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Exhibit 4.1
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CP&L ENERGY, INC.
TO
THE CHASE MANHATTAN BANK,
Trustee
------------
Contingent Value Obligation Agreement
Dated as of November 30, 2000
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TABLE OF CONTENTS*
<TABLE>
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ARTICLE I Definitions and Other Provisions of General Application............................................. 1
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Section 101. Definitions.................................................................................... 1
Section 102. Compliance Certificates and Opinions........................................................... 7
Section 103. Form of Documents Delivered to Trustee......................................................... 8
Section 104. Acts of Holders................................................................................ 9
Section 105. Notices, Etc. to Trustee and Company........................................................... 10
Section 106. Notice to Holders of Securities; Waiver........................................................ 11
Section 107. Conflict with Trust Indenture Act.............................................................. 12
Section 108. Effect of Headings and Table of Contents....................................................... 12
Section 109. Successors and Assigns......................................................................... 12
Section 110. Separability Clause............................................................................ 12
Section 111. Benefits of Agreement.......................................................................... 12
Section 112. Governing Law.................................................................................. 12
Section 113. Legal Holidays................................................................................. 12
ARTICLE II Security Forms...................................................................................... 13
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Section 201. Forms Generally................................................................................ 13
Section 202. Form of Trustee's Certificate of Authentication................................................ 13
Section 203. Securities Issuable Initially in the Form of Global Securities................................. 13
ARTICLE III The Securities...................................................................................... 16
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Section 301. Title and Terms................................................................................ 16
Section 302. Number......................................................................................... 16
Section 304. Temporary Securities........................................................................... 17
Section 305. Registration, Registration of Transfer and Exchange............................................ 18
Section 306. Mutilated, Destroyed, Lost and Stolen Securities............................................... 20
Section 307. Payments in U.S. Currency...................................................................... 21
Section 308. Persons Deemed Owners.......................................................................... 21
Section 309. Cancellation by Security Registrar............................................................. 21
ARTICLE IV Covenants........................................................................................... 22
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Section 401. Payment of Amounts, if any, to Holders......................................................... 22
Section 402. Maintenance of Office or Agency................................................................ 22
Section 403. Money for Securities Payments to be Held in Trust.............................................. 22
Section 404. Corporate Existence............................................................................ 23
Section 405. Annual Officer's Certificate as to Compliance.................................................. 23
</TABLE>
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Agreement.
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<TABLE>
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Section 406. Good Faith and Fair Dealing.................................................................... 24
Section 407. Books and Records.............................................................................. 24
Section 408. Insurance...................................................................................... 24
Section 409. Indebtedness................................................................................... 24
Section 410. Prohibited Transactions........................................................................ 24
Section 411. Income Tax Treatment........................................................................... 24
ARTICLE V Events of Default; Remedies............................................................................... 25
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Section 501. Events of Default.............................................................................. 25
Section 502. Collection of Indebtedness and Suits for Enforcement by Trustee................................ 26
Section 503. Trustee May File Proofs of Claim............................................................... 26
Section 504. Trustee May Enforce Claims Without Possession of Securities.................................... 27
Section 505. Application of Money Collected................................................................. 27
Section 506. Limitation on Suits............................................................................ 27
Section 507. Unconditional Right of Holders to Receive Payments............................................. 28
Section 508. Restoration of Rights and Remedies............................................................. 28
Section 509. Rights and Remedies Cumulative................................................................. 28
Section 510. Delay or Omission Not Waiver................................................................... 29
Section 511. Control by Holders of Securities............................................................... 29
Section 512. Waiver of Past Defaults........................................................................ 29
Section 513. Undertaking for Costs.......................................................................... 30
Section 514. Operating and Ownership Decisions.............................................................. 30
Section 515. Tax Decisions and Procedures................................................................... 30
Section 516. Limitation of Liability........................................................................ 30
Section 517. No Rights of Acceleration; Unsecured Obligations............................................... 31
Section 518. Non Interest-Bearing Obligations............................................................... 31
Section. 519 No Redemption.................................................................................. 31
ARTICLE VI The Trustee............................................................................................... 31
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Section 601. Certain Duties and Responsibilities............................................................ 31
Section 602. Notice of Defaults............................................................................. 33
Section 603. Certain Rights of Trustee...................................................................... 33
Section 604. Not Responsible for Recitals or Issuance of Securities......................................... 34
Section 605. May Hold Securities............................................................................ 35
Section 606. Money Held in Trust............................................................................ 35
Section 607. Compensation and Reimbursement................................................................. 35
Section 608. Disqualification; Conflicting Interests........................................................ 36
Section 609. Corporate Trustee Required; Eligibility........................................................ 36
Section 610. Resignation and Removal; Appointment of Successor.............................................. 37
Section 611. Acceptance of Appointment by Successor......................................................... 38
Section 612. Merger, Conversion, Consolidation or Succession to Business.................................... 39
Section 613. Preferential Collection of Claims Against Company.............................................. 39
Section 614. Co-trustees and Separate Trustees.............................................................. 40
Section 615. Appointment of Authenticating Agent............................................................ 41
Section 616. Paying Agents Afforded Protection.............................................................. 42
</TABLE>
(11)
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<TABLE>
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ARTICLE VII Holders' Lists and Reports by Trustee and Company....................................................... 43
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Section 701. Lists of Holders............................................................................... 43
Section 702. Reports by Trustee and Company................................................................. 43
ARTICLE VIII Consolidation, Merger, Conveyance or Other Transfer..................................................... 44
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Section 801. Company May Consolidate, Etc., Only on Certain Terms........................................... 44
Section 802. Successor Corporation Substituted.............................................................. 45
ARTICLE IX Amendments.............................................................................................. 45
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Section 901. Amendments Without Consent of Holders.......................................................... 45
Section 902. Amendments With Consent of Holders............................................................. 46
Section 903. Execution of Amendments........................................................................ 47
Section 904. Effect of Amendments........................................................................... 48
Section 905. Conformity With Trust Indenture Act............................................................ 48
Section 906. Reference in Securities to Amendments.......................................................... 48
ARTICLE X Meetings of Holders; Action Without Meeting............................................................. 48
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Section 1001. Purposes for Which Meetings May be Called..................................................... 48
Section 1002. Call, Notice and Place of Meetings............................................................ 48
Section 1003. Persons Entitled to Vote at Meetings.......................................................... 49
Section 1004. Quorum; Action................................................................................ 49
Section 1005. Attendance at Meetings; Determination of Voting Rights; Conduct and Adjournment of Meetings... 50
Section 1006. Counting Votes and Recording Action of Meetings............................................... 51
Section 1007. Action Without Meeting........................................................................ 51
ARTICLE XI Immunity of Incorporators, Stockholders, Officers and Directors......................................... 51
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Section 1101. Liability Solely Corporate.................................................................... 51
ARTICLE XII Subordination of Securities............................................................................. 52
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Section 1201. Securities Subordinate to Senior Indebtedness................................................. 52
Section 1202. Payment Over of Proceeds of Securities........................................................ 52
Section 1203. Disputes with Holders of Certain Senior Indebtedness.......................................... 54
Section 1204. Subrogation................................................................................... 54
Section 1205. Obligation of the Company Unconditional....................................................... 55
Section 1206. Priority of Senior Indebtedness Upon Maturity................................................. 55
Section 1207. Trustee as Holder of Senior Indebtedness...................................................... 55
Section 1208. Notice to Trustee to Effectuate Subordination................................................. 55
Section 1209. Modification, Extension, etc. of Senior Indebtedness.......................................... 56
Section 1210. Trustee Has No Fiduciary Duty to Holders of Senior Indebtedness............................... 56
Section 1211. Paying Agents Other than the Trustee.......................................................... 56
Section 1212. Rights of Holders of Senior Indebtedness Not Impaired......................................... 56
</TABLE>
(iii)
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<TABLE>
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Section 1213. This Article Not to Prevent Events of Default................................................. 57
Section 1214. Effect of Subordination Provisions; Termination............................................... 57
ARTICLE XIII Maintenance of Contingency Funds......................................................................... 57
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Section 1301. Payments to Trustee........................................................................... 57
Section 1302. Maintenance of Accounts....................................................................... 57
Section 1303. Investment and Application of Contingency Funds............................................... 57
Section 1304. Officer's Certificates Relating to Contingency Funds; Tax Reporting........................... 58
Section 1305. Officer's Certificate Relating to Satisfaction of Payment Obligations......................... 59
</TABLE>
APPENDIX A - CERTIFICATE REPRESENTING THE SECURITIES
APPENDIX B - COMPANY ORDER, OFFICER'S CERTIFICATE, AND OPINION OF COUNSEL
APPENDIX C - ACCOUNTANTS' CERTIFICATE
(iv)
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CP&L ENERGY, INC.
Reconciliation and tie between Trust Indenture Act of 1939
and Contingent Value Obligation Agreement, dated as of November 30, 2000
Trust Indenture Act Section Agreement Section
(S)310 (a)(1) ..................................... 609
(a)(2) ..................................... 609
(a)(3) ..................................... 614
(a)(4) ..................................... Not Applicable
(b) ..................................... 608
610
(S)311 (a) ..................................... 613
(b) ..................................... 613
(c) ..................................... 613
(S)312 (a) ..................................... 701
(b) ..................................... 701
(c) ..................................... 701
(S)313 (a) ..................................... 702
(b) ..................................... 702
(c) ..................................... 702
(d) ..................................... 702
(S)314 (a) ..................................... 702
(a)(4) ..................................... 405
(b) ..................................... Not Applicable
(c)(1) ..................................... 102
(c)(2) ..................................... 102
(c)(3) ..................................... Not Applicable
(d) ..................................... Not Applicable
(e) ..................................... 102
(S)315 (a) ..................................... 601
603
(b) ..................................... 602
(c) ..................................... 601
(d) ..................................... 601
(e) ..................................... 513
(S)316 (a) ..................................... 511
512
(a)(1)(A)..................................... Not Applicable
511
(a)(1)(B)..................................... 512
(a)(2) ..................................... Not Applicable
(b) ..................................... 507
(S)317 (a)(1) ..................................... 502
(a)(2) ..................................... 503
(b) ..................................... 403
(S)318 (a) ..................................... 107
(v)
<PAGE>
CONTINGENT VALUE OBLIGATION AGREEMENT, dated as of November 30, 2000,
between CP&L ENERGY, INC., a corporation duly organized and existing under the
laws of the State of North Carolina (herein called the "Company"), having its
principal office at 411 Fayetteville Street, Raleigh, North Carolina 27601-1748,
and THE CHASE MANHATTAN BANK, a banking corporation organized under the laws of
the State of New York, having its principal corporate trust office at 450 West
33rd Street, New York, New York 10001, as Trustee (herein called the "Trustee").
RECITAL OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Agreement to provide for the issuance of its Contingent Value Obligations
(herein called the "Securities" or "CVOs"), to be issued as contemplated herein;
and all acts necessary to make this Agreement a valid agreement of the Company
have been performed.
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, capitalized terms used herein
shall have the meanings assigned to them in Article One of this Agreement.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE I
Definitions and Other Provisions of General Application
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Section 101. Definitions.
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For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(b) all terms used herein without definition which are defined in the
form of Security attached as Appendix A either directly or by reference
therein, have the meanings assigned to them therein;
(c) all terms used herein without definition which are defined in the
Trust Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(d) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in the
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United States, and, except as otherwise herein expressly provided, the
term "generally accepted accounting principles" with respect to any
computation required or permitted hereunder shall mean such accounting
principles as are generally accepted in the United States at the date of
such computation; provided, however, that in determining generally accepted
accounting principles applicable to the Company, the Company shall, to the
extent required, conform to any order, rule or regulation of any
administrative agency, regulatory authority or other governmental body
having jurisdiction over the Company; and
(e) the words "herein", "hereof' and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in that
Article.
"Act", when used with respect to any Holder of a Security, has the
meaning specified in Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent Members" means members of, or participants in, a Broker/Nominee
Depository.
"Agreement" means this instrument as originally executed and delivered
and as it may from time to time be supplemented or amended by one or more
agreements supplemental hereto entered into pursuant to the applicable
provisions hereof.
"Authorized Officer" means the Chairman of the Board, the President,
any Vice President, the Treasurer or any other duly authorized officer of the
Company.
"Board of Directors" means either the board of directors of the
Company or any committee thereof or any director or directors and/or officer or
officers of the Company to whom that board or committee shall have duly
delegated its authority duly authorized to act in respect of matters relating to
this Agreement.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Book-Entry Global Security" shall mean a Security registered in the
name of the Security Registrar or its nominee on the Book-Entry System to
represent, from time to time, all Securities outstanding under this Agreement
other than Securities represented by the
2
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Broker/Nominee Depository Global Securities or represented by Individually
Registered Securities issued pursuant to Section 305.
"Book-Entry Registered Holder" shall mean, with respect to a Security
held under the Book-Entry System, each Person reflected in the records of the
Security Registrar as the registered owner of Securities.
"Book-Entry System" shall mean a direct registration system approved
by the Commission and maintained by the Security Registrar as agent for and with
the approval of the Company whereby Securities issued under this Agreement may
be registered in the Holder's name in uncertificated, book-entry form on the
books of the Security Register maintained pursuant to Section 305.
"Broker/Nominee Depository" shall mean each clearing agency registered
under the Exchange Act or any other applicable statute or regulation, whether
one of more, and maintaining a book-entry system for participating brokers,
financial institutions and nominees pursuant to which beneficial ownership in
Securities reflected on the books and records of the Security Registrar may be
transferred or exchanged on the records of such clearing agency. Initially, the
sole Broker/Nominee Depository shall be The Depository Trust Company, New York,
New York, but the Security Registrar, with the written consent of the Company,
may from time to time establish relationships with any number of other
Broker/Nominee Depositories.
"Broker/Nominee Depository Global Security" shall mean a Security
registered in the name of any Broker/Nominee Depository or its nominee, all in
accordance with this Agreement, on the Book-Entry System maintained by the
Security Registrar and held by the Security Registrar as agent or custodian for
the Broker/Nominee Depository.
"Business Day", when used with respect to a Place of Payment or any
other particular location specified in the Securities or this Agreement, means
any day, other than a Saturday or Sunday, which is not a day on which banking
institutions or trust companies in such Place of Payment or other location are
generally authorized or required by law, regulation or executive order to remain
closed.
"Certificate" means the form of certificate representing the
Securities attached hereto as Appendix A.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, or,
if at any time after the date of execution and delivery of this Agreement such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body, if any, performing such duties at such
time.
"Company" means the Person named as the "Company" in the first
paragraph of this Agreement until a successor Person shall have become such
pursuant to the applicable provisions of this Agreement, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by an Authorized Officer and delivered to the
Trustee.
3
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"Contingency Funds" means amounts held by the Trustee in support of
the obligation of the Company to make payments to the Holders, as specified in
the Securities. Contingency Funds shall consist of amounts paid to the Trustee
pursuant to Section 1301, plus earnings on amounts held as Contingency Funds,
less Allocable Expenses.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of execution and delivery of this
Agreement is located at 450 West 33rd Street, New York, New York 10001.
"corporation" means a corporation, association, company, limited
liability company, joint stock company or business trust.
"Default Interest Rate" means the three month London Interbank Offered
Rate, as published in the Wall Street Journal, as such rate may change from time
to time, plus 300 basis points.
"Designated Trustee Office" means any office or offices of the
Trustee or any Affiliate, servicer or other agent of the Trustee from time to
time established by the Trustee in its discretion as the location at which
particular actions or functions will occur. The Trustee shall, upon the written
request of the Company or any Holder, provide the Company or such Holder with a
written list of its Designated Trustee Offices hereunder, but, in the absence of
such written request or unless otherwise provided herein or unless necessary for
the proper performance by the Trustee of its responsibilities hereunder, the
Trustee may establish and change its Designated Trustee Offices hereunder
without notice to the Company or any Holder.
"Dollar" or "$" means a dollar or other equivalent unit in such coin
or currency of the United States as at the time shall be legal tender for the
payment of public and private debts.
"Effective Time" has the meaning given thereto in the Exchange
Agreement.
"Event of Default" has the meaning specified in Section 501.
"Exchange Agreement" shall mean the Amended and Restated Agreement and
Plan of Exchange dated March 3, 2000 between the Company, Carolina Power & Light
Company and Florida Progress Corporation.
"Global Security" shall mean a Book-Entry Global Security or a
Broker/Nominee Depository Global Security issued in accordance with the terms of
this Agreement and representing outstanding CVOs.
"Governmental Authority" means the government of the United States or
of any State or Territory thereof or of the District of Columbia or of any
county, municipality or other political subdivision of any thereof, or any
department, agency, authority or other instrumentality of any of the foregoing.
"Government Obligations" means:
4
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(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
entitled to the benefit of the full faith and credit thereof;
(b) certificates, depositary receipts or other instruments which
evidence a direct ownership interest in obligations described in clause (a)
above or in any specific interest or principal payments due in respect
thereof; provided, however, that the custodian of such obligations or
specific interest or principal payments shall be a bank or trust company
(which may include the Trustee or any Paying Agent) subject to United
States federal or state supervision or examination with a combined capital
and surplus of at least $100,000,000; and provided, further, that except as
may be otherwise required by law, such custodian shall be obligated to pay
to the holders of such certificates, depositary receipts or other
instruments the full amount received by such custodian in respect of such
obligations or specific payments and shall not be permitted to make any
deduction therefrom; and
(c) money market funds subject to the provisions of Rule 2a-7 under
the Investment Company Act of 1940 which invest solely in obligations
described in paragraphs (a) and (b) above.
"Holder" shall mean, (a) in the case of a Security held under the
Book-Entry System, the Book-Entry Registered Holder, (b) in the case of a
Broker/Nominee Global Security, the applicable Broker/Nominee Depository with
respect to that Broker/Nominee Depository Global Security, and (c) in the case
of an Individually Registered Security, the Physical Certificate Registered
Holder.
"Individually Registered Security" means a Security evidenced by a
physical Certificate issued, at the request of a Holder, pursuant to Section 305
of this Agreement in exchange for any Securities held by such Holder in
uncertificated form on the Book-Entry System.
"Maturity", when used with respect to any Senior Indebtedness, means
the date on which the principal of such indebtedness or an installment of
principal becomes due and payable as provided therein.
"Officer's Certificate" means a certificate signed by an Authorized
Officer and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, or other counsel acceptable to the Trustee.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Agreement, except:
(a) Securities theretofore canceled by the Trustee or the Security
Registrar or delivered to the Trustee or the Security Registrar for
cancellation; and
5
<PAGE>
(b) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Agreement, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it and the Company that such Securities are held by a bona
fide purchaser or purchasers in whose hands such Securities are valid
obligations of the Company;
provided, however, that in determining whether or not the Holders of the
requisite amount of the Securities Outstanding under this Agreement have given
any request, demand, authorization, direction, notice, consent or waiver
hereunder or whether or not a quorum is present at a meeting of Holders of
Securities, Securities owned by the Company or any other obligor upon the
Securities or any Affiliate of the Company or of such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver or upon any such
determination as to the presence of a quorum, only Securities which the Trustee
knows to be so owned shall be so disregarded.
"Paying Agent" means any Person authorized by the Company to make
payments on any Securities on behalf of the Company.
"Payment Date" means the date specified in the applicable Officer's
Certificate as a date on which the Trustee or the Company is to make a payment
to the Holders or the Trustee is to make a payment to the Company.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, trust or unincorporated organization or any
Governmental Authority.
"Physical Certificate Registered Holder" shall mean, with respect to
an Individually Registered Security, the Person reflected on the Security
Register maintained by the Security Registrar as agent for the Company as the
registered owner of such Security.
"Place of Payment", when used with respect to the Securities, means
the offices or agencies of the Paying Agent maintained for that purpose from
time to time, or at any other office or agency maintained by the Company for
such purpose; provided, however, that at the option of the Company, payment may
be made by check or wire transfer.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed (to the extent
lawful) to evidence the same debt as the mutilated, destroyed, lost or stolen
Security.
"Responsible Officer", when used with respect to the Trustee, means
any officer or other authorized representative of the Trustee assigned by the
Trustee to administer its corporate trust matters.
"Securities" has the meaning stated in the first recital of this
Agreement and more particularly means any securities authenticated and delivered
under this Agreement.
6
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"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Senior Indebtedness" means all obligations of, or guaranteed or
assumed by, the Company for borrowed money, or for the payment of money relating
to any lease which is capitalized on the consolidated balance sheet of the
Company and its subsidiaries in accordance with generally accepted accounting
principles as in effect from time to time, or evidenced by bonds, debentures,
notes or other similar instruments, and in each case, amendments, renewals,
extensions, modifications and refundings of any such indebtedness or
obligations, whether existing as of the date of this Agreement or subsequently
incurred by the Company. Notwithstanding the foregoing, "Senior Indebtedness"
will not include (A) the obligations evidenced by the Securities, (B)
obligations of the Company that by their terms are expressly pari passu in right
of payment to the Securities, (C) obligations of the Company to any subsidiary
of the Company or any other affiliate of the Company and (D) obligations which
when incurred and without regard to any election under Section 1111(b) of the
Federal Bankruptcy Code are without recourse to the Company.
"Trust Indenture Act" means, the Trust Indenture Act of 1939 as in
force and effect as of the date of execution of this Agreement; provided,
however, that in the event the Trust Indenture Act of 1939 is succeeded by
another statute or is amended after such date, "Trust Indenture Act" shall mean
such successor statute or the Trust Indenture Act of 1939, as so amended, to the
extent such successor statute is applicable to this Agreement or to the actions
of the Company or the Trustee under or pursuant to this Agreement.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Agreement until a successor Trustee shall have become such
with respect to the Securities pursuant to the applicable provisions of this
Agreement, and thereafter "Trustee" shall mean or include each Person who is
then a Trustee hereunder, and if at any time there is more than one such Person,
"Trustee" as used with respect to the Securities shall mean the Trustee with
respect to the Securities.
"United States" means the United States of America, its territories,
its possessions and other areas subject to its political jurisdiction.
Section 102. Compliance Certificates and Opinions.
Except as otherwise expressly provided in this Agreement, upon any
application or request by the Company to the Trustee to take any action under
any provision of this Agreement, the Company shall furnish to the Trustee an
Officer's Certificate stating that all conditions precedent, if any, provided
for in this Agreement relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate or opinion need be
furnished.
7
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Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement shall include:
(a) a statement that each Person signing such certificate or opinion
has read such covenant or condition and the definitions herein relating
thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such Person, such Person
has made such examination or investigation as is necessary to enable such
Person to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each such Person,
such condition or covenant has been complied with.
Section 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such officer's certificate or opinion are
based are erroneous. Any such certificate or Opinion of Counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Whenever, subsequent to the receipt by the Trustee of any Board
Resolution, Officer's Certificate, Opinion of Counsel or other document or
instrument, a clerical, typographical or other inadvertent or unintentional
error or omission shall be discovered therein, a new document or instrument may
be substituted therefor in corrected form with the same force and effect as if
originally filed in the corrected form and, irrespective of the date or dates of
the actual execution and/or delivery thereof, such substitute document or
instrument shall be deemed
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to have been executed and/or delivered as of the date or dates required with
respect to the document or instrument for which it is substituted. Anything in
this Agreement to the contrary notwithstanding, if any such corrective document
or instrument indicates that action has been taken by or at the request of the
Company which could not have been taken had the original document or instrument
not contained such error or omission, the action so taken shall not be
invalidated or otherwise rendered ineffective but shall be and remain in full
force and effect, (except to the extent that such action was a result of willful
misconduct or bad faith or had or could be expected to have an adverse effect on
the Holders of the Securities). Without limiting the generality of the
foregoing, any Securities issued under the authority of such defective document
or instrument shall nevertheless be the valid obligations of the Company
entitled to the benefits of this Agreement equally and ratably with all other
Outstanding Securities, except as aforesaid.
Section 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
election, waiver or other action provided by this Agreement to be made,
given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person
or by an agent duly appointed in writing or, alternatively, may be embodied
in and evidenced by the record of Holders voting in favor thereof, either
in person or by proxies duly appointed in writing, at any meeting of
Holders duly called and held in accordance with the provisions of Article
Ten, or a combination of such instruments and any such record. Except as
herein otherwise expressly provided, such action shall become effective
when such instrument or instruments or record or both are delivered to the
Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments and any such record (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Holders signing such instrument or instruments and so voting
at any such meeting. Proof of execution of any such instrument or of a
writing appointing any such agent, or of the holding by any Person of a
Security, shall be sufficient for any purpose of this Agreement and
(subject to Section 601) conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section. The record of any
meeting of Holders shall be proved in the manner provided in Section 1006.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof or may be proved in any other manner which the Trustee
and the Company deem sufficient. Where such execution is by a signer
acting in a capacity other than his individual capacity, such certificate
or affidavit shall also constitute sufficient proof of his authority.
(c) The aggregate number (except as otherwise contemplated in the
proviso to the definition of Outstanding) and serial numbers of Securities
held by any Person, and the date of holding the same, shall be proved by
the Security Register.
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(d) Any request, demand, authorization, direction, notice, consent,
election, waiver or other Act of a Holder shall bind every future Holder of
the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee
or the Company in reliance thereon, whether or not notation of such action
is made upon such Security.
(e) Until such time as written instruments shall have been delivered
to the Trustee with respect to the requisite percentage of the aggregate
number of Securities for the action contemplated by such instruments, any
such instrument executed and delivered by or on behalf of a Holder may be
revoked with respect to any or all of such Securities by written notice by
such Holder or any subsequent Holder, proven in the manner in which such
instrument was proven.
(f) Securities authenticated and delivered after any Act of Holders
may, and shall if required by the Trustee, bear a notation in form approved
by the Trustee as to any action taken by such Act of Holders. If the
Company shall so determine, new Securities so modified as to conform, in
the opinion of the Trustee and the Company, to such action may be prepared
and executed by the Company and authenticated and delivered by the Trustee
in exchange for Outstanding Securities.
(g) If the Company shall solicit from Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company
may, at its option, fix in advance a record date for the determination of
Holders entitled to give such request, demand, authorization, direction,
notice, consent, waiver or other Act, but the Company shall have no
obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of record at the
close of business on the record date shall be deemed to be Holders for the
purposes of determining whether Holders of the requisite proportion of the
Outstanding Securities have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other
Act, and for that purpose the Outstanding Securities shall be determined as
of the record date.
Section 105. Notices, Etc. to Trustee and Company.
Any request, demand, authorization, direction, notice, consent,
election, waiver or Act of Holders or other document provided or permitted by
this Agreement to be made upon, given or furnished to, or filed with, the
Trustee by any Holder or by the Company, or the Company by the Trustee or by any
Holder, shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and delivered personally to an officer or
other responsible employee of the addressee, or transmitted by facsimile
transmission or other direct written electronic means to such telephone number
or other electronic communications address as the parties hereto shall from time
to time designate, or transmitted by certified or registered mail, charges
prepaid, to the applicable address set opposite such party's name below or to
such other address as either party hereto may from time to time designate:
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If to the Trustee, to:
The Chase Manhattan Bank
c/o Chase National Corporate Services, Inc.
3800 Colonnade Parkway
Suite 490
Birmingham, Alabama 35243
Telephone: (205) 968-0500
Telecopy: (205) 968-9109
If to the Company, to:
CP&L Energy, Inc.
411 Fayetteville Street
Raleigh, North Carolina 27601-1768
Attention: Mark F. Mulhern, Treasurer
Telephone: (919) 546-6373
Telecopy: (919) 546-7826
Any communication contemplated herein shall be deemed to have been
made, given, furnished and filed if personally delivered, on the date of
delivery, if transmitted by facsimile transmission or other direct written
electronic means, upon the date of receipt of the transmission, and if
transmitted by certified or registered mail, on the date of receipt.
Section 106. Notice to Holders of Securities; Waiver.
Except as otherwise expressly provided herein, where this Agreement
provides for notice to Holders of any event, such notice shall be sufficiently
given, and shall be deemed given, to Holders if in writing and mailed, first-
class postage prepaid, to each Holder affected by such event, at the address of
such Holder as it appears in the Security Register, not later than the latest
date, and not earlier than the earliest date, prescribed for the giving of such
notice.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice to
Holders by mail, then such notification as shall be made with the approval of
the Trustee shall constitute a sufficient notification for every purpose
hereunder. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders.
Any notice required by this Agreement may be waived in writing by the
Person entitled to receive such notice, either before or after the event
otherwise to be specified therein, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
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Section 107. Conflict with Trust Indenture Act.
If any provision of this Agreement limits, qualifies or conflicts with
another provision hereof which is required or deemed to be included in this
Agreement by, or is otherwise governed by, any of the provisions of the Trust
Indenture Act, such other provision shall control; and if any provision hereof
otherwise conflicts with the Trust Indenture Act, the Trust Indenture Act shall
control.
Section 108. Effect of Headings and Table of Contents.
The Article and Section headings in this Agreement and the Table of
Contents are for convenience only and shall not affect the construction hereof.
Section 109. Successors and Assigns.
All covenants and agreements in this Agreement by the Company shall
bind its successors and assigns, whether so expressed or not.
Section 110. Separability Clause.
In case any provision in this Agreement or the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 111. Benefits of Agreement.
Nothing in this Agreement or the Securities, express or implied, shall
give to any Person, other than the parties hereto, their successors hereunder,
the Holders, and so long as the notice described in Section 1214 hereof has not
been given, the holders of Senior Indebtedness, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
Section 112. Governing Law.
This Agreement and the Securities shall be governed by and construed
in accordance with the laws of the State of New York, without regard to
conflicts of law principles, except to the extent that the law of any other
jurisdiction shall be mandatorily applicable.
Section 113. Legal Holidays.
In any case where any date for an amount payable under the Securities
shall not be a Business Day at any Place of Payment, then payment need not be
made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on the date originally payable, and, if such payment is made or duly
provided for on such Business Day, then interest, if interest otherwise would
accrue and be payable under the terms of the Securities, shall not accrue on the
amount so payable for the period from and after the date originally payable to
such Business Day.
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ARTICLE II
Security Forms
--------------
Section 201. Forms Generally.
The definitive Securities shall be in the form set forth in Appendix
A, the terms of which are hereby incorporated by reference and made a part of
this Agreement for all purposes, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Agreement, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with the rules of any Book-Entry System or securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities.
The Securities shall be issuable in registered form without coupons.
The definitive Securities shall be produced in such manner as shall be
determined by the officers executing such Securities, as evidenced by their
execution thereof.
Section 202. Form of Trustee's Certificate of Authentication.
The Trustee's certificate of authentication shall be in substantially
the form set forth below:
This is one of the Securities referred to in the within-
mentioned Agreement.
Dated:____________
The Chase Manhattan Bank
as Trustee
By: _____________________________
Authorized Representative
Section 203. Securities Issuable Initially in the Form of Global Securities.
(a) Upon the satisfaction by the Company of the conditions precedent
to the original issuance of the CVOs under Section 303, the Company shall
execute and the Trustee shall, in accordance with Section 303 and the
Company Order delivered to the Trustee thereunder, authenticate and deliver
a Broker/Nominee Depository Global Security representing the number of CVOs
to be issued in exchange for shares of common stock of Florida Progress
Corporation immediately prior to the Effective Time (as defined in the
Exchange Agreement) reflected on the books of the Exchange Agent as held by
The Depository Trust Company or its nominee and authenticate and deliver a
Book-Entry Global Security for the balance of the CVOs to be issued under
Section 302. On the date of original issuance of the CVOs the
Broker/Nominee Depository Global
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Security and the Book-Entry Global Security, taken together, shall
represent the aggregate number of authorized and issued CVOs outstanding
under this Agreement, and subsequent to the original issuance of the CVOs,
the aggregate number of CVOs Outstanding shall not exceed the aggregate
number of CVOs represented by the Book-Entry Global Security, the
Broker/Nominee Depository Global Security and the Individually Registered
Securities. The Book-Entry Global Security (1) shall be registered in the
name of the Security Registrar or its nominee, and (2) shall be delivered
to the Security Registrar or pursuant to the Security Registrar's
instruction. The Broker/Nominee Depository Global Security (1) shall be
registered on the Book-Entry System in the name of the Broker/Nominee
Depository or its nominee, and (2) shall be delivered to the Security
Registrar (and, after the receipt by the Security Registrar of written
notification from the Exchange Agent under the Exchange Agreement of the
satisfaction by The Depository Trust Company of the conditions to the
receipt of CVOs by holders of Florida Progress Corporation common stock
held by The Depository Trust Company or its nominee, shall be held by the
Security Registrar as agent or custodian for the Broker/Nominee
Depository). The Security Registrar shall, from time to time, increase or
decrease on the Book-Entry System or reflect on the Book-Entry Global
Certificate or the Broker/Nominee Depository Global Security, as
applicable, the number of CVOs represented by the Book-Entry Global
Certificate and the Broker/Nominee Depository Global Certificate as
appropriate in order to reflect the number of CVOs Outstanding, the
exchange of CVOs represented by Global Securities for Individually
Registered Securities, and exchanges of CVOs represented by the Book-Entry
Global Security for CVOs represented by a Broker/Nominee Depository Global
Security, and vice versa.
(b) Subject to the provisions of paragraph (c) below, a Global
Security may be transferred, in whole but not in part and in the manner
provided in Section 305, only (1) in the case of the Book-Entry Global
Security, to a nominee of the Security Registrar, or to the Security
Registrar, or to a successor Security Registrar selected or approved by the
Company, or to a nominee of such successor Security Registrar, or (2) in
the case of a Broker/Nominee Depository Global Security, to a nominee for
the Broker/Nominee Depository, or to the Broker/Nominee Depository, or to a
successor Broker/Nominee Depository for such Broker/Nominee Depository
Global Security selected or approved by the Security Registrar with the
consent of the Company, or to a nominee of such successor Broker/Nominee
Depository. Nothing contained in this paragraph (b) shall restrict or
diminish the right of any Book-Entry Registered Holder to obtain, upon
request pursuant to Section 305, one or more Individually Registered
Securities in exchange for all or a portion of the Securities registered to
such Holder on the Book-Entry System.
(c) (1) If at any time the Security Registrar notifies the Company
that it is unwilling or unable to continue as a Security Registrar or to
maintain the Book-Entry System or if at any time any Security Registrar
shall no longer be eligible or in good standing under the Exchange Act, or
other applicable statute or regulation, the Company, with the approval of
the Trustee, shall appoint a successor Security Registrar to maintain the
Security Register and the Book-Entry System. If a successor Security
Registrar is not appointed within 90 days after the Company receives such
notice or becomes aware of such ineligibility, or if the Book-Entry System
no longer can be maintained or is no
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longer available, the Company will execute, and the Trustee, upon receipt
of a Company Order for the authentication and delivery of Individually
Registered Securities in exchange for the Book-Entry Global Security, will
authenticate and deliver Individually Registered Securities of like tenor
and terms in definitive form in a number equal to the number of Securities
represented by the Book-Entry Global Security in exchange for such Book-
Entry Global Security. Such Securities will be issued in registered form to
such Persons as are then reflected on the Book-Entry System as the Book-
Entry Registered Holders.
(2) If at any time a Broker/Nominee Depository for a Broker/Nominee
Depository Global Security notifies the Security Registrar that it is
unwilling or unable to continue as a Broker/Nominee Depository for such
Broker/Nominee Depository Global Security or if at any time any such
Broker/Nominee Depository shall no longer be eligible or in good standing
under the Exchange Act, or other applicable statute or regulation, the
Security Registrar, with the written instructions of the Company, shall
appoint a successor Broker/Nominee Depository with respect to such
Broker/Nominee Depository Global Security. If a successor Broker/Nominee
Depository for such Broker/Nominee Depository Global Security is not
appointed within 90 days after the Security Registrar receives such notice
or becomes aware of such ineligibility, the Company will execute, and the
Trustee, upon receipt of a Company Order for the authentication and
delivery of Individually Registered Securities in exchange for such
Broker/Nominee Depository Global Security, will authenticate and deliver
Individually Registered Securities of like tenor and terms in definitive
form in a number equal to the number of Securities represented by the
Broker/Nominee Depository Global Security in exchange for such
Broker/Nominee Depository Global Security. Such Securities will be issued
in registered form to such Persons as are specified by the Broker/Nominee
Depository or shall be exchanged, in accordance with procedures established
by the Security Registrar and approved by the Company, for Securities
registered in book-entry, uncertificated form on the Book-Entry System to
Persons specified by the Broker/Nominee Depository.
(3) In any exchange provided for in any of the preceding two
paragraphs, the Company will execute and the Trustee will authenticate and
deliver Individually Registered Securities in definitive form in authorized
denominations (or, if applicable, shall be exchanged, in accordance with
procedures established by the Security Registrar and approved by the
Company, for Securities registered in book-entry, uncertificated form on
the Book-Entry System to Persons specified by a Broker/Nominee Depository).
Upon the exchange of an entire Global Security for Individually Registered
Securities, such Global Security shall be cancelled by the Trustee.
(4) Any endorsement of a Global Security to reflect the amount, or any
increase or decrease in the amount, or changes in the rights of Holders, of
Outstanding Securities represented thereby shall be made in such manner and
by such Person or Persons as shall be specified therein or in the Company
Order to be delivered pursuant to Section 303 with respect thereto.
Subject to the provisions of Section 303, the Trustee shall deliver and
redeliver any such Global Security in the manner and upon instructions
given by the Person or Persons specified therein or in the applicable
Company Order. If a
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Company Order pursuant to Section 303 has been, or simultaneously is,
delivered, any instructions by the Company with respect to such Global
Security shall be in writing but need not be accompanied by or contained in
an Officer's Certificate and need not be accompanied by an Opinion of
Counsel.
ARTICLE III
The Securities
--------------
Section 301. Title and Terms.
The Securities shall be known and designated as the "Contingent Value
Obligations" of the Company. The terms of the Security shall be described in
the form of Security attached as Appendix A, as may be modified pursuant to
Section 906.
Section 302. Number
When and if issued under this Agreement, one whole CVO shall be issued
under this Agreement in exchange for each whole share of common stock of Florida
Progress Corporation outstanding immediately prior to the Effective Time (as
defined in the Exchange Agreement) and one whole CVO shall be issued under this
Agreement in exchange for each fractional share of common stock of Florida
Progress Corporation outstanding immediately prior to the Effective Time (as
defined in the Exchange Agreement), all as reflected in the Company Order
delivered to the Trustee pursuant to Section 303 of this Agreement. The
aggregate number of CVOs that may be issued pursuant to this Agreement shall
equal the sum of (i) the total number of whole shares and (ii) the total number
of holders of record of fractional shares of common stock of Florida Progress
Corporation outstanding immediately prior to the Effective Time (as defined in
the Exchange Agreement) as reflected in the Company Order delivered to the
Trustee pursuant to Section 303 of this Agreement. In the event that it is
determined that the number of CVOs represented by the initial Global Securities
executed and authenticated pursuant to the initial Company Order delivered under
Section 303 is less than or is more than the total number of CVOs to be issued
pursuant to this Section 302, the Company shall promptly take action to cause
additional CVOs to be issued pursuant to this Agreement or to cause any excess
CVOs to be canceled as required to satisfy its obligations under the Exchange
Agreement. The Trustee shall be entitled to receive and rely upon an additional
Company Order, Officer's Certificate and Opinion of Counsel in connection with
the authentication and delivery of Securities and the cancellation of any
previously issued CVOs in accordance with the immediately preceding sentence.
Section 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by an
Authorized Officer but need not be attested. The signature of any or all of
these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at the time of execution Authorized Officers of the Company shall bind
the Company,
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notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
The Trustee shall authenticate and deliver the Securities, for
original issue, in accordance with the Company Order referred to below, upon
receipt by the Trustee of:
(a) A Company Order, Officer's Certificate and Opinion of Counsel in
substantially the form attached hereto as Appendix B; and
(b) The Securities executed on behalf of the Company by an Authorized
Officer.
At any time and from time to time after execution of this Agreement,
the Company may deliver Securities executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Securities; and the Trustee, in accordance with such Company
Order, shall authenticate and deliver such Securities as provided in this
Agreement and not otherwise.
Each Security shall be dated the date of its authentication.
The authorized denomination of any Certificate representing Securities
executed and authenticated under this Agreement shall be one CVO or any whole
multiple thereof. Fractional Securities shall not be authorized.
No Security shall be entitled to any benefit under this Agreement or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee or its agent by manual signature, and such certificate
upon any Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder and is entitled to
the benefits of this Agreement.
Section 304. Temporary Securities.
Pending the preparation of definitive Securities the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued, with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be issued without unreasonable delay. After the preparation of
definitive Securities the temporary Securities shall be exchangeable, without
charge to the Holder thereof, for definitive Securities upon surrender of such
temporary Securities at the office or agency of the Company maintained pursuant
to Section 402 in a Place of Payment for such Securities. Upon such
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surrender of temporary Securities, the Company shall, except as aforesaid,
execute and the Trustee shall authenticate and deliver in exchange therefor
definitive Securities of like tenor.
Until exchanged in full as hereinabove provided, temporary Securities
shall in all respects be entitled to the same benefits under this Agreement as
definitive Securities of like tenor authenticated and delivered hereunder.
Section 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept in each office designated pursuant
to Section 402, with respect to the Securities, a register (all registers kept
in accordance with this Section being collectively referred to as the "Security
Register") in which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Securities and the
registration of transfer thereof. The Company shall designate one Person to
maintain the Security Register for the Securities on a consolidated basis, and
such Person is referred to herein, with respect to the Securities, as the
"Security Registrar." Anything herein to the contrary notwithstanding, the
Company may designate one or more of its offices as an office in which a
register with respect to the Securities shall be maintained, and the Company may
designate itself the Security Registrar. The Security Register shall be open
for inspection by the Trustee and the Company at all reasonable times.
To the fullest extent permitted by law, the Security Registrar shall
at all times maintain a Book-Entry System under which Securities may be
registered in book-entry form without the issuance of physical Certificates to
Holders and under which each participating Holder will receive a periodic
advice or statement of account from the Security Registrar or its agent
indicating the number of Securities registered to the Holder in book-entry form.
The Book-Entry Global Security will be issued to the Security Registrar, for the
benefit of the Book-Entry Registered Holders, and will represent all CVOs held
by Book-Entry Registered Holders.
The Company, any other obligor upon the Securities or the Trustee
shall treat as the Act of a Holder any instrument or writing of any Person
identified by the Security Registrar as a Book-Entry Registered Holder and any
Person identified by the Security Registrar and the applicable Broker/Nominee
Depository as the owner of a beneficial interest in a Broker/Nominee Depository
Global Security, provided that the fact and date of the execution of such
instrument or writing is proved in accordance with Section 104(b).
The Holder of any Securities held in book-entry, uncertificated form
under the Book-Entry System shall be entitled upon written request submitted to
the Security Registrar to receive one or more Certificates evidencing
Individually Registered Securities in exchange for all or a portion of the
Securities registered to such Holder on the Book-Entry System. Whenever any
Book-Entry Registered Holder requests the issuance of Individually Registered
Securities in exchange for all or a portion of the Securities registered to such
Holder on the Book-Entry System, the Company shall execute, and the Trustee or
its Authenticating Agent shall authenticate and deliver, one or more
Certificates in authorized denominations evidencing the Individually Registered
Securities which the Holder making the exchange is entitled to receive.
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Upon surrender for registration of transfer of any Individually
Registered Security at the office or agency of the Company maintained pursuant
to Section 402 in a Place of Payment for the Securities, the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Individually Registered
Securities of like tenor.
Any Individually Registered Security may be exchanged at the option of
the Holder, for one or more new Individually Registered Securities that
represent in the aggregate the same number of CVOs as the Individually
Registered Security surrendered, upon surrender of the Individually Registered
Securities to be exchanged at any such office or agency. Whenever any
Individually Registered Securities are so surrendered for exchange, the Company
shall execute, and the Trustee or its Authenticating Agent shall authenticate
and deliver, the Individually Registered Securities which the Holder making the
exchange is entitled to receive.
At the written request of any Individually Registered Security Holder
submitted to the Security Registrar and upon surrender of the physical
certificate evidencing the applicable Individually Registered Security at the
office or agency of the Company maintained pursuant to Section 402 in a Place of
Payment for the Securities, any Individually Registered Security Holder shall be
entitled to exchange all or any portion of the Securities represented by any
Individually Registered Security for Securities held in book-entry,
uncertificated form on the Book-Entry System. Whenever any Individually
Registered Securities are so surrendered for exchange for Securities in
uncertificated, book-entry form, the Security Registrar shall issue an advice to
the Holder evidencing the registration of additional Securities to the Holder on
the Book-Entry System and the Company shall execute, and the Trustee or its
Authenticating Agent shall authenticate and deliver, a new Individually
Registered Security or Securities in authorized denominations to evidence the
balance of the Securities which the Holder making the exchange is entitled to
receive.
All Securities delivered upon any registration of transfer or exchange
of Securities shall be valid obligations of the Company, evidencing the same
rights and entitled to the same benefits under this Agreement, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company, the Trustee or the
Security Registrar) be duly endorsed or shall be accompanied by a written
instrument of transfer in form satisfactory to the Company, the Trustee or the
Security Registrar, as the case may be, duly executed by the Holder thereof or
his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304 or 906 not involving any transfer.
None of the Company, the Trustee or any Paying Agent in their
capacities as such will have any responsibility or liability for any aspect of
the records relating to or payments made
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on account of beneficial ownership interests of a Broker/Nominee Depository
Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
Notwithstanding the foregoing, the Company, any other obligor upon the
Securities, the Trustee and any agent of any of them shall give effect to any
written certification, proxy or other authorization furnished by a
Broker/Nominee Depository, and shall not impair, as between the Broker/Nominee
Depository and its Agent Members, the operation of customary practices governing
the exercise of the rights of a beneficial owner of any Broker/Nominee
Depository Global Security. The registered holder of a Broker/Nominee
Depository Global Security may grant proxies and otherwise authorize any Person,
including Agent Members and Persons that may hold interests through Agent
Members, to take any action that a Holder is entitled to take under this
Agreement or the Securities.
In the case of each Broker/Nominee Depository Global Security
reflected on the Security Register, all notices and reports required to be
delivered by the Company or the Trustee to Holders under this Agreement shall be
delivered by the Company or the Trustee, as applicable, to each Agent Member of
the applicable Broker/Nominee Depository in sufficient quantities (as requested
by such Agent Member in writing) to allow such Agent Member to forward such
notices and reports to the Persons who hold beneficial interests in the
Securities through such Agent Member.
Section 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee or the
Security Registrar, the Company shall execute and the Trustee shall authenticate
and deliver in exchange therefor a new Security of like tenor and amount and
bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (a)
evidence to their satisfaction of the ownership of and the destruction, loss or
theft of any Security and (b) such security or indemnity as may be reasonably
required by them and the Security Registrar to save each of them and any agent
of either of them harmless, then, in the absence of notice to the Company or the
Trustee that such Security is held by a Person purporting to be the owner of
such Security, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of like tenor and bearing a number not contemporaneously outstanding.
Notwithstanding the foregoing, in case any such mutilated, destroyed,
lost or stolen Security has become or is about to become due and payable, the
Company in its discretion may, instead of issuing a new Security, pay such
Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
reasonable expenses (including the fees and expenses of the Trustee) connected
therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company,
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whether or not the destroyed, lost or stolen Security shall be at any time
enforceable by anyone other than the Holder of such new Security, and any such
new Security shall be entitled to all the benefits of this Agreement equally and
proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
Section 307. Payments in U.S. Currency.
Payment of any amounts pursuant to the Securities shall be made in
such coin or currency of the United States of America as at the time is legal
tender for the payment of public and private debts. However, the Company may,
at its option, pay such amounts by wire transfer or check payable in such money.
Section 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered (including, to the extent
applicable, a Book-Entry Registered Holder and a Physical Certificate Registered
Holder) as the absolute owner of such Security for the purpose of receiving
payments on such Security and for all other purposes whatsoever, whether or not
such Security be overdue, and neither the Company, the Trustee nor any agent of
the Company or the Trustee shall be affected by notice to the contrary.
Section 309. Cancellation by Security Registrar.
All Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Security
Registrar, be delivered to the Security Registrar and, if not theretofore
canceled, shall be promptly canceled by the Security Registrar. The Company may
at any time deliver to the Security Registrar for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever or which the Company shall not have issued and
sold, and all Securities so delivered shall be promptly canceled by the Security
Registrar. No Securities shall be authenticated in lieu of or in exchange for
any Securities canceled as provided in this Section, except as expressly
permitted by this Agreement. All canceled Securities held by the Security
Registrar shall be disposed of in accordance with the customary practices of the
Security Registrar at the time in effect, and the Security Registrar shall not
be required to destroy any such certificates and the Security Registrar shall
promptly deliver a certificate of disposition to the Trustee and the Company
unless, by a Company Order, similarly delivered, the Company shall direct that
canceled Securities be returned to it. The Security Registrar shall promptly
deliver evidence of any cancellation of a Security in accordance with this
Section 309 to the Trustee and the Company.
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ARTICLE IV
Covenants
---------
Section 401. Payment of Amounts, if any, to Holders.
The Company will duly and punctually pay the amounts, if any, on the
Securities in accordance with the terms of the Securities and this Agreement.
Such amounts shall be considered paid on the date due if on such date the
Trustee or the Paying Agent holds in accordance with this Agreement money
sufficient to pay all such amounts then due and the Company has directed the
Trustee or Paying Agent to make payment to the Holders in accordance with the
terms of this Agreement and the Securities. Notwithstanding any other
provisions of this Agreement, the Paying Agent shall comply with all United
States federal withholding and any other withholding requirements with respect
to payments to Holders that the Company, the Trustee or the Paying Agent
reasonably believes are applicable under the Internal Revenue Code of 1986, as
amended, and the Treasury regulations thereunder. Amounts withheld in
compliance with such withholding requirements shall, for purposes of this
Agreement, be treated as paid to the Holder such withholding was made with
respect to. The consent of Holder shall not be required for any such
withholding.
Section 402. Maintenance of Office or Agency.
The Company shall maintain in each Place of Payment for the Securities
an office or agency where payment of such Securities shall be made, where the
registration of transfer or exchange of such Securities may be effected and
where notices and demands to or upon the Company in respect of such Securities
and this Agreement may be served. The Company shall give prompt written notice
to the Trustee of the location, and any change in the location, of each such
office or agency and prompt notice to the Holders of any such change in the
manner specified in Section 106.
The Company may also from time to time designate one or more other
offices or agencies with respect to the Securities for any or all of the
foregoing purposes and may from time to time rescind such designations;
provided, however, that, no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency for such
purposes in each Place of Payment for such Securities in accordance with the
requirements set forth above. The Company shall give prompt written notice to
the Trustee, and prompt notice to the Holders in the manner specified in Section
106, of any such designation or rescission and of any change in the location of
any such other office or agency.
Anything herein to the contrary notwithstanding, any office or agency
required by this Section may be maintained at an office of the Company, in which
event the Company shall perform all functions to be performed at such office or
agency.
Section 403. Money for Securities Payments to be Held in Trust.
Whenever the Company shall have one or more Paying Agents for the
Securities, it shall, on or before each payment due date on such Securities,
deposit with such Paying Agents sums sufficient (without duplication) to pay the
amounts, if any, so becoming due, such sum to
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be held in trust for the benefit of the Persons entitled to such payments, and
(unless such Paying Agent is the Trustee) the Company shall promptly notify the
Trustee of any failure by it so to act.
The Company shall cause each Paying Agent for the Securities, other
than the Company or the Trustee, to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent shall:
(a) hold all sums held by it for the payment of any amount payable on
such Securities in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise disposed of as
herein provided;
(b) give the Trustee notice of any failure by the Company (or any
other obligor upon such Securities) to make any payment of any amount
payable on such Securities.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of any amount payable on any Security
and remaining unclaimed for two years after such payment has become due and
payable shall be paid to the Company on Company Request, or, if then held by the
Company, shall be discharged from such trust; and, upon such payment or
discharge, the Holder of such Security shall, as an unsecured general creditor
and not as a Holder of an Outstanding Security, look only to the Company for
payment of the amount so due and payable and remaining unpaid, and all liability
of the Trustee or such Paying Agent with respect to such trust money, and all
liability of the Company as trustee thereof, shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such payment to the Company, may at the expense of the Company cause to be
mailed, on one occasion only, notice to such Holders that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of mailing, any unclaimed balance of such money then
remaining will be paid to the Company.
Section 404. Corporate Existence.
Subject to the rights of the Company under Article Eight, the Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence.
Section 405. Annual Officer's Certificate as to Compliance.
Not later than June 1 in each year, commencing June 1, 2001, the
Company shall deliver to the Trustee an Officer's Certificate which need not
comply with Section 102, executed by the principal executive officer, the
principal financial officer or the principal accounting officer of the Company,
stating whether, to such officer's knowledge, the Company is in compliance with
all conditions and covenants under this Agreement, such compliance to be
determined without regard to any period of grace or requirement of notice under
this Agreement, and making any other statements as may be required by the
provisions of Section 314(a)(4) of the Trust Indenture Act.
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Section 406. Good Faith and Fair Dealing.
Notwithstanding the provisions of Sections 514 and 515, in all matters
concerning the Securities, including the operation of the EARTHCO Plants and
calculation of amounts payable with respect to the Securities, the Company shall
exercise good faith and fair dealing with respect to the Holders of Securities.
Section 407. Books and Records.
The Company shall cause each EARTHCO Business Entity to maintain
separate books and records and to maintain financial statements in accordance
with generally accepted accounting principles.
Section 408. Insurance.
The Company shall cause the EARTHCO Business Entities to maintain
casualty insurance on the EARTHCO Plants in accordance with customary industry
practice.
Section 409. Indebtedness.
The Company shall not permit any of the EARTHCO Business Entities to
incur obligations for borrowed money, or to guarantee or assume any such
obligations or to allow mortgages or other encumbrances to exist on any assets
of the EARTHCO Business Entities.
Section 410. Prohibited Transactions.
(a) Except for Dispositions to Persons who are Affiliates of the
Company, the Company will not sell, transfer or otherwise dispose of any
interest (in whole or in part) in any entity which directly or indirectly
owns an interest in any of the EARTHCO Business Entities.
(b) The Company will not engage in and will cause its Affiliates to
refrain from engaging in, Dispositions for consideration other than (i)
cash or (ii) promissory notes, or other deferred payment obligations,
payable only in cash.
Section 411. Income Tax Treatment.
Absent a contrary determination by the United States Internal Revenue
Service or a change in applicable law, for United States federal income tax
purposes:
(a) the Company will treat the Contingency Funds and the trust created
hereunder as a "grantor trust" of which the Company is the sole owner;
(b) the Company will not treat the Securities as "debt instruments" on
which original issue discount accrues before payments are made to the
Holders of the Securities; and
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(c) the Company will treat each payment made to the Holders pursuant
to the Securities as including "unstated interest" pursuant to Section 483
of the United States Internal Revenue Code.
ARTICLE V
Events of Default; Remedies
---------------------------
Section 501. Events of Default.
"Event of Default", wherever used herein with respect to the
Securities means any one of the following events:
(a) the failure to pay all or any part of the amounts payable with
respect to the Securities as and when the same shall become due and
payable;
(b) the failure to perform or the breach of any covenant or warranty
of the Company in this Agreement for a period of 60 days (or, with respect
to covenants contained in Sections 404 through 411, 30 days) after there
has been given, by registered or certified mail, to the Company by the
Trustee, or to the Company and the Trustee by the Holders of at least 33%
of the Outstanding Securities, a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a
"Notice of Default" hereunder, unless the Trustee, or the Trustee and the
Holders of an amount of Securities not less than the amount of Securities
the Holders of which gave such notice, as the case may be, shall agree in
writing to an extension of such period prior to its expiration; or
(c) the entry by a court having jurisdiction in the premises of (1) a
decree or order for relief in respect of the Company in an involuntary case
or proceeding under any applicable United States federal or state
bankruptcy, insolvency, reorganization or other similar law or (2) a decree
or order adjudging the Company a bankrupt or insolvent, or approving as
properly filed a petition by one or more Persons other than the Company
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable United States federal or state
law, or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official for the Company or for any
substantial part of its property, or ordering the winding up or liquidation
of its affairs, and any such decree or order for relief or any such other
decree or order shall have remained unstayed and in effect for a period of
90 consecutive days; or
(d) the commencement by the Company of a voluntary case or proceeding
under any applicable United States federal or state bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of the Company in case or
proceeding under any applicable United States federal or state bankruptcy,
insolvency, reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or the filing
by it of a petition
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or answer or consent seeking reorganization or relief under any applicable
United States federal or state law, or the consent by it to the filing of
such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar official
of the Company or of any substantial part of its property, or the making by
it of an assignment for the benefit of creditors, or the admission by it in
writing of its inability to pay its debts generally as they become due, or
the authorization of such action by the Board of Directors.
Section 502. Collection of Indebtedness and Suits for Enforcement by Trustee.
If an Event of Default described in clause (a) of Section 501 shall
have occurred and be continuing, the Company shall, upon demand of the Trustee,
pay to it, for the benefit of the Holders of the Securities, the whole amount
then due and payable on such Securities together with such further amount as
shall be sufficient to cover any amounts due to the Trustee under Section 607.
If the Company shall fail to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, which amounts shall bear interest at the Default Interest Rate, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.
If an Event of Default with respect to the Securities shall have
occurred and be continuing, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the Holders of the Securities by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Agreement or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
Section 503. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee shall be entitled and empowered, by intervention in such
proceeding or otherwise,
(a) to file and prove a claim for any amount owing and unpaid in
respect of the Securities and to file such other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee
(including any claim for amounts due to the Trustee under Section 607) and
of the Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same,
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and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amounts due it under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section 504. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Agreement or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders in respect of which such judgment has been
recovered.
Section 505. Application of Money Collected.
Subject to the provisions of Article Twelve, any money collected by
the Trustee pursuant to this Article shall be applied in the following order, at
the date or dates fixed by the Trustee upon presentation of the Securities in
respect of which or for the benefit of which such money shall have been
collected and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
First: To the payment of all amounts due the Trustee under Section
607;
Second: To the payment of all interest accrued but unpaid pursuant to
Section 502;
Third: To the payment of the amounts then due and unpaid upon the
Securities, pro rata, and without preference or priority of any Security
--------
over any other Security; and
Fourth: To the payment of the remainder, if any, to the Company, or to
whomsoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.
Section 506. Limitation on Suits.
No Holder shall have any right to institute any proceeding, judicial
or otherwise, with respect to this Agreement, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless:
(a) such Holder shall have previously given written notice to the
Trustee of a continuing Event of Default with respect to the Securities;
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(b) if an Event of Default shall have occurred and be continuous, the
Holders of not less than 33% of the Outstanding Securities considered as
one class, shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own name as Trustee
hereunder;
(c) such Holder or Holders shall have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity shall have failed to institute any such proceeding;
and
(e) no direction inconsistent with such written request shall have
been given to the Trustee during such 60-day period by the Holders of a
majority of the Outstanding Securities;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Agreement to affect, disturb or prejudice the rights of any other of
such Holders or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Agreement, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
Section 507. Unconditional Right of Holders to Receive Payments.
Notwithstanding any other provision in this Agreement, the right of
any Holder of any Security to receive payment of the amounts payable in respect
of such Security on or after the respective due dates expressed in such
Security, or to institute suit for the enforcement of any such payment or after
such respective dates, shall not be impaired without the consent of such Holder.
Section 508. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Agreement and such proceeding shall have been
discontinued or abandoned for any reason, or shall have been determined
adversely to the Trustee or to such Holder, then and in every such case, subject
to any determination in such proceeding, the Company, and Trustee and such
Holder shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and such Holder
shall continue as though no such proceeding had been instituted.
Section 509. Rights and Remedies Cumulative.
Except as otherwise provided in the last paragraph of Section 306 and
in Section 506, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The
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assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
Section 510. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article or by law to the Trustee
or to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may be.
Section 511. Control by Holders of Securities.
If an Event of Default shall have occurred and be continuing in
respect of the Securities, the Holders of a majority of the Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee with respect to the Securities;
provided, however, that
(a) such direction shall not be in conflict with any rule of law or
with this Agreement, and could not involve the Trustee in personal
liability in circumstances where indemnity would not in the Trustee's
reasonable discretion be adequate, and
(b) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
Before proceeding to exercise any right or power hereunder at the
direction of such Holders, the Trustee shall be entitled to receive from such
Holders security or indemnity satisfactory to the Trustee in its reasonable
judgment against the costs, expenses and liabilities which might be incurred by
it in compliance with any such direction.
Section 512. Waiver of Past Defaults.
The Holders of not less than a majority of the Outstanding Securities
may on behalf of the Holders of all the Securities waive any past default
hereunder with respect to the Securities and its consequences, except a default
(a) in the payment of any amounts payable on the Securities, or
(b) in respect of a covenant or provision hereof which under Section
902 cannot be modified or amended without the consent of the Holder of each
Outstanding Security.
Upon any such waiver, such default shall cease to exist, and any and
all Events of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Agreement; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
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Section 513. Undertaking for Costs.
The Company and the Trustee agree, and each Holder by his acceptance
thereof shall be deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy under this
Agreement, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply, to any suit instituted by the
Trustee or to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% of the Outstanding Securities for the enforcement of
the payments on the Securities on or after the respective due date expressed in
the Securities.
Section 514. Operating and Ownership Decisions.
Except as provided in Section 410, and subject to the provisions of
Section 406, the EARTHCO Plants will be held and operated in accordance with the
Company's determination, in its sole discretion, of the appropriate extent and
manner of ownership and operation of the EARTHCO Plants, including any reduction
or termination of operations at one or more EARTHCO Plants and the Disposition
of either any or all interests in any EARTHCO Plant or any or all interests in
any EARTHCO Business Entity.
Section 515. Tax Decisions and Procedures.
Subject to the provisions of Section 406, the Company shall have
complete and full control and sole discretion with respect to (i) the reporting
of any item on its United States tax return or the United States tax return of
any partnership or other entity that owns (or is treated for United States
federal income tax purposes as owning) an EARTHCO Plant or any interest therein,
and (ii) the conduct or contest of any tax audit or proceeding with respect
thereto. Neither the Trustee, any Holder or any other party shall have any
right to participate in any such proceeding. The Trustee will be granted
access, upon reasonable request, to such United States federal or state tax
returns and related documentation except for attorney-client or accountant-
client privileged material (if the Trustee has received an Opinion of Counsel to
that effect), but the Trustee shall have no obligation to request any such
information unless directed to do so by the Holders of in excess of 33% of the
Securities.
Section 516. Limitation of Liability.
The Company will have no liability to any Holder arising from any
action taken with respect to the EARTHCO Plants, the EARTHCO Business Entities,
the availability of the Section 29 Credits, or the matters described in Section
515 except to the extent arising from the Company's failure to perform or breach
of any express covenant or warranty of the Company in this Agreement or in the
Certificate.
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Section 517. No Rights of Acceleration; Unsecured Obligations.
No provisions of this Agreement or the Securities shall be deemed to
give rise to any right on the part of the Trustee or the Holders of the
Securities to "accelerate" the amounts payable on the Securities or to otherwise
require the payment of the Contingency Funds except on the dates and in the
amounts specified in the Securities. The Securities and the obligations of the
Company under the Securities and this Agreement are general, unsecured
obligations of the Company and are not secured by any express or implied
mortgage, lien, charge, assignment or other encumbrance of or against any assets
of the Company or any EARTHCO Business Entities, including without limitation
any of the EARTHCO Plants.
Section 518. Non Interest-Bearing Obligations.
No provisions of this Agreement or the Securities shall be interpreted
to provide that the Securities shall bear interest, except for amounts bearing
interest at the Default Interest Rate pursuant to Section 502. Earnings on
Contingency Funds, although not to be construed as "interest", will be included
in amounts paid to Holders as provided in the Securities.
Section 519. No Redemption.
No provisions of this Agreement or the Securities shall be interpreted
to provide for any option on behalf of either the Company or the Holders of a
Security to cause any Security to be redeemed prior to the final payment to be
made on the Securities.
ARTICLE VI
The Trustee
-----------
Section 601. Certain Duties and Responsibilities.
(a) The Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee in the
Trust Indenture Act and no implied covenants or obligations shall be read
into this Agreement against the Trustee. For purposes of Sections 315(a)
and 315(c) of the Trust Indenture Act, the term "default" is hereby defined
as an Event of Default which has occurred and is continuing.
(b) The Trustee, prior to the occurrence of an Event of Default and
after the curing or waiving of all Events of Default which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement and the Trust Indenture Act. In
case an Event of Default of which a Responsible Officer of the Trustee has
actual knowledge has occurred (which has not been cured or waived) the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as
a prudent man would exercise or use under the circumstances in the conduct
of his own affairs.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act or its own
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willful misconduct, except that prior to the occurrence of an Event of
Default and after the curing or waiving of all Events of Default which may
have occurred
(1) the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, and the Trustee
shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Agreement, and no
implied covenants or obligations shall be read into this Agreement
against the Trustee; and
(2) In the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to
the requirements of this Agreement; but, in the case of any such
certificates or opinions that by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall not be
under a duty to examine the same to determine whether or not they
conform to the requirements of this Agreement.
(d) The Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer or Officers of the Trustee, unless it
shall be proven that the Trustee was negligent in ascertaining the
pertinent facts.
(e) The Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith, in accordance with the
direction of the Holders of Securities pursuant to Section 511, relating to
the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Agreement.
(f) No provision of this Agreement shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or indemnity satisfactory to the Trustee in
its reasonable judgment against such risk or liability is not reasonably
assured to it.
(g) Notwithstanding anything contained in this Agreement to the
contrary, the duties and responsibilities of the Trustee under this
Agreement shall be subject to the protections, exculpations and limitations
on liability afforded to the Trustee under the provisions of the Trust
Indenture Act, including those provisions of such Act deemed by such Act to
be included herein.
(h) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
this Section.
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Section 602. Notice of Defaults.
The Trustee shall give the Holders notice of any default hereunder
with respect to the Securities to the Holders of Securities of which it has
knowledge (within the meaning of Section 603(h) hereof) in the manner and to the
extent required to do so by the Trust Indenture Act, unless such default shall
have been cured or waived; provided that, except in the case of default in the
payment of amounts payable on any of the Securities, the Trustee shall be fully
protected in withholding such notice if and so long as the board of directors,
executive committee, or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determines that the withholding of such
notice is in the best interests of the Holders of the Securities. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time, or both, would become, an Event of Default.
Section 603. Certain Rights of Trustee.
Subject to the provisions of Section 601 and to the applicable
provisions of the Trust Indenture Act:
(a) the Trustee may rely conclusively and shall be fully protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order, or as
otherwise expressly provided herein, and any resolution of the Board of
Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Agreement the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officer's Certificate,
(d) the Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the request or direction
of any Holder pursuant to this Agreement, unless such Holder shall have
offered to the Trustee security or indemnity satisfactory to the Trustee in
its reasonable judgment against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice,
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request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall (subject to applicable
legal requirements) be entitled to examine, during normal business hours,
the books, records and premises of the Company, personally or by agent or
attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through any number of
agents (including, without limitation, authenticating agents and paying
agents), servicers, custodians, nominees or attorneys (any or all of which
agents, servicers, custodians, nominees or attorneys, in Trustee's
discretion, may be Affiliates of the Trustee) and the Trustee shall not be
responsible for any misconduct or negligence on the part of any agent,
servicer, custodian, nominee or attorney appointed with due care by it
hereunder; and
(h) the Trustee shall not be charged with knowledge of any default or
Event of Default with respect to the Securities unless either (1) a
Responsible Officer of the Trustee shall have actual knowledge of the
default or Event of Default or (2) written notice of such default or Event
of Default (which shall state that such notice is a "Notice of Default" or
a "Notice of an Event of Default" hereunder, as the case may be) shall have
been given to the Trustee by the Company, any other obligor on such
Securities or by any Holder of such Securities.
(i) the Trustee shall not be bound to ascertain or inquire as to the
performance or observance of any covenants, conditions or agreements on the
part of the Company, except as otherwise set forth herein, but the Trustee
may require of the Company, full information and advice as to the
performance of the covenants, conditions and agreements contained herein
and (except for attorney-client and accountant-client privileged material
excluded under Section 515) shall be entitled in connection herewith to
examine the books, records and premises of the Company; and
(j) in the event that the Trustee is also acting as authenticating
agent, paying agent, security registrar, exchange agent or transfer agent
hereunder, the rights, indemnities (including without limitation Section
607) and protections afforded to the Trustee pursuant to this Article Six
shall also be afforded to such paying agent, security registrar, exchange
agent or transfer agent.
Section 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities (except the
Trustee's certificates of authentication) shall be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Agreement or of the Securities. Neither
the Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Securities or the proceeds thereof.
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Section 605. May Hold Securities.
Each of the Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other agent of the Company, in its individual or any
other capacity, may become the owner or pledgee of Securities and, subject to
Sections 608 and 613, may otherwise deal with the Company with the same rights
it would have if it were not the Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other agent.
Section 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds, except to the extent required by law. The Trustee shall be
under no liability for interest on investment of any money received by it
hereunder except as expressly provided herein or otherwise agreed with, and for
the sole benefit of, the Company.
Section 607. Compensation and Reimbursement.
The Company shall
(a) pay to the Trustee from time to time reasonable compensation for
all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(b) except as otherwise expressly provided herein, reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Agreement, including the costs of collection and including the
reasonable compensation and the expenses and disbursements of its agents
and counsel, except to the extent that any such expense, disbursement or
advance may be attributable to its gross negligence, willful misconduct or
bad faith; and
(c) indemnify, defend and hold harmless the Trustee and its directors,
officers, agents and employees (collectively, the "Indemnitees") harmless
from and against any and all claims, liabilities, losses, damages, fines,
penalties, taxes (other than taxes on the income of the Trustee) and
expenses, including out-of-pocket and incidental expenses and legal fees
(including the allocated costs and expenses of in-house counsel and legal
staff) ("Losses") that may be imposed on, incurred by, or asserted against,
the Indemnitees or any of them for following any instructions or other
directions upon which the Trustee is authorized to rely pursuant to the
terms of this Agreement; and
(d) in addition to and not in limitation of clause (c) above of this
Paragraph, indemnify, defend and hold harmless the Indemnitees and each of
them from and against any and all Losses that may be imposed on, incurred
by or asserted against the Indemnities or any of them in connection with or
arising out of the exercise of performance by the Trustee of any of its
powers or duties under this Agreement, provided that the Indemnitees have
not acted with gross negligence or engaged in willful misconduct; and
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(e) In connection with any actual or alleged Losses under either (c)
or (d) above, the Company shall assume the defense of the Indemnitees with
counsel acceptable to the Trustee; provided that the Trustee may employ
separate counsel and participate in the defense but the fees and expenses
of such separate counsel, if any, shall be at the Trustee's own expense.
As security for the performance of the obligations of the Company
under this Section, the Trustee shall have a lien prior to the Securities upon
all property and funds held or collected by the Trustee as such other than
property and funds held in trust under Section 403 (except as otherwise provided
in Section 403). "Trustee" for purposes of this Section shall include any
predecessor Trustee; provided; however, that the negligence, willful misconduct
or bad faith of any Trustee hereunder shall not affect the rights of any other
Trustee hereunder.
When a Trustee incurs expenses or renders services in connection with
an Event of Default specified in Section 501(c) or Section 501(d), the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable United States federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section 607 shall survive termination of this
Agreement.
Section 608. Disqualification; Conflicting Interests.
If the Trustee shall have or acquire any conflicting interest within
the meaning of the Trust Indenture Act, it shall either eliminate such
conflicting interest or resign to the extent, in the manner and with the effect,
and subject to the conditions, provided in the Trust Indenture Act and this
Agreement. For purposes of Section 310(b)(1) of the Trust Indenture Act and to
the extent permitted thereby, the Trustee shall not be deemed to have a
conflicting interest by virtue of being a Trustee under (i) this Agreement with
respect to Securities, or (ii) the Indenture, dated as of October 28, 1999, of
Carolina Power & Light Company.
Section 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
(a) a corporation organized and doing business under the laws of the
United States, any State or Territory thereof or the District of Columbia,
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $100,000,000 and subject to
supervision or examination by United States federal or state authority, and
maintaining an office in the Borough of Manhattan, New York City, or
(b) if and to the extent permitted by the Commission by rule,
regulation or order upon application, a corporation or other Person
organized and doing business under the laws of a foreign government,
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $100,000,000 or the Dollar
equivalent of the applicable foreign currency and subject to supervision or
examination by authority of such foreign government or a political
subdivision thereof substantially equivalent to supervision or examination
applicable to United States institutional trustees,
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and, in either case, qualified and eligible under this Article and the Trust
Indenture Act. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of such supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
Section 610. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.
(b) The Trustee may resign at any time with respect to the Securities
by giving written notice thereof to the Company. If the instrument of
acceptance by a successor Trustee required by Section 611 shall not have
been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities.
(c) The Trustee may be removed at any time with respect to the
Securities by Act of the Holders of a majority of the Outstanding
Securities delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608 after
written request therefor by the Company or by any Holder who has been
a bona fide Holder for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or
by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any such case, (x) the Company by a Board Resolution may remove the
Trustee with respect to all Securities or (y) subject to Section 513, any Holder
who has been a bona fide Holder for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to all Securities and
the appointment of a successor Trustee or Trustees.
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(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause
(other than as contemplated in clause (y) in subsection (d) of this
Section), with respect to the Securities, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with
respect to the Securities and shall comply with the applicable requirements
of Section 611. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities shall be appointed by Act of the Holders of a
majority of the Outstanding Securities delivered to the Company and the
retiring Trustee, the successor Trustee so appointed shall, forthwith upon
its acceptance of such appointment in accordance with the applicable
requirements of Section 611, become the successor Trustee with respect to
the Securities and to that extent supersede the successor Trustee appointed
by the Company. If no successor Trustee with respect to the Securities
shall have been so appointed by the Company or the Holders and accepted
appointment in the manner required by Section 611, any Holder who has been
a bona fide Holder of a Security for at least six months may, on behalf of
itself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities.
(f) So long as no event which is, or after notice or lapse of time, or
both, would become, an Event of Default shall have occurred and be
continuing, and except with respect to a Trustee appointed by Act of the
Holders of a majority of the Outstanding Securities pursuant to subsection
(e) of this Section, if the Company shall have delivered to the Trustee (i)
a Board Resolution appointing a successor Trustee, effective as of a date
specified therein, and (ii) an instrument of acceptance of such
appointment, effective as of such date, by such successor Trustee in
accordance with Section 611, the Trustee shall be deemed to have resigned
as contemplated in subsection (b) of this Section, the successor Trustee
shall be deemed to have been appointed by the Company pursuant to
subsection (e) of this Section and such appointment shall be deemed to have
been accepted as contemplated in Section 611, all as of such date, and all
other provisions of this Section and Section 611 shall be applicable to
such resignation, appointment and acceptance except to the extent
inconsistent with this subsection (f).
(g) The Company or, should the Company fail so to act promptly, the
successor Trustee, at the expense of the Company, shall give notice of each
resignation and each removal of the Trustee with respect to the Securities
and each appointment of a successor Trustee with respect to the Securities
by mailing written notice of such event by first-class mail, postage
prepaid, to all Holders of Securities as their names and addresses appear
in the Security Register. Each notice shall include the name of the
successor Trustee with respect to the Securities and the address of its
corporate trust office.
Section 611. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to the Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee
an instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or
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conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of all sums
owed to it, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee
and shall duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder.
(b) Upon request of any such successor Trustee, the Company shall
execute any instruments which fully vest in and confirm to such successor
Trustee all such rights, powers and trusts referred to in subsection (a) of
this Section.
(c) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
Section 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
Section 613. Preferential Collection of Claims Against Company.
If the Trustee shall be or become a creditor of the Company or any
other obligor upon the Securities (other than by reason of a relationship
described in Section 311(b) of the Trust Indenture Act), the Trustee shall be
subject to any and all applicable provisions of the Trust Indenture Act
regarding the collection of claims against the Company or such other obligor.
For purposes of Section 311(b) of the Trust Indenture Act:
(a) the term "cash transaction" means any transaction in which full
payment for goods or securities sold is made within seven days after
delivery of the goods or securities in currency or in checks or other
orders drawn upon banks or bankers and payable upon demand;
(b) the term "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by the Company for the purpose of financing the purchase,
processing, manufacturing, shipment, storage or sale of goods, wares or
merchandise and which is secured by documents evidencing title to,
possession of, or a lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods, wares or
merchandise previously constituting the security, provided the security is
received by the Trustee simultaneously
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with the creation of the creditor relationship with the Company arising
from the making, drawing, negotiating or incurring of the draft, bill of
exchange, acceptance or obligation.
Section 614. Co-trustees and Separate Trustees.
At any time or times, for the purpose of meeting the legal
requirements of any applicable jurisdiction, the Company and the Trustee shall
have power to appoint, and, upon the written request of the Trustee or of the
Holders of at least thirty-three percent (33%) of the Securities then
Outstanding, the Company shall for such purpose join with the Trustee in the
execution and delivery of all instruments and agreements necessary or proper to
appoint, one or more Persons approved by the Trustee either to act as co-
trustee, jointly with the Trustee, or to act as separate trustee, in either case
with such powers as may be provided in the instrument of appointment, and to
vest in such Person or Persons, in the capacity aforesaid, any property, title,
right or power deemed necessary or desirable, subject to the other provisions of
this Section. If the Company does not join in such appointment within 15 days
after the receipt by it of a request so to do, or if an Event of Default shall
have occurred and be continuing, the Trustee alone shall have power to make such
appointment.
Should any written instrument or instruments from the Company be
required by any co-trustee or separate trustee so appointed to more fully
confirm to such co-trustee or separate trustee such property, title, right or
power, any and all such instruments shall, on request, be executed, acknowledged
and delivered by the Company.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following conditions:
(a) the Securities shall be authenticated and delivered, and all
rights, powers, duties and obligations hereunder in respect of the custody
of securities, cash and other personal property held by, or required to be
deposited or pledged with, the Trustee hereunder, shall be exercised
solely, by the Trustee;
(b) the rights, powers, duties and obligations hereby conferred or
imposed upon the Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed
either by the Trustee or by the Trustee and such co-trustee or separate
trustee jointly, as shall be provided in the instrument appointing such co-
trustee or separate trustee, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed, the Trustee
shall be incompetent or unqualified to perform such act, in which event
such rights, powers, duties and obligations shall be exercised and
performed by such co-trustee or separate trustee;
(c) the Trustee at any time, by an instrument in writing executed by
it, with the concurrence of the Company, may accept the resignation of or
remove any co-trustee or separate trustee appointed under this Section,
and, if an Event of Default shall have occurred and be continuing, the
Trustee shall have power to accept the resignation of, or remove, any such
co-trustee or separate trustee without the concurrence of the Company.
Upon the written request of the Trustee, the Company shall join with the
Trustee in the
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execution and delivery of all instruments and agreements necessary or
proper to effectuate such resignation or removal. A successor to any co-
trustee or separate trustee so resigned or removed may be appointed in the
manner provided in this Section;
(d) no co-trustee or separate trustee hereunder shall be personally
liable by reason of any act or omission of the Trustee, or any other such
trustee hereunder; and
(e) any Act of Holders delivered to the Trustee shall be deemed to
have been delivered to each such co-trustee and separate trustee.
Section 615. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect
to the Securities, which shall be authorized to act on behalf of the Trustee to
authenticate Securities issued upon original issuance, exchange, registration of
transfer or partial redemption thereof or pursuant to Section 306, and
Securities so authenticated shall be entitled to the benefits of this Agreement
and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference is made in this Agreement to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States, any State or territory thereof or the
District of Columbia, authorized under such laws to act as Authenticating Agent,
having a combined capital and surplus of not less than $50,000,000 and subject
to supervision or examination by United States federal or state authority. If
such Authenticating Agent publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such Authenticating Agent shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published.
If at any time an Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section.
The Trustee hereby appoints ChaseMellon Shareholder Services, L.L.C.
as an Authenticating Agent.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving 45 days
written notice thereof to the Trustee and to the Company. The Trustee may at
any time terminate the agency of
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an Authenticating Agent by giving written notice thereof to such Authenticating
Agent and to the Company. Upon receiving such a notice of resignation or upon
such a termination, or in case at any time such Authenticating Agent shall cease
to be eligible in accordance with the provisions of this Section, the Trustee
may appoint a successor Authenticating Agent which shall be acceptable to the
Company. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section.
The provisions of Sections 308, 604 and 605 shall be applicable to
each Authenticating Agent.
If an appointment with respect to the Securities shall be made
pursuant to this Section, the Securities may have endorsed thereon, in lieu of
the Trustee's certificate of authentication, an alternate certificate of
authentication substantially in the following form:
This is one of the Securities therein referred to in the within-
mentioned Agreement.
Dated:______________
_____________________________
As Trustee
By___________________________
As Authenticating Agent
By___________________________
Authorized Signatory
Section 616. Paying Agents Afforded Protection.
In case at any time any Paying Agent other than the Trustee or the
Company shall have been appointed by the Company and be then acting hereunder,
such Paying Agent shall be afforded the rights, indemnities and protections
afforded to the Trustee under Sections 601, 603, 604, 606, and 607.
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ARTICLE VII
Holders' Lists and Reports by Trustee and Company
-------------------------------------------------
Section 701. Lists of Holders.
Semiannually, between March 15 and April 1 and between September 15
and October 1 in each year, commencing with the year 2001, and at such other
times as the Trustee may request in writing, the Company shall furnish or cause
to be furnished to the Trustee information as to the names and addresses of the
Holders, and the Trustee shall preserve such information and similar information
received by it in any other capacity and afford to the Holders access to
information so preserved by it, all to such extent, if any, and in such manner
as shall be required by the Trust Indenture Act; provided, however, that no such
list need be furnished so long as the Trustee shall be the Security Registrar.
Every Holder of Securities by receiving and holding the same, agrees with the
Company and the Trustee that neither the Company nor the Trustee nor any agent
of either of them shall be held accountable by reason of the disclosure of any
such information as to the names and addresses of the Holders of Securities in
accordance with Section 312 of the Trust Indenture Act, or any successor section
of such Act, regardless of the source from which such information was derived,
and that the Trustee shall not be held accountable by reason of mailing any
material pursuant to a request made under Section 312(b) of the Trust Indenture
Act, or any successor section of such Act.
Section 702. Reports by Trustee and Company.
Not later than sixty (60) days after May 15 in each year, commencing
May 15, 2001, the Trustee shall transmit to the Holders and the Commission a
report, dated as of the next preceding May 15/th/, with respect to any events
and other matters described in Section 313(a) of the Trust Indenture Act, in
such manner and to the extent required by the Trust Indenture Act. The Trustee
shall transmit to the Holders and the Commission, and the Company shall file
with the Trustee (within thirty (30) days after filing with the Commission in
the case of reports which pursuant to the Trust Indenture Act must be filed with
the Commission and furnished to the Trustee) and transmit to the Holders, such
other information, reports and other documents, if any, at such times and in
such manner, as shall be required by the Trust Indenture Act. Without
limitation to the generality of the foregoing, the Company, pursuant to Section
314(a) of the Trust Indenture Act, shall:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) that the Company may be required to file
with the Commission pursuant to Section 13 or Section 15(d) of the Exchange
Act.
(2) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Company with the conditions
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and covenants of this Agreement as may be required from time to time by
such rules and regulations; and
(3) transmit, within 30 days after the filing thereof with the
Trustee, to the Holders, in the manner and to the extent provided in
Section 313(c) of the Trust Indenture Act, such summaries of any
information, documents and reports required to be filed by the Company
pursuant to paragraphs (1) and (2) above of this Section 702 as may be
required by rules and regulations prescribed from time to time by the
Commission.
The Company shall notify the Trustee of the listing of any Securities
on any securities exchange, in which event any subsequent reports of the Trustee
and the Company provided for above shall be provided to such securities exchange
to the extent required under the Trust Indenture Act. Delivery of such reports,
information and documents (and the reports described in the next paragraph) by
the Company to the Trustee is for informational purposes only, and the Trustee's
receipt of such shall not constitute constructive notice of any information
contained therein or determinable from information contained therein, including
the Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officer's Certificates).
The Company will also deliver to the Holders, and to the Agent Members
holding interests in a Broker/Nominee Global Security through the Broker/Nominee
Depository for delivery to holders of beneficial interests in the Securities,
with a copy to the Trustee, not later than 60 days after the end of each of the
first three calendar quarters and 120 days after the end of each year, a report
describing the results of operations for each EARTHCO Plant for that quarter,
and updating material developments, including any adjustments for previous
periods and relevant tax proceedings and positions.
ARTICLE VIII
Consolidation, Merger, Conveyance or Other Transfer
---------------------------------------------------
Section 801. Company May Consolidate, Etc., Only on Certain Terms.
Notwithstanding the provisions of Section 404, the Company shall not
consolidate with or merge into any other Person, or convey or otherwise transfer
or lease its properties and assets substantially as an entirety to any Person,
unless
(a) the Person formed by such consolidation or into which the Company
is merged or the Person which acquires by conveyance or transfer, or which
leases, the properties and assets of the Company substantially as an
entirety shall be a Person organized and existing under the laws of the
United States, any State thereof or the District of Columbia, and shall
expressly assume, by an agreement or other instrument supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the Trustee,
the due and punctual payment of the Outstanding Securities and the
performance of every covenant of this Agreement on the part of the Company
to be performed or observed;
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(b) immediately after giving effect to such transaction and treating
any indebtedness for borrowed money which becomes an obligation of the
Company as a result of such transaction as having been incurred by the
Company at the time of such transaction, no Event of Default, and no event
which, after notice or lapse of time or both, would become an Event of
Default, shall have occurred and be continuing; and
(c) the Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, or other transfer or lease and such
supplemental indenture or other instrument comply with this Article and
that all conditions precedent herein provided for relating to such
transactions have been complied with.
Section 802. Successor Corporation Substituted.
Upon any consolidation by the Company with or merger by the Company
into any other Person or any conveyance, or other transfer or lease of the
properties and assets of the Company substantially as an entirety in accordance
with Section 801, the successor Person formed by such consolidation or into
which the Company is merged or the Person to which such conveyance, transfer or
lease is made shall succeed to, and be substituted for, and may exercise every
right and power of, the Company under this Agreement with the same effect as if
such successor Person had been named as the Company herein, and thereafter,
except in the case of a lease, the predecessor Person shall be relieved of all
obligations and covenants under this Agreement and the Securities Outstanding
hereunder.
ARTICLE IX
Amendments
----------
Section 901. Amendments Without Consent of Holders.
Without the consent of any Holders, the Company and the Trustee, at
any time and from time to time, may enter into one or more amendments hereto, in
form satisfactory to the Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein
and in the Securities, all as provided in Article Eight; or
(b) to add one or more covenants of the Company or other provisions
that the Company and the Trustee consider to be for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company; or
(c) to add any additional Events of Default with respect to the
Securities Outstanding hereunder; or
(d) to change or eliminate any provision of this Agreement or to add
any new provision to this Agreement; provided, however, that no such
change, elimination or
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addition shall adversely affect the interests of the Holders of Securities
Outstanding on the date of such amendment; or
(e) to provide collateral security for the Securities; or
(f) to change any place or places where (1) the amounts due and
payable on all Securities shall be payable, (2) all Securities may be
surrendered for registration of transfer, (3) all Securities may be
surrendered for exchange and (4) notices and demands to or upon the Company
in respect of all the Securities and this Agreement may be served, provided
that no such changes shall adversely affect the interests of the Holders of
the Securities;
(g) to provide for the issuance and authentication under this
Agreement of Securities other than Global Securities and to specify the
authorized denominations of such Securities and establish conditions and
procedures relating to the transfer and exchange of such Securities that do
not adversely affect the interests of the Holders of Securities; or
(h) to cure any ambiguity or to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein; provided that no such changes or additions shall adversely affect
the interests of the Holders of the Securities.
Without limiting the generality of the foregoing, if the Trust
Indenture Act as in effect at the date of the execution and delivery of this
Agreement or at any time thereafter shall be amended and if any such amendment
shall require one or more changes to any provisions hereof or the inclusion
herein of any additional provisions, or shall by operation of law be deemed to
effect such changes or incorporate such provisions by reference or otherwise,
this Agreement shall be deemed to have been amended so as to conform to such
amendment to the Trust Indenture Act, and the Company and the Trustee may,
without the consent of any Holders, enter into an amendment hereto to effect or
evidence such changes or additional provisions.
The Trustee is hereby authorized to join with the Company in the
execution of any amendment pursuant to this Section 901 to effect any such
amendment described above, to make any further agreements and stipulations which
may be contained therein and to accept the conveyance, transfer and assignment
of any property thereunder, but the Trustee shall not be obligated to, but may
in its discretion, enter into any such amendment which affects the Trustee's own
rights, duties or immunities under this Agreement or otherwise.
Section 902. Amendments With Consent of Holders.
With the consent of the Holders of not less than a majority of the
Securities then Outstanding by Act of said Holders delivered to the Company and
the Trustee, the Company, when authorized by a Board Resolution, and the Trustee
may enter into an amendment hereto for the purpose of adding any provisions to,
or changing in any manner or eliminating any provisions of this Agreement;
provided that no such amendment shall:
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(a) reduce the amounts payable in respect of the Securities, or
otherwise modify the method of payment of amounts payable in respect of the
Securities (other than modifications that would not adversely affect the
interests of Holders in any material respect);
(b) impair the right of any Holder to receive the amounts payable in
respect of the Securities on or after the due dates therefore or to
institute suit for the enforcement of any payment on or with respect to
such Holder's Securities;
(c) reduce the percentage of the Outstanding Securities the consent of
the Holders of which is required for any such amendment, or the consent of
the Holders of which is required for any waiver of compliance with any
provision of this Agreement or of any default hereunder and its
consequences, or reduce the requirements of Section 1004 for quorum or
voting, without, in any such case, the consent of the Holders of each
Outstanding Security, or
(d) modify any of the provisions of this Section 902 or Section 512
with respect to the Securities (except to increase the percentages referred
to in this Section or such other Sections or to provide that other
provisions of this Agreement cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected thereby);
provided, however, that this clause shall not be deemed to require the
consent of any Holder with respect to changes in the references to "the
Trustee" and concomitant changes in this Section, or the deletion of this
proviso, in accordance with the requirements of Section 614.
Upon the request of the Company, accompanied by a copy of the Board
Resolution authorizing the execution of any such amendment or supplement to this
Agreement, compliance by the Company with Section 903 hereof, and the filing
with the Trustee of evidence of the consent of the Holders of the Securities
required hereunder with respect to the proposed amendment or supplement, the
Trustee shall join with the Company in the execution of such amendment or
supplement unless the amendment or supplement affects the Trustee's own rights,
duties or immunities under this Agreement, or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
amendment or supplement.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed amendment, but it shall be
sufficient if such Act shall approve the substance thereof. A waiver by a
Holder of such Holder's right to consent under this Section shall be deemed to
be a consent of such Holder.
Section 903. Execution of Amendments.
In executing, or accepting the additional trusts created by, any
amendment permitted by this Article or the modifications thereby of the trusts
created by this Agreement, the Trustee shall be entitled to receive, and, in the
absence of bad faith, shall be fully protected in relying upon, an Officer's
Certificate and an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement. The Trustee may, but
shall not
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be obligated to, enter into any such amendment which affects the Trustee's own
rights, duties, immunities or liabilities under this Agreement or otherwise.
Section 904. Effect of Amendments.
Upon the execution of any amendment under this Article, this Agreement
shall be modified in accordance therewith, and such amendment shall form a part
of this Agreement for all purposes; and every Holder of Securities theretofore
or thereafter authenticated and delivered hereunder shall be bound thereby. Any
amendment permitted by this Article may restate this Agreement in its entirety,
and, upon the execution and delivery thereof, any such restatement shall
supersede this Agreement as theretofore in effect for all purposes.
Section 905. Conformity With Trust Indenture Act.
Every amendment executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act as then in effect.
Section 906. Reference in Securities to Amendments.
Securities authenticated and delivered after the execution of any
amendment pursuant to this Article may, and shall if required by the Trustee,
bear a notation in form approved by the Trustee as to any matter provided for in
such amendment. If the Company shall so determine, new Securities so modified
as to conform, in the opinion of the Trustee and the Company, to any such
supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities.
ARTICLE X
Meetings of Holders; Action Without Meeting
-------------------------------------------
Section 1001. Purposes for Which Meetings May be Called.
A meeting of Holders of Securities may be called at any time and from
time to time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be made, given or taken by Holders of Securities.
Section 1002. Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders of the
Securities, for any purpose specified in Section 1001, to be held at such
time and at such place in the Borough of Manhattan, The City of New York,
as the Trustee shall determine, or, with the approval of the Company, at
any other place. Notice of every such meeting, setting forth the time and
the place of such meeting and in general terms the action proposed to be
taken at such meeting, shall be given, in the manner provided in Section
106, not less than 21 nor more than 180 days prior to the date fixed for
the meeting.
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(b) If the Trustee shall have been requested to call a meeting of the
Holders of the Securities by the Company or by the Holders of 33% of the
Outstanding Securities, for any purpose specified in Section 1001, by
written request setting forth in reasonable detail the action proposed to
be taken at the meeting, and the Trustee shall not have given the notice of
such meeting within 21 days after receipt of such request or shall not
thereafter proceed to cause the meeting to be held as provided herein, then
the Company or the Holders of Outstanding Securities in the amount above
specified may determine the time and the place in the Borough of Manhattan,
The City of New York, or in such other place as shall be determined or
approved by the Company, for such meeting and may call such meeting for
such purposes by giving notice thereof as provided in subsection (a) of
this Section.
(c) Any meeting of Holders of Securities shall be valid without notice
if the Holders of all Outstanding Securities are present in person or by
proxy and if representatives of the Company and the Trustee are present, or
if notice is waived in writing before or after the meeting by the Holders
of all Outstanding Securities, or by such of them as are not present at the
meeting in person or by proxy, and by the Company and the Trustee.
Section 1003. Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders of the Securities a
Person shall be (a) a Holder of one or more Outstanding Securities, or (b) a
Person appointed by an instrument in writing as proxy for a Holder or Holders of
one or more Outstanding Securities by such Holder or Holders. The only Persons
who shall be entitled to attend any meeting of Holders of Securities shall be
the Persons entitled to vote at such meeting and their counsel, any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.
Section 1004. Quorum; Action.
The Persons entitled to vote a majority of the Outstanding Securities
shall constitute a quorum for a meeting of Holders of the Securities; provided,
however, that if any action is to be taken at such meeting which this Agreement
expressly provides may be taken by the Holders of a specified percentage, which
is less than a majority, of the Outstanding Securities, the Persons entitled to
vote such specified percentage of the Outstanding Securities shall constitute a
quorum. In the absence of a quorum within one hour of the time appointed for
any such meeting, the meeting shall, if convened at the request of Holders of
Securities, be dissolved. In any other case the meeting may be adjourned for
such period as may be determined by the chairman of the meeting prior to the
adjournment of such meeting. In the absence of a quorum at any such adjourned
meeting, such adjourned meeting may be further adjourned for such period as may
be determined by the chairman of the meeting prior to the adjournment of such
adjourned meeting. Except as provided by Section 1005(e), notice of the
reconvening of any meeting adjourned for more than 30 days shall be given as
provided in Section 1002(a) not less than ten days prior to the date on which
the meeting is scheduled to be reconvened. Notice of the reconvening of an
adjourned meeting shall state expressly the percentage, as provided above, of
the number of the Outstanding Securities which shall constitute a quorum.
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Except as limited by Section 902, any resolution presented to a
meeting or adjourned meeting duly reconvened at which a quorum is present as
aforesaid may be adopted only by the affirmative vote of the Holders of a
majority of the Outstanding Securities; provided, however, that, except as so
limited, any resolution with respect to any action which this Agreement
expressly provides may be taken by the Holders of a specified percentage, which
is less than a majority, of the Outstanding Securities may be adopted at a
meeting or an adjourned meeting duly reconvened and at which a quorum is present
as aforesaid by the affirmative vote of the Holders of such specified percentage
of the Outstanding Securities.
Any resolution passed or decision taken at any meeting of Holders of
the Securities duly held in accordance with this Section shall be binding on all
the Holders of the Securities, whether or not present or represented at the
meeting.
Section 1005. Attendance at Meetings; Determination of Voting Rights; Conduct
and Adjournment of Meetings.
(a) Attendance at meetings of Holders of Securities may be in person
or by proxy; and, to the extent permitted by law, any such proxy shall
remain in effect and be binding upon any future Holder of the Securities
with respect to which it was given unless and until specifically revoked by
the Holder or future Holder of such Securities before being voted.
(b) Notwithstanding any other provisions of this Agreement, the
Trustee may make such reasonable regulations as it may deem advisable for
any meeting of Holders of Securities in regard to proof of the holding of
such Securities and of the appointment of proxies and in regard to the
appointment and duties of inspectors of votes, the submission and
examination of proxies, certificates and other evidence of the right to
vote, and such other matters concerning the conduct of the meeting as it
shall deem appropriate. Except as otherwise permitted or required by any
such regulations, the holding of Securities shall be proved in the manner
specified in Section 104 and the appointment of any proxy shall be proved
in the manner specified in Section 104. Such regulations may provide that
written instruments appointing proxies, regular on their face, may be
presumed valid and genuine without the proof specified in Section 104 or
other proof.
(c) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been
called by the Company or by Holders as provided in Section 1002(b), in
which case the Company or the Holders of Securities calling the meeting, as
the case may be, shall in like manner appoint a temporary chairman. A
permanent chairman and a permanent secretary of the meeting shall be
elected by vote of the Persons entitled to vote a majority in aggregate
number of the Outstanding Securities represented at the meeting, considered
as one class.
(d) At any meeting each Holder or proxy shall be entitled to one vote
for each Security held or represented by him; provided, however, that no
vote shall be cast or counted at any meeting in respect of any Security
challenged as not Outstanding and ruled by the chairman of the meeting to
be not Outstanding. The chairman of the meeting shall have no right to
vote, except as a Holder of a Security or proxy.
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(e) Any meeting duly called pursuant to Section 1002 at which a quorum
is present may be adjourned from time to time by Persons entitled to vote a
majority of the Outstanding Securities represented at the meeting,
considered as one class; and the meeting may be held as so adjourned
without further notice.
Section 1006. Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of Holders shall
be by written ballots on which shall be subscribed the signatures of the Holders
or of their representatives by proxy and the aggregate number and serial numbers
of the Outstanding Securities with respect to which the meeting shall have been
called, held or represented by them. The permanent chairman of the meeting
shall appoint two inspectors of votes who shall count all votes cast at the
meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports of all votes cast at the
meeting. A record of the proceedings of each meeting of Holders shall be
prepared by the secretary of the meeting and there shall be attached to said
record the original reports of the inspectors of votes on any vote by ballot
taken thereat and affidavits by one or more persons having knowledge of the
facts setting forth a copy of the notice of the meeting and showing that said
notice was given as provided in Section 1002 and, if applicable, Section 1004.
Each copy shall be signed and verified by the affidavits of the permanent
chairman and secretary of the meeting and one such copy shall be delivered to
the Company, and another to the Trustee to be preserved by the Trustee, the
latter to have attached thereto the ballots voted at the meeting. Any record so
signed and verified shall be conclusive evidence of the matters therein stated.
Section 1007. Action Without Meeting.
In lieu of a vote of Holders at a meeting as hereinbefore contemplated
in this Article, any request, demand, authorization, direction, notice, consent,
waiver or other action may be made, given or taken by Holders by written
instruments as provided in Section 104.
ARTICLE XI
Immunity of Incorporators, Stockholders, Officers and Directors
---------------------------------------------------------------
Section 1101. Liability Solely Corporate.
No recourse shall be had for the payment of any amount payable on any
Securities, or any part thereof, or for any claim based thereon or otherwise in
respect thereof, or of the indebtedness represented thereby, or upon any
obligation, covenant or agreement under this Agreement, against any
incorporator, stockholder, officer or director, as such, past, present or future
of the Company or of any predecessor or successor Person (either directly or
through the Company or a predecessor or successor Person), whether by virtue of
any constitutional provision, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise; it being expressly agreed and understood
that this Agreement and all the Securities are solely corporate obligations, and
that no personal liability whatsoever shall attach to, or be incurred by, any
incorporator, stockholder, officer or director, past, present or future, of the
Company or of any predecessor or successor Person, either directly or indirectly
through the
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Company or any predecessor or successor Person, because of the obligations
hereby authorized or under or by reason of any of the obligations, covenants or
agreements contained in this Agreement or in any of the Securities or to be
implied herefrom or therefrom, and that any such personal liability is hereby
expressly waived and released as a condition of, and as part of the
consideration for, the execution of this Agreement and the issuance of the
Securities.
ARTICLE XII
Subordination of Securities
---------------------------
Section 1201. Securities Subordinate to Senior Indebtedness.
The Company, for itself, its successors and assigns, covenants and
agrees, and each Holder of the Securities by its acceptance thereof, likewise
covenants and agrees, that the payment of all amounts payable on the Securities
is hereby expressly subordinated, to the extent and in the manner set forth in
this Article, in right of payment to the prior payment in full of all Senior
Indebtedness.
Each Holder of the Securities, by its acceptance thereof, authorizes
and directs the Trustee on its behalf to take such action as may be necessary or
appropriate to effectuate the subordination as provided in this Article, and
appoints the Trustee its attorney-in-fact for any and all such purposes.
Without limiting the generality of the foregoing, nothing contained in
this Article shall restrict the right of the Trustee or the Holders of
Securities to take any action to pursue any rights or remedies hereunder;
provided, however, that all Senior Indebtedness then due and payable shall first
be paid in full before the Holders of the Securities or the Trustee are entitled
to receive any direct or indirect payment from the Company of any amounts
payable on the Securities.
Section 1202. Payment Over of Proceeds of Securities.
In the event (a) of any insolvency or bankruptcy proceedings or any
receivership, liquidation, reorganization or other similar proceedings in
respect of the Company or a substantial part of its property, or of any
proceedings for liquidation, dissolution or other winding up of the Company,
whether or not involving insolvency or bankruptcy, whether voluntary or
involuntary or (b) subject to the provisions of Section 1203, that (i) a default
shall have occurred with respect to the payment of principal of or interest on
or other monetary amounts due and payable on any Senior Indebtedness, or (ii)
there shall have occurred a default (other than a default in the payment of
principal or interest or other monetary amounts due and payable) in respect of
any Senior Indebtedness, as defined therein or in the instrument under which the
same is outstanding, permitting the holder or holders thereof to accelerate the
maturity thereof (with notice or lapse of time, or both), and such default shall
have continued beyond the period of grace, if any, in respect thereof, and, in
the cases of subclauses (i) and (ii) of this clause (b), such default shall not
have been cured or waived or shall not have ceased to exist, then:
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(1) the holders of all Senior Indebtedness shall first be
entitled to receive payment of the full amount due thereon, or
provision shall be made for such payment in money or money's worth,
before the Holders of any of the Securities are entitled to receive a
payment on account of the Securities;
(2) any payment by, or distribution of assets of, the Company of
any kind or character, whether in cash, property or securities, to
which any Holder or the Trustee would be entitled except for the
provisions of this Article, shall be paid or delivered by the person
making such payment or distribution, whether a trustee in bankruptcy,
a receiver or liquidating trustee or otherwise, directly to the
holders of such Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture
under which any instruments evidencing any of such Senior Indebtedness
may have been issued, ratably according to the aggregate amounts
remaining unpaid on account of such Senior Indebtedness held or
represented by each, to the extent necessary to make payment in full
of all Senior Indebtedness remaining unpaid after giving effect to any
concurrent payment or distribution (or provision therefor) to the
holders of such Senior Indebtedness, before any payment or
distribution is made to the Holder of the Securities or to the Trustee
under this Agreement; and
(3) in the event that, notwithstanding the foregoing, following
receipt by the Trustee of notice pursuant to Section 1208 of any fact
that would prohibit the making of any payment to or by the Trustee
pursuant to the provisions of this Article, any payment by, or
distribution of assets of, the Company of any kind or character,
whether in cash, property or securities, in respect of any amount
payable on the Securities or in connection with any repurchase by the
Company of the Securities, shall be received by the Trustee or any
Holder before all Senior Indebtedness is paid in full, or provision is
made for such payment in money or money's worth, such payment or
distribution in respect of any amount payable on the Securities or in
connection with any repurchase by the Company of the Securities shall
be paid over to the holders of such Senior Indebtedness or their
representative or representatives or to the trustee or trustees under
any indenture under which any instruments evidencing any such Senior
Indebtedness may have been issued, ratably as aforesaid, for
application to the payment of all Senior Indebtedness remaining unpaid
until all such Senior Indebtedness shall have been paid in full, after
giving effect to any concurrent payment or distribution (or provision
therefor) to the holders of such Senior Indebtedness. Without
limitation, the Contingency Funds will be considered payment received
by the Trustee for purposes of this paragraph.
For purposes of this Article only, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan or reorganization or readjustment which are subordinate
in right of payment to all Senior Indebtedness which may at the time be
outstanding to the same extent as, or to a greater extent than, the Securities
are so subordinated as provided in this Article. The consolidation of the
Company with, or the merger of the Company into, another Person or the
liquidation or dissolution of the Company following
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the conveyance or transfer of its property as an entirety, or substantially as
an entirety, to another Person upon the terms and conditions provided for in
Article Eight hereof shall not be deemed a dissolution, winding-up, liquidation
or reorganization for the purposes of this Section 1202 if such other Person
shall, as a part of such consolidation, merger, conveyance or transfer, comply
with the conditions stated in Article Eight hereof. Nothing in Section 1201 or
in this Section 1202 shall apply to claims of, or payments to, the Trustee under
or pursuant to Section 607.
Section 1203. Disputes with Holders of Certain Senior Indebtedness.
Any failure by the Company to make any payment on or perform any other
obligation in respect of Senior Indebtedness, other than any indebtedness
incurred by the Company or assumed or guaranteed, directly or indirectly, by the
Company for money borrowed (or any deferral, renewal, extension or refunding
thereof) or any other obligation as to which the provisions of this Section
shall have been waived by the Company in the instrument or instruments by which
the Company incurred, assumed, guaranteed or otherwise created such indebtedness
or obligation, shall not be deemed a default under clause (b) of Section 1202 if
(i) the Company shall be disputing its obligation to make such payment or
perform such obligation and (ii) either (A) no final judgment relating to such
dispute shall have been issued against the Company which is in full force and
effect and is not subject to further review, including a judgment that has
become final by reason of the expiration of the time within which a party may
seek further appeal or review, or (B) in the event that a judgment that is
subject to further review or appeal has been issued, the Company shall in good
faith be prosecuting an appeal or other proceeding for review and a stay or
execution shall have been obtained pending such appeal or review.
Section 1204. Subrogation.
Senior Indebtedness shall not be deemed to have been paid in full
unless the holders thereof shall have received cash (or securities or other
property satisfactory to such holders) in full payment of such Senior
Indebtedness then outstanding. Upon the payment in full of all Senior
Indebtedness, the Holders of the Securities shall be subrogated to the rights of
the holders of Senior Indebtedness to receive any further payments or
distributions of cash, property or securities of the Company applicable to the
holders of the Senior Indebtedness until all amounts payable on the Securities
shall be paid in full; and such payments or distributions of cash, property or
securities received by the Holders of the Securities, by reason of such
subrogation, which otherwise would be paid or distributed to the holders of such
Senior Indebtedness shall, as between the Company, its creditors other than the
holders of Senior Indebtedness, and the Holders, be deemed to be a payment by
the Company to or on account of Senior Indebtedness, it being understood that
the provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders, on the one hand, and the holders of
the Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders of the Securities
would otherwise have been entitled but for the provisions of this Article shall
have been applied, pursuant to the provisions of this Article, to the payment of
all amounts payable under Senior Indebtedness, then and in such case, the
Holders of the Securities shall be entitled to receive from
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the holders of such Senior Indebtedness any payments or distributions received
by such holders of Senior Indebtedness in excess of the amount required to make
payment in full, or provision for payment, of such Senior Indebtedness.
Section 1205. Obligation of the Company Unconditional.
Nothing contained in this Article or elsewhere in this Agreement or in
the Securities is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Indebtedness and the Holders, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders amounts payable on the Securities as and when the same shall become due
and payable in accordance with their terms, or is intended to or shall affect
the relative rights of the Holders and creditors of the Company other than the
holders of Senior Indebtedness, nor shall anything herein or therein prevent the
Trustee or any Holder from exercising all remedies otherwise permitted by
applicable law upon default under this Agreement, subject to the rights, if any,
under this Article of the holders of Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.
Upon any payment or distribution of assets or securities of the
Company referred to in this Article, the Trustee and the Holders shall be
entitled to rely upon any order or decree of a court of competent jurisdiction
in which such bankruptcy, dissolution, winding up, liquidation or reorganization
proceedings are pending or upon a certificate of the receiver, trustee in
bankruptcy, liquidating trustee agent or other person making such payment or
distribution delivered to the Trustee or to the Holders for the purpose of
ascertaining the persons entitled to participate in such distribution, the
holders of the Senior Indebtedness and other indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon, and all other facts pertinent thereto or to this Article.
Section 1206. Priority of Senior Indebtedness Upon Maturity.
Upon the maturity of the principal of any Senior Indebtedness by lapse
of time, acceleration or otherwise, all matured principal of Senior Indebtedness
and interest and premium, if any, thereon shall first be paid in full before any
payment is made upon the Securities or before any Securities can be acquired by
the Company.
Section 1207. Trustee as Holder of Senior Indebtedness.
The Trustee shall be entitled to all rights set forth in this Article
with respect to any Senior Indebtedness at any time held by it, to the same
extent as any other holder of Senior Indebtedness. Nothing in this Article
shall deprive the Trustee of any of its rights as such holder.
Section 1208. Notice to Trustee to Effectuate Subordination.
The Company shall give prompt written notice to the Trustee of any
fact known to the Company that would prohibit the making of any payment to or by
the Trustee in respect of the Securities pursuant to the provisions of this
Article. Notwithstanding the provisions of this Article or any other provision
of the Agreement, the Trustee shall not be charged with knowledge of the
existence of any facts which would prohibit the making of any payment of moneys
to or by
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the Trustee unless and until the Trustee shall have received written notice
thereof from the Company, from a Holder or from a holder of any Senior
Indebtedness or from any representative or representatives of such holder and,
prior to the receipt of any such written notice, the Trustee shall be entitled,
subject to Section 601, in all respects to assume that no such facts exist.
Section 1209. Modification, Extension, etc. of Senior Indebtedness.
The holders of Senior Indebtedness may, without affecting in any
manner the subordination of the payment of the amounts payable on the
Securities, at any time or from time to time and in their absolute discretion,
agree with the Company to change the manner, place or terms of payment, change
or extend the time of payment of, or renew or alter, any Senior Indebtedness, or
amend or supplement any instrument pursuant to which any Senior Indebtedness is
issued, or exercise or refrain from exercising any other of their rights under
the Senior Indebtedness including, without limitation, the waiver of default
thereunder, all without notice to or assent from the Holders or the Trustee.
Section 1210. Trustee Has No Fiduciary Duty to Holders of Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and objectives as
are specifically set forth in this Article, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Agreement against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness, and shall not be
liable to any such holders if it shall mistakenly pay over or deliver to the
Holders or the Company or any other Person, cash, property or securities to
which any holders of Senior Indebtedness shall be entitled by virtue of this
Article or otherwise.
Section 1211. Paying Agents Other than the Trustee.
In case at any time any Paying Agent other than the Trustee or the
Company shall have been appointed by the Company and be then acting hereunder,
the term "Trustee" as used in this Article shall in such case (unless the
context shall otherwise require) be construed as extending to and including such
Paying Agent within its meaning as fully for all intents and purposes as if such
Paying Agent were named in this Article in addition to or in place of the
Trustee; provided, however, that Sections 1207, 1208 and 1210 shall not apply to
the Company if it acts as Paying Agent.
Section 1212. Rights of Holders of Senior Indebtedness Not Impaired.
No right of any present or future holder of Senior Indebtedness to
enforce the subordination herein shall at any time or in any way be prejudiced
or impaired by any act or failure to act on the part of the Company or by any
noncompliance by the Company with the terms, provisions and covenants of this
Agreement, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
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Section 1213. This Article Not to Prevent Events of Default.
The failure to make a payment on the Securities by reason of any
provision of this Article shall not be construed as preventing the occurrence of
an Event of Default specified in paragraph (a) of Section 501.
Section 1214. Effect of Subordination Provisions; Termination.
Notwithstanding anything contained herein to the contrary, other than
as provided in the immediately succeeding sentence, all the provisions of this
Agreement shall be subject to the provisions of this Article, so far as the same
may be applicable thereto.
Notwithstanding anything contained herein to the contrary, the
provisions of this Article Twelve shall be of no further effect, and the
Securities shall no longer be subordinated in right of payment to the prior
payment of Senior Indebtedness, if the Company shall have delivered to the
Trustee a notice to such effect. Any such notice delivered by the Company shall
not be deemed to be an amendment for purposes of Article Nine.
ARTICLE XIII
Maintenance of Contingency Funds
--------------------------------
Section 1301. Payments to Trustee.
The Company will make periodic payments to the Trustee to be held as
Contingency Funds at the times and in the amounts specified in the Securities.
Contingency Funds will be held by the Trustee to support the obligations of the
Company to make payments to the Holders as specified in the Securities, except
as provided in Section 1303.
Section 1302. Maintenance of Accounts.
The Trustee will maintain separate records and accounting with respect
to the contingency funds for each Operation Year and for each Tax Year after
2007. The account for each Operation Year will include payments made to the
Trustee related to such Operation Year pursuant to Section 1301, plus earnings
on amounts held with respect to such Operation Year, less all Allocable
Expenses, and, if applicable, plus or minus, as appropriate, all Excess Cash
Flow Estimate Adjustments, Excess Carryforward Credit Estimate Adjustments,
Final Excess Cash Flow Deposit Adjustments, Final Excess Carryforward Credit
Deposit Adjustments, and Final Excess Disposition Proceeds Deposit Adjustments.
Allocable Expenses directly related to an Operation Year or Tax Year shall be
deducted from the account for such year, and other Allocable Expenses shall be
deducted pro rata from the accounts maintained for all years.
--- ----
Section 1303. Investment and Application of Contingency Funds.
All Contingency Funds held by the Trustee will be invested in
Government Obligations selected by the Trustee. The Company will advise the
Trustee as to the anticipated dates for the payments to be made on the
Securities and the Trustee will, to the extent practicable, cause the
Contingency Funds to be invested in Government Obligations maturing or
redeemable at the option of the holder on or prior to the anticipated dates for
payments identified
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by the Company. In investing the Contingency Funds, the Trustee may make any and
all investments through its own bond or securities department or any affiliate
providing investment services. The Contingency Funds will be applied by the
Trustee, as directed by the Company, either (a) to the Holders in satisfaction
of the Company's obligations to make payments to the Holders of the Securities,
(b) to the payment of Allocable Expenses or reimbursement of the Company
therefor, (c) to the Company in satisfaction of amounts owed to the Company
under the terms of the Securities because of Excess Cash Flow Estimate
Adjustments, Excess Carryforward Credit Estimate Adjustments, Final Excess Cash
Flow Deposit Adjustments, Final Excess Carryforward Credit Deposit Adjustments,
and Final Excess Disposition Proceeds Deposit Adjustments, or (d) to the Company
as reimbursement for amounts paid by the Company directly to the Holders in
satisfaction of the Company's obligations to make payments to the Holders of the
Securities, if there were corresponding deposits made by the Company with the
Trustee with respect to such obligations.
Section 1304. Officer's Certificates Relating to Contingency Funds; Tax
Reporting.
The Company shall deliver Officer's Certificates and Accountants'
Certificates to the Trustee at such times and in such forms as are called for in
the Securities, including without limitation by March 15/th/ following each
Operation Year, within 20 Business Days after the Tax Filing Date for each
Operation Year, within 30 Business Days after the Interim Determination Date for
each Operation Year, within 20 Business Days after the Final Determination Date
for each Operation Year, by March 15/th/ following each Tax Year after 2007,
within 20 Business Days after the Tax Filing Date for a Tax Year after 2007,
within 30 Business Days after the Interim Determination Date for a Tax Year
after 2007, within 20 Business Days after the Final Determination Date for a Tax
Year after 2007, as soon as practicable after the receipt of any Disposition
Proceeds in cash by the Company and within 20 Business Days after the
termination of all indemnity obligations with respect to a particular
Disposition. In addition, the Company shall deliver to the Trustee an Officer's
Certificate and an Accountants' Certificate not less than 5 Business Days prior
to any Payment Date specified in the Officer's Certificate, which Officer's
Certificate shall certify as to each component of the amount or amounts to be
paid to the Company or to the Holders of the Securities on the corresponding
Payment Date (other than any information which is exclusively within the
possession of the Trustee).
Notwithstanding any other provision of this Agreement or the
Securities to the contrary, the Trustee is not required to take notice of the
occurrence or existence of any condition or event which, under the terms of this
Agreement or the Securities, gives rise to any required deposit of Contingency
Funds by the Company or submission of information by the Company or to the
establishment of a Payment Date, unless and until the submission of an Officer's
Certificate by the Company identifying such condition or event and certifying to
all relevant aspects thereof.
The Company shall be fully responsible for ensuring compliance with
any requirements for the calculation, withholding or reporting of foreign,
federal, state or local taxes relative to this Agreement and the Securities.
The Trustee shall not be responsible for the calculation, withholding or
reporting of any foreign, federal, state or local taxes attributable to this
Agreement and the Securities or attributable to any payments to Holders of
Securities or any actual or imputed income or earnings for purposes of any
foreign, federal, state or local taxes.
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Section 1305. Officer's Certificate Relating to Satisfaction of Payment
Obligations.
Within 30 Business Days after the satisfaction of all of the Company's
payment obligations to the Holders under the Securities, the Company shall
deliver to the Trustee an Officer's Certificate certifying (i) that the Company
has satisfied its payment obligations to the Holders under the Securities and
this Agreement, and (ii) that the Company is in compliance with all covenants
and conditions under the Securities and this Agreement.
____________________
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the day and year first above written.
CP&L ENERGY, INC.
By: /s/ William D. Johnson
------------------------------------
Name: William D. Johnson
Title: Executive Vice President
THE CHASE MANHATTAN BANK, Trustee
By: /s/ Patti Maner
------------------------------------
Name: Patti Maner
Title: Authorized Representative
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APPENDIX A - Form of Certificate
[FORM OF FACE OF CVO CERTIFICATE]
REGISTERED REGISTERED
[CP&L ENERGY, INC.][or any subsequent name of such entity]
Cusip Number: ___________
No. _____________________ Certificate for _______ Contingent Value Obligations
Registered Owner: ___________________________
This certifies the registered owner designated above, or registered
assigns (the "Holder"), is the registered holder of the number of Contingent
Value Obligations ("CVOs") set forth above. Each CVO entitles the Holder,
subject to the provisions contained herein and in the Agreement referred to on
the reverse hereof, to payments from CP&L Energy, Inc., a North Carolina
corporation (the "Company"), in an amount and in the form determined pursuant to
the provisions set forth on the reverse hereof and as more fully described in
the Agreement referred to on the reverse hereof. Such payment shall be made on
each Payment Date as defined on the reverse hereof.
Payment of any amounts pursuant to this CVO Certificate shall be made
only to the registered Holder (as defined in the Agreement) of this CVO
Certificate. [Alternative sentence to be used in Book Entry Global
Certificates: Payment of any amounts pursuant to this CVO Certificate to be made
to its Holder shall be made directly to the registered Holders (as defined in
the Agreement) whose CVOs are represented by this Certificate in accordance with
Section 305 of the Agreement.] Payment of any amount on this CVO Certificate
shall be made at one or more offices or agencies maintained by the Company for
such purpose from time to time, in such currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts; provided, however, that at the option of the Company, payment may be made
by check or wire transfer payable in such money. ________________ has been
initially appointed as Paying Agent at its office or agency in
__________________, _________________.
Reference is hereby made to the further provisions of this CVO
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
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Unless the certificate of authentication hereon has been duly executed
by the Trustee referred to on the reverse hereof by manual signature, this CVO
Certificate shall not be entitled to any benefit under the Agreement, or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
(SEAL) CP&L ENERGY, INC.
By_____________________________
Name:
Title:
Attest:
______________________
Name:
Title:
Dated:________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned
Agreement.
Dated:__________
__________________________, as Trustee
By:___________________________________
Name:
Title:
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[FORM OF REVERSE OF CVO CERTIFICATE]
This CVO Certificate is one of a duly authorized issue of securities
of the Company (herein called the "CVOs") issued under and in accordance with
the Contingent Value Obligation Agreement, dated as of November 30, 2000 (herein
called the "Agreement," which shall have the meaning assigned to it in such
instrument), between the Company and The Chase Manhattan Bank, a banking
corporation organized under the laws of the State of New York, as trustee (the
"Trustee," which term includes any successor trustee under the Agreement), and
is subject to the terms and provisions contained in the Agreement, to all of
which terms and provisions the Holder of this CVO Certificate consents by
acceptance hereof. The Agreement is hereby incorporated herein by reference and
made a part hereof. Reference is hereby made to the Agreement for a full
statement of the respective rights, limitations of rights, duties, obligations
and immunities thereunder of the Company, the Trustee and the holders of the
CVOs. All capitalized terms used in this CVO Certificate without definition
shall have the respective meanings ascribed to them in the Agreement. Copies of
the Agreement can be obtained by contacting the Trustee.
The payment obligations evidenced by this CVO Certificate are, to the
extent provided in the Agreement, subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness, and this CVO Certificate
is issued subject to the provisions of the Agreement with respect thereto. Each
Holder of this CVO Certificate, by accepting the same, (a) agrees to and shall
be bound by such provisions, (b) authorizes and directs the Trustee on its
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination so provided and (c) appoints the Trustee its
attorney-in-fact for any and all such purposes. Each Holder hereof, by its
acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Agreement by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such Holder upon said provisions.
I. DEPOSITS WITH THE TRUSTEE
A. Excess Cash Flow Deposits.
1. Estimate. On March 15th following each Operation Year (each, an
--------
"Excess Cash Flow Estimate Deposit Date"), the Company shall deliver to the
Trustee (i) an Officer's Certificate identifying the Excess Cash Flow Estimate
for such Operation Year, (ii) an Accountants' Certificate, and (iii) an amount
equal to the Excess Cash Flow Estimate for such Operation Year.
2. Estimate Adjustment. Within 20 Business Days after the Tax
-------------------
Filing Date for an Operation Year, the Company shall deliver to the Trustee (i)
an Officer's Certificate identifying the revised Excess Cash Flow Estimate for
the applicable Operation Year and the amount of any Excess Cash Flow Estimate
Adjustment to be made for such Operation Year, (ii) an Accountants' Certificate,
and (iii) an amount equal to the Excess Cash Flow Estimate Adjustment (if
positive), together with any earnings with respect thereto (calculated at the
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average yield on the portion of the Contingency Funds allocable to such
Operation Year)from the Excess Cash Flow Estimate Deposit Date to the date of
such delivery. Within 20 Business Days after receipt of such Officer's
Certificate, the Excess Cash Flow Estimate Adjustment (if negative), together
with any earnings with respect thereto from the Excess Cash Flow Estimate
Deposit Date to the applicable Payment Date, shall be paid by the Trustee to the
Company from the Contingency Funds, if any, held by the Trustee allocable to
such Operation Year.
3. Final Deposit Adjustment. Within 20 Business Days after the
------------------------
Final Determination Date for an Operation Year, the Company shall deliver to the
Trustee (i) an Officer's Certificate identifying the Final Excess Cash Flow
Deposit Adjustment for the applicable Operation Year, (ii) an Accountants'
Certificate, and (iii) an amount equal to the Final Excess Cash Flow Deposit
Adjustment (if positive), together with any earnings with respect thereto
(calculated at the average yield on the portion of the Contingency Funds
allocable to such Operation Year) from the Excess Cash Flow Estimate Deposit
Date to the date of such delivery. Within 20 Business Days after receipt of
such Officer's Certificate, the Final Excess Cash Flow Deposit Adjustment (if
negative), together with any earnings with respect thereto from the Excess Cash
Flow Estimate Deposit Date to the applicable Payment Date, shall be paid by the
Trustee to the Company from the Contingency Funds, if any, held by the Trustee
allocable to such Operation Year; provided, however, that if such Final Excess
Cash Flow Deposit Adjustment (plus earnings) is more than the remaining
Contingency Funds allocable to such Operation Year, the deficiency shall be paid
to the Company from remaining Contingency Funds, if any, allocable to one or
more other Tax Years, and the amounts potentially payable to CVO Holders with
respect to such other Tax Year or Years shall be reduced by the amount of such
deficiency. For purposes of the preceding sentence, the deficiency shall be
paid to the Company from the Contingency Funds allocable to the earliest Tax
Year or Years for which Contingency Funds remain.
B. Excess Carryforward Credits Deposits.
1. Estimate. On March 15/th/ following each Tax Year after 2007
--------
(each, an "Excess Carryforward Credits Estimate Deposit Date"), the Company
shall deliver to the Trustee (i) an Officer's Certificate identifying the Excess
Carryforward Credits Estimate for such Tax Year, (ii) an Accountants'
Certificate, and (iii) an amount equal to the Excess Carryforward Credits
Estimate for such Tax Year.
2. Estimate Adjustment. Within 20 Business Days after the Tax
-------------------
Filing Date for a Tax Year after 2007, the Company shall deliver to the Trustee
(i) an Officer's Certificate identifying the revised Excess Carryforward Credits
Estimate for the applicable Tax Year and the amount of any Excess Carryforward
Credits Estimate Adjustment to be made for such Tax Year, (ii) an Accountants'
Certificate, and (iii) an amount equal to the Excess Carryforward Credits
Estimate Adjustment (if positive), together with any earnings with respect
thereto (calculated at the average yield on the portion of the Contingency Funds
allocable to such Tax Year) from the Excess Carryforward Credits Estimate
Deposit Date to the date of such delivery. Within 20 Business Days after
receipt of such Officer's Certificate, the Excess Carryforward Credits Estimate
Adjustment (if negative), together with any earnings with respect thereto from
the Excess Carryforward Credits Estimate Deposit Date to the applicable Payment
Date, shall be
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paid by the Trustee to the Company from the Contingency Funds, if any, held by
the Trustee allocable to such Tax Year.
3. Final Deposit Adjustment. Within 20 Business Days after the
------------------------
Final Determination Date for a Tax Year after 2007, the Company shall deliver to
the Trustee (i) an Officer's Certificate identifying the Final Excess
Carryforward Credits Deposit Adjustment for the applicable Tax Year, (ii) an
Accountants' Certificate, and (iii) an amount equal to the Final Excess
Carryforward Credits Deposit Adjustment (if positive), together with any
earnings with respect thereto (calculated at the average yield on the portion of
the Contingency Funds allocable to such Tax Year) from the Excess Carryforward
Credits Estimate Deposit Date to the date of such delivery. Within 20 Business
Days after receipt of such Officer's Certificate, the Final Excess Carryforward
Credits Deposit Adjustment (if negative), together with any earnings with
respect thereto from the Excess Carryforward Credits Estimate Deposit Date to
the applicable Payment Date, shall be paid by the Trustee to the Company from
the Contingency Funds, if any, held by the Trustee allocable to such Tax Year;
provided, however, that if such Final Excess Carryforward Credits Deposit
Adjustment (plus earnings) is more than the remaining Contingency Funds
allocable to such Tax Year, the deficiency shall be paid to the Company from
remaining Contingency Funds, if any, allocable to one or more other Tax Years,
and the amounts potentially payable to CVO Holders with respect to such other
Tax Year or Years shall be reduced by the amount of such deficiency. For
purposes of the preceding sentence, the deficiency shall be paid to the Company
from the Contingency Funds allocable to the earliest Tax Year or Years for which
Contingency Funds remain.
C. Excess Disposition Proceeds.
1. Estimate Deposit. As soon as practicable after the receipt of
----------------
Disposition Proceeds in cash by the Company (each, an "Excess Disposition
Proceeds Deposit Date"), the Company shall deliver to the Trustee (i) an
Officer's Certificate identifying (a) the Excess Disposition Proceeds
attributable to such cash Disposition Proceeds, (b) the Maximum Indemnity
Obligation Amount with respect to such Disposition, and (c) the Company's good
faith estimate of the time frame during which any indemnity obligation with
respect to such Disposition is expected to remain outstanding, (ii) an
Accountants' Certificate, and (iii) an amount equal to any Excess Disposition
Proceeds attributable to such cash Disposition Proceeds.
2. Final Deposit Adjustment. Within 20 Business Days after the
------------------------
termination (by payment or expiration) of all indemnity obligations with respect
to a particular Disposition, the Company shall deliver to the Trustee (i) an
Officer's Certificate identifying the amount of any Final Excess Disposition
Proceeds Deposit Adjustment with respect to such Disposition (if applicable),
and (ii) an Accountants' Certificate. Within 20 Business Days after receipt of
such Officer's Certificate, the Final Excess Disposition Proceeds Deposit
Adjustment (if applicable), together with any earnings with respect thereto from
the Excess Disposition Proceeds Deposit Date to the applicable Payment Date,
shall be paid by the Trustee to the Company from the Contingency Funds, if any,
held by the Trustee allocable to such Disposition; provided, however, that if
such Final Excess Disposition Proceeds Deposit Adjustment (plus earnings) is
more than the remaining Contingency Funds, if any, allocable to such
Disposition, the deficiency shall be paid to the Company from remaining
Contingency Funds allocable to one or more Tax Years or other Dispositions, and
the amounts potentially payable to CVO Holders with respect to such
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Tax Year or Years or other Dispositions shall be reduced by the amount of such
deficiency. For purposes of the preceding sentence, the deficiency shall be paid
to the Company from the Contingency Funds allocable to the earliest Tax Year or
Years or other Dispositions for which Contingency Funds remain.
II. PAYMENTS TO HOLDERS
The Company shall pay, or by Officer's Certificate (delivered with an
Accountants' Certificate) direct the Trustee to pay from Contingency Funds, to
the Holder hereof of record on the date that is 15 Business Days prior to the
applicable Payment Date, the following:
A. Excess Cash Flow Payments.
1. Interim Payment. With respect to each Operation Year for which
---------------
an Interim Determination Date occurs prior to the Final Determination Date,
within 30 Business Days after the Interim Determination Date for such Operation
Year, for each outstanding CVO represented hereby, a pro rata portion of the
Interim Excess Cash Flow Payment with respect to such Operation Year, together
with any earnings with respect thereto from the Excess Cash Flow Estimate
Deposit Date to the applicable Payment Date, and less any Allocable Expenses
allocable to such Operation Year;
2. Adjustment to Interim Payment . With respect to each Operation
------------------------------
Year for which an Interim Determination Date occurs prior to the Final
Determination Date, within 30 Business Days after the Final Determination Date
for such Operation Year, for each outstanding CVO represented hereby, a pro rata
portion of the Excess Cash Flow Payment Adjustment (if positive) with respect to
such Operation Year, together with any earnings with respect thereto from the
Excess Cash Flow Estimate Deposit Date to the applicable Payment Date, less any
Allocable Expenses allocable to such Operation Year and not taken into account
pursuant to the preceding paragraph (II)(A)(1);
3. Final Payment. With respect to each Operation Year for which no
-------------
Interim Determination Date occurs prior to the Final Determination Date, within
30 Business Days after the Final Determination Date for such Operation Year, for
each outstanding CVO represented hereby, a pro rata portion of the actual Excess
Cash Flow for such Operation Year, determined as of the Final Determination
Date, together with any earnings with respect thereto from the Excess Cash Flow
Estimate Deposit Date to the applicable Payment Date, and less any Allocable
Expenses allocable to such Operation Year;
B. Excess Carryforward Credits Payments.
1. Interim Payment. With respect to each Tax Year after 2007 for
---------------
which an Interim Determination Date occurs prior to the Final Determination
Date, within 30 Business Days after the Interim Determination Date for such Tax
Year, for each outstanding CVO represented hereby, a pro rata portion of the
Interim Excess Carryforward Credits Payment for such Tax Year, together with any
earnings with respect thereto from the Excess Carryforward
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Credits Estimate Deposit Date to the applicable Payment Date, and less any
Allocable Expenses allocable to such Tax Year;
2. Adjustment to Interim Payment . With respect to each Tax Year
------------------------------
after 2007 for which an Interim Determination Date occurs prior to the Final
Determination Date, within 30 Business Days after the Final Determination Date
for such Tax Year, for each outstanding CVO represented hereby, a pro rata
portion of the Excess Carryforward Credits Payment Adjustment (if positive) for
such Tax Year, together with any earnings with respect thereto from the Excess
Carryforward Credits Estimate Deposit Date to the applicable Payment Date, less
any Allocable Expenses allocable to such Tax Year and not taken into account
pursuant to the preceding paragraph (II)(B)(1);
3. Final Payment. With respect to each Tax Year after 2007 for
-------------
which no Interim Determination Date occurs prior to the Final Determination
Date, within 30 Business Days after the Final Determination Date for such Tax
Year, for each outstanding CVO represented hereby, a pro rata portion of the
actual Excess Carryforward Credits for such Tax Year, determined as of the Final
Determination Date, together with any earnings with respect thereto from the
Excess Carryforward Credits Estimate Deposit Date to the applicable Payment
Date, and less any Allocable Expenses allocable to such Tax Year;
C. Excess Disposition Proceeds.
1. Interim Payment. With respect to each Disposition, as soon as
---------------
practicable after the receipt of Excess Disposition Proceeds by the Trustee, for
each outstanding CVO represented hereby, a pro rata portion of the Interim
Excess Disposition Proceeds Payment with respect to such Disposition; and
2. Adjustment to Interim Payment. With respect to each Disposition,
-----------------------------
(A) within 30 Business Days after the termination of all indemnity obligations
with respect to such Disposition, for each outstanding CVO represented hereby, a
pro rata portion of the Excess Disposition Proceeds Payment Adjustment (if
positive) with respect to such Disposition, together with any earnings with
respect thereto from the Excess Disposition Proceeds Estimate Deposit Date to
the applicable Payment Date, and (B) for any Tax Year following the termination
of the indemnity obligations and in which the Company receives any Disposition
Proceeds with respect to such Disposition, as soon as practicable following the
receipt by the Trustee of any Excess Disposition Proceeds attributable to such
Disposition Proceeds, for each outstanding CVO represented hereby, a pro rata
portion of such Excess Disposition Proceeds.
D. Other Payment Provisions
The Company may deduct (or by Officer's Certificate direct the Trustee
to deduct) from the payments to be made to Holders under this Certificate a pro
---
rata share of Allocable Expenses to be reimbursed to the Company.
----
Notwithstanding the foregoing, the amounts of payments to the Holders
under this CVO Certificate with respect to a Tax Year or a Disposition may be
reduced in the event of a deficiency with respect to another Tax Year or another
Disposition, as described above in Article I ("Deposits with the Trustee").
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If the payment date for a payment by the Company falls on a day that
is not a Business Day, the related payment will be made on the next succeeding
Business Day as if it were made on the date such payment was due, and no
interest will accrue on the amounts so payable for the period from and after
such date to the next succeeding Business Day.
Notwithstanding the provisions of Article II ("Payments to Holders"),
if any payment otherwise due to be made to the Holders by the Company (including
amounts previously deferred pursuant to this provision) is, in the aggregate,
less than one million dollars, then the amount of such payment will be retained
as Contingency Funds and combined (together with earnings on such amount) with
the next payment made to the Holders; provided, however, that this provision
shall not be applicable to payments for any Tax Year or any Disposition which
the Company reasonably believes will be the final Tax Year or Disposition with
respect to which payments will be made to the Holders. If a payment is deferred
pursuant to the preceding sentence and the Company subsequently concludes that
no further payments are reasonably likely to be made to the Holders, then the
Company shall pay (or direct the Trustee to pay from Contingency Funds) the
amount of the deferred payment (together with earnings thereon from the date
which the payment would have been made to the applicable Payment Date) to the
Holders as soon as practicable thereafter.
III. OTHER PROVISIONS
No reference herein to the Agreement and no provision of this CVO
Certificate or of the Agreement shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay any amounts determined
pursuant to the terms hereof and of the Agreement at the times, place and
amount, and in the manner, herein prescribed. The Holder of this CVO
Certificate, by acceptance hereof, agrees that, except as otherwise expressly
provided in the Agreement, the EARTHCO Plants will be held and operated in
accordance with the Company's determination, in its sole discretion of the
appropriate extent and manner of ownership and operation of the EARTHCO Plants,
including any reduction or termination of operations at one or more EARTHCO
Plants and the Disposition of either any or all interests in the EARTHCO Plants
or any or all interests in any EARTHCO Business Entity. The Holder of this CVO
Certificate also agrees that, except as otherwise expressly provided in the
Agreement, the Company shall have complete and full control and sole discretion
with respect to (i) the reporting of any item on its United States federal and
state income tax returns or the United States federal and state income tax
returns of any partnership or other entity that owns (or is treated for United
States federal income tax purposes as owning) an EARTHCO Plant or any interest
therein, and (ii) the conduct or contest of any tax audit or proceeding with
respect thereto. Neither the Trustee, the Holder of this CVO Certificate or any
other party shall have any right to participate in any such proceeding.
The Holder of this CVO Certificate, by acceptance hereof, agrees that,
except as otherwise expressly provided in the Agreement, neither the Holder nor
the Trustee has the right to "accelerate" the amounts payable on the CVOs or to
otherwise require payment of the Contingency Funds except on the dates and in
the amounts specified in this CVO Certificate. The Holder of this CVO
Certificate also agrees that the CVOs and the obligations of the
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Company under the CVOs and the Agreement are general, unsecured obligations of
the Company and are not secured by any express or implied mortgage, lien,
charge, assignment or other encumbrance of or against the assets of the Company
or any EARTHCO Business Entities, including without limitation any of the
EARTHCO Plants.
The Company and, by its acceptance of this CVO Certificate, the Holder
of this CVO Certificate agree that this CVO Certificate is intended to
constitute a deferred payment obligation to which Section 483 of the Internal
Revenue Code (relating to unstated interest) applies and is not intended to
constitute an equity interest of any kind for United States federal, state, and
local tax purposes.
The Company and, by its acceptance of this CVO Certificate, the Holder
of this CVO Certificate also agree that the CVOs shall not bear interest, except
for amounts bearing interest at the Default Interest Rate.
The Company and, by its acceptance of this CVO Certificate, the Holder
of this CVO Certificate also agree that neither the Company nor the Holder has
the option to cause any CVO to be redeemed prior to the final payment to be made
on the CVOs.
The headings in this CVO Certificate are for convenience only and
shall not affect the construction hereof.
Any reference to any provision of law or tax form in this CVO
Certificate shall be deemed to include any corresponding successor provision
thereto or version thereof.
Neither the Company nor the Trustee has any duty or obligation to the
Holder of this CVO Certificate, except as expressly set forth herein or in the
Agreement.
IV. CERTAIN DEFINITIONS
"Accountants" means the Company's independent public accountants.
"Accountants' Certificate" means a certificate of the Accountants in
the form attached as Appendix C to the Agreement.
"Allocable Expenses" means all fees and expenses of the Trustee,
expenses of maintaining, investing and administering the Contingency Funds,
costs reasonably incurred by the Company in establishing and administering the
Securities, costs of transferring interests in the Securities and other typical
transfer agent functions, and that portion of any of the Company's tax
administration, audit or controversy expenses reasonably allocable to the CVOs
(including, within limitation, expenses relating to the determination of any tax
item associated with EARTHCO Plants).
"Carryforward Credits" means any Section 29 Credits earned during an
Operation Year and carried forward (after taking into account the assumptions
with respect to the priority of use of tax credits in the definition of Net Cash
Flow) as part of the Company's minimum tax
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credit (within the meaning of Section 53 of the Internal Revenue Code) and
utilized in one or more Tax Years after 2007.
"Contingency Funds" means all payments made by the Company to the
Trustee and held by the Trustee, plus earnings on amounts held, and less
Allocable Expenses.
"Default Interest Rate" means the three month London Interbank Offered
Rate, as published in the Wall Street Journal, as such rate may change from time
to time, plus 300 basis points.
"Disposition" means any sale or other transfer during an Operation
Year to a Person outside the Company's consolidated United States federal income
tax group of an interest in an EARTHCO Business Entity or EARTHCO Plant that
would result in a loss or reduction of any Section 29 Credits available to the
Company.
"Disposition Proceeds" means proceeds received by the Company with
respect to a Disposition less (A) the Company's unrecovered Initial Investment
(or a pro rata portion in the event of a partial Disposition), (B) expenses
--- ----
incurred in connection with such Disposition, and (C) taxes on such Disposition,
assuming for this purpose that the taxable gain shall be as reported on the
Company's IRS Form 1120 and taxed at a combined federal and state income tax
rate of 40%. For purposes of clause (A), the Company shall be deemed to have
recovered its Initial Investment with respect to the interest that is the
subject of such Disposition (i) to the extent it shall have been recovered from
previous Disposition Proceeds with respect to such Disposition, and (ii) to the
extent there shall have been cumulative Excess Cash Flow attributable to the
relevant EARTHCO Business Entity for previous Operation Years (other than that
in which such Disposition occurs). For purposes of the previous sentence, the
Excess Cash Flow that shall be attributable, for each previous Operation Year,
to the relevant EARTHCO Business Entity or EARTHCO Plant that is the subject of
the Disposition shall be determined by multiplying the Excess Cash Flow for that
Operation Year by a fraction, whose numerator shall be the weighted average
annual Company ownership interest (whether direct or indirect) in the EARTHCO
Plant and whose denominator shall be the sum of the weighted average annual
Company ownership interest (whether direct or indirect) in all EARTHCO Plants.
If such Disposition relates to less than a 100% interest in the relevant EARTHCO
Plant, the recovery of the Initial Investment will only be the cumulative Excess
Cash Flow during all previous Operation Years attributable to the fractional
interest that is the subject of the Disposition. For example, for each
Operation Year before any Disposition has occurred, 100/400, or 25%, of Excess
Cash Flow will be allocated to each EARTHCO Plant; for each Operation Year after
there has been no Disposition except a Disposition of a 50% interest in one
EARTHCO Plant, 100/350 of Excess Cash Flow will be allocated to each 100%-owned
EARTHCO Plant and 50/350 of Excess Cash Flow will be allocated to the one 50%-
owned EARTHCO Plant; and so forth.
"EARTHCO Business Entity" means any corporation, partnership, limited
liability company, or other entity owning (for United States federal income tax
purposes) an interest in an EARTHCO Plant, including, on the date hereof, Ceredo
Synfuel, LLC, Sandy River Synfuel, LLC, Solid Energy, LLC, and Solid Fuel, LLC.
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"EARTHCO Plants" means the following:
(i) the secondary coal recovery system facility owned by Solid
Energy LLC and currently located at Kentucky May Coal Company,
Inc.'s Arnolds Fork Preparation Plant near Kite, Kentucky;
(ii) the secondary coal recovery system facility owned by Solid Fuel
LLC and currently located at Powell Mountain Coal Company,
Inc.'s Preparation Plant near St. Charles, Virginia;
(iii) the secondary coal recovery system facility owned by Ceredo
Synfuel LLC and currently located at Kanawha River Terminal,
Inc.'s Ceredo Dock in Ceredo, West Virginia; an d
(iv) the secondary coal recovery system facility owned by Sandy
River Synfuel LLC and currently located at Kanawha River
Terminal, Inc.'s Ceredo Dock in Ceredo, West Virginia.
"Excess Carryforward Credits" means the amount equal to 50% of the
excess of (A) the Carryforward Credits, for a particular Operation Year, over
(B) any amount by which the Preference exceeded Net Cash Flow for the Operation
Year in which they were earned.
"Excess Carryforward Credits Estimate" means for each Tax Year after
2007, the Excess Carryforward Credits originally estimated by the Company on
March 15/th/ following such Tax Year and revised within 20 Business Days after
the Tax Filing Date for such Tax Year.
"Excess Carryforward Credits Estimate Adjustment" means the difference
between (A) the revised Excess Carryforward Credits Estimate for a particular
Tax Year, determined as of the Tax Filing Date for such Tax Year, and (B) the
original Excess Carryforward Credits Estimate for such Tax Year, determined as
of March 15/th/ following such Tax Year.
"Excess Carryforward Credits Payment Adjustment" means the difference
between (A) the actual Excess Carryforward Credits for a particular Tax Year,
determined as of the Final Determination Date, and (B) the Interim Excess
Carryforward Credits Payment for such Tax Year.
"Excess Cash Flow" means, for each Operation Year, 50% of the Net Cash
Flow in excess of the Preference.
"Excess Cash Flow Estimate" means for each Operation Year the Excess
Cash Flow originally estimated by the Company on March 15/th/ following such
Operation Year and revised within 20 Business Days after the Tax Filing Date for
such Operation Year.
"Excess Cash Flow Estimate Adjustment" means the difference between
(A) the revised Excess Cash Flow Estimate for a particular Operation Year,
determined as of the Tax
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Filing Date for such Operation Year, and (B) the original Excess Cash Flow
Estimate for such Operation Year, determined as of March 15/th/ following such
Tax Year.
"Excess Cash Flow Payment Adjustment" means the difference between (A)
the actual Excess Cash Flow for a particular Operation Year, determined as of
the Final Determination Date, and (B) the Interim Excess Cash Flow Payment for
such Operation Year.
"Excess Disposition Proceeds" means the amount equal to either, (A) in
the event of a Disposition prior to March 16, 2002, 25% of the Disposition
Proceeds for such Disposition or (B) in the event of a Disposition after March
15, 2002, the Ratio multiplied by the Disposition Proceeds for such Disposition.
"Excess Disposition Proceeds Payment Adjustment" means the difference
between (A the remaining Contingency Funds allocable to a particular
Disposition, and (B) the total Final Excess Disposition Proceeds Deposit
Adjustment paid to the Company for such Disposition.
"Final Determination Date" means for each Tax Year, the later of (A)
the date when the statute of limitations for a Tax Year under both sections 6501
and, if applicable, 6229 of the Internal Revenue Code and in the case of an
examination by any state taxing authority, the statute of limitations under the
applicable state law, has expired or (B) in the event any taxing authority has
proposed any adjustment for a Tax Year, the date when there has occurred with
respect to all such proposed adjustments by all such taxing authorities for such
Tax Year, (i) a decision, judgment, decree, or other order of a court of
competent jurisdiction that has become final and not subject to further appeal
(through the passage of time or otherwise); (ii) a nonappealable written
agreement with the applicable taxing authority; or (iii) the completion of
administrative proceedings with the applicable taxing authority, if a judicial
contest is not, or ceases to be, available or, in the taxpayer's sole
discretion, is not to be commenced or continued.
"Final Excess Carryforward Credits Deposit Adjustment" means the
difference between (A) the actual Excess Carryforward Credits for a particular
Tax Year, determined as of the Final Determination Date, and (B) the Excess
Carryforward Credits Estimate for such Tax Year.
"Final Excess Cash Flow Deposit Adjustment" means the difference
between (A) the actual Excess Cash Flow for a particular Operation Year,
determined as of the Final Determination Date, and (B) the Excess Cash Flow
Estimate for such Operation Year.
"Final Excess Disposition Proceeds Deposit Adjustment" means either
(A) in the event of a Disposition prior to March 16, 2002, 25% of the Indemnity
Obligation Amount for such Disposition or (B) in the event of a Disposition
after March 15, 2002, the Ratio multiplied by the Indemnity Obligation Amount
for such Disposition.
"Indemnity Obligation Amount" means the total actual indemnity
obligation incurred by the Company or any subsidiary with respect to any
Disposition plus all out-of-pocket expenses incurred in connection with any
indemnity claim relating to such Disposition.
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"Initial Investment" means the cost to acquire an EARTHCO Plant or
EARTHCO Business Entity plus any costs to move and reassemble an EARTHCO Plant
at a new location, all as reflected on the books of the Company or its
subsidiaries (including the applicable EARTHCO Business Entity), without any
deduction for depreciation or amortization.
"Interim Determination Date" means, with respect to a Tax Year, the
date when all the following facts are true: (1) the Examination Division of the
IRS has completed its examination of, and issued its final written report
relating to, the Company's consolidated United States federal income tax return
for that Tax Year; (2) no adjustment is then proposed and remains unresolved
with respect to any item relating to an EARTHCO Plant for that Tax Year; (3)
there then exists no examination or other proceeding with respect to the United
States federal income tax return for such Tax Year or any prior Tax Year of any
EARTHCO Business Entity; and (4) there are remaining Contingency Funds deposited
with respect to one or more subsequent Tax Years for which neither an Interim
Determination Date nor a Final Determination Date has occurred.
"Interim Excess Carryforward Credits Payment " means for each Tax Year
after 2007, the lesser of (A) the Excess Carryforward Credits Estimate for such
Tax Year previously deposited into the Contingency Funds, or (B) the Excess
Carryforward Credits for such Tax Year, determined as of the Interim
Determination Date, and based upon the proposed redetermination of the Company's
consolidated tax liability and taxable income as shown on the IRS examination
report for such Tax Year.
"Interim Excess Cash Flow Payment " means for each Operation Year, the
lesser of (A) the Excess Cash Flow Estimate for such Operation Year previously
deposited into the Contingency Funds, or (B) the Excess Cash Flow for such
Operation Year, determined as of the Interim Determination Date, and based upon
the proposed redetermination of the Company's consolidated tax liability and
taxable income as shown on the IRS examination report for such Operation Year.
"Interim Excess Disposition Proceeds Payment" means the amount equal
to the excess of (A) the amount deposited by the Company pursuant to paragraph
(I)(C)(1) hereof with respect to a Disposition, over (B) 25% of the Maximum
Indemnity Obligation Amount, in the case of a Disposition prior to March 16,
2002, or the Ratio multiplied by the Maximum Indemnity Obligation Amount, in the
case of a Disposition after March 15, 2002. For any Disposition for which the
Company is to receive one or more additional payments of Disposition Proceeds,
the preceding sentence shall be applied by replacing "Maximum Indemnity
Obligation Amount" with a pro rata portion thereof based upon the ratio of the
--- ----
amount so deposited to the total Excess Disposition Proceeds received and to be
received for such Disposition.
"Internal Revenue Code" means the United States Internal Revenue Code
of 1986, as amended.
"IRS" means the United States Internal Revenue Service.
"Maximum Indemnity Obligation Amount" means either (A) the total
maximum indemnity obligation that could be incurred by the Company or any
subsidiary with respect to
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any Disposition, as set forth in the agreement providing for indemnity with
respect to such Disposition, or (B) if no such maximum is set forth in any
agreement, the Company's good faith estimate of the total maximum indemnity
obligation that could be incurred by the Company or any subsidiary with respect
to such Disposition; provided that, in the case of an indemnity obligation
concerning an environmental matter, the Company shall take into consideration
(in forming its good faith estimate) the written evaluation of an independent
third party.
"Net Cash Flow" means the Company's share of each EARTHCO Business
Entity's income or loss adjusted for depreciation and other non-cash items, plus
(A) income tax benefits, less income taxes incurred and (B) income tax credits
realized. The Company's share of each EARTHCO Business Entity's partnership
income or loss shall be determined from IRS Schedule K-1, of Form 1065, received
in connection with each partnership's tax filing. Such amount shall be adjusted
to a cash basis by adjusting for depreciation and other non-cash items creating
such income or loss. Income tax benefits will be determined for the Operation
Year under consideration by multiplying (i) the Company's statutory United
States federal income tax rate by any partnership losses relating to an EARTHCO
Plant reported on such Forms K-1 that the Company realizes on its IRS Form 1120
and (ii) the Company's effective state income tax rate (after taking into
account the deduction of state income taxes for United States federal income tax
purposes) by any such partnership losses that the Company or a subsidiary
realizes on the applicable state income tax returns. Income taxes incurred
shall be determined for the Operation Year under consideration by multiplying
(i) the Company's statutory United States federal income tax rate by any
partnership income reported on such Forms K-1 that the Company realizes on its
IRS Form 1120 and (ii) the Company's effective state income tax rate (after
taking into account the deduction of state income taxes for United States
federal income tax purposes) by any such partnership income that the Company or
a subsidiary realizes on the applicable state income tax returns. The income
tax credits realized will be determined by the Company's share of Section 29
Credits on such Forms K-1 and any unused Section 29 Credits, related to the
EARTHCO Plants, carried forward (as part of the Company's minimum tax credit)
from previous Operation Years, that reduce total tax on the Company's Form 1120
for the current Operation Year. For purposes of the calculation of Net Cash
Flow, in any Operation Year for which the Company generates carryforwards of tax
credits of equal priority with the Section 29 Credits under the Internal Revenue
Code or Treasury Regulation ordering rules because of limitations on their use,
the Section 29 Credits will be deemed to be the first such credits used in such
Operation Year. Additionally, Section 29 Credits will be deemed utilized in the
order in which they were earned.
"Operation Year" means each Tax Year from 2001 through and including
2007.
"Payment Date" means the date specified in the applicable Officer's
Certificate as a date on which the Trustee or the Company is to make a payment
to the Holders or the Trustee is to make a payment to the Company.
"Preference" means $80 million for each Operation Year, subject to the
following adjustments:
(a) In the event of a Disposition of 100% of an EARTHCO Plant
or EARTHCO Business Entity, the Preference will be reduced by the following
amounts
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(and for the year of the Disposition, by a pro rata portion based on the
--- ----
portion of the year remaining after the Disposition):
EARTHCO Business Entity or Dollar Amount
-------------------------- -------------
EARTHCO Plant Owned By
----------------------
Solid Energy, LLC $15.8 million
Solid Fuel, LLC $15.8 million
Ceredo Synfuel, LLC $27.6 million
Sandy River Synfuel, LLC $20.8 million
; and
(b) In the event of a Disposition of less than 100% of an EARTHCO
Plant or EARTHCO Business Entity, the Preference will be reduced by pro
---
rata portions of the above amounts, based on the percentage sold and, for
----
the year of the Disposition, the portion of the year remaining after the
Disposition.
"Ratio" means the ratio of Excess Cash Flow to Net Cash Flow for prior
Operation Years, determined on a cumulative basis, assuming for this purpose
that in each prior Operation Year the Company's share of (i) the aggregate net
income (as computed for United States federal income tax purposes) of the
EARTHCO Business Entities is taxed at a combined federal and state income tax
rate of 40%, (ii) the aggregate net loss (as computed for United States federal
income tax purposes) of the EARTHCO Business Entities produces a combined
federal and state income tax benefit equal to 40% of such loss, and (iii)
Section 29 Credits are utilized in full in the Tax Year earned.
"Section 29 Credits" means any credit against the United States
federal income tax liability of the Company resulting from the production and
sale of "qualified fuels" from the EARTHCO Plants to an unrelated person as
provided for in Section 29 of the Internal Revenue Code.
"Tax Filing Date" means the date of the filing of the Company's annual
United States federal income tax return for the applicable Tax Year.
"Tax Year" means a calendar year or any fiscal year that the Company
may adopt as its taxable year for United States federal income tax purposes.
ABBREVIATIONS
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as
tenants in common and not as community property
UNIF TRANS
MIN ACT - _______________________Custodian__________________________
(Custodian) (Minor)
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under Uniform Transfers to Minors Act ___________________
(State)
Additional abbreviations may also be used though not on the above list.
FOR VALUE RECEIVED, the undersigned hereby sell(s) and transfer(s) unto
________________________________________________________ (please insert Social
Security or other identifying number of assignee).
________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE OF
ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
the within CVO Certificate and all rights thereunder, hereby irrevocably
constituting and appointing
________________________________________________________________________________
________________________________________________________________________________
agent to transfer said CVO Certificate on the books of the Company, with full
power of substitution in the premises.
Dated:______________ _______________________________________________________
_______________________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the face of
the within instrument in every particular without
alteration or enlargement, or any change whatever.
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