a corporation duly organized and existing
under the laws of the State of Delaware (herein referred to as the "Company",
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to _________________
_______, or registered assigns, the principal sum of _________ Dollars on
June 1, 2029, PROVIDED, if a Tax Event occurs, then the Company will have the
right (a) prior to the dissolution of Pogo Trust I, to shorten the Maturity Date
of this series of Debentures to the minimum extent required, but not earlier
than June 2, 2014, or (b) to direct the Property Trustee to dissolve Pogo Trust
I (if not previously dissolved) and shorten the Maturity Date of this series of
Debentures to the minimum extent required, but not earlier than June 2, 2014, in
each case such that in the opinion of counsel to the Company, experienced in
such matters, after shortening the Maturity Date, interest paid on this
series of Debentures will be deductible for federal income tax purposes, and to
pay interest on said principal sum from June 2, 1999 or from the most recent
interest payment date (each such date, an "Interest Payment Date") to which
interest has been paid or duly provided for, quarterly in arrears on March 1,
June 1, September 1 and December 1 of each year, commencing September 1, 1999 at
the rate of 6 1/2% per annum plus Additional Interest and Compounded Interest,
if any, until the principal hereof shall have become due and payable, and on
any overdue principal and premium, if any.
So long as no Event of Default has occurred and is continuing, the
Company shall have the right to defer payments of interest on this series of
Debentures by extending the interest payment period of this series of Debentures
at any time from time to time for up to 20 consecutive quarterly interest
periods (each such period an "Extended Interest Payment Period"), at the end of
which period the Company shall pay all interest accrued and unpaid thereon
(together with Compounded Interest and Additional Interest, if any); PROVIDED
THAT no Extended Interest Payment Period may extend beyond the Maturity Date or
redemption date of this series of Debentures. Prior to the termination of any
Extended Interest Payment Period, the Company may pay all or any portion of the
interest accrued on this series of Debentures on any Interest Payment Date to
holders of record on the regular record date for such Interest Payment Date or
prepay at any time all or any portion of the interest accrued during an
Extension Period or from time to time further extend such Extended Interest
Payment Period; PROVIDED THAT such Extended Interest Payment Period together
with all such further extensions thereof shall not exceed 20 consecutive
quarterly interest periods or extend beyond the Maturity Date or redemption date
of this series of Debentures. Upon the termination of any Extended Interest
Payment Period and the payment of all accrued and
29
unpaid interest, including any Additional Interest and Compounded Interest, the
Company may commence a new Extended Interest Payment Period, subject to the
foregoing requirements. No interest shall be due and payable during an Extended
Interest Payment Period, except at the end thereof. On the Interest Payment
Date occurring at the end of the Extended Interest Payment Period, the Company
shall pay all accrued and unpaid interest on this series of Debentures,
including any Additional Interest and Compounded Interest, to the holders of
this series of Debentures in whose names this series of Debentures are
registered in the Debenture Register (regardless of who the holders of record
may have been on other dates during the Extended Interest Payment Period) on the
record date for such Interest Payment Date.
The amount of interest payable on any Interest Payment Date shall be
computed on the basis of a 360-day year of twelve 30-day months, and for any
period shorter than a full quarterly interest period for which interest is
computed, interest shall be computed on the basis of the actual number of days
elapsed per 90-day quarter. In the event that any date on which interest is
payable on this series of Debentures is not a Business Day, then payment of
interest payable on such date shall be made on the next succeeding day which is
a Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on the date such payment was
originally payable. The interest installment so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the person in whose name this Debenture (or one or more
Predecessor Debentures, as defined in said Indenture) is registered at the close
of business on the regular record date for such interest installment, [IF POGO
TRUST I OR ITS PROPERTY TRUSTEE IS THE HOLDER OF RECORD OF THIS DEBENTURE --
which shall be the close of business on the Business Day next preceding such
Interest Payment Date, provided if the Preferred Securities of Pogo Trust I are
no longer in book-entry only form, the regular record dates shall be the close
of business on the fifteenth (15th) day of the month in which such Interest
Payment Date occurs] [IF PURSUANT TO THE PROVISIONS OF SECTION 2.11(c) OF THE
INDENTURE THIS series of Debentures IS NOT REPRESENTED BY A GLOBAL DEBENTURE --
which shall be the close of business on the fifteenth (15th) day of the month in
which such Interest Payment Date occurs.] Any such interest installment not
punctually paid or duly provided for shall forthwith cease to be payable to the
registered holders on such regular record date, and shall instead be paid to the
person in whose name this Debenture (or one or more Predecessor Debentures) is
registered at the close of business on a special record date to be fixed by the
Trustee for the payment of such defaulted interest, notice whereof shall be
given to the registered holders of this series of Debentures not less than 10
days prior to such special record date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
or quotation system on which the Debentures of this series may be listed or
traded, and upon such notice as may be required by such exchange or quotation
system, all as more fully provided in Section 2.03 of the Indenture. The
principal of and the interest on this
30
Debenture shall be payable at the Corporate Trust Office of the Trustee, in any
coin or currency of the United States of America which at the time of payment is
legal tender for payment of public and private debts; PROVIDED, HOWEVER, that
payment of interest may be made at the option of the Company by check mailed to
the registered holder at such addresses as shall appear in the Debenture
Register and that the payment of principal will only be made upon the surrender
of this Debenture to the Trustee. Notwithstanding the foregoing, so long as the
owner and record holder of this Debenture is the Property Trustee (as defined in
the Indenture), the payment of the principal of and interest (including
Additional Interest and Compounded Interest, if any) on this Debenture will be
made by the Company in immediately available funds on the payment date therefor
at such place and to the Property Account (as defined in the Indenture)
established and maintained by the Property Trustee pursuant to the Declaration
of Trust (as defined in the Indenture).
The indebtedness evidenced by this Debenture is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all Senior Debt (as defined in the Indenture), and this
Debenture is issued subject to the provisions of the Indenture with respect
thereto. Each holder of this Debenture, by accepting the same, (a) agrees to
and shall be bound by such provisions, (b) authorizes and directs the Trustee on
his behalf to take such action as may be necessary or appropriate to acknowledge
or effectuate the subordination so provided and (c) appoints the Trustee his
attorney-in-fact for any and all such purposes. Each holder hereof, by his
acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Debt, whether now outstanding or hereafter incurred, and waives reliance
by each such holder upon said provisions.
This Debenture shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any purpose
until the Certificate of Authentication hereon shall have been signed by or on
behalf of the Trustee.
The provisions of this Debenture are continued on the reverse side
hereof and such continued provisions shall for all purposes have the same effect
as though fully set forth at this place.
31
IN WITNESS WHEREOF, the Company has caused this Instrument to be
executed.
Dated:
------------------------
POGO PRODUCING COMPANY
By:
-------------------------------------
Name:
Title:
Attest:
By:
---------------------------
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures of the series of Debentures described in
the within-mentioned Indenture.
------------------------------ ------------------------------------
as Trustee or as Authentication Agent
By By
---------------------------- ----------------------------------
Authorized Signatory Authorized Signatory
32
(FORM OF REVERSE OF SERIES A DEBENTURE)
This Debenture is one of a duly authorized series of Debentures of the
Company (herein sometimes referred to as the "Debentures"), specified in the
Indenture, all issued or to be issued in one or more series under and pursuant
to an Indenture dated as of June 1, 1999 duly executed and delivered between the
Company and Wilmington Trust Company, a Delaware banking corporation, as Trustee
(herein referred to as the "Trustee"), as supplemented by the Supplemental
Indenture No. 1 dated as of June 1, 1999 ("Supplemental Indenture No. 1")
between the Company and the Trustee (said Indenture as so supplemented being
hereinafter referred to as the "Indenture"), to which Indenture and all
indentures supplemental thereto reference is hereby made for a description of
the rights, limitations of rights, obligations, duties and immunities thereunder
of the Trustee, the Company and the holders of the Debentures, and, to the
extent specifically set forth in the Indenture, the holders of Senior Debt and
Preferred Securities. By the terms of the Indenture, the Debentures are
issuable in series which may vary as to amount, date of maturity, rate of
interest and in other respects as in the Indenture provided. This series of
Debentures is designated the 6 1/2% Junior Subordinated Convertible Debentures,
Series A due 2029 and is limited in aggregate principal amount as specified in
said Supplemental Indenture No. 1.
Except as provided in the next paragraph, the Debentures of this
series shall not be redeemed by the Company prior to June 1, 2002. The Company
shall have the right to redeem this Debenture at the option of the Company, in
whole or in part, at any time from time to time on or after June 1, 2002 (an
"Optional Redemption"), upon not less than 30 nor more than 60 days' notice to
the holders of the Debentures of this series, during the twelve-month periods
commencing June 1 in each of the following years at the indicated redemption
price (expressed as a percentage of the principal amount of the Series A
Debentures being redeemed), together with any accrued but unpaid interest
thereon, including Compounded Interest and Additional Interest, if any, to, but
excluding, the date of such redemption (the "Optional Redemption Price"):
Redemption Price Redemption Price
---------------- ----------------
(% of (% of
principal principal
Year amount) Year amount)
---- ------ ---- ------
2002 . . . . . . 104.55% 2006 . . . . . . . . 101.95%
2003 . . . . . . 103.90% 2007 . . . . . . . . 101.30%
2004 . . . . . . 103.25% 2008 . . . . . . . . 100.65%
2005 . . . . . . 102.60% 2009 and thereafter . 100%
If the Debentures of this series are redeemed on any Interest Payment
Date, accrued and unpaid interest shall be payable to holders of record on the
relevant record date.
33
The Company shall not redeem any Debentures of this series unless all
accrued and unpaid interest thereon, including Compounded Interest and
Additional Interest, if any, has been paid for all quarterly interest periods
terminating on or prior to the date of notice of redemption.
If a Special Event shall occur and be continuing, this Series A
Debenture shall be exchangeable for Preferred Securities in accordance with
Section 3.05 of the Indenture or, in certain circumstances, redeemable by the
Company in accordance with Section 3.02 of the Indenture.
If a Tax Event shall occur or be continuing, the Company shall have
the right at any time to redeem the Debentures of this series in whole, but not
in part, for cash at the Tax Redemption Price, together with any accrued unpaid
interest thereon, including Compounded Interest and Additional Interest, if any,
to but excluding the date of such redemption within 90 days following the
occurrence of such Tax Event.
"Tax Event" means that the Company and the Regular Trustees shall
have received an opinion of nationally recognized independent 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 the theretofore
generally 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 than a remote risk that (i) Pogo Trust I is, or
will be within 90 days of the date thereof, subject to federal income tax
with respect to income accrued or received on the Debentures of this series,
(ii) Pogo Trust I 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 the Company to Pogo Trust I on the
Debentures of this series is not, or within 90 days of the date thereof will
not be, deductible by the Company for federal income tax purposes;
34
"Tax Redemption Price" means with respect to each $50 principal
amount of Series A Debentures (i) if the Series A Debentures are redeemed as
a result of the occurrence of a Tax Event prior to June 1, 2002, the greater
of (a) the total principal amount of such Series A Debenture or the
liquidation amount of the Preferred Securities, (b) the average of the
highest and lowest reported sale prices, regular way, of the Preferred
Securities over the five trading days immediately prior to the day on which
notice of such redemption is given, and (c) the average of the highest and
lowest reported sale prices, regular way, of Preferred Securities on the
trading day immediately prior to the day on which notice of such redemption
is given, or (ii) if the Series A Debentures are redeemed as a result of the
occurrence of a Tax Event on or after June 1, 2002, the principal amount of
such Series A Debentures. For purposes of clauses (b) and (c) above, if the
Series A Debentures have been distributed in exchange for Preferred
Securities, the references to sales prices shall be deemed to refer to the
sales price, of the Series A Debentures.
If the Debentures of this series are only partially redeemed by the
Company pursuant to an Optional Redemption, the Debentures shall be redeemed pro
rata or by lot or in some other equitable manner determined by the Trustee;
provided if, at the time of redemption, the Debentures of this series are
registered as a Global Debenture, the Depository shall determine the principal
amount of such Debentures of this series held by each holder of Debentures to be
redeemed in accordance with its customary procedures. Notwithstanding the
foregoing, if a partial redemption of the Debentures of this series 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, the Company shall not be permitted to effect such partial redemption and
will only redeem the Debentures of this series in whole.
In the event of redemption of this Debenture in part only, a new
Debenture or Debentures of this series for unredeemed portion hereof will be
issued in the name of the holder hereof upon the cancellation hereof.
Subject to the terms and conditions set forth in Article V of
Supplemental Indenture No. 1, this Debenture is convertible, at the option of
the holder hereof, into shares of Common Stock upon delivery by such holder to
the Conversion Agent of an irrevocable Notice of Conversion [IF DEBENTURE ISSUED
IN CERTIFICATED FORM -- and, surrender to the Conversion Agent by such holder of
this Debenture, duly endorsed or assigned to the Company in a blank.] In
addition a holder of Preferred Securities may exercise its right under the
Declaration of Trust to convert such Preferred Securities into Common Stock by
delivering to the Conversation Agent an irrevocable Notice of Conversion
directing
35
the Conversion Agent (i) to exchange such Preferred Security for the portion of
this Debenture held by the Trust and (ii) to immediately convert such portion of
this Debenture, on behalf of such holder, into Common Stock, and if such
Preferred Securities are in the form of Definitive Preferred Security
Certificates, surrendering such Definitive Preferred Security Certificates, duly
endorsed or assigned to the Company or in blank. A form of Notice of Conversion
is included at the end of this Debenture.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debentures of this
series may be declared, and upon such declaration shall become, due and payable,
in the manner, with the effect and subject to the conditions provided in the
Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Debentures of each series affected at the time
outstanding, as defined in the Indenture (and, if this Debenture is held as a
trust asset of Pogo Trust I, such consent of holders of the Preferred Securities
and the Common Securities as may be required under the Declaration of Trust), to
execute supplemental indentures for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Indenture or
of any supplemental indenture or of modifying in any manner the rights of the
holders of the Debentures; PROVIDED, HOWEVER, that no such supplemental
indenture shall (i) extend the fixed maturity of the Debentures of this series,
or reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, or reduce any premium payable upon the redemption
thereof, without the consent of the holder of each Debenture so affected or (ii)
reduce the aforesaid percentage of Debentures, the holders of which are required
to consent to any such supplemental indenture, without the consent of the
holders of each Debenture (and, if this Debenture is held as a trust asset of
Pogo Trust I, such consent of the holders of the Preferred Securities and the
Common Securities as may be required under the Declaration of Trust) then
outstanding and affected thereby. The Indenture also contains provisions
permitting the holders of a majority in aggregate principal amount of the
Debentures of a series at the time outstanding affected thereby (subject, in the
case of a Debenture held as a trust asset of Pogo Trust I and with respect to
which a securities exchange has not theretofore occurred, to such consent of
holders of Preferred Securities and Common Securities as may be required under
the Declaration of Trust), on behalf of the holders of the Debentures of such
series, to waive any past default in the performance of any of the covenants
contained in the Indenture, or established pursuant to the Indenture with
respect to such series, and its consequences, except a default in the payment of
the principal of or premium, if any, or interest on any of the Debentures of
such series as and when the same shall become due by the terms of the Debentures
of such series otherwise than by acceleration (unless such default
36
has been cured and a sum sufficient to pay all matured installments of interest
and principal and any premium has been deposited with the Trustee), or a call
for redemption of the Debentures of such series. Any such consent or waiver by
the registered holder of this Debenture (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such holder and upon all future
holders and owners of this Debenture and of any Debenture issued in exchange
herefor or in place hereof (whether by registration of transfer or otherwise),
irrespective of whether or not any notation of such consent or waiver is made
upon this Debenture.
Subject to Section 13.11 of the Indenture, no reference herein to the
Indenture (other than such Section) and no provision of this Debenture or of the
Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of and interest on this Debenture at the
time and place at the rate and in the money herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, this Debenture is transferable by the registered holder
hereof on the Debenture Register, upon surrender of this Debenture for
registration of transfer at the Corporate Trust Office of the Trustee
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company or the Trustee duly executed by the registered
holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Debentures of authorized denominations and for the same aggregate
principal amount and series will be issued to the designated transferee or
transferees. No service charge will be made for any such transfer, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this
Debenture, the Company, the Trustee, any paying agent and any Debenture
Registrar may deem and treat the registered holder hereof as the absolute owner
hereof (whether or not this Debenture shall be overdue and notwithstanding any
notice of ownership or writing hereon made by anyone other than the Debenture
Registrar) for the purpose of receiving payment of or on account of the
principal hereof and interest due hereon and for all other purposes, and neither
the Company nor the Trustee nor any paying agent nor any Debenture Registrar
shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Debenture, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, shareholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
37
[If certificated Debentures -- The Debentures of this series are
issuable only in registered form without coupons in denominations of $50 and any
integral multiple thereto.] [If Global Debenture -- This Global Debenture is
exchangeable for Debentures in definitive form under certain limited
circumstances set forth in the Indenture. Debentures of this series so issued
are issuable only in registered form without coupons in denominations of $50 or
any integral multiple thereof.] As provided in the Indenture and subject to
certain limitations [If Global Debenture -- herein and] therein set forth,
Debentures of this series [If Global Debenture -- so issued] are exchangeable
for a like aggregate principal amount of Debentures of this series of a
different authorized denomination, as requested by the holder surrendering the
same.
All terms used in this Debenture which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
The Company and, by its acceptance of this Debenture or a beneficial
interest therein, the holder of, and any Person that acquires a beneficial
interest in, this Debenture agree that for United States federal, state and
local tax purposes it is intended that this Debenture constitute indebtedness.
THE INDENTURE AND THIS DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES THEREOF.
38
FORM OF NOTICE OF CONVERSION
To: Pogo Producing Company
The undersigned owner of this Debenture hereby irrevocably exercises
the option to convert this Debenture, or the portion below designated, into
Common Stock of Pogo Producing Company in accordance with the terms of the
Indenture referred to in this Debenture, and directs that the shares 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
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.
Date: ____________, ____
in whole _______ Portions of Debenture to be in part converted ($50
or integral multiples thereof):
$
-------------------------------------------------
--------------------------------------------------
Signature (for conversion only)
Please Print or Typewrite Name and Address,
Including Zip Code, and Social Security or Other
Identifying Number
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
Signature Guarantee:*____________________________________
* 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.
39
ARTICLE EIGHT
Miscellaneous Provisions
SECTION 8.01. The Indenture, as supplemented by this Supplemental
Indenture, is in all respects ratified and confirmed. This Supplemental
Indenture No. 1 shall be deemed part of the Indenture in the manner and to the
extent herein and therein provided.
SECTION 8.02. Enforcement Rights of Holders of Preferred Securities.
A holder of Preferred Securities will (i) have the right to enforce the Property
Trustee's rights as holder of the Series A Debentures if the Property Trustee
fails to enforce its rights under the Series A Debentures and (ii) have the
right to directly institute a proceeding for enforcement of payment to such
holder of the principal of or interest on the Series A Debentures if an Event of
Default has occurred and is continuing and such event is attributed to the
failure of the Company to pay interest or principal on the Series A Debentures,
in the manner and to the extent set forth in Section 3.10(e) of the Declaration
of Trust.
SECTION 8.03. Recitals. The recitals herein contained are made by
the Company and not by the Trustee, and the Trustee assumes no responsibility
for the correctness thereof. The Trustee makes no representation as to the
validity or sufficiency of this Supplemental Indenture No. 1.
SECTION 8.04. Counterparts. This Supplemental Indenture No. 1 may be
executed in any number of counterparts each of which shall be an original; but
such counterparts shall together constitute but one and the same instrument.
SECTION 8.05. GOVERNING LAW. THIS SUPPLEMENTAL INDENTURE NO. 1 AND
EACH SERIES A DEBENTURE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF
THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES
THEREOF.
SECTION 8.06. Separability. In case any one or more of the
provisions contained in this Supplemental Indenture No. 1 or in the Series A
Debentures shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Supplemental Indenture No. 1 or of the Series A
Debentures, but this Supplemental Indenture No. 1 and the Series A Debentures
shall be construed as if such invalid or illegal or unenforceable provision had
never been contained herein or therein.
40
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture No. 1 to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, on the date or dates indicated in the
acknowledgments and as of the day and year first above written.
POGO PRODUCING COMPANY
By:
--------------------------------
Name:
Title:
Attest:
------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY
as Trustee
By:
--------------------------------
Name:
Title:
Attest:
------------------------------
Name:
Title:
41
