SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report:
(Date of earliest event reported)
January 15, 1996
CITIZENS UTILITIES COMPANY
(Exact name of registrant as specified in charter)
Delaware 001-11001 06-0619596
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
High Ridge Park, P.O. Box 3801, Stamford, Connecticut 06905
- ------------------------------------------------------ -----
(Address of principal executive offices) (Zip code)
(203) 329-8800
(Registrant's telephone number, including area code)
No change since last report
(Former name or former address, if changed since last report)
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
4.200.1 Indenture dated as of January 15, 1996, between Citizens
Utilities Company and Chemical Bank, as indenture trustee.
4.200.2 First Supplemental Indenture dated as of January 15, 1996,
between Citizens Utilities Company and Chemical Bank, as indenture trustee.
4.200.3 5% Convertible Subordinated Debenture due 2036 (contained as
Exhibit A to Exhibit 4.200.2).
4.200.4 Amended and Restated Declaration of Trust dated as of January
15, 1996, of Citizens Utilities Trust.
4.200.5 Convertible Preferred Security Certificate (contained as
Exhibit A-1 to Exhibit 4.200.4).
4.200.6 Amended and Restated Limited Partnership Agreement dated as of
January 15, 1996 of Citizens Utilities Capital L.P.
4.200.7 Partnership Preferred Security Certificate (contained as Annex
A to Exhibit 4.200.6).
4.200.8 Convertible Preferred Securities Guarantee Agreement dated as
of January 15, 1996 between Citizens Utilities Company and Chemical Bank, as
guarantee trustee.
4.200.9 Partnership Preferred Securities Guarantee Agreement dated as
of January 15, 1996 between Citizens Utilities Company and Chemical Bank, as
guarantee trustee.
4.200.10 Letter of Representations, dated January 18, 1996, from
Citizens Utilities Company and Chemical Bank, as trustee, to DTC, for deposit of
Convertible Preferred Securities with DTC.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
CITIZENS UTILITIES COMPANY
(Registrant)
Date: May 28, 1996 By:/s/ Livingston E. Ross
------------------------
Vice President and Controller
EXECUTION COPY
=========================
CITIZENS UTILITIES COMPANY,
To
CHEMICAL BANK,
Trustee
----------------
INDENTURE
Dated as of January 15, 1996
------------------------------
==============================
<PAGE>
CITIZENS UTILITIES COMPANY
Reconciliation and tie between Trust Indenture Act of 1939 and Indenture,
dated as of January 15, 1996.
Trust Indenture
Act Section Indenture Section
--------------- -----------------
subsection 310(a)(1) 6.9
(a)(2) 6.9
(a)(3) Not Applicable
(a)(4) Not Applicable
(a)(5) 6.9
(b) 6.8, 6.10
subsection 311(a) 6.13
(b) 6.13
312(a) 7.1,7.2(a)
(b) 7.2(b)
(c) 7.2(c)
subsection 313(a) 7.3(a)
(b) 7.3(a)
(c) 7.3(a)
(d) 7.3(b)
subsection 314(a) 7.4
(b) Not Applicable
(c)(1) 1.2
(c)(2) 1.2
(c)(3) Not Applicable
(d) Not Applicable
(e) 1.2
subsecton 315(a) 6.1
(b) 2.7
(c) 6.1
(d) 6.1
(d)(1) 6.1
(e) 5.14
316(a) 5.2, 5.12, 5.13
(a)(1)(A) 5.2,5.12
(a)(1)(B) 5.2,5.13
(a)(2) Not Applicable
(b) .5.8
(c) 1.4(c)
<PAGE>
subsection 317(a)(1) 5.3
(a)(2) 5.4
(b) 10.3
subsection 318(a) 2.1
NOTE: This reconciliation and tie shall not, for any
purpose, be deemed to be a part of the Indenture.
INDENTURE, dated as of January 15, 1996, from CITIZENS UTILITIES COMPANY, a
corporation duly organized and existing under the laws of the State of Delaware
(herein called the "Company"), having its principal administrative offices at
High Ridge Park, Building No. 3, Stamford, Connecticut 06905, to CHEMICAL BANK,
a New York banking corporation, as Trustee (herein called the "Trustee"), having
its principal corporate trust office at 450 West 33rd Street, New York, New York
10001.
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
subordinated debentures, notes or other evidences of indebtedness (herein called
the "Securities"), to be issued in one or more series as in this Indenture
provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities or of series thereof, as
follows:
ARTICLE
Definitions and Other Provisions
of General Application
Section 1.1 Definitions.
------------
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as are
generally accepted at the date of such computation; and
(4) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Act", when used with respect to any Holder, has the meaning specified in
Section 1.4.
"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.
"Authenticating Agent" means any Person authorized by the Trustee to act on
behalf of the Trustee to authenticate Securities.
"Board of Directors", when used with reference to the Company, means either
the board of directors, or any duly authorized committee of the board of
directors, of the Company, as the case requires.
"Board Resolution", when used with reference to the Company, 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 Security" means any Security registered in the name of CEDE &
Co., as nominee of DTC, or any successor to CEDE and Co. and/or DTC.
"Business Day" means any day other than a Saturday or Sunday or a day on
which banking institutions in The City of New York are authorized or obligated
by law or executive order to close.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or, if at
any time after the execution of this instrument such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor corporation shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor corporation.
"Company Request" or "Company Order" means a written request or order, as
the case may be, signed in the name of the Company, by its Chairman of the
Board, its President or a Vice President, and by its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the
Trustee.
"Conversion Agent" means any Person authorized by the Company to convert
any Securities on behalf of the Company.
"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, as at the date of this Indenture, is located at 450 West 33rd
Street, 15th Floor, New York, New York 10001, Attn: Corporate Trustee
Administration Department.
The term "corporation" includes corporations, associations, companies and
business trusts.
The terms "defeasance" and "covenant defeasance" bear the meanings assigned
to such terms, respectively, by Sections 13.2 and 13.3.
"Delayed Interest" has the meaning specified in Section 3.7.
"DTC" or "Depository" means the securities depository, The Depository Trust
Company, New York, New York, and any successor.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Agent" means any Person authorized by the Company to exchange any
Securities on behalf of the Company.
"Fiscal Year" means with respect to the Company, the fiscal year ending
December 31 of each year or such other date as the Company may hereafter elect,
and with respect to any other Person, the calendar year or other annual
accounting period of the Person in question.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof and shall
include the terms of particular series of Securities established as contemplated
by Section 3.1.
"Interest", when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity.
"Interest Payment Date", when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.
"Letter of Representation", with respect to the Securities of any series,
means that certain agreement by and among the Company, the Trustee and DTC
setting forth the rights and duties of DTC and its nominee to act as depository
and registered owner, with respect to such Securities.
"Maturity", when used with respect to any Security, means the date on which
the principal of such Security or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of the Company and delivered
to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company and who shall be acceptable to the Trustee.
"Original Issue Discount Security" means any Security which provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 5.2.
"Outstanding", when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
-------
(i) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities for whose payment or redemption money (or in the case
of payment by defeasance under Section 13.2, money, U.S. Government obligations
or both) in the necessary amount has been theretofore deposited with the Trustee
or any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own Paying
Agent) for the Holders of such Securities; provided that, if such Securities are
--------
to be redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor satisfactory to the Trustee has been made
and provided further, in the case of payment by
----------------
defeasance under Section 13.2, that all conditions precedent to the
application of such Section shall have been satisfied; and
(iii) Securities which have been paid pursuant to Section 3.6 or
surrendered for conversion or exchange into other securities or in exchange for
or in lieu of which other Securities have been authenticated and delivered
pursuant to this Indenture, other than any such Securities in respect of which
there shall have been presented to the Trustee proof satisfactory to it that
such Securities are held by a bona fide purchaser in whose hands such Securities
are valid obligations of the Company;
provided, however, that in determining whether the Holders of the
- -----------------
requisite principal amount of the Outstanding Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, (i) the
principal amount of an Original Issue Discount Security that shall be deemed to
be Outstanding shall be the amount of the principal thereof that would be due
and payable as of the date of such determination upon acceleration of the
Maturity thereof pursuant to Section 5.2, (ii) the principal amount of a
Security denominated in a foreign currency or currencies shall be the U.S.
dollar equivalent, determined on the date of original issuance of such Security,
of the principal amount (or, in the case of an Original Issue Discount Security,
the U.S. dollar equivalent on the date of original issuance of such Security of
the amount determined as provided in (i) above) of such Security, and (iii)
Securities owned by the Company, or any other obligor upon the Securities or any
Affiliate of the Company, or of such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which the Trustee knows to
be so owned shall be so disregarded. Securities so owned which have been pledged
in good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's independent right so to act with
respect to such Securities and that the pledgee is not the Company, or any other
obligor upon the Securities or any Affiliate of the Company or of such other
obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Payment", when used with respect to the Securities of any series,
means the place or places where the principal of (and premium, if any) and
interest on the Securities of that series are payable as specified as
contemplated by Section 3.1 or, if not so specified, the City of New York, New
York.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date
on the Securities of any series means the date specified for that purpose as
contemplated by Section 3.1.
"Responsible Officer", when used with respect to the Trustee, means any
officer in the Corporate Trust Office of the Trustee and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge of and familiarity with the
particular subject.
"Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 3.5.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.7.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding Voting
Stock of which is owned, directly or indirectly, by the Company, or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed, provided,
--------
however, that in the event the Trust Indenture Act of 1939 is amended
- -------
after such date, "Trust Indenture Act" means, to the extent required by any such
amendment, the Trust Indenture Act of 1939 as so amended, except as provided in
Section 9.5 or Section 10.6.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder, and if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities of
any series shall mean the Trustee with respect to Securities of that series.
"U.S. Government Obligation" has the meaning set forth in Section 13.4.
"Vice President", when used with respect to the Company, means any vice
president, whether or not designated by a number or a word or words added before
or after the title "vice president".
"Voting Stock" means stock which ordinarily has voting power for the
election of directors, whether at all times or only so long as no senior class
of stock has such voting power by reason of any contingency, but shall not
include securities convertible into such Voting Stock.
Section 1.2 Compliance Certificates and Opinions.
------------------------------------
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.3 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 any officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 1.4 Acts of Holders.
---------------
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is hereby expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 6.1) conclusive in favor of the Trustee and the Company,
if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which the Trustee deems sufficient.
(c) The Company may, in the circumstances permitted by the Trust Indenture
Act, fix any day as the record date for the purpose of determining the Holders
entitled to give or take any request, demand, authorization, direction, notice,
consent, waiver or other action, or to vote on any action, authorized or
permitted to be given or taken by Holders. If not set by the Company prior to
the first solicitation of a Holder made by any Person in respect of any such
action, or, in the case of any such vote, prior to such vote, the record date
for any such action or vote shall be the 30th day (or, if later, the date of the
most recent list of Holders required to be provided pursuant to Section 7.1)
prior to such first solicitation or vote, as the case may be. With regard to any
record date, only the Holders on such date (or their duly designated proxies)
shall be entitled to give or take, or vote on, the relevant action.
(d) The ownership of Securities shall be proved by the Security
Register.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
Section 1.5 Notices, Etc., to Trustee or Company.
------------------------------------
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing to or
with the Trustee at its Corporate Trust Office, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Company addressed to it
at the address of its office specified in the first paragraph of this instrument
or at any other address previously furnished in writing to the Trustee by the
Company.
Section 1.6 Notice to Holders; Waiver.
-------------------------
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed,
to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.
Section 1.7 Conflict with Trust Indenture Act.
---------------------------------
If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act that is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
that may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
Section 1.8 Effect of Headings and Table of Contents.
----------------------------------------
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 1.9 Successors and Assigns.
----------------------
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
Section 1.10 Separability Clause.
-------------------
In case any provision in this Indenture or in the Securities 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 2.1 Benefits of Indenture.
---------------------
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors hereunder
and the Holders, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
Section 1.12 Governing Law.
-------------
This Indenture, and the Securities, shall be governed by and construed in
accordance with the laws of the State of New York.
Section 1.13 Legal Holidays.
--------------
In any case where any Interest Payment Date, Redemption Date or Stated Maturity
of any Security or the last date on which a Holder has the right to convert or
exchange his Securities shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal (and premium, if any) or conversion
or exchange of the Securities need not be made at such Place of Payment on such
date, but may be made on the next succeeding Business Day at such Place of
Payment with the same force and effect as if made on the Interest Payment Date
or Redemption Date, or at the Stated Maturity, or on such last day for
conversion or exchange, provided that no interest shall accrue for the period
from and after such Interest Payment Date, Redemption Date or Stated Maturity,
as the case may be, except that if such succeeding Business Day falls in the
next calendar year, payment shall be made on the immediately preceding Business
Day.
ARTICLE
Security Forms
Section 2.1 Forms Generally.
---------------
The Securities of each series shall be in substantially such form as shall
be established by or pursuant to a Board Resolution or, to the extent authorized
by a Board Resolution, an Officers' Certificate, or as set forth in, or in an
Exhibit to, any indenture supplemental hereto which establishes such series in
each case substantially in the form annexed to such Board Resolution, Officers'
Certificate or supplemental indenture, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of such Securities. If the form of Securities of
any series of such Securities is established by action taken pursuant to a Board
Resolution, a copy of an appropriate record of such action shall be certified by
the Secretary or an Assistant Secretary of the Company and delivered to the
Trustee at or prior to the delivery of the Company Order contemplated by Section
3.3 for the authentication and delivery of such Securities.
The Trustee's certificates of authentication shall be in substantially the
form set forth in this Article.
The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.
Section 2.2 Form of Trustee's Certificate of Authentication.
-----------------------------------------------
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
CHEMICAL BANK, as
Trustee
By_________________________________
Authorized Signatory
ARTICLE 3
The Securities
Section 3.1 Amount Unlimited; Issuable in Series.
------------------------------------
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution or, to the extent authorized by
a Board Resolution, an Officers' Certificate, or established in one or more
indentures supplemental hereto, prior to the issuance of Securities of any
series, such of the following as may be appropriate to such series:
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from all other Securities);
(2) any limit upon the aggregate principal amount of the Securities of
the series which may be authenticated and delivered under this Indenture (except
for Securities authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Securities of the series pursuant to
Section 3.4, 3.5, 3.6, 9.6 or 11.7 and except for any Securities which, pursuant
to Section 3.3, are deemed never to have been authenticated and delivered
hereunder);
(3) the Person or Persons to whom any interest on a Security of the
series shall be payable, if other than the Person in whose name that Security is
registered at the close of business on the Regular Record Date for such interest
or the method of determining the same;
(4) the date or dates on which the principal of the Securities of
the series is payable or the method of determining the same;
(5) the rate or rates (or method for establishing the rate or rates)
at which the Securities of the series shall bear interest, if any, the date or
dates from which such interest shall accrue, the Interest Payment Dates on which
such interest shall be payable and the Regular Record Date and/or Special Record
Date for the interest payable on any Interest Payment Date or other date on
which interest is paid (or method for establishing such date or dates);
(6) the form of payment (whether by cash, securities or other
property) in satisfaction of interest requirements of the Securities of the
series;
(7) the right of the Company, if any, to defer interest with
respect the Securities of the series;
(8) any subordination terms of the Securities of the series;
(9) the place or places where the principal of (and premium, if any)
and interest on Securities of the series shall be payable;
(10) if applicable, the period or periods within which, the price or
prices at which and the terms and conditions upon which Securities of the
series may be redeemed, in whole or in part, at the option of the Company;
(11) if applicable, the terms and conditions upon which the
Securities of the series may be convertible or exchangeable, in whole or in
part;
(12) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous provisions or
at the option of a Holder thereof and the period or periods within which, the
price or prices at which and the terms and conditions upon which Securities of
the series shall be redeemed or purchased, in whole or in part, pursuant to such
obligation;
(13) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Securities of the series shall be issuable;
(14) if other than the full principal amount thereof, the portion of
the principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 5.2;
(15) if other than such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public or
private debts, the currency or currencies (including composite currencies) or
securities or other property in which payment of the principal of (and premium,
if any) and/or interest on the Securities of such series shall be payable;
(16) if the principal of (and premium, if any) and/or interest on the
Securities of such series are to be payable, at the election of the Company or
any Holder, in a currency or currencies (including composite currencies) or
securities or other property other than that in which the Securities are stated
to be payable, the period or periods within which, and the terms and conditions
upon which, such election may be made;
(17) if the amounts of payments of principal of (and premium, if any)
and/or interest on the Securities of such series may be determined with
reference to an index, the manner in which such amounts shall be determined;
(18) in the case of Securities of a series the terms of which are not
established pursuant to subsection (15), (16) or (17) above, the application, if
any, of Section 13.2 and/or Section 13.3 to the Securities of such series; or,
in the case of Securities the terms of which are established pursuant to
subsection (15), (16) or (17) above, the adoption and applicability to such
Securities of any terms and conditions similar to those contained in Section
13.2 and/or Section 13.3;
(19) if applicable, the issuance of a global security representing
all of the Securities of such series and exchange of such global Security for
definitive or other Securities representing such series, or the issuance of
global securities of any other nature;
(20) any addition to, deletion or modification of any Event of Default
applicable to such series;
(21) any provisions providing for or governing one or more series of
global Securities, bearer Securities or Securities proposed to be listed or
quoted on or in any exchange or market, within or without the United States of
America, including provisions which establish the form and terms of such
Securities, including interest coupons, and govern the manner of payment of
principal and interest, registration and exchange of Securities, notice to
Holders, Acts of Holders, waivers and any and all other aspects thereof; and
(22) any other terms of the series (which terms shall not be in
conflict with the provisions of this Indenture which apply to such series).
All Securities of any one series shall be substantially identical except as
to interest rates, method for determining interest rates, Interest Payment
Dates, Regular Record Dates, redemption terms, Stated Maturity, denomination,
date of authentication, currency or other property, any index for determining
amounts payable, and except as may otherwise be provided in or pursuant to such
Board Resolution and set forth or determined as provided in such Officers'
Certificate or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
Section 3.2 Denominations.
-------------
The Securities of each series shall be issuable in registered form without
coupons in such denominations as shall be specified as contemplated by Section
3.1. In the absence of any such provisions with respect to the Securities of any
series, the Securities of such series shall be issuable in denominations of
$1,000 and any integral multiple thereof.
Section 3.3 Execution, Authentication, Delivery and Dating.
----------------------------------------------
The Securities shall be executed on behalf of the Company by its Chairman
of the Board, its President, one of its Vice Presidents or its Treasurer, under
its corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Securities
may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities. If the
form or terms of the Securities of the series have been established in or
pursuant to one or more Board Resolutions or Officers' Certificates as permitted
by Sections 2.1 and 3.1, in authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to such Securities,
the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be
fully protected in relying upon, an Opinion of Counsel stating,
(a) if the form of any of such Securities has been established by or
pursuant to Board Resolution or Officers' Certificate as permitted by Section
2.1, that such form has been established in conformity with the provisions of
this Indenture;
(b) if the terms of any of such Securities have been established by or
pursuant to Board Resolution or Officers' Certificate as permitted by Section
3.1, that such terms have been established in conformity with the provisions of
this Indenture; and
(c) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute valid and legally binding
obligations of the Company enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorga nization and other laws of general applicability
relating to or affecting the enforcement of creditors' rights and to general
equity principles.
If the Company shall establish pursuant to Section 3.1 that the Securities
of a series are to be issued in the form of one or more registered global
securities, then the Company shall execute and the Trustee shall, in accordance
with this Section and the Company Order with respect to such series,
authenticate and deliver one or more registered global securities that (a)(i)
shall represent and shall be denominated in an amount equal to the aggregate
principal amount of all of the Securities of such series issued and not yet
canceled, (ii) shall be registered in the name of DTC or a nominee of DTC, (iii)
shall be delivered by the Trustee to DTC or pursuant to DTC's instructions, and
(iv) shall bear a legend substantially to the following effect: "Unless and
until it is exchanged in whole or in part for Securities in definitive
registered form, this Security may not be transferred except as a whole by DTC
to a nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC or
by DTC or any such nominee to a successor to DTC or a nominee of such successor"
or such other legend as shall be acceptable to DTC; or (b) shall comply with
such other terms or procedures as may be set forth in a Company Order with
respect to such series. Notwithstanding that such form or terms have been so
established, the Trustee shall not be required to authenticate such Securities
if the issue of such Securities pursuant to this Indenture would adversely
affect the Trustee's own rights, duties or immunities under the Securities and
this Indenture or otherwise in a manner which is not reasonably acceptable to
the Trustee.
Notwithstanding the provisions of Section 3.1 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 3.1 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the time
of authentication of each Security of such series if such documents are
delivered at or prior to the time of authentication upon original issuance of
the first Security of such series to be issued.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder and is entitled to the
benefits of this Indenture. Notwithstanding the foregoing, if any Security shall
have been authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 3.9, together with an Officers' Certificate
(which need not comply with Section 1.2 and need not be accompanied by an
Opinion of Counsel) stating that such Security has never been issued and sold by
the Company, for all purposes of this Indenture such Security shall be deemed
never to have been authenticated and delivered hereunder and shall never be
entitled to the benefits of this Indenture.
Section 3.4 Temporary Securities.
--------------------
Pending the preparation of definitive Securities of any series, the Company
may execute, and upon Company Order, the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive securities in lieu of which they are issued, with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities of any series are issued, the Company will cause
definitive Securities of that series to be prepared without unreasonable delay.
After the preparation of definitive Securities of such series, the temporary
Securities of such series shall be exchangeable for definitive securities of
such series upon surrender of the temporary Securities of such series at the
office or agency of the Company in a Place of Payment for that series, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities of any series, the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of the same series and of like tenor, of authorized
denominations. Until so exchanged, the temporary Securities of any series shall
in all respects be entitled to the same benefits under this Indenture as
definitive Securities of such series.
Section 3.5 Registration, Registration of Transfer and Exchange.
---------------------------------------------------
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office being herein
sometimes referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security of any series
at the office or agency in a Place of Payment for that series, the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Securities of the same
series, of any authorized denominations and of a like aggregate principal amount
and tenor.
At the option of the Holder, Securities of any series may be exchanged for
other Securities of the same series of any authorized denominations and of a
like aggregate principal amount and tenor, upon surrender of the Securities to
be exchanged at such office or agency. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange is
entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company or the Trustee) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Company and the Security Registrar duly executed, by the Holder thereof or
his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 3.4, 9.6 or 11.7 not involving any transfer.
The Company shall not be required (i) to issue, register the transfer of or
exchange Securities of any series during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Securities of that series selected for redemption under Section 11.3 and ending
at the close of business on the day of such mailing, or (ii) to register the
transfer of or exchange any Security so selected for redemption in whole or in
part, except the unredeemed portion of any Security being redeemed in part.
Section 3.6 Mutilated, Destroyed, Lost and Stolen Securities.
------------------------------------------------
If any mutilated Security is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Security of the same series and of like tenor and principal amount, and
bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of any of them harmless then, in the absence of notice to the Company
or the Trustee that such Security has been acquired by a bona fide purchaser,
the Company shall execute and upon its request the Trustee shall authenticate
and deliver, in lieu of any such destroyed, lost or stolen Security, a new
Security of the same series and of like tenor and principal amount, and bearing
a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, 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 expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Security of any series, issued pursuant to this Section in lieu
of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
Section 3.7 Payment of Interest; Interest Rights Preserved.
----------------------------------------------
Unless otherwise provided as contemplated by Section 3.1 with respect to
any series of Securities, interest on any Security which is payable (unless
payment has been deferred pursuant to the exercise of a right of the Company so
to defer), and is punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest.
Any interest on any Security of any series which is payable, but is not
punctually paid or duly provided for for any reason, including the exercise of a
right of the Company to defer such interest payment, on any Interest Payment
Date (herein called "Delayed Interest") shall forthwith cease to be payable to
the Person entitled to such interest by virtue of having been such Holder, and
such Delayed Interest may be paid by the Company, at its election in each case,
as provided in Clauses (1), (2) or (3) below:
(1) With respect to any Delayed Interest resulting from the exercise
of a right of the Company to defer such Delayed Interest, the Company may elect
to make payment, in whole or in part,as hereinafter provided in this
subparagraph (1). The Company may elect -
to make payment to the Persons in whose names the Securities of such series
are registered at the close of business on a Special Record Date for the payment
of such Delayed Interest, which shall be fixed by the Company in the following
manner: The Company shall notify the Trustee in writing of the amount of Delayed
Interest proposed to be paid on each Security of such series, the date of the
proposed payment if payment is to be in shares of Common Stock (the "Special
Stock Transfer and Valuation Date"), and the date of the proposed payment if
payment is to be in cash (the "Special Cash Interest Payment Date"), which shall
also be the "Special Distribution Payment Date" for purposes of the Partnership
Preferred Securities and the Convertible Preferred Securities and the related
distribution. Thereupon the Company shall fix a special record date (the
"Special Record Date") for the payment of such Delayed Interest which shall be
not more than 35 days and not less than 15 days prior to the date of the
proposed payment. The Company shall promptly cause notice of the proposed
payment of such Delayed Interest and the Special Record Date, Special Stock
Transfer and Valuation Date, Special Cash Interest Payment Date and Special
Distribution Payment Date therefor to be mailed, first-class postage prepaid, or
delivered by courier service or by hand delivery or by any other manner deemed
practicable by the Trustee, to each Holder of Securities of such series at his
address as it appears in the Security Register, not less than 10 days prior to
such Special Record Date. Notice of the proposed payment of such Delayed
Interest and such dates therefor having been so mailed or delivered, such
Delayed Interest shall be paid to the Persons in whose names the Securities of
such series are registered at the close of business on such Special Record Date
and shall no longer be payable pursuant to the following Clauses (2) or (3).
(2) With respect to any Delayed Interest which has not been the
subject of the exercise of the Company's right to defer, the Company may elect
to make payment of any Delayed Interest to the Persons in whose names the
Securities of such series (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date for the payment of
such Delayed Interest, which shall be fixed in the following manner. The Company
shall notify the Trustee in writing of the amount of Delayed Interest proposed
to be paid on each Security of such series and the date of the proposed payment,
which shall be established so as to permit adequate time for the time periods
noted below, and at the same time the Company shall deposit with the Trustee an
amount of money equal to the aggregate amount proposed to be paid in respect of
such Delayed Interest or shall make arrangements satisfactory to the Trustee for
such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to such
Delayed Interest as in this Clause provided. Thereupon the Trustee shall fix a
special record date (the "Special Record Date") for the payment of such Delayed
Interest which shall be not more than 30 days and not less than 15 days prior to
the date of the proposed payment and not less than 10 days after the receipt by
the Trustee of the notice of the proposed payment. The Trustee shall promptly
notify the Company of such Special Record Date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment of such
Delayed Interest and the Special Record Date therefor to be mailed, first-class
postage prepaid, or delivered by courier service or by hand delivery, or by any
other manner deemed practicable by the Trustee, to each Holder of Securities of
such series at his address as it appears in the Security Register, not less than
10 days prior to such Special Record Date. Notice of the proposed payment of
such Delayed Interest and the Special Record Date therefor having been so mailed
or delivered, such Delayed Interest shall be paid to the Persons in whose names
the Securities of such series (or their respective Predecessor Securities) are
registered at the close of business on such Special Record Date and shall no
longer be payable pursuant to the following Clause (3).
(3) The Company may make payment of any Delayed Interest on the
Securities of any series in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may be listed
or any book-entry security system which may be applicable to the Debentures, and
upon such notice as may be required by such exchange or system, if, after notice
given by the Company to the Trustee of the proposed payment pursuant to this
Clause, such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
In the case of any Security which is converted or exchanged (other than
exchanges pursuant to Section 3.5) after any Regular Record Date or Special
Record Date and on or prior to the next succeeding Interest Payment Date (other
than any Security whose Maturity is prior to such Interest Payment Date),
interest whose Stated Maturity is on such Interest Payment Date shall be payable
on such Interest Payment Date notwithstanding such conversion or exchange, and
such interest (whether or not punctually paid or duly provided for) shall be
paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on such Regular Record Date
or Special Record Date. Except as otherwise expressly provided in the
immediately preceding sentence, in the case of any Security which is converted
or exchanged, interest whose Stated Maturity is after the date of conversion or
exchange of such Security shall not be payable, and the Company shall not make
nor be required to make any other payment, adjustment or allowance with respect
to accrued but unpaid interest on the Securities being converted or exchanged.
Section 3.8 Persons Deemed Owners.
---------------------
Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Security is registered as the owner of such Security
for the purpose of receiving payment of principal of (and premium, if any) and
(subject to Section 3.7) interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
Section 3.9 Cancellation.
------------
All Securities surrendered for payment, redemption, registration of
transfer or exchange or conversion or exchange or for credit against any sinking
fund payment shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be promptly canceled by it. The Company may
at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and may deliver to the Trustee for cancellation any
Securities previously authenticated hereunder which the Company has not issued
and sold and all Securities so delivered shall be promptly canceled by the
Trustee. No Securities shall be authenticated in lieu of or in exchange for any
Securities canceled as provided in this Section, except as expressly permitted
by this Indenture. All canceled Securities held by the Trustee shall be disposed
of as directed by a Company Order from the Company or in the absence of such
Company Order, in accordance with the Trustee's standard procedures.
Section 3.10 Computation of Interest.
-----------------------
Except as otherwise specified as contemplated by Section 3.1 for Securities
of any series, interest on the Securities of each series shall be computed on
the basis of a 360-day year of twelve 30-day months.
Section 3.11 Book-Entry Securities.
(a) Except as provided in subsection (c) of this Section 3.11, the
registered owner of all Securities of any series of Securities which is
designated as a Book Entry Security series in the Board Resolution, Officers'
Certificate, indenture supplemental hereto establishing such series, or other
instrument supplemental hereto, shall be CEDE & Co., as nominee of DTC. Payment
of interest for any Securities registered as of each Record Date in the name of
CEDE & Co. shall be made by wire transfer to the account of CEDE & Co. on the
Interest Payment Date for such Securities at the address indicated on the Record
Date for CEDE & Co. in the registration books of the Company kept by Trustee, as
Security Registrar.
(b) With respect to any Book-Entry Securities, the Securities shall be
issued in the form of one or more fully registered global securities in the
principal amount of each separate series of the Securities. Upon issuance, the
ownership of such Securities shall be registered in the registration books of
the Company kept by the Trustee in the name of CEDE & Co., as nominee of DTC.
The Trustee and the Company may treat DTC (or its nominee) as the sole and
exclusive owner of the Securities registered in its name for the purposes of
payment of the principal of, premium, if any, or interest on such Securities,
giving any notice permitted or required to be given to Holders under this
Indenture, registering the transfer of such Securities, obtaining any consent or
other action to be taken by Holders and for all other purposes whatsoever; and
neither the Trustee nor the Company shall be affected by any notice to the
contrary. Neither the Trustee nor the Company shall have any responsibility or
obligation to any DTC participant, any Person claiming a beneficial ownership
interest in Securities registered in the name of CEDE & Co. under or through DTC
or any DTC participant, or any other Person which is not shown on the
registration books of the Company kept by the Trustee as being a Holder with
respect to the accuracy of any records maintained by DTC, CEDE & Co. or any DTC
participant; the payment by DTC or any DTC participant to any beneficial owner
of any amount in respect of the principal of, premium, if any, or interest on
the Securities registered in the name of CEDE & Co.; the delivery to any DTC
participant or any beneficial owner of any notice which is permitted or required
to be given to Holders under this Indenture; the selection by DTC or any DTC
participant of any Person to receive payment in the event of a partial payment
of any Securities registered in the name of CEDE & Co.; or any consent given or
other action taken by DTC as Holder. The Paying Agent shall pay all principal
of, premium, if any, and interest on any Securities registered in the name of
CEDE & Co., only to or upon the order of CEDE & Co., as nominee of DTC, and all
such payments shall be valid and effective to fully satisfy and discharge the
Company's obligations with respect to the principal of, premium, if any, and
interest on such Securities to the extent of the sum or sums so paid. Upon
delivery by DTC to the Trustee of written notice to the effect that DTC had
determined to substitute a new nominee in place of CEDE & Co., and subject to
the provisions herein with respect to record dates, the words "CEDE & Co." in
this Indenture shall refer to such new nominee of DTC.
(c) With respect to any series of Securities registered or proposed to be
registered in the name of CEDE & Co., in the event that (i) DTC gives or has
given notice that it will discontinue its services as securities depository for
such series of Securities; or (ii) DTC ceases or has ceased to be a clearing
house registered under the Securities Exchange Act of 1934; or (iii) the Company
in its sole discretion determines or has determined that the beneficial owners
of such Securities will be entitled to obtain definitive certificates; or (iv)
an Event of Default with respect to such series has occurred and is continuing,
the Company shall, if the event is triggered by either (i) or (ii) above,
attempt to locate another qualified securities depository. If the Company fails
to locate such a replacement or if the event is triggered by either (iii) or
(iv) above, then it shall notify DTC and the Trustee, requesting DTC to notify
its participants, of the availability through DTC of definitive certificates. In
any such event, the Trustee shall issue, register the transfer of and exchange
definitive certificates as requested by DTC and any other Holders in appropriate
amounts. The Company and the Trustee shall be obligated to deliver definitive
certificates as described in this Indenture. In the event definitive
certificates are issued to Holders other than DTC, the provisions of this
Indenture shall apply to, among other things, the registration, transfer of and
exchange of such certificates and the method of payment of principal of,
premium, if any, and interest on such certificates. Whenever DTC requests the
Company and the Trustee to do so, the Trustee and the Company will cooperate
with DTC in taking appropriate action after reasonable notice (i) to make
available one or more separate certificates evidencing the Securities registered
in the name of CEDE & Co., to any DTC participant having Securities credited to
its DTC account or (ii) to arrange for another securities depository to maintain
custody of certificates evidencing such Securities. If the Company uses a
securities depository other than DTC, the provisions of this Section shall apply
with the appropriate modifications.
(d) Notwithstanding any other provision of this Indenture to the contrary,
so long as any Securities are registered in the name of CEDE & Co., as nominee
of DTC, all payments with respect to the principal of, premium, if any, and
interest on such Securities and all notices, with respect to such Securities
shall be made and given to DTC as provided in the applicable Letter of
Representation.
(e) In connection with any notice or other communication to be provided to
Holders pursuant to this Indenture by the Company or the Trustee with respect to
any consent or other action to be taken by Holders so long as any Securities of
a series are registered in the name of CEDE & Co., as nominee of DTC, the
Company or the Trustee, as the case may be, shall establish a record date for
such consent or other action and give DTC notice of such record date not less
than 15 calendar days in advance of such record date to the extent possible.
(f) The notice requirements set forth in the Letter of Representation
relating to the Securities of any series with respect to redemptions,
conversions and mandatory tenders shall be effective whenever such Securities
are Book Entry Securities, notwithstanding any other provisions of this
Indenture, to the extent such other provisions are incompatible with the notice
requirements set forth in the Letter of Representation.
ARTICLE 4
Satisfaction and Discharge
Section 4.1 Satisfaction and Discharge of Indenture.
---------------------------------------
This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of conversion, exchange, registration of
transfer or exchange of Securities herein expressly provided for), and the
Trustee, on the demand of and at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture,
when
(1) either
(A) all Securities theretofore authenticated and delivered (other than
(i) Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 3.6 and (ii) Securities for whose
payment money has theretofore been deposited in trust or segregated and held in
trust by, the Company and thereafter repaid to the Company or discharged from
such trust, as provided in Section 10.3) have been delivered to the Trustee for
cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity year,
or
(iii) are to be called for redemption under arrangements
satisfactory to the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has deposited or
caused to be deposited with the Trustee as trust funds in trust for the purpose
an amount sufficient to pay and discharge the entire indebtedness on such
Securities not theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and interest to the date of such deposit (in the
case of Securities which have become due and payable) or to the Stated Maturity
or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, stating that all conditions precedent herein provided
for relating to the satisfaction and discharge of this Indenture have been
complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7, and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 4.2 and the last
paragraph of Section 10.3 shall survive.
Section 4.2 Application of Trust Money.
--------------------------
Subject to provisions of the last paragraph of Section 10.3, all money
deposited with the Trustee pursuant to Section 4.1, shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as Paying Agent) as the Trustee may determine, to
the Persons entitled thereto, of the principal (and premium, if any) and
interest for whose payment such money has been deposited with or received by the
Trustee as contemplated by Section 4.1. Subject to Section 3.7, all moneys
deposited with the Trustee (and held by it or any Paying Agent) for the payment
of any Securities which are subsequently converted or exchanged shall be
returned to the Company upon Company Request.
Section 4.3 Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any money or securities
in accordance with Section 4.2 of this Indenture, by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 4.1 of this
Indenture until such time as the Trustee or Paying Agent is permitted to apply
all such money or securities
in accordance with Section 4.2 of this Indenture; provided that, if the
--------
Company has made any payment of principal of or interest on any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or securities held by the Trustee or Paying Agent.
ARTICLE 5
Remedies
Section 5.1 Events of Default .
"Event of Default", wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security of that
series when it becomes due and payable, and continuance of such default for a
period of 60 days; or
(2) default in the payment of the principal of (or premium, if any,
on) any Security of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment, when and as
due by the terms of a Security of that series; or
(4) default in the performance, or breach, of any covenant or warranty
of the Company in this Indenture (other than a covenant or warranty a default in
whose performance or whose breach is elsewhere in this Section specifically
dealt with or which has expressly been included in this Indenture solely for the
benefit of a series of Securities other than that series), and continuance of
such default or breach for a period of 90 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 a majority in principal amount of the
Outstanding Securities of that series a written notice specifying such default
or breach and requiring it to be remedied and stating that such notice is a
"Notice of Default" hereunder; or
(5) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance any
such decree or order for relief or any such other decree or order unstayed and
in effect for a period of 60 consecutive days; or
(6) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of a decree or order
for relief in respect of the Company in an involuntary case or proceeding under
any applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable Federal or State law, or
the consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Company or of any substantial part of
its property, or the making by either of them of an assignment for the benefit
of creditors, or the admission by either of them in writing of its inability to
pay its debts generally as they become due, or the talking of corporate action
by the Company in furtherance of any such action; or
(7) any other Event of Default provided with respect to Securities
of that series;
it being understood that in each case (other than those described in
paragraphs (1) through (3) above to the extent the Trustee is the Paying Agent
for the Securities of such series) the Trustee shall not be deemed to have
knowledge of an Event of Default hereunder unless a Responsible Officer has
received written notice thereof.
Nothing contained in this Section 5.1 shall limit the rights of the Company
to add, delete or modify any Event of Default or other similar event with
respect to one or more series of Securities at the time of establishment of any
such series as provided in Section 3.1 hereof.
Section 5.2 Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------
If an Event of Default with respect to Securities of any series at the time
Outstanding occurs and is continuing, then and in every such case the Trustee or
the Holders of a majority in principal amount of the Outstanding Securities of
that series may declare the principal amount (or, if any of the Securities of
that series are Original Issue Discount Securities, such portion of the
principal amount of such Securities as may be specified in the terms thereof) of
all of the Securities of that series to be due and payable immediately, by a
notice in writing to the Company (and to the Trustee if given by Holders), and
upon any such declaration such principal amount (or specified amount) shall
become immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities of that series, other
than interest deferred in accordance with the provisions of any supplemental
indenture,
(B) the principal of (and premium, if any, on) any Securities of that
series which have become due otherwise than by such declaration of acceleration
and interest thereon at the rate or rates prescribed therefor in such
Securities,
(C) to the extent that payment of such interest is lawful, interest
upon overdue interest at the rate or rates prescribed therefor in such
Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel;
and
(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series which
have become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee.
- --------------------------------------------------------
- -------
The Company covenants that if
(1) default occurs in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for a
period of 60 days;
(2) default occurs in the payment of the principal of (or premium, if any,
on) any Security at the Maturity thereof; or
(3) default occurs in the deposit of any sinking fund payment, when
and as due by the terms of a Security of that series;
the Company will, upon demand of the Trustee, pay to it, for the benefit of
the Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any overdue interest, at the rate
or rates prescribed therefor in such Securities, and, addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Securities and collect the
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 Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
Section 5.4 Trustee May File Proofs of Claim.
--------------------------------
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise, to take any and
all actions authorized by the Trust Indenture Act in order to have claims of the
Holders of Securities of any series and the Trustee allowed in any such
proceeding. In particular the Trustee shall be authorized,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Securities and
to file such other papers or documents as may be necessary or advisable in order
to, have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel) and of the Holders allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section 5.5 Trustee May Enforce Claims Without Possession of Securities.
- -----------------------------------------------------------
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.
Section 5.6 Application of Money Collected.
------------------------------
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (or premium,
if any) or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 6.7; and
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Securities in respect of
which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due and
payable on such Securities for principal (and premium, if any) and interest,
respectively.
Section 5.7 Limitation on Suits.
-------------------
No Holder of any Security of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless
(1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default with respect to the Securities of that series;
(2) the Holders of a majority in principal amount of the Outstanding
Securities of that series shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 90 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 90-day period by the Holders of 66 2/3% in principal
amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall
have any right in any manner whatever by virtue of, or by availing of any
provision of this Indenture to affect, disturb or prejudice the rights of any
other of such Holders, or to obtain or to seek to obtain priority or preference
over any other of such Holders or to enforce any right under this Indenture,
except in the manner herein provided and for the equal and ratable benefit of
all of such Holders.
Section 5.8 Unconditional Right of Holders to Receive Principal, Premium and
Interest and to Convert or Exchange.
- ---------------------------------------
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of (and premium, if any) and (subject to Section 3.7)
interest on such Security on the Stated Maturity or Maturities expressed in such
Security (or, in the case of redemption, on the Redemption Date), to convert or
exchange such Security in accordance with the terms of any supplemental
indenture providing for conversion or exchange, and to institute suit for the
enforcement of any such payment and right to convert or exchange, and such
rights shall not be impaired without the consent of such Holder.
Section 5.9 Restoration of Rights and Remedies
----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
Section 5.10 Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
3.6, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 5.11 Delay or Omission Not Waiver.
----------------------------
No delay or omission of the Trustee or of any Holder of any Securities to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
Section 5.12 Control by Holders.
------------------
The Holders of a majority in principal amount of the Outstanding Securities
of any series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee with respect to the Securities of
such series, provided that
--------
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, nor subject the Trustee to a material risk of personal
liability, and
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
Section 5.13 Waiver of Past Defaults.
-----------------------
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to such
series and its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on any Security of such series, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
Section 5.14 Undertaking for Costs.
---------------------
All parties to this Indenture agree, and each Holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in principal
amount of the outstanding Securities of any series, or to any suit instituted by
any Holder for the enforcement of the right to receive payment of the principal
of (or premium if any) or interest on any Security on or after the Stated
Maturity or Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date) or to convert or exchange any
Security.
Section 5.15 Waiver of Stay or Extension Laws.
--------------------------------
The Company covenants (to the extent that.it may lawfully do so) that it
will not at any time insist upon or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE 6
The Trustee
Section 6.1 Certain Duties and Responsibilities.
-----------------------------------
The duties and responsibilities of the Trustee shall be as provided by the
Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it. Whether or not therein expressly
so provided, every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
Section 6.2 Notice of Defaults.
------------------
The Trustee shall give the Holders notice of any default hereunder as and
to the extent provided by the Trust Indenture Act; provided, however,
-------- -------
that in the case of any default of the character specified in Section 5.1(4), no
such notice to Holders shall be given until at least 30 days after the
occurrence thereof. For the purpose of this Section, the term "default" means
any event which is, or after notice or lapse of time or both would become, an
Event of Default.
Section 6.3 Certain Rights of Trustee.
-------------------------
Subject to the provisions of Section 6.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order, or as otherwise
expressly provided herein, and any resolution of the Board of Directors of the
Company may be sufficiently evidenced by a Board Resolution;
(c) the Trustee may consult with counsel 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;
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(e) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney;
and
(f) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
Whenever in the administration of this Indenture the Trustee shall deem it
desirable that a matter be proved or established prior to taking, suffering or
omitting any action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely upon
an Officers' Certificate.
Section 6.4 Not Responsible for Recitals or Issuance of Securities.
------------------------------------------------------
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company
and the Trustee or any Authenticating Agent assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities. The Trustee or any
Authenticating Agent shall not be accountable for the use or application by the
Company of Securities or the proceeds thereof.
Section 6.5 May Hold Securities.
-------------------
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar, any Conversion Agent, any Exchange Agent or any other agent of the
Company or of the Trustee, in its individual or any other capacity, may become
the owner or pledgee of Securities and, subject to Sections 6.8 and 6.13, may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Authenticating Agent, Paying Agent, Security Registrar, Conversion
Agent, Exchange Agent or such other agent in writing.
Section 6.6 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 money received by it hereunder except as otherwise
agreed with the Company.
Section 6.7 Compensation and Reimbursement.
------------------------------
The Company agrees
(1) to 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);
(2) except as otherwise expressly provided herein, to 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
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to the Trustee's negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder.
As security for the performance of the obligations of the Company under
this Section the Trustee shall have a lien prior to the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the payment of principal of, premium, if any, or interest, if any,
on particular Securities.
Section 6.8 Disqualification; Conflicting Interests.
---------------------------------------
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture. Nothing herein
shall prohibit the Trustee from filing the application described in the
penultimate paragraph of Section 3.10(b) of the Trust Indenture Act as the same
is in effect on the date of this instrument, or any successor provision or any
other application seeking similar relief.
Section 6.9 Corporate Trustee Required Eligibility.
---------------------------------------
There shall at all times be a Trustee hereunder which shall be a corporation
organized and doing business under the laws of the United States of America, any
state thereof or the District of Columbia, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000 and subject to supervision or examination by Federal or State
authority. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
Section 6.10 Resignation and
Removal; Appointment of Successor.
- -------------------------------------------------
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.11.
(b) The Trustee may resign at any time with respect to the Securities
of one or more series by giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 6.11 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the outstanding Securities of such series, delivered to the Trustee and to
the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.8 after written
request therefor by the Company or any Holder who has been a bona fide Holder of
a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.9 and
shall fail to resign after written request therefor by the Company or 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, (i) the Company, by a Board Resolution, may
remove the Trustee with respect to all Securities, or (ii) subject to Section
5.14, any Holder who has been a bona fide Holder of a Security for at least six
months may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee with respect to
all Securities and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, with
respect to the Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with respect
to the Securities of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Securities of one or more
or all of such series and that at any time there shall be only one Trustee with
respect to the Securities of any particular series) and shall comply with the
applicable requirements of Section 6.11. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment in accordance with the applicable requirements of Section
6.11, become the successor Trustee with respect to the Securities of such series
and to that extent supersede the successor Trustee appointed by the Company. If
no successor Trustee with respect to the Securities of any series shall have
been so appointed by the Company or the Holders and accepted appointment in the
manner required by Section 6.11, any Holder who has been a bona fide Holder of a
Security of such series for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee with respect to the Securities of such
series.
(f) The Company shall give notice of each resignation and each removal
of the Trustee with respect to the securities of any series and each appointment
of a successor Trustee with respect to the Securities of any series by mailing
written notice of such event by first-class mail, postage prepaid, to all
Holders of Securities of such series as their names and addresses appear in the
Security Register. Each notice shall include the name of the successor Trustee
with respect to the Securities of such series and the address of its Corporate
Trust Office.
Section 6.11 Acceptance of Appointment by Successor.
--------------------------------------
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees co-trustees of the
same trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates; but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in paragraph (a) and (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
Section 6.12 Merger, Conversion, Consolidation or Succession to Business.
- -----------------------------------------------------------
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
Section 6.13 Preferential Collection of Claim Against Company.
------------------------------------------------
If and when the Trustee shall be, or shall become, a creditor,
directly or indirectly, secured or unsecured, of the Company (or any other
obligor upon the Securities), the Trustee shall be subject to the provisions of
Section 3.11 of the Trust Indenture Act.
Section 6.14 Appointment of Authenticating Agent.
-----------------------------------
At any time when any of the Securities remain Outstanding, the Trustee may
appoint an Authenticating Agent or Agents with respect to one or more series of
Securities which shall be authorized to act on behalf of the Trustee to
authenticate Securities of such series issued upon exchange, registration of
transfer or partial redemption thereof or pursuant to Section 3.6, and
Securities so authenticated shall be entitled to the benefits of this Indenture
and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States of America, any State thereof or the
District of Columbia, authorized under such laws to act as Authenticating Agent,
having a combined capital and surplus of not less than $50,000,000 and subject
to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and 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 Authenticating Agent shall be acceptable to the Company and shall
mail written notice of such appointment by first-class mail, postage prepaid, to
all Holders of Securities of the series with respect to which such
Authenticating Agent will serve, as their names and addresses appear in the
Security Register. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this section.
The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternate
certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
CHEMICAL BANK, as Trustee
By:_________________________________
As Authenticating Agent
By:_________________________________
Authorized Signatory
ARTICLE 7
Holders' Lists and Reports by Trustee and Company
Section 7.1 Company to Furnish Trustee Names and Addresses of Holders.
---------------------------------------------------------
The Company will furnish or cause to be furnished to the Trustee
(1) semi-annually, not later than 15 days after each Regular Record
Date (or, if there is no Regular Record Date relating to a series, semi-annually
on dates set forth in the Board Resolution, Officers' Certificate or
supplemental indenture with respect to such series), a list, in such form as the
Trustee may reasonably require, of the names and addresses of the Holders as of
such date, and
(2) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished;
excluding from any such list names and addresses received by the
---------
Trustee in its capacity as Security Registrar.
Section 7.2 Preservation of Information; Communications to Holders.
------------------------------------------------------
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities and the
corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) 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 any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
Section 7.3 Reports by Trustee.
------------------
(a) On or before May 15, 1996 and on or before May 15 in each year
thereafter, so long as any Securities are Outstanding hereunder, the Trustee
shall transmit to Holders such reports concerning the Trustee and its actions
under this Indenture as may be required pursuant to the Trust Indenture Act in
the manner provided pursuant thereto.
(b) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each securities exchange upon which any
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when any Securities are listed on any securities
exchange.
Section 7.4 Reports by Company.
------------------
The Company shall file with the Trustee and the Commission, and transmit to
Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times and
in the manner provided pursuant to such Act; provided that any such information,
documents or reports required to be filed by the Company with the Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 shall be
filed with the Trustee within 15 days after the same is so required to be filed
with the Commission.
ARTICLE 8
Consolidation, Merger, Conveyance, Transfer or Lease
Section 8.1 Company May Consolidate, Etc., Only on Certain Terms.
----------------------------------------------------
The Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, and the Company shall not permit any Person to consolidate with
or merge into the Company, or convey, transfer or lease its properties and
assets substantially as an entirety to the Company, unless:
(1) (a) the Company shall be the surviving entity, or (b) the
surviving, resulting or transferee Person, as the case may be, shall be a legal
entity organized and existing under the laws of one of the states of the United
States of America or the District of Columbia, shall have a consolidated net
worth immediately subsequent to such consolidation, merger, conveyance, transfer
or lease at least equal to that of the Company immediately prior to such
consolidation, merger, conveyance, transfer or lease and shall expressly assume,
by an indenture supplemental hereto, executed and delivered to the Trustee, in
form reasonably satisfactory to the Trustee, the due and punctual payment of the
principal of (and premium, if any) and interest on all the Securities and the
performance and observance of every covenant of this Indenture on the part of
the Company to be performed or observed; and
(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would become
an Event of Default, shall have happened and be continuing; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture comply with this
Article and that all conditions precedent herein provided for relating to such
transaction have been complied with.
Section 8.2 Successor Substituted.
---------------------
Upon any consolidation by the Company with or merger by the Company into
any other Person or any conveyance, transfer or lease of the properties and
assets of the Company substantially as an entirety in accordance with Section
8.1, the successor Person formed by such consolidation, or into which the
Company is merged or 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 Indenture 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 Indenture and the Securities.
ARTICLE 9
Supplemental Indentures
Section 9.1 Supplemental Indentures Without Consent of Holders
-------------------------------------------------
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes with respect to one or more series of
Securities:
(1) 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; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be for
the benefit of less than all series of Securities, stating that such covenants
are expressly being included solely for the benefit of such series) or to
surrender any right or power herein conferred upon the Company; or
(3) to add any additional Events of Default; or
(4) to add to or change any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the issuance of
Securities in bearer form, registrable or not registrable as to principal, and
with or without interest coupons, or to permit or facilitate the issuance of
Securities in uncertificated form, or to permit or facilitate compliance with
the procedures or requirements of any securities exchange or market within or
without the United States of America on or in which such series may be proposed
for listing or quotation; or
(5) to provide for modifications of the DTC book-entry system or
adoption of additional or alternative systems of book-entry systems; or
(6) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall become
--------
effective only when there is no Security Outstanding of any series created
prior to the execution of such supplemental indenture which is entitled to the
benefit of such provision; or
(7) to establish the form or terms of Securities of any series as
permitted by Sections 2.1 and 3.1; or
(8) to make provisions with respect to the conversion or exchange
rights of Holders of any series of Securities; or
(9) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or more
series or to add to or change any of the provisions of this Indenture as shall
be necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the requirements of Section
6.11(b); or
(10) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to make any
other provisions with respect to matters or questions arising under this
Indenture, provided such action shall
--------
not adversely affect the interests of the Holders of Securities of any
series in any material respect.
Section 9.2 Supplemental Indentures with Consent of Holders.
-----------------------------------------------
With the consent of the Holders of not less than 66 2/3% in principal
amount of the Outstanding Securities of all series affected by the proposed
indenture or indentures supplemental hereto referred to below by Act of said
Holders delivered to the Company and the Trustee, the Company, when authorized
by a Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities of such series
under this Indenture; provided,
- --------
however, that no such supplemental indenture shall, without the consent of
- -------
the Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any installment
of principal of or interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or reduce the amount of the principal of an Original Issue
Discount Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 5.2, or impair the
right to institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date), or adversely affect the right to convert or exchange any
Security, or modify the provisions of any supplemental indenture with respect to
the subordination of any Security in a manner adverse to the Holders, or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences provided for in this Indenture, or
(3) modify any of the provisions of this Section or Section 5.13,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of
the Holder of each Outstanding Security affected thereby; provided, however,
that this clause shall not be
- -------- -------
deemed to require the consent of any Holder with respect to changes in the
references to "the Trustee" and concomitant changes in this Section, or the
deletion of this proviso, in accordance with the requirements of Sections
6.11(b) and 9.1(7).
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
Section 9.3 Execution of Supplemental Indentures.
------------------------------------
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 6.1) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties, immunities or liabilities under this Indenture or
otherwise.
Section 9.4 Effect of Supplemental Indentures.
---------------------------------
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 9.5 Conformity with Trust Indenture Act.
-----------------------------------
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
Section 9.6 Reference in Securities to Supplemental Indentures.
--------------------------------------------------
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and such Securities may be authenticated and delivered
by the Trustee in exchange for Outstanding Securities of such series.
ARTICLE 10
Covenants
Section 10.1 Payment of Principal, Premium and Interest.
------------------------------------------
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of (and premium,
if any) and interest on the Securities of that series in accordance with the
terms of the Securities and this Indenture.
Section 10.2 Maintenance of Office or Agency.
-------------------------------
The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange, where Securities of that series, if
convertible or exchangeable, may be surrendered for conversion or exchange, and
where notices and demands to or upon the Company in respect of the Securities of
that series and this Indenture may be served. The Company will give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where the
Securities of one or more series may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; provided,
however, that no such
-------- -------
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in each Place of Payment for
Securities of any series for such purposes. The Company will give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.
Section 10.3 Money for Securities Payments to Be Held in Trust.
-------------------------------------------------
If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
failure so to act.
Whenever the Company shall have one or more Paying Agents for any series of
Securities, it will, on or before each due date of the principal of (and
premium, if any) or interest on any Securities of that series, deposit with a
Paying Agent a sum sufficient to pay the principal (and premium, if any) or
interest so becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal, premium or interest, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of its action
or failure so to act.
The Company will cause each Paying Agent for any series of Securities other
than the Trustee to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee, subject to the provisions of
this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Securities of that series in trust for the
benefit of the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company in the
making of any payment of principal (and premium, if any) or interest on the
Securities of that series; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company in trust for the payment of the principal of (and premium, if any)
or interest on any Security of any series and remaining unclaimed for one year
after such principal (and premium, if any) or interest has become due and
payable shall be paid to the Company, on Company Request, or (if then held by
the Company) shall be discharged from such trust; and the Holder of such
Security shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or
such Paying Agent,
- -------- -------
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in the Borough of Manhattan, The City of New York, notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such publication, any unclaimed balance of
such money then remaining will be repaid to the Company.
Section 10.4 Corporate Existence.
-------------------
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence.
Section 10.5 Waiver of Certain Covenants.
---------------------------
A Board Resolution or Officers' Certificate or indenture supplemental
hereto which establishes the terms of a series of Securities may provide that
specified terms, provisions and conditions are subject to this Section. In such
event the Company may omit in any particular instance to comply with any such
term, provision or condition with respect to the Securities of such series if
before the time for such compliance the Holders of at least 66 2/3% in principal
amount of the Outstanding Securities of such series shall, by Act of such
Holders, either waive such compliance in such instance or generally waive
compliance with such term, provision or condition. No such waiver shall extend
to or affect such term, provision or condition except to the extent so expressly
waived, and until such waiver shall become effective, the obligations of the
Company and the duties of the Trustee in respect of any such term, provision or
condition shall remain in full force and effect.
Section 10.6 Certificate to Trustee.
----------------------
So long as the same shall be required by the Trust Indenture Act, the
Company will deliver to the Trustee, within 120 days of the end of each fiscal
year (or such other time or times as may be required by the Trust Indenture Act
as then in effect) a certificate signed by its principal executive officer,
principal financial officer or principal accounting officer as to his or her
knowledge of the Company's compliance with all conditions and covenants under
this Indenture (such compliance to be determined without regard to any period of
grace or requirement of notice provided in this Indenture) or in such other form
and with such other signatories as may be required by the Trust Indenture Act as
then in effect.
ARTICLE 11
Redemption of Securities
Section 11.1 Applicability of Article.
------------------------
Securities of any series which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated by Section 3.1 for Securities of any series) in
accordance with this Article.
Section 11.2 Election to Redeem; Notice to Trustee.
-------------------------------------
The election of the Company to redeem any Securities shall be evidenced by
a Board Resolution. In the case of any redemption at the election of the Company
of all the Securities of any series, the Company shall, at least 35 days prior
to the Redemption Date fixed by the Company (unless a shorter period shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date. In
case of any redemption at the election of the Company of less than all the
Securities of any series, the Company shall, at least 40 days prior to the
Redemption Date fixed by the Company (unless a shorter period shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Securities of such series to be redeemed. In the case of
any redemption of securities prior to the expiration of any restriction on such
redemption provided in the terms of such Securities or elsewhere in this
Indenture, the Company shall furnish the Trustee with an Officers' Certificate
evidencing compliance with such restriction. The Company may rescind its
election to redeem Securities by notice to the Trustee at any time on or before
20 days prior to the Redemption Date (unless a shorter period shall be
satisfactory to the Trustee). To the extent the foregoing rescission provisions
and the rescission provisions of Section 11.4 are inconsistent with applicable
book-entry procedures of DTC, or any other record owner of registered global
securities, such rescission provisions shall be modified to the extent necessary
to permit coordination or conformity with such procedures, but the minimum time
limitations of the rescission provisions shall not be reduced.
Section 11.3 Selection by Trustee of Securities to Be Redeemed.
-------------------------------------------------
If less than all the Securities of like tenor of any series are to be
redeemed, the particular Securities to be redeemed shall be selected not more
than 35 days prior to the Redemption Date (unless a shorter period shall be
satisfactory to the Trustee and the Company) by the Trustee, from the
Outstanding Securities of such series not previously called for redemption, by
such method as the Trustee shall deem fair and appropriate and which may provide
for the selection for redemption of portions (equal to the minimum authorized
denomination for Securities of that series or any integral multiple thereof) of
the principal amount of such Securities of a denomination larger than the
minimum authorized denomination for such Securities.
The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption and, in the case of any Securities selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.
Section 11.4 Notice of Redemption.
--------------------
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Securities to be redeemed, at his address appearing in the
Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series are to
be redeemed, the identification (and, in the case of partial redemption, the
principal amounts) of the particular Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and, if applicable, that
interest thereon will cease to accrue on and after said date,
(5) the place or places where such Securities are to be surrendered
for payment of the Redemption Price,
(6) if such Securities are convertible or exchangeable other than
pursuant to Section 3.5, the conversion price and the last date on which such
Securities may be converted or exchanged,
(7) that the redemption is for a sinking fund, if such is the case,
and
(8) if the Company intends to retain its right to rescind the
redemption, the last date by which notice of rescission of a redemption of
Securities may be given.
Notice of redemption of Securities to be redeemed at the election of the
Company, and any notice of the rescission of any such redemption, shall be given
by the Company or, at the Company's request, by the Trustee in the name and at
the expense of the Company. Any notice of rescission of any redemption shall be
given on or before 15 days prior to the applicable Redemption Date.
Section 11.4 Deposit of Redemption Price.
---------------------------
On or before any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in section 10.3) an amount of
money sufficient to pay on the Redemption Date the Redemption Price of, and
(except if the Redemption Date shall be an Interest Payment Date) accrued
interest on, all the Securities which are to be redeemed on that date.
Section 11.6 Securities Payable on Redemption Date.
-------------------------------------
Notice of redemption having been given as aforesaid (and not rescinded
within the time limitations referred to above), the Securities so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified, and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such
Securities shall cease to bear interest. Upon surrender of any such Security for
redemption in accordance with said notice, such Security shall be paid by the
Company at the Redemption Price, together with accrued interest to the
Redemption Date; provided,
--------
however, that installments of interest whose Stated Maturity is on or
- -------
prior to the Redemption Date shall be payable to the Holders of such Securities,
or one or more Predecessor Securities, registered as such at the close of
business on the relevant Record Dates according to their terms and the
provisions of Section 3.7.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate prescribed therefor in the
Security.
Section 11.7 Securities Redeemed in Part.
---------------------------
Any Security which is to be redeemed only in part shall be surrendered at a
Place of Payment therefor (with, if the Company or the Trustee so requires, due
endorsement by or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Security without service charge,
a new Security or Securities of the same series and of like tenor, of an
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
ARTICLE 12
Sinking Funds
Section 12.1 Applicability of Article.
-------------------------
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of a series except as otherwise specified as
contemplated by Section 3.1 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms of
Securities of any series is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an "optional sinking
fund payment". If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 12.2. Each sinking fund payment shall be applied to the redemption of
securities of any series as provided for by the terms of Securities of such
series.
Section 12.2 Satisfaction of Sinking Fund Payments with Securities.
-----------------------------------------------------
The Company (1) may deliver Outstanding Securities of a series (other than
any previously called for redemption) and (2) may apply as a credit Securities
of a series which have been redeemed either at the election of the Company
pursuant to the terms of such Securities or through the application of permitted
optional sinking fund payments pursuant to the terms of such Securities, in each
case in satisfaction of all or any part of any sinking fund payment with respect
to the Securities of such series required to be made pursuant to the terms of
such Securities as provided for by the terms of such series; provided that such
Securities have not
--------
been previously so credited. Such Securities shall be received and credited for
such purpose by the Trustee at the Redemption Price specified in such Securities
for redemption through operation of the sinking fund and the amount of such
sinking fund payment shall be reduced accordingly.
Section 12.3 Redemption of Securities for Sinking Fund.
-----------------------------------------
Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 12.2 and will also deliver to the Trustee any Securities to
be so delivered. Not less than 30 days before each such sinking fund payment
date the Trustee shall select the Securities to be redeemed upon such sinking
fund payment date in the manner specified in Section 11.3 and cause notice of
the redemption thereof to be given in the name of and at the expense of the
Company in the manner provided in Section 11.4. Such notice having been duly
given, the redemption of such Securities shall be made upon the terms and in the
manner stated in Sections 11.6 and 11.7.
ARTICLE 13
Defeasance and Covenant Defeasance
Section 13.1 Applicability of Article; Company's Option to Effect
Defeasance or Covenant Defeasance.
----------------------------------
If pursuant to Section 3.1 provision is made for either or both of (a)
defeasance of the Securities of a series under Section 13.2 or (b) covenant
defeasance of the Securities of a series under Section 13.3, then the provisions
of such Section or Sections, as the case may be, together with the other
provisions of this Article Thirteen, shall be applicable to the Securities of
such series, and the Company may at its option by or pursuant to a Board
Resolution, at any time, with respect to the Securities of such series, elect to
have either Section 13.2 (if applicable) or Section 13.3 (if applicable) be
applied to the Outstanding Securities of such series upon compliance with the
conditions set forth below in this Article Thirteen.
Section 13.2 Defeasance and Discharge.
------------------------
Upon the Company's exercise of the above option applicable to this Section,
the Company shall be deemed to have been discharged from its obligations with
respect to the Outstanding Securities of such series on the date the conditions
set forth below are satisfied (hereinafter, "defeasance"). For this purpose,
such defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by the Outstanding Securities of
such series and to have satisfied all its other obligations under such
Securities and this Indenture insofar as such Securities are concerned (and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (A) the rights of Holders of
Outstanding Securities of such series to receive, solely from the trust fund
described in Section 13.4 and as more fully set forth in such Section, payments
in respect of the principal of (and premium, if any) and interest on such
Securities when such payments are due, (B) the Company's obligations with
respect to such Securities under Sections 3.4, 3.5, 3.6, 10.2 and 10.3, (C) the
rights, powers, trusts, duties, and immunities of the Trustee under Sections
3.5, 3.6, 3.7, 3.9, 4.2, 6.7 and the last paragraph of Section 10.3, and
otherwise the duty of the Trustee to authenticate Securities of such series
issued on registration of transfer or exchange, (D) this Article Thirteen and
(E) any other Section of this Indenture contemplated by Section 3.1 to survive.
Subject to compliance with this Article Thirteen, the Company may exercise its
option under this Section 13.2 notwithstanding the prior exercise of its option
under Section 13.3 with respect to the Securities of such series.
Section 13.3 Covenant Defeasance.
-------------------
Upon the Company's exercise of the above option applicable to this Section
with respect to the Securities of any series, the Company shall be released from
its obligations under any covenant specified in the Board Resolution, Officers'
Certificate or supplemental indenture establishing the terms, conditions and
limitations with respect to the Outstanding Securities of such series as being
subject to release pursuant to this Section on and after the date the conditions
set forth below are satisfied (hereinafter, "covenant defeasance"). For this
purpose, such covenant defeasance means that, with respect to the Outstanding
Securities of such series, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, and such covenant shall no longer be applicable to the Company,
whether directly or indirectly by reason of any reference elsewhere herein to
any such Section or by reason of any reference in any such document to any other
provision herein or in any other document, but the remainder of this Indenture
and the Securities of any other series shall be unaffected thereby.
Section 13.4 Conditions to Defeasance or Covenant Defeasance.
-----------------------------------------------
The following shall be the conditions to application of either Section 13.2
or Section 13.3 to the Outstanding Securities of such series:
(a) the Company shall irrevocably have deposited or caused to be
deposited with the Trustee as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to, the benefit of the holders of such Securities, (A) money in an amount, or
(B) U.S. Government Obligations which through the scheduled payment of principal
and interest in respect thereof in accordance with their terms will provide, not
later than one day before the due date of any payment, money in an amount, or
(C) a combination thereof, sufficient, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge, and which shall be
applied by the Trustee to pay and discharge, (i) the principal of (and premium,
if any, on) and each installment of principal of (and premium, if any) and
interest on the Outstanding Securities of such series on the Stated Maturity of
such principal or installment of principal or interest and (ii) any mandatory
sinking fund payments or analogous payments applicable to the Outstanding
Securities of such series on the day on which such payments are due and payable
in accordance with the terms of this Indenture and of such Securities. For this
purpose, "U.S. Government Obligations" means securities that are (x) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (y) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act of 1933, as amended) as custodian with respect to any such
U.S. Government Obligation or a specific payment of principal of or interest on
any such U.S. Government Obligation held by such custodian for the account of
the holder of such depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal of or interest on the U.S. Government Obligation evidenced by such
depository receipt.
(b) (i) No Event of Default or event which with notice or lapse of
time or both would become an Event of Default with respect to the Securities of
such series shall have occurred and be continuing on the date of such deposit,
and (ii) with respect to a defeasance and discharge under Section 13.2, no such
Event of Default or event shall have occurred and be continuing under subsection
501(5) or (6) hereof at any time during the period ending on the 91st day after
the date of such deposit or, if longer, ending on the day following the
expiration of the longest preference period applicable to the Company in respect
of such deposit (it being understood that this condition shall not be deemed
satisfied until the expiration of such period); provided that in connection with
a defeasance under
- --------
Section 13.2 the Company will be released from any covenants specified as
being subject to this Article 13 in a Board Resolution or Officers' Certificate
or indenture supplemental hereto which establishes the term of a series of
Securities, immediately upon the making of the deposit under subsection (a)
without reference to the additional period of time referred to in this
subsection (ii); and provided, further, however, that if (x) a bank with an
investment rating
- -------- -------
of at least A by each of Standard & Poor's Corporation and Moody's
Investors Service, Inc. shall issue in favor of the Trustee, for the benefit of
the Holders of the Outstanding Securities to be defeased hereunder, an unsecured
letter of credit to guarantee the deposit referred to in subparagraph (a) above
and (y) the Company shall provide to the Trustee an Opinion of Counsel (which
shall be nationally recognized counsel experienced in bankruptcy matters)
satisfactory to the Trustee to the effect that no payments pursuant to the
letter of credit to be made for the benefit of the Holders of the Outstanding
Securities to be defeased hereunder would be subject to recapture, as a
preference or otherwise, by any trustee in bankruptcy of the Company, then this
condition shall be satisfied without regard to the period of time referred to in
subsection (ii) above.
(c) Such defeasance or covenant defeasance shall not (i) cause the
Trustee for the Securities of such series to have a conflicting interest as
defined in Section 6.8 and for purposes of the Trust Indenture Act with respect
to any securities of the Company or (ii) result in a trust arising from such
deposit which constitutes an investment company under the Investment Company Act
of 1940, as amended (the "40 Act"), unless it is registered as such or exempt
from registration under the 40 Act.
(d) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or any
other agreement or instrument to which the Company is a party or by which it is
bound.
(e) Such defeasance or covenant defeasance shall not cause any
Securities of such series then listed on any registered national securities
exchange under the Securities Exchange Act of 1934, as amended, to be delisted.
(f) In the case of an election under Section 13.2, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (x) the Company
has received from, or there has been published by, the Internal Revenue Service
a ruling, or (y) since the date of this Indenture there has been a change in the
applicable Federal income tax law, in either case to the effect that, and based
thereon such opinion shall confirm that, the Holders of the Outstanding
Securities of such series will not recognize income, gain or loss for Federal
income tax purposes as a result of such defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such defeasance had not occurred.
(g) In the case of an election under Section 13.3, the Company shall
have delivered to the Trustee an opinion of Counsel to the effect that the
Holders of the Outstanding Securities of such series will not recognize income,
gain or loss for Federal income tax purposes as a result of such covenant
defeasance and will be subject to Federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such covenant
defeasance had not occurred.
(h) Such defeasance or covenant defeasance shall be effected in
compliance with any additional terms, conditions or limitations which may be
imposed on the Company in connection therewith pursuant to Section 3.1.
(i) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that all conditions precedent
provided for relating to either the defeasance under Section 13.2 or the
covenant defeasance under Section 13.3 (as the case may be) have been complied
with.
Section 13.5 Deposited Money and U.S. Government Obligations to
be Held in Trust; Other Miscellaneous Provisions.
-------------------------------------------------
Subject to the provisions of the last paragraph of Section 10.3, all money
and U.S. Government Obligations (including the proceeds thereof) deposited with
the Trustee pursuant to Section 13.4 in respect of the Outstanding Securities of
such series shall be held in trust and applied by the Trustee, in accordance
with the provisions of such Securities and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as its
own paying agent) as the Trustee may determine, to the Holders of such
Securities, of all sums due and to become due thereon in respect of principal
(and premium, if any) and interest, but such money need not be segregated from
other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 13.4 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of the Outstanding Securities of such series.
Anything in this Article Thirteen to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 13.4 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent defeasance or covenant
defeasance.
Section Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or securities
in accordance with Section 13.5 of this Indenture, by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Securities of the applicable
series shall be revived and reinstated as though no deposit had occurred
pursuant to Section 13.4 of this Indenture until such time as the Trustee or
Paying Agent is permitted to apply all such money or securities in accordance
with Section 13.5 of this Indenture; provided that, if the Company has made any
payment of principal ------- of or interest on any Securities because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the money or
securities held by the Trustee or Paying Agent.
ARTICLE 14
Immunity of Incorporators, Shareholders,
Officers and Directors
Section 14.1 Indenture and Securities Solely Corporate Obligations.
-----------------------------------------------------
No recourse under or upon any obligation, covenant or agreement of this
Indenture, any supplemental indenture or of any Security, or for any claim based
thereon or otherwise in respect thereof, shall be had against any incorporator,
shareholder, officer or director, as such, past, present or future, of the
Company or of any successor Person either directly or through the Company,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise; it being expressly
understood that this Indenture and the obligations issued hereunder are solely
corporate obligations, and that no such personal liability whatever shall attach
to, or is or shall be incurred by, the incorporators, shareholders, officers or
directors, as such, of the Company or of any successor Person, or any of them,
because of the creation of the indebtedness hereby authorized, or under or by
reason of the obligations, covenants or agreements contained in this Indenture
or in any of the Securities or implied therefrom; and that any and all such
personal liability, either at common law or in equity or by constitution or
statute, of, and any and all such rights and claims against, every such
incorporator, shareholder, officer or director, as such, because of the creation
of the indebtedness hereby authorized, or under or by reason of the obligations,
covenants or agreements contained in this Indenture or in any of the Securities
or implied therefrom, are hereby expressly waived and released as a condition
of, and as a consideration for, the execution of this Indenture and the issue of
such Securities.
* * * * *
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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed, all
as of the day and year first above written.
CITIZENS UTILITIES COMPANY
By:__________________________________
Title:Vice President and Treasurer
Attest:
- --------------------------
Secretary
CHEMICAL BANK, as Trustee
By:_________________________________ Title: Vice President
Attest:
- ------------------------
Assistant Vice President
County of Fairfield) )
) ss.:
State of Connecticut)
On the 15th day of January, 1996, before me personally came Robert J.
DeSantis, to me known, who, being by me duly sworn, did depose and say that he
is Vice President and Treasurer of CITIZENS UTILITIES COMPANY, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
--------------------------------------
<PAGE>
County of New York )
) ss.:
State of New York )
On this 15th day of January in the year of 1996 before me personally came
__________________, to me personally known, who being by me duly sworn did
depose and say that he is Vice President of CHEMICAL BANK, one of the
corporations described in and which executed the foregoing Indenture; that he
knows the seal of said corporation; that the seal affixed to said instrument
opposite the execution thereof on behalf of said corporation is the corporate
seal of said corporation; that said instrument was signed and said corporate
seal was so affixed on behalf of said corporation by authority and order of its
board of directors; that he signed his name thereto by like authority; and he
acknowledged said instrument to be his free act and deed and the free act and
deed of said Chemical Bank.
IN WITNESS WHEREOF I have hereunto set my hand and affixed my official
seal, at New York in said State of New York, the day and year first above
written.
------------------------------------
<PAGE>
PARTIES 1
RECITALS OF THE COMPANY 1
ARTICLE 1
Definitions and Other Provisions
of General Application
Section 1.1 Definitions 1
Section 1.2 Compliance Certificates and Opinions 7
Section 1.3 Form of Documents Delivered to Trustee 7
Section 1.4 Acts of Holders 8
Section 1.5 Notices, Etc., to Trustee or Company 9
Section 1.6 Notice to Holders; Waiver 9
Section 1.7 Conflict with Trust Indenture Act 10
Section 1.8 Effect of Headings and Table of Contents 10
Section 1.9 Successors and Assigns 10
Section 1.10 Separability Clause 10
Section 1.11 Benefits of Indenture 10
Section 1.12 Governing Law 10
Section 1.13 Legal Holidays 10
ARTICLE 2
Security Forms
Section 2.1 Forms Generally 11
Section 2.2 Form of Trustee's Certificate of
Authenication 12
ARTICLE 3
The Securities
Section 3.1 Amount Unlimited; Issuable in Series 12
Section 3.2 Denominations 15
Section 3.3 Execution, Authentication,
Delivery and Dating 15
Section 3.4 Temporary Securities 17
Section 3.5 Registration, Registration of
Transfer and Exchange 17
Section 3.6 Mutilated, Destroyed, Lost and
Stolen Securities 18
Section 3.7 Payment of Interest; Interest Rights
Preserved 19
Section 3.8 Persons Deemed Owners 21
Section 3.9 Cancellation 22
Section 3.10 Computation of Interest 22
Section 3.11 Book-Entry Securities 22
ARTICLE 4
Satisfaction and Discharge
Section 4.1 Satisfaction and Discharge of Indenture 24
Section 4.2 Application of Trust Money 25
Section 4.3 Reinstatement. 26
ARTICLE 5
Remedies
Section 5.1 Events of Default 26
Section 5.2 Acceleration of Maturity;
Rescission and Annulment 28
Section 5.3 Collection of Indebtedness and Suits
for Enforcement by Trustee. 29
Section 5.4 Trustee May File Proofs of Claim 29
Section 5.5 Trustee May Enforce Claims
Without Possession of Securities 30
Section 5.6 Application of Money Collected 30
Section 5.7 Limitation on Suits 31
Section 5.8 Unconditional Right of Holders to
Receive Principal, Premium and
Interest and to Convert or Exchange 31
Section 5.9 Restoration of Rights and Remedies 32
Section 5.10 Rights and Remedies Cumulative 32
Section 5.11 Delay or Omission Not Waiver 32
Section 5.12 Control by Holders 32
Section 5.13 Waiver of Past Defaults 33
Section 5.14 Undertaking for Costs 33
Section 5.15 Waiver of Stay or Extension Laws 33
ARTICLE 6
The Trustee
Section 6.1 Certain Duties and Responsibilities 34
Section 6.2 Notice of Defaults 34
Section 6.3 Certain Rights of Trustee 34
Section 6.4 Not Responsible for Recitals or
Issuance of Securities 35
Section 6.5 May Hold Securities 35
Section 6.6 Money Held in Trust 36
Section 6.7 Compensation and Reimbursement 36
Section 6.8 Disqualification; Conflicting Interests 36
Section 6.9 Corporate Trustee Required; Eligibility 37
Section 6.10 Resignation and Removal; Appointment
of Successor 37
Section 6.11 Acceptance of Appointment by Successor 38
Section 6.12 Merger, Conversion, Consolidation or
Succession to Business 39
Section 6.13 Preferential Collection of Claim
Against Company 40
Section 6.14 Appointment of Authenticating Agent 40
ARTICLE 7
Holders' Lists and Reports by Trustee and Company
Section 7.1 Company to Furnish Trustee Names and
Addresses of Holders 41
Section 7.2 Preservation of Information;
Communications to Holders 42
Section 7.3 Reports by Trustee 42
Section 7.4 Reports by Company 42
ARTICLE 8
Consolidation, Merger, Conveyance, Transfer or Lease
Section 8.1 Company May Consolidate, Etc.,
Only on Certain Terms 43
Section 8.2 Successor Substituted 44
ARTICLE 9
Supplemental Indentures
Section 9.1 Supplemental Indentures Without
Consent of Holders 44
Section 9.2 Supplemental Indentures with
Consent of Holders 45
Section 9.3 Execution of Supplemental Indentures 46
Section 9.4 Effect of Supplemental Indentures 46
Section 9.5 Conformity with Trust Indenture Act 47
Section 9.6 Reference in Securities to Supplemental
Indentures 47
ARTICLE 10
Covenants
Section 10.1 Payment of Principal, Premium and Interest 47
Section 10.2 Maintenance of Office or Agency 47
Section 10.3 Money for Securities Payments
to Be Held in Trust 48
Section 10.4 Corporate Existence 49
Section 10.5 Waiver of Certain Covenants 49
Section 10.6 Certificate to Trustee 50
ARTICLE 11
Redemption of Securities
Section 11.1 Applicability of Article 50
Section 11.2 Election to Redeem; Notice to Trustee 50
Section 11.3 Selection by Trustee of Securities
to Be Redeemed 51
Section 11.4 Notice of Redemption 51
Section 11.5 Deposit of Redemption Price 52
Section 11.6 Securities Payable on Redemption Date 52
Section 11.7 Securities Redeemed in Part 53
ARTICLE 12
Sinking Funds
Section 12.1 Applicability of Article 53
Section 12.2 Satisfaction of Sinking Fund Payments
with Securities 53
Section 12.3 Redemption of Securities for Sinking Fund 54
ARTICLE 13
Defeasance and Covenant Defeasance
Section 13.1 Applicability of Article;
Company's Option to Effect Defeasance
or Covenant Defeasance 54
Section 13.2 Defeasance and Discharge 54
Section 13.3 Covenant Defeasance 55
Section 13.4 Conditions to Defeasance or Covenant
Defeasance 55
Section 13.5 Deposited Money and U.S. Government Obligations to
be Held in Trust; Other Miscellaneous
Provisions 58
Section 13.6 Reinstatement 58
ARTICLE 14
Immunity of Incorporators, Shareholders,
Officers and Directors
Section 14.1 Indenture and Securities Solely Corporate
Obligations 59
FIRST SUPPLEMENTAL INDENTURE, dated as of January 15, 1996, between
CITIZENS UTILITIES COMPANY, a corporation duly organized and existing under the
laws of the State of Delaware (herein called "Citizens" or the "Company"),
having its principal administrative offices at High Ridge Park, Building No. 3,
Stamford, Connecticut 06905, and CHEMICAL BANK, a New York banking corporation,
as Trustee (herein called the "Trustee"), having its principal corporate trust
office at 450 West 33rd Street, New York, New York 10001. The First Supplemental
Indenture is one of several agreements executed in connection with the issuance
by the Company and certain of its affiliates of up to $211,756,050 principal
amount of Debentures, up to 4,149,500 Partnership Preferred Securities and up to
4,025,000 Convertible Preferred Securities (the "Offering"). For ease of
reference, certain of the operative agreements in connection with the Offering
make use of a Statement of Common Definitions. In this First Supplemental
Indenture, such Statement of Common Definitions ("Statement of Common
Definitions") is found at Exhibit B. For the purposes hereof, capitalized terms
are defined in Section 1.1 hereof, elsewhere in this First Supplemental
Indenture, in the Indenture, and in the Statement of Common Definitions.
RECITALS
WHEREAS, the Company has entered into an Indenture dated as of January 15, 1996
(the "Indenture"), with the Trustee to provide for the issuance from time to
time of the Company's debentures, notes or other evidences of indebtedness
(herein called the "Securities"), to be issued in one or more series; and
WHEREAS, Section 9.1 of the Indenture provides, among other things, that
the Company and the Trustee may enter into indentures supplemental to the
Indenture for, among other things, the purpose of establishing the form and
terms of the Securities of any series as permitted in Sections 2.1 and 3.1 of
the Indenture and adding to the covenants of the Company for the benefit of the
Holders of any series of Securities; and
WHEREAS, the Company or one of its wholly owned subsidiaries is the general
partner of Citizens Capital, and the Company formed Citizens Capital to issue
the Partnership Preferred Securities, with a liquidation preference of $50 per
Partnership Preferred Security, and to issue the General Partnership Security;
and
WHEREAS, the Company has formed the Trust under the Trust Act pursuant to
the Declaration for the purpose of issuing the Convertible Preferred Securities
and the Convertible Common Securities (the Convertible Common Securities and the
Convertible Preferred Securities are together, the "Trust Securities"), selling
such Trust Securities and contributing the proceeds thereof to Citizens Capital;
and
WHEREAS, the Company wishes to sell to Citizens Capital, and Citizens
Capital wishes to purchase from the Company, Debentures in exchange for the
funds received by Citizens Capital from the Trust and capital contributed to
Citizens Capital by the General Partner; and
WHEREAS, the Declaration provides that the holders of Convertible Preferred
Securities may cause the Conversion Agent to exchange such Convertible Preferred
Securities for Partnership Preferred Securities, and, in turn, such Partnership
Preferred Securities for Debentures held by Citizens Capital, and immediately
convert such Debentures into Common Stock Series A; and
WHEREAS, the Company is irrevocably guaranteeing, on a subordinated basis,
payment of distributions, payment of the Redemption Price (as defined herein)
and payments on liquidation, to the extent provided in the Convertible Preferred
Securities Guarantee Agreement dated January 15, 1996 and the Convertible Common
Securities Guarantee Agreement dated January 15, 1996, each between the Company
and Chemical Bank, as guarantee trustee for the benefit of the holders of the
Trust Securities, which guarantee, together with the back-up undertakings (as
defined herein), will be full and unconditional; and
WHEREAS, the Company, by corporate action duly taken, has authorized the
issuance of a first series of Securities designated as the 5% Convertible
Subordinated Debentures Due 2036 (hereinafter sometimes called the
"Debentures"), which series is limited in aggregate principal amount to
$211,756,050, such Debentures to contain such provisions as have been determined
by or at the direction of the Board of Directors of the Company and as are set
forth in this First Supplemental Indenture; and
WHEREAS, all conditions have been complied with, all actions have been
taken and all things have been done which are necessary to make the Debentures,
when executed by the Company and authenticated by or on behalf of the Trustee
and when delivered as herein and in the Indenture provided, the valid
obligations of the Company, and to make this First Supplemental Indenture a
valid and binding supplemental indenture.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Debentures
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Debentures, as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions.
------------
For all purposes of this First Supplemental Indenture, except as otherwise
herein expressly provided or unless the context otherwise requires:
(1) capitalized terms used in this First Supplemental Indenture shall
have the meanings ascribed to them in the Indenture, this First Supplemental
Indenture or, to the extent not inconsistent with the Indenture or this First
Supplemental Indenture, the Statement of Common Definitions;
(2) the words "herein", "hereof" and "hereto" and other words of
similar import used in this First Supplemental Indenture refer to this First
Supplemental Indenture as a whole and not to any particular Article or Section
or other subdivision of this First Supplemental Indenture;
(3) the provisions of this First Supplemental Indenture shall be read
in conjunction with the provisions of the Indenture only with respect to the
Debentures and the provisions of the Indenture shall not be modified by this
First Supplemental Indenture with respect to any series of the Securities
outstanding or to be outstanding under the Indenture, other than the Debentures;
and
(4) terms defined in this First Supplemental Indenture shall apply
only to this First Supplemental Indenture and the Debentures hereunder, and such
definitions shall not apply to any supplemental indenture other than this First
Supplemental Indenture or to any Securities outstanding or to be outstanding
under the Indenture, other than the Debentures.
"Additional Interest" has the meaning specified in Section 3.1(17).
"Average Market Price" is defined in the Statement of Common Definitions.
"back-up undertakings" is defined in the Statement of Common Definitions.
"Capital Lease Obligation" of any Person means the obligation to pay rent
or other payment amounts under a lease of (or other Indebtedness arrangements
conveying the right to use) real or personal property of such Person which is
required to be classified and accounted for as a capital lease or a liability on
the face of a balance sheet of such Person in accordance with generally accepted
accounting principles. The stated maturity of such obligation shall be the date
of the last payment of rent or any other amount due under such lease prior to
the first date upon which such lease may be terminated by the lessee without
payment of a penalty.
"Cash Interest Payment Date" has the meaning specified in Section 3.1(4).
"Citizens Capital" is defined in the Statement of Common Definitions.
"Common Stock" and "Common Stock Series A" are defined in the Statement of
Common Definitions.
"Company Tax Event" is defined in the Statement of Common Definitions.
"Compound Interest" is defined in the Statement of Common Definitions.
"Conversion Agent" is defined in the Statement of Common Definitions.
"Conversion Price" has the meaning specified in Section 5.4.
"Convertible Common Securities" is defined in the Statement of Common
Definitions.
"Convertible Preferred Securities" is defined in the Statement of Common
Definitions.
"Date of Conversion" has the meaning specified in Section 5.2.
"Debentures Payment" has the meaning specified in Section 4.2.
"Declaration" is defined in the Statement of Common Definitions.
"Delaware Trustee" is defined in the Statement of Common Definitions.
"Designated Senior Holder" means, with respect to any Senior Indebtedness,
the Person designated as such in accordance with the terms of the instrument
evidencing such Senior Indebtedness.
"Distribution Declaration Date" has the meaning specified in Section 3.1(4)
"Distribution Declaration Notice" has the meaning specified in Section
3.1(4).
"Election Period" is defined in the Statement of Common Definitions.
"Equivalent Value" is defined in the Statement of Common Definitions.
"Expiration Time" has the meaning specified in Section 5.5(e).
"General Partnership Security" is defined in the Statement of Common
Definitions.
"Guarantee" by any Person means any obligation, contingent or otherwise,
of such Person guaranteeing any Indebtedness of any other Person where such
other Person is the Primary Obligor under such Indebtedness, in any manner,
whether directly or indirectly, and including, without limitation, any
obligation of such Person (i) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness or to purchase (or to advance or
supply funds for the purchase of) any security for the payment of such
Indebtedness, (ii) to purchase property, securities or services for the purpose
of assuring the holder of such Indebtedness of the payment of such Indebtedness
or (iii) to maintain working capital, equity capital or other financial
statement condition or liquidity of the Primary Obligor so as to enable the
Primary Obligor to pay such Indebtedness (and "Guaranteed," "Guaranteeing" and
"Guarantor" shall have meanings correlative to the foregoing); provided,
however, that the Guarantee by any Person shall not
-------- -------
include endorsements by such Person for collection or deposit, in either case,
in the ordinary course of business.
"Incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
Guarantee or otherwise become liable in respect of such Indebtedness or other
obligation or the recording, as required pursuant to generally accepted
accounting principles or otherwise, of any such Indebtedness or other obligation
as a liability on the balance sheet of such Person (and "Incurrence,"
"Incurred," "Incurrable" and "Incurring" shall have meanings correlative to the
foregoing); provided, however, that a change in generally
-------- -------
accepted accounting principles that results in an obligation of such Person that
exists at such time becoming Indebtedness shall not be deemed an Incurrence of
such Indebtedness.
"Indebtedness" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person, (i) all
Indebtedness described in clauses (i)-(vii) of the definition of Senior
Indebtedness (all references to Citizens in such definition being deemed to
refer to such Person) and (ii) the maximum fixed redemption or repurchase price
of Redeemable Interests of such Person at the time of determination.
"Junior Subordinated Payment" has the meaning specified in Section 4.2.
"Limited Partnership Agreement" is defined in the Statement of Common
Definitions.
"Ministerial Action Obligation" is defined in the Statement of Common
Definitions.
"NASDAQ" is defined in the Statement of Common Definitions.
"Notice of Conversion" means the notice to be given by a Holder of
Debentures to the Conversion Agent directing the Conversion Agent to convert the
Debentures into Common Stock Series A on behalf of such Holder.
"NYSE" is defined in the Statement of Common Definitions.
"Other Subordinated Indebtedness" has the meaning specified in Section 9.1.
"Partnership Event" is defined in the Statement of Common Definitions.
"Partnership Preferred Securities" is defined in the Statement of Common
Definitions.
"Partnership Securities" is defined in the Statement of Common Definitions.
"Paying Agent" is defined in the Statement of Common Definitions.
"Payment Blockage Period" has the meaning specified in Section 4.3.
"Person" is defined in the Statement of Common Definitions.
"Primary Obligor" shall refer to the Person who is primarily liable under
any Indebtedness.
"Proceeding" has the meaning specified in Section 4.2.
"Property Trustee" is defined in the Statement of Common Definitions.
"Purchased Shares" has the meaning specified in Section 5.5(e).
"Rating Agency Event" is defined in the Statement of Common Definitions.
"Redeemable Interest" of any Person means any equity security of or other
ownership interest in such Person that by its terms or otherwise is required to
be redeemed prior to the Stated Maturity of the principal of the Debentures or
is or may be redeemable at the option of the holder thereof at any time prior to
the Stated Maturity of the principal of the Debentures; provided, however, that
interests which are redeemable solely for any equity
- -------- -------
security of or other ownership interest in such Person that by its terms or
otherwise is not required to be redeemed prior to the Stated Maturity of the
principal of the Debentures shall not constitute Redeemable Interests.
"Redemption Price" has the meaning specified in Section 6.1.
"Reference Date" has the meaning specified in Section 5.5(c).
"Record Date" has the meaning specified in Section 3.1(4) and shall also
mean any Special Record Date, as defined in the Indenture.
"Securities" has the meaning specified in the Recitals to this instrument.
"Senior Indebtedness" means the principal of, premium, if any, interest on
and any other payment due pursuant to any of the following, whether Incurred on
or prior to the date hereof or hereafter Incurred:
(i) all obligations of Citizens for money borrowed;
(ii) all obligations of Citizens evidenced by notes, debentures, bonds
or other similar instruments, including obligations Incurred in connection with
the acquisition of property, assets or businesses;
(iii) all Capital Lease Obligations of Citizens;
(iv) all reimbursement obligations of Citizens with respect to letters
of credit, bankers' acceptances or similar facilities issued for the account of
Citizens;
(v) all obligations of Citizens issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts payable and
accrued liabilities arising in the ordinary course of business);
(vi) all payment obligations of Citizens under interest rate swap or
similar agreements or foreign currency hedge, exchange or similar agreements at
the time of determination, including any such obligations Incurred by Citizens
solely to act as a hedge against increases in interest rates that may occur
under the terms of other outstanding variable or floating rate Indebtedness of
Citizens;
(vii) all obligations under lease transactions pursuant to which
Citizens or any of its Subsidiaries are treated as the owner of the subject
property for United States federal income tax purposes;
(viii) all obligations of the type referred to in clauses (i) through
(vii) above of another Person and all dividends of another Person the payment of
which, in either case, Citizens has assumed or Guaranteed or for which Citizens
is responsible or liable, directly or indirectly, jointly or severally, as
obligor, Guarantor or otherwise; and
(ix) all amendments, modifications, renewals, extensions,
refinancings, replacements and refundings by Citizens of any such Indebtedness
referred to in clauses (i) through (viii) above (and of any such amended,
modified, renewed, extended, refinanced, refunded or replaced Indebtedness);
provided, however, that the following shall not constitute Senior
- -------- -------
indebtedness: (A) any trade accounts payable or accrued liabilities arising in
the ordinary course of business, (B) any Indebtedness owed to a Person when such
Person is a Subsidiary of Citizens, or (C) any Indebtedness which by the terms
of the instrument creating or evidencing the same expressly provides that it is
not superior in right of payment to the Debentures. For purposes of this
Definition, "Indebtedness" includes any obligation to pay principal, premium (if
any), interest, penalties, reimbursement or indemnity amounts, fees and expenses
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to Citizens whether or not a claim for
post-petition interest is allowed in such proceeding). Such Senior Indebtedness
shall continue to be Senior Indebtedness and entitled to the benefits of the
subordination provisions irrespective of any amendment, modification or waiver
of any term of such Senior Indebtedness.
"Senior Nonmonetary Default" has the meaning specified in Section 4.3.
"Senior Payment Default" has the meaning specified in Section 4.3.
"Share Transfer and Valuation Date" is defined in the Statement of Common
Definitions.
"Special Event" is defined in the Statement of Common Definitions.
"Special Representative" is defined in the Statement of Common Definitions.
"Subsidiary" is defined in the Statement of Common Definitions.
"Trading Day" is defined in the Statement of Common Definitions.
"Trustee" shall mean Chemical Bank as trustee with respect to the
Debentures, until a successor Trustee shall have become such pursuant to the
terms of the Indenture.
"Trust" is defined in the Statement of Common Definitions.
"Trust Event" is defined in the Statement of Common Definitions.
"Trust Securities" has the meaning specified in the Recitals to this
instrument.
"Underwriting Agreement" is defined in the Statement of Common Definitions.
"Voting Stock" has the meaning specified in the Statement of Common
Definitions.
Except as otherwise expressly provided or unless the context otherwise
requires, "First Supplemental Indenture" means this instrument as originally
executed or, if amended or supplemented pursuant to the applicable provisions of
the Indenture, as amended or supplemented.
ARTICLE 2
FORMS OF DEBENTURES
Section 2.1 Form of the Debentures.
-----------------------
The Debentures shall be in substantially the form set forth in Exhibit A to
this First Supplemental Indenture, as such form may be completed pursuant to
Article 3 hereof, the terms of which Exhibit A are herein incorporated by
reference and made a part of this First Supplemental Indenture.
ARTICLE 3
TERMS OF THE DEBENTURES
Section 3.1 Terms of the Debentures.
------------------------
The terms of the Debentures shall be as follows:
(1) The Securities to be issued under the Indenture and this First
Supplemental Indenture shall be the Debentures and shall be designated as the
"5% Convertible Subordinated Debentures Due 2036".
(2) The Debentures shall constitute a single series of the Securities
under the Indenture, which series is limited in aggregate principal amount to
$211,756,050.
(3) So long as all of the Debentures are registered in the name of
CEDE & Co., or any other nominee of The Depository Trust Company, and are
intended to be Book-Entry Securities, the provisions of Section 3.11 of the
Indenture shall apply to the Debentures. Thereafter, or in lieu thereof, the
Debentures may be subjected to the requirements of a successor or different
book-entry securities system that may be adopted by the Company in accordance
with the provisions of the Indenture and this First Supplemental Indenture.
(4) Interest on the Debentures will be paid in either shares of Common
Stock Series A or cash, as specified in paragraphs (4), (5) and (6) of this
Section. Interest which is paid in shares of Common Stock Series A shall be paid
on the Share Transfer and Valuation Date, as defined in paragraph (5) below.
Interest which is paid in cash shall be paid on the Cash Interest Payment Date,
as defined in this paragraph (4). Computation of the interest payments shall be
as follows: Interest on each of the Debentures shall be payable at the rate per
annum specified in the title of the Debenture from January 22, 1996, or from the
most recent Cash Interest Payment Date to which interest has been paid or duly
provided for, quarterly in arrears, on (or, if interest is paid in shares of
Common Stock Series A, computed as of) January 31, April 30, July 31 and October
31 in each year (each such date, a "Cash Interest Payment Date"), commencing on
April 30, 1996, subject to the right of deferral of the Company referred to in
paragraph (7) of this Section. Interest shall be calculated on the basis of a
360-day year consisting of 12 months of 30 days each. For any period shorter
than a full quarter, interest will be computed on the basis of the actual number
of days elapsed in such period. The interest payable and punctually paid or duly
provided for in cash on any Cash Interest Payment Date or in shares of Common
Stock Series A on any Share Transfer and Valuation Date will be paid to the
Person in whose name such Debenture (or one or more Predecessor Securities) is
registered at the close of business on the regular record date ("Record Date")
next preceding such interest payment. Upon or before the day on which the Trust,
the Partnership or the Company (or any direct or indirect beneficial owner of
the Debentures) is required to give notice of the record date for the next
scheduled distribution payable on the Convertible Preferred Securities, the
Partnership Preferred Securities or the Debentures to the NYSE, or NASDAQ, or
other applicable self-regulatory organization, or to the holders of the
Convertible Preferred Securities, the Partnership Preferred Securities or the
Debentures (the "Distribution Declaration Date," a date which will be specified
in advance by the Company in a written notice delivered to the Trustee, and
which date shall initially be the date specified in paragraph (8) of this
Section unless changed by the Company in accordance with the provisions of this
Section), the Company shall give written notice ("Distribution Declaration
Notice") to the Trustee and the Holders of the Debentures and the holders of the
Convertible Preferred Securities and the Partnership Preferred Securities, which
notice shall specify (a) whether the Company is exercising its option in whole
or in part to make the next interest payment in cash, (b) whether the Company is
exercising its right to elect to defer such next interest payment as permitted
by paragraph (7) of this Section (unless written notice of the Company's
election to defer such interest payment shall previously have been given to the
Trustee and such holders), (c) the Record Date for such interest payment (unless
such Record Date has theretofore been established by the Company and notice
thereof has previously been given to the Trustee and such holders), (d) the
Share Transfer and Valuation Date (as set forth in paragraph (5) of this
Section) and (e) if such Distribution Declaration Notice relates to the January
31 Cash Interest Payment Date, the Election Period procedures.
The Record Date shall be established by the Company in the
Distribution Declaration Notice as aforesaid or in a separate written notice
given to the Trustee and the Holders no later than the Distribution Declaration
Date immediately preceding the Cash Interest Payment Date in question. Such
notice (or a separate notice) may also establish a schedule for subsequent
Record Dates which shall remain in effect until changed by a later written
notice to the Trustee and Holders. In the event that any date on which interest
is payable on the Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day which is a Business
Day (and without any interest or other payment in respect of any such delay)
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on the Cash Interest Payment Date. Any
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Record Date by virtue of having been such a Holder
and shall be paid by the Company as provided in Section 3.7 of the Indenture.
Any interest that has been properly deferred pursuant to Section 3.1(7) hereof
shall be payable only as provided in Section 3.7 of the Indenture.
Upon the deferral of any interest payment as permitted by paragraph
(7) of this Section, interest on such deferred interest payment will be
compounded on each Cash Interest Payment Date and accrued until paid at the rate
specified in the title of the Debenture until the amount of such deferred
interest (including compounded interest thereon) is paid in full.
(5) So long as Citizens Capital shall be the Holder of all of the
Outstanding Debentures, and subject to provisions of paragraph (6) of this
Section, payment of interest shall be made by delivery (which may be by
book-entry) on a date (the "Share Transfer and Valuation Date"), which will be
specified by the Company in the immediately preceding Distribution Declaration
Notice, of shares of Common Stock Series A with an Equivalent Value to the
interest requirement set forth in paragraph (4) of this Section. At any time
subsequent to the Share Transfer and Valuation Date, the Company shall have the
right to purchase some or all of the shares of Common Stock Series A delivered
to the Holder as aforesaid at a price equal to the Equivalent Value of such
shares on the relevant Share Transfer and Valuation Date. If subsequent to the
delivery of shares of Common Stock Series A to Citizens Capital on the Share
Transfer and Valuation Date, Citizens Capital sells shares of Common Stock
Series A to make cash distributions with respect to the Partnership Preferred
Securities, and the net proceeds from the sale of such shares of Common Stock
Series A is less than the proportionate share of the interest requirement set
forth in paragraph (4) of this Section that is allocable to the Partnership
Preferred Securities for which a cash distribution election has been made (the
amount by which net cash proceeds from the sale of such shares falls short of
such interest requirement being referred to as the "Cash Shortfall"), then the
Company, in its capacity as borrower with respect to the Outstanding Debentures,
shall be obligated to transfer an amount of cash to Citizens Capital equal to
the Cash Shortfall on or prior to the Cash Interest Payment Date.
(6) So long as Citizens Capital shall be the Holder of all of the
Outstanding Debentures, the Company shall have the option to elect, at any time
prior to the Share Transfer and Valuation Date, to make payment of interest on
or before the Cash Interest Payment Date in cash, which shall be payable either,
at the option of the Company exercised on or before the Cash Interest Payment
Date, (i) by check mailed to the address of the Holder appearing on the Security
Register, (ii) by wire transfer in immediately available funds at such place and
to such account as may be designated by a Holder upon application to the
Security Registrar not later than the Record Date with respect to the first Cash
Interest Payment Date for which such transfer is requested, or (iii) as
otherwise provided with respect to a Book-Entry Security or pursuant to any
applicable book-entry security system or similar system. The Company shall also
have the continuing right at any time prior to the Share Transfer and Valuation
Date to elect to pay all or part of the next interest payment in cash as
aforesaid (notwithstanding the relevant Distribution Declaration Notice) by
delivering a further written notice of override to the Holders, the Trustee and
the holders of the Convertible Preferred Securities, and by complying with any
requirements of any stock exchange or market quotation system or the Commission
with respect to the public notification or notice of such override. If only part
of such interest payment is in cash and the number of shares of Common Stock
Series A transferred is less than the number of shares of Common Stock Series A
to be transferred for the account of Holders who have elected to receive shares
of Common Stock Series A, the shares transferred to the account of each such
Holder shall be reduced pro rata so that the number of shares received by each
such Holder will be reduced by the same proportion, to the extent possible. If
the Company has made an election to pay interest in cash, the payment of such
cash to the Holders shall occur on the Cash Interest Payment Date and need not
be made on the Share Transfer and Valuation Date. If the Company has not elected
prior to the Share Transfer and Valuation Date to pay interest in cash, the
payment of such interest in shares of Common Stock shall occur on the Share
Transfer and Valuation Date. If Citizens Capital ceases to be the Holder of all
of the outstanding Debentures, Citizens will be deemed to have elected to make
each subsequent payment of interest in cash.
The principal amount of the Debentures together with all accrued
or deferred but unpaid interest will be paid at maturity or redemption by check
and shares of Common Stock, if any, against presentation of the Debentures by
the Holders or their duly authorized agent at the office or agency of the
Trustee, in New York, New York or such other address in New York, New York as
the Trustee shall designate by written notice to the Holders of the Debentures.
(7) The Company shall have the right, at any time and from time to
time during the term of the Debentures, to elect to defer the date on which one
or more of the quarterly interest payments would otherwise become due and
payable by the giving of notice of deferral; provided that (a) no
--------
deferred quarterly interest payment, including any extension of deferral, shall
remain unpaid for more than 20 consecutive quarters or be deferred beyond the
Stated Maturity of the Debentures, (b) no Event of Default has occurred and is
continuing, and (c) so long as any deferred interest has not been paid, the
Company shall not take any action prohibited in the first sentence of Section
9.1 of this First Supplemental Indenture.
If the Company intends to exercise such right to elect to defer one or
more interest payments, it shall give written notification thereof to the
Trustee and the Holders no later than the Distribution Declaration Date
occurring immediately prior to the first Cash Interest Payment Date with respect
to which interest is being deferred. A deferred interest payment will become due
and payable by the Company only upon the Company's giving a deferred
distribution notice to the Holders of the Debentures and the Trustee in
accordance with the provisions of Section 3.7 of the Indenture applicable to
delayed interest payments, including deferred interest. The Company shall also
give notice of any deferred interest payment to the holders of the Trust
Securities and Partnership Preferred Securities. No interest payment deferred in
accordance with this paragraph shall be deemed due or payable until the date
specified for payment in Section 3.7 of the Indenture, or at Stated Maturity,
whichever occurs first.
(8) Prior to and pending the establishment by the Company of a
different schedule by written notice given by the Company to the Trustee, the
Holders and the holders of the Partnership Preferred Securities and the
Convertible Preferred Securities, the Record Dates and related Distribution
Declaration Dates and Share Transfer and Valuation Dates shall occur on the days
set forth on Annex A.
Upon the completion of the giving of notice or taking of other
action to establish or change any Distribution Declaration Date, Record Date or
Share Transfer and Valuation Date, the Company shall deliver (which delivery may
be contemporaneous with the delivery of such notice) to the Trustee, and shall
retain, a copy of a revised Annex A duly reflecting any such date which has been
established or changed.
(9) If carried out in accordance with the provisions of paragraphs
(4), (5), (6), (7) and (8) of this Section, the Company may give notice or take
other action to establish or change any Distribution Declaration Date, Record
Date, Special Record Date or Share Transfer and Valuation Date (each of such
days being referred to as a "Date" or collectively, "Dates" for the purposes of
this paragraph), or to establish or change any schedule for one or more of the
Dates, without any requirement of receiving the consent, authorization, or any
other action by any other Person, including the Trustee, Citizens Capital, the
Trust, any Holder or any beneficial owner of the Debentures, or any holder of
Partnership Securities or Trust Securities. Such establishment or change shall
not be deemed to be an act or change requiring a supplemental indenture pursuant
to Section 9.2 of the Indenture. Upon maturity or the redemption of all
Outstanding Debentures, the Cash Interest Payment Date shall then become the
maturity date or the Redemption Date, as the case may be, and the Company may
establish or change any Date to reflect any such resulting change in the Cash
Interest Payment Date; provided that the Record Date shall be at least 15 days
before the Cash Interest Payment Date. Any Annex A and revised Annex A given to
the Trustee pursuant to this Section shall be deemed to be included within the
term "notice" as used in Section 6.3 of the Indenture. The Trustee shall be
under no obligation with respect to the establishment, or change, of Dates and
may rely upon such notice or notification to the full extent provided in such
Section 6.3.
(10) Notwithstanding the foregoing, so long as Citizens Capital or the
Trust is the Holder of the Debentures, payment of the principal and interest on
the Debentures will be made at such place and to such account as may be
designated by such Holder.
(11) The Debentures shall be subordinated in right of payment to
Senior Indebtedness as provided in Article 4.
(12) The Debentures shall be convertible as provided in Article 5.
(13) The Debentures shall be redeemable as provided in Article 6.
(14) The Debentures shall be issued in registered form only and in
denominations of $50 or any amount in excess thereof which is an integral
multiple of $50.
(15) When principal and interest on the Debentures is payable in cash,
it shall be payable in the coin or currency of the United States of America,
which, at the time of payment, is legal tender for public and private debts.
(16) The Debentures shall not be subject to the defeasance provided
for in Sections 13.2 and 13.3 of the Indenture.
(17) If at any time while Citizens Capital or the Trust is the Holder
of the Outstanding Debentures or the Trust is the holder of the Outstanding
Partnership Preferred Securities of Citizens Capital, Citizens Capital or the
Trust becomes legally obligated to pay any Taxes, then, in such case, the
Company shall pay, but without duplication, such amounts, if any, as shall be
required to pay such Taxes of Citizens Capital or the Trust either (i) as
additional interest ("Additional Interest") on the Debentures, (ii) directly to
such taxing authority or (iii) to the Trust or Citizens Capital, as the case may
be, so that such Taxes are paid on or before any date of redemption or the
Stated Maturity, whichever comes first. To the extent that such payments give
rise to additional Taxes of Citizens Capital or the Trust, the Company shall
also make payment for such additional Taxes of Citizens Capital or the Trust.
The Company shall pay Additional Interest or make such other payments in an
amount and at such time so that the net amounts received as interest or
distribution payments by Citizens Capital and the Trust, and distributable to
the holders of the Partnership Preferred Securities and the Convertible
Preferred Securities, respectively, after all such Taxes have been paid will not
be less than the amount that would have been received and distributed by such
entities had no such Taxes been imposed.
(18) The Debentures initially will not be issued in the form of a
registered global debenture. If Debentures are thereafter to be issued in the
form of one or more registered global debentures, such global securities shall
be governed by the appropriate provisions of Section 3.3 and 3.11 of the
Indenture.
ARTICLE 4
SUBORDINATION OF DEBENTURES
Section 4.1 Debentures Subordinate to Senior Indebtedness.
----------------------------------------------
The Company covenants and agrees, and each Holder of a Debenture, by his
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article (subject to Article Four of the
Indenture), the payment of the principal of (and premium, if any) and interest
on each and all of the Debentures is hereby expressly made subordinate and
subject in right of payment to the prior payment in full in cash of all Senior
Indebtedness.
Article Four shall constitute a continuing offer to all Persons who become
holders of, or continue to hold, Senior Indebtedness, and such provisions are
made for the benefit of the holders of Senior Indebtedness and such holders are
made obligees hereunder and any one or more of them may enforce such provisions.
Holders of Senior Indebtedness need not prove reliance on the subordination
provisions hereof.
Section 4.2 Payment Over of Proceeds Upon Dissolution, etc.
-----------------------------------------------
Upon any payment or distribution of assets of the Company to creditors upon
any liquidation, dissolution, winding-up, reorganization, assignment for the
benefit of creditors, marshalling of assets or liabilities or any bankruptcy,
insolvency or similar proceedings of the Company (each such event, if any,
herein sometimes referred to as a "Proceeding"):
(1) the holders of Senior Indebtedness shall be entitled to receive
payment in full in cash of all amounts due on or to become due on or in respect
of all Senior Indebtedness, before the Holders of the Debentures are entitled to
receive any payment (including any payment to Holders of the Debentures made in
respect of any other Indebtedness of the Company subordinated to the payment of
the Debentures, such payment or distribution being hereinafter referred to as a
"Junior Subordinated Payment"), on account of the principal of (and premium, if
any) or interest on the Debentures or on account of any purchase, redemption or
other acquisition of Debentures by the Company, any Subsidiary of the Company,
the Trustee or any Paying Agent (all such payments, distributions, purchases,
redemptions and acquisitions, whether or not in connection with a Proceeding,
herein referred to, individually and collectively, as a "Debentures Payment");
and
(2) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, by set-off or otherwise,
to which the Holders of the Debentures or the Trustee would be entitled but for
the provisions of this Article (including, without limitation, any Junior
Subordinated Payment) shall be paid by the liquidating trustee or agent or other
Person making such payment or distribution, whether a trustee in bankruptcy, a
receiver or liquidating trustee or otherwise, directly to the holders of 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 the Senior Indebtedness held or
represented by each, to the extent necessary to make payment in full in cash of
all Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment to the holders of such Senior Indebtedness.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Debenture shall have received in
connection with any Proceeding any Debentures Payment before all Senior
Indebtedness is paid in full or payment thereof provided for in cash, then and
in such event such Debentures Payment shall be paid over or delivered forthwith
to the trustee in bankruptcy, receiver, liquidating trustee, custodian,
assignee, agent or other Person making payment or distribution of assets of the
Company for application to the payment of all Senior Indebtedness remaining
unpaid, to the extent necessary to pay all Senior Indebtedness in full in cash
after giving effect to any concurrent payment to or for the holders of Senior
Indebtedness.
For purposes of this Article only, the words "any payment or distribution
of any kind or character, whether in cash, property or securities" shall not be
deemed to include a payment or distribution of stock or securities of the
Company provided for by a plan of reorganization or readjustment authorized by
an order or decree of a court of competent jurisdiction in a reorganization
proceeding under any applicable bankruptcy law or of any other corporation
provided for by such plan of reorganization or readjustment which stock or
securities are subordinated in right of payment to all then outstanding Senior
Indebtedness to substantially the same extent, or to a greater extent than, the
Debentures 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 the conveyance or transfer
of all or substantially all of its properties and assets as an entirety to
another Person upon the terms and conditions set forth in Article Eight of the
Indenture shall not be deemed a Proceeding for the purposes of this Section if
the Person formed by such consolidation or into which the Company is merged or
the Person which acquires by conveyance or transfer such properties and assets
as an entirety, as the case may be, shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions set forth in Article
Eight of the Indenture.
Section 4.3 No Payment When Senior Indebtedness In Senior Payment
Default or Senior Indebtedness Accelerated.
---------------------------------------------------
In the event that (a) any Senior Payment Default (as defined below) shall
have occurred and such Senior Indebtedness shall have become, by reason thereof,
due and payable prior to the Stated Maturity thereof, then no Debentures Payment
shall be made (except that, so long as Citizens Capital shall be the Holder of
all of the Outstanding Debentures, payment may be made in shares of capital
stock), unless and until such Senior Payment Default shall have been cured or
waived in writing or shall have ceased to exist or all amounts then due and
payable in respect of such Senior Indebtedness (including amounts that have
become and remain due by acceleration) shall have been paid in full in cash.
"Senior Payment Default" means any default (which default has continued beyond
any applicable grace and/or cure period (if any), in the payment of principal of
(or premium, if any) or interest on any Senior Indebtedness when due, whether at
the stated maturity of any such payment or by declaration of acceleration, call
for redemption, mandatory payment or prepayment or otherwise.
In the event that any Senior Nonmonetary Default (as defined below) shall
have occurred and be continuing, then, upon the receipt by the Company and the
Trustee of written notice of such Senior Nonmonetary Default from the Designated
Senior Holder of such certain Senior Indebtedness, no Debentures Payment (except
that, so long as Citizens Capital shall be the Holder of all of the Outstanding
Debentures, payment may be made in shares of capital stock) shall be made,
during the period (the "Payment Blockage Period") commencing on the date of such
receipt of such written notice and ending (subject to any blockage of payments
that may then or thereafter be in effect as the result of any Senior Payment
Default) on the earlier of (i) the date on which the Senior Indebtedness to
which such Senior Nonmonetary Default relates is discharged or such Senior
Nonmonetary Default shall have been cured or waived in writing or shall have
ceased to exist and any acceleration of Senior Indebtedness to which such Senior
Nonmonetary Default relates shall have been rescinded or annulled or (ii) the
179th day after the date of such receipt of such written notice. No more than
one Payment Blockage Period may be commenced with respect to the Debentures
during any period of 360 consecutive days and there shall be a period of at
least 181 consecutive days in each period of 360 consecutive days when no
Payment Blockage Period is in effect. Following the commencement of any Payment
Blockage Period, the holders of the Senior Indebtedness will be precluded from
commencing a subsequent Payment Blockage Period until the conditions set forth
in the preceding sentence are satisfied. For all purposes of this paragraph, no
Senior Nonmonetary Default that existed or was continuing on the date of
commencement of any Payment Blockage Period with respect to the Senior
Indebtedness initiating such Payment Blockage Period shall be, or be made, the
basis for the commencement of a subsequent Payment Blockage Period by holders of
Senior Indebtedness or their representatives unless such Senior Nonmonetary
Default shall have been cured for a period of not less than 90 consecutive days.
"Senior Nonmonetary Default" means any default (other than a Senior Payment
Default) or any event which, after notice or lapse of time (or both), would
become an event of default, under the terms of any instrument or agreement
pursuant to which any Senior Indebtedness is outstanding, permitting (after
notice or lapse of time or both) one or more holders of such Senior Indebtedness
(or a trustee or agent on behalf of the holders thereof) to declare such Senior
Indebtedness due and payable prior to the date on which it would otherwise
become due and payable.
In the event that, notwithstanding the foregoing, the Company shall make
any Debentures Payment to the Trustee or any Holder prohibited by the foregoing
provisions of this Section, then and in such event such Debentures Payment shall
be paid over and delivered forthwith to the Designated Senior Holders under the
Senior Indebtedness.
The provisions of this Section shall not apply to any Debentures Payment
with respect to which Section 4.2 hereof would be applicable.
Section 4.4 Payment Permitted If No Default.
--------------------------------
Nothing contained in this Article or elsewhere in this First Supplemental
Indenture or in any of the Debentures shall prevent the Company, at any time
except during the pendency of any Proceeding referred to in Section 4.2 hereof
or under the conditions described in Section 4.3 hereof, from making Debentures
Payments.
Section 4.5 Subrogation To Rights Of Holders Of Senior Indebtedness.
---------------------------------------------------------
Subject to the payment in full in cash of all Senior Indebtedness, the
Holders of the Debentures shall be subrogated to the rights of the holders of
such Senior Indebtedness to receive payments and distributions of cash, property
and securities applicable to the Senior Indebtedness until the principal of and
interest on the Debentures shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the Holders of the
Debentures or the Trustee would be entitled except for the provisions of this
Article, and no payments pursuant to the provisions of this Article to the
holders of Senior Indebtedness by Holders of the Debentures or the Trustee,
shall, as among the Company, its creditors other than holders of Senior
Indebtedness and the Holders of the Debentures, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness.
Section 4.6 Provisions Solely To Define Relative Rights.
--------------------------------------------
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 Senior Indebtedness on the other hand. Nothing contained in this
Article or elsewhere in this First Supplemental Indenture or in the Debentures
is intended to or shall (a) impair, as among the Company, its creditors (other
than holders of Senior Indebtedness) and the Holders of the Debentures, the
obligation of the Company, which is absolute and unconditional (and which,
subject to the rights under this Article of the holders of Senior Indebtedness,
is intended to rank equally with all other general obligations of the Company),
to pay to the Holders of the Debentures the principal of and interest on the
Debentures as and when the same shall become due and payable in accordance with
their terms; or (b) affect the relative rights against the Company of the
Holders of the Debentures and creditors of the Company, other than the holders
of Senior Indebtedness; or (c) prevent the Trustee or the Holder of any
Debenture from exercising all remedies otherwise permitted by applicable law
upon default under this First Supplemental Indenture or the Indenture, subject
to the rights, if any, under this Article of the holders of Senior Indebtedness
to receive cash, property and securities otherwise payable or deliverable to the
Trustee or such Holder or, under the conditions specified in Section 4.3, to
prevent any payment prohibited by such Section or enforce their rights pursuant
to the penultimate paragraph in Section 4.3.
Section 4.7 Trustee To Effectuate Subordination.
------------------------------------
Each Holder of a Debenture by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of the Company whether in bankruptcy, insolvency, receivership
proceedings, or otherwise, the timely filing of a claim for the unpaid balance
of the Indebtedness of the Company owing to such Holder in the form required in
such proceedings and the causing of such claim to be approved. If the Trustee
does not file a proper claim at least 30 days before the expiration of the time
to file such claim, then the holders of the Senior Indebtedness and their
agents, trustees or other representatives are authorized to do so (but shall in
no event be liable for any failure to do so) for and on behalf of the Holders of
the Debentures.
Section 4.8 No Waiver Of Subordination Provisions.
--------------------------------------
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
First Supplemental Indenture or the Indenture, regardless of any knowledge
thereof any such holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Debentures, without incurring responsibility to the Holders of the Debentures
and without impairing or releasing the subordination provided in this Article or
the obligations hereunder of the Holders of the Debentures to the holders of the
Senior Indebtedness, do any one or more of the following: (i) change the manner,
place or terms of payment or extend the time of payment of, or renew or alter,
Senior Indebtedness, or otherwise amend or supplement in any manner Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (ii) permit the Company to borrow, repay and
then reborrow any or all of the Senior Indebtedness; (iii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Indebtedness; (iv) release any Person liable in any manner for
the collection of Senior Indebtedness; (v) exercise or refrain from exercising
any rights against the Company and any other Person; and (vi) apply any sums
received by them to Senior Indebtedness.
Section 4.9 Notice To Trustee.
------------------
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Debentures. Notwithstanding the provision of this
Article or any other provision of this First Supplemental Indenture or the
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts which would prohibit the making of any payment to or by the Trustee in
respect of the Debentures, unless and until a Responsible Officer of the Trustee
shall have received written notice thereof from the Company, any holder of
Senior Indebtedness, any Designated Senior Holder or from any trustee, fiduciary
or agent therefore; and, prior to the receipt of any such written notice, the
Trustee, subject to the provisions of Section 6.1 of the Indenture, shall be
entitled in all respects to assume that no such facts exist; provided, however,
that if the Trustee shall not have received the notice provided for in this
Section at least three Business -------- Days prior to the date upon which by
the terms hereof any money may become payable for any purpose (including,
without limitation, the payment of the principal or interest on any Debenture),
then, anything herein contained to the contrary notwithstanding, but without
limiting the rights and remedies of the holders of Senior Indebtedness or any
trustee, fiduciary or agent therefor, the Trustee shall have full power and
authority to receive such money and to apply the same to the purpose for which
such money was received and shall not be affected by any notice to the contrary
which may be received by it within three Business Days prior to such date. Any
notice required or permitted to be given to the Trustee by a holder of Senior
Indebtedness or by any Designated Senior Holder shall be in writing and shall be
sufficient for every purpose hereunder if in writing and either (i) sent via
facsimile to the Trustee, the receipt of which shall be confirmed via telephone,
or (ii) mailed, first class postage prepaid, or sent by overnight carrier, to
the Trustee addressed to it at the address of its principal office specified in
the first paragraph of this instrument or at any other address furnished in
writing to such holder of Senior Indebtedness by the Trustee.
Subject to the provisions of Section 6.1 of the Indenture, the Trustee
shall be entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness or Designated Senior
Holder (or a trustee, fiduciary or agent therefor) to establish that such notice
has been given by a holder of Senior Indebtedness or Designated Senior Holder
(or a trustee, fiduciary or agent therefor). In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any Person as a holder of Senior Indebtedness or Designated Senior
Holder to participate in any payment or distribution pursuant to this Article,
the Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness held by such
Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article, and if such evidence is not furnished, the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
Notwithstanding anything else contained herein, no notice, request or
other communication to or with the Trustee shall be deemed given unless received
by a Responsible Officer at the Trustee's principal corporate trust office.
Section 4.10 Reliance On Judicial Order Or Certificate Of Liquidating Agent.
--------------------------------------------------------
Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee, subject to the provisions of Section 6.1 of the
Indenture, and the Holders of the Debentures shall be entitled to rely upon any
order or decree entered by any court of competent jurisdiction in which such
Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee for the benefit of creditors, agent or
other Person making such payment or distribution, delivered to the Trustee or to
the Holders of Debentures, for the purpose of ascertaining the Persons entitled
to participate in such payment or 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, provided that the foregoing shall
apply only if such court has been apprised of the provisions of this Article.
Section 4.11 Trustee Not Fiduciary For Holders Of Senior Indebtedness.
---------------------------------------------------------
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
in good faith mistakenly pay over or distribute to Holders of Debentures or to
the Company or to 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 4.12 Rights of Trustee As Holder Of Senior Indebtedness;
Preservation Of Trustee's Rights.
--------------------------------
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this First Supplemental Indenture shall deprive the
Trustee of any of its rights as a holder of Senior Indebtedness.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 6.7 of the Indenture.
Section 4.13 Article Applicable to Paying Agents.
------------------------------------
In case at any time any Paying Agent other than the Trustee 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 otherwise
requires) 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 Section 4.11 hereof shall not apply to the
--------- --------
Company or any Affiliate of the Company if it or such Affiliate acts as Paying
Agent.
ARTICLE 5
CONVERSION OF DEBENTURES
Section 5.1 Conversion Privilege.
---------------------
Subject to and upon compliance with the provisions of this Article, at
the option of the Holder thereof, any Debenture may, at any time or from time to
time on any Business Day to and including, but not after, the close of business
on the day which is five Business Days prior to January 15, 2036, be converted,
in whole, or, if the Debenture is in a principal amount in excess of $50, in
part, in integral multiples of $50 principal amount, into fully paid and
nonassessable shares of Common Stock Series A, at the Conversion Price in effect
on the date of conversion. In case a Debenture or a portion thereof is called
for redemption, such conversion right in respect of such Debenture or the
portion so called, shall expire at the close of business on the day which is
five Business Days prior to the Redemption Date, unless the Company defaults in
making the payment due upon redemption.
Section 5.2 Manner of Exercise of Conversion Privilege.
-------------------------------------------
In order to exercise the conversion privilege, the Holder of any
Debenture to be converted in whole or in part shall surrender such Debenture to
the Conversion Agent at the office or agency to be maintained by the Company
pursuant to Section 10.2 of the Indenture for the conversion of Debentures, with
the fully completed Notice of Conversion set forth in the Debenture duly
completed and, if so required by the Company, accompanied by instruments of
transfer, in form satisfactory to the Company and to the Trustee, duly executed
by the Holder or his duly authorized attorney in writing. Said notice shall
state the name or names (with addresses), if other than the Holder, in which the
certificate or certificates for shares of Common Stock Series A which shall be
issuable on such conversion shall be issued. As promptly as practicable after
the surrender of such Debenture with the signed and completed notice as
aforesaid, the Company shall, subject to the provisions of Section 5.8, issue
and deliver at such office or agency to such Holder, or on his written order, a
certificate or certificates for the number of shares of Common Stock Series A
issuable on the principal amount of the Debenture then surrendered for
conversion, and cash, as provided in Section 5.3, in respect of any fraction of
a share of Common Stock Series A otherwise issuable upon such conversion, and
the Company shall execute, and the Trustee shall authenticate and deliver to
such Holder without service charge, a new Debenture or Debentures, of any
authorized denomination as requested by such Holder, in an aggregate principal
amount equal to and in exchange for the unconverted portion of the Debenture so
surrendered. Such conversion shall be deemed to have been effected immediately
prior to the close of business on the date (herein called the "Date of
Conversion") on which such Debenture containing a duly completed and executed
Notice of Conversion shall have been surrendered as aforesaid, and the Person or
Persons in whose name or names any certificate or certificates for shares of
Common Stock Series A shall be issuable upon such conversion shall be deemed to
have become on the Date of Conversion the holder or holders of record of the
shares represented thereby; provided, however, that
-----------------
any such surrender, on any date when the stock transfer books of the Company
shall be closed, shall constitute the Person or Persons in whose name or names
the certificate or certificates for such shares are to be issued as the record
holder or holders thereof, for all purposes at the opening of business on the
next succeeding day on which such stock transfer books are open, but such
conversion shall nevertheless be at the Conversion Price in effect at the close
of business on the date when such Debenture shall have been so surrendered. The
Holder at the close of business on any Record Date for the payment of interest
will be entitled to receive the interest payable on his or her Debenture on the
corresponding Cash Interest Payment Date notwithstanding the conversion of such
Debenture into Common Stock Series A following such Record Date. Subject to
Sections 5.5 and 5.6 hereof, no payment or adjustment shall be made upon
conversion on account of any interest accrued or deferred or otherwise unpaid on
the principal of any Debenture or portion thereof so converted or for any
dividends or distributions on any shares of Common Stock Series A. Holders of
Common Stock Series A issued upon conversion prior to or on a record date for
any dividend or distribution on such shares shall be entitled to receive the
same dividend or distribution as other holders of record of Common Stock Series
A.
Section 5.3 Fractional Shares.
------------------
No fractional shares of Common Stock Series A shall be issued upon
conversion of Debentures. If more than one Debenture shall be surrendered for
conversion at one time by the same Holder, the number of full shares which shall
be issuable upon conversion shall be computed on the basis of the aggregate
principal amount of the Debentures so surrendered. Instead of any fractional
interest in a share of Common Stock Series A which would otherwise be issuable
upon conversion of any Debenture or Debentures, the Company shall pay a cash
adjustment in respect of such fractional interest to the nearest one-hundredth
of a share in an amount equal to the Average Market Price of such fractional
interest on the Date of Conversion.
Section 5.4 Conversion Price.
-----------------
The initial conversion price of the Debentures shall be $15.375 per share
of Common Stock Series A, subject to adjustment as provided in this Article 5
(the "Conversion Price").
Section 5.5 Adjustment of Conversion Price.
-------------------------------
The Conversion Price for each series shall be adjusted from time to time
as follows:
(a) In case the Company shall, while any of the Debentures are
outstanding, (i) pay a dividend or make a distribution with respect to its
Common Stock Series A in shares of Common Stock Series A, (ii) subdivide its
outstanding shares of Common Stock Series A, (iii) combine its outstanding
shares of Common Stock Series A into a smaller number of shares or (iv) issue by
reclassification of its shares of Common Stock Series A any shares of capital
stock of the Company, the conversion privilege and the Conversion Price for each
series of Debentures in effect immediately prior to such action shall be
adjusted so that the Holder of any Debenture thereafter surrendered for
conversion shall be entitled to receive the number of shares of capital stock of
the Company which he would have owned immediately following such action had such
Debenture been converted immediately prior thereto. An adjustment made pursuant
to this subsection (a) shall become effective immediately after the record date
in the case of a dividend or other distribution and shall become effective
immediately after the effective date in case of a subdivision, combination or
reclassification (or immediately after the record date if a record date shall
have been established for such event). If, as a result of an adjustment made
pursuant to this subsection (a), the Holder of any Debenture thereafter
surrendered for conversion shall become entitled to receive shares of two or
more classes or series of capital stock of the Company, the Board of Directors
(whose determination shall be conclusive and shall be described in a Board
Resolution filed with the Trustee) shall determine the allocation of the
adjusted Conversion Price for each series of Debentures between or among shares
of such classes or series of capital stock.
(b) In case the Company shall, while any of the Debentures are
outstanding, issue rights or warrants to all holders of its Common Stock Series
A entitling them (for a period expiring within 45 days after the record date
mentioned below) to subscribe for or purchase shares of Common Stock Series A at
a price per share less than the current market price per share of Common Stock
Series A (as determined pursuant to subsection (f) below) on the record date
mentioned below, the Conversion Price for the Debentures shall be adjusted so
that the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the date of issuance of such rights or
warrants by a fraction of which the numerator shall be the number of shares of
Common Stock Series A outstanding on the date of issuance of such rights or
warrants plus the number of shares which the aggregate offering price of the
total number of shares so offered for subscription or purchase would purchase at
such current market price, and of which the denominator shall be the number of
shares of Common Stock Series A outstanding on the date of issuance of such
rights or warrants plus the number of additional shares of Common Stock Series A
offered for subscription or purchase. Such adjustment shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such rights or warrants. To the extent that shares of Common Stock
Series A are not so delivered after the expiration of such rights or warrants,
the Conversion Price shall be readjusted to the Conversion Price which would
then be in effect if such date fixed for the determination of stockholders
entitled to receive such rights or warrants had not been fixed. For the purposes
of this subsection, the number of shares of Common Stock Series A at any time
outstanding shall not include shares held in the treasury of the Company. The
Company shall not issue any rights or warrants in respect of shares of Common
Stock Series A held in the treasury of the Company. In case any rights or
warrants referred to in this subsection in respect of which an adjustment shall
have been made shall expire unexercised within 45 days after the same shall have
been distributed or issued by the Company, the Conversion Price shall be
readjusted at the time of such expiration to the Conversion Price that would
have been in effect if no adjustment had been made on account of the
distribution or issuance of such expired rights or warrants.
(c) Subject to the last sentence of this subsection, in case the
Company shall, by dividend or otherwise, distribute to all holders of its Common
Stock Series A evidences of its indebtedness, shares of any class or series of
capital stock (other than Common Stock Series A), cash or assets (including
securities, but excluding any rights or warrants referred to in subsection (b),
any dividend or distribution paid exclusively in cash and any dividend or
distribution referred to in subsection (a) of this Section), the Conversion
Price shall be reduced so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the
effectiveness of the Conversion Price reduction contemplated by this subsection
(c) by a fraction of which the numerator shall be the current market price per
share (determined as provided in subsection (f) below) of the Common Stock
Series A on the record date fixed for the determina-tion of stockholders
entitled to receive such distribution (the "Reference Date") less the fair
market value (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution), as of
the Reference Date, of the portion of the evidences of indebtedness, shares of
capital stock, cash and assets so distributed applicable to one share of Common
Stock Series A and the denominator shall be such current market price per share
of the Common Stock Series A, such reduction to become effective immediately
prior to the opening of business on the "ex" date related to the Reference Date.
In the event that such dividend or distribution is not so paid or made, the
Conversion Price shall again be adjusted to be the Conversion Price which would
then be in effect if such dividend or distribution had not occurred. If the
Board of Directors determines the fair market value of any distribution for
purposes of this subsection (c) by reference to the actual or when issued
trading market for any securities comprising such distribution, it must in doing
so consider the prices in such market over the same period used in computing the
current market price per share of Common Stock Series A (determined as provided
in subsection (f)). For purposes of this subsection (c), any dividend or
distribution that includes shares of Common Stock Series A or rights or warrants
to subscribe for or purchase shares of Common Stock Series A shall be deemed
instead to be (1) a dividend or distribution of the evidences of indebtedness,
shares of capital stock, cash or assets other than such shares of Common Stock
Series A or such rights or warrants (making any Conversion Price reduction
required by this subsection (c)) immediately followed by (2) a dividend or
distribution of such shares of Common Stock Series A or such rights or warrants
(making any further Conver-sion Price reduction required by subsections (a) or
(b), except that any shares of Common Stock Series A included in such dividend
or distribution shall not be deemed outstanding for purposes of computing any
adjustment of the Conversion Price in subparagraph (a).
(d) In case the Company shall pay or make a dividend or other
distribution on its Common Stock Series A exclusively in cash (excluding all
regular cash dividends if the annualized amount thereof per share of Common
Stock Series A does not exceed 15% of the current market price per share
(determined as provided in subsection (f)) of Common Stock Series A on the
Trading Day next preceding the date of declaration of such dividend), the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the effectiveness of the Conversion Price reduction contemplated by this
subsection by a fraction of which the numerator shall be the current market
price per share (determined as provided in subsection (f)) of the Common Stock
Series A on the date fixed for the determination of stockholders entitled to
receive payment of such distribution less the amount of cash so distributed and
not excluded as provided applicable to one share of Common Stock Series A and
the denominator shall be such current market price per share of the Common Stock
Series A, such reduction to become effective immediately prior to the opening of
business on the "ex" date related to the Reference Date for the payment of such
distribution; provided, however, that in the event the
- --------- --------
portion of the cash so distributed applicable to one share of Common
Stock Series A is equal to or greater than the current market price per share
(determined as provided in subsection (f)) of the Common Stock Series A on the
record date mentioned above, in lieu of the foregoing adjustment, adequate
provision shall be made so that each Holder of Debentures shall have the right
to receive upon conversion the amount of cash such Holder would have received
had such Holder converted such Debentures immediately prior to the record date
for the distribution of the cash. In the event that such dividend or
distribution is not so paid or made, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such record
date had not been fixed.
(e) In case a tender or exchange offer (other than an odd-lot
offer) made by the Company or any Subsidiary of the Company for all or any
portion of the Company's Common Stock Series A shall expire and such tender or
exchange offer shall involve the payment by the Company or such Subsidiary of
consideration per share of Common Stock Series A having a fair market value (as
determined in good faith by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution) at the last time (the
"Expiration Time") tenders or exchanges may be made pursuant to such tender or
exchange offer (as it shall have been amended) that exceeds 110% of the current
market price per share (determined as provided in subsection (f)) of the Common
Stock Series A on the Trading Day next succeeding the Expiration Time, the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the effectiveness of the Conversion Price reduction contemplated by this
subsection by a fraction of which the numerator shall be the number of shares of
Common Stock Series A outstanding (including any tendered or exchanged shares)
at the Expiration Time multiplied by the current market price per share
(determined as provided in subsection (f)) of the Common Stock Series A on the
Trading Day next succeeding the Expiration Time and the denominator shall be the
sum of (x) the fair market value (determined as aforesaid) of the aggregate
consideration payable to holders based on the acceptance (up to any maximum
specified in the terms of the tender or exchange offer) of all shares validly
tendered or exchanged and not withdrawn as of the Expiration Time (the shares
deemed so accepted, up to any such maximum, being referred to as the "Purchased
Shares") and (y) the product of the number of shares of Common Stock Series A
outstanding (less any Purchased Shares) at the Expiration Time and the current
market price per share (determined as provided in subsection (f)) of the Common
Stock Series A on the Trading Day next succeeding the Expiration Time, such
reduction to become effective immediately prior to the opening of business on
the day following the Expiration Time.
(f) For the purpose of any computation under subsections (b), (c),
(d) or (e), the current market price per share of Common Stock Series A on any
date in question shall be deemed to be the average of the daily Average Market
Prices for the five consecutive Trading Days selected by the Company commencing
not more than 20 Trading Days before, and ending not later than, the earlier of
the day in question and, if an "ex" date is applicable to a record date, the day
before the "ex" date with respect to the record date relating to the issuance or
distribution requiring such computation; provided, however, that
--------- -------
if another event occurs that would require an adjustment pursuant to
subsections (a) through (e), inclusive, the Board of Directors may make such
adjustments to the Average Market Prices during such five Trading Day period as
it deems appropriate to effectuate the intent of the adjustments in this
Section, in which case any such determination by the Board of Directors shall be
conclusive. For purposes of this paragraph, the term "ex" date, (1) when used
with respect to any issuance or distribution, means the first date on which the
Common Stock Series A trades regular way on the NYSE or on such successor
securities exchange as the Common Stock Series A may be listed or in the
relevant market from which the Average Market Prices were obtained without the
right to receive such issuance or distribution, and (2) when used with respect
to any tender or exchange offer means the first date on which the Common Stock
Series A trades regular way on such securities exchange or in such market after
the Expiration Time of such offer.
(g) The Company may make such reductions in the Conversion Price,
in addition to those required by subsections (a) through (e) as it considers to
be advisable to avoid or diminish any income tax to holders of Common Stock
Series A or rights to purchase Common Stock Series A resulting from any dividend
or distribution of stock (or rights to acquire stock) or from any event treated
as such for income tax purposes. The Company from time to time may reduce the
Conversion Price by any amount for any period of time if the period is at least
twenty (20) days, the reduction is irrevocable during the period, and the Board
of Directors of the Company shall have made a determination that such reduction
would be in the best interest of the Company, which determination shall be
conclusive. Whenever the Conversion Price is reduced pursuant to the preceding
sentence, the Company shall mail to Holders of the Debentures a notice of the
reduction at least fifteen (15) days prior to the date the reduced Conversion
Price takes effect, and such notice shall state the reduced Conversion Price and
the period it will be in effect.
(h) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
Conversion Price; provided; however; that any --------- --------
adjustments which by reason of this subparagraph (i) are not required to
be made shall be carried forward and taken into account in determining whether
any subsequent adjustment shall be required.
(i) Notwithstanding the foregoing provisions, the issuance of any
shares of Common Stock Series A pursuant to any plan providing for the
reinvestment of dividends or interest payable on securities of the Company and
the investment of additional optional amounts in shares of Common Stock Series A
under any such plan, and the issuance of any shares of Common Stock Series A or
options or rights to purchase such shares pursuant to any employee benefit plan
or program of the Company or pursuant to any option, warrant, right or
exercisable, exchangeable or convertible security outstanding on the date the
Debentures are first issued, shall not be deemed to constitute an issuance of
Common Stock Series A or exercisable, exchangeable or convertible securities by
<PAGE>
the Company to which any of the adjustment provisions described above
applies. There shall also be no adjustment of the Conversion Price in case of
the issuance of any stock (or securities convertible into or exchangeable for
stock) of the Company except as specifically described in this Article Five.
(j) If any action would require adjustment of the Conversion Price
pursuant to more than one of the provisions described above, only one adjustment
shall be made and such adjustment shall be the amount of adjustment that has the
highest absolute value to the Holder of the Debentures.
Section 5.6 Reclassification, Consolidation, Merger or Sale of Assets.
----------------------------------------------------------
In the event that the Company shall be a party to any transaction
(including without limitation (a) any recapitalization or reclassification of
the Common Stock Series A (other than a change in par value, or from par value
to no par value, or from no par value to par value, or as a result of a
subdivision or combination of the Common Stock Series A), (b) any consolidation
of the Company with, or merger of the Company into, any other Person, or any
merger of another Person into the Company (other than a merger which does not
result in a reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock Series A of the Company), (c) any sale or
transfer of all or substantially all of the assets of the Company or (d) any
compulsory share exchange) pursuant to which the Common Stock Series A is
converted into the right to receive other securities, cash or other property,
then lawful provision shall be made as part of the terms of such transaction
whereby the Holder of each Debenture then outstanding shall have the right
thereafter to convert such Debenture only into the kind and amount of
securities, cash and other property receivable upon consummation of such
transaction by a holder of the number of shares of Common Stock Series A of the
Company into which such Debenture could have been converted immediately prior to
such transaction.
The Company or the Person formed by such consolidation or resulting
from such merger or which acquired such assets or which acquires the Company's
shares, as the case may be, shall make provision in its certificate or articles
of incorporation or other constituent document to establish such right. Such
certificate or articles of incorporation or other constituent document shall
provide for adjustments which, for events subsequent to the effective date of
such certificate or articles of incorporation or other constituent document,
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Article Five. The above provisions shall similarly apply to
successive transactions of the foregoing type.
Section 5.7 Notice of Adjustments of Conversion Price.
------------------------------------------
Whenever the Conversion Price is adjusted as herein provided:
(a) the Company shall compute the adjusted Conversion Price and
shall prepare a certificate signed by the Treasurer or Controller of the Company
setting forth the adjusted Conversion Price and showing in reasonable detail the
facts upon which such adjustment is based, and such certificate shall forthwith
be filed with the Trustee and the Conversion Agent; and
(b) a notice stating the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price shall as soon as practicable be
mailed by the Company to all record holders of Convertible Preferred Securities,
Partnership Preferred Securities and Debentures at their last addresses as they
appear upon the transfer books of the Company, the Trust or Citizens Capital, as
the case may be.
Section 5.8 Notices.
--------
In case, at any time while any of the Debentures are outstanding,
(a) the Company shall (i) declare a dividend (or any other
distribution) on its Common Stock Series A, excluding any cash dividends that
would not require adjustment pursuant to Section 5.5(d) or dividends payable in
shares of Common Stock Series A, or (ii) authorize a tender or exchange offer
that would require an adjustment pursuant to Section 5.5(e); or
(b) the Company shall authorize the issuance to all holders of its
Common Stock Series A of rights or warrants to subscribe for or purchase shares
of its Common Stock Series A or of any other subscription rights or warrants; or
(c) the Company shall authorize any reclassification of its Common
Stock Series A (other than a transaction or event referred to in clauses (i),
(ii), (iii) or (iv) of subsection (a) of Section 5.5) or any consolidation or
merger to which the Company is a party and for which approval of any
stockholders of the Company is required (except for a merger of the Company into
one of its subsidiaries solely for the purpose of changing the corporate
domicile of the Company to another state of the United States and in connection
with which there is no substantive change in the rights or privileges of any
securities of the Company other than changes resulting from differences in the
corporate statutes of the then existing and the new state of domicile), or the
sale or transfer of all or substantially all of the assets of the Company; or
(d) the voluntary or involuntary dissolution, liquidation or
winding up of the Company shall occur or be authorized;
then the Company shall cause to be filed at each office or agency
maintained by the Company for the purpose of conversion of the Debentures
pursuant to Section 10.2 of the Indenture, and shall cause to be mailed to the
Holders of Debentures and the holders of the Convertible Preferred Securities
and the Partnership Preferred Securities at their last addresses as they shall
appear on the Securities Register or the transfer books of the Trust or Citizens
Capital, as the case may be, at least 10 days before the date hereinafter
specified (or the earlier of the dates hereinafter specified, in the event that
more than one date is specified), a notice stating (i) the date on which a
record is to be taken for the purpose of such dividend, distribution, rights or
warrants, or, if a record is not to be taken, the date as of which the holders
of Common Stock Series A of record to be entitled to such dividend,
distribution, rights or warrants are to be determined or (ii) the date on which
any such reclassification, consolidation, merger, sale, share exchange,
transfer, dissolution, liquidation or winding up is expected that holders of
Common Stock Series A of record shall be entitled to exchange their Common Stock
Series A for securities or other property (including cash), if any, deliverable
upon such reclassification, consolidation, merger, sale, share exchange,
transfer, dissolution, liquidation or winding up. The failure to give or receive
the notice required by this Section 5.8 or any defect therein shall not affect
the legality or validity of any such dividend, distribution, right or warrant or
other action.
Section 5.9 Taxes on Conversion.
--------------------
The Company will pay any and all documentary, stamp or
similar transfer taxes payable to the United States of America or any political
subdivision or taxing authority thereof or therein respect of the issue or
delivery of shares of Common Stock Series A on conversion of Debentures pursuant
hereto; provided, however, that the Company shall
-------- -------
not be required to pay any tax which may be payable in respect of any
transfer involved in the issue or delivery of shares of Common Stock Series A in
a name other than that of the Holder of the Debentures to be converted and no
such issue or delivery shall be made unless and until the Person requesting such
issue or delivery has paid to the Company the amount of any such tax or has
established, to the satisfaction of the Company, that such tax has been paid.
Section 5.10 Company to Provide Stock.
-------------------------
The Company covenants that there shall be reserved, from time to
time, free from preemptive rights, out of authorized but unissued shares of
Common Stock Series A, sufficient shares to provide for the conversion of the
Debentures from time to time as such Debentures are presented for conversion.
If any shares of Common Stock Series A to be reserved for the purpose of
conversion of Debentures hereunder require registration with or approval of, or
authorization by, any governmental authority under Federal or state law before
such shares may be validly issued or delivered upon conversion, then the Company
covenants that it will in good faith and as expeditiously as possible endeavor
to secure such registration, approval or authorization, as the case may be.
Before any action which would cause an adjustment reducing the Conversion
Price for the Debentures below the then par value, if any, of the Common Stock
Series A, the Company covenants that there will be taken all corporate action
which may, in the opinion of its counsel, be necessary in order that there may
be validly and legally issued fully paid and non-assessable shares of such
Common Stock Series A at such adjusted Conversion Price.
The Company covenants that all shares of Common Stock Series A which may
be issued upon conversion of Debentures will upon issue be duly authorized,
validly issued, fully paid and non-assessable and free from all liens and
charges with respect to the issue or delivery thereof. Such shares of Common
Stock Series A will, upon issue, be listed on the NYSE or any other national
securities exchange, NASDAQ or other quotation system on which shares of Common
Stock Series A may then be listed or quoted.
Section 5.11 Disclaimer of Responsibility for Certain Matters.
-------------------------------------------------
Neither the Trustee nor any Conversion Agent shall at any time be under
any duty or responsibility to any Holder of Debentures to determine whether any
facts exist which may require any adjustment of the Conversion Price for any
series of Debentures, or with respect to the nature or extent of any such
adjustment when made, or with respect to the method employed, or herein or in
any supplemental indenture provided to be employed, in making the same. Neither
the Trustee nor any Conversion Agent shall be accountable with respect to the
registration, validity or value (or the kind or amount) of any shares of Common
Stock Series A, or of any securities or property, which may any time be issued
or delivered upon the conversion of any Debenture; and neither the Trustee nor
any Conversion Agent makes any representation with respect thereto. Neither the
Trustee nor any Conversion Agent shall be responsible for any failure of the
Company to issue or deliver any shares of Common Stock Series A or stock
certificates or other securities, cash or property upon the surrender of any
Debenture for the purpose of conversion, or, subject to Section 1.4 of the
Indenture, to comply with any of the covenants of the Company obtained in this
Article 5.
Section 5.12 Return of Funds Deposited for Redemption of Converted
Debentures.
-------------------------------------------
Any funds which at any time shall have been deposited by the
Company or on its behalf with the Trustee or any other Paying Agent for the
purpose of paying the principal of, premium, if any, and interest, if any, on
any of the Debentures and which shall not be required for such purposes because
of the conversion of such Debentures, as provided in this Article 5, shall
forthwith after such conversion, upon Company Request, be repaid to the Company
by the Trustee or such other Paying Agent.
Section 5.13 Disposition of Converted Debentures.
------------------------------------
All Debentures delivered to the Company or any Conversion Agent upon
conversion pursuant to this Article 5 shall be delivered to the Trustee for
cancellation.
ARTICLE 6
REDEMPTION OF DEBENTURES
Section 6.1 Redemption
----------
(a) Optional Redemption: At any time on or after February 1,
1999, the Company, at its option, will have the right to prepay or redeem the
Debentures, in whole or in part, at 100% of the principal amount being redeemed
in cash (together with any accrued or deferred but unpaid interest to the
Redemption Date in cash or Common Stock) (such amount and form of payment being
the "Redemption Price").
(b) Accrued or Deferred Interest. The Company may not redeem
any outstanding Debentures unless on or before the Redemption Date all accrued
or deferred but unpaid interest has been paid in full on all Debentures for all
quarterly interest payment periods terminating on or before the date of
redemption.
Section 6.2 Applicability of Article.
-------------------------
Redemption of Debentures at the election of the Company, as
permitted by Section 6.1, shall be made in accordance with such provision, this
Article and Article 11 of the Indenture, to the extent not inconsistent with
this Article 6.
Section 6.3 Election to Redeem; Notice to Trustee; Other Notices.
--------------------------------------------
(a) Election to Redeem; Notice to Trustee. The election of the
- -------------------------------------
Company to redeem any Debentures pursuant to Section 6.1 shall be
evidenced by a Board Resolution. In the case of any redemption, the Company
shall, at least 40 days and no more than 60 days prior to the Redemption Date
fixed by the Company, notify the Trustee of such Redemption Date and of the
principal amount of Debentures to be redeemed and any accrued or deferred and
unpaid interest thereon and provide a copy of the notice of redemption given to
Holders of Debentures to be redeemed pursuant to Section 6.4. In the event that
any date fixed for redemption is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day, except that, if such Business Day is in the next
succeeding calendar year, such payment will be made on the immediately preceding
Business Day.
(b) Notice of Redemption. If the Company, after a Distribution
- --------------------
Declaration Date, proposes to deliver a notice of redemption to the
Trustee of a proposed Redemption Date for Debentures, the proposed Redemption
Date established in such notice shall be no earlier than the Cash Interest
Payment Date or the Special Cash Interest Payment Date related to such
Distribution Declaration Date.
(c) Distribution Declaration Date Notice. If the Company has
------------------------------------
delivered or is proposing to deliver a notice of redemption to the Trustee
and the Company proposes to deliver a Distribution Declaration Notice to the
Trustee, the schedule of Dates established by the Company as contemplated in
Section 3.1(a) herein and set forth in the Distribution Declaration Notice shall
provide for adequate time for the activities required for the payment of
interest in Common Stock or cash, and the related Cash Interest Payment Date or
Special Cash Interest Payment Date shall be no later than the Redemption Date.
If the Company proposes to establish a Special Cash Interest Payment Date after
having delivered, or proposing to deliver, a notice of redemption to the Trustee
establishing a Redemption Date, the Special Cash Interest Payment Date so
established shall be no later than such Redemption Date. The Company may only
change the Cash Interest Payment Date so as to coincide with a Redemption Date
which is earlier than a regular scheduled Redemption Date, in which case the
Company must also establish a Record Date for such changed Cash Interest Payment
Date as provided in Section 3.1(a).
Section 6.4 Notice of Redemption.
---------------------
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Debentures to be redeemed, at his address appearing in
the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) that on the Redemption Date the Redemption Price will
become due and payable upon each such Debenture to be redeemed and that interest
thereon will cease to accrue on and after said date,
(4) the place or places where such Debentures
are to be surrendered for payment of the Redemption Price,
(5) the date that the conversion right shall expire, and (6)
the Conversion Price.
Notice of redemption of Debentures to be redeemed shall be given by
the Company or, at the Company's request, by the Trustee in the name and at the
expense of the Company.
Section 6.5 Deposit of Redemption Price.
----------------------------
Prior to 10:00 a.m., New York City time, on any Redemption Date (or,
with respect to the shares of Common Stock, the Share Transfer and Valuation
Date), the Company shall deposit with the Trustee or with a Paying Agent (or, if
the Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 10.3 of the Indenture) an amount of money and Common Stock,
if any, sufficient to pay the Redemption Price of all the Debentures to be
redeemed.
Section 6.6 Debentures Payable on Redemption Date.
--------------------------------------
Notice of redemption having been given as aforesaid, the Debentures
so to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in such payment) such Debentures shall cease to bear
interest. Upon surrender of any such Debenture for redemption in accordance with
said notice, such Debenture shall be paid by the Company at the Redemption
Price; provided, ---------
however, that any installment of interest for the period prior to or
-------
ending
on a Cash Interest Payment Date or Special Cash Interest Payment Date
which is prior to, or the same date as, the Redemption Date shall be payable to
the Holders of such Debentures registered as such at the close of business on
the relevant Record Dates subject to the provisions of Section 3.7 of the
Indenture and Article 3 of this First Supplemental Indenture.
ARTICLE 7
AMENDMENTS TO INDENTURE FOR PURPOSES
OF FIRST SERIES OF DEBENTURES
Section 7.1 Amendment to Section 5.1 of Indenture for Purposes of
First Series of Debentures.
-------------------------------------------
For all purposes of the Debentures and for no other purposes,
Section 5.1 of the Indenture shall read (terms used but not defined in the
Indenture shall have the requisite meanings as used in this First Supplemental
Indenture):
"Section 5.1. Events of Default.
------------------
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the provisions of Article Four of the First Supplemental
Indenture or shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(1) failure to pay any principal of the
Debentures when due, and such failure shall continue for 15 days; or
(2) failure to pay any interest on the Debentures, other than
Additional Interest, if any, when due and such failure continues for a period of
60 days; provided, that a deferral of
--------
an interest payment by the Company pursuant to the First
Supplemental Indenture shall not constitute a default in the payment of interest
for this or any other purpose and no interest payment which has been deferred
shall be deemed due or payable until the date specified as the date for payment
of such interest as provided in Section 3.7 of the Indenture; or
(3) failure by the Company to issue the Common Stock Series A
(or other securities) upon an election to convert the Debentures for Common
Stock Series A (or other securities), which failure shall continue for five
days; or
(4) failure by the Company to perform in any material respect
any other covenant herein (other than a covenant whose performance is elsewhere
in this Section specifically dealt with) for the benefit of the holders of
Debentures continued for a period of 90 days after written notice, by registered
or certified mail, (i) to the Company by the Trustee or (ii) to the Company and
the Trustee by the Holders of a majority in aggregate principal amount of the
Debentures or by the holders of a majority in liquidation amount of Partnership
Preferred Securities or Convertible Preferred Securities; or
(5) the dissolution, winding up, liquidation or termination of
the Partnership unless the same is a result of a Special Event or Rating Agency
Event; or
(6) the dissolution, winding-up, liquidation
or termination of the Trust unless the same is a result of a Special Event or
Rating Agency Event; or
(7) the entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of the Company, the Partnership
or the Trust in an involuntary case or proceeding under any applicable Federal
or State bankruptcy, insolvency, reorganization or other similar law or (B) a
decree or order adjudging the Company, the Partnership or the Trust a bankrupt
or insolvent, or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company, the
Partnership or the Trust under any applicable federal or state law, or
appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company, the Partnership or the Trust or of any
substantial part of the property of any of them, or ordering the winding up or
liquidation of its affairs, and the continuance or any such decree or order for
relief or any such other decree or order unstayed and in effect for a period of
60 consecutive days; or
(8) the commencement by the Company, the Partnership or the
Trust of a voluntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent, or the consent by any
of the Company, the Partnership or the Trust it to the entry of a decree or
order for relief in respect of itself in an involuntary case or proceeding under
any applicable federal or state bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against either the Company, the Partnership or the Trust, or the
filing by any of them of a petition or answer or consent seeking reorganization
or relief under any applicable federal or state law, or the consent by any of
the Company, the Partnership or the Trust to the filing of such petition or to
the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company, the
Partnership or the Trust or of any substantial part of the property of any of
them, or the making by any of them of an assignment for the benefit of
creditors, or the admission by any of them in writing of its inability to pay
its debts generally as they become due, or the taking of corporate action by the
Company, the Partnership or the Trust in furtherance of any such action;
it being understood that (other than as described in paragraphs (1) and (2)
above to the extent the Trustee is the Paying Agent for the Debentures) the
Trustee shall not be deemed to have nowledge of an Event of Default hereunder
unless a Responsible Officer has received written notice thereof."
Section 7.2 Amendment to Section 5.13 of Indenture for Purposes of
First Series of Debentures.
-------------------------------------------
For all purposes of the Debentures and for no other purposes, Section 5.13
of the Indenture shall read (terms used but not defined in the Indenture shall
have the requisite meanings as used in this First Supplemental Indenture):
"Section 5.13. Waiver of Past Defaults.
------------------------
The Holders of not less than a majority in principal amount of the
outstanding Debentures may on behalf of the Holders of all the Debentures waive
any past default hereunder with respect to such Debentures and its consequences,
except a default
(1) in the payment of the principal of (or
premium, if any) or interest on the Debentures, or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the Holder of
each outstanding Debenture affected;
provided, however, that if the Debentures are held by Citizens Capital
--------- -------- or the Trust, such waiver shall not be effective until,
in the case that the Debentures are
held by Citizens Capital, the holders of a majority in liquidation preference of
the Partnership Preferred Securities, or, in the case that the Debentures are
held by the Trust, the holders of a majority in liquidation preference of the
Convertible Preferred Securities, as the case may be, shall have consented to
such waiver; provided, further, that if the consent of the Holder of each
- --------- --------
Debenture is required and the Debentures are held by Citizens Capital or
the Trust, such waiver shall not be effective until, in the case that the
Debentures are held by Citizens Capital, each holder of the Partnership
Preferred Securities, or, in the case that the Debentures are held by the Trust,
each holder of the Trust Securities, as the case may be, shall have consented to
such waiver.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon."
Section 7.3 Amendment to Section 9.1 of Indenture for Purposes of
First Series of Debentures.
-------------------------------------------
For all purposes of the Debentures and for no other purposes, subsection
(10) of Section 9.1 of the Indenture shall read (terms used but not defined in
the Indenture shall have the requisite meanings as used in this First
Supplemental Indenture):
"(10) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to make any
other provisions with respect to matters or questions arising under this
Indenture or the First Supplemental Indenture which shall not be inconsistent
with the provisions of this Indenture or the First Supplemental Indenture;
provided that such
--------
action pursuant to this clause (10) shall not adversely affect the
interests of the Holders in any material respect or, so long as any of the
Convertible Preferred Securities or Partnership Preferred Securities shall
remain outstanding, the holders of the Convertible Preferred Securities or
Partnership Preferred Securities in any material respect."
Section 7.4 Amendment to Section 9.2 of Indenture for Purposes of
First Series of Debentures.
-------------------------------------------
For all purposes of the Debentures and for no other purposes, there shall
be added a proviso following subsection (3) of Section 9.2 of the Indenture,
which shall read (terms used but not defined in the Indenture shall have the
requisite meanings as used in this First Supplemental Indenture):
"; provided, that, so long as any of the Convertible Preferred Securities or
--------
Partnership Preferred Securities remains outstanding, no such amendment shall be
made that adversely affects the holders of the Convertible Preferred Securities
or Partnership Preferred Securities, and no termination of this Indenture or the
First Supplemental Indenture shall occur, and no waiver of any Event of Default
or compliance with any covenant under this Indenture or the First Supplemental
Indenture shall be effective, without the prior consent of the holders of at
least 66-2/3% of the aggregate liquidation preference of the outstanding
Convertible Preferred Securities or Partnership Preferred Securities unless and
until the Debentures and all accrued or deferred and unpaid interest thereon
have been paid in full."
ARTICLE 8
EXPENSES
Section 8.1 Payment and Expenses.
---------------------
In connection with the offering, sale and issuance of the Debentures to
Citizens Capital in connection with the issuance of the Partnership Securities
by Citizens Capital and the sale of the Trust Securities by the Trust, the
Company shall:
(a) pay for all costs and expenses relating to the offering, sale
and issuance of the Debentures, including commissions to the underwriters
payable pursuant to the Underwriting Agreement and compensation and expenses of
the Trustee under the Indenture in accordance with the provisions of Section 6.7
of the Indenture;
(b) pay for all costs and expenses relating to
the organization, maintenance and dissolution of Citizens Capital and the
Trust and the retention of its regular trustees;
(c) pay for all costs and expenses of Citizens Capital and the Trust
(including but not limited to, costs and expenses relating to the organization
of Citizens Capital and the Trust, the issuance of the Partnership Securities,
the offering, sale and issuance of the Trust Securities (including commissions
to the underwriters in connection therewith), the fees and expenses of the
Property Trustee and the Delaware Trustee, the costs and expenses relating to
the operation of Citizens Capital and the Trust, including without limitation,
costs and expenses of accountants, attorneys, statistical or bookkeeping
services expenses for printing and engraving and computing or accounting
equipment, paying agent(s), registrar(s), transfer agent(s), duplicating, travel
and telephone and other telecommunications expenses and costs and expenses
incurred in connection with the acquisition, financing, and disposition of
Citizens Capital and Trust assets);
(d) pay for all costs and expenses relating to the
enforcement by the Property Trustee under the Trust of the rights of the holders
of the Convertible Preferred Securities; and
(e) to the extent contemplated by Section 3.1(17), pay Taxes of
Citizens Capital and the Trust and all liabilities, costs and expenses with
respect to such Taxes of Citizens Capital and the Trust, either by payment of
Additional Interest, by payment directly to the taxing authority or by otherwise
making funds available to Citizens Capital or the Trust, as contemplated by
Section 3.1(17).
ARTICLE 9
COVENANTS
Section 9.1 Covenants.
----------
(1) The Company agrees (i) that the Company will not declare or pay
any dividend or distribution (other than in shares of its capital stock) on any
of the Company's capital stock, (ii) that neither the Company nor any of its
Subsidiaries will redeem, purchase, acquire for value or make a liquidation
payment to any holder of, or with respect to, any of the Company's capital stock
or any of the Company's indebtedness for borrowed money which by its terms
expressly ranks junior in subordination to the Debentures ("Other Subordinated
Indebtedness") (other than (x) as an issuance of capital stock upon conversion
of a convertible security or in payment of interest, premium or principal or in
payment in redemption, purchase or other acquisition or liquidation of capital
stock or Other Subordinated Indebtedness, (y) as a result of reclassification of
such capital stock or the exchange or conversion of one class or series of
capital stock for another class or series of capital stock, or (z) in connection
with the right of the Company to purchase or reacquire shares of Common Stock
Series A referred to in Section 3.1(5) of this First Supplemental Indenture or
under the provisions of the Declaration or the Limited Partnership Agreement),
(iii) that the Company will not make any payment of principal, premium or
interest (unless payable in shares of capital stock) on Other Subordinated
Indebtedness, and (iv) that neither the Company nor any of its Subsidiaries will
make any guarantee of payments which would be prohibited or limited by the
foregoing (other than payments under the Guarantees, payments of dividends by a
Subsidiary, or guarantees of dividends or payments payable to the Company), if
at such time (a) there shall have occurred any event that, with the giving of
notice or the lapse of time or both, would constitute an Event of Default
hereunder or under the Debentures, (b) the Company shall be in default with
respect to its payment or other obligations under the Guarantees or (c) the
Company shall have given notice of its election to defer an interest payment as
provided herein and any deferred interest payment remains unpaid. The term
"Other Subordinated Indebtedness" shall not include any indebtedness which is
outstanding under an instrument dated prior to the date of this First
Supplemental Indenture which does not expressly permit the deferral of payment
or extension of the time for payment of interest, premium or principal, or any
installment thereof.
(2) The Company also covenants (i) to remain the General Partner of
Citizens Capital; provided that any permitted successor of the
--------
Company under the Limited Partnership Agreement may succeed to the
Company's duties as General Partner, (ii) to cause at least 3% of the total
value of Citizens Capital and at least 3% of all interests in the capital,
income, gain, loss, deduction and credit of Citizens Capital to be held by the
Company, as a General Partner of Citizens Capital, (iii) not to voluntarily
dissolve, wind-up or liquidate Citizens Capital, (iv) to perform timely all of
its duties as General Partner (including the duty to declare and pay
distributions on the Partnership Preferred Securities), (v) to maintain direct
ownership of all partnership interests of Citizens Capital other than the
Partnership Preferred Securities and any special partnership interest, except as
may be permitted by the Limited Partnership Agreement, (vi) to use its
reasonable efforts to cause Citizens Capital to remain a limited partnership and
otherwise to continue to be treated as a partnership for United States federal
income tax purposes; (vii) to issue Common Stock Series A upon an election by
Holders to convert the Debentures; and (viii) to own Convertible Common
Securities equal to at least 3% of the total undivided beneficial interests in
the assets of the Trust.
(3) The Company also covenants that so long as any Debentures are
held by Citizens Capital, the General Partner shall not (i) exercise its option
to select the form of payment of interest in violation of instructions of the
Special Representative, (ii) direct the time, method and place of conducting any
proceeding for any remedy available to the Special Representative, or exercising
any trust or power conferred on the Special Representative with respect to the
Debentures, (iii) waive any past default which is waivable under this First
Supplemental Indenture, (iv) exercise any right to rescind or annul a
declaration that the principal of all the Debentures shall be due and payable,
(v) consent to any amendment, modification or termination of the Debentures or
of this First Supplemental Indenture or the Indenture without, in each case,
obtaining the prior approval of the Property Trustee after having received the
prior consent of the holders of at least 66-2/3% or more of the aggregate
liquidation preference of the Convertible Preferred Securities then outstanding,
provided, however, that where a consent under the Debentures would
-------- -------
require the consent of each Holder affected thereby, no such consent shall
be given by the General Partner without the prior approval of such Property
Trustee after having received the prior consent from each holder of the
Convertible Preferred Securities. The General Partner shall not revoke any
action previously approved by the Property Trustee with the prior consent or
approval of the holders of the Convertible Preferred Securities, without the
approval of the Property Trustee after having received the prior consent or
approval of the holders of Convertible Preferred Securities representing 66-2/3%
or more (or 100% where the consent of each holder affected thereby is required)
of the aggregate liquidation preference of the Convertible Preferred Securities.
(4) If the Trust or Citizens Capital shall notify the Company and
the Trustee in writing that either the Trust or Citizens Capital is giving
notice of the redemption of all or a portion of the Trust Securities or the
Partnership Preferred Securities and General Partnership Security, which notice
shall state an amount of liquidating value to be redeemed of each security and
the date of such redemption, the Company will promptly give notice of redemption
of the Debentures with the same principal amount (without duplication) as the
aggregate liquidating value of the Partnership Preferred Securities and the
General Partnership Security being redeemed or, if the Debentures are held by
the Trust, in the same aggregate principal amount as the liquidating value of
the Trust Securities being redeemed. The redemption date specified in such
notice of redemption of Debentures shall be the same redemption date as is
specified by the Trust or Citizens Capital.
(5) If Debentures are to be distributed to the holders of the
Convertible Preferred Securities upon a liquidation of the Trust, the Company
will use its best efforts to list the Debentures on the NYSE or on such other
exchange as the Convertible Preferred Securities are then listed.
(6) The Company expressly acknowledges that, under the terms of the
Convertible Preferred Securities, the trustee for the holders of outstanding
Convertible Preferred Securities shall have the right to appoint a Special
Representative, which Special Representative shall be authorized to exercise the
right of the Trustee or the Holders of not less than a majority in principal
amount of the outstanding Debentures to accelerate the principal amount of the
Debentures and to enforce the Holders' other rights hereunder or under the
Debentures.
(7) At the time of any Special Event, the Company
has a Ministerial Action Obligation.
ARTICLE 10
MISCELLANEOUS
Section 10.1 Benefits of Indenture.
----------------------
The Company's obligations under the Indenture and this First Supplemental
Indenture and the Debentures will also be for the benefit of the holders from
time to time of the Partnership Preferred Securities, Convertible Preferred
Securities and Convertible Common Securities. Nothing in the Indenture or this
First Supplemental Indenture or in the Debentures, express or implied, shall
give any Person, other than the parties hereto and their successors hereunder,
the holders of Senior Indebtedness, the holders of Convertible Preferred
Securities and Convertible Common Securities, the holders of Partnership
Preferred Securities and the Holders of Debentures, any benefit or any legal or
equitable right, remedy or claim under the Indenture and this First Supplemental
Indenture.
Section 10.2 Incorporation of Indenture.
---------------------------
From and after the date hereof, the Indenture, as supplemented by this
First Supplemental Indenture, shall be read, taken and construed as one and the
same instrument with respect to the Debentures.
Section 10.3 Acceptance of Trust.
--------------------
The Trustee accepts the trusts created by the Indenture, as hereby
supplemented by this First Supplemental Indenture, and agrees to perform the
same upon the terms and conditions in the Indenture, as so supplemented.
Section 10.4 Conflict with Trust Indenture Act.
----------------------------------
If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act that is required under such Act to be a part of and
govern this First Supplemental Indenture, such provision of the Act shall
control. If any provision of this First Supplemental Indenture modifies or
excludes any provision of the Trust Indenture Act that may be so modified or
excluded, such provision of the Act shall be deemed to apply to this First
Supplemental Indenture only as so modified and if not so excluded, as the case
may be.
Section 10.5 Governing Law.
--------------
This First Supplemental Indenture, and the Debentures, shall be governed
by and construed in accordance with the laws of the State of New York.
Section 10.6 Recitals.
---------
The recitals contained in the Indenture, this First Supplemental Indenture
and the Debentures, except the Trustee's certificate of authentication, shall be
taken as statements of the Company, and the Trustee assumes no responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of the Indenture, as supplemented by this First Supplemental
Indenture.
Section 10.7 Amendments.
-----------
Notwithstanding any other provisions hereof, all amendments to the
Indenture made hereby shall have effect only with respect to the Debentures, and
not with respect to the Securities of any other series created subsequent to the
date hereof.
Section 10.8 Counterparts.
-------------
This First Supplemental Indenture may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the date first above written.
CITIZENS UTILITIES COMPANY
By:______________________________
Title: Vice President and
Treasurer
Attest:
- --------------------------------
Secretary
CHEMICAL BANK, as Trustee
By:______________________________
Title: Vice President
Attest:
- -------------------------------
Assistant Vice President
<PAGE>
County of Fairfield )
) ss.:
State of Connecticut )
On the day of January, 1996, before me personally came Robert J.
DeSantis, to me known, who, being by me duly sworn, did depose and say that he
is Vice President and Treasurer of CITIZENS UTILITIES COMPANY, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporations; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
----------------------------------
Notary Public, State of Connecticut
<PAGE>
County of New York )
) ss.:
State of New York )
On this day of January in the year of 1996 before me personally came
_____________________________________________, to me personally known, who being
by me duly sworn did depose and say that he resides at
_____________________________ _______________________________________, that he
is Vice President of CHEMICAL BANK, one of the corporations described in and
which executed the foregoing indenture; that he knows the seal of said
corporation; that the seal affixed to said instrument opposite the execution
thereof on behalf of said corporation is the corporate seal of said corporation;
that said instrument was signed and said corporate seal was so affixed on behalf
of said corporation by authority and order of its board of directors; that he
signed his name thereto by like authority; and he acknowledged said instrument
to be his free act and deed and the free act and deed of said Chemical Bank.
IN WITNESS WHEREOF I have hereunder set my hand and affixed my
official seal, at New York in said State of New York, the day and year first
above written.
----------------------------------
Notary Public, State of New York
<PAGE>
ANNEX A
Initial Record Dates,
Distribution Declaration Dates and Share Transfer and
Valuation Dates
Distribution Record Date Share Transfer Related Cash
Declaration Date and Valuation Date Interest Payment Date
- ---------------- ----------- ------------------ ---------------------
December 6 December 19 January 18 January 31
March 13 March 23 April 17 April 30
June 13 June 23 July 18 July 31
September 12 September 22 October 18 October 31
If the scheduled Distribution Declaration Date falls on a day which is not a
Business Day, the Distribution Declaration Date shall be the next preceeding day
that is a Business Day. If the scheduled Share Transfer and Valuation Date or
Cash Interest Payment Date falls on a day which is not a Business Day, the Share
Transfer and Valuation Date or Cash Interest Payment Date, as the case may be,
shall be the next succeding day that is a Business Day except that, if such
Business Day is in the next succeeding calendar year, the Share Transfer and
Valuation Date or Cash Interest Payment Date, as the case may be, shall be the
immediately preceding Business Day.
<PAGE>
EXHIBIT A
to
First Supplemental Indenture
(FORM OF DEBENTURE)
REGISTERED REGISTERED
R ________ $___________
CITIZENS UTILITIES COMPANY
5% CONVERTIBLE SUBORDINATED DEBENTURE DUE 2036
CITIZENS UTILITIES COMPANY, a Delaware corporation (hereinafter called the
Company , which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
----------------------------
or registered assigns, the principal sum of _________________________________
($_______________) DOLLARS on January 15, 2036, and to pay interest (computed on
the basis of a 360-day year of twelve 30-day months) thereon from January 22,
1996 or from the most recent Cash Interest Payment Date to which interest has
been paid or duly provided for, quarterly (subject to deferral as set forth
herein) in arrears on (or, if interest is paid in shares of Common Stock Series
A, as provided in the Indenture, computed as of) January 31, April 30, July 31
and October 31 of each year (each such date, a "Cash Interest Payment Date"),
commencing on April 30, 1996, at the rate per annum specified in the title of
this Debenture, until the principal hereof is paid or made available for payment
and on any overdue principal and (without duplication and to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest at the same rate per annum compounded quarterly. Unless
deferred by the Company as provided in the Indenture, the interest so payable,
and punctually paid or duly provided for, in cash on any Cash Interest Payment
Date or in shares of Common Stock Series A on any Share Transferand Valuation
Date will, as provided in the Indenture, be paid to the Person in whose name
this Debenture (or one or more Predecessor Securities) is registered at the
close of business on the Record Date next preceding such interest payment, which
is a date to be established by the Company by written notice to the Trustee and
the Holders prior to such Cash Interest Payment Date. Any such interest not so
punctually paid or duly provided for (including any deferred interest referred
to on the reverse hereof) shall forthwith cease to be payable to the registered
Holder on such Record Date and may be paid to the Person in whose name this
Debenture is registered at the close of business on a Special Record Date for
the payment of such deferred interest to be fixed by the Company, as provided in
the Indenture.
Subject to the requirements of any book-entry security system applicable to this
Debenture, payment of principal and interest of this Debenture will be made at
maturity or redemption against presentation of the Debenture by the Holder or
the duly authorized agent of the Holder at the office or agency of the Trustee
maintained for that purpose in the Borough of Manhattan, The City of New York,
unless otherwise specified in notice of redemption. Payment of principal (and
interest, to the extent that interest is payable in cash) will be made in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts.
As more fully provided in the Indenture, so long as the Holder of the Debentures
is Citizens Utilities Capital L.P., the Company will have the option to pay the
interest becoming due on the quarterly Cash Interest Payment Dates either by
delivery of an Equivalent Value of shares of its Common Stock Series A (as
described in the Indenture) (which delivery shall be made on the Share Transfer
and Valuation Date), or in cash. Interest paid in cash will be paid by check
mailed to the address of the Holder as such address shall appear on the Security
Register or by wire transfer in immediately available funds at such place and to
such account as may be designated by the Holder upon application to the Security
Registrar as provided in the Indenture.
The indebtedness evidenced by this Debenture is, to the extent provided in the
Indenture, subordinate and subject in right of payment to the prior payment in
full in cash of all Senior Indebtedness (as defined in the Indenture), and this
Debenture is issued subject to the provisions of the Indenture with respect
thereto. Each Holder of this Debenture, by accepting the same, (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee on his
or her behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination so provided and (c) appoints the
Trustee his or her attorney-in-fact for any and all such purposes. Each Holder
hereof, by his or her acceptance hereof, hereby waives all notice of the
acceptance of the subordination provisions contained herein and in the Indenture
by each holder of Senior Indebtedness, whether now outstanding or hereafter
incurred, and waives reliance by each such holder upon said provisions.
Additional provisions of the Indenture under which this Debenture is issued and
to the terms of which it is subject are summarized on the reverse hereof, but
the provisions set forth in the Indenture alone shall be definitive as to the
respective rights, duties, obligations and covenants of the Company, the Trustee
and the Holder of this Debenture.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee for the Debentures by manual signature, this Debenture
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, CITIZENS UTILITIES COMPANY has caused this Instrument
to be duly executed under its corporate seal.
Dated:
CERTIFICATE OF AUTHENTICATION CITIZENS UTILITIES COMPANY
THIS IS ONE OF THE SECURITIES OF
THE SERIES DESIGNATED THEREIN
REFERRED TO IN THE WITHIN-MENTIONED
INDENTURE. By:______________________________
VICE PRESIDENT AND TREASURER
CHEMICAL BANK, TRUSTEE
Attest:__________________________
SECRETARY
By:--------------------------------
AUTHORIZED OFFICER
<PAGE>
FORM OF REVERSE OF DEBENTURE]
This Debenture is one of a duly authorized series of Securities of the Company
(herein sometimes referred to as the Debentures ), issued or to be issued under
and pursuant to an Indenture dated as of January 15, 1996, duly executed and
delivered between the Company and Chemical Bank, as Trustee (the Trustee ), as
supplemented by the First Supplemental Indenture dated as of January 15, 1996,
between the Company and the Trustee (the Indenture as so supplemented, the
Indenture ), to which Indenture and all indentures supplemental thereto
reference is hereby made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the Company and
the Holders of the Debentures. This series of Debentures is limited in aggregate
principal amount as specified in said First Supplemental Indenture.
Deferred Interest. As provided in the Indenture, the Company shall have the
- -----------------
right, at any time and from time to time during the term of the Debentures, upon
notice delivered to the Holders and the Trustee no later than the Distribution
Declaration Date (as defined in the Indenture), to defer the date on which one
or more of the quarterly interest payments would otherwise become due and
payable; provided that (a) no deferred quarterly interest
--------
payment, including any extension of deferral, shall remain unpaid for more than
20 consecutive quarters or be deferred beyond the Stated Maturity of the
Debentures, (b) no Event of Default under the Indenture has occurred and is
continuing and (c), so long as any deferred interest has not been paid, the
Company shall not take certain actions prohibited by the Indenture. In the event
of an deferal, any interest payment shall be deemed not due or payable until the
date specified for payment in a deferred distribution notice given by the
Company to the Trustee and to the Holer. Upon the deferral of any interest
payment, interest on such deferred interest payment will be compoinded and
accrued on each Cash Interest Payment Date at the rate specified in the title of
this Debenture until the amount of such deferred interest (including compounded
interest thereon) is paid in full.
Conversion of Debentures.
- ------------------------- At the option of the Holder, this Debenture may, at
any time or from time to time on any Business Day to and cluding, but not after,
the close of business on the day which is five Business Days prior to January
15, 2036, be converted, in whole, or, if the Debenture is in a principal amount
in excess of $50, in part, in integrral multiples of $50 principal amount, into
fully paid and nonassessable shares of Common Stock Series A of the Company, at
the Conversion Price in effect at the date of conversion. In case a Debenture or
a portion thereof is called for redemption, such conversion right in respect of
such Debenture or the portion so called, shall expire at the close of business
on the day which is five Business Days prior to the Redemption Date, unless the
Company defaults in making the payment due upon redemption. If this Debenture is
to be converted only in part, is shall be surrendered at any office or agency of
the Company designated for that purpose pursuant to the Indenture, and the
Company shall execute, and the Trustee shall authenticate and deliver to the
Holder hereof without service charge, a new Debenture or Debentures, of any
authorized denomination as requested by the Holder, in an aggregate principal
amount equal to and in exchange for the unconverted portion of this Debenture so
surrendered. In order to exercise the conversion privilege, the Holder shall
surrender this Debenture to the Conversion Agent at the office or agency to be
maintained by the company pursuant to the Indenture for the conversion of
Debentures with the Notice of Conversion set forth below in this Debenture duly
completed and, is so required by the Company, accompanied by instruments of
transfer, in form satisfactory to the Company and to the Trustee, duly executed
by the Holder or his duly authorized attorney in writing. As promptly as
practiacable after the surender of this Debenture with the notice duly completed
as aforesaid, the Company shall then issue and delive at such office or agency
to the Holder, or on his written order, a certificate or certificates for the
number of the shares of Common Stock Series A then issuable in accordance with
the provisions of the Indenture and cash inrespect of any fraction of a share of
Common Stock Series A otherwise issuable upon such conversion. Any such
conversion shall be deemed to have been effected at the time and on the date as
specified in the Indenture. The Holder of this Debenture at the close of
business on any Record Date for the payment of interest will be intitled to
receive the interest payable hereon on the corresponding Cash Interest Payment
Date notwithstanding the conversion of such Debenture into Common Stock Series A
following such Record Date. Subject to provisions of Sections 5.5 and 5.6 of the
First Supplemental Indenture, no payment or adjustment shall be made upon
conversion on account of any interest accrued or deferred or otherwise upoaid on
the principal or any portion thereof of this Debenture so converted or for any
dividends or distributions on any shares of Common Stocks Series A. The initial
Conversion Price of the Debentures, as of the dae of issuance, is $15.375 per
share of Common Stock Series A, which Conversion Price is subject to adjustment
as provided in the Indenture.
Optional Redemption.
- -------------------- At any time on or after February 1, 1999, the Company as
its option, will have the right to prepay or redeem the Debentures, in whole or
in part, at 100% of the principal amount being redeemed (together with any
accrued or deferred but unpaid interest on the portion being so redeemed) (the
"Redemption Price") upon notice and in the manner provided in the Indenture. The
company may not redeem any outstanding Debentures unless on or before the
Redemption Date all accrued or deferred but unpaid interest has been paid on all
Debentures for all quarterly interest payment periods terminating on or before
the date of redemption.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debentures under the Indenture at
any time by the Company and Trustee with the consent of the Holders of at least
66 2/3% in aggregate principal amount of the Debentures outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Debentures at the time
Outstanding, or voting at a meeting of Holders, on behalf of the Holders of all
the Debentures, to waive compliance by the Company with certain provisions of
the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holders of this Debenture Shall
be conclusive and binding upon such Holder and upon all future Holders of this
Debenture and of any debenture issued upon the registration of transfer hereof
or in exchange hereof or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Debenture.
No reference herein to the Indenture an no provision of this Debenture or of the
Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of and (subject to deferral) interest on
this Debenture at the time, place and rate, and in the coin or currency, herein
prescribed, or to exchange this Debenture for common Stock Series A or other
securities or property for which Debentures are from time to time convertible as
provided in the Indenture.
In the event of the merger or consolidation of the obligor on the Debentures
into, or of the transfer of its assets substantially as an entirety to, a
successor corporation, such successor corporation shall assume payment of the
Debentures and performance of every covenant of the Indenture on the part of the
predecessor corporation to be performed, and shall be substituted for the
predecessor corporation under the Indenture; and in the event of any such
transfer, such predecessor corporation shall be discharge from all obligations
and covenants under the Indenture and the Debentures and may be dissolved and
liquidated, all as more fully set forth in the Indenture.
If an Event of Default, as defined in the Indenture, with respect to the
Debentures shall occur and be continuing, the principal of all the Debentures
may be declared due and payable at the time, in the manner and with the effect
provided in the Indenture.
As provided in the Indenture and subject to certain limitations therein and
herein set forth, this Debenture is transferable on the Security Register of the
Company, upon surrender of this Debenture for registration of transfer at the
office or agency of the Company in any place where principal and interest on the
Debentures are payable, or at any other office or agency of the Company
maintained for that purpose,duly endorsed by, or accompanied by a written
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Debentures, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.
The Debentures are issuable only in registered form without coupons in
denominations of $50 and any multiple of $50. As provided in the Indenture and
subject to certain limitations therein set forth, Debentures are exchangeable
for a like aggregate principal amount of Debentures of a like tenor and of
different authorized denominations, as requested by the Holder surrendering the
same. No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection with such registration of
transfer or exchange, other then certain exchanges not involving any transfer.
Prior to due presentment of this Debenture for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Debenture is registered as the owner hereof for the
purpose of receiving payment as herein provided and for all other purposes,
whether or not this Debenture shall be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
This Debenture shall for all purposes be governed by, and construed in
accordance with, the laws of the State of New York.
Certain terms used in this Debenture which are defined in the Indenture have the
meanings set forth therein.
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY NUMBER OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
----------------------------------
|---------------------------------|---------------------------------------
(Name and address of Assignee, including zip code, must be printed or
typewritten)
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
the within Debenture, and all rights thereunder, hereby irrevocably,
constituting and appointing
___________________________________________________________________Attorney
to transfer the said Debenture on the books of Citizens Utilities Company with
full power of substitution in the premises.
Dated:_______________ ________________________________________
NOTICE:The signature of this assignment
must correspond with the name as it appears upon the face of the within
Debenture in every particular, without alteration or enlargement or any change
whatever.
<PAGE>
FORM OF CONVERSION NOTICE
To Citizens Utilities Company:
The undersigned Holder of this Debenture hereby irrevocably exercises the option
to convert this Debenture (or a portion thereof, which is $50.00 or an integral
multiple thereof, designated below), into shares of Common Stock Series A of the
Company or other securities or other property or cash in accordance with the
terms of the Indenture referred to in this Debenture, and directs that the
shares, other securities, other property or cash issuable and deliverable upon
the conversion, together with any check in payment for fractional shares and any
Debentures representing any unconverted principal amount hereof, be issued and
delivered to the undersigned unless a different name has been indicated below.
If shares are to be issued in the name of a Person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
Dated:
---------------------------------------
Signature (for exchange only)
- ----------------------------------------
(Name)
----------------------------------------
(Address)
- ----- ----------------------------------
Please print name and address (including
zip code or similar number)
Fill in for registration of share Principal Amount of Debentures to be s or
other securities and/or converted in an integral multiple of Debentures if to be
issued other- $50.00, if less than all: wise than to the Holder:
- ----------------------------------
(Name) $_____________________________________
- ----------------------------------
(Address)
- ----------------------------------
Please print name and address
(including zip code or similar number)
<PAGE>
Statement of Common Definitions
Exhibit B
"Additional Interest" is defined in Section 3.1(17) of the First
Supplemental Indenture.
"Average Market Price" for Common Stock on any day will be determined by
averaging the high and low sales prices of Common Stock for such day as reported
in The Wall Street Journal, under "New York Stock Exchange Composite
- ------------------------ Transactions" or any successor market transaction
report on the day in question (the "Date"). If the Common Stock is not listed on
the NYSE but is quoted or admitted to trading on another national securities
exchange, on the National Market System of the National Association of
Securities Dealers, Inc., the Average Market Price shall be determined by
reference to the average of the high and low reported sales prices on such
exchange if available or, if not so available, the high and low sales prices
reported by such National Market System if available, or, if not so available,
the high and low bid and asked prices in the over-the-counter market on the day
in question as reported by the National Quotation Bureau Incorporated or a
similarly generally accepted reporting service if available, or if not so
available, in such manner, as otherwise determined in good faith by the Board of
Directors of the Company. If no trading occurs on the NYSE (or such other market
for which sales prices or quotations are regularly available) in the Common
Stock on the Date, the Average Market Price will be determined by averaging the
high and low sales prices per share of Common Stock on the Trading Day
immediately preceding the Date.
"back-up undertakings" means the obligations of Citizens under the
Guarantee Agreements, taken together with Citizens' obligations under the
Convertible Debentures, the Indenture, the Declaration and the Limited
Partnership Agreement, including its obligation to pay costs, expenses and
certain indemnities of the Trust.
"Base Indenture" means the Indenture between Citizens and Chemical Bank,
as Indenture Trustee, dated as of January 15, 1996.
"Business Day" means any day other than a Saturday or a Sunday or a day
on which banking institutions in The City of New York are authorized or
obligated by law or executive order to close.
"Cash Interest Payment Date" is defined in Section 3.1(4) of the First
Supplemental Indenture.
"Change in 1940 Act Law" means the occurrence of a change in law or
regulation or a written change in interpretation or application of law or
regulation by any legislature body, court, governmental agency or regulatory
authority with respect to the 1940 Act.
"Change in Tax Law" means (a) any change or prospective change which is
announced or publicly stated in the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority thereof or
therein, (b) any change or prospective change in an interpretation or
application of any such laws or regulations by any legislative body, court,
governmental agency or regulatory authority (including the enactment of any
legislation and the publication of any judicial decision or regulatory
determination), (c) any interpretation or pronouncement that provides for a
position with respect to such laws or regulations that differs from the
generally accepted position or (d) any action by any governmental agency or body
or regulatory authority, which, assuming such change is enacted, promulgated,
issued or effective or such interpretation or pronouncement is issued or
announced or becomes effective or such action is taken, in each case on or after
the date of the Prospectus, would have the result specified.
"Citizens" or the "Company" means Citizens Utilities Company,
a Delaware corporation, or its successor.
"Citizens Capital" means Citizens Utilities Capital L.P., a special
purpose Delaware limited partnership of which the Company is the general
partner, also sometimes referred to as the "Partnership."
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depository
for the Convertible Preferred Securities or the Partnership Preferred
Securities, as the case may be, and in whose name (or nominee's name) shall be
registered a Global Certificate or one or more global L.P. Certificates, as the
case may be, and which shall undertake to effect book-entry transfers and
pledges of beneficial interests in the Convertible Preferred Securities or the
Partnership Preferred Securities, as the case may be.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of interest in securities
deposited with the Clearing Agency.
"Closing Date" means the Closing Date as defined in the Underwriting
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any corresponding federal tax statute enacted after the date of the
issuance of the Convertible Preferred Securities. A reference to a specific
section (Section) of the Code refers not only to such specific section but also
to any corresponding provision of any federal tax statute enacted after the date
of the issuance of the Convertible Preferred Securities, as such specific
section or corresponding provision is in effect on the date of application of
the provisions of the Declaration or the Limited Partnership Agreement
containing such reference.
"Common Stock" or "Common Stock Series A" means shares of the Common
Stock Series A of the Company, par value $.25 per share, and (i) for the
purposes of the making of distributions in shares of capital stock, any
successor capital stock of the Company, and (ii) for the purposes of Article 5
of the First Supplemental Indenture, any successor security or property
(including cash) into which the Debentures issued under the First Supplemental
Indenture may be convertible in accordance with said Article 5.
"Company Tax Event" means that the Company shall have obtained a Tax
Event Opinion to the effect that, as a result of a Change in Tax Law, there is
more than an insubstantial risk that interest payable to the holders of the
Convertible Debentures would not be deductible by Citizens for United States
federal income tax purposes.
"Compound Interest" means, upon any deferral of interest payments
permitted by the Indenture, the interest which will be compounded on each Cash
Interest Payment Date and accrued until paid at the rate per annum specified in
the designation of the Convertible Debentures on any interest so deferred until
the amount of such deferred interest (including Compound Interest thereon) is
paid in full.
"Conversion Agent" means the Person appointed under the Limited
Partnership Agreement, the Declaration or the Indenture to act on behalf of the
holders of Convertible Preferred Securities, the Partnership Preferred
Securities or the Convertible Debentures, as the case may be, in effecting the
conversion of Convertible Preferred Securities, the Partnership Preferred
Securities or the Convertible Debentures, as the case may be, as and in the
manner set forth in the Limited Partnership Agreement, the Declaration or the
Indenture, as the case may be. Initially, Chemical Bank shall act as Conversion
Agent with respect to the Convertible Preferred Securities and the Company shall
act as Conversion Agent with respect to the Partnership Preferred Securities and
the Convertible Debentures.
"Convertible Common Securities" means common undivided beneficial
interests in the assets of Citizens Utilities Trust.
"Convertible Debentures" means $211,756,050 aggregate principal amount
of the 5% Convertible Subordinated Debentures Due 2036, issued pursuant to the
Indenture.
"Convertible Preferred Securities" means the 5% Citizens Utilities
Convertible Preferred Securities, each with a liquidation value of $50,
representing preferred undivided beneficial interests in the assets of the
Trust.
"Date" shall have the meaning as specified in the definition of
"Average Market Price" contained in this Statement of Common Definitions.
"Debenture Issuer" means Citizens in its capacity as issuer of the
Convertible Debentures.
"Declaration" means the declaration of trust dated October 13, 1995, as
amended by the amended and restated declaration of trust dated January 15, 1996,
by Citizens, as sponsor, and the trustees named therein, establishing the Trust
under the Trust Act, as such declaration of trust may be further amended or
supplemented.
"Declaration Event of Default" means a Partnership Event of Default.
"Delaware Trustee" means a trustee under the Declaration which will
have a principal place of business or reside in the State of Delaware.
Initially, Chemical Bank Delaware will act as Delaware Trustee.
"Distribution Declaration Date" is defined in Section 3.1(4) of the
First Supplemental Indenture.
"Distribution Declaration Notice" is defined in Section 3.1(4) of the
First Supplemental Indenture.
"Distribution Payment Date" means January 31, April 30, July 31 and
October 31 of each year, or if any such date is not a Business Day, the next
succeeding Business Day except that, if such Business Day is in the next
succeeding calendar year, the Distribution Payment Date shall be the immediately
preceding Business Day.
"Election Period" means the period of ten Business Days in each year
specified in the Distribution Declaration Notice relating to the January 31
Distribution Payment Date, as provided in paragraph (4) of Section 3.1 of the
First Supplemental Indenture.
"Equivalent Value" means the shares of Common Stock Series A with a
fair market value on the Share Transfer and Valuation Date equivalent to the
interest payment due on the next scheduled interest payment date.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expiration Time" is defined in Section 5.5(e) of the First
Supplemental Indenture.
"First Supplemental Indenture" means the First Supplemental Indenture
dated as of January 15, 1996 to the Indenture, as amended or supplemented.
"General Partner" means Citizens, as general partner of Citizens
Capital, or any successor general partner of Citizens Capital.
"General Partnership Security" means the general partnership interest
of Citizens in Citizens Capital.
"Guarantee Agreements" means the Convertible Common Securities
Guarantee Agreement and the Convertible Preferred Securities Guarantee
Agreement, each with respect to the Trust, and the Partnership Preferred
Securities Guarantee Agreement with respect to Citizens Capital, each dated
January 15, 1996, and each as amended or supplemented from time to time.
"Indenture" means the Base Indenture, as it may from time to time be
supplemented or amended by one or more indentures supplemental thereto,
including the First Supplemental Indenture.
"Indenture Event of Default" means an Event of Default as defined in
Section 5.1 of the Base Indenture, as supplemented by the First Supplemental
Indenture.
"Indenture Trustee" means Chemical Bank, as trustee under the
Indenture, or any successor trustee under the Indenture.
"Investment Company Act Opinion" means an opinion of a nationally
recognized independent counsel experienced in practice under the 1940 Act.
"Limited Partnership Agreement" means the amended and restated limited
partnership agreement of Citizens Capital dated as of January 15, 1996, as
amended or supplemented.
"Ministerial Action Obligation" shall have the meaning set forth in the
following sentence. If at the time of any Special Event, Citizens, Citizens
Capital or the Trust is actually aware of an opportunity to eliminate the
adverse effect of the Special Event on the Trust, Citizens or Citizens Capital
by taking some ministerial action (such as filing a form or making an election
or pursuing some other similar reasonable measure) where the taking of such
action does not involve a material cost, then neither Citizens, Citizens Capital
nor the Trust shall liquidate Citizens Capital or the Trust by reason of such
Special Event, without first having pursued such ministerial action.
"NASDAQ" means The Nasdaq Stock Market, Inc.
"1940 Act" means the Investment Company Act of 1940, as amended.
"NYSE" means the New York Stock Exchange.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two authorized officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in the applicable agreement shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definition relating
thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Partnership Event" means a Partnership Tax Event or a Partnership
Investment Company Act Event.
"Partnership Event of Default" means an Indenture Event of Default.
"Partnership Investment Company Act Event" means that the General
Partner shall have received an Investment Company Act Opinion that as a result
of the occurrence of a Change in 1940 Act Law, there is more than an
insubstantial risk that the Partnership is or will be considered an Investment
Company which is required to be registered under the 1940 Act, which Change in
1940 Act Law becomes effective on or after the first date of issuance of the
Partnership Preferred Securities.
"Partnership Preferred Securities" means the 5% Partnership Preferred
Securities, issued by Citizens Capital pursuant to the Limited Partnership
Agreement, representing limited partnership interests in Citizens Capital.
"Partnership Securities" means the Partnership Preferred
Securities and the General Partnership Security.
"Partnership Tax Event" means that the General Partner shall have
obtained a Tax Event Opinion to the effect that, as a result of a Change in Tax
Law, there is more than an insubstantial risk that (i) Citizens Capital is
subject to United States federal income tax with respect to interest accrued or
received on the Convertible Debentures or (ii) Citizens Capital is subject to
more than a de minimis amount of taxes, duties or other governmental charges.
"Paying Agent" means the Person appointed under and authorized pursuant
to the Limited Partnership Agreement, the Declaration or the Indenture to act on
behalf of the holders of Convertible Preferred Securities, the Partnership
Preferred Securities or the Convertible Debentures, as the case may be, in
effecting the payment of principal, distributions or interest, as the case may
be, redemption payments and liquidation payments, as and in the manner set forth
in the Limited Partnership Agreement, the Declaration or the Indenture, as the
case may be. Initially, Chemical Bank shall act as Paying Agent with respect to
the Convertible Preferred Securities and the Company shall act as Paying Agent
with respect to the Partnership Preferred Securities and the Convertible
Debentures.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated association or government or any agency or political subdivision
thereof.
"Property Trustee" means the property trustee of the Trust under
the Declaration. Initially, Chemical Bank will act as Property Trustee.
"Prospectus" shall mean the prospectus dated January 16, 1996 of the
Trust, relating to the offering to the public of 3,500,000 Convertible Preferred
Securities, plus up to 525,000 additional Convertible Preferred Securities to
cover overallotments.
"Rate" means 5% per annum.
"Rating Agency Event" shall occur when, and if, (i) any nationally
recognized securities rating agency lowers its rating of the Company's senior,
unsecured long-term debt to a rating less than the rating in effect on the date
of the issuance of the Convertible Preferred Securities and (ii) the Company has
elected to transmit notice thereof to the Trust.
"Regular Trustees" means the Regular Trustees of the Trust as
defined in the Declaration. Initially, Robert J. DeSantis and Edward O.
Kipperman will act as Regular Trustees.
"Share Transfer and Valuation Date" means the day on which shares of
Common Stock are transferred to the holders of Convertible Debentures pursuant
to Section 3.1(5) of the First Supplemental Indenture. Initially, the Share
Transfer and Valuation Date will be at least nine Business Days before the
Distribution Payment Date and Cash Interest Payment Date, subject to change to
reflect evolving market practices and settlement procedures.
"Special Event" means a Partnership Event, a Trust Event or a Company
Tax Event.
"Special Representative" means the Person appointed (i) to enforce
Partnership Preferred Security holders' rights under the Partnership Guarantee,
(ii) to enforce Citizens Capital's rights against the Company under the
Convertible Debentures or (iii) to exercise rights otherwise exercisable by the
General Partner to declare and pay distributions on the Partnership Preferred
Securities as provided in Section 6.2(h) of the Limited Partnership Agreement.
"Sponsor" means Citizens in its capacity as trust sponsor of the Trust
pursuant to the Declaration.
"Subsidiary" of any Person means (i) a corporation more than 50% of the
outstanding Voting Stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person or by such Person and
one or more Subsidiaries thereof or (ii) any other Person (other than a
corporation) in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries of such Person or such
Person and one or more other Subsidiaries thereof, directly or indirectly, has
at least a majority ownership and power to direct the policies, management and
affairs thereof.
"Taxes" means any taxes, duties, assessments or governmental charges of
whatever nature (other than withholding taxes) imposed by the United States or
any other domestic taxing authority upon either the Trust or Citizens Capital.
"Tax Event Opinion" shall mean an opinion of a nationally recognized
tax counsel experienced in such matters.
"Trading Day" means any day on which the NYSE (or any other market used
for the determination of Average Market Price) is open for the trading of
securities.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trust" means Citizens Utilities Trust, a statutory business trust
created under the Trust Act pursuant to the Declaration.
"Trust Act" means the Delaware Business Trust Act, Chapter 38 of Title
12 of the Delaware Code, 12 Del. Code ss.3801 et seq., as it may be amended from
time to time.
"Trust Event" means a Trust Tax Event or a Trust Investment Company Act
Event.
"Trust Investment Company Act Event" means that Citizens shall have (i)
requested and received and (ii) delivered to the Regular Trustees, an Investment
Company Act Opinion to the effect that there has occurred a Change in 1940 Act
Law such that there is a more than an insubstantial risk that the Trust is or
will be considered an investment company which is required to be registered
under the 1940 Act.
"Trust Tax Event" means that Citizens shall have (i) requested and
received, and (ii) delivered to the Regular Trustees, a Tax Event Opinion to the
effect that there has occurred a Change in Tax Law such that there is more than
an insubstantial risk that (i) the Trust may be subject to United States federal
income tax with respect to distributions accrued or received on the Partnership
Preferred Securities or (ii) the Trust is subject to more than a de minimis
amount of taxes, duties or other governmental charges.
"Underwriting Agreement" means the agreement dated January 16, 1996,
among the Company, Citizens Capital and the Trust and the underwriters named
therein relating to the issuance and sale by the Trust to such underwriters of
the Convertible Preferred Securities.
"Voting Stock" of any Person means capital stock of such Person which
ordinarily has voting power for the election of directors (or Persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
<PAGE>
EXECUTION COPY
CITIZENS UTILITIES COMPANY
TO
CHEMICAL BANK
(Trustee)
FIRST SUPPLEMENTAL INDENTURE
Dated as of January 15, 1996
Supplemental to the Indenture
Dated as of January 15, 1996
<PAGE>
TABLE OF CONTENTS
Page
TABLE OF CONTENTS
Page
cuc\ps\cucps.630
cuc\ps\cucps.630
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions 2
ARTICLE 2
FORMS OF DEBENTURES
Section 2.1 Form of the Debentures 8
ARTICLE 3
TERMS OF THE DEBENTURES
Section 3.1 Terms of the Debentures 9
ARTICLE 4
SUBORDINATION OF DEBENTURES
Section 4.1 Debentures Subordinate to Senior Indebtedness 14
Section 4.2 Payment Over of Proceeds Upon Dissolution, etc. 14
Section 4.3 No Payment When Senior Indebtedness In Senior
Payment Default or Senior Indebtedness Accelerated 16
Section 4.4 Payment Permitted If No Default 17
Section 4.5 Subrogation To Rights Of Holders Of Senior
Indebtedness 17
Section 4.6 Provisions Solely To Define Relative Rights 17
Section 4.7 Trustee To Effectuate Subordination 18
Section 4.8 No Waiver Of Subordination Provisions 18
Section 4.9 Notice To Trustee 19
Section 4.10 Reliance On Judicial Order Or Certificate Of
Liquidating Agent 20
Section 4.11 Trustee Not Fiduciary For Holders Of Senior
Indebtedness 20
Section 4.12 Rights of Trustee As Holder Of Senior
Indebtedness; Preservation Of Trustee's Rights 20
Section 4.13 Article Applicable to Paying Agents 21
ARTICLE 5
CONVERSION OF DEBENTURES
Section 5.1 Conversion Privilege 21
Section 5.2 Manner of Exercise of Conversion Privilege 21
Section 5.3 Fractional Shares 22
Section 5.4 Conversion Price 22
Section 5.5 Adjustment of Conversion Price 23
Section 5.6 Reclassification, Consolidation, Merger or Sale of
Assets 28
Section 5.7 Notice of Adjustments of Conversion Price 29
Section 5.8 Notices 29
Section 5.9 Taxes on Conversion 30
Section 5.10 Company to Provide Stock 30
Section 5.11 Disclaimer of Responsibility for Certain Matters 31
Section 5.12 Return of Funds Deposited for Redemption of
Converted Debentures 31
Section 5.13 Disposition of Converted Debentures 31
ARTICLE 6
REDEMPTION OF DEBENTURES
Section 6.1 Redemption 32
Section 6.2 Applicability of Article 32
Section 6.3 Election to Redeem; Notice to Trustee; Other
Notices 32
Section 6.4 Notice of Redemption 33
Section 6.5 Deposit of Redemption Price 33
Section 6.6 Debentures Payable on Redemption Date 34
ARTICLE 7
AMENDMENTS TO INDENTURE FOR PURPOSES
OF FIRST SERIES OF DEBENTURES
Section 7.1 Amendment to Section 5.1 of Indenture
for Purposes of First Series of Debentures 34
Section 7.2 Amendment to Section 5.13 of Indenture
for Purposes of First Series of Debentures 36
Section 7.3 Amendment to Section 9.1 of Indenture
for Purposes of First Series of Debentures 37
Section 7.4 Amendment to Section 9.2 of Indenture
for Purposes of First Series of Debentures 37
ARTICLE 8
EXPENSES
Section 8.1 Payment and Expenses 38
ARTICLE 9
COVENANTS
Section 9.1 Covenants 39
ARTICLE 10
MISCELLANEOUS
Section 10.1 Benefits of Indenture 41
Section 10.2 Incorporation of Indenture 41
Section 10.3 Acceptance of Trust 42
Section 10.4 Conflict with Trust Indenture Act 42
Section 10.5 Governing Law 42
Section 10.6 Recitals 42
Section 10.7 Amendments 42
Section 10.8 Counterparts 42
AMENDED AND RESTATED DECLARATION
OF TRUST
CITIZENS UTILITIES TRUST
Dated as of ________, 1995
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
CITIZENS UTILITIES TRUST
____________, 1995
AMENDED AND RESTATED DECLARATION OF TRUST
("Declaration") dated and effective as of ___________, 1995, by
the undersigned trustees (together with all other Persons from
time to time duly appointed and serving as trustees in accordance
with the provisions of this Declaration, the "Trustees"),
Citizens Utilities Company, a Delaware corporation, as trust
sponsor (the "Sponsor"), and by the holders, from time to time,
of undivided beneficial interests in the Trust to be issued
pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor established a
trust (the "Trust") under the Delaware Business Trust Act
pursuant to a Declaration of Trust dated as of _________, 1995,
(the "Original Declaration") and a Certificate of Trust filed
with the Secretary of State of Delaware on __________, 1995, for
the sole purpose of issuing and selling certain securities
representing undivided beneficial interests in the assets of the
Trust and contributing the proceeds thereof to Citizens Capital
to acquire certain Partnership Preferred Securities of Citizens
Capital;
WHEREAS, as of the date hereof, no interests in the
Trust have been issued;
WHEREAS, all of the Trustees and the Sponsor, by this
Declaration, amend and restate each and every term and provision
of the Original Declaration; and
NOW, THEREFORE, it being the intention of the parties
hereto to continue the Trust as a business trust under the Trust
Act and that this Declaration constitute the governing instrument
of such business trust, the Trustees declare that all assets
contributed to the Trust will be held in trust for the benefit of
the holders, from time to time, of the securities representing
undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not
defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Declaration has
the same meaning throughout;
(c) all references to "the Declaration" or "this
Declaration" are to this Declaration as modified,
supplemented or amended from time to time;
(d) all references in this Declaration to Articles and
Sections and Exhibits are to Articles and Sections
of and Exhibits to this Declaration unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the
same meaning when used in this Declaration unless
otherwise defined in this Declaration or unless
the context otherwise requires; and
(f) a reference to the singular includes the plural
and vice versa.
"Affiliate" has the same meaning as given to that term
in Rule 405 of the Securities Act or any successor rule
thereunder.
"Authorized Officer" of a Person means any Person that
is authorized to bind such Person.
"Base Indenture" has the meaning set forth in Annex II
hereto.
"Book Entry Interest" means a beneficial interest in a
Global Certificate, ownership and transfers of which shall be
maintained and made through book entries by a Clearing Agency as
described in Section 9.4.
"Business Day" has the meaning set forth in Annex II
hereto.
"Certificate" means a Common Security Certificate or a
Preferred Security Certificate.
"Citizens Capital" has the meaning set forth in Annex
II hereto.
"Clearing Agency" has the meaning set forth in Annex II
hereto.
"Clearing Agency Participant" has the meaning set forth
in Annex II hereto. "Closing Date" has the meaning set forth in Annex II
hereto.
"Code" has the meaning set forth in Annex II hereto.
"Commission" means the Securities and Exchange
Commission.
"Common Security Certificate" means a definitive
certificate in fully registered form representing a Convertible
Common Security, substantially in the form of Exhibit A-2.
"Common Stock" has the meaning set forth in Annex II
hereto.
"Company" has the meaning set forth in Annex II hereto.
"Company Tax Event" has the meaning set forth in Annex
II hereto.
"Compounded Distributions" has the meaning set forth in
Section 2(b) of Annex I hereto.
"Conversion Agent" has the meaning set forth in Annex
II hereto.
"Conversion Date" has the meaning set forth in Section
5(b) of Annex I hereto.
"Conversion Price" has the meaning set forth in Section
5(a) of Annex I hereto.
"Convertible Common Securities" has the meaning set
forth in Annex II hereto.
"Convertible Common Securities Guarantee Agreement"
means the guarantee agreement to be dated as of ________, 1995,
of the Sponsor in respect of the Convertible Common Securities,
as amended or supplemented.
"Convertible Debentures" has the meaning set forth in
Annex II hereto, with Exhibit D being a specimen certificate for
such series of Convertible Debentures.
"Convertible Preferred Securities" has the meaning set
forth in Annex II hereto.
"Convertible Preferred Securities Guarantee Agreement"
means the Convertible Preferred Securities Guarantee Agreement,
dated as of ______, 1995, between the Sponsor and Chemical Bank,
as guarantee trustee, in respect of the Convertible Preferred
Securities, as amended or supplemented.
"Covered Person" means: (a) any officer, director,
shareholder, partner, member, representative, employee or agent
of (i) the Trust or (ii) the Trust's Affiliates; and (b) any
Holder of Securities.
"Debenture Issuer" has the meaning set forth in Annex
II hereto.
"Declaration Event of Default" has the meaning set
forth in Annex II hereto. "Delaware Trustee" has the meaning set forth
in Section 5.2.
"Definitive Preferred Security Certificates" has the
meaning set forth in Section 9.4.
"Distribution" has the meaning set forth in Section
6.1.
"Distribution Declaration Date" has the meaning set
forth in Annex II hereto.
"Distribution Declaration Notice" has the meaning set
forth in Annex II hereto.
"Distribution Payment Date" has the meaning set forth
in Annex II hereto.
"DTC" means The Depository Trust Company, the initial
Clearing Agency.
"Election Period" has the meaning set forth in Annex II
hereto.
"Equivalent Value" has the meaning set forth in Annex
II hereto.
"Exchange Act" has the meaning set forth in Annex II
hereto.
"Fiscal Year" has the meaning set forth in Section
11.1.
"General Partner" has the meaning set forth in Annex II
hereto.
"Global Certificate" has the meaning set forth in
Section 9.4.
"Guarantee Agreements" has the meaning set forth in
Annex II hereto.
"Holder" means a Person in whose name a Certificate
representing a Security is registered, such Person being a
beneficial owner within the meaning of the Business Trust Act.
"Indemnified Person" means (a) any Trustee; (b) any
Affiliate of any Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or
agents of any Trustee; or (d) any employee or agent of the Trust
or its Affiliates.
"Indenture" has the meaning set forth in Annex II
hereto.
"Indenture Trustee" has the meaning set forth in Annex
II hereto.
"Investment Company" means an investment company as
defined in the 1940 Act.
"Legal Action" has the meaning set forth in Section
3.6(g).
"Limited Partner" means the Trust in its capacity as
holder of the Partnership Preferred Securities of Citizens
Capital.
"Limited Partnership Agreement" has the meaning set
forth in Annex II hereto.
"List of Holders" has the meaning set forth in Section
2.2.
"Ministerial Action Obligation" has the meaning set
forth in Annex II hereto.
"Majority in liquidation amount of the Securities"
means, except as provided in the terms of the Convertible
Preferred Securities and by the Trust Indenture Act, Holder(s) of
outstanding Securities voting together as a single class or, as
the context may require, Holders of outstanding Convertible
Preferred Securities or Holders of outstanding Convertible Common
Securities voting separately as a class, who are the record
owners of more than 50% of the aggregate liquidation amount
(including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions
to the date upon which the voting percentages are determined) of
all outstanding Securities of the relevant class.
"1940 Act" has the meaning set forth in Annex II
hereto.
"Officers' Certificate" has the meaning set forth in
Annex II hereto.
"Partnership Event" has the meaning set forth in Annex
II hereto.
"Partnership Investment Company Act Event" has the
meaning set forth in Annex II hereto.
"Partnership Preferred Securities" has the meaning set
forth in Annex II hereto.
"Partnership Tax Event" has the meaning set forth in
Annex II hereto.
"Paying Agent" has the meaning specified in Section
3.8(i).
"Payment Amount" has the meaning specified in Section
6.1.
"Person" has the meaning set forth in Annex II hereto.
"Preferred Security Beneficial Owner" means, with
respect to a Book Entry Interest, a Person who is the beneficial
owner of such Book Entry Interest, as reflected on the books of
the Clearing Agency, or on the books of a Person maintaining an
account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Preferred Security Certificate" means a certificate
representing a Convertible Preferred Security substantially in
the form of Exhibit A-1. "Property Trustee" has the meaning set forth
in Annex II hereto.
"Property Trustee Account" has the meaning set forth in
Section 3.8(d).
"Quorum" means a majority of the Regular Trustees or,
if there are only two Regular Trustees, both of them.
"Rating Agency Event" has the meaning set forth in
Section 4(e) of Annex I hereto.
"Redemption Notice" has the meaning set forth in
Section 4(e) of Annex I hereto.
"Regular Trustee" means any Trustee other than the
Property Trustee and the Delaware Trustee.
"Related Party" means, with respect to the Sponsor, any
direct or indirect wholly owned subsidiary of the Sponsor or any
other Person that owns, directly or indirectly, 100% of the
outstanding voting securities of the Sponsor.
"Responsible Officer" means, with respect to the
Property Trustee, any officer of the Property Trustee with direct
responsibility for the administration of the Trust and also
means, with respect to a particular corporate trust matter, any
other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular
subject.
"Securities" means the Convertible Common Securities
and the Convertible Preferred Securities.
"Securities Guarantee Agreements" means the Convertible
Common Securities Agreement and the Convertible Preferred
Securities Agreement.
"Securities Act" means the Securities Act of 1933, as
amended.
"Share Transfer and Valuation Date" has the meaning set
forth in Annex II hereto.
"66-2/3% in liquidation amount of the Securities"
means, except as provided in the terms of the Convertible
Preferred Securities and by the Trust Indenture Act, Holders of
outstanding Securities voting together as a single class or, as
the context may require, Holders of outstanding Convertible
Preferred Securities or Holders of outstanding Convertible Common
Securities voting separately as a class, representing at least
66 2/3% of the aggregate liquidation amount (including the stated
amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions, to the date
upon which the voting percentages are determined) of all
outstanding Securities of the relevant class.
"Special Distribution Notice" has the meaning set forth
in Section 4(e) of Annex I hereto.
"Special Event" has the meaning set forth in Annex II
hereto.
"Special Representative" has the meaning set forth in
the Partnership Agreement.
"Sponsor" means Citizens Utilities Company, a Delaware
corporation, or any successor entity in a merger, consolidation
or amalgamation, in its capacity as sponsor of the Trust.
"Successor Delaware Trustee" has the meaning set forth
in Section 5.6(b).
"Successor Regular Trustee" has the meaning set forth
in Section 5.6(d).
"Successor Property Trustee" has the meaning set forth
in Section 5.6(b).
"Super Majority" has the meaning set forth in
Section 2.6(a)(ii).
"10% in liquidation amount of the Securities" means,
except as provided in the terms of the Convertible Preferred
Securities or by the Trust Indenture Act, Holders of outstanding
Securities voting together as a single class or, as the context
may require, Holders of outstanding Convertible Preferred
Securities or Holders of outstanding Convertible Common
Securities, voting separately as a class, representing 10% of the
aggregate liquidation amount (including the stated amount that
would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all outstanding Securities
of the relevant class.
"Trading Day" has the meaning set forth in Annex II
hereto.
"Treasury Regulations" has the meaning set forth in
Annex II hereto.
"Trust Act" has the meaning set forth in Annex II
hereto.
"Trustee" or "Trustees" means each Person who has
signed this Declaration as a trustee, so long as such Person
shall continue in office in accordance with the terms hereof, and
all other Persons who may from time to time be duly appointed,
qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the
Trustees shall refer to such Person or Persons solely in their
capacity as trustees hereunder.
"Trust Event" has the meaning set forth in Annex II
hereto.
"Trust Indenture Act" means the Trust Indenture Act of
1939, as amended.
"Trust Investment Company Act Event" has the meaning
set forth in Annex II hereto.
"Trust Tax Event" has the meaning set forth in Annex II
hereto. "Underwriting Agreement" has the meaning set forth in
Annex II hereto.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of
the Trust Indenture Act that are required to be
part of this Declaration and shall, to the extent
applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee
which is a Trustee for the purposes of the Trust
Indenture Act.
(c) If and to the extent that any provision of this
Declaration limits, qualifies or conflicts with
the duties imposed by SECTIONSECTION 310 to 317, inclusive,
of the Trust Indenture Act, such imposed duties shall
control.
(d) The application of the Trust Indenture Act to this
Declaration shall not affect the nature of the
Securities as equity securities representing
undivided beneficial interests in the assets of
the Trust.
SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Regular Trustees on
behalf of the Trust shall provide the Property
Trustee (i) within 14 days after each record date
for payment of Distributions, a list, in such form
as the Property Trustee may reasonably require, of
the names and addresses of the Holders of the
Securities ("List of Holders") as of such record
date, provided that neither the Sponsor nor the
Regular Trustees on behalf of the Trust shall be
obligated to provide such List of Holders at any
time the List of Holders does not differ from the
most recent List of Holders given to the Property
Trustee by the Sponsor and the Regular Trustees on
behalf of the Trust, and (ii) at any other time,
promptly following, and in any event within 10
days of, receipt by the Trust of a written request
for a List of Holders as of a date no more than 14
days before such List of Holders is given to the
Property Trustee. The Property Trustee shall
preserve, in as current a form as is reasonably
practicable, all information contained in Lists of
Holders given to it or which it receives in the
capacity as Paying Agent (if acting in such
capacity), provided that the Property Trustee may
destroy any List of Holders previously given to it
on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its
obligations under SECTIONS 311(a), 311(b) and 312(b) of
the Trust Indenture Act. SECTION 2.3 Reports by the
Property Trustee.
Within 60 days after May 1 of each year, the Property
Trustee shall provide to the Holders of the Convertible Preferred
Securities such reports as are required by SECTION 313 of the Trust
Indenture Act, if any, in the form and in the manner provided by
SECTION 313 of the Trust Indenture Act. The Property Trustee shall
also comply with the requirements of SECTION 313(d) of the Trust
Indenture Act.
SECTION 2.4 Periodic Reports to Property Trustee.
Each of the Sponsor and the Regular Trustees on behalf
of the Trust shall provide to the Property Trustee such
documents, reports and information as required by SECTION 314 of the
Trust Indenture Act (if any) and the compliance certificate
required by SECTION 314 of the Trust Indenture Act in the form, in the
manner and at the times required by SECTION 314 of the Trust Indenture
Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf
of the Trust shall provide to the Property Trustee such evidence
of compliance with any conditions precedent, if any, provided for
in this Declaration that relate to any of the matters set forth
in SECTION 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to
SECTION 314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of
Convertible Preferred Securities may, by vote, on
behalf of the Holders of all of the Convertible
Preferred Securities, waive any past Declaration
Event of Default with respect to the Convertible
Preferred Securities and its consequences,
provided that, if the underlying Partnership Event
of Default:
(i) is not waivable under the Limited Partnership
Agreement, such Declaration Event of Default
shall also not be waivable; or
(ii) requires the consent or vote of the holders
of greater than a majority in principal
amount of the Partnership Preferred
Securities (a "Super Majority") to be waived
under the Limited Partnership Agreement, the
Declaration Event of Default may only be
waived by the vote of the Holders of at least
the proportion in liquidation amount of the
Convertible Preferred Securities that the
relevant Super Majority represents of the
aggregate liquidation amount of the
Partnership Preferred Securities outstanding.
Upon such waiver, any such Declaration Event of
Default shall cease to exist, and shall be deemed
to have been cured, for every purpose of this
Declaration, but no such waiver shall extend to
any subsequent or other Declaration Event of Default or
impair any right consequent thereon. Any waiver by the
Holders of the Convertible Preferred Securities of a
Declaration Event of Default with respect to the
Convertible Preferred Securities shall also be deemed to
constitute a waiver by the Holders of the Convertible
Common Securities of any such Declaration Event of
Default with respect to the Convertible Common
Securities for all purposes of this Declaration
without any further act, vote, or consent of the
Holders of the Convertible Common Securities.
(b) The Holders of a Majority in liquidation amount of
the Convertible Common Securities may, by vote, on
behalf of the Holders of all of the Convertible
Common Securities, waive any past Declaration
Event of Default with respect to the Convertible
Common Securities and its consequences, provided
that, if the underlying Partnership Event of
Default:
(i) is not waivable under the Limited Partnership
Agreement, except where the Holders of the
Convertible Common Securities are deemed to
have waived such Declaration Event of Default
as provided below in this Section 2.6(b),
such Declaration Event of Default shall also
not be waivable; or
(ii) requires the consent or vote of a Super
Majority to be waived, except where the
Holders of the Convertible Common Securities
are deemed to have waived such Declaration
Event of Default as provided below in this
Section 2.6(b), the Declaration Event of
Default may only be waived by the vote of the
Holders of at least the proportion in
liquidation amount of the Convertible
Preferred Securities that the relevant Super
Majority represents of the aggregate
liquidation amount of the Partnership
Preferred Securities outstanding;
provided, further, that, at any time when a
Declaration Event of Default with respect to the
Convertible Preferred Securities has occurred and
is continuing, each Holder of Convertible Common
Securities will be deemed to have waived any such
Declaration Event of Default and all Declaration
Events of Default with respect to the Convertible
Common Securities and its consequences until all
Declaration Events of Default with respect to the
Convertible Preferred Securities have been cured,
waived or otherwise eliminated, and until such
Declaration Events of Default have been so cured,
waived or otherwise eliminated, the Property
Trustee will be deemed to be acting solely on
behalf of the Holders of the Convertible Preferred
Securities and only the Holders of the Convertible
Preferred Securities will have the right to direct
the Property Trustee in accordance with the terms
of the Securities. Subject to the foregoing
provisions of this Section 2.6(b), upon such waiver, any
such default shall cease to exist and any Declaration
Event of Default with respect to the Convertible Common
Securities arising therefrom shall be deemed to have been
cured for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other
default or Declaration Event of Default with
respect to the Convertible Common Securities or
impair any right consequent thereon.
(c) A waiver of a Partnership Event of Default by the
Property Trustee, acting at the direction of the
Holders of the Convertible Preferred Securities,
constitutes a waiver of the corresponding
Declaration Event of Default.
SECTION 2.7 Event of Default; Notice.
(a) The Property Trustee shall, within 90 days after
the occurrence of a Declaration Event of Default,
transmit by mail, first class postage prepaid, to
the Holders of the Securities, notices of all
Declaration Events of Default with respect to the
Securities known to the Property Trustee, unless
such Declaration Events of Default have been cured
before the giving of such notice; provided, that,
except for a default in the payment of liquidation
amount of (or premium, if any) or distribution on
any of the Partnership Preferred Securities or in
the payment of any sinking fund installment
established for the Partnership Preferred
Securities, the Property Trustee shall be
protected in withholding such notice if and so
long as the board of directors, the executive
committee, or a trust committee of directors
and/or Responsible Officers of the Property
Trustee in good faith determines that the
withholding of such notice is in the interests of
the Holders of the Securities.
(b) The Property Trustee shall not be deemed to have
knowledge of any Declaration Event of Default
except any default Declaration Event of Default as
to which the Property Trustee shall have received
written notice or a Responsible Officer charged
with the administration of the Declaration shall
have obtained written notice.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "Citizens Utilities Trust," or such
other name as the Regular Trustees may adopt from time to time
following written notice to the Property Trustee, the Delaware
Trustee and the Holders of Securities. The Trust's activities
may be conducted under the name of the Trust or any other name
deemed advisable by the Regular Trustees.
SECTION 3.2 Office. The address of the principal office of the Trust is
c/o Citizens Utilities Company, High Ridge Park, P.O. Box 3801,
Stamford, Connecticut 06905. On ten (10) Business Days written
notice to the Property Trustee, the Delaware Trustee and the
Holders of Securities, the Regular Trustees may designate another
principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are
(a) to issue and sell Securities and use the proceeds from such
sale to acquire the Partnership Preferred Securities, and (b)
except as otherwise limited herein, to engage in only those other
activities necessary, or incidental thereto. The Trust shall not
borrow money, issue debt or reinvest proceeds derived from
investments, pledge any of its assets, or otherwise undertake (or
permit to be undertaken) any activity that would cause the Trust
not to be classified for United States federal income tax
purposes as a grantor trust.
SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration
and to the specific duties of the Property Trustee, the Regular
Trustees shall have exclusive and complete authority to carry out
the purposes of the Trust. An action taken by the Regular
Trustees in accordance with their powers shall constitute the act
of and serve to bind the Trust and an action taken by the
Property Trustee in accordance with its powers shall constitute
the act of and serve to bind the Trust. In dealing with the
Trustees acting on behalf of the Trust, no Person shall be
required to inquire into the authority of the Trustees to bind
the Trust. Persons dealing with the Trust are entitled to rely
conclusively on the power and authority of the Trustees as set
forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the
Convertible Debentures and the Property Trustee Account or as
otherwise provided in this Declaration, legal title to all assets
of the Trust shall be vested in the Trust. The Holders shall not
have legal title to any part of the assets of the Trust, but
shall have an undivided beneficial interest in the assets of the
Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power,
duty and authority to cause the Trust to engage in the following
activities:
(a) to issue and sell the Convertible Preferred
Securities and the Convertible Common Securities
in accordance with this Declaration; provided,
however, that the Trust may issue no more than one
series of Convertible Preferred Securities and no
more than one series of Convertible Common
Securities, and, provided further, that there
shall be no interests in the Trust other than the
Securities, and the issuance of Securities shall
be limited to a simultaneous issuance of both Convertible
Preferred Securities and Convertible Common Securities on
each Closing Date;
(b) in connection with the issue and sale of the
Convertible Preferred Securities, at the direction
of the Sponsor, to:
(i) execute and file with the Commission the
registration statement on Form S-3
prepared by the Sponsor, including any
amendments thereto, pertaining to the
Convertible Preferred Securities;
(ii) execute and file any documents prepared by
the Sponsor, or take any acts as
determined by the Sponsor to be necessary
in order to qualify or register all or
part of the Convertible Preferred
Securities in any State in which the
Sponsor has determined to qualify or
register such Convertible Preferred
Securities for sale;
(iii) execute and file an application, prepared
by the Sponsor, to the New York Stock
Exchange or any other national stock
exchange or the Nasdaq National Market for
listing upon notice of issuance of the
Convertible Preferred Securities;
(iv) execute and file with the Commission a
registration statement on Form 8-A,
including any amendments thereto, prepared
by the Sponsor, relating to the
registration of the Convertible Preferred
Securities under Section 12(b) of the
Exchange Act; and
(v) execute and enter into the Underwriting
Agreement providing for the sale of the
Convertible Preferred Securities, on
behalf of the Trust, and perform the
duties and obligations of the Trust
thereunder;
(c) to acquire the Partnership Preferred Securities
with the proceeds of the sale of the Convertible
Preferred Securities and the Convertible Common
Securities; provided, however, that the Regular
Trustees shall cause legal title to the
Partnership Preferred Securities to be held of
record in the name of the Property Trustee for the
benefit of the Holders of the Convertible
Preferred Securities and the Holders of
Convertible Common Securities;
(d) to give the Sponsor and the Property Trustee
prompt written notice of the occurrence of a Trust
Event; provided that the Regular Trustees shall
consult with the Debenture Issuer, Citizens
Capital and the Property Trustee before taking or
refraining from taking any Ministerial Action
Obligation in relation to a Trust Event;
(e) to establish a record date with respect to all
actions to be taken hereunder that require a
record date be established, including and with
respect to, for the purposes of SECTION316(c) of the
Trust Indenture Act, Distributions, voting rights,
redemptions and exchanges, and to issue relevant
notices to the Holders of Convertible Preferred
Securities and Holders of Convertible Common
Securities as to such actions and applicable
record dates (with copies to the Property
Trustee);
(f) to take all actions and perform such duties as may
be required of the Regular Trustees pursuant to
the terms of the Securities;
(g) to bring or defend, pay, collect, compromise,
arbitrate, resort to legal action, or otherwise
adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section
3.8(f), the Property Trustee has the exclusive
power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents
(who may be designated as officers with titles)
and managers, contractors, advisors, and
consultants and pay reasonable compensation for
such services;
(i) to cause the Trust to comply with the Trust's
obligations under the Trust Indenture Act;
(j) to give the certificate required by SECTION 314(a)(4) of
the Trust Indenture Act to the Property Trustee,
which certificate may be executed by any Regular
Trustee;
(k) to incur expenses that are necessary or incidental
to carry out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as,
registrar and transfer agent for the Securities;
(m) to give prompt written notice to the Holders of
the Securities (with a copy to the Property
Trustee) of any notice received from Citizens
Capital of a decision to defer distribution
payments on the Partnership Preferred Securities
under the Limited Partnership Agreement;
(n) to execute all documents or instruments, perform
all duties and powers, and do all things for and
on behalf of the Trust in all matters necessary or
incidental to the foregoing;
(o) to take all action that may be necessary or
appropriate for the preservation and the
continuation of the Trust's valid existence,
rights, franchises and privileges as a statutory
business trust under the laws of the State of
Delaware and of each other jurisdiction in which
such existence is necessary to protect the limited
liability of the Holders of the Convertible Preferred
Securities or to enable the Trust to effect the purposes
for which the Trust was created;
(p) to take any action, not inconsistent with this
Declaration or with applicable law, that the
Regular Trustees determine in their discretion to
be necessary or desirable in carrying out the
activities of the Trust as set out in this Section
3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be
an Investment Company required to be
registered under the Investment Company
Act;
(ii) causing the Trust to be classified for
United States federal income tax purposes
as a grantor trust; and
(iii) cooperating with the Debenture Issuer to
ensure that the Convertible Debentures
will be treated as indebtedness of the
Debenture Issuer for United States federal
income tax purposes;
provided that such action does not adversely affect the
interests of the Holders; and
(q) to take all action necessary to cause all
applicable tax returns and tax information reports
that are required to be filed with respect to the
Trust to be duly prepared and filed by the Regular
Trustees, on behalf of the Trust.
The Regular Trustees must exercise the powers set forth
in this Section 3.6 in a manner that is consistent with the
purposes and functions of the Trust set out in Section 3.3, and
the Regular Trustees shall not take any action that is
inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall
have none of the powers or the authority of the Property Trustee
set forth in Section 3.8.
SECTION 3.7 Prohibition of Actions by the Trust and the
Trustees.
(a) The Trust shall not, and the Trustees (including
the Property Trustee) shall not, engage in any
activity other than as required or authorized by
this Declaration. In particular, the Trust shall
not and the Trustees (including the Property
Trustee) shall not take any action to cause the
Trust to:
(i) invest any proceeds received by the Trust
from holding the Partnership Preferred
Securities, but shall distribute all such
proceeds to Holders of Securities pursuant
to the terms of this Declaration and of
the Securities;
(ii) acquire any assets other than as expressly
provided herein;
(iii) possess Trust property for other than a
Trust purpose;
(iv) make any loans or incur any indebtedness
other than loans represented by the
Partnership Preferred Securities;
(v) possess any power or otherwise act in such
a way as to vary the Trust assets or the
terms of the Securities in any way
whatsoever;
(vi) issue any securities or other evidences of
beneficial ownership of, or beneficial
interest in, the Trust other than the
Securities; or
(vii) other than as set forth in Annex I hereto,
(A) if the Property Trustee holds the
Partnership Preferred Securities, (i)
cause the Special Representative to direct
the time, method and place of conducting
any proceeding for any remedy available to
the Indenture Trustee or exercising any
trust or power conferred upon the
Indenture Trustee with respect to the
Convertible Debentures, (ii) cause the
Special Representative to waive any past
default that is waivable under Section
5.13 of the Base Indenture, (iii) cause
the Special Representative to exercise any
right to rescind or annul any declaration
that the principal amount of all the
Convertible Debentures shall be due and
payable, or (iv) cause the Special
Representative to consent to any
amendment, modification or termination of
the Limited Partnership Agreement or the
Partnership Preferred Securities where
such consent shall be required unless the
Trust shall have received an opinion of
counsel to the effect that such amendment,
modification or termination will not cause
more than an insubstantial risk that for
United States federal income tax purposes
the Trust will not be classified as a
grantor trust; or (B) if the Property
Trustee holds Convertible Debentures as a
result of the liquidation of Citizens
Capital, (i) direct the time, method and
place of conducting any proceeding for any
remedy available to the Indenture Trustee
or exercising any trust or power conferred
upon the Indenture Trustee with respect to
the Convertible Debentures, (ii) waive any
past default that is waivable under
Section 5.13 of the Base Indenture,
(iii) exercise any right to rescind or
annul any declaration that the principal
amount of all the Convertible Debentures shall
be due and payable, or (iv) consent
to any amendment, modification or
termination of the Indenture or the
Convertible Debentures where such consent
shall be required unless the Trust shall
have received an opinion of counsel to the
effect that such amendment, modification
or termination will not cause more than an
insubstantial risk that for United States
federal income tax purposes the Trust will
not be classified as a grantor trust; or
(viii) other than in connection with the
liquidation of the Trust pursuant to a
Special Event or Rating Agency Event, file
a certificate of cancellation of the
Trust.
SECTION 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Partnership Preferred
Securities shall be owned by and held of record in
the name of the Property Trustee in trust for the
benefit of the Holders of the Securities. The
right, title and interest of the Property Trustee
to the Partnership Preferred Securities shall vest
automatically in each Person who may hereafter be
appointed as Property Trustee in accordance with
in Section 5.6. Such vesting and cessation of
title shall be effective whether or not
conveyancing documents with regard to the
Convertible Debentures have been executed and
delivered.
(b) The Property Trustee shall not transfer its right,
title and interest in the Partnership Preferred
Securities to the Regular Trustees or to the
Delaware Trustee (if the Property Trustee does not
also act as Delaware Trustee).
(c) The Property Trustee shall not exercise any rights
of conversion with respect to any of the
Partnership Preferred Securities unless and until
it has received copies of notices of conversion
with respect to an aggregate liquidation amount of
the Securities equal to the aggregate liquidation
amount of Partnership Preferred Securities to be
converted.
(d) The Property Trustee shall:
(i) establish and maintain a segregated non-
interest bearing trust account (the
"Property Trustee Account") in the name of
and under the exclusive control of the
Property Trustee on behalf of the Holders
of the Securities and, upon the receipt of
payments of funds or securities made in
respect of the Partnership Preferred
Securities held by the Property Trustee,
deposit such funds or securities into the
Property Trustee Account and make payments
to the Holders of the Convertible Preferred
Securities and Holders of the Convertible Common
Securities from the Property Trustee Account in
accordance with Section 6.1. Funds or securities in
the Property Trustee Account shall be held
uninvested until disbursed in accordance
with this Declaration.
(ii) engage in such ministerial activities as
shall be necessary or appropriate to
effect the redemption of the Convertible
Preferred Securities and the Convertible
Common Securities to the extent the
Partnership Preferred Securities or the
Convertible Debentures are redeemed or
mature; and
(iii) upon written notice of distribution issued
by the Regular Trustees in accordance with
the terms of the Securities, engage in
such ministerial activities as shall be
necessary or appropriate to effect the
distribution of the Partnership Preferred
Securities or the Convertible Debentures,
as the case may be, to Holders of
Securities, or redemption of the
Securities, as the case may be, upon the
occurrence of a Special Event or Rating
Agency Event.
(e) The Property Trustee shall take all actions and
perform such duties as may be specifically
required of the Property Trustee pursuant to the
terms of the Securities.
(f) The Property Trustee shall be authorized to bring
or defend any Legal Action which arises out of or
in connection with a Declaration Event of Default
or the Property Trustee's duties and obligations
under this Declaration or the Trust Indenture Act.
(g) The Property Trustee shall not resign as a Trustee
unless either:
(i) the Trust has been completely liquidated and
the proceeds of the liquidation distributed
to the Holders of Securities pursuant to the
terms of the Securities; or
(ii) a Successor Property Trustee has been
appointed and has accepted that appointment
in accordance with Section 5.6.
(h) The Property Trustee shall have the legal power to
exercise all of the rights, powers and privileges
of a holder of Partnership Preferred Securities
under the Limited Partnership Agreement and, if a
Partnership Event of Default occurs and is
continuing, the Property Trustee shall, for the
benefit of Holders of the Securities, enforce its
rights as holder of the Partnership Preferred
Securities subject to the rights of the Holders
pursuant to the terms of such Securities.
(i) The Property Trustee may authorize one or more
Persons (each, a "Paying Agent") to pay
Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to
all Securities, to act as a Conversion Agent with
respect to the Securities on behalf of the Trust,
or to act as agent with respect to the election by
holders of the Convertible Preferred Securities of
the form of payments of distributions; and any
such Paying Agent shall comply with SECTION 317(b) of
the Trust Indenture Act. Any Paying Agent may be
removed by the Property Trustee at any time and a
successor Paying Agent or additional Paying Agents
may be appointed at any time by the Property
Trustee.
(j) Subject to this Section 3.8, the Property Trustee
shall have none of the duties, liabilities, powers
or the authority of the Regular Trustees set forth
in Section 3.6.
The Property Trustee must exercise the powers set forth in
this Section 3.8 in a manner that is consistent with the
purposes and functions of the Trust set out in Section 3.3,
and the Property Trustee shall not take any action that is
inconsistent with the purposes and functions of the Trust
set out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the
Property Trustee.
(a) The Property Trustee, before the occurrence of any
Declaration Event of Default and after the curing
of all Declaration Events of Default that may have
occurred, shall undertake to perform only such
duties as are specifically set forth in this
Declaration and no implied covenants shall be read
into this Declaration against the Property
Trustee. In case a Declaration Event of Default
has occurred (that has not been cured or waived
pursuant to Section 2.6), the Property Trustee
shall exercise such of the rights and powers
vested in it by this Declaration, and use the same
degree of care and skill in their exercise, as a
prudent person would exercise or use under the
circumstances in the conduct of his or her own
affairs.
(b) No provision of this Declaration shall be
construed to relieve the Property Trustee from
liability for its own negligent action, its own
negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of a Declaration
Event of Default and after the curing or
waiving of all such Declaration Events of
Default that may have occurred:
(A) the duties and obligations of the Property
Trustee shall be determined solely by the
express provisions of this Declaration and
the Property Trustee shall not be liable except
for the performance of such duties
and obligations as are specifically set
forth in this Declaration, and no implied
covenants or obligations shall be read into
this Declaration against the Property
Trustee; and
(B) in the absence of bad faith on the part of
the Property Trustee, the Property Trustee
may conclusively rely, as to the truth of
the statements and the correctness of the
opinions expressed therein, upon any
certificates or opinions furnished to the
Property Trustee and, if required by the
terms of this Declaration, conforming to
the requirements of this Declaration; but
in the case of any such certificates or
opinions that by any provision hereof are
specifically required to be furnished to
the Property Trustee, the Property Trustee
shall be under a duty to examine the same
to determine whether or not they conform to
the requirements of this Declaration;
(ii) the Property Trustee shall not be liable for
any error of judgment made in good faith by a
Responsible Officer of the Property Trustee,
unless it shall be proved that the Property
Trustee was negligent in ascertaining the
pertinent facts;
(iii) the Property Trustee shall not be liable with
respect to any action taken or omitted to be
taken by it in good faith in accordance with
the direction of the Holders given pursuant to
the terms of this Declaration relating to the
time, method and place of conducting any
proceeding for any remedy available to the
Property Trustee, or exercising any trust or
power conferred upon the Property Trustee under
this Declaration;
(iv) no provision of this Declaration shall require
the Property Trustee to expend or risk its own
funds or otherwise incur personal financial
liability in the performance of any of its
duties or in the exercise of any of its rights
or powers, if it shall have reasonable grounds
for believing that the repayment of such funds
or liability is not reasonably assured to it
under the terms of this Declaration or adequate
indemnity against such risk or liability is not
reasonably assured to it;
(v) the Property Trustee's sole duty with respect
to the custody, safe keeping and physical
preservation of the Partnership Preferred
Securities (or, if applicable, Convertible
Debentures) and the Property Trustee Account
shall be to deal with such property in a
similar manner as the Property Trustee deals
with similar property for its own account,
subject to the protections and limitations on
liability afforded to the Property Trustee
under this Declaration and the Trust Indenture
Act;
(vi) the Property Trustee shall have no duty or
liability for or with respect to the value,
genuineness, existence or sufficiency of the
Partnership Preferred Securities or Convertible
Debentures or the payment of any taxes or
assessments levied thereon or in connection
therewith;
(vii) the Property Trustee shall not be liable for
any interest on any money received by it except
as it may otherwise agree in writing with the
Sponsor. Money held by the Property Trustee
need not be segregated from other funds held by
it except in relation to the Property Trustee
Account maintained by the Property Trustee
pursuant to Section 3.8(d)(i) and except to the
extent otherwise required by law; and
(viii) the Property Trustee shall not be responsible
for monitoring the compliance by the Regular
Trustees, the Delaware Trustee or the Sponsor
with their respective duties under this
Declaration, nor shall the Property Trustee be
liable for the acts, omissions, default,
negligence or misconduct of the Regular
Trustees, the Delaware Trustee or the Sponsor.
SECTION 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may rely 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, sent or
presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the
Regular Trustees contemplated by this
Declaration shall be sufficiently evidenced by
an Officers' Certificate;
(iii) whenever in the administration of this
Declaration, the Property Trustee shall deem it
desirable that a matter be proved or
established before taking, suffering or
omitting any action hereunder, the Property
Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of
bad faith on its part, request and rely upon an
Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by
the Sponsor or the Regular Trustees;
(iv) the Property Trustee shall have no duty to see
to any recording, filing or registration of any
instrument (including any financing or
continuation statement or any filing under tax
or securities laws) or any rerecording,
refiling or registration thereof;
(v) the Property Trustee may consult with counsel
or other experts and the advice or opinion of
such counsel and experts with respect to legal
matters or advice within the scope of such
experts' area of expertise 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
accordance with such advice or opinion, such
counsel may be counsel to the Sponsor or any of
its Affiliates, and may include any of its
employees. The Property Trustee shall have the
right at any time to seek instructions
concerning the administration of this
Declaration from any court of competent
jurisdiction;
(vi) the Property Trustee shall be under no
obligation to exercise any of the rights or
powers vested in it by this Declaration at the
request or direction of any Holder, unless such
Holder shall have provided to the Property
Trustee adequate security and indemnity against
the costs, expenses (including attorneys' fees
and expenses) and liabilities that might be
incurred by it in complying with such request
or direction, including such reasonable
advances as may be requested by the Property
Trustee; provided, that, nothing contained in
this Section 3.10(a)(vi) shall be taken to
relieve the Property Trustee, upon the
occurrence of a Declaration Event of Default,
of its obligation to exercise the rights and
powers vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to make
any investigation into the facts or matters
stated in any resolution, certificate,
statement, instrument, opinion, report, notice,
request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness
or other paper or document, but the Property
Trustee, in its discretion, may make such
further inquiry or investigation into such
facts or matters as it may see fit;
(viii) the Property Trustee may execute any of the
trusts or powers hereunder or perform any
duties hereunder either directly or by or
through agents or attorneys and the Property
Trustee shall not be responsible for any
misconduct or negligence on the part of any
agent or attorney appointed with due care by it
hereunder;
(ix) any action taken by the Property Trustee or its
agents hereunder shall bind the Trust and the
Holders of the Securities, and the signature of
the Property Trustee or its agents alone shall
be sufficient and effective to perform any such
action and no third party shall be required to
inquire as to the authority of the Property
Trustee to so act or as to its compliance with
any of the terms and provisions of this
Declaration, both of which shall be
conclusively evidenced by the Property
Trustee's or its agent's taking such action;
(x) whenever in the administration of this
Declaration the Property Trustee shall deem it
desirable to receive instructions with respect
to enforcing any remedy or right or taking any
other action hereunder, the Property Trustee
(i) may request instructions from the Holders
of the Securities, which instructions may only
be given by the Holders of the same proportion
in liquidation amount of the Securities as
would be entitled to direct the Property
Trustee under the terms of the Securities in
respect of such remedy, right or action, (ii)
may refrain from enforcing such remedy or right
or taking such other action until such
instructions are received, and (iii) shall be
protected in acting in accordance with such
instructions; and
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be
under any obligation to take any action that is
discretionary under the provisions of this
Declaration.
(b) No provision of this Declaration shall be deemed
to impose any duty or obligation on the Property
Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or
imposed on it, in any jurisdiction in which it
shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance
with applicable law, to perform any such act or
acts, or to exercise any such right, power, duty
or obligation. No permissive power or authority
available to the Property Trustee shall be
construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration
other than Section 5.2, the Delaware Trustee shall not be
entitled to exercise any powers, nor shall the Delaware Trustee
have any of the duties and responsibilities of the Regular
Trustees or the Property Trustee described in this Declaration.
Except as set forth in Section 5.2, the Delaware Trustee shall be
a Trustee for the sole and limited purpose of fulfilling the
requirements of SECTION 3807 of the Business Trust Act. In the
performance of any duties or obligations hereunder, the Delaware
Trustee shall be entitled to the same benefits and immunities as
the Property Trustee under Sections 3.9(b) and 3.10 hereof.
SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Regular Trustees,
and except as otherwise required by the Business Trust Act, a
majority of or, if there are only two, any Regular Trustee or, if
there is only one, such Regular Trustee, is, authorized to
execute on behalf of the Trust any documents that the Regular
Trustees have the power and authority to execute pursuant to
Section 3.6; provided that, the registration statement referred
to in Section 3.6(b)(i), including any amendments thereto, shall
be signed by all of the Regular Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of
Securities.
The recitals contained in this Declaration and the
Securities shall be taken as the statements of the Sponsor, and
the Trustees do not assume any responsibility for their
correctness. The Trustees make no representations as to the
value or condition of the property of the Trust or any part
thereof. The Trustees make no representations as to the validity
or sufficiency of this Declaration or the Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions
of Article VIII hereof, shall have existence for 45 years from
the initial Closing Date.
SECTION 3.15 Mergers.
(a) The Trust may not consolidate, amalgamate, merge
with or into, or be replaced by, or convey,
transfer or lease its properties and assets
substantially as an entirety to any corporation or
other body, except as described in Section 3.15(b)
and (c).
(b) The Trust may, with the consent of a majority of
the Regular Trustees (or if there are only one or
two Regular Trustees, with the consent of each
such Regular Trustee) and without the consent of
the Holders of the Securities, the Delaware
Trustee or the Property Trustee, consolidate,
amalgamate, merge with or into, or be replaced by
a trust organized as such under the laws of any
State; provided that:
(i) such successor entity (the "Successor Entity")
either:
(A) expressly assumes all of the obligations of
the Trust under the Securities; or
(B) substitutes for the Securities other
securities having substantially the same
terms as the Convertible Preferred
Securities (the "Successor Securities") so
long as the Successor Securities rank the same as
the Convertible Preferred Securities rank with
respect to Distributions and payments upon
liquidation, redemption and otherwise;
(ii) Citizens Capital expressly acknowledges a
trustee of the Successor Entity that possesses
the same powers and duties as the Property
Trustee as the holder of the Partnership
Preferred Securities and that satisfies the
same criteria as required of the Property
Trustee by Section 5.3 of this Declaration;
(iii) the Convertible Preferred Securities or any
Successor Securities are listed, or any
Successor Securities will be listed upon
notification of issuance, on any national
securities exchange or with an other
organization on which the Convertible Preferred
Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation or
replacement does not cause the Convertible
Preferred Securities (including any Successor
Securities) to be downgraded by any nationally
recognized statistical rating organization;
(v) such merger, consolidation, amalgamation or
replacement does not adversely affect the
rights, preferences and privileges of the
Holders of the Securities (including any
Successor Securities) in any material respect;
(vi) such Successor Entity has a purpose identical
to that of the Trust;
(vii) prior to such merger, consolidation,
amalgamation or replacement, the Sponsor and
the Property Trustee have received an opinion
of a nationally recognized independent counsel
to the Trust experienced in such matters to the
effect that:
(A) such merger, consolidation, amalgamation or
replacement does not adversely affect the
rights, preferences and privileges of the
Holders of the Securities (including any
Successor Securities) in any material
respect;
(B) following such merger, consolidation,
amalgamation or replacement, neither the
Trust nor the Successor Entity will be
required to register as an Investment
Company;
(C) all conditions precedent in this
Declaration to such merger, consolidation,
amalgamation or replacement have been
satisfied; and
(viii) the Sponsor guarantees the obligations of such
Successor Entity under the Successor Securities at
least to the extent provided by the Convertible
Preferred Securities Guarantee Agreement.
(c) Notwithstanding Section 3.15(b), the Trust shall
not, except with the consent of Holders of 100% in
liquidation amount of the Securities, consolidate,
amalgamate, merge with or into, or be replaced by
any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation,
merger or replacement would cause the Trust or
Successor Entity to be classified as other than a
grantor trust for United States federal income tax
purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Convertible Common Securities.
On each Closing Date, the Sponsor shall purchase for
cash all the Convertible Common Securities issued by the Trust,
in an amount equal to at least 3% of the total capital of the
Trust, at the same time as the Convertible Preferred Securities
are sold.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the
Convertible Preferred Securities, the Sponsor shall have the
exclusive right and responsibility to engage in the following
activities:
(a) to prepare for filing by the Trust with the
Commission a registration statement on Form S-3 in
relation to the Convertible Preferred Securities,
including any amendments thereto;
(b) to determine the States in which to take
appropriate action to qualify or register for sale
all or part of the Convertible Preferred
Securities and to do any and all such acts, other
than actions which must be taken by the Trust, and
advise the Trust of actions it must take, and
prepare for execution and filing any documents to
be executed and filed by the Trust, as the Sponsor
deems necessary or advisable in order to comply
with the applicable laws of any such States;
(c) to prepare for filing by the Trust an application
to the New York Stock Exchange or any other
national stock exchange or the Nasdaq National
Market for listing upon notice of issuance of any
Convertible Preferred Securities;
(d) to prepare for filing by the Trust with the
Commission a registration statement on Form 8-A
relating to the registration of the Convertible
Preferred Securities under Section 12(b) of the
Exchange Act, including any amendments thereto;
and
(e) to negotiate the terms of the Underwriting
Agreement providing for the sale of the
Convertible Preferred Securities.
SECTION 4.3 Covenants of Sponsor.
Other than in connection with the liquidation of the
Trust pursuant to a Special Event or Rating Agency Event, the
Sponsor shall not cause the filing of a certificate of
cancellation of the Trust.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.
The number of Trustees shall initially be four (4),
and:
(a) at any time before the issuance of any Securities,
the Sponsor may, by written instrument, increase
or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number
of Trustees may be increased or decreased by vote
of the Holders of a Majority in liquidation amount
of the Convertible Common Securities voting as a
class at a meeting of the Holders of the
Convertible Common Securities.
SECTION 5.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of
Delaware; or
(b) if not a natural person, an entity which has its
principal place of business in the State of
Delaware, and otherwise meets the requirements of
applicable law,
provided that, if the Property Trustee has its principal
place of business in the State of Delaware and otherwise
meets the requirements of applicable law, then the Property
Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application.
SECTION 5.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee which
shall act as Property Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business
under the laws of the United States of America or
any State or Territory thereof or of the
District of Columbia, or a corporation or
Person permitted by the Commission to act as an
institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise
corporate trust powers, having a combined
capital and surplus of at least 50 million U.S.
dollars ($50,000,000), and subject to
supervision or examination by Federal, State,
Territorial or District of Columbia authority.
If such corporation publishes reports of
condition at least annually, pursuant to law or
to the requirements of the supervising or
examining authority referred to above, then for
the purposes of this Section 5.3(a)(ii), the
combined capital and surplus of such
corporation shall be deemed to be its combined
capital and surplus as set forth in its most
recent report of condition so published.
(b) If at any time the Property Trustee shall cease to
be eligible to so act under Section 5.3(a), the
Property Trustee shall immediately resign in the
manner and with the effect set forth in Section
5.6(c).
(c) If the Property Trustee has or shall acquire any
"conflicting interest" within the meaning of SECTION
310(b) of the Trust Indenture Act, the Property
Trustee and the Holder of the Convertible Common
Securities (as if it were the obligor referred to
in SECTION 310(b) of the Trust Indenture Act) shall in
all respects comply with the provisions of SECTION
310(b) of the Trust Indenture Act.
(d) The Convertible Preferred Securities Guarantee
Agreement shall be deemed to be specifically
described in this Declaration for purposes of
clause (i) of the first provision contained in
Section 310(b) of the Trust Indenture Act.
SECTION 5.4 Qualifications of Regular Trustees and Delaware
Trustee Generally.
Each Regular Trustee and the Delaware Trustee (unless
the Property Trustee also acts as Delaware Trustee) shall be
either a natural person who is at least 21 years of age or a
legal entity that shall act through one or more Authorized
Officers.
SECTION 5.5 Initial Trustees.
The initial Regular Trustees shall be:
Robert J. DeSantis
Edward O. Kipperman
The initial Delaware Trustee shall be:
Chemical Bank Delaware, a Delaware banking corporation.
The initial Property Trustee shall be: Chemical Bank, a New
York banking corporation.
SECTION 5.6 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.6(b), Trustees may be
appointed or removed without cause at any time:
(i) until the issuance of any Securities, by
written instrument executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote
of the Holders of a Majority in liquidation
amount of the Convertible [Common] Securities
voting as a class at a meeting of the Holders
of the Convertible [Common] Securities.
(b)(i) The Trustee that acts as Property Trustee shall
not be removed in accordance with Section
5.6(a) until a successor Property Trustee (the
"Successor Property Trustee") has been
appointed and has accepted such appointment by
written instrument executed by such Successor
Property Trustee and delivered to the Regular
Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall
not be removed in accordance with Section
5.6(a) until a successor Trustee possessing the
qualifications to act as Delaware Trustee under
Sections 5.2 and 5.4 (a "Successor Delaware
Trustee") has been appointed and has accepted
such appointment by written instrument executed
by such Successor Delaware Trustee and
delivered to the Regular Trustees and the
Sponsor.
(c) A Trustee appointed to office shall hold office
until his successor shall have been appointed or
until his death, removal or resignation. Any
Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument
in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall
take effect upon such delivery or upon such later
date as is specified therein; provided, however,
that:
(i) No such resignation of the Trustee that acts as
the Property Trustee shall be effective:
(A) until a Successor Property Trustee has been
appointed and has accepted such appointment
by instrument executed by such Successor
Property Trustee and delivered to the
Trust, the Sponsor and the resigning
Property Trustee; or
(B) until the assets of the Trust have been
completely liquidated and the proceeds
thereof distributed to the Holders of the
Securities; and
(ii) no such resignation of the Trustee that acts as
the Delaware Trustee shall be effective until a
Successor Delaware Trustee has been appointed
and has accepted such appointment by instrument
executed by such Successor Delaware Trustee and
delivered to the Trust, the Sponsor and the
resigning Delaware Trustee.
(d) The Holders of the Convertible Common Securities
shall use their best efforts to promptly appoint a
successor Regular Trustee ("a Successor Regular
Trustee"), Successor Delaware Trustee or Successor
Property Trustee, as the case may be, if a Regular
Trustee, the Property Trustee or the Delaware
Trustee delivers an instrument of resignation in
accordance with this Section 5.6.
(e) If no Successor Property Trustee or Successor
Delaware Trustee shall have been appointed and
accepted appointment as provided in this Section
5.6 within 60 days after delivery to the Sponsor
and the Trust of an instrument of resignation, the
resigning Property Trustee or Delaware Trustee, as
applicable, may petition any court of competent
jurisdiction for appointment of a Successor
Property Trustee or Successor Delaware Trustee.
Such court may thereupon, after prescribing such
notice, if any, as it may deem proper and
prescribe, appoint a Successor Property Trustee or
Successor Delaware Trustee, as the case may be.
SECTION 5.7 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and
the number of Trustees is not reduced pursuant to Section 5.1, or
if the number of Trustees is increased pursuant to Section 5.1, a
vacancy shall occur. A resolution certifying the existence of
such vacancy by a majority of the Regular Trustees shall be
conclusive evidence of the existence of such vacancy. The
vacancy shall be filled with a Trustee appointed in accordance
with Section 5.6.
SECTION 5.8 Effect of Vacancies.
The death, resignation, retirement, removal,
bankruptcy, dissolution, liquidation, incompetence or incapacity
to perform the duties of a Trustee shall not operate to annul the
Trust. Whenever a vacancy in the number of Regular Trustees
shall occur, until such vacancy is filled by the appointment of a
Successor Regular Trustee in accordance with Section 5.6, the
Regular Trustees in office, regardless of their number, shall
have all the powers granted to the Regular Trustees and shall
discharge all the duties imposed upon the Regular Trustees by
this Declaration.
SECTION 5.9 Merger of a Trustee.
Any corporation into which a 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 a Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate
trust business of a Trustee, shall be the successor of such Trustee
hereunder, provided such corporation shall be otherwise
qualified and eligible under this Declaration, 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 a 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 5.10 Meetings.
Meetings of the Regular Trustees shall be held from
time to time upon the call of any Regular Trustee. Regular
meetings of the Regular Trustees may be held at a time and place
fixed by resolution of the Regular Trustees. Notice of any in-
person meetings of the Regular Trustees shall be hand delivered
or otherwise delivered in writing (including by facsimile, with a
hard copy by overnight courier) not less than 48 hours before
such meeting. Notice of any telephonic meetings of the Regular
Trustees or any committee thereof shall be hand delivered or
otherwise delivered in writing (including by facsimile, with a
hard copy by overnight courier) not less than 24 hours before a
meeting. Notices shall contain a brief statement of the time,
place and anticipated purposes of the meeting. The presence
(whether in person or by telephone) of a Regular Trustee at a
meeting shall constitute a waiver of notice of such meeting
except where a Regular Trustee attends a meeting for the express
purpose of objecting to the transaction of any activity on the
ground that the meeting has not been lawfully called or convened.
Unless provided otherwise in this Declaration, any action of the
Regular Trustees may be taken at a meeting by vote of a majority
of the Regular Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter,
provided that a Quorum is present, or without a meeting by the
unanimous written consent of the Regular Trustees.
SECTION 5.11 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney
consistent with applicable law, delegate to any
other natural person over the age of 21 his or her
power for the purpose of executing any documents
contemplated in Section 3.6, including any
registration statement or amendment thereto filed
with the Commission, or making any other
governmental filing; and
(b) the Regular Trustees shall have power to delegate
from time to time to such of their number or to
officers of the Trust the doing of such things and
the execution of such instruments either in the
name of the Trust or the names of the Regular
Trustees or otherwise as the Regular Trustees may
deem expedient, to the extent such delegation is
not prohibited by applicable law or contrary to
the provisions of the Trust, as set forth herein.
SECTION 5.12 Compensation and Reimbursement Citizens Capital agrees
(a) to pay to the Property Trustee and the
Delaware Trustee from time to time reasonable
compensation for all services rendered by each of them
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, to reimburse the Property Trustee and the
Delaware Trustee upon either of their request for all
the respective reasonable expenses, disbursements and
advances incurred or made by the Property Trustee or
the Delaware Trustee, as the case may be, in accordance
with any provision of this Declaration (including the
reasonable compensation and the expenses and
disbursements of its agents and counsel), except any
such expense, disbursement or advance as may be
attributable to the Property Trustee's or the Delaware
Trustee's negligence or bad faith, as the case may be;
and
(c) to indemnify the Proper Trustee and the
Delaware Trustee for, and to hold each of them harmless
against, any loss, liability or expense incurred
without negligence or bad faith on the part of the
Property Trustee or the Delaware Trustee, as the case
may be, arising out of or in connection with the
acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of
defending either of them against any claim or liability
in connection with the exercise or performance of any
of their respective powers or duties hereunder.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions in accordance with the
applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Convertible Preferred
Securities and the Convertible Common Securities in accordance
with the preferences set forth in their respective terms. If and
to the extent that Citizens Capital makes a distribution payment
(including payment of Compounded Distributions (as defined in the
Limited Partnership Agreement)) of premium and principal on the
Partnership Preferred Securities held by the Property Trustee
(the amount of any such payment being a "Payment Amount"), the
Property Trustee shall and is directed, to the extent funds
and/or Common Stock are available, to make a distribution (a
"Distribution") of the Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Regular Trustees shall on behalf of the Trust
issue one class of Convertible Preferred Securities
having such terms as are set forth in
Annex I hereto and one class of Convertible Common
Securities having such terms as are set forth in
Annex I hereto. The Trust shall have no
securities or other interests in the assets of the
Trust other than the Convertible Preferred
Securities and the Convertible Common Securities.
(b) The Certificates shall be signed on behalf of the
Trust by a Regular Trustee. Such signature shall
be the manual signature of any present or any
future Regular Trustee. In case any Regular
Trustee of the Trust who shall have signed any of
the Securities shall cease to be such Regular
Trustee before the Certificates so signed shall be
delivered by the Trust, such Certificates
nevertheless may be delivered as though the person
who signed such Certificates had not ceased to be
such Regular Trustee; and any Certificate may be
signed on behalf of the Trust by such persons who,
at the actual date of execution of such Security,
shall be the Regular Trustees of the Trust,
although at the date of the execution and delivery
of the Declaration any such person was not such a
Regular Trustee. Certificates shall be printed,
lithographed or engraved or may be produced in any
other manner as is reasonably acceptable to the
Regular Trustees, as evidenced by their execution
thereof, and may have such letters, numbers or
other marks of identification or designation and
such legends or endorsements as the Regular
Trustees may deem appropriate, or as may be
required to comply with any law or with any rule
or regulation of any stock exchange on which
Securities may be listed, or to conform to usage.
(c) The consideration received by the Trust for the
issuance of the Securities shall constitute a
contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in
this Declaration, the Securities so issued shall
be deemed to be validly issued, fully paid and
non-assessable.
(e) Every Person, by virtue of having become a Holder
or a Preferred Security Beneficial Owner in
accordance with the terms of this Declaration,
shall be deemed to have expressly assented and
agreed to the terms of, and shall be bound by,
this Declaration.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall terminate:
(i) upon the bankruptcy of the Holder of the
Convertible Common Securities or the Sponsor;
(ii) upon the filing of a certificate of dissolution
or its equivalent with respect to the Holder of
the Convertible Common Securities or the
Sponsor; the filing of a certificate of
cancellation with respect to the Trust or the
revocation of the Holder of the Convertible
Common Securities or the Sponsor's charter and
the expiration of 90 days after the date of
revocation without a reinstatement thereof;
(iii) upon the entry of a decree of judicial
dissolution of the Holder of the Convertible
Common Securities, the Sponsor or the Trust;
(iv) when all of the Securities shall have been
called for redemption and the amounts necessary
for redemption thereof shall have been paid to
the Holders in accordance with the terms of the
Securities;
(v) upon the occurrence and continuation of a Trust
Event, Partnership Event, Company Tax Event or
Rating Agency Event pursuant to which (i) the
Trust shall have been dissolved in accordance
with the terms of the Securities and either all
of the Partnership Preferred Securities or such
amount of Convertible Debentures as set forth
in Annex I, as the case may be, shall have been
distributed to the Holders of Securities in
exchange for all of the Securities or (ii) the
Securities shall have been redeemed; or
(vi) before the issuance of any Securities, with the
consent of all of the Regular Trustees and the
Sponsor.
(b) As soon as is practicable after the occurrence of
an event referred to in Section 8.1(a), the
Regular Trustees shall file a certificate of
cancellation with the Secretary of State of the
State of Delaware.
(c) The provisions of Section 3.9 and Article X shall
survive the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in
part, in accordance with the terms and conditions
set forth in this Declaration and in the terms of
the Securities. Any transfer or purported
transfer of any Security not made in accordance
with this Declaration shall be null and void. (b)
Subject to this Article IX, Convertible Preferred
Securities shall be freely transferable.
(c) Subject to this Article IX, the Sponsor and any
Related Party may only transfer Convertible Common
Securities to the Sponsor or a Related Party of
the Sponsor; provided that, any such transfer is
subject to the condition precedent that the
transferor obtain the written opinion of
nationally recognized independent counsel
experienced in such matters that such transfer
would not cause more than an insubstantial risk
that:
(i) the Trust would not be classified for United
States federal income tax purposes as a grantor
trust; and
(ii) the Trust would be an Investment Company or the
transferee would become an Investment Company.
SECTION 9.2 Transfer of Certificates.
The Regular Trustees shall provide for the registration
of Certificates and of transfers of Certificates, which will be
effected without charge but only upon payment (with such
indemnity as the Regular Trustees may require) in respect of any
tax or other government charges that may be imposed in relation
to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new
Certificates to be issued in the name of the designated
transferee or transferees. Every Certificate surrendered for
registration of transfer shall be accompanied by a written
instrument of transfer in form satisfactory to the Regular
Trustees duly executed by the Holder or such Holder's attorney
duly authorized in writing. Each Certificate surrendered for
registration of transfer shall be canceled by the Regular
Trustees. A transferee of a Certificate shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon
the receipt by such transferee of a Certificate. By acceptance
of a Certificate, each transferee shall be deemed to have agreed
to be bound by this Declaration.
SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any
Certificate shall be registered on the books and records of the
Trust as the sole holder of such Certificate and of the
Securities represented by such Certificate for purposes of
receiving Distributions and for all other purposes whatsoever
and, accordingly, shall not be bound to recognize any equitable
or other claim to or interest in such Certificate or in the
Securities represented by such Certificate on the part of any
Person, whether or not the Trust shall have actual or other
notice thereof.
SECTION 9.4 Book Entry Interests.
Unless otherwise specified in the terms of the
Convertible Preferred Securities, the Preferred Securities
Certificates, on original issuance, will be issued in the form of
one or more, fully registered, global Preferred Security
Certificates (each a "Global Certificate"), to be delivered to DTC, the
initial Clearing Agency, by, or on behalf of, the Trust.
Such Global Certificates shall initially be registered on the
books and records of the Trust in the name of Cede & Co., the
nominee of DTC, and no Preferred Security Beneficial Owner will
receive a definitive Preferred Security Certificate representing
such Preferred Security Beneficial Owner's interests in such
Global Certificates, except as provided in Section 9.7. Unless
and until definitive, fully registered Preferred Security
Certificates (the "Definitive Preferred Security Certificates")
have been issued to the Preferred Security Beneficial Owners
pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in
full force and effect;
(b) the Trust and the Trustees shall be entitled to
deal with the Clearing Agency for all purposes of
this Declaration (including the payment of
Distributions on the Global Certificates and
receiving approvals, votes or consents hereunder)
as the Holder of the Convertible Preferred
Securities and the sole holder of the Global
Certificates and shall have no obligation to the
Preferred Security Beneficial Owners;
(c) to the extent that the provisions of this Section
9.4 conflict with any other provisions of this
Declaration, the provisions of this Section 9.4
shall control; and
(d) the rights of the Preferred Security Beneficial
Owners shall be exercised only through the
Clearing Agency and shall be limited to those
established by law and agreements between such
Preferred Security Beneficial Owners and the
Clearing Agency and/or the Clearing Agency
Participants and receive and transmit payments of
Distributions on the Global Certificates to such
Clearing Agency Participants. DTC will make book
entry transfers among the Clearing Agency
Participants.
SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the
Convertible Preferred Security Holders is required under this
Declaration, unless and until Definitive Preferred Security
Certificates shall have been issued to the Preferred Security
Beneficial Owners pursuant to Section 9.7, the Trustees shall
give all such notices and communications specified herein to be
given to the Convertible Preferred Security Holders to the
Clearing Agency, and shall have no notice obligations to the
Preferred Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its
services as securities depositary with respect to the Convertible
Preferred Securities, the Regular Trustees may, in their sole
discretion, appoint a successor Clearing Agency with respect to
such Convertible Preferred Securities.
SECTION 9.7 Definitive Preferred Security Certificates.
If:
(a) a Clearing Agency elects to discontinue its
services as securities depositary with respect to
the Convertible Preferred Securities and a
successor Clearing Agency is not appointed within
90 days after such discontinuance pursuant to
Section 9.6;
(b) the Regular Trustees elect after consultation with
the Sponsor to terminate the book entry system
through the Clearing Agency with respect to the
Convertible Preferred Securities; or
(c) upon a Declaration Event of Default
then:
(d) Definitive Preferred Security Certificates shall
be prepared by the Regular Trustees on behalf of
the Trust with respect to such Convertible
Preferred Securities; and
(e) upon surrender of the Global Certificates by the
Clearing Agency, accompanied by registration
instructions, the Regular Trustees shall cause
Definitive Preferred Security Certificates to be
delivered to Preferred Security Beneficial Owners
in accordance with the instructions of the
Clearing Agency. Neither the Trustees nor the
Trust shall be liable for any delay in delivery of
such instructions and each of them may
conclusively rely on and shall be protected in
relying on, said instructions of the Clearing
Agency. The Definitive Preferred Security
Certificates shall be printed, lithographed or
engraved or may be produced in any other manner as
is reasonably acceptable to the Regular Trustees,
as evidenced by their execution thereof, and may
have such letters, numbers or other marks of
identification or designation and such legends or
endorsements as the Regular Trustees may deem
appropriate, or as may be required to comply with
any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of
any stock exchange on which Convertible Preferred
Securities may be listed, or to conform to usage.
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered
to the Regular Trustees, or if the Regular
Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of
any Certificate; and
(b) there shall be delivered to the Regular Trustees
such security or indemnity as may be required by
them to keep each of the Trustees harmless,
then:
In the absence of notice that such Certificate shall
have been acquired by a bona fide purchaser, any Regular Trustee
on behalf of the Trust shall execute and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like denomination. In
connection with the issuance of any new Certificate under this
Section 9.8, the Regular Trustees may require the payment of a
sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute
conclusive evidence of an ownership interest in the relevant
Securities, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Declaration,
the Securities Guarantee Agreements, the Indenture
and the terms of the Securities, neither the
Sponsor nor the Trustees shall be:
(i) personally liable for the return of any portion
of the capital contributions (or any return
thereon) of the Holders of the Securities which
shall be made solely from the assets of the
Trust; and
(ii) be required to pay to the Trust or to any
Holder of Securities any deficit upon
dissolution of the Trust or otherwise.
(b) The Holder of the Convertible Common Securities
shall be liable for all of the debts and
obligations of the Trust (other than with respect
to the Securities) to the extent not satisfied out
of the Trust's assets.
(c) Pursuant to SECTION 3803(a) of the Business Trust Act,
the Holders of the Convertible Preferred
Securities shall be entitled to the same
limitation of personal liability extended to
stockholders of private corporations for profit
organized under the General Corporation Law of the
State of Delaware.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible
or accountable in damages or otherwise to the
Trust or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission
performed or omitted by such Indemnified Person in
good faith on behalf of the Trust and in a manner
such Indemnified Person reasonably believed to be
within the scope of the authority conferred on
such Indemnified Person by this Declaration or by
law, except that an Indemnified Person shall be liable
for any such loss, damage or claim incurred
by reason of such Indemnified Person's gross
negligence (or, in the case of the Property
Trustee, negligence) or willful misconduct with
respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the
Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person
as to matters the Indemnified Person reasonably
believes are within such other Person's
professional or expert competence and who has been
selected with reasonable care by or on behalf of
the Trust, including information, opinions,
reports or statements as to the value and amount
of the assets, liabilities, profits, losses, or
any other facts pertinent to the existence and
amount of assets from which Distributions to
Holders of Securities might properly be paid.
SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an
Indemnified Person has duties (including fiduciary
duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an
Indemnified Person acting under this Declaration
shall not be liable to the Trust or to any other
Covered Person for its good faith reliance on the
provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict
the duties and liabilities of an Indemnified
Person otherwise existing at law or in equity
(other than the duties imposed on the Property
Trustee under the Trust Indenture Act), are agreed
by the parties hereto to replace such other duties
and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or
arises between an Indemnified Person and any
Covered Person; or
(ii) whenever this Declaration or any other
agreement contemplated herein or therein
provides that an Indemnified Person shall act
in a manner that is, or provides terms that
are, fair and reasonable to the Trust or any
Holder of Securities,
the Indemnified Person shall resolve such conflict
of interest, take such action or provide such
terms, considering in each case the relative
interest of each party (including its own
interest) to such conflict, agreement, transaction
or situation and the benefits and burdens relating
to such interests, any customary or accepted
industry practices, and any applicable generally
accepted accounting practices or principles. In
the absence of bad faith by the Indemnified
Person, the resolution, action or term so made, taken or
provided by the Indemnified Person shall
not constitute a breach of this Declaration or any
other agreement contemplated herein or of any duty
or obligation of the Indemnified Person at law or
in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person
is permitted or required to make a decision
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be
entitled to consider such interests and factors
as it desires, including its own interests, and
shall have no duty or obligation to give any
consideration to any interest of or factors
affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act
under such express standard and shall not be
subject to any other or different standard
imposed by this Declaration or by applicable
law.
SECTION 10.4 Indemnification.
(a) To the fullest extent permitted by applicable law,
the Sponsor shall indemnify and hold harmless each
Indemnified Person from and against any loss,
damage, liability, tax, penalty, expense
(including legal fees and expenses) or claim of
any kind or nature whatsoever incurred by such
Indemnified Person by reason of the creation,
operation or termination of the Trust or any act
or omission performed or omitted by such
Indemnified Person in good faith on behalf of the
Trust and in a manner such Indemnified Person
reasonably believed to be within the scope of
authority conferred on such Indemnified Person by
this Declaration, except that no Indemnified
Person shall be entitled to be indemnified in
respect of any loss, damage or claim incurred by
such Indemnified Person by reason of gross
negligence (or, in the case of the Property
Trustee, negligence) or willful misconduct with
respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law,
expenses (including legal fees) incurred by an
Indemnified Person in defending any claim, demand,
action, suit or proceeding shall, from time to
time, be advanced by the Sponsor prior to the
final disposition of such claim, demand, action,
suit or proceeding upon receipt by the Sponsor of
an undertaking by or on behalf of the Indemnified
Person to repay such amount if it shall be
determined that the Indemnified Person is not
entitled to be indemnified as authorized in
Section 10.4(a). The indemnification shall
survive the resignation or removal of any Trustee
and the termination of this Declaration. SECTION 10.5
Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee
and the Property Trustee may engage in or possess an interest in
other business ventures of any nature or description,
independently or with others, similar or dissimilar to the
business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in
and to such independent ventures or the income or profits derived
therefrom and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed
wrongful or improper. No Covered Person, nor the Sponsor,
Delaware Trustee or Property Trustee shall be obligated to
present any particular investment or other opportunity to the
Trust even if such opportunity is of a character that, if
presented to the Trust, could be taken by the Trust, and any
Covered Person, the Sponsor, the Delaware Trustee and the
Property Trustee shall have the right to take for its own account
(individually or as a partner or fiduciary) or to recommend to
others any such particular investment or other opportunity. Any
Covered Person, the Delaware Trustee and the Property Trustee may
engage or be interested in any financial or other transaction
with the Sponsor or any Affiliate of the Sponsor, or may act as
depositary for, trustee or agent for, or act on any committee or
body of holders of, securities or other obligations of the
Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be
the calendar year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust,
the Regular Trustees shall keep, or cause to be
kept, full books of account, records and
supporting documents, which shall reflect in
reasonable detail each transaction of the Trust.
The books of account shall be maintained on the
accrual method of accounting, in accordance with
generally accepted accounting principles,
consistently applied. The Trust shall use the
accrual method of accounting for United States
federal income tax purposes. The books of account
and the records of the Trust shall be examined by
and reported upon as of the end of each Fiscal
Year by a firm of independent certified public
accountants selected by the Regular Trustees.
(b) The Regular Trustees shall cause to be prepared
and delivered to each of the Holders of
Securities, within 90 days after the end of each
Fiscal Year of the Trust, annual financial
statements of the Trust, including a balance sheet
of the Trust as of the end of such Fiscal Year,
and the related statements of income or loss; (c) The
Regular Trustees shall cause to be duly
prepared and delivered to each of the Holders of
Securities, any annual United States federal
income tax information statement, required by the
Code, containing such information with regard to
the Securities held by each Holder as is required
by the Code and the Treasury Regulations.
Notwithstanding any right under the Code to
deliver any such statement at a later date, the
Regular Trustees shall endeavor to deliver all
such statements within 30 days after the end of
each Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly
prepared and filed with the appropriate taxing
authority, an annual United States federal income
tax return, on a Form 1041 or such other form
required by United States federal income tax law,
and any other annual income tax returns required
to be filed by the Regular Trustees on behalf of
the Trust with any state or local taxing
authority.
SECTION 11.3 Banking.
The Trust shall maintain one or more bank accounts in
the name and for the sole benefit of the Trust; provided,
however, that all payments of funds or securities in respect of
the Partnership Preferred Securities held by the Property Trustee
shall be made directly to the Property Trustee Account and no
other funds or securities of the Trust shall be deposited in the
Property Trustee Account. The sole signatories for such accounts
shall be designated by the Regular Trustees; provided, however,
that the Property Trustee shall designate the signatories for the
Property Trustee Account.
SECTION 11.4 Withholding.
The Trust and the Regular Trustees shall comply with
all withholding requirements under United States federal, state
and local law. The Trust shall request, and the Holders shall
provide to the Trust, such forms or certificates as are necessary
to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be
requested by the Trust to assist it in determining the extent of,
and in fulfilling, its withholding obligations. The Regular
Trustee shall file required forms with applicable jurisdictions
and, unless an exemption from withholding is properly established
by a Holder, shall remit amounts withheld with respect to the
Holder to applicable jurisdictions. To the extent that the Trust
is required to withhold and pay over any amounts to any authority
with respect to Distributions or allocations to any Holder, the
amount withheld shall be deemed to be a distribution in the
amount of the withholding to the Holder. In the event of any
claimed over withholding, Holders shall be limited to an action
against the applicable jurisdiction. If the amount required to
be withheld was not withheld from actual Distributions made, the
Trust may reduce subsequent Distributions by the amount of such
withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration
or by any applicable terms of the Securities, this
Declaration may only be amended by a written
instrument approved and executed by:
(i) the Regular Trustees (or, if there are more
than two Regular Trustees a majority of the
Regular Trustees);
(ii) if the amendment affects the rights, powers,
duties, obligations or immunities of the
Property Trustee, the Property Trustee; and
(iii) if the amendment affects the rights, powers,
duties, obligations or immunities of the
Delaware Trustee, the Delaware Trustee;
(b) no amendment shall be made, and any such purported
amendment shall be void and ineffective:
(i) unless, in the case of any proposed amendment,
the Property Trustee shall have first received
an Officers' Certificate from each of the Trust
and the Sponsor that such amendment is
permitted by, and conforms to, the terms of
this Declaration (including the terms of the
Securities);
(ii) unless, in the case of any proposed amendment
which affects the rights, powers, duties,
obligations or immunities of the Property
Trustee, the Property Trustee shall have first
received:
(A) an Officers' Certificate from each of the
Trust (signed by each of the Regular
Trustees) and the Sponsor that such
amendment is permitted by, and conforms to,
the terms of this Declaration (including
the terms of the Securities); and
(B) an opinion of counsel (who may be counsel
to the Sponsor, any Trustee or the Trust)
that such amendment is permitted by, and
conforms to, the terms of this Declaration
(including the terms of the Securities) and
that all conditions precedent to such
proposed amendment have been satisfied; and
(iii) to the extent the result of such amendment
would be to:
(A) cause the trust to fail to continue to be
classified for purposes of United States
federal income taxation as a grantor trust;
(B) reduce or otherwise adversely affect the
powers of the Property Trustee in
contravention of the Trust Indenture Act;
or
(C) cause the Trust to be deemed to be an
Investment Company required to be
registered under the Investment Company
Act;
(c) at such time after the Trust has issued any
Securities that remain outstanding, any amendment
that would adversely affect the rights, privileges
or preferences of any Holder of Securities may be
effected only with such additional requirements as
may be set forth in the terms of such Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be
amended without the consent of all of the Holders
of the Securities;
(e) Article IV shall not be amended without the
consent of the Holders of a Majority in
liquidation amount of the Convertible Common
Securities and;
(f) the rights of the Holders of the Convertible
Common Securities under Article V to increase or
decrease the number of, and appoint and remove
Trustees shall not be amended without the consent
of the Holders of a Majority in liquidation amount
of the Convertible Common Securities; and
(g) notwithstanding Section 12.1(c), this Declaration
may be amended without the consent of the Holders
of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this
Declaration that may be defective or
inconsistent with any other provision of this
Declaration;
(iii) add to the covenants, restrictions or
obligations of the Sponsor; or
(iv) to conform to any change in the 1940 Act or
written change in interpretation or application
of the rules and regulations promulgated
thereunder by any legislative body, court,
government agency or regulatory authority in
such a manner that the Trust shall not become
an Investment Company and which amendment does
not have a material adverse effect on the
right, preferences or privileges of the
Holders.
SECTION 12.2 Meetings of the Holders of Securities; Action by
Written Consent.
(a) Meetings of the Holders of any class of Securities
may be called at any time by the Regular Trustees or,
following a Declaration Event of Default, by
the Property Trustee (or as provided in the terms
of the Securities) to consider and act on any
matter on which Holders of such class of
Securities are entitled to act under the terms of
this Declaration, the terms of the Securities or
the rules of any stock exchange on which the
Convertible Preferred Securities are listed or
admitted for trading. The Regular Trustees shall
call a meeting of the Holders of such class if
directed to do so by the Holders of at least 10%
in liquidation amount of such class of Securities.
Such direction shall be given by delivering to the
Regular Trustees one or more calls in a writing
stating that the signing Holders of Securities
wish to call a meeting and indicating the general
or specific purpose for which the meeting is to be
called. Any Holders of Securities calling a
meeting shall specify in writing the Security
Certificates held by the Holders of Securities
exercising the right to call a meeting and only
those Securities specified shall be counted for
purposes of determining whether the required
percentage set forth in the second sentence of
this paragraph has been met.
(b) Except to the extent otherwise provided in the
terms of the Securities, the following provisions
shall apply to meetings of Holders of Securities:
(i) notice of any such meeting shall be given to
all the Holders of Securities having a right to
vote thereat at least 7 days and not more than
60 days before the date of such meeting.
Whenever a vote, consent or approval of the
Holders of Securities is permitted or required
under this Declaration or the rules of any
stock exchange on which the Convertible
Preferred Securities are listed or admitted for
trading, such vote, consent or approval may be
given at a meeting of the Holders of
Securities. Any action that may be taken at a
meeting of the Holders of Securities may be
taken without a meeting if a consent in writing
setting forth the action so taken is signed by
the Holders of Securities owning not less than
the minimum amount of Securities in liquidation
amount that would be necessary to authorize or
take such action at a meeting at which all
Holders of Securities having a right to vote
thereon were present and voting. Prompt notice
of the taking of action without a meeting shall
be given to the Holders of Securities entitled
to vote who have not consented in writing. The
Regular Trustees may specify that any written
ballot submitted to the Security Holder for the
purpose of taking any action without a meeting
shall be returned to the Trust within the time
specified by the Regular Trustees;
(ii) each Holder of a Security may authorize any
Person to act for it by proxy on all matters in
which a Holder of Securities is entitled to
participate, including waiving notice of any
meeting, or voting or participating at a
meeting. No proxy shall be valid after the
expiration of 11 months from the date thereof
unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the
Holder of Securities executing it. Except as
otherwise provided herein, all matters relating
to the giving, voting or validity of proxies
shall be governed by the General Corporation
Law of the State of Delaware relating to
proxies, and judicial interpretations
thereunder, as if the Trust were a Delaware
corporation and the Holders of the Securities
were stockholders of a Delaware corporation;
(iii) each meeting of the Holders of the Securities
shall be conducted by the Regular Trustees or,
if called by the Property Trustee, the Property
Trustee or by such other Person that the
Regular Trustees or the Property Trustee, as
the case may be, may designate; and
(iv) unless the Business Trust Act, this
Declaration, the terms of the Securities, the
Trust Indenture Act or the listing rules of any
stock exchange on which the Convertible
Preferred Securities are then listed or trading
otherwise provides, the Regular Trustees, in
their sole discretion (or if any meeting of
Holders has been called by the Property
Trustee, the Property Trustee in its sole
discretion), shall establish all other
provisions relating to meetings of Holders of
Securities, including notice of the time, place
or purpose of any meeting at which any matter
is to be voted on by any Holders of Securities,
waiver of any such notice, action by consent
without a meeting, the establishment of a
record date, quorum requirements, voting in
person or by proxy or any other matter with
respect to the exercise of any such right to
vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND THE DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee.
The Trustee that acts as initial Property Trustee
represents and warrants to the Trust and to the Sponsor at the
date of this Declaration, and each Successor Property Trustee
represents and warrants to the Trust and the Sponsor at the time
of the Successor Property Trustee's acceptance of its appointment
as Property Trustee that:
(a) The Property Trustee is a New York banking
corporation with trust powers, duly organized,
validly existing and in good standing under the
laws of the State of New York, with trust power and
authority to execute and deliver, and to carry
out and perform its obligations under the terms
of, the Declaration.
(b) The execution, delivery and performance by the
Property Trustee of the Declaration has been duly
authorized by all necessary corporate action on
the part of the Property Trustee. The Declaration
has been duly executed and delivered by the
Property Trustee, and it constitutes a legal,
valid and binding obligation of the Property
Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other
similar laws affecting creditors' rights generally
and to general principles of equity and the
discretion of the court (regardless of whether the
enforcement of such remedies is considered in a
proceeding in equity or at law).
(c) The execution, delivery and performance of the
Declaration by the Property Trustee does not
conflict with or constitute a breach of the
Articles of Organization or By-laws of the
Property Trustee.
(d) No consent, approval or authorization of, or
registration with or notice to, any State or
Federal banking authority is required for the
execution, delivery or performance by the Property
Trustee, of the Declaration.
[(e) The Property Trustee, pursuant to the Declaration,
shall hold legal title and a valid ownership
interest in the Partnership Preferred Securities
under the law of its place of incorporation and
Delaware law.]
SECTION 13.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee
represents and warrants to the Trust and to the Sponsor at the
date of this Declaration, and each Successor Delaware Trustee
represents and warrants to the Trust and the Sponsor at the time
of the Successor Delaware Trustee's acceptance of its appointment
as Delaware Trustee that:
(a) The Delaware Trustee is a Delaware banking
corporation with trust powers, duly organized,
validly existing and in good standing under the
laws of the State of Delaware, with trust power
and authority to execute and deliver, and to carry
out and perform its obligations under the terms
of, the Declaration.
(b) The Delaware Trustee has been authorized to
perform its obligations under the Certificate of
Trust and the Declaration. The Declaration under
Delaware law constitutes a legal, valid and
binding obligation of the Delaware Trustee,
enforceable against it in accordance with its
terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar
laws affecting creditors' rights generally
and to general principles of equity and the
discretion of the court (regardless of whether the
enforcement of such remedies is considered in a
proceeding in equity or at law).
(c) No consent, approval or authorization of, or
registration with or notice to, any State or
Federal banking authority is required for the
execution, delivery or performance by the Delaware
Trustee of the Declaration.
(d) The Delaware Trustee is an entity which has its
principal place of business in the State of
Delaware.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
All notices provided for in this Declaration shall be in writing,
duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by registered or certified mail,
as follows:
(a) if given to the Trust, in care of the Regular
Trustees at the Trust's mailing address set forth
below (or such other address as the Trust may give
notice of to the Trustees and the Holders of the
Securities):
CITIZENS UTILITIES TRUST
c/o Citizens Utilities Company
High Ridge Park
P.O. Box 3801
Stamford, Connecticut 06905
Attention:
(b) if given to the Delaware Trustee, at the mailing
address set forth below (or such other address as
the Delaware Trustee may give notice of to the
other Trustees):
Chemical Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
Attention: Corporate Trustee
Administration Department
(c) if given to the Property Trustee, at the mailing
address set forth below (or such other address as
the Property Trustee may give notice of to the
other Trustees):
Chemical Bank
450 West 33rd Street, 15th Floor
New York, New York 10001
Attention: Corporate Trustee
Administration Department
(d) if given to the Holder of the Convertible Common
Securities, at the mailing address of the Sponsor
set forth below (or such other address as the
Holder of the Convertible Common Securities may
give notice to the Trust):
CITIZENS UTILITIES COMPANY
High Ridge Park
P.O. Box 3801
Stamford, Connecticut 06905
Attention: _________________
(e) if given to any other Holder, at the address set
forth on the books and records of the Trust.
All such notices shall be deemed to have been given
when received in person, telecopied with receipt confirmed, or
mailed by first class mail, postage prepaid, except that if a
notice or other document is refused delivery or cannot be
delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been
delivered on the date of such refusal or inability to deliver.
SECTION 14.2 Governing Law.
This Declaration and the rights of the parties
hereunder shall be governed by and interpreted in accordance with
the laws of the State of Delaware and all rights and remedies
shall be governed by such laws without regard to principles of
conflict of laws.
SECTION 14.3 Intention of the Parties.
It is the intention of the parties hereto that the
Trust be classified for United States federal income tax purposes
as a grantor trust. The provisions of this Declaration shall be
interpreted to further this intention of the parties.
SECTION 14.4 Headings.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the
interpretation of this Declaration or any provision hereof.
SECTION 14.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto
is named or referred to, the successors and assigns of such party
shall be deemed to be included, and all covenants and agreements
in this Declaration by the Sponsor and the Trustees shall bind
and inure to the benefit of their respective successors and
assigns, whether so expressed.
SECTION 14.6 Partial Enforceability.
If any provision of this Declaration, or the
application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Declaration, or the
application of such provision to Persons or circumstances other
than those to which it is held invalid, shall not be affected
thereby.
SECTION 14.7 Counterparts.
This Declaration may contain more than one counterpart
of the signature page and this Declaration may be executed by the
affixing of the signature of each of the Trustees and a duly
authorized officer of the Company to one of such counterpart
signature pages. All of such counterpart signature pages shall
be read as though one, and they shall have the same force and
effect as though all of the signers had signed a single signature
page.
IN WITNESS WHEREOF, the undersigned has caused these
presents to be executed as of the day and year first above
written.
Robert J. DeSantis
as Regular Trustee
__________________________
Edward O. Kipperman
as Regular Trustee
__________________________
CHEMICAL BANK DELAWARE
as Delaware Trustee
By:
Name:
Title:
CHEMICAL BANK
as Property Trustee
By:
Name:
Title:
CITIZENS UTILITIES COMPANY
as Sponsor
By:
Name:
Title:
ANNEX I
TERMS OF SECURITIES
ANNEX II
STATEMENT OF COMMON DEFINITIONS
EXHIBIT A-1
FORM OF PREFERRED SECURITY CERTIFICATE
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
EXHIBIT B
FORM OF NOTICE OF DISTRIBUTION ELECTION
TO: Citizens Utility Company,
As General Partner,
The undersigned owner of ____% Partnership Preferred
Securities (liquidation preference $50 per preferred security)
(the "Partnership Preferred Securities"), issued pursuant to the
Amended and Restated Agreement of Limited Partnership (the
"Limited Partnership Agreement"), dated as of ___________ ___,
1995, by and among Citizens Utilities Company, as the general
partner, ____________, as initial limited partner, and such other
Persons (as defined therein) who become Limited Partners (as
defined therein) as provided in the Limited Partnership
Agreement, hereby irrevocably elects to receive, in the form
prescribed below, Distributions (as such term is defined in the
Limited Partnership Agreement) due and payable to the undersigned
on the four Distribution Payment Dates (as such term is defined
in the Limited Partnership Agreement) occurring after the
Election Period during which this Notice of Distribution Election
is being submitted, and on each succeeding Distribution Payment
Date until such time as another Notice of Distribution Election
is timely submitted during an Election Period, as follows:
The Undersigned, as a Holder of Partnership Preferred
Securities, elects to receive payment of Distributions due and
payable on the next four Distribution Payment Dates on such
Partnership Preferred Securities, and on each succeeding
Distribution Payment Date until such time as another Notice of
Distribution Election is timely submitted during an Election
Period, in the form of:
Choose one:
( ) Cash
( ) An Equivalent Value of shares Common Stock Series A,
par value $.25 per share, of Citizens Utilities Company
("Common Stock")
The undersigned does also hereby direct the addressee
that any and all Distributions in the form of Common Stock made
pursuant to this Notice of Distribution Election be delivered to
and issued in the name of the undersigned, unless a different
name/different names has/have been indicated in the assignment
below. If such shares are to be issued in the name/names of a
person/persons other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto.
This Notice of Distribution Election and any action
taken hereunder shall be governed by the terms of the Limited
Partnership Agreement.
Date: ____________, ____
Signature
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other
Identifying Number
(Applicable only if box (B) has
been checked.) If a name or names
other than the undersigned, please
indicate in the spaces below the
name or names in which shares of
Common Stock are to be issued,
along with the address or addresses
of such person or persons
EXHIBIT C
FORM OF PARTNERSHIP PREFERRED SECURITIES
EXHIBIT D
FORM OF CONVERTIBLE DEBENTURE
EXHIBIT E
UNDERWRITING AGREEMENT
TABLE OF CONTENTS
Page
ARTICLE I INTERPRETATION AND DEFINITIONS . . . . . . . . 2
SECTION 1.1 Definitions . . . . . . . . . . . . . . . 2
ARTICLE II TRUST INDENTURE ACT . . . . . . . . . . . . . 9
SECTION 2.1 Trust Indenture Act; Application . . . . . 9
SECTION 2.2 Lists of Holders of Securities . . . . . . 9
SECTION 2.3 Reports by the Property Trustee . . . . . . 10
SECTION 2.4 Periodic Reports to Property Trustee . . . 10
SECTION 2.5 Evidence of Compliance with Conditions
Precedent . . . . . . . . . . . . . . . 10
SECTION 2.6 Events of Default; Waiver . . . . . . . . . 11
SECTION 2.7 Event of Default; Notice . . . . . . . . . 13
ARTICLE III ORGANIZATION . . . . . . . . . . . . . . . . . 14
SECTION 3.1 Name . . . . . . . . . . . . . . . . . . . 14
SECTION 3.2 Office . . . . . . . . . . . . . . . . . . 14
SECTION 3.3 Purpose . . . . . . . . . . . . . . . . . . 14
SECTION 3.4 Authority . . . . . . . . . . . . . . . . . 14
SECTION 3.5 Title to Property of the Trust . . . . . . 15
SECTION 3.6 Powers and Duties of the Regular Trustees . 15
SECTION 3.7 Prohibition of Actions by the Trust and
the Trustees . . . . . . . . . . . . . . 18
SECTION 3.8 Powers and Duties of the Property Trustee . 20
SECTION 3.9 Certain Duties and Responsibilities of the
Property Trustee . . . . . . . . . . . . 23
SECTION 3.10 Certain Rights of Property Trustee . . . . 25
SECTION 3.11 Delaware Trustee . . . . . . . . . . . . . 28
SECTION 3.12 Execution of Documents . . . . . . . . . . 28
SECTION 3.13 Not Responsible for Recitals or Issuance
of Securities . . . . . . . . . . . . . 29
SECTION 3.14 Duration of Trust . . . . . . . . . . . . 29
SECTION 3.15 Mergers . . . . . . . . . . . . . . . . . 29
ARTICLE IV SPONSOR . . . . . . . . . . . . . . . . . . . 31
SECTION 4.1 Sponsor's Purchase of Convertible Common
Securities . . . . . . . . . . . . . . . 31
SECTION 4.2 Responsibilities of the Sponsor . . . . . . 31
SECTION 4.3 Covenants of Sponsor . . . . . . . . . . . 32
ARTICLE V TRUSTEES . . . . . . . . . . . . . . . . . . . 32
SECTION 5.1 Number of Trustees . . . . . . . . . . . . 32
SECTION 5.2 Delaware Trustee . . . . . . . . . . . . . 33
SECTION 5.3 Property Trustee; Eligibility . . . . . . . 33
SECTION 5.4 Qualifications of Regular Trustees and
Delaware Trustee Generally . . . . . . . 34
SECTION 5.5 Initial Trustees . . . . . . . . . . . . . 34
SECTION 5.6 Appointment, Removal and Resignation
of Trustees . . . . . . . . . . . . . . 34
SECTION 5.7 Vacancies among Trustees . . . . . . . . . 36
SECTION 5.8 Effect of Vacancies . . . . . . . . . . . . 36
SECTION 5.9 Merger of a Trustee . . . . . . . . . . . . 37
SECTION 5.10 Meetings . . . . . . . . . . . . . . . . . 37
SECTION 5.11 Delegation of Power . . . . . . . . . . . . 38
ARTICLE VI DISTRIBUTIONS . . . . . . . . . . . . . . . . 38
SECTION 6.1 Distributions . . . . . . . . . . . . . . . 38
ARTICLE VII ISSUANCE OF SECURITIES . . . . . . . . . . . . 38
SECTION 7.1 General Provisions Regarding Securities . . 38
ARTICLE VIII TERMINATION OF TRUST . . . . . . . . . . . . . 40
SECTION 8.1 Termination of Trust . . . . . . . . . . . 40
ARTICLE IX TRANSFER OF INTERESTS . . . . . . . . . . . . 41
SECTION 9.1 Transfer of Securities . . . . . . . . . . 41
SECTION 9.2 Transfer of Certificates . . . . . . . . . 41
SECTION 9.3 Deemed Security Holders . . . . . . . . . . 42
SECTION 9.4 Book Entry Interests . . . . . . . . . . . 42
SECTION 9.5 Notices to Clearing Agency . . . . . . . . 43
SECTION 9.6 Appointment of Successor Clearing Agency . 43
SECTION 9.7 Definitive Preferred Security
Certificates . . . . . . . . . . . . . . 43
SECTION 9.8 Mutilated, Destroyed, Lost or
Stolen Certificates . . . . . . . . . . 44
ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF
SECURITIES, TRUSTEES OR OTHERS . . . . . . . 45
SECTION 10.1 Liability . . . . . . . . . . . . . . . . 45
SECTION 10.2 Exculpation . . . . . . . . . . . . . . . 46
SECTION 10.3 Fiduciary Duty . . . . . . . . . . . . . . 46
SECTION 10.4 Indemnification . . . . . . . . . . . . . 47
SECTION 10.5 Outside Businesses . . . . . . . . . . . . 48
ARTICLE XI ACCOUNTING . . . . . . . . . . . . . . . . . . 49
SECTION 11.1 Fiscal Year . . . . . . . . . . . . . . . 49
SECTION 11.2 Certain Accounting Matters . . . . . . . . 49
SECTION 11.3 Banking . . . . . . . . . . . . . . . . . 50
SECTION 11.4 Withholding . . . . . . . . . . . . . . . 50
ARTICLE XII AMENDMENTS AND MEETINGS . . . . . . . . . . . 51
SECTION 12.1 Amendments . . . . . . . . . . . . . . . . 51
SECTION 12.2 Meetings of the Holders of Securities;
Action by Written Consent . . . . . . . 53
ARTICLE XIII REPRESENTATIONS OF PROPERTY TRUSTEE
AND THE DELAWARE TRUSTEE . . . . . . . . . . 55
SECTION 13.1 Representations and Warranties of
Property Trustee . . . . . . . . . . . 55
SECTION 13.2 Representations and Warranties of
Delaware Trustee . . . . . . . . . . . 56
ARTICLE XIV MISCELLANEOUS . . . . . . . . . . . . . . . . 57
SECTION 14.1 Notices . . . . . . . . . . . . . . . . . 57
SECTION 14.2 Governing Law . . . . . . . . . . . . . . 58
SECTION 14.3 Intention of the Parties . . . . . . . . . 58
SECTION 14.4 Headings . . . . . . . . . . . . . . . . . 58
SECTION 14.5 Successors and Assigns . . . . . . . . . . 59
SECTION 14.6 Partial Enforceability . . . . . . . . . . 59
SECTION 14.7 Counterparts . . . . . . . . . . . . . . . 59
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
310(a) . . . . . . . . . . . . . . . . . 5.3(a)
310(c) . . . . . . . . . . . . . . . . . Inapplicable
311(c) . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . 2.2(a)
312(b) . . . . . . . . . . . . . . . . . 2.2(b)
313 . . . . . . . . . . . . . . . . . . . 2.3
314(a) . . . . . . . . . . . . . . . . . 2.4
314(b) . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . 2.5
314(d) . . . . . . . . . . . . . . . . . Inapplicable
314(f) . . . . . . . . . . . . . . . . . Inapplicable
315(a) . . . . . . . . . . . . . . . . . 3.9(b)
315(c) . . . . . . . . . . . . . . . . . 3.9(a)
315(d) . . . . . . . . . . . . . . . . . 3.9(a)
316(a) . . . . . . . . . . . . . . . . . Annex I
316(c) . . . . . . . . . . . . . . . . . 3.6(e)
_______________
* This Cross-Reference Table does not constitute part
of the Declaration and shall not affect the
interpretation of any of its terms or provisions.
ANNEX I
TERMS OF
__% CITIZENS UTILITIES CONVERTIBLE
PREFERRED SECURITIES
__% CITIZENS UTILITIES CONVERTIBLE
COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and
Restated Declaration of Trust, dated as of ,
1995 (as amended from time to time, the "Declaration"),
the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the
Convertible Preferred Securities and the Convertible
Common Securities are set out below (each capitalized
term used but not defined herein has the meaning set
forth in the Declaration or, if not defined in such
Declaration, as defined in the Prospectus referred to
below):
1. DESIGNATION AND NUMBER.
(a) Convertible Preferred Securities.
______________ Convertible Preferred Securities of the
Trust with an aggregate liquidation amount with respect
to the assets of the Trust of one hundred and seventy
five million dollars ($175,000,000), plus up to an
additional Convertible Preferred Securities of
the Trust with an aggregate liquidation amount with
respect to the assets of the Trust of twenty-six million,
two hundred and fifty thousand dollars ($26,250,000)
solely to cover over-allotments as provided for in the
Underwriting Agreement (the "Additional Convertible
Preferred Securities"), and a liquidation preference with
respect to the assets of the Trust of $50 per Convertible
Preferred Security, are hereby designated for the
purposes of identification only as " % Citizens
Utilities Convertible Preferred Securities" (the
"Convertible Preferred Securities"). The Preferred
Security Certificates evidencing the Convertible
Preferred Securities shall be substantially in the form
attached to the Declaration as Exhibit A-1, with such
changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice or
to conform to the rules of any stock exchange on which
the Convertible Preferred Securities are listed.
(b) Convertible Common Securities.
______________ Convertible Common Securities of the Trust
with an aggregate liquidation amount with respect to the
assets of the Trust of five million, four hundred and
thirteen thousand dollars ($5,413,000) plus up to an
additional Convertible Common Securities
of the Trust with an aggregate liquidation amount with
respect to the assets of the Trust of eight hundred and
twelve thousand dollars ($812,000) to meet the capital
requirements of the Trust in the event of an issuance of
Additional Convertible Preferred Securities, and a
liquidation amount with respect to the assets of the
Trust of $50 per Convertible Common Security, are hereby
designated for the purposes of identification only as
"__% Citizens Utilities Convertible Common Securities"
(the "Convertible Common Securities"). The Common
Security Certificates evidencing the Convertible Common
Securities shall be substantially in the form attached to
the Declaration as Exhibit A-2, with such changes and
additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice.
2. DISTRIBUTIONS.
(a) Periodic Distributions payable on
each Security will be fixed at a rate per annum of ____%
(the "Rate") of the stated liquidation amount of $50 per
Security, such rate being the rate of distributions
payable on the Partnership Preferred Securities to be
held by the Property Trustee. Distributions in arrears
for more than one quarter will bear interest thereon at
the Rate (to the extent permitted by applicable law), and
such compounded interest shall be paid as Compounded
Distributions (as defined hereinafter). The form of
payments of distributions (the "Distributions") may be in
either cash or an Equivalent Value of shares of Common
Stock, as provided in Section 8 of this Annex I. A
Distribution can be paid only to the extent that payments
are made in respect of the Partnership Preferred
Securities held by the Property Trustee. The amount of
Distributions payable for any period will be computed for
any full quarterly Distribution period on the basis of a
360-day year of twelve 30-day months, and for any period
shorter than a full quarterly Distribution period for
which Distributions are computed, Distributions will be
computed on the basis of the actual number of days
elapsed in such period.
(b) Distributions on the Securities will
be cumulative, will accrue from , 1995 and will be
payable quarterly in arrears, on January 31, April 30,
July 31 and October 31 of each year, commencing on
, 1996, except as otherwise described below (each, a
"Distribution Payment Date"). If the Debenture Issuer
elects to defer the payment of interest on the
Convertible Debentures (each, a "Deferral"), as a
consequence of such Deferral, distributions on the
Partnership Preferred Securities and, therefore, the
Distributions will also be deferred. Despite such
Deferral, quarterly Distributions will continue to accrue
with interest thereon (to the extent permitted by
applicable law) at the Rate, compounded quarterly, during
any such Deferral, and shall be paid as compounded
distributions (the "Compounded Distributions") to the
Holders. Prior to the termination of any such Deferral,
Citizens Capital may, under the Limited Partnership
Agreement, be required to further extend such Deferral as
a result of further Deferrals of interest payments on the
Convertible Debentures, and such Deferral shall cause
Distributions on the Securities to be further deferred;
provided, that such Deferral together with all such
previous and further Deferrals may not exceed 20
consecutive quarters nor extend the maturity date of the
Securities. Payments of accrued Distributions, including
Compounded Distributions, which have been deferred
pursuant to this Section 2 will be payable to Holders as
they appear on the books and records of the Trust on the
first record date after the end of the Deferral. Upon
the termination of any Deferral and the payment of all
amounts then due, the Debenture Issuer may, under the
Indenture, commence a new Deferral, subject to the above
requirements. Such new Deferral by the Debenture Issuer
shall cause Citizens Capital to defer distributions on
the Partnership Preferred Securities, which in turn shall
cause the Trust to defer Distributions.
(c) Distributions on the Securities will
be payable to the Holders thereof as they appear on the
books and records of the Trust on the Regular Record Date
(as defined in the Indenture) immediately preceding the
applicable Distribution Payment Date. So long as the
Securities remain in book-entry only form, subject to any
applicable laws and regulations and the provisions of the
Declaration, each such payment in respect of the
Convertible Preferred Securities will be made as
described under the heading "Description of the
Convertible Preferred Securities -- Book-Entry Only
Issuance -- The Depository Trust Company" in the
Prospectus dated ______, 1995 (the "Prospectus") of the
Trust included in the Registration Statement on Form S-3
of the Sponsor, Citizens Capital and the Trust (Reg. No.
33-63615-00, 33-63615-01, and 33-63615-02). The relevant
record dates for the Convertible Common Securities shall
be the same record dates as for the Convertible Preferred
Securities. Distributions payable on any Securities that
are not punctually paid on any Distribution Payment Date,
as a result of Citizens Capital having failed to make a
payment on the Partnership Preferred Securities, will
cease to be payable to the Person in whose name such
Securities are registered on the Regular Record Date, and
such late Distribution will instead be payable to the
Person in whose name such Securities are registered on
the Special Record Date (as defined in the Base
Indenture) in accordance with Section 3.7 of the Base
Indenture or other specified date determined in
accordance with Section 3.7 of the Base Indenture. If
any date on which Distributions are payable on the
Securities is not a Business Day, then payment of the
Distribution payable on such date will be made on the
next succeeding day that is a Business Day (and without
any interest or other payment in respect of any such
delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on
the immediately preceding Business Day, in each case with
the same force and effect as if made on such date.
(d) In the event of an election by the
Holder to convert its Securities through the Conversion
Agent into shares of Common Stock, pursuant to the terms
of the Securities as set forth in this Annex I to the
Declaration, no payment, allowance or adjustment shall be
made with respect to accumulated, accrued, deferred or
otherwise unpaid Distributions on such Securities, or be
required to be made; provided that in the case of any
Securities which are converted after the close of
business on a relevant record date for the payment of
Distributions and on or prior to the next succeeding
Distribution Payment Date, Distributions which are due
and payable on the next Distribution Payment Date shall
be payable on such Distribution Payment Date
notwithstanding such conversion and such Distribution
shall be paid to the Holder of such Securities registered
as such at the close of business on the relevant
Distribution Payment Date according to their terms.
(e) In the event that there is any money
or other property held by or for the Trust that is not
accounted for hereunder, such property shall be
distributed Pro Rata (as defined in Section 10 of this
Annex I) among the Holders of the Securities on the next
Distribution Payment Date.
(f) In the event that Citizens Capital is
dissolved and the Convertible Debentures are distributed
or transferred to the Property Trustee on behalf of the
Trust, Distributions shall continue to be payable in the
manner provided for by this Section 2, except that
Distributions shall no longer be payable upon receipt of
distributions due under the Partnership Preferred
Securities as set forth in the Limited Partnership
Agreement but rather shall be payable upon receipt of
payments due under the Convertible Debentures as set
forth in the Indenture and such Distributions on the
Convertible Preferred Securities shall, pursuant to
Section 8(b) hereof, be payable only in cash.
3. LIQUIDATION DISTRIBUTION UPON DISSOLUTION.
In the event of any voluntary or involuntary,
liquidation, dissolution, winding-up or termination of
the Trust, the Holders of the Securities on the date of
the liquidation dissolution, winding-up or termination,
as the case may be, will be entitled to receive out of
the assets of the Trust available for distribution to
Holders of Securities after satisfaction of liabilities
to creditors, an amount equal to the aggregate of the
stated liquidation amount of $50 per Security, payable in
cash, plus accrued or deferred and unpaid Distributions
thereon to the date of payment, payable in cash or an
Equivalent Value of Common Stock (such amount being the
"Liquidation Distribution"), unless, in connection with
such liquidation, dissolution, winding-up or termination,
at the election of the Regular Trustees, Partnership
Preferred Securities (or, if the Partnership has been
terminated and the Property Trustee holds Convertible
Debentures, Convertible Debentures) in an aggregate
liquidation amount (or principal amount) equal to the
aggregate stated liquidation amount of such Securities,
with a distribution rate (or interest rate) equal to the
Rate of, and bearing accrued or deferred and unpaid
distributions (or interest) in an amount equal to the
accrued or deferred and unpaid Distributions on, such
Securities, shall be distributed on a Pro Rata basis to
the Holders of the Securities in exchange for such
Securities.
If, upon any liquidation, dissolution, winding-
up or termination of the Trust, the Liquidation
Distribution can be paid only in part because the Trust
has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts
payable directly by the Trust on the Securities shall be
paid on a Pro Rata basis in accordance with Section 10 of
this Annex I.
If, upon any liquidation, dissolution, winding
up or termination of the Trust, the Holders of Securities
are paid in full the aggregate Liquidation Distribution
to which they are entitled, then such Holders will not be
entitled to receive or share in any other assets of the
Trust thereafter available for distribution to any other
holders of beneficial interests in the Trust.
4. REDEMPTION AND DISTRIBUTION.
(a) Mandatory Redemption. Upon the
payment or repayment of the Convertible Debentures in
whole or in part, whether at maturity, upon acceleration
of the maturity of the Convertible Debentures or upon
redemption, the proceeds from such repayment or payment
shall be simultaneously applied to redeem, ultimately,
upon redemption of Partnership Preferred Securities, if
any, Securities having an aggregate liquidation amount
equal to the aggregate principal amount of the
Convertible Debentures so repaid or redeemed, at a
redemption price of $50 per Security, payable in cash,
plus an amount equal to accrued or deferred and unpaid
Distributions thereon at the date of the redemption,
payable in cash or Common Stock (the "Redemption Price").
Holders will be given not less than 30 nor more than 60
days notice of such redemption. If the Convertible
Debentures are redeemed in part, then the Securities
shall be redeemed on a Pro Rata basis in accordance with
Section 10 of this Annex I.
(b) [reserved]
(c) Special Distribution. (i) If, at any
time, a Trust Event shall occur and be continuing, the
Regular Trustees shall:
(A) dissolve the Trust and, after satisfaction
of creditors, cause the Partnership Preferred
Securities held by the Property Trustee, having an
aggregate stated liquidation amount equal to the
aggregate stated liquidation amount of, with a
distribution rate identical to the Rate of, and
accrued or deferred and unpaid distributions equal
to accrued or deferred and unpaid Distributions on,
and having the same record date for payment as the
Securities, to be distributed to the Holders of the
Securities, in liquidation of such Holders'
interests in the Trust, on a Pro Rata basis, or
(B) upon the dissolution of Citizens Capital in
the manner set forth in the Limited Partnership
Agreement, dissolve the Trust, and, after
satisfaction of creditors, cause the Convertible
Debentures held by the General Partner, having an
aggregate stated principal amount equal to the
aggregate stated liquidation amount of, with an
interest payment rate identical to the Rate of, and
accrued or deferred and unpaid interest equal to
accrued or deferred and unpaid Distributions on, and
having the same record date for payment as the
Securities, to be distributed to the Holders of the
Securities, in liquidation of such Holders'
interests in the Trust, on a Pro Rata basis;
provided, however, that the Trust has a Ministerial
Action Obligation.
(ii) If, at any time, a Partnership Event shall
occur and be continuing, the General Partner may dissolve
Citizens Capital in accordance with the Limited
Partnership Agreement with the result that Convertible
Debentures having an aggregate stated principal amount
equal to the aggregate stated liquidation amount of, with
a distribution rate identical to the distribution rate
of, and accrued or deferred and unpaid distributions on
and having the same record date for payment as the
Partnership Preferred Securities, will be distributed to
the holders of Partnership Preferred Securities, in
liquidation of such holders' interest in Citizens
Capital; provided, further, that, Citizens Capital has a
Ministerial Action Obligation.
(iii) If, at any time, a Company Tax Event
shall occur and be continuing, and the Company, as
General Partner of Citizens Capital, shall have caused
the dissolution of Citizens Capital, the Regular Trustees
shall, at the direction of the Sponsor, dissolve the
Trust and after satisfaction of creditors, cause the
Convertible Debentures having an aggregate principal
amount equal to the aggregate liquidation preference of
the Securities to be distributed to the Holders of the
Securities in liquidation of the Trust and Citizens
Capital; provided, however, that, the Debenture Issuer
has a Ministerial Action Obligation.
(iv) If, at any time, a Rating Agency Event
shall occur and be continuing, the Company, as Sponsor of
the Trust, shall dissolve the Trust and (i) after
satisfaction of creditors, cause the Partnership
Preferred Securities having an aggregate liquidation
amount equal to the aggregate liquidation amount of the
Securities to be distributed to the Holders of the
Securities in liquidation of the Trust or (ii) if, at the
option of the General Partner, Citizens Capital is
dissolved upon the occurrence of a Rating Agency Event as
set forth in the Limited Partnership Agreement, after
satisfaction of creditors, cause the Convertible
Debentures having an aggregate principal amount equal to
the aggregate liquidation preference of the Securities to
be distributed to the Holders of the Securities in
liquidation of the Trust and Citizens Capital.
After the date for any distribution of
Partnership Preferred Securities or Convertible
Debentures, as the case may be, upon dissolution and
liquidation of the Trust (i) the Securities will be
deemed to be no longer outstanding, (ii) if the
Convertible Preferred Securities are still in book-entry
only form, The Depository Trust Company (the
"Depositary") or its nominee, as the record holder of the
Convertible Preferred Securities, will receive a
registered global certificate or certificates
representing the Partnership Preferred Securities or
Convertible Debentures, as the case may be, and (iii) any
Common Security Certificate and any Preferred Security
Certificate not held by the Depositary or its nominee
will be deemed to represent, as applicable, (a)
Partnership Preferred Securities having an aggregate
liquidation amount equal to the aggregate stated
liquidation amount of, with a distribution rate identical
to the Rate of, and accrued or deferred and unpaid
distributions equal to the accrued or deferred and unpaid
Distributions on such Securities, or (b) Convertible
Debentures having an aggregate principal amount equal to
the aggregate stated liquidation amount of, with an
interest rate identical to the Rate of, and accrued and
unpaid interest equal to accrued and unpaid Distributions
on such Securities, as the case may be, until such
Certificates are presented to the Company, as General
Partner or Debenture Issuer, as the case may be, or its
agent for registration of transfer or reissuance.
(d) General. The Trust may not redeem fewer
than all the outstanding Securities unless all accrued or
deferred and unpaid Distributions have been paid in full
on all Securities for all quarterly Distribution periods
terminating on or before the date of redemption. If
fewer than all the outstanding Securities are to be so
redeemed, the Convertible Common Securities and the
Convertible Preferred Securities will be redeemed Pro
Rata and the Convertible Preferred Securities to be
redeemed will be redeemed as described in Section
4(e)(ii) of this Annex I.
Citizens Capital or the Debenture Issuer, as
the case may be, have undertaken under the Limited
Partnership Agreement or the Indenture, as the case may
be, use their best efforts if the Partnership Preferred
Securities or the Convertible Debentures are distributed
to Holders of the Securities to have the Partnership
Preferred Securities or the Convertible Debentures, as
the case may be, listed on the New York Stock Exchange or
on such other exchange as the Convertible Preferred
Securities were listed immediately prior to the
distribution of the Partnership Preferred Securities or
the Convertible Debentures, as the case may be.
(e) Redemption Procedures. (i) Notice of any
redemption of Securities (a "Redemption Notice") will be
given by the Trust by mail to each Holder of Securities
to be redeemed not fewer than 30 nor more than 60 days
before the date fixed for redemption, which will be the
date fixed for redemption of the Partnership Preferred
Securities, which in turn will be the date fixed for
redemption of the Convertible Debentures. For purposes
of the calculation of the date of redemption and the
dates on which notices are given pursuant to this Section
4(e)(i) of Annex I, a Redemption Notice shall be deemed
to be given on the day such notice is first mailed, by
first-class mail, postage prepaid, to Holders of
Securities. Each Redemption Notice shall be addressed to
the Holders of Securities at the address of each such
Holder appearing in the books and records of the Trust.
No defect in the Redemption Notice or in the mailing
thereof with respect to any Holder shall affect the
validity of the redemption proceedings with respect to
any other Holder.
(ii) In the event that fewer than all the
outstanding Securities are to be redeemed, the Securities
to be redeemed shall be redeemed Pro Rata and, in the
event Convertible Preferred Securities are held in book-
entry only form by the Depositary or its nominee (or any
successor Clearing Agency or its nominee), the Depositary
will reduce Pro Rata the amount of the interest of each
Clearing Agency Participant in the Convertible Preferred
Securities to be redeemed; provided, that if, as a result
of such Pro Rata redemption, Clearing Agency Participants
would hold fractional interests in the Convertible
Preferred Securities, the Depositary will adjust the
amount of the interest of each Clearing Agency
Participant to be redeemed to avoid such fractional
interests.
(iii) If the Trust gives a Redemption Notice
(which notice will be irrevocable) then (A) while the
Convertible Preferred Securities are in book-entry only
form, by 12:00 noon, New York City time, on the
redemption date, provided that Citizens Capital or the
Debenture Issuer, as the case may be, has paid the
Property Trustee a sufficient amount of cash and Common
Stock in connection with the related redemption or
maturity of the Partnership Preferred Securities and/or
Convertible Debentures, the Property Trustee will deposit
irrevocably with the Paying Agent cash and/or Common
Stock sufficient to pay the applicable Redemption Price
with respect to the Securities and will give the Paying
Agent irrevocable instructions and authority to pay the
Redemption Price to the Depositary for payment to the
holders of the Book Entry Interests, and (B) in the case
that the Convertible Preferred Securities are issued in
definitive form, provided that Citizens Capital or the
Debenture Issuer, as the case may be, has paid the
Property Trustee a sufficient amount of cash and/or
Common Stock in connection with the related redemption or
maturity of the Partnership Preferred Securities and/or
the Convertible Debentures, the Property Trustee will
deposit such cash and/or Common Stock with the Paying
Agent, who in turn will pay the applicable Redemption
Price to the Holders of such Securities by check and
shares of Common Stock, if any, mailed to the address of
the relevant Holder appearing on the books and records of
the Trust on the redemption date. Upon satisfaction of
the foregoing conditions, then immediately prior to the
close of business on the date of such deposit or payment,
all rights of Holders of such Convertible Preferred
Securities so called for redemption will cease, except
the right of the Holders to receive the Redemption Price,
but without interest on such Redemption Price, and from
and after the date fixed for redemption, such Partnership
Preferred Securities will not accrue distributions or
bear interest. In the event that any date fixed for
redemption of Convertible Preferred Securities is not a
Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding
Business Day (and without any interest in respect of any
such delay), except that, if such Business Day falls in
the next calendar year, such payment will be made on the
immediately preceding Business Day. In the event that
payment of the Redemption Price is improperly withheld or
refused and not paid by either the Property Trustee or
the Company, distributions on the Convertible Preferred
Securities called for redemption will continue to accrue
at the Rate, compounded quarterly, to the extent that
payment of such interest is legally available, until the
Redemption Price is actually paid. Neither the Regular
Trustees nor the Trust shall be required to register or
cause to be registered the transfer of any Securities
which have been so called for redemption.
(iv) If a Redemption Notice shall have been
given with respect to the redemption of the Securities,
the conversion rights set forth in Section 5 of this
Annex I shall terminate at the close of business on the
fifth Business Day prior to the redemption date.
(v) Subject to the foregoing and applicable
law (including, without limitation, United States federal
securities laws), the Sponsor or any of its subsidiaries
may at any time and from time to time purchase
outstanding Convertible Preferred Securities by tender,
in the open market or by private agreement.
(f) Distribution. On or after a dissolution
as provided for in Section 4(c), the Trust shall send by
mail to each Holder of Securities to be replaced a notice
(a "Special Distribution Notice") with respect to any
distribution of Partnership Preferred Securities or
Convertible Debentures in connection with such
dissolution of the Trust.
(g) Redemption Notices and Special
Distribution Notices shall be sent by the Regular
Trustees on behalf of the Trust to (A) in respect of the
Convertible Preferred Securities, if Global Certificates
are outstanding, the Depositary or its nominee (or any
successor Clearing Agency or its nominee) or, if
Definitive Preferred Security Certificates have been
issued, to the Holder thereof, and (B) in respect of the
Convertible Common Securities, to the Holder thereof.
5. CONVERSION RIGHTS.
The Holders of Securities shall have the right,
at any time up to and including the fifth Business Day
prior to the maturity or redemption of the Securities, at
their option, to cause the Conversion Agent to convert
Securities, on behalf of the converting Holders, into
shares of Common Stock in the manner described herein on
and subject to the following terms and conditions:
(a) The Securities will be convertible at the
office of the Conversion Agent into fully paid and
nonassessable shares of Common Stock pursuant to the
Holder's direction in writing given pursuant to Section
5(b) of this Annex I. Upon receipt of any such written
directions, the Conversion Agent shall (i) exchange such
Securities for a portion of the Partnership Preferred
Securities or Convertible Debentures, as the case may be,
theretofore held by the Trust on the basis of one
Security per $50 liquidation amount of Partnership
Preferred Securities or $50 principal amount of
Convertible Debentures, as the case may be, (ii), as
holder of such Partnership Preferred Securities in the
event Citizens Capital has not been dissolved,
immediately cause Citizens Capital to exchange such
amount of Partnership Preferred Securities for a portion
of the Convertible Debentures theretofore held by
Citizens Capital on the basis of $50 liquidation amount
of Partnership Preferred Securities per $50 principal
amount of Convertible Debentures, and (iii) as holder of
such Convertible Debentures, immediately convert such
amount of Convertible Debentures into fully paid and
nonassessable shares of Common Stock at an initial rate
of _________ shares of Common Stock per $50 principal
amount of Convertible Debentures (which is equivalent to
a conversion price of $______ per share of Common Stock,
subject to certain adjustments set forth in the terms of
the Convertible Debentures (as so adjusted, "Conversion
Price")).
(b) In order to convert Securities into Common
Stock the Holder shall timely submit to the Conversion
Agent at the office referred to above an irrevocable
request to convert Securities on behalf of such Holder
(the "Notice of Conversion"), together, if the Securities
are in certificated form, with such certificates. The
Conversion Request shall (i) set forth the number of
Securities to be converted and the name or names, if
other than the Holder, in which the shares of Common
Stock should be issued and (ii) direct the Conversion
Agent (a) to exchange such Securities for a portion of
the Partnership Preferred Securities or Convertible
Debentures, as the case may be, held by the Trust (at the
rate of exchange specified in the preceding paragraph),
(b) to, in the event Partnership Preferred Securities are
held, immediately exchange such Partnership Preferred
Securities on behalf of such Holder, into Convertible
Debentures (at the conversion rate specified in the
preceding paragraph) and (c) to immediately convert such
Convertible Debentures on behalf of such Holder into
Common Stock (at the conversion rate specified in the
preceding paragraph). The Conversion Agent shall notify
the Trust of the Holder's election to exchange Securities
for a portion of the Partnership Preferred Securities or
Convertible Debentures, as the case may be, held by the
Trust and the Trust shall, upon receipt of such notice,
deliver to the Conversion Agent the appropriate
liquidation amount of Partnership Preferred Securities or
the appropriate principal amount of Convertible
Debentures, as the case may be, for exchange in
accordance with this Section. In the event Partnership
Preferred Securities are held by the Trust, the
Conversion Agent shall thereupon notify Citizens Capital
of the Holder's election to exchange such Partnership
Preferred Securities for a portion of the Convertible
Debentures held by Citizens Capital and Citizens Capital
shall, upon receipt of such notice, deliver to the
Conversion Agent the appropriate principal amount of
Convertible Debentures for exchange in accordance with
this Section. The Conversion Agent shall thereupon
notify the Company of the Holder's election to convert
such Convertible Debentures into shares of Common Stock.
If any Securities are converted after the close of
business on a relevant record date for the payment of
Distributions and on or prior to the next succeeding
Distribution Payment Date, Distributions which are due
and payable on the next Distribution Payment Date shall
be payable on such Distribution Payment Date
notwithstanding such conversion and such Distribution
shall be paid to the Holder of such Securities registered
as such at the close of business on the relevant
Distribution Payment Date according to their terms.
Except as provided above, neither the Trust nor the
Sponsor will make, or be required to make, any payment,
allowance or adjustment upon any conversion on account of
any accumulated or deferred or unpaid Distributions
accrued on the Securities (including any Compounded
Distributions accrued thereon) surrendered for
conversion, or on account of any accumulated and unpaid
dividends or distributions on the shares of Common Stock
issued upon such conversion. Securities shall be deemed
to have been converted immediately prior to the close of
business on the day on which a Notice of Conversion
relating to such Securities is received by the Conversion
Agent in accordance with the foregoing provision (the
"Conversion Date"). The Person or Persons entitled to
receive the Common Stock issuable upon conversion of the
Securities shall be treated for all purposes as the
record holder or holders of such Common Stock at such
time; provided, that, any such surrender, on any date
when the stock transfer books of the Company shall be
closed, shall constitute the Person or Persons in whose
name or names the certificate or certificates for such
shares of Common Stock are to be issued as the record
holder or holders thereof, for all purposes at the
opening of business on the next succeeding day on which
such stock transfer books are open, but such conversion
shall nevertheless be at the Conversion Price in effect
at the close of business on the date when such Securities
shall have been so surrendered. As promptly as
practicable on or after the Conversion Date, the Company
shall issue and deliver at the office of the Conversion
Agent a certificate or certificates for the number of
full shares of Common Stock issuable upon such
conversion, together with the cash payment, if any, in
lieu of any fraction of any share to the Person or
Persons entitled to receive the same, unless otherwise
directed by the Holder in the Notice of Conversion and
the Conversion, Agent shall distribute such certificate
or certificates to such Person or Persons.
(c) Each Holder of a Security by his
acceptance thereof appoints the Property Trustee
"Conversion Agent" for the purpose of effecting the
conversion of Securities in accordance with this Section.
In effecting the conversion and transactions described in
this Section, the Conversion Agent shall be acting as
agent of the Holders of Securities directing it to effect
such conversion transactions. The Conversion Agent is
hereby authorized (i) to exchange Securities from time to
time for Partnership Preferred Securities or Convertible
Debentures, as the case may be, held by the Trust in
connection with the conversion of such Securities in
accordance with this Section, (ii) to, in the event
Partnership Preferred Securities are held by the Trust,
exchange such Partnership Preferred Securities for
Convertible Debentures held by Citizens Capital in
connection with the conversion of such Securities in
accordance with this Section and (iii) to convert all or
a portion of the Convertible Debentures into Common Stock
and thereupon to deliver such shares of Common Stock in
accordance with the provisions of this Section and to
deliver to Citizens Capital a new Convertible Debenture
or Convertible Debentures for any resulting unconverted
principal amount and to the Trust a new Partnership
Preferred Security or Partnership Preferred Securities or
Convertible Debenture or Convertible Debentures, as the
case may be, for any resulting unconverted liquidation
amount.
(d) No fractional shares of Common Stock will
be issued as a result of conversion, but in lieu thereof,
such fractional interest will be paid in cash by the
Company to the Trust, which in turn will make such
payment to the Holder or Holders of Securities so
converted.
(e) The Trust shall deliver the shares of
Common Stock received upon conversion of the Convertible
Debentures to the converting Holder free and clear of all
liens, charges, security interests and encumbrances,
except for United States withholding taxes. The Trust
shall prepare and shall use its best efforts to obtain
and keep in force such governmental or regulatory permits
or other authorizations as may be required by law, and
shall comply with all applicable requirements as to
registration or qualification of the Common Stock (and
all requirements to list the Common Stock issuable upon
conversion of Convertible Debentures that are at the time
applicable), in order to enable the Trust to lawfully
deliver the Common Stock to each Holder upon conversion
of the Securities.
(f) The Debenture Issuer has undertaken,
pursuant to the Indenture, to pay any and all taxes that
may be payable in respect of the issue or delivery of
shares of Common Stock on conversion of Convertible
Debentures and the delivery of the shares of Common Stock
by the Trust upon conversion of the Securities. The
Debenture Issuer is not, however, required under the
Indenture to pay any tax which may be payable in respect
of any transfer involved in the issue and delivery of
shares of Common Stock in a name other than that in which
the Securities so converted were registered, and no such
issue or delivery shall be made unless and until the
Person requesting such issue has paid to the Trust the
amount of any such tax, or has established to the
satisfaction of the Trust that such tax has been paid.
(g) Nothing in the preceding Paragraph (f)
shall limit the requirement of the Trust to withhold
taxes pursuant to the terms of the Securities as set
forth in this Annex I to the Declaration or to the
Declaration itself or otherwise require the Property
Trustee or the Trust to pay any amounts on account of
such withholdings.
6. VOTING RIGHTS - CONVERTIBLE PREFERRED
SECURITIES.
(a) Except as provided under Sections 6(b) and
9 of this Annex I and as otherwise required by law and
the Declaration, the Holders of the Convertible Preferred
Securities will have no voting rights.
(b) Subject to the requirements of the
penultimate sentence of this paragraph, the Holders of a
Majority in aggregate liquidation amount of the
Convertible Preferred Securities voting separately as a
class may direct the time, method, and place of
conducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power
conferred upon the Property Trustee under the
Declaration, including (i) for so long as the Property
Trustee shall hold the Partnership Preferred Securities,
(A) causing the Special Representative (as defined in the
Partnership Agreement) to direct the time, method and
place of conducting any proceeding for any remedy
available to the Indenture Trustee, or exercising any
trust or power conferred on Indenture Trustee with
respect to the Convertible Debentures, (B) causing the
Special Representative to waive any past default and its
consequences that are waivable under Section 5.13 of the
Base Indenture, or (C) causing the Special Representative
to exercise any right to rescind or annul a declaration
that the principal amount of all the Convertible
Debentures shall be due and payable; and (ii) if the
Property Trustee holds Convertible Debentures in the
event that Citizens Capital is liquidated and such
Convertible Debentures are distributed in exchange for
the Partnership Preferred Securities, (A) directing the
time, method and place of conducting any proceeding for
any remedy available to the Indenture Trustee, or
exercising any trust or power conferred upon the
Indenture Trustee with respect to the Convertible
Debentures, (B) waiving any past default that is waivable
under Section 5.13 of the Base Indenture, or
(C) exercising any right to rescind or annul any
declaration that the principal amount of all the
Convertible Debentures shall be due and payable;
provided, however, that where a consent or action under
the Limited Partnership Agreement or the Indenture, as
the case may be, would require the consent or act of the
Holders of greater than a majority in liquidation amount
of the Partnership Preferred Securities or the holders of
greater than a majority in principal amount of
Convertible Debentures, as the case may be, affected
thereby (a "Super Majority"), the Property Trustee may
only give such consent or take such action at the
direction of the Holders of at least the proportion in
liquidation amount of the Securities which the relevant
Super Majority represents of the aggregate liquidation
amount of the Partnership Preferred Securities or the
aggregate principal amount of the Convertible Debentures,
as the case may be, outstanding. The Property Trustee
shall not revoke any action previously authorized or
approved by a vote of the Holders of the Convertible
Preferred Securities. Other than with respect to
directing the time, method and place of conducting any
remedy available to the Property Trustee or the Special
Representative as set forth above, the Property Trustee
shall not take any action in accordance with the
directions of the Holders of the Convertible Preferred
Securities under this paragraph unless the Property
Trustee has obtained an opinion of tax counsel to the
effect that, for United States federal income tax
purposes, the Trust will continue to be classified as a
grantor trust after consummation of such action. If the
Property Trustee fails to enforce its rights under the
Declaration, any Holder of Convertible Preferred
Securities may institute a legal proceeding directly
against any Person to enforce the Property Trustee's
rights under the Declaration, without first instituting a
legal proceeding against the Property Trustee or any
other Person.
Any approval or direction of Holders of
Convertible Preferred Securities may be given at a
separate meeting of Holders of Convertible Preferred
Securities convened for such purpose, at a meeting of all
of the Holders of Securities in the Trust or pursuant to
written consent. The Regular Trustees will cause a
notice of any meeting at which Holders of Convertible
Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such
Holders is to be taken, to be mailed to each Holder of
record of Convertible Preferred Securities. Each such
notice will include a statement setting forth (i) the
date of such meeting or the date by which such action is
to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such
Holders are entitled to vote or of such matter upon which
written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the
Convertible Preferred Securities will be required for the
Trust to redeem and cancel Convertible Preferred
Securities, or to distribute Partnership Preferred
Securities or Convertible Debentures, as the case may be,
in accordance with the Declaration and the terms of the
Securities.
Notwithstanding that Holders of Convertible
Preferred Securities are entitled to vote or consent
under any of the circumstances described above, any of
the Convertible Preferred Securities that are owned by
the Sponsor, or by any entity directly or indirectly
controlling or controlled by or under direct or indirect
common control with the Sponsor shall not be entitled to
vote or consent and shall, for purposes of such vote or
consent, be treated as if they were not outstanding;
provided, however, that holders of Convertible Preferred
Securities that have been validly pledged by the Company
or any such affiliate to a party otherwise eligible to
vote may vote or consent under any of the circumstances
described above.
7. VOTING RIGHTS - CONVERTIBLE COMMON
SECURITIES.
(a) Except as provided under Sections 7(b),
7(c) and 9 of this Annex I and as otherwise required by
law and the Declaration, the Holders of the Convertible
Common Securities will have no voting rights.
(b) The Holders of the Convertible Common
Securities are entitled, in accordance with Article V of
the Declaration, to vote to appoint, remove or replace
any Trustee or to increase or decrease the number of
Trustees.
(c) Subject to Section 2.6 of the Declaration
and only after all Events of Default with respect to the
Convertible Preferred Securities have been cured, waived
or otherwise eliminated, and subject to the requirements
of the penultimate sentence of this paragraph, the
Holders of a Majority in aggregate liquidation amount of
the Convertible Common Securities voting separately as a
class may direct the time, method, and place of
conducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power
conferred upon the Property Trustee under the
Declaration, including (i) for so long as the Property
Trustee shall hold the Partnership Preferred Securities,
(A) directing the time, method, place of conducting any
proceeding for any remedy available to the Indenture
Trustee, or exercising any trust or power conferred on
the Indenture Trustee with respect to the Convertible
Debentures, or cause the Special Representative, if one
shall be elected, to do so, (B) causing the Special
Representative to waive any past default and its
consequences that are waivable under Section 5.13 of the
Base Indenture, or (C) causing the Special Representative
to exercise any right to rescind or annul a declaration
that the principal amount of all the Convertible
Debentures shall be due and payable; and (ii) if the
Property Trustee holds Convertible Debentures in the
event that Citizens Capital is liquidated and such
Convertible Debentures are distributed in exchange for
the Partnership Preferred Securities (A) directing the
time, method and place of conducting any proceeding for
any remedy available to the Indenture Trustee, or
exercising any trust or power conferred upon the
Indenture Trustee with respect to the Convertible
Debentures, (B) waiving any past default that is waivable
under Section 5.13 of the Base Indenture, or
(C) exercising any right to rescind or annul any
declaration that the principal amount of all the
Convertible Debentures shall be due and payable;
provided, however, that where a consent or action under
the Limited Partnership Agreement or Indenture, as the
case may be, would require the consent or act of a Super
Majority of the Holders of the Partnership Preferred
Securities or the Convertible Debentures, as the case may
be, the Property Trustee may only give such consent or
take such action at the direction of the Holders of at
least the proportion in liquidation amount of the
Convertible Common Securities which the relevant Super
Majority represents of the aggregate liquidation amount
of the Partnership Preferred Securities or the aggregate
principal amount of the Convertible Debentures, as the
case may be, outstanding. Pursuant to this Section 7(c)
to Annex I, the Property Trustee shall not revoke any
action previously authorized or approved by a vote of the
Holders of the Convertible Common Securities. Other than
with respect to directing the time, method and place of
conducting any remedy available to the Property Trustee
or the Special Representative as set forth above, the
Property Trustee shall not take any action in accordance
with the directions of the Holders of the Convertible
Common Securities under this paragraph unless the
Property Trustee has obtained an opinion of tax counsel
to the effect that, for United States federal income tax
purposes, the Trust will continue to be classified as a
grantor trust after consummation of such action. If the
Property Trustee fails to enforce its rights under the
Declaration, any Holder of Convertible Common Securities
may institute a legal proceeding directly against any
Person to enforce the Property Trustee's rights under the
Declaration, without first instituting a legal proceeding
against the Property Trustee or any other Person.
Any approval or direction of Holders of
Convertible Common Securities may be given at a separate
meeting of Holders of Convertible Common Securities
convened for such purpose, at a meeting of all of the
Holders of Securities in the Trust or pursuant to written
consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Convertible Common Securities
are entitled to vote, or of any matter upon which action
by written consent of such Holders is to be taken, to be
mailed to each Holder of record of Convertible Common
Securities. Each such notice will include a statement
setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of
any resolution proposed for adoption at such meeting on
which such Holders are entitled to vote or of such matter
upon which written consent is sought and (iii)
instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the
Convertible Common Securities will be required for the
Trust to redeem and cancel Convertible Common Securities
or to distribute Partnership Preferred Securities or
Convertible Debentures, as the case may be, in accordance
with the Declaration and the terms of the Securities.
8. DISTRIBUTION ELECTION.
(a) Declaration by Company. For so long as
Citizens Capital shall hold the Convertible Debentures,
the Company shall by the Distribution Declaration Date
applicable to each Distribution Payment Date, declare the
form of payment in which it intends to pay the interest
on the Convertible Debentures. Such Distribution
Declaration Notice shall determine the form of payment in
which the Trust shall pay the Distributions, subject to
the terms and conditions of this Section 8 of Annex I.
If the Company shall have declared to pay interest on the
Convertible Debentures in cash, by the Distribution
Declaration Date in respect of a Distribution Payment
Date, the Holders of the Securities will receive
Distributions only in cash, notwithstanding any election
by a Holder of the Securities to the contrary. If the
Company shall have by the Distribution Declaration Date
declared to pay interest on the Convertible Debentures in
shares of Common Stock, the Holders of the Securities may
receive Distributions in cash or shares of Common Stock
subject to the provisions of this Section 8 of Annex I.
If the Company fails to make a timely declaration, the
Company shall be deemed to have elected to pay interest
in shares of Common Stock.
(b) Election by Holder. For so long as
Citizens Capital shall hold the Convertible Debentures,
Distributions on the Securities may be payable in cash or
shares of Common Stock as set forth in this Section 8 of
Annex I. If Convertible Debentures are not held by
Citizens Capital, Distributions shall be payable only in
cash. Subject to Sections 8(a), 8(d) and 8(e) of this
Annex I, each Holder may elect during the annual Election
Period to receive Distributions in either (a) an
Equivalent Value of shares of Common Stock (a "Stock
Distribution Election") or (b) cash (a "Cash Distribution
Election"), in each case by submitting to the Trust a
notice of distribution election substantially in the form
of Exhibit B (a "Notice of Distribution Election"). The
Trust shall thereupon inform all such parties (e.g., the
Clearing Agency, any Clearing Agency Participants, any
nominee of the Clearing Agency) as are necessary to
ensure that the Paying Agent is properly informed of such
Holder's election with respect to a pro rata share of the
Partnership Preferred Securities. The Notice of
Distribution Election shall specify the form of payment
in which the Holder elects to receive Distributions. If
a Holder transfers any or all Securities registered in
such Holder's name, the subsequent Holder(s) of such
transferred Securities shall be deemed to have made a
Cash Distribution Election for the remaining Distribution
Payment Dates prior to the next Election Period for which
such subsequent Holder(s) appear as the Holder(s) of
record. During such next Election Period a subsequent
Holder can make his or her Distribution Election by
submitting a Notice of Distribution Election to the
Trust. If no Distribution Election is made, the Holder
shall be deemed to have made a Cash Distribution
Election. All elections will continue in effect until
another election is timely made in a subsequent annual
Election Period.
(c) Common Stock Election by Company. If the
Company has (or is deemed to have) elected to pay
interest on the Convertible Debentures in shares of
Common Stock, the Trust shall pay Distributions on
Securities in accordance with this Section 8(c) of Annex
I. No fractional shares of Common Stock will be issued
as a result of the Company's election to pay interest on
the Convertible Debentures in Common Stock, but in lieu
thereof, such fractional interest will be paid in cash.
No fractional shares of Common Stock will be issued as a
result of the Holder's election to receive payments of
Distributions in Common Stock, but in lieu thereof such
fractional interests will be paid for in cash to the
Security Holders.
(i) To the extent a Holder has timely made a
Stock Distribution Election, subject to Section 8(d) and
(e) of this Annex I, on each Distribution Payment Date
the Paying Agent shall distribute an Equivalent Value of
shares of Common Stock, together with the cash payment,
if any, in lieu of any fractional share of Common Stock,
to such Holder at the address specified on the register
of the Trust.
(ii) To the extent a Holder has timely made a
Cash Distribution Election, or has been deemed to have
made a Cash Distribution Election, on each Distribution
Payment Date the Paying Agent shall pay to such Holder
his or her Distribution in cash.
(d) Company Cash Option. Notwithstanding the
other paragraphs of this Section 8 of Annex I, the
Debenture Issuer has the right (the "Company Cash
Option") on and after a Distribution Declaration Date on
which it has elected to pay interest on the Convertible
Debentures in shares of Common Stock, but before the
corresponding Share Transfer and Valuation Date, to cause
all Holders of Securities to receive payment of
Distributions in cash. The Debenture Issuer may exercise
the Company Cash Option; provided, that the Debenture
Issuer is required by the Indenture to provide written
notice to the Trust, Citizens Capital, the Paying Agent
and the Holders of the Securities (a "Cash Payment
Notice").
(e) Call Option on Common Stock. On or after
the Share Transfer and Valuation Date, the Company may
cause some or all the Holders of Securities who have made
Stock Distribution Elections to receive Distributions in
cash by purchasing from Citizens Capital some or all of
the shares of Common Stock distributed by the Company as
interest payment on the Convertible Debentures, that have
not yet been sold or distributed at a price equal to the
Equivalent Value (the "Company Call Option"). The
Company may exercise the Company Call Option if the
Company shall have provided a Cash Payment Notice.
9. AMENDMENTS TO DECLARATION AND LIMITED
PARTNERSHIP AGREEMENT.
(a) In addition to any requirements under
Section 12.1 of the Declaration, if any proposed
amendment to the Declaration provides for, or the Regular
Trustees otherwise propose to effect, (i) any action that
would adversely affect the powers, preferences or special
rights of the Securities, whether by way of amendment to
the Declaration or otherwise, or (ii) the dissolution,
winding-up or termination of the Trust, other than as
described in Section 8.1 of the Declaration, then the
Holders of outstanding Securities as a class will be
entitled to vote on such amendment or proposal (but not
on any other amendment or proposal) and such amendment or
proposal shall not be effective except with the approval
of the Holders of at least 66-2/3% in liquidation amount
of the Securities, voting together as a single class;
provided, however, if any amendment or proposal referred
to in clause (i) above would adversely affect only the
Convertible Preferred Securities or the Convertible
Common Securities, then only the affected class will be
entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with
the approval of 66-2/3% in liquidation amount of such
class of Securities.
(b) In the event the consent of the
Property Trustee, as the holder of the Partnership
Preferred Securities or, in the event Citizens Capital is
dissolved and the Convertible Debentures are issued to
the holders of the Partnership Preferred Securities, the
Convertible Debentures, is required under the Limited
Partnership Agreement or the Indenture, as the case may
be, with respect to any amendment, modification or
termination of the Limited Partnership Agreement or the
Indenture, as the case may be, or the Partnership
Preferred Securities or the Convertible Debentures, as
the case may be, the Property Trustee shall request the
direction of the Holders of the Securities with respect
to such amendment, modification or termination and shall
vote with respect to such amendment, modification or
termination as directed by a Majority in liquidation
amount of the Securities voting together as a single
class; provided, however, that where a consent under the
Limited Partnership Agreement or the Indenture, as the
case may be, would require the consent of a Super
Majority of the Holders of Partnership Preferred
Securities or Convertible Debentures, as the case may be,
the Property Trustee may only give such consent at the
direction of the Holders of at least the proportion in
liquidation amount of the Securities which the relevant
Super Majority represents of the aggregate liquidation
amount of the Partnership Preferred Securities or
aggregate principal amount of the Convertible Debentures,
as the case may be, outstanding; provided, further, that
the Property Trustee shall not take any action in
accordance with the directions of the Holders of the
Securities under this Section 9(b) of Annex I unless the
Property Trustee has obtained an opinion of tax counsel
to the effect that for United States federal income tax
purposes the Trust will continue to be classified as a
grantor trust after consummation of such action.
10. PRO RATA.
A reference in these terms of the Securities to
any payment, distribution (of Partnership Preferred
Securities or Convertible Debentures), Distribution or
treatment as being "Pro Rata" shall mean pro rata to each
Holder of Securities according to the aggregate
liquidation amount of the Securities held by the relevant
Holder in relation to the aggregate liquidation amount of
all Securities outstanding, unless, in relation to a
payment, an Event of Default has occurred and is
continuing, in which case any funds available to make
such payment shall be paid first to each Holder of the
Convertible Preferred Securities pro rata according to
the aggregate liquidation amount of Convertible Preferred
Securities held by the relevant Holder relative to the
aggregate liquidation amount of all Convertible Preferred
Securities outstanding, and only after satisfaction of
all amounts owed to the Holders of the Convertible
Preferred Securities, to each Holder of Convertible
Common Securities pro rata according to the aggregate
liquidation amount of Convertible Common Securities held
by the relevant Holder relative to the aggregate
liquidation amount of all Convertible Common Securities
outstanding.
11. RANKING.
The Convertible Preferred Securities rank pari
passu and payment thereon shall be made Pro Rata with the
Convertible Common Securities except that when an Event
of Default occurs and is continuing under the
Declaration, the rights of Holders of the Convertible
Common Securities to payment in respect of Distributions
and payments upon liquidation, redemption and otherwise
are subordinated to the rights to payment of the Holders
of the Convertible Preferred Securities.
12. LISTING.
The Regular Trustees shall use their best
efforts to cause the Convertible Preferred Securities to
be listed for quotation on the New York Stock Exchange.
13. ACCEPTANCE OF GUARANTEE AGREEMENTS,
LIMITED PARTNERSHIP AGREEMENT AND
INDENTURE.
Each Holder of Convertible Preferred Securities
and Convertible Common Securities, by the acceptance
thereof, agrees to the provisions of the Convertible
Preferred Securities Guarantee Agreement and the
Convertible Common Securities Guarantee Agreement,
respectively, including the subordination provisions
therein, and to the provisions of the Limited Partnership
Agreement and the Indenture.
14. NO PREEMPTIVE RIGHTS.
The Holders of the Securities shall have no
preemptive rights to subscribe for any additional
Securities.
15. MISCELLANEOUS.
These terms constitute a part of the
Declaration.
The Sponsor will provide a copy of the
Declaration, the Convertible Preferred Securities
Guarantee Agreement, the Limited Partnership Agreement
and the Indenture to a Holder without charge on written
request to the Trust at its principal place of business.
EXHIBIT A-1
FORM OF PREFERRED SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
[IF THE CONVERTIBLE PREFERRED SECURITY IS TO BE A
GLOBAL CERTIFICATE INSERT - This Convertible Preferred Security
is a Global Certificate within the meaning of the Declaration
hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depositary") or a nominee of the
Depositary. This Convertible Preferred Security is exchangeable
for Convertible Preferred Securities registered in the name of a
person other than the Depositary or its nominee only in the
limited circumstances described in the Declaration and no
transfer of this Convertible Preferred Security (other than a
transfer of this Convertible Preferred Security as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the
Depositary) may be registered except in limited circumstances.
Unless this Convertible Preferred Security is presented
by an authorized representative of The Depository Trust Company
(55 Water Street, New York) to the Trust or its agent for
registration of transfer, exchange or payment, and any
Convertible Preferred Security issued is registered in the name
of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment
hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the
registered owner hereof, Cede & Co., has an interest herein.]
Certificate Number Number of Convertible Preferred Securities
CUSIP NO. [ ]
Certificate Evidencing Convertible Preferred Securities
of
Citizens Utilities Trust
____% Citizens Utilities Convertible
Preferred Securities
(liquidation amount $50 per Convertible Preferred Security)
Citizens Utilities Trust, a statutory business trust
formed under the laws of the State of Delaware (the "Trust"),
hereby certifies that
(the "Holder") is the registered owner of
preferred securities of the Trust representing undivided
beneficial interests in the assets of the Trust designated the
_____% Citizens Utilities Convertible Preferred Securities
(liquidation amount $50 per Convertible Preferred Security) (the
"Convertible Preferred Securities"). The Convertible Preferred
Securities are transferable on the books and records of the
Trust, in person or by a duly authorized attorney, upon surrender
of this certificate duly endorsed and in proper form for
transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Convertible
Preferred Securities represented hereby are issued and shall in
all respects be subject to the provisions of the Amended and
Restated Declaration of Trust of the Trust dated as of _______,
1995, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the
Convertible Preferred Securities as set forth in Annex I to the
Declaration. Capitalized terms used herein but not defined shall
have the meaning given them in the Declaration. The Holder is
entitled to the benefits of the Convertible Preferred Securities
Guarantee Agreement to the extent provided therein. The Sponsor
will provide a copy of the Declaration, the Convertible Preferred
Securities Guarantee Agreement, the Limited Partnership Agreement
and the Indenture to a Holder without charge upon written request
to the Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound
by the Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United
States federal income tax purposes, the Convertible Debentures as
indebtedness and the Convertible Preferred Securities as evidence
of indirect beneficial ownership in the Partnership Preferred
Securities.
IN WITNESS WHEREOF, the Trust has executed this
certificate this day of , 199 .
CITIZENS UTILITIES TRUST
By:
Name:
Title: Regular Trustee
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Convertible Preferred
Security will be fixed at a rate per annum of % (the "Rate")
of the stated liquidation preference of $50 per Convertible
Preferred Security, such rate being the rate of distribution
payable on the Partnership Preferred Securities to be held by the
Property Trustee. Distributions in arrears for more than one
quarter will bear interest thereon compounded quarterly at the
Rate (to the extent permitted by applicable law)("Compounded
Distributions"). The term "Distributions" as used herein
includes payment in the form of cash or shares of common stock,
Series A, par value $.25 per share, of Citizens Utilities Company
("Common Stock"). A Distribution is payable only to the extent
that payments are made in respect of the Partnership Preferred
Securities or Convertible Debentures, as the case may be, held by
the Property Trustee and to the extent the Property Trustee has
funds available therefor. The amount of Distributions payable
for any period will be computed for any full quarterly
Distribution period on the basis of a 360-day year of twelve
30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number
of days elapsed per 30-day month.
Except as otherwise described below, distributions on
the Convertible Preferred Securities will be cumulative, will
accrue from the date of original issuance and will be payable
quarterly in arrears, on January 31, April 30, July 31, and
October 31 of each year, commencing on , 1996, to
Holders of record on the relevant Record Dates (as such term is
defined in the Declaration), which payment dates shall correspond
to the distribution payment dates on the Partnership Preferred
Securities or, in the event Citizens Capital is dissolved and the
Convertible Debentures are distributed to the holders of the
Convertible Preferred Securities, on the Convertible Debentures.
Citizens Capital may be directed by the Debenture Issuer, acting
pursuant to the Indenture, to defer distribution payments by
extending the distribution payment period on the Partnership
Preferred Securities for a period not exceeding 20 consecutive
quarters (each a "Deferral") and, as a consequence of such
deferral, Distributions will also be deferred. In the event
Citizens Capital has been dissolved and the Convertible
Debentures are held by the Trust, the Trust may be directed by
the Debenture Issuer, acting pursuant to the Indenture, to defer
distribution payments by extending the Distributions for a period
not exceeding a Deferral. Despite such deferral, quarterly
Distributions will continue to accrue with interest thereon (to
the extent permitted by applicable law) at the Rate compounded
quarterly during any such Deferral. Prior to the termination of
any such Deferral, Citizens Capital or the Trust, as the case may
be, may be required to further extend such Deferral; provided
that such Deferral together with all such previous and further
extensions thereof may not exceed 20 consecutive quarters nor
extend the maturity date of the Convertible Preferred Securities.
Payments of accrued Distributions will be payable to Holders as
they appear on the books and records of the Trust on the first
record date after the end of the Deferral. Upon the termination
of any Deferral and the payment of all amounts then due, Citizens
Capital or the Trust, as the case may be, may commence a new
Deferral, subject to the above requirements. The Convertible
Preferred Securities shall be redeemable as provided in the
Declaration.
The Convertible Preferred Securities shall be
convertible into shares of Common Stock, through (i) the exchange
of Convertible Preferred Securities for a portion of the
Partnership Preferred Securities or Convertible Debentures, as
the case may be, held by the Property Trustee, (ii) in the event
Partnership Preferred Securities are held by the Trust, the
immediate exchange of Partnership Preferred Securities for a
portion of the Convertible Debentures held by Citizens Capital or
the Trust, as the case may be, and (iii) the immediate conversion
of such Convertible Debentures into shares of Common Stock, in
the manner and according to the terms set forth in the
Declaration.
CONVERSION REQUEST
To: Chemical Bank,
as Property Trustee of
Citizens Utilities Trust
The undersigned owner of these Convertible Preferred
Securities hereby irrevocably exercises the option to convert
these Convertible Preferred Securities, or the portion below
designated, into Series A Common Stock of CITIZENS UTILITIES
COMPANY (the "Common Stock") in accordance with the terms of the
Amended and Restated Declaration of Trust (the "Declaration"),
dated as of _________ ___, 1995, by the Trustees named therein,
Citizens Utilities Company, as Sponsor, and by the Holders (as
defined therein). Pursuant to the aforementioned exercise of the
option to convert these Convertible Preferred Securities, the
undersigned hereby directs the Conversion Agent (as that term is
defined in the Declaration) to (i) exchange such Convertible
Preferred Securities for a portion of the Partnership Preferred
Securities (as that term is defined in the Declaration) or
Convertible Debentures (as that term is defined in the
Declaration), as the case may be, held by the Trust (at the rate
of exchange specified in the terms of the Convertible Preferred
Securities set forth as Annex I to the Declaration), (ii), in the
event Partnership Preferred Securities are held by the Trust,
promptly exchange such Partnership Preferred Securities for a
portion of the Convertible Debentures (as that term is defined in
the Declaration) held by Citizens Capital (at the rate of
exchange specified in the terms of the Convertible Preferred
Securities set forth as Annex I to the Declaration), and (iii)
immediately convert such Convertible Debentures on behalf of the
undersigned, into Common Stock (at the conversion rate specified
in the terms of the Convertible Preferred Securities set forth as
Annex I to the Declaration).
The undersigned does also hereby direct the Conversion
Agent that the shares issuable and deliverable upon conversion,
together with any check in payment for fractional shares, be
issued in the name of and delivered to the undersigned, unless a
different name has been indicated in the assignment below. If
shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable
with respect thereto.
This Conversion Request and any action taken hereunder
shall be governed by the terms of the Declaration and the terms
of the Convertible Preferred Securities set forth in Annex I
thereto.
Date: ____________, ____
in whole __ in part
Number of Convertible Preferred
Securities to be converted:
___________________
If a name or names other than the
undersigned, please indicate in the
spaces below the name or names in
which the shares of Common Stock
are to be issued, along with the
address or addresses of such person
or persons
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other
Identifying Number
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Preferred Security Certificate to:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Insert assignee's social security or tax identification number)
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
agent to transfer this Preferred Security Certificate on the
books of the Trust. The agent may substitute another to act for
him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this
Preferred Security Certificate)
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
Certificate Number Number of Convertible Common Securities
Certificate Evidencing Convertible Common Securities
of
Citizens Utilities Trust
______% Citizens Utilities Convertible
Common Securities
(liquidation amount $50 per Convertible Common Security)
Citizens Utilities Trust, a statutory business trust
formed under the laws of the State of Delaware (the "Trust"),
hereby certifies that
(the "Holder") is the registered owner of
common securities of the Trust representing undivided beneficial
interests in the assets of the Trust designated the ______%
Citizens Utilities Convertible Common Securities (liquidation
amount $50 per Convertible Common Security) (the "Convertible
Common Securities"). The Convertible Common Securities are
transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate
duly endorsed and in proper form for transfer. The designation,
rights, privileges, restrictions, preferences and other terms and
provisions of the Convertible Common Securities represented
hereby are issued and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of
the Trust dated as of _______, 1995, as the same may be amended
from time to time (the "Declaration"), including the designation
of the terms of the Convertible Common Securities as set forth in
Annex I to the Declaration. Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration.
The Holder is entitled to the benefits of the Convertible Common
Securities Guarantee Agreement to the extent provided therein.
The Sponsor will provide a copy of the Declaration, the
Convertible Common Securities Guarantee Agreement, the Limited
Partnership Agreement and the Indenture to a Holder without
charge upon written request to the Sponsor at its principal place
of business.
Upon receipt of this certificate, the Sponsor is bound
by the Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat for United
States federal income tax purposes the Convertible Debentures as
indebtedness and the Convertible Common Securities as evidence of
indirect beneficial ownership in the [Limited Partnership
Securities].
IN WITNESS WHEREOF, the Trust has executed this certificate
this day of , 199 .
CITIZENS UTILITIES TRUST
By:
Name:
Title: Regular Trustee
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Convertible Common
Security will be fixed at a rate per annum of % (the "Rate")
of the stated liquidation preference of $50 per Convertible
Common Security, such rate being the rate of distribution payable
on the Partnership Common Securities to be held by the Property
Trustee. Distributions in arrears for more than one quarter will
bear interest thereon compounded quarterly at the Rate (to the
extent permitted by applicable law)("Compounded Distributions").
The term "Distributions" as used herein includes payment in the
form of cash or shares of common stock, par value $.25 per share,
of Citizens Utilities Company ("Common Stock"). A Distribution
is payable only to the extent that payments are made in respect
of the Partnership Preferred Securities or the Convertible
Debentures, as the case may be, held by the Property Trustee and
to the extent the Property Trustee has funds available therefor.
The amount of Distributions payable for any period will be
computed for any full quarterly Distribution period on the basis
of a 360-day year of twelve 30-day months, and for any period
shorter than a full quarterly Distribution period for which
Distributions are computed, Distributions will be computed on the
basis of the actual number of days elapsed per 30-day month.
Except as otherwise described below, distributions on
the Convertible Common Securities will be cumulative, will accrue
from the date of original issuance and will be payable quarterly
in arrears, on January 31, April 30, July 31, and October 31 of
each year, commencing on , 1996, to Holders of record
on the relevant Record Dates (as such term is defined in the
Declaration), which payment dates shall correspond to the
distribution payment dates on the Partnership Preferred
Securities or, in the event Citizens Capital is dissolved and the
Convertible Debentures are distributed to the holders of the
Convertible Common Securities, on the Convertible Debentures.
Citizens Capital may be directed by the Debenture Issuer, acting
pursuant to the Indenture, to defer distribution payments by
extending the distribution payment period on the Partnership
Preferred Securities for a period not exceeding 20 consecutive
quarters (each a "Deferral") and, as a consequence of such
deferral, Distributions will also be deferred. In the event
Citizens Capital has been dissolved and the Convertible
Debentures are held by the Trust, the Trust may be directed by
the Debenture Issuer, acting pursuant to the Indenture, to defer
distribution payments by extending the Distributions for a period
not exceeding a Deferral. Despite such deferral, quarterly
Distributions will continue to accrue with interest thereon (to
the extent permitted by applicable law) at the Rate compounded
quarterly during any such Deferral. Prior to the termination of
any such Deferral, Citizens Capital or the Trust, as the case may
be, may be required to further extend such Deferral; provided
that such Deferral together with all such previous and further
extensions thereof may not exceed 20 consecutive quarters nor
extend the maturity date of the Convertible Preferred Securities.
Payments of accrued Distributions will be payable to Holders as
they appear on the books and records of the Trust on the first
record date after the end of the Deferral. Upon the termination
of any Deferral and the payment of all amounts then due, Citizens
Capital or the Trust, as the case may be, may commence a new
Deferral, subject to the above requirements.
The Convertible Common Securities shall be redeemable
as provided in the Declaration.
The Convertible Common Securities shall be convertible
into shares of Series A of Common Stock ("Common Stock"), through
(i) the exchange of Convertible Common Securities for a portion
of the Partnership Preferred Securities or Convertible
Debentures, as the case may be, held by the Property Trustee,
(ii) in the event Partnership Preferred Securities are held by
the Trust, the immediate exchange of Partnership Preferred
Securities for a portion of the Convertible Debentures held by
Citizens Capital or the Trust, as the case may be, and (iii) the
immediate conversion of such Convertible Debentures into shares
of Common Stock, in the manner and according to the terms set
forth in the Declaration.
CONVERSION REQUEST
To: Chemical Bank,
as Property Trustee of
Citizens Utilities Trust
The undersigned owner of these Convertible Common
Securities hereby irrevocably exercises the option to convert
these Convertible Common Securities, or the portion below
designated, into Series A Common Stock of CITIZENS UTILITIES
COMPANY (the "Common Stock") in accordance with the terms of the
Amended and Restated Declaration of Trust (the "Declaration"),
dated as of _________ ___, 1995, by the Trustees named therein,
Citizens Utilities Company, as Sponsor, and by the Holders (as
defined therein). Pursuant to the aforementioned exercise of the
option to convert these Convertible Common Securities, the
undersigned hereby directs the Conversion Agent (as that term is
defined in the Declaration) to (i) exchange such Convertible
Common Securities for a portion of the Partnership Preferred
Securities (as that term is defined in the Declaration) or
Convertible Debentures (as that term is defined in the
Declaration) held by the Trust (at the rate of exchange specified
in the terms of the Convertible Common Securities set forth as
Annex I to the Declaration), (ii) in the event Partnership
Preferred Securities are held by the Trust, immediately exchange
such Partnership Preferred Securities for a portion of the
Convertible Debentures (as that term is defined in the
Declaration) held by Citizens Capital (at the rate of exchange
specified in the terms of the Convertible Common Securities set
forth as Annex I to the Declaration) and (iii) immediately
convert such Convertible Debentures on behalf of the undersigned,
into Common Stock (at the conversion rate specified in the terms
of the Convertible Common Securities set forth as Annex I to the
Declaration).
The undersigned does also hereby direct the Conversion
Agent that the shares issuable and deliverable upon conversion,
together with any check in payment for fractional shares, be
issued in the name of and delivered to the undersigned, unless a
different name has been indicated in the assignment below. If
shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable
with respect thereto.
This Conversion Request and any action taken hereunder
shall be governed by the terms of the Declaration and the terms
of the Convertible Common Securities set forth in Annex I
thereto.
Date: ____________, ____
in whole __ in part
Number of Convertible Common
Securities to be converted:
___________________
If a name or names other than the
undersigned, please indicate in the
spaces below the name or names in
which the shares of Common Stock
are to be issued, along with the
address or addresses of such person
or persons
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other
Identifying Number
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Common Security Certificate to:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Insert assignee's social security or tax identification number)
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints ________________________________________
_________________________________________________________________
_________________________________________________________________
agent to transfer this Common Security Certificate on the books
of the Trust. The agent may substitute another to act for him or
her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this
Common Security Certificate)
EXHIBIT B
FORM OF NOTICE OF DISTRIBUTION ELECTION
TO: _____________________,
as the Regular Trustees
of Citizens Utilities Trust
The undersigned owner of ____% Citizens Utilities
Convertible Preferred Securities (liquidation amount $50 per
Convertible Preferred Security) (the "Convertible Preferred
Securities"), issued pursuant to the Amended and Restated
Declaration of Trust (the "Declaration"), dated as of __________
___, 1995, by the Trustees named therein, Citizens Utilities
Company, as Sponsor, and by the Holders (as defined therein),
hereby elects to receive any and all Distributions (as such term
is defined in the Declaration) due and payable on the
Distribution Payment Date immediately following the Election
Period during which this Notice of Distribution Election is being
submitted, and on each succeeding Distribution Payment Date until
such time as another Notice of Distribution Election is submitted
during an Election Period, as follows:
I, ______________________, as Holder of [Number of
Convertible Preferred Securities held] Convertible Preferred
Securities, elect to receive any and all Distributions due and
payable on the next Distribution Payment Date and thereafter in
the following form:
(A) ( ) Cash; or
(B) ( ) An Equivalent Value (as such term is defined in
the Declaration) of shares of common stock series
A, par value $.25 per share, of Citizens Utilities
Company ("Common Stock").
The undersigned does also hereby direct the addressee
that any and all Distributions in the form of Common Stock made
pursuant to this Notice of Distribution Election be delivered to
and issued in the name of the undersigned, unless a different
name has been indicated in the assignment below. If such shares
are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable
with respect thereto.
This Notice of Distribution Election and any action
taken hereunder shall be governed by the terms of the Declaration
and the terms of the Convertible Preferred Securities set forth
in Annex I thereto.
Date: ____________, ____
Signature
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other
Identifying Number
(Applicable only if box (B) has
been checked.) If a name or names
other than the undersigned, please
indicate in the spaces below the
name or names in which shares of
Common Stock are to be issued,
along with the address or addresses
of such person or persons
Draft of October 9, 1995
AMENDED AND RESTATED AGREEMENT
OF
LIMITED PARTNERSHIP
OF
CITIZENS UTILITIES CAPITAL L.P.
Dated as of ______ __, 1995
AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
CITIZENS UTILITIES CAPITAL L.P.
AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP of Citizens Utilities Capital L.P., a
Delaware limited partnership ("Citizens Capital"), dated
as of __________, 1995, among Citizens Utilities Company,
a Delaware corporation (the "Company" or "Citizens"), as
the general partner, [ ], a [Delaware]
corporation, as the initial limited partner (the "Initial
Limited Partner") and such other Persons (as defined
herein) who become Limited Partners (as defined herein)
as provided herein.
WHEREAS, Citizens and the Initial Limited
Partner entered into an Agreement of Limited Partnership,
dated as of __________, 1995 (the "Original Limited
Partnership Agreement");
WHEREAS, the Certificate of Limited Partnership
of Citizens Capital was filed with the Office of the
Secretary of State of the State of Delaware on
__________, 1995;
WHEREAS, Citizens Utilities Trust, a Delaware
business trust (the "Trust"), formed under the Amended
and Restated Declaration of Trust, among the Company, as
Sponsor, Chemical Bank, as property trustee (the
"Property Trustee"), and Chemical Bank Delaware, as
Delaware trustee (the "Delaware Trustee"), and Robert J.
DeSantis and Edward O. Kipperman, as regular trustees
(the "Regular Trustees"), dated as of ______ __, 1995
(the "Declaration") will issue and sell up to
____________ (or _____________ if the over-allotment
option is exercised) of its ____% Convertible Trust
Preferred Securities (the "Convertible Preferred
Securities") with a liquidation preference of $50 per
Convertible Preferred Security, having an aggregate
liquidation preference with respect to the assets of the
Trust of $___________ (or $__________ if the over-
allotment option is exercised) pursuant to the
Underwriting Agreement (the "Underwriting Agreement")
dated ______ __, 1995, among the Company, Citizens
Capital, the Trust and the Underwriters named therein;
WHEREAS, the trustees of the Trust, on behalf
of the Trust, will issue and sell to the Company
Convertible Common Securities evidencing an ownership
interest in the Trust, registered in the name of the
Company, in an aggregate amount equal to at least three
percent (3%) of the total capitalization of the Trust,
equivalent to at least ________ Convertible Common
Securities (or at least __________ Convertible Common
Securities if the over-allotment option is exercised),
with a liquidation amount of $50 per Convertible Common
Security, having an aggregate liquidation amount with
respect to the assets of the Trust of at least
$___________ (or at least $________ if the over-allotment
option is exercised) (the "Convertible Common
Securities");
WHEREAS, the Trust will use all the proceeds
from the sale of the Convertible Preferred Securities and
the Convertible Common Securities to purchase Partnership
Preferred Securities (as hereinafter defined) in an
aggregate liquidation preference of $____________ (or
$______________ if the over-allotment option is
exercised);
WHEREAS, the Company is guaranteeing the
payment of distributions on the Partnership Preferred
Securities, and payments upon and liquidation with
respect to the Partnership Preferred Securities, to the
extent provided in the Partnership Preferred Securities
Guarantee Agreement (the "Partnership Guarantee
Agreement") executed by the Company for the benefit of
the holders of the Partnership Preferred Securities from
time to time;
WHEREAS, so long as any Convertible Preferred
Securities are outstanding, the Declaration provides that
the holders of Convertible Preferred Securities may cause
the Conversion Agent to (a) exchange such Convertible
Preferred Securities for Partnership Preferred Securities
or Convertible Debentures (as hereinafter defined), as
the case may be, held by the Trust, (b) in the event
Partnership Preferred Securities are held by the Trust,
direct the General Partner to exchange such Partnership
Preferred Securities for Convertible Debentures held by
Citizens Capital and (c) immediately convert such
Convertible Debentures into Common Stock (as hereinafter
defined);
WHEREAS, the Company wishes to sell to Citizens
Capital, and Citizens Capital wishes to purchase from the
Company, Convertible Debentures in an aggregate principal
amount equal to ___________________, the aggregate stated
liquidation preference of the Partnership Preferred
Securities issued and sold by Citizens Capital; and
WHEREAS, the Partners desire to continue
Citizens Capital under the Act (as defined herein) and to
amend and restate the Original Limited Partnership
Agreement in its entirety.
NOW, THEREFORE, in consideration of the
agreements and obligations set forth herein and for other
good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties
hereto agree to amend and restate the Original Limited
Partnership Agreement as follows:
ARTICLE I
DEFINED TERMS
Section 1.1 DEFINITIONS. Unless the context
otherwise requires, the terms defined in this Article I
shall, for the purposes of this Agreement, have the
meanings herein specified.
"Act" means the Delaware Revised Uniform
Limited Partnership Act, as amended from time to time.
"Action" means any action permitted to be taken
by the General Partner under this Agreement relating to
the terms of the Partnership Preferred Securities, which
action shall be in writing.
"Additional Distributions" means Distributions
that shall be declared and paid by Citizens Capital on
any Distribution arrearages in respect of the Partnership
Preferred Securities at the rate of __% per annum
compounded quarterly.
"Additional Interest" has the meaning set forth
in Annex C hereto.
"Affiliate" means, with respect to a specified
Person, (a) any Person directly or indirectly owning,
controlling or holding with power to vote 10% or more of
the outstanding voting securities or other ownership
interests of the specified Person, (b) any Person 10% or
more of whose outstanding voting securities or other
ownership interests are directly or indirectly owned,
controlled or held with power to vote by the specified
Person, (c) any Person directly or indirectly
controlling, controlled by, or under common control with
the specified Person, (d) a partnership in which the
specified Person is a general partner, (e) any officer or
director of the specified Person and (f) if the specified
Person is an officer, director, general partner or
employee, any other entity for which the specified Person
acts in any such capacity.
"Agreement" means the Limited Partnership
Agreement.
"Book-Entry Interest" means a beneficial
interest in the LP Certificates, ownership and transfers
of which shall be made through the book-entry system of a
Clearing Agency as described in Section 10.4.
"Business Day" has the meaning set forth in
Annex C hereto.
"Capital Account" has the meaning set forth in
Section 3.3.
"Cash Equivalent Amount" has the meaning set
forth in Section 6.4(c)(iii).
"Citizens Capital" has the meaning set forth in
Annex C hereto.
"Certificate" means the Certificate of Limited
Partnership of Citizens Capital filed with the Secretary
of State of the State of Delaware on August __, 1995, as
it may be amended and restated from time to time.
"Clearing Agency" means an organization
registered as a "Clearing Agency" pursuant to Section 17A
of the Exchange Act that is acting as depository for the
Partnership Preferred Securities and in whose name (or
nominee's name) shall be registered one or more global LP
Certificates and which shall undertake to effect book-
entry transfers and pledges of the Partnership Preferred
Securities.
"Clearing Agency Participant" means a broker,
dealer, bank, other financial institution or other Person
for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of interest in
securities deposited with the Clearing Agency.
"Closing Date" means the Closing Time and each
"Date of Delivery" under the Underwriting Agreement.
"Code" means the Internal Revenue Code of 1986,
as amended from time to time, or any corresponding
federal tax statute enacted after the date of this
Agreement. A reference to a specific section (Section)
of the Code refers not only to such specific section but
also to any corresponding provision of any federal tax
statute enacted after the date of this Agreement, as such
specific section or corresponding provision is in effect
on the date of application of the provisions of this
Agreement containing such reference.
"Common Stock" has the meaning set forth in
Annex C hereto.
"Company" has the meaning set forth in the
forepart of this Agreement and Annex C hereto.
"Company Event" has the meaning set forth in
Annex C hereto.
"Conversion Agent" has the meaning set forth in
Annex C hereto.
"Conversion Date" has the meaning set forth in
Section 6.3(b) of this Agreement.
"Conversion Price" has the meaning set forth in
Section 6.3(a) of this Agreement.
"Convertible Common Securities" has the meaning
set forth in Annex C hereto.
"Convertible Debentures" has the meaning set
forth in Annex C hereto.
"Convertible Preferred Securities" has the
meaning set forth in Annex C hereto.
"Declaration" has the meaning set forth in
Annex C hereto.
"Deferred Interest" means interest that shall
accrue on any interest on the Convertible Debentures that
is not paid quarterly and that shall accrue at the rate
of __% per annum compounded quarterly.
"Definitive LP Certificates" has the meaning
set forth in Section 10.4(a) of this Agreement.
"Distributions" means the cumulative
distributions in cash or Common Stock, as the case may
be, from the Partnership with respect to the Interests
represented by the Partnership Preferred Securities,
accruing from the first Closing Date and payable
quarterly in arrears as set forth herein, commencing
__________, 1995.
"Distribution Declaration Date" has the meaning
set forth in Annex C hereto.
"Distribution Declaration Notice" has the
meaning set forth in Annex C hereto.
"Distribution Payment Date" has the meaning set
forth in Section 6.2(b)(ii) of this Agreement.
"DTC" means The Depository Trust Company, the
initial Clearing Agency.
"Election Agent" shall have the meaning set
forth in Annex C hereto.
"Election Period" has the meaning set forth in
Annex C hereto.
"Eligible Institution" means (a) the Fiscal
Agent or (b) a depository institution organized under the
laws of the United States of America or any one of the
states thereof or the District of Columbia (or any
domestic branch of a foreign bank), (1)(i) which has
either (A) a long-term unsecured debt rating of AAA or
better by S&P and Aaa or better by Moody's or (B) a
short-term unsecured debt rating or a certificate of
deposit rating of A-1+ or better by S&P and P-1 or better
by Moody's and (ii) whose deposits are insured by the
FDIC or (2)(i) the parent of which has a long-term or
short-term unsecured debt rating which signifies
investment grade and (ii) whose deposits are insured by
the FDIC.
"Eligible Investment Account" means either (a)
a segregated account with an Eligible Institution or (b)
a segregated trust account with the corporate trust
department of a depository institution organized under
the laws of the Untied States of America or any one of
the states thereof or the District of Columbia (or any
domestic branch of a foreign bank), having corporate
trust powers and acting as trustee for funds deposited in
such account, so long as any of the securities of such
depository institution shall have a credit rating from
each Rating Agency in one of its generic rating
categories which signifies investment grade.
"Eligible Investment" mean book-entry
securities, negotiable instruments, cash or securities
represented by instruments in bearer or registered form
which evidence:
(a) direct obligations of, and obligations
fully guaranteed as to timely payment by, the
Government of the United States of America;
(b) demand deposits, time deposits or
certificates of deposit of any depository
institution or trust company incorporated under the
laws of the United States of America or any state
thereof and subject to supervision and examination
by federal or state banking or depository
institution authorities; PROVIDED, HOWEVER, that at
the time of the investment or contractual commitment
to invest therein, the commercial paper or other
short-term unsecured debt obligations (other than
such obligations the rating of which is based on the
credit of a Person other than such depository
institution or trust company) thereof shall have a
credit rating from each of S&P, Moody's and, if
rated by Fitch, Fitch in the highest investment
category granted thereby;
(c) commercial paper having, at the time of
the investment or contractual commitment to invest
therein, a rating from each of S&P, Moody's and, if
rated by Fitch, Fitch in the highest investment
rating category granted thereby;
(d) investments in money market funds having a
rating from each of S&P and Moody's in the highest
investment rating category granted thereby;
(e) demand deposits, time deposits and
certificates of deposit which are fully insured by
the FDIC;
(f) bankers' acceptances issued by any
depository institution or trust company referred to
in clause (b) above; or
(g) repurchase obligations with respect to any
security that is a direct obligation of, or fully
guaranteed by, the Government of the United States
of America or any agency or instrumentality thereof,
the obligations of which are backed by the full
faith and credit of the United States of America, in
either case entered into with (i) a depository
institution or trust company (acting as principal)
described in clause (b) or (ii) a depository
institution or trust company which is an Eligible
Institution and the deposits of which are insured by
the FDIC.
"Equivalent Value" has the meaning set forth in
Annex C hereto.
"Event of Default" has the meaning set forth in
Annex C hereto.
"Exchange Act" means the Securities Exchange
Act of 1934, as amended.
"FDIC" means the Federal Deposit Insurance
Corporation or any successor thereto.
"Fiscal Agent" means ______________.
"Fiscal Period" means each calendar quarter.
"Fiscal Year" means (i) the period commencing
upon the formation of Citizens Capital and ending on
December 31, 1995, and (ii) any subsequent twelve (12)
month period commencing on January 1 and ending on
December 31.
"Fitch" means Fitch Investors Service, Inc. or
any successor thereto.
"General Partner" has the meaning set forth in
Annex C hereto.
"General Partnership Security" has the meaning
set forth in Annex C hereto.
"Guarantee Agreements" has the meaning set
forth in Annex C hereto.
"Holder" or "Partnership Preferred Security
Holder" means a Limited Partner in whose name an LP
Certificate representing Partnership Preferred Securities
is registered.
"Indenture" has the meaning set forth in Annex
C hereto.
"Indenture Trustee" has the meaning set forth
in Annex C hereto.
"Initial Limited Partner" means _____________,
a [Delaware] corporation.
"Interest" means the entire ownership interest
of a Partner in Citizens Capital at any particular time,
including, without limitation, its interest in the
capital, profits, losses and distributions of Citizens
Capital.
"Limited Partner" means any Person who is
admitted to Citizens Capital as a Limited Partner
pursuant to the terms of this Agreement.
"Liquidation Distribution" has the meaning set
forth in Section 6.2(g).
"Liquidator" has the meaning specified in
Section 11.3 of this Agreement.
"LP Certificate" means a certificate
substantially in the form attached hereto as Annex A,
evidencing the Partnership Preferred Securities held by a
Limited Partner.
"Majority or Other Stated Percentage in
Liquidation Preference" means Holder(s) of Partnership
Preferred Securities who are the record owners of
Partnership Preferred Securities whose aggregate
liquidation preferences represent not less than 50% or
not less than such stated percentage of the aggregate
liquidation preference of all Partnership Preferred
Securities then outstanding.
"Maximum Stock Sales Proceeds" has the meaning
set forth in Section 6.4(c)(ii).
"Moody's" means Moody's Investors Service, Inc.
or any successor thereto.
"Net Income" and "Net Loss", respectively, for
any Fiscal Period mean the income and loss, respectively,
of Citizens Capital for such Fiscal Period as determined
in accordance with the method of accounting followed by
Citizens Capital for federal income tax purposes,
including, for all purposes, the net income, if any, from
Eligible Investments and any income exempt from tax
expenditures of Citizens Capital which are described in
the Code; provided, however, that any item allocated
under Sections 4.2 and 4.3 shall be excluded from the
computation of Net Income and Net Loss.
"No Recognition Opinion" has the meaning set
forth in Annex C hereto.
"Notice of Conversion" has the meaning set
forth in Section 4.2(a) of this Agreement.
"Original Limited Partnership Agreement" has
the meaning set forth in the recitals to this Agreement.
"Partners" means the General Partner and, if
appointed pursuant to Section 6.2(h), any Special
Representative and the Limited Partners, collectively,
where no distinction is required by the context in which
the term is used.
"Partnership Distribution Account" has the
meaning specified in Section 3.6(b) of this Agreement.
"Partnership Event" has the meaning set forth
in Annex C hereto.
"Partnership Guarantee Agreement" means the
Partnership Preferred Securities Guarantee Agreement
dated as of __________, 1995 of Citizens in favor of the
Partnership Preferred Security Holders with respect to
the Partnership Preferred Securities.
"Partnership Investment Company Act Event" has
the meaning set forth in Annex C hereto.
"Partnership Preferred Securities" has the
meaning set forth in Annex C hereto.
"Partnership Preferred Security Owner" means,
with respect to a Book Entry Interest, a Person who is
the beneficial owner of such Book Entry Interest as
reflected on the books of the Clearing Agency, or on the
books of a Person maintaining an account with such
Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case
in accordance with the rules of such Clearing Agency or
Clearing Agency Participant).
"Partnership Purchase Agreement" means the
partnership purchase agreement between the Trust and
Citizens Capital providing for the purchase of the
Partnership Preferred Securities.
"Partnership Securities" has the meaning set
forth in Annex C hereto.
"Partnership Tax Event" has the meaning set
forth in Annex C hereto.
"Paying Agent" shall have the meaning set forth
in Annex C hereto.
"Person" has the meaning set forth in Annex C
hereto.
"Power of Attorney" means the Power of Attorney
granted pursuant to Section 13.2.
"Property Trustee" has the meaning set forth in
Annex C hereto.
"Purchase Price" for any Partnership Preferred
Security means the amount paid per Partnership Preferred
Security pursuant to the Partnership Purchase Agreement.
"Redemption Price" has the meaning set forth in
Section 6.2(c).
"Rating Agencies" means Fitch, Moody's and S&P.
"Rating Agency Event" has the meaning set forth
in Annex C hereto.
"Securities Act" means the Securities Act of
1933, as amended.
"Share Transfer and Valuation Date" has the
meaning set forth in Annex C hereto.
"Shortfall Amount" has the meaning set forth in
Section 6.4(c)(ii).
"Special Representative" means the Person
appointed (i) to enforce Partnership Preferred Security
Holders' rights under the Partnership Guarantee
Agreement, (ii) to enforce Citizens Capital's rights
against Citizens under the Convertible Debentures or
(iii) to exercise rights otherwise exercisable by the
General Partner to declare and pay distributions on the
Partnership Preferred Securities as provided in Section
6.2(h) of this Agreement.
"S&P" means Standard & Poor's Ratings Group or
any successor thereof.
"Tax Matters Partner" means the General Partner
designated as such in Section 9.8 hereof.
"Trading Day" has the meaning set forth in
Annex C hereto.
"Transfer Agent" means Chemical Bank and its
successors and assigns.
"Treasury Regulations" means the income tax
regulations, including temporary regulations, promulgated
under the Code, as such regulations may be amended from
time to time (including corresponding provisions of
succeeding regulations).
"Trust" has the meaning set forth in Annex C
hereto.
"Trust Event" has the meaning set forth in
Annex C hereto.
"Trust Investment Company Act Event" has the
meaning set forth in Annex C hereto.
"Trust Securities" means the Convertible Common
Securities and the Convertible Preferred Securities.
"Trust Tax Event" has the meaning set forth in
Annex C hereto.
"Underwriters" means the underwriters named in
Schedule I to the Underwriting Agreement.
"Underwriting Agreement" means the Underwriting
Agreement dated __________, 1995, among the Company,
Citizens Capital, the Trust and the several Underwriters
named therein relating to the issuance and sale of the
Convertible Preferred Securities.
Section 1.2 HEADINGS. The headings and
subheadings in this Agreement are included for
convenience and identification purposes only and are in
no way intended to describe, interpret, define or limit
the scope, extent or intent of this Agreement or any
provision hereof.
ARTICLE II
CONTINUATION OF CITIZENS CAPITAL;
ADMISSION OF PARTNERSHIP PREFERRED SECURITIES HOLDERS;
WITHDRAWAL OF INITIAL LIMITED PARTNER
Section 2.1 CONTINUATION OF CITIZENS CAPITAL.
The parties hereto agree to continue Citizens Capital in
accordance with the terms of this Agreement. The General
Partner, for itself and as agent for the Limited
Partners, shall make every reasonable effort to assure
that an amendment to the Certificate of Limited
Partnership reflecting this Agreement, and all other
certificates and documents, are properly executed and
shall accomplish all filing, recording, publishing and
other acts necessary or appropriate for compliance with
all the requirements for the continuation of Citizens
Capital as a limited partnership under the Act and under
all other laws of the State of Delaware or such other
jurisdictions in which the General Partner determines
that Citizens Capital may conduct business. The rights
and duties of the Partners shall be as provided herein
and, subject to the terms hereof, the Act.
Section 2.2 NAME. The name of Citizens
Capital is "Citizens Utilities Capital L.P.", as such
name may be modified from time to time by the General
Partner following written notice to the Limited Partners.
Section 2.3 BUSINESS OF CITIZENS CAPITAL. The
purposes of Citizens Capital are (a) to issue limited
partnership interests in Citizens Capital in the form of
Partnership Preferred Securities, and to use
substantially all of the proceeds thereof and
substantially all of the proceeds from the capital
contributed to Citizens Capital by the General Partner to
purchase the Convertible Debentures of Citizens, (b) to
invest, at all times, at least 1% of the total capital
contributed to Citizens Capital by the Partners, (c) to
receive interest and other payments on the Convertible
Debentures in the form of cash or Common Stock and
distribute such cash or Common Stock to the Partners as
distributions on Citizens Capital or sell such number of
shares of Common Stock in the market to generate cash to
pay cash distributions on the Partnership Preferred
Securities, (d) to effect the conversion of Partnership
Preferred Securities into Common Stock and (e) except as
otherwise limited herein, to enter into, make and perform
all contracts and other undertakings, and engage in all
activities and transactions as the General Partner may
reasonably deem necessary or advisable for the carrying
out of the foregoing purposes of Citizens Capital.
Citizens Capital may not conduct any other business or
operations except as contemplated by the preceding
sentence.
Section 2.4 TERM. The term of Citizens
Capital shall commence upon the filing of the Certificate
in the Office of the Secretary of State of the State of
Delaware and shall continue for 45 years from the initial
Closing Date, unless dissolved before such date in
accordance with the provisions of this Agreement.
Section 2.5 REGISTERED AGENT AND OFFICE.
Citizens Capital's registered agent and office in
Delaware shall be The Corporation Trust Company,
Corporation Trust Center, 1209 Orange Street, Wilmington,
New Castle County, Delaware 19801. At any time, the
General Partner may designate another registered agent
and/or registered office.
Section 2.6 PRINCIPAL PLACE OF BUSINESS. The
principal place of business of Citizens Capital shall be
c/o Citizens Utilities Company, High Ridge Park, P.O. Box
3801, Stamford, Connecticut 06905. Upon ten days written
notice to the Partners, the General Partner may change
the location of Citizens Capital's principal place of
business, provided that such change has no material
adverse effect upon any Partner.
Section 2.7 NAME AND BUSINESS ADDRESS OF
GENERAL PARTNER. The name and address of the General
Partner are as follows:
Citizens Utilities Company
High Ridge Park
P.O. Box 3801
Stamford, Connecticut 06905
Attention: ____________
The General Partner may change its name or business
address from time to time, in which event the General
Partner shall promptly notify the Limited Partners of any
such change.
Section 2.8 QUALIFICATION TO DO BUSINESS. The
General Partner shall cause Citizens Capital to become
qualified, formed or registered under the applicable
qualification, fictitious name or similar laws of any
jurisdiction in which Citizens Capital transacts
business.
Section 2.9 ADMISSION OF HOLDERS OF
PARTNERSHIP PREFERRED SECURITIES; WITHDRAWAL OF INITIAL
LIMITED PARTNER.
(a) Without execution of this Agreement, upon
the acquisition of an LP Certificate by a Person, whether
by purchase, gift, devise or otherwise, which acquisition
shall be deemed to constitute a request by such Person
that the books and records of Citizens Capital reflect
such Person's admission as a Limited Partner, such Person
shall be admitted to Citizens Capital as a Limited
Partner and shall become bound by this Agreement.
(b) Following the first admission of a
Partnership Preferred Security Holder to Citizens Capital
as a Limited Partner, the Initial Limited Partner shall
withdraw from Citizens Capital and shall receive the
return of its capital contribution without interest or
deduction.
(c) The name and mailing address of each
Partner and the amount contributed by such Partner to the
capital of Citizens Capital shall be listed on the books
and records of Citizens Capital. The General Partner
shall be required to update the books and records from
time to time as necessary to accurately reflect such
information.
ARTICLE III
CAPITAL CONTRIBUTIONS; REPRESENTATION OF
PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST;
CAPITAL ACCOUNTS
Section 3.1 CAPITAL CONTRIBUTIONS.
(a) The General Partner has, on or prior to
the first Closing Date, contributed an aggregate of $3.00
to the capital of Citizens Capital. The General Partner
shall on or prior to each subsequent Closing Date, make
such additional capital contributions as are necessary to
maintain its Capital Account balance at an amount equal
to at least 3% of the aggregate positive Capital Account
balances of all Partners as of the time of each such
Closing Date.
(b) The Initial Limited Partner has, prior to
the date hereof, contributed the amount of $97.00 to the
capital of Citizens Capital, which amount will be
returned to the Initial Limited Partner as contemplated
by Section 2.9(b).
(c) On each Closing Date, each Person who
acquires a Partnership Preferred Security from Citizens
Capital shall, in connection with the acquisition of such
Partnership Preferred Security, contribute to the capital
of Citizens Capital an amount in cash equal to the
Purchase Price for such Partnership Preferred Security.
(d) No Limited Partner shall at any time be
required to make any additional capital contributions to
Citizens Capital, except as may be required by law.
Section 3.2 PARTNERSHIP PREFERRED SECURITY
HOLDER'S INTEREST REPRESENTED BY L.P. CERTIFICATE. A
Partnership Preferred Security Holder's Interest shall be
represented by the L.P. Certificate held by or on behalf
of such Holder. Each Partnership Preferred Security
Holder's respective ownership of Partnership Preferred
Securities shall be set forth on the books and records of
Citizens Capital. Each Holder hereby agrees that its
Interest represented by its L.P. Certificate shall for
all purposes be personal property. A Partnership
Preferred Security Holder shall have no interest in
specific Partnership property.
Section 3.3 CAPITAL ACCOUNTS. An individual
capital account (a "Capital Account") shall be
established and maintained on the books of Citizens
Capital for each Partner in compliance with Treasury
Regulation Sections 1.704-1(b)(2)(iv) and 1.704-2, as
amended. Subject to the preceding sentence, each Capital
Account will be increased by the amount of the capital
contributions (including the Purchase Price) made by, and
the Net Income allocated to, such Partner (or predecessor
in interest) and reduced by the amount of distributions
made by Citizens Capital, and Net Losses allocated, to
the Partner (or predecessor thereof). In addition, a
Partner's Capital Account shall be increased or
decreased, as the case may be, for any items specifically
allocated to such Partner under Section 4.2 of this
Agreement, and, to the extent permitted under the
applicable Treasury Regulation, the General Partner's
Capital Account will be increased to the extent the
General Partner pays any costs or expenses of Citizens
Capital directly out of the General Partner's own funds.
If any property is distributed in kind to any Partner,
the amount of such distribution shall, solely for
purposes of reducing a Partner's Capital Account, and not
for tax purposes, be equal to the fair market value of
such Property at the time of distribution.
Section 3.4 INTEREST ON CAPITAL CONTRIBUTIONS.
Except as provided herein, no Partner shall be entitled
to interest on or with respect to any capital
contribution to Citizens Capital.
Section 3.5 WITHDRAWAL AND RETURN OF CAPITAL
CONTRIBUTIONS. Subject to Section 3.1(b), no Partner
shall be entitled to withdraw any part of such Partner's
capital contribution to Citizens Capital. No Partner
shall be entitled to receive any distributions from
Citizens Capital, except as provided in this Agreement.
Section 3.6 INVESTMENT OF CAPITAL CONTRIBUTIONS.
(a) The General Partner may establish and
maintain in the name of Citizens Capital an Eligible
Investment Account bearing a designation clearly
indicating that the funds deposited therein are held for
the benefit of the Partners. On each Closing Date, the
General Partner shall deposit from the proceeds of the
aggregate capital contributions received from the
Partners an amount equal to at least 1% of such aggregate
capital contributions into the Eligible Investment
Account. On the first Closing Date, the amount deposited
by the General Partner shall equal $_____.
(b) Funds on deposit in the Eligible
Investment Account shall be invested by the General
Partner; PROVIDED, HOWEVER, it is understood and agreed
that the General Partner shall not be liable for any loss
arising from such investment in Eligible Investments;
PROVIDED FURTHER that none of the funds deposited in the
Eligible Investment Account shall be invested in an
Eligible Investment or Eligible Investments issued by the
General Partner or an Affiliate thereof for a period of
five years following the Closing Date. All such Eligible
Investments shall be held by the General Partner for the
benefit of Citizens Capital, PROVIDED, HOWEVER, that on
the day preceding each Distribution Payment Date all
interest and other investment income (net of losses and
investment expenses) on funds on deposit in the Eligible
Investment Account shall be deposited into Citizens
Capital's account maintained by Citizens Capital for
receipt of income on the Convertible Debentures (the
"Partnership Distribution Account") and shall constitute
a portion of Citizens Capital's Net Income eligible for
distribution to the Partners. Funds on deposit in the
Eligible Investment Account shall be invested in Eligible
Investments that will mature prior to the next succeeding
Distribution Payment Date.
ARTICLE IV
ALLOCATIONS
Section 4.1 PROFITS AND LOSSES. After giving
effect to the special allocations set forth in Sections
4.2 and 4.3 and subject to further modification by
Section 4.4, which special allocations shall take
precedence over any allocations made pursuant to this
Section 4.1,
(a) Citizens Capital's Net Income for each
Fiscal Period of Citizens Capital shall be allocated as
follows:
(i) First, among Holders of Partnership
Preferred Securities, as of the close of business on
the record date for such Fiscal Period, an amount of
Net Income equal to the excess of (x) the
Distributions accrued on each Holder's Partnership
Preferred Securities from the first Closing Date
through and including the close of business on the
record date for such Fiscal Period, including any
Additional Distributions payable with respect
thereto, over (y) the amount of Net Income allocated
to each such Holder pursuant to this Section
4.1(a)(i) in all prior Fiscal Periods, including any
Additional Distributions payable with respect
thereto.
(ii) Second, to each Holder of a Partnership
Preferred Security in an amount equal to the excess
of (x) all Net Losses, if any, allocated to each
such Holder from the date of issuance of the
Partnership Preferred Security through and including
the close of such Fiscal Period pursuant to Section
4.1(b)(ii) over (y) the amount of Net Income, if
any, allocated to each such Holder pursuant to this
Section 4.1(a)(ii) in all prior Fiscal Periods.
(iii) Any remaining Net Income shall be
allocated to the General Partner.
(b) Citizens Capital's Net Loss for any Fiscal
Period shall be allocated as follows:
(i) First, to the General Partner until the
balance of the General Partner's Capital Account is
reduced to zero.
(ii) Second, among the Holders in proportion
to their respective aggregate Capital Account
balances, until the Capital Account balances of such
Holders are reduced to zero, provided, however, that
the General Partner shall make appropriate
adjustments in these allocations, in accordance with
Section 4.1(c), with respect to any Partnership
Preferred Securities as to which Net Income has been
allocated with respect to Distributions that accrued
but were not paid.
(iii) Any remaining Net Loss shall be
allocated to the General Partner.
(c) The General Partner shall make such
changes to the allocations in Sections 4.1(a) and 4.1(b)
as it deems reasonably necessary so that, in the year of
Citizens Capital's liquidation, amounts distributed to
the Partnership Preferred Security Holders in accordance
with Section 11.4(ii) shall equal their Liquidation
Distributions.
Section 4.2 SPECIAL ALLOCATIONS.
(a) CONVERSION INTO COMMON STOCK. If a Holder
delivers an irrevocable notice of conversion ("Notice of
Conversion") to the Conversion Agent which instructs the
Conversion Agent to exchange some or all of such Holder's
Partnership Preferred Securities for a portion of the
Convertible Debentures held by Citizens Capital and to
immediately convert such Convertible Debentures into
Common Stock pursuant to Section 6.3(b) of this
Agreement, such Holder shall be allocated any interest
(including original issue discount) accruing on a daily
basis on the Convertible Debentures so converted until,
but not including, the date of such conversion, but only
to the extent such interest (including original issue
discount) was not previously allocated to the Partners in
a prior Fiscal Period as part of Net Income under Section
4.1(a) of this Agreement.
(b) DISTRIBUTIONS IN COMMON STOCK. If a
Holder delivers a Notice of Distribution Election to the
General Partner which instructs Citizens Capital to have
distributions paid on a specified portion of the
Partnership Preferred Securities in the form of Common
Stock (rather than cash) on the next Distribution Payment
Date or is deemed to have made such election of any such
distribution in the form of Common Stock (rather than
cash) on such Distribution Payment Date pursuant to
Section 6.4, such Holder shall, solely for purpose of
adjusting its Capital Account, and not for tax purposes,
be allocated Net Income or Net Loss, as the case may be,
in addition to Net Income and Net Loss allocated pursuant
to Section 4.1(a), equal to the difference between the
fair market value and the book value of the Common Stock
at the time of its distribution.
(c) INCOME FROM SALE OF COMMON STOCK. Any
income, gain or loss resulting from the sale of any
shares of Common Stock, and any expenditures resulting
from or related to the sale of any shares of Common
Stock, shall be allocated entirely to the General
Partner.
(d) INCOME FROM ELIGIBLE INVESTMENTS. Any
income, gain or loss resulting from purchase, ownership
or disposition of Eligible Investments shall be allocated
entirely to the General Partner.
(e) PROPERTY AFTER PAYMENT DATES. Any cash or
shares of Common Stock or other property remaining in the
Partnership after a Payment Date after the satisfaction
of obligations to the Limited Partners shall be allocated
entirely to the General Partner.
4.3 OTHER ALLOCATION PROVISIONS
(a) All expenditures described in Code Section
705(a)(2)(B) that are incurred by, or on behalf of,
Citizens Capital and paid or otherwise reimbursed by the
General Partner shall be allocated entirely to the
General Partner.
(b) In the event any Holder unexpectedly
receives any adjustments, allocations or distributions
described in Treasury Regulation Section 1.704-
1(b)(2)(ii)(d)(4), (5) or (6), items of Net Income shall
be specially allocated to such Holder in an amount and
manner sufficient to eliminate, to the extent required by
the Treasury Regulations, the deficit, if any, in the
balance of the Capital Account of such Holder as quickly
as possible. This Section 4.3(b) is intended to comply
with then qualified income offset provision in Section
1.704(b)(2)(ii)(d) of the Treasury Regulations.
(c) For purposes of determining the profits,
losses or any other items allocable to any period,
profits, losses and any such other items shall be
determined on a daily basis, unless the General Partner
determines that another method is permissible under
Section 704 of the Code and the Treasury Regulations
promulgated thereunder. Unless otherwise specified, such
profits, losses or other items shall be determined for
each Fiscal Period.
(d) The Partners are aware of the income tax
consequences of the allocations made by this Article IV
and hereby agree to be bound by the provisions of this
Article IV in reporting their shares of Net Income and
Net Loss for U.S. federal income tax purposes.
(e) Notwithstanding anything to the contrary
that may be expressed or implied in this Article IV, the
interest of the General Partner in each item of income,
gain, loss, deduction and credit will be equal to at
least (i) at any time that aggregate capital
contributions to Citizens Capital are equal to or less
than $50,000,000, 1% of each such item and (ii) at any
time that aggregate capital contributions to Citizens
Capital are greater than $50,000,000, at least 1%,
multiplied by a fraction (not exceeding one and not less
than 0.2), the numerator of which is $50,000,000 and the
denominator of which is the lesser of (A) the aggregate
Capital Account balances of the Capital Accounts of all
Partners at such time and (B) the aggregate capital
contributions to Citizens Capital of all Partners at such
time.
(f) The Partners intend that the allocations
under Section 4.1 conform to Treasury Regulations
Sections 1.704-1(b) and 1.704-2 (including, without
limitation, the minimum gain chargeback, chargeback of
partner nonrecourse debt minimum gain, qualified income
offset and partner nonrecourse debt provisions of such
Treasury Regulations), and the General Partner shall make
such changes in the allocations under Section 4.1 as it
believes are reasonably necessary to meet the
requirements of such Treasury Regulations.
(g) Solely for the purpose of adjusting the
Capital Accounts of the Partners, and not for tax
purposes, if any property (including, without limitation,
shares of Common Stock) is distributed in kind to any
Partner, the difference between the fair market value of
such property and its book value at the time of
distribution shall be treated as gain or loss recognized
by Citizens Capital and allocated pursuant to the
provisions of Sections 4.1, 4.2 and 4.3.
Section 4.4 ALLOCATIONS FOR INCOME TAX
PURPOSES. The income, gains, losses, deductions and
credits of Citizens Capital (including the character of
such items of income, gain, loss, deductions and credits)
shall be allocated in the same manner as the items
entering into the computation of Net Income and Net Loss
are allocated under Sections 4.1, 4.2 and 4.3; provided,
however, that solely for federal, state and local income
and franchise tax purposes, but not for book or Capital
Account purposes, income, gain, loss and deductions with
respect to any property properly carried on Citizens
Capital's books at a value other than the tax basis of
such property shall be allocated in a manner determined
in the General Partner's discretion, so as to take into
account (consistently with Code Section 704(c)
principles) the difference between such property's book
value and its tax basis. Notwithstanding anything to the
contrary set forth in this Agreement, the General Partner
is authorized to modify the allocations of this Section
4.4, and Sections 4.1, 4.2 and 4.3, if necessary or
appropriate, in the General Partner's sole discretion,
for the allocations to fairly reflect the economic gain,
income or loss to each of the Partners, or as otherwise
required by the Code or the Treasury Regulations. Any
Net Income or Net Loss resulting from a difference
between the fair market value of property distributed in
kind (including, without limitation, shares of Common
Stock) that is deemed to result under Section 4.2(b) or
4.3(g), shall not be deemed to constitute Net Income or
Net Loss, as the case may be, for purposes of allocating
income, gains or losses to the Partners for federal,
state or local tax purposes.
Section 4.5 WITHHOLDING. Citizens Capital
shall comply with withholding requirements under federal,
state and local law and shall remit amounts withheld to
and file required forms with applicable jurisdictions.
To the extent that Citizens Capital is required to
withhold and pay over any amounts to any authority with
respect to distributions or allocations to any Partner,
the amount withheld shall be deemed to be a distribution
in the amount of the withholding to the Partner. In the
event of any claimed over-withholding, Partners shall be
limited to an action against the applicable jurisdiction.
If the amount withheld was not withheld from actual
distributions, Citizens Capital may reduce subsequent
distributions by the amount of such withholding. Each
Partner agrees to furnish Citizens Capital with any
representations and forms as shall reasonably be
requested by Citizens Capital to assist it in determining
the extent of, and in fulfilling, its withholding
obligations.
ARTICLE V
DISTRIBUTIONS
Section 5.1 DISTRIBUTIONS. Limited Partners
shall receive periodic Distributions, if any, redemption
payments and liquidation distributions in accordance with
the terms of the Partnership Preferred Securities set
forth in Article VI. Subject to the rights of the
Partnership Preferred Security Holders, all cash and
other property remaining in the Partnership Distribution
Account shall be distributed to the General Partner at
such time as the General Partner shall determine.
Section 5.2 LIMITATIONS ON DISTRIBUTIONS.
Citizens Capital shall not make a distribution to any
Partner on account of such Partner's Interest if such
distribution would violate Section 17-607 of the Act or
other applicable law.
ARTICLE VI
ISSUANCE OF PARTNERSHIP PREFERRED SECURITIES
Section 6.1 GENERAL PROVISIONS REGARDING
PARTNERSHIP PREFERRED SECURITIES.
(a) There is hereby authorized for issuance
and sale Partnership Preferred Securities having an
aggregate liquidation preference not greater than $[ ]
and having the designation, annual distribution rate,
liquidation preference, redemption terms, conversion and
exchange rights and other powers, preferences and special
rights and limitations set forth in this Article VI. The
aggregate liquidation preference of Partnership Preferred
Securities authorized hereunder shall be reduced 30 days
after the first Closing Date to the amount purchased by
the Underwriters.
(b) The payment of distributions (including
payments of distributions by Citizens Capital in
liquidation or on redemption in respect of Partnership
Preferred Securities shall be guaranteed by the Company
pursuant to the Partnership Guarantee Agreement. In the
event of an appointment of a Special Representative
pursuant to Section 6.2(h), among other things, to
enforce the Partnership Guarantee Agreement, the Special
Representative may take possession of the Partnership
Guarantee Agreement for such purpose. The Partnership
Preferred Security Holders, by acceptance of such
Partnership Preferred Securities, acknowledge and agree
to the subordination provisions in, and other terms of,
the Partnership Guarantee Agreement.
(c) The proceeds received by Citizens Capital
from the issuance of Partnership Preferred Securities,
together with the proceeds of the capital contributed by
the General Partner pursuant to Section 3.1(a) of this
Agreement, but less any amounts deposited by the General
Partner in the Eligible Investment Account pursuant to
Section 3.6(a), shall be invested by Citizens Capital in
Convertible Debentures with (i) an aggregate principal
amount equal to such aggregate proceeds (less accrued
interest, if any) and (ii) an interest rate at least
equal to the distribution rate of the Partnership
Preferred Securities.
(d) Citizens Capital may not issue any other
interests in Citizens Capital, without the approval of
the Holders of not less than 66-2/3% in Liquidation
Preference of the Partnership Preferred Securities;
provided, however, that Citizens Capital may issue a
general partnership security to the Special
Representative. All Partnership Preferred Securities
shall rank senior to all other Interests in Citizens
Capital in respect of the right to receive Distributions
or other distributions and the right to receive payments
out of the assets of Citizens Capital upon voluntary or
involuntary liquidation, dissolution, winding-up or
termination of Citizens Capital. All Partnership
Preferred Securities redeemed, purchased or otherwise
acquired by Citizens Capital (including Partnership
Preferred Securities surrendered for conversion or
exchange) shall be canceled. The Partnership Preferred
Securities will be issued in registered form only.
Distributions on all Partnership Preferred Securities
shall be cumulative.
(e) No Holder shall be entitled as a matter of
right to subscribe for or purchase, or have any
preemptive right with respect to, any part of any new or
additional limited partnership interests, or of
securities convertible into any Partnership Preferred
Securities or other limited partnership interests,
whether now or hereafter authorized and whether issued
for cash or other consideration or by way of a
distribution.
(f) Neither the Company nor any Affiliate of
the Company shall have the right to vote or give or
withhold consent with respect to any Partnership
Preferred Security owned by it, directly or indirectly,
and, for purposes of any matter upon which the Limited
Partners may vote or give or withhold consent as provided
in this Agreement, Partnership Preferred Securities owned
by the Company or any Affiliate shall be treated as if
they were not outstanding.
Section 6.2 PARTNERSHIP PREFERRED SECURITIES.
(a) DESIGNATION. The Partnership Preferred
Securities, liquidation preference $50 per Partnership
Preferred Security, are hereby designated as " %
Convertible Partnership Preferred Securities".
(b) DISTRIBUTIONS. (i) Partnership Preferred
Security Holders shall be entitled to receive, when, as
and if declared by the General Partner, cumulative
Distributions at a rate per annum of % of the stated
liquidation preference of $50 per Partnership Preferred
Security, calculated on the basis of a 360-day year
consisting of 12 months of 30 days each. For any period
shorter than a full quarter period, Distributions will be
computed on the basis of the actual number of days
elapsed in such period. Distributions shall be payable
quarterly in arrears in United States dollars and, to the
extent Partnership Preferred Security Holders deliver a
Notice of Distribution Election instructing the General
Partner to pay Distributions on a specified portion of
the Interests in Common Stock, subject to the provisions
of Section 6.4, in Common Stock. If all or a portion of
a distribution is made in Common Stock as a result of a
Notice of Distribution Election, the amount of such
distribution on a Partnership Preferred Security that a
Holder shall be entitled to receive shall be an
Equivalent Value of Common Stock at the Share Transfer
and Valuation Date regardless of the fair market value of
such stock at the time of its distribution by Citizens
Capital. Such Distributions will accrue and be
cumulative whether or not they have been declared and
whether or not there are funds of Citizens Capital
legally available for the payment of Distributions.
Distributions on the Partnership Preferred Securities
shall be cumulative from the first Closing Date.
Additional Distributions upon any Distribution arrearages
shall be declared and paid in order to provide, in
effect, quarterly compounding on such Distribution
arrearages at a rate of ___% per annum compounded
quarterly, and such Additional Distributions shall
accumulate. In the event that any date on which
Distributions are payable on the Partnership Preferred
Securities is not a Business Day, then payment of the
Distribution payable on such date will be made on the
next succeeding day which is a Business Day (and without
any interest or other payment in respect of any such
delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on
the immediately preceding Business Day, in each case with
the same force and effect as if made on such date.
(ii) Distributions on the Partnership
Preferred Securities must be declared quarterly and be
paid in arrears on January 31, April 30, July 31 and
October 31 of each year, commencing on __________, 1996
(each a "Distribution Payment Date") to the extent that
Citizens Capital has, on such date, (x) funds (including
Common Stock and to the extent Partnership Preferred
Security Holders have elected or are deemed to have
elected to receive Common Stock) legally available for
the payment of such Distributions and (y) cash and, where
applicable, Common Stock, on hand sufficient to permit
such payments, it being understood that to the extent
that funds (including, where applicable, Common Stock)
are not available to pay in full all accumulated and
unpaid Distributions, Citizens Capital may pay partial
Distributions to the extent of funds (including, where
applicable, Common Stock) legally available therefor.
For purposes of this Section 6.2(b), net
interest and investment income from funds on deposit in
the Eligible Investment Account that is transferred into
the Partnership Distribution Account shall be considered
funds available for the payment of Distributions;
provided, however, that the principal amount of Eligible
Investments shall not be available as Distributions or
otherwise except in connection with a liquidating
distribution pursuant to Section 11.4 of this Agreement.
Distributions will be payable to the Holders as
they appear on the books and records of Citizens Capital
on the Regular Record Date (as such term is defined in
the Indenture) immediately preceding the applicable
Distribution Payment Date. Distributions payable on any
Partnership Preferred Securities that are not punctually
paid on any Distribution Payment Date, as a result of the
Company having failed to make a payment on the
Convertible Debentures, will cease to be payable to the
Person in whose name such Partnership Preferred
Securities are registered on the relevant record date,
and such late Distribution will instead be payable to the
Person in whose name such Partnership Preferred
Securities are registered on the special record date or
other specified date determined in accordance with the
Limited Partnership Agreement. If any date on which
Distributions are payable on the Partnership Preferred
Securities is not a Business Day, then payment of the
Distribution payable on such date will be made on the
next succeeding day that is a Business Day (and without
any interest or other payment in respect of any such
delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on
the immediately preceding Business Day, in each case with
the same force and effect as if made on such date. In
the event of any extended interest payment period with
respect to the Convertible Debentures resulting in the
deferral of the payment of Distributions on the
Partnership Preferred Securities, the General Partner
shall notify the Holders as to such extended interest
payment period.
(iii) Citizens Capital shall not:
(1) pay, declare or set aside for payment, any
distributions on any other Interests in Citizens
Capital; or
(2) redeem, purchase or otherwise acquire or
make any liquidation payment with respect to any
other Interests in Citizens Capital;
until, in each case, such time as all accumulated and
unpaid Distributions on all of the Partnership Preferred
Securities, including any Additional Distributions
thereon, shall have been paid in full for all
Distribution periods terminating on or prior to the date
of such payment or the date of such redemption, purchase
or acquisition, as the case may be.
(iv) In the event of an election by the Holder
to convert all or any portion of its Partnership
Preferred Securities through the Conversion Agent into
Common Stock pursuant to Section 6.3 of this Agreement,
neither the Company nor Citizens Capital shall make, or
be required to make, any payment, allowance or adjustment
with respect to accumulated and unpaid Distributions on
such Partnership Preferred Securities; provided that
Holders of Partnership Preferred Securities at the close
of business on any record date for the payment of
Distributions will be entitled to receive the
Distribution payable on such Partnership Preferred
Securities on the corresponding Distribution Payment Date
notwithstanding the conversion of such Partnership
Preferred Securities into Common Stock following such
record date.
(c) MANDATORY REDEMPTION. Upon repayment of
the Convertible Debentures at maturity, prepayment or
redemption of the Convertible Debentures, including as a
result of the acceleration of the Convertible Debentures
upon the occurrence of an Event of Default under the
Indenture with respect to the Convertible Debentures, the
proceeds from such repayment, prepayment or redemption
simultaneously shall be applied to redeem the Partnership
Preferred Securities at a redemption price equal to the
liquidation preference per Partnership Preferred Security
plus accumulated and unpaid Distributions (whether or not
earned or declared) to the date fixed for redemption,
including any Additional Distributions accrued thereon,
payable in cash (the "Redemption Price"). Holders will
be given not less than 30 nor more than 60 days' notice
of such redemption.
(d) OPTIONAL REDEMPTION. Partnership
Preferred Securities shall be redeemable at the option of
Citizens Capital (subject to the prior consent of the
Company), in whole or in part from time to time, on or
after __________ __, 1998 at the Redemption Price.
Citizens Capital may not redeem the Partnership Preferred
Securities in part unless all accumulated and unpaid
distributions (whether or not earned or declared),
including any Additional Distributions, have been paid in
full on all Partnership Preferred Securities for all
quarterly distribution periods terminating on or prior to
the date of redemption. The Company shall have the right
to cause Citizens Capital to exercise such redemption
option.
(e) SPECIAL REDEMPTION. If, at any time, a
Partnership Event shall occur and be continuing, the
General Partner may dissolve Citizens Capital and, after
satisfaction of creditors, either (i) upon receipt by the
Company of a No Recognition Opinion with respect to the
Convertible Debentures and delivery of such No
Recognition Opinion to Citizens Capital, cause the
Convertible Debentures held by the General Partner,
having an aggregate stated principal amount equal to the
aggregate stated liquidation preference of, with a
distribution rate identical to the distribution rate of,
and accrued and unpaid distributions equal to accrued and
unpaid distributions on and having the same record date
for payment as the Partnership Preferred Securities, to
be distributed to the holders of the Partnership
Preferred Securities, in liquidation of such holders'
interests in Citizens Capital or (ii) in the event the
Company cannot receive a No Recognition Opinion, at the
direction of the Company, as Debenture Issuer, and
following the redemption, in whole or in part, of the
Convertible Debentures in the manner set forth in the
Indenture redeem, in whole or in part, the Partnership
Preferred Securities in the manner set forth in this
Agreement, provided that the General Partner is unable to
avoid such Partnership Event by taking some ministerial
action such as filing a form or making an election or
pursuing some other reasonable measure that, in the sole
judgment of the General Partner, will have no adverse
effect on Citizens Capital, the General Partner or the
Holders, if any, of the Trust Securities and will involve
no material cost ("Ministerial Action"). In the event
that the General Partner undertakes the actions specified
in item (i) of this paragraph, the Company, as Sponsor,
may dissolve the Trust, if in existence, and thereby
cause the Convertible Debentures to be distributed to the
Holders, if any, of the Trust Securities. In the event
that (a) the Convertible Debentures are distributed in
connection with a Partnership Event and (b) the Company,
as Sponsor of the Trust, causes or has caused the Trust
to be liquidated, the Company will use its best efforts
to have the Convertible Debentures listed on the NYSE or,
if the Trust Securities or the Partnership Preferred
Securities, as the case may be, are not then listed on
the NYSE, such other exchange on which the Trust
Securities or the Partnership Preferred Securities, as
the case may be, may then be listed.
If, at any time, a Company Event shall occur
and be continuing, the Company, as Debenture Issuer, may
cause the redemption, in whole but not in part, of the
Partnership Preferred Securities by redeeming, in whole
but not in part, the Convertible Debentures in the manner
set forth in the Indenture, which redemption shall in
turn cause the redemption of the Partnership Preferred
Securities in the manner set forth in this Agreement,
provided that the Company is unable to avoid such Company
Event by taking a Ministerial Action. In the case of a
Company Event, the Company may also elect to cause the
Convertible Debentures and, hence, the Partnership
Preferred Securities to remain outstanding.
If, at any time, a Trust Event shall occur and
be continuing the Company shall (i) after receipt by the
Company of a No Recognition Opinion with respect to the
Partnership Preferred Securities and delivery of such No
Recognition Opinion to the Trust, dissolve the Trust and,
after satisfaction of creditors, cause the Partnership
Preferred Securities held by the Property Trustee, having
an aggregate stated liquidation preference equal to the
aggregate stated liquidation amount of, with a
distribution rate identical to the distribution rate of,
and accrued and unpaid distributions equal to accrued and
unpaid distributions on and having the same record date
for payment as the Trust Securities, to be distributed to
the holders of the Trust Securities, in liquidation of
such holders' interests in the Trust, in the manner set
forth in the Declaration, or (ii) after receipt by the
Company of No Recognition Opinions with respect to the
Partnership Preferred Securities and the Convertible
Debentures and delivery of the appropriate No Recognition
Opinion to each of the Trust and Citizens Capital, and
following the dissolution of Citizens Capital in the
manner set forth in this Agreement, dissolve the Trust,
and, after satisfaction of creditors, cause the
Convertible Debentures held by the General Partner,
having aggregate stated principal amount equal to the
aggregate stated liquidation amount of, with an interest
payment rate identical to the distribution rate of and
accrued and unpaid interest equal to accrued and unpaid
distributions on and having the same record date for
payment as the Trust Securities, to be distributed to the
holders of the Trust Securities, in liquidation of such
holders' interests in the Trust, in the manner set forth
in the Declaration, or, in the event the Company cannot
receive a No Recognition Opinion with respect to the
Partnership Preferred Securities, the Company may
dissolve the Trust and, after satisfaction of creditors,
at the direction of the Company, as Debenture Issuer, and
following the redemption, in whole or in part, of the
Convertible Debentures in the manner set forth in the
Indenture and the Partnership Preferred Securities in the
manner set forth in this Agreement, redeem, in whole or
in part, the Trust Securities in the manner set forth in
the Declaration; provided that the Company and the Trust
are unable to avoid such Trust Event by taking a
Ministerial Action.
Upon the distribution of the Partnership
Preferred Securities or the Convertible Debentures in
connection with a Trust Event, the Company will use its
best efforts to have such Partnership Preferred
Securities or Convertible Debentures, as the case may be,
listed on the NYSE or, if the Trust Securities or
Partnership Preferred Securities, as the case may be, are
not then listed on the NYSE, such other exchange on which
such Trust Securities or Partnership Preferred Securities
may then be listed.
If, at any time, a Rating Agency Event shall
occur and be continuing the Company shall either (i)
after dissolution of the Trust, if still in existence, in
the manner set forth in the Declaration and after
satisfaction of creditors, cause the Partnership
Preferred Securities having an aggregate liquidation
preference equal to the aggregate liquidation amount of
the Trust Securities to be distributed to the holders of
the Trust Securities in liquidation of the Trust or (ii)
upon dissolution of Citizens Capital as set forth in this
Agreement and after satisfaction of creditors, cause the
Convertible Debentures having an aggregate principal
amount equal to the aggregate liquidation preference of
the Partnership Preferred Securities to be distributed to
the holders of the Partnership Preferred Securities in
liquidation of Citizens Capital. Upon the distribution
of Partnership Preferred Securities or Convertible
Debentures in connection with a Rating Agency Event, the
Company will use its best efforts to have such
Partnership Preferred Securities or Convertible
Debentures listed on the NYSE or, if the Trust Securities
or Partnership Preferred Securities, as the case may be,
are not then listed on the NYSE, such other exchange on
which such Trust Securities or Partnership Preferred
Securities may then be listed.
(f) REDEMPTION PROCEDURES. (i) Notice of any
redemption (a "Notice of Redemption") of the Partnership
Preferred Securities to be redeemed will be given by
Citizens Capital by mail to each Holder of Partnership
Preferred Securities not fewer than 30 nor more than 60
days prior to the date fixed for redemption thereof
following the issuance of a notice of prepayment or
redemption of the Convertible Debentures by Citizens to
Citizens Capital. For purposes of the calculation of the
date of redemption and the dates on which notices are
given pursuant to this paragraph (f)(i), a Notice of
Redemption shall be deemed to be given on the day such
notice is first mailed by first-class mail, postage
prepaid, to each Holder of Partnership Preferred
Securities. Each Notice of Redemption shall be addressed
to each Holder of Partnership Preferred Securities at the
address of the Holder appearing in the books and records
of Citizens Capital. No defect in the Notice of
Redemption or in the mailing thereof with respect to any
Partnership Preferred Security shall affect the validity
of the redemption proceedings with respect to any other
Partnership Preferred Security.
(ii) If, following a notice of prepayment of
all outstanding Convertible Debentures, Citizens Capital
issues a Notice of Redemption, then, by 12:00 noon, New
York time, on the redemption date, Citizens will repay to
Citizens Capital an aggregate principal amount of the
Convertible Debentures, which, together with accrued and
unpaid interest and any Deferred Interest thereon, will
be an amount sufficient to pay the Redemption Price for
all Partnership Preferred Securities then outstanding.
If a Notice of Redemption shall have been issued and
funds deposited as required or a check deposited in the
U.S. mails postage prepaid, then upon the date of such
deposit, all rights of the Partnership Preferred Security
Holders who hold such Partnership Preferred Securities so
called for redemption will cease, except the right of the
Holders of such securities to receive the Redemption
Price, but without interest from and after such
redemption date. In the event that any date fixed for
redemption of Partnership Preferred Securities is not a
Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or
other payment in respect of any such delay), except that,
if such Business Day falls in the next calendar year,
such payment will be made on the immediately preceding
Business Day. In the event that payment of the
Redemption Price in respect of Partnership Preferred
Securities is improperly withheld or refused and not paid
either by Citizens Capital or by Citizens pursuant to the
Partnership Guarantee Agreement, Distributions on such
Partnership Preferred Securities (including any
Additional Distributions thereon) will continue to
accumulate at the then applicable rate, from the original
redemption date to the date that the Redemption Price is
actually paid.
(iii) Redemption/Distribution Notices shall be
sent by Citizens Capital to the Holders of the
Partnership Preferred Securities.
(iv) If a Notice of Redemption shall have been
issued, the conversion rights set forth in Section 6.3
shall terminate at the close of business five Business
Days prior to the redemption date.
(g) LIQUIDATION RIGHTS. In the event of any
voluntary or involuntary liquidation, dissolution,
winding-up or termination of Citizens Capital, the
Holders of Partnership Preferred Securities at the time
outstanding will be entitled to receive out of the assets
of Citizens Capital (including any Eligible Investments
or amounts deposited in the Eligible Investment Account)
legally available for distribution to Partners after
satisfaction of liabilities of creditors as required by
the Act before any distribution of assets is made with
respect to any other Interest in Citizens Capital, an
amount equal to the aggregate of the stated liquidation
preference of $50 per Partnership Preferred Security
payable in cash and accumulated and unpaid Distributions
(whether or not earned or declared) to the date of
payment, including any Additional Distributions accrued
thereon (the "Liquidation Distribution") payable in cash
or in Common Stock.
(h) VOTING RIGHTS -- SPECIAL REPRESENTATIVE.
(i) If (x) Citizens Capital fails to pay Distributions
in full on the Partnership Preferred Securities for six
(6) consecutive quarters (other than as a result of a
determination by Citizens to extend the interest payment
period of the Convertible Debentures in accordance with
the terms thereof), (y) an Event of Default under the
Indenture occurs and is continuing or (z) Citizens is in
default on any of its payment obligations under the
Partnership Guarantee Agreement, then the Holders, upon
the affirmative vote of at least a Majority in
Liquidation Preference of the Partnership Preferred
Securities, will be entitled to appoint and authorize a
Special Representative to enforce Citizens Capital's
rights as a creditor under the Convertible Debentures,
enforce the rights of the Holders under the Partnership
Guarantee Agreement and to declare and pay Distributions
(including Additional Distributions) on the Partnership
Preferred Securities. Upon the appointment of a Special
Representative, the Special Representative shall be
authorized, and shall to the extent of legally available
funds, declare and pay Distributions (including
Additional Distributions) on the Partnership Preferred
Securities. So long as the appointment of the Special
Representative is effective, the Special Representative
shall manage the business and affairs of Citizens Capital
to the exclusion of the General Partner.
(ii) In furtherance of the foregoing, and
without limiting the powers of any Special Representative
so appointed and for the avoidance of any doubt
concerning the powers of the Special Representative, any
Special Representative, in its own name and as Special
Representative of Citizens Capital, may institute a
proceeding, including, without limitation, any suit in
equity, an action at law or other judicial or
administrative proceeding, to enforce Citizens Capital's
rights directly against Citizens, or any other obligor in
connection with such obligations on behalf of Citizens
Capital, and may prosecute such proceeding to judgment or
final decree, and enforce the same against Citizens or
any other obligor in connection with such obligations and
collect, out of the property, wherever situated, of
Citizens or any such other obligor upon such obligations,
the monies adjudged or decreed to be payable in the
manner provided by law.
(iii) For purposes of determining whether
Citizens Capital has failed to pay Distributions in full
for six (6) consecutive quarters, Distributions shall be
deemed to remain in arrears, notwithstanding any payments
in respect thereof, until full cumulative Distributions
have been or contemporaneously are declared and paid with
respect to all quarterly Distribution periods terminating
on or prior to the date of payment of such full
cumulative Distributions. Not later than 30 days after
such right to appoint a Special Representative arises,
the General Partner will convene a meeting for election
of a Special Representative. If the General Partner
fails to convene such meeting within such 30-day period,
the Holders of not less than 10% in Liquidation
Preference of the Partnership Preferred Securities will
be entitled to convene such meeting. The provisions of
Section 12.3 relating to the convening and conduct of
meetings of the Partners will apply with respect to any
such meeting. Any Special Representative so appointed
shall vacate office immediately if Citizens Capital (or
Citizens pursuant to the Partnership Guarantee Agreement)
shall have paid in full all accumulated and unpaid
Distributions (including any Additional Distributions) on
the Partnership Preferred Securities or such Event of
Default or default, as the case may be, shall have been
cured.
(i) VOTING RIGHTS -- CERTAIN AMENDMENTS. (i)
If any proposed amendment of this Agreement provides for,
or the General Partner otherwise proposes to effect, (x)
any action that would have a material adverse affect on
the powers, preferences or rights of the Partnership
Preferred Securities, whether by way of amendment of this
Agreement or otherwise or (y) the liquidation,
dissolution, winding-up or termination of Citizens
Capital, then the Holders of outstanding Partnership
Preferred Securities will be entitled to vote on such
amendment or action of the General Partner (but not on
any other amendment or action) and such amendment or
action shall not be effective except with the approval of
Holders of not less than 66-2/3% in Liquidation
Preference of the Partnership Preferred Securities;
provided, however, that no such approval shall be
required if the liquidation, dissolution, winding-up or
termination of Citizens Capital is proposed or initiated
pursuant to Section 11.2 hereof.
(ii) Any required approval of Holders may be
given at a separate meeting of such Holders convened for
such purpose or pursuant to written consent. Citizens
Capital will cause a notice of any meeting at which
Holders are entitled to vote, or of any matter upon which
action by written consent of such Holders is to be taken,
to be mailed to each Holder. Each such notice will
include a statement setting forth (x) the date of such
meeting or the date by which such action is to be taken,
(y) a description of any matter on which such Holders are
entitled to vote or upon which written consent is sought
and (z) instructions for the delivery of proxies or
consents. No vote or consent of the Holders will be
required for Citizens Capital to redeem and cancel
Partnership Preferred Securities in accordance with this
Agreement.
(iii) Except as provided in this Section 6.2,
Holders shall have no voting rights, and the Holders may
not remove the General Partner.
Section 6.3 CONVERSION RIGHTS OF PARTNERSHIP
PREFERRED SECURITIES. The Holders of Partnership
Preferred Securities shall have the right, at their
option, at any time before the close of business five
days prior to maturity of the Partnership Preferred
Securities or as otherwise set forth in this Agreement,
to cause the Conversion Agent to convert Partnership
Preferred Securities, on behalf of the converting
Holders, into shares of Common Stock in the manner
described herein on and subject to the following terms
and conditions:
(a) The Partnership Preferred Securities will
be convertible at the office of the Conversion Agent into
fully paid and nonassessable shares of Common Stock
pursuant to the Holder's direction to the Conversion
Agent to exchange such Partnership Preferred Securities
for a portion of the Convertible Debentures theretofore
held by Citizens Capital on the basis of one Partnership
Preferred Security per $50 principal amount of
Convertible Debentures, and immediately convert such
amount of Convertible Debentures into fully paid and
nonassessable shares of Common Stock at an initial rate
of shares of Common Stock per $50 principal amount of
Convertible Debentures (which is equivalent to a
conversion price of $____ per share of Common Stock,
subject to certain adjustments set forth in the terms of
the Convertible Debentures (as so adjusted, the
"Conversion Price")).
(b) In order to convert Partnership Preferred
Securities into Common Stock, the Holder shall surrender
the Partnership Preferred Securities to be converted to
the Conversion Agent at the office referred to above,
together with an irrevocable Notice of Conversion (i)
setting forth the number of Partnership Preferred
Securities to be converted and the name or names, if
other than the Holder, in which the shares of Common
Stock should be issued and (ii) directing the Conversion
Agent (a) to exchange such Partnership Preferred
Securities for a portion of the Convertible Debentures
held by Citizens Capital (at the rate of exchange
specified in the preceding paragraph) and (b) to
immediately convert such Convertible Debentures, on
behalf of such Holder, into Common Stock (at the
conversion rate specified in the preceding paragraph).
If the Notice of Conversion is delivered in a timely
manner, the Conversion Agent shall notify Citizens
Capital of the Holder's election to exchange Partnership
Preferred Securities for a portion of the Convertible
Debentures held by Citizens Capital and Citizens Capital
shall, upon receipt of such notice, deliver to the
Conversion Agent the appropriate principal amount of
Convertible Debentures for exchange in accordance with
this Section. The Conversion Agent shall thereupon
notify Citizens of the Holder's election to convert such
Convertible Debentures into shares of Common Stock.
Holders of Partnership Preferred Securities at the close
of business on a Distribution payment record date will be
entitled to receive the Distribution payable on such
securities on the corresponding Distribution Payment Date
notwithstanding the conversion of such Partnership
Preferred Securities following such Distribution payment
record date. Except as provided above, no payment,
allowance or adjustment shall be made by Citizens Capital
or Citizens upon any conversion on account of any
accumulated and unpaid Distributions accrued on the
Partnership Preferred Securities (including any
Additional Distributions accrued thereon) surrendered for
conversion, or on account of any accumulated and unpaid
distributions on the shares of Common Stock issued upon
such conversion. Partnership Preferred Securities shall
be deemed to have been converted immediately prior to the
close of business on the day on which a Notice of
Conversion relating to such Partnership Preferred
Securities is delivered in accordance with the foregoing
provisions (the "Conversion Date"). The Person or
Persons entitled to receive the Common Stock issuable
upon conversion of the Convertible Debentures shall be
treated for all purposes as the record holder or holders
of such Common Stock at such time. No fractional shares
of Common Stock will be issued as a result of conversion,
but in lieu thereof, such fractional interest will be
paid in cash by Citizens. As promptly as practicable on
or after the Conversion Date, Citizens shall issue and
deliver at the office of the Conversion Agent a
certificate or certificates for the number of full shares
of Common Stock issuable upon such conversion, together
with the cash payment, if any, in lieu of any fraction of
any share to the Person or Persons entitled to receive
the same, unless otherwise directed by the Holder in the
notice of conversion and the Conversion Agent shall
distribute such certificate or certificates to such
Person or Persons.
(c) Each Holder of a Partnership Preferred
Security by his acceptance thereof appoints the Transfer
Agent for the Partnership Preferred Securities as
Conversion Agent for the purpose of effecting the
conversion of Partnership Preferred Securities in
accordance with this Section. In effecting the
conversion transactions described in this Section, the
Conversion Agent shall be acting as agent of the Holders
of Partnership Preferred Securities directing it to
effect such conversion or exchange transactions. The
Conversion Agent is hereby authorized (i) to exchange
Partnership Preferred Securities from time to time for
Convertible Debentures held by Citizens Capital in
connection with the conversion of such Partnership
Preferred Securities in accordance with this Section
hereof, and (ii) to convert all or a portion of the
Convertible Debentures into Common Stock and thereupon to
deliver such shares of Common Stock in accordance with
the provisions of this Section and to deliver to Citizens
Capital a new Convertible Debenture or Convertible
Debentures for any resulting unconverted principal
amount.
(d) No fractional shares of Common Stock will
be issued as a result of conversion, but in lieu thereof,
such fractional interest will be paid in cash by Citizens
to Citizens Capital, which in turn will make such payment
to the Holder or Holders of Partnership Preferred
Securities so converted.
(e) Citizens shall at all times reserve and
keep available out of its authorized and unissued Common
Stock, solely for issuance upon the conversion of the
Convertible Debentures, free from any preemptive or other
similar rights, such number of shares of Common Stock as
shall from time to time be issuable upon the conversion
of all the Convertible Debentures then outstanding.
Notwithstanding the foregoing, Citizens shall be entitled
to deliver upon conversion of Convertible Debentures,
shares of Common Stock reacquired and held in the
treasury of Citizens (in lieu of the issuance of
authorized and unissued shares of Common Stock), so long
as any such treasury shares, upon delivery, are free and
clear of all liens, charges, security interests or
encumbrances. Any shares of Common Stock issued upon
conversion of the Convertible Debentures shall be duly
authorized, validly issued and fully paid and
nonassessable. Citizens Capital shall deliver the shares
of Common Stock received upon conversion of the
Convertible Debentures to the converting Holder free and
clear of all liens, charges, security interests and
encumbrances, except for United States withholding taxes.
Each of Citizens and Citizens Capital shall prepare and
shall use its best efforts to obtain and keep in force
such governmental or regulatory permits or other
authorizations as may be required by law, and shall
comply with all applicable requirements as to
registration or qualification of the Common Stock (and
all requirements to list the Common Stock issuable upon
conversion of Convertible Debentures that are at the time
applicable), in order to enable Citizens to lawfully
issue Common Stock to Citizens Capital upon conversion of
the Convertible Debentures and Citizens Capital to
lawfully deliver the Common Stock to each Holder upon
conversion of the Partnership Preferred Securities.
(f) Citizens will pay any and all taxes that
may be payable in respect of the issue or delivery of
shares of Common Stock on conversion of Convertible
Debentures and the delivery of the shares of Common Stock
by Citizens Capital upon conversion of the Partnership
Preferred Securities. Citizens shall not, however, be
required to pay any tax which may be payable in respect
of any transfer involved in the issue and delivery of
shares of Common Stock in a name other than that in which
the Partnership Preferred Securities so converted were
registered, and no such issue or delivery shall be made
unless and until the person requesting such issue has
paid to Citizens Capital the amount of any such tax, or
has established to the satisfaction of Citizens Capital
that such tax has been paid.
(g) Nothing in Section 6.3(f) shall limit the
requirement of Citizens Capital to withhold taxes
pursuant to Section 4.5 or otherwise require the General
Partner or Citizens Capital to pay any amounts on account
of such withholdings.
Section 6.4 DISTRIBUTION ELECTION.
(a) DECLARATION BY COMPANY. For so long as
Citizens Capital shall hold the Convertible Debentures,
the Company shall have by the Distribution Declaration
Date immediately preceding a Distribution Payment Date
declared by Distribution Declaration Notice the form of
payment in which it intends to pay the interest on the
Convertible Debentures held by the Citizens Capital. If
the Company shall have by the Distribution Declaration
Date in respect of a Distribution Payment Date, declared
to pay interest on the Convertible Debentures in the form
of cash, the holders of the Partnership Preferred
Securities will receive payments of distributions from
Citizens Capital only in the form of cash,
notwithstanding any election by the holder to the
contrary. If the Company shall have by the Distribution
Declaration Date declared to pay interest on the
Convertible Debentures in the form of shares of Common
Stock, the holders of the Partnership Preferred
Securities may receive distributions on the Partnership
Preferred Securities in the form of cash or shares of
Common Stock subject to the provision of this Section
6.4. If the Company fails to make a timely declaration,
the Company shall be deemed to have elected to pay
interest in the form of shares of Common Stock.
(b) ELECTION BY HOLDER. Distributions on the
Partnership Preferred Securities may be payable in cash
or an Equivalent Value of shares of Common Stock as set
forth in this Section 6.4. Subject to Sections 6.4(a)
and 6.4(d), each Holder may during an Election Period
elect to receive Distributions for the next four
Distribution Payment Dates in either (a) an Equivalent
Value of shares of Common Stock (a "Stock Distribution
Election") or (b) cash (a "Cash Distribution Election"),
in each case by submitting to the Election Agent a notice
of distribution election substantially in the form of
Annex B ("Notice of Distribution Election"); provided
however, that so long as the Property Trustee of the
Trust or a Clearing Agency is the Holder of the
Partnership Preferred Securities, the Holder may elect to
receive Distributions in a combination of cash and Common
Stock by specifying the aggregate number of the
Partnership Preferred Securities for each respective form
of payment. The Notice of Distribution Election shall
specify the form of payment (or, if the Property Trustee
or Clearing Agency is the Holder of the Partnership
Preferred Securities, the aggregate amount for each
respective form of payment) in which the Holder elects to
receive Distributions. If a Holder fails to submit a
Notice of Distribution Election during the Election
Period, the Holder shall be deemed to have elected to
receive distributions in the form of cash. If a Holder
transfers any or all Partnership Preferred Securities in
such Holder's possession, the subsequent Holder(s) of
such transferred Partnership Preferred Securities shall
be deemed to have made a Cash Distribution Election for
the remaining Distribution Payment Dates prior to the
next Election Period for which such subsequent Holder(s)
appear as the Holder(s) of record.
(c) COMMON STOCK ELECTION BY COMPANY. If the
Company has (or is deemed to have) elected to pay
interest on the Convertible Debentures in the form of
shares of Common Stock, Citizens Capital shall take such
actions and pay Distributions on Partnership Preferred
Securities in accordance with this Section 6.4(c). On
the Share Transfer and Valuation Date, the Company shall
issue and deliver to the office of the Paying Agent such
certificate or certificates of shares of Common Stock
representing Equivalent Value of Common Stock (or in the
names of such Persons as the Paying Agent shall so
designate to the Company) to satisfy in full the
obligation of the Company to pay interest on the
Convertible Debentures for the applicable Interest
Payment Date. No fractional shares of Common Stock will
be issued as a result of the Company's election to pay
interest on the Convertible Debentures in Common Stock,
but in lieu thereof, such fractional interest will be
paid to Citizens Capital in cash by the Company. No
fractional shares of Common Stock will be issued as a
result of the Holder's election to receive payments of
Distribution in the form of Common Stock, but in lieu
thereof such fractional interests will be paid for in
cash by Citizens Capital to the Partnership Preferred
Security Holders.
(i) To the extent Holders have elected to
receive payment of Distributions in
shares of Common Stock, the Paying Agent
shall distribute Equivalent Value of
Common Stock equal to the amount of such
Distribution, together with the cash
payment, if any, in lieu of any
fractional share of Common Stock to such
Partnership Preferred Security Holders
at the address specified on the register
of Citizens Capital. If, on any
Interest Payment Date, the Trust or a
Clearing Agency is the holder of record
of all or substantially all the
Partnership Preferred Securities, then
in determining the amount of cash to
deliver in lieu of fractional shares of
Common Stock, the beneficial holders of
the Trust Securities shall each be
treated as if it were a holder of record
of its proportionate share of the
Partnership Preferred Securities rather
than the Trust itself.
(ii) To the extent Holders have elected to
receive payment of Distributions in
cash, Citizens Capital shall sell in
accordance with applicable law such
number of shares of Common Stock held by
Citizens Capital in the open market
through designated brokers or sell
shares of Common Stock back to the
Company to generate cash in a dollar
amount equal to the amount (the "Cash
Equivalent Amount") necessary to pay all
Holders that elect to receive cash
Distributions (or, if the Property
Trustee or a Clearing Agency is the
Holder of the Partnership Preferred
Securities, wholly or partially in
cash). If the sales proceeds after the
payment of expenses, if any, relating to
such sales (the "Maximum Stock Sales
Proceeds") from the sale of all shares
of Common Stock held by Citizens Capital
for a Distribution Payment Date is less
than the Cash Equivalent Amount, the
General Partner shall be liable for and
shall promptly pay to Citizens Capital
the amount (the "Shortfall Amount")
equal to the difference between the Cash
Equivalent Amount and the Maximum Stock
Sales Proceeds.
(iii) To the extent there are any shares of
Common Stock or any cash remaining
(collectively "Excess Property") after
satisfying the obligations of the
holders of the Partnership Preferred
Securities in respect of any
Distribution Payment Date, such Excess
Property shall belong to, be allocated
to and inure to the sole benefit of the
General Partner.
(d) ELECTION BY THE COMPANY. Notwithstanding
the foregoing sections, Citizens has the right (the
"Company Cash Option") on and after the Distribution
Declaration Date but before the Cash Interest Payment
Date (as such term is defined in the Indenture) to cause
all Holders of Partnership Preferred Securities to
receive payment of Distributions in the form of cash by
paying interest on the Convertible Debentures in cash.
The Company may exercise the Company Cash Option if the
Company shall have provided written notice to the Trust
and the holders of the Trust Securities (a "Cash Payment
Notice").
(e) CALL OPTION ON COMMON STOCK. On or after
the Share Transfer and Valuation Date, the Company may
cause Citizens Capital or some or all the holders of
Partnership Preferred Securities to receive Distributions
in the form of cash by purchasing from Citizens Capital
shares of Common Stock, distributed by the Company as
interest payment on the Convertible Debentures, that have
not yet been sold for cash or distributed to the holders
of the Partnership Preferred Securities at a price equal
to the Equivalent Value (the "Company Call Option"). The
Company may exercise the Company Call Option if the
Company shall have provided a Cash Payment Notice.
ARTICLE VII
BOOKS OF ACCOUNT, RECORDS AND REPORTS
Section 7.1 BOOKS AND RECORDS.
(a) Proper and complete records and books of
account of Citizens Capital shall be kept by the General
Partner in which shall be entered fully and accurately
all transactions and other matters relative to Citizens
Capital's businesses as are usually entered into records
and books of account maintained by Persons engaged in
businesses of a like character, including a Capital
Account for each Partner. The books and records of
Citizens Capital, together with a certified copy of this
Agreement and of the Certificate, shall at all times be
maintained at the principal office of the General Partner
and shall be open to the inspection and examination of
the Partners or their duly authorized representatives for
a proper purpose during reasonable business hours.
(b) The General Partner may, for such period
of time that the General Partner deems reasonable, keep
confidential from the Partners any information with
respect to Citizens Capital the disclosure of which the
General Partner reasonably believes is not in the best
interests of Citizens Capital or is adverse to the
interests of Citizens Capital or which Citizens Capital
or the General Partner is required by law or by an
agreement with any Person to keep confidential.
(c) Within one month after the close of each
Fiscal Year, the General Partner shall transmit to each
Partner, a statement indicating such Partner's share of
each item of Partnership income, gain, loss, deduction or
credit for such Fiscal Year for federal income tax
purposes.
Section 7.2 ACCOUNTING METHOD. For both
financial and tax reporting purposes and for purposes of
determining profits and losses, the books and records of
Citizens Capital shall be kept on the accrual method of
accounting applied in a consistent manner and shall
reflect all Partnership transactions and be appropriate
and adequate for Citizens Capital's business.
Section 7.3 ANNUAL AUDIT. As soon as
practical after the end of each Fiscal Year, but not
later than 90 days after such end, the financial
statements of Citizens Capital shall be audited by a firm
of independent certified public accountants selected by
the General Partner, and such financial statements shall
be accompanied by a report of such accountants containing
their opinion. The cost of such audits will be an
expense of Citizens Capital and paid by Citizens.
ARTICLE VIII
POWERS, RIGHTS AND DUTIES
OF THE LIMITED PARTNERS
Section 8.1 LIMITATIONS. Other than as set
forth in this Agreement, the Limited Partners shall not
participate in the management or control of Citizens
Capital's business, property or other assets nor shall
the Limited Partners transact any business for Citizens
Capital, nor shall the Limited Partners have the power to
act for or bind Citizens Capital, said powers being
vested solely and exclusively in the General Partner
(and, upon appointment, the Special Representative).
Except for shares of Common Stock deliverable upon
conversion or exchange of the Partnership Preferred
Securities, the Limited Partners shall have no interest
in the properties, or assets of the General Partner, or
any equity therein, or in any proceeds of any sales
thereof (which sales shall not be restricted in any
respect, by virtue of acquiring or owning an Interest in
Citizens Capital).
Section 8.2 LIABILITY. Subject to the
provisions of the Act, no Limited Partner shall be liable
for the repayment, satisfaction or discharge of any debts
or other obligations of Citizens Capital in excess of the
Capital Account balance of such Limited Partner.
Section 8.3 PRIORITY. No Limited Partner
shall have priority over any other Limited Partner as to
Partnership allocations or distributions.
ARTICLE IX
POWERS, RIGHTS AND DUTIES
OF THE GENERAL PARTNER
Section 9.1 AUTHORITY. Subject to the
limitations provided in this Agreement, the General
Partner or, upon appointment pursuant to Section 6.2(h),
the Special Representative, shall have exclusive and
complete authority and discretion to manage the
operations and affairs of Citizens Capital and to make
all decisions regarding the business of Citizens Capital.
Any action taken by the General Partner or, upon
appointment pursuant to Section 6.2(h), the Special
Representative, shall constitute the act of and serve to
bind Citizens Capital. In dealing with the General
Partner or, upon appointment pursuant to Section 6.2(h),
the Special Representative, acting on behalf of Citizens
Capital no Person shall be required to inquire into the
authority of the General Partner or, upon appointment
pursuant to Section 6.2(h), the Special Representative,
to bind Citizens Capital. Persons dealing with Citizens
Capital are entitled to rely conclusively on the power
and authority of the General Partner or, upon appointment
pursuant to Section 6.2(h), the Special Representative,
as set forth in this Agreement.
Section 9.2 POWER AND DUTIES OF GENERAL
PARTNER. Except as otherwise specifically provided
herein, the General Partner (or, upon appointment
pursuant to Section 6.2(h), the Special Representative),
shall have all rights and powers of a general partner
under the Act, and shall have all authority, rights and
powers in the management of Citizens Capital business to
do any and all other acts and things necessary, proper,
convenient or advisable to effectuate the purposes of
this Agreement, including by way of illustration but not
by way of limitation, the following:
(a) to secure the necessary goods and services
required in performing the General Partner's duties
for Citizens Capital;
(b) to exercise all powers of Citizens
Capital, on behalf of Citizens Capital, in
connection with enforcing Citizens Capital's rights
under the Convertible Debentures and the Partnership
Guarantee Agreement;
(c) to issue Partnership Preferred Securities
and to admit Limited Partners in connection
therewith in accordance with this Agreement;
(d) to act as registrar and transfer agent for
the Partnership Preferred Securities or designate an
entity to act as registrar and transfer agent;
(e) to establish a record date with respect to
all actions to be taken hereunder that require a
record date be established, including with respect
to Distributions and voting rights and to make
determinations as to the payment of Distributions,
and make or cause to be made all other required
payments to Holders and to the General Partner;
(f) to open, maintain and close bank accounts
and to draw checks and other orders for the payment
of money;
(g) to bring or defend, pay, collect,
compromise, arbitrate, resort to legal action, or
otherwise adjust claims or demands of or against
Citizens Capital;
(h) to deposit, withdraw, invest, pay, retain
and distribute Citizens Capital's funds in a manner
consistent with the provisions of this Agreement;
(i) to take all action which may be necessary
or appropriate for the preservation and the
continuation of Citizens Capital's valid existence,
rights, franchises and privileges as a limited
partnership under the laws of the State of Delaware
and of each other jurisdiction in which such
existence is necessary to protect the limited
liability of the Limited Partner or to enable
Citizens Capital to conduct the business in which it
is engaged;
(j) to cause Citizens Capital to enter into
and perform, on behalf of Citizens Capital, the
Underwriting Agreement and to cause Citizens Capital
to purchase the Convertible Debentures without any
further act, vote or approval of any Partner; and
(k) to execute and deliver any and all
documents or instruments, perform all duties and
powers and do all things for and on behalf of
Citizens Capital in all matters necessary or
desirable or incidental to the foregoing.
Section 9.3 OBLIGATIONS AND EXPENSES PAYABLE
BY GENERAL PARTNER. (a) The General Partner hereby
assumes and shall be liable for the debts, obligations
and liabilities of the Partnership, including any
liabilities arising under the Securities Act of 1933 and
Securities Exchange Act of 1934, and agrees to pay to
each Person to whom Citizens Capital is now or hereafter
becomes indebted or liable, the "Beneficiaries," whether
such indebtedness, obligations or liabilities arise in
contract, tort or otherwise, (including, without
limitation, payment obligations arising under Sections
7.3 of this Agreement, but excluding payment obligations
of the Company to Holders of the Partnership Preferred
Securities in such Holders' capacities as Holders of such
Partnership Preferred Securities, such obligations being
separately guaranteed under the Partnership Guarantee
Agreement) the full payment of such indebtedness and any
and all liabilities, when and as due. This Agreement is
intended to be for the benefit of and to be enforceable
by all such Beneficiaries whether or not such
Beneficiaries have received notice hereof.
(b) The General Partner agrees to pay for
and be responsible for:
(i) all costs and expenses relating to
the sale of shares of the Citizens Utility Common Stock
received as interest payments on the Convertible
Debentures (including brokerage, transfer and custodial
fees);
(ii) all costs and expenses of Citizens
Capital (including, but not limited to, costs and
expenses relating to the organization of Citizens
Capital, the offering, sale and issuance of Partnership
Preferred Securities, the costs and expenses relating to
the operation of Citizens Capital, including without
limitation, costs and expenses of accountants, attorneys,
statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting
equipment, paying agent(s), registrar(s), transfer
agents), duplicating, travel and telephone and other
telecommunications expenses and costs and expenses
incurred in connection with the acquisition, financing,
and disposition of Partnership assets); and
(iii) any and all taxes (other than
United States withholding taxes attributable to Citizens
Capital or its assets) and all liabilities, costs and
expenses with respect to such taxes of Citizens Capital.
Section 9.4 LIABILITY. Except as expressly
set forth in this Agreement or in the Guarantee
Agreements, (a) the General Partner shall not be
personally liable for the return of any portion of the
capital contributions (or any return thereon) of the
Limited Partners; (b) the return of such capital
contributions (or any return thereon) shall be made
solely from assets of Citizens Capital; and (c) the
General Partner shall not be required to pay to Citizens
Capital or to any Limited Partner any deficit in any
Limited Partner's Capital Account upon dissolution or
otherwise. Other than as expressly provided in this
Agreement or under the Act, no Limited Partner shall have
the right to demand or receive property other than cash
for its respective Interest in Citizens Capital.
Otherwise, the General Partner shall be liable to an
unlimited extent for the debts and other obligations of
Citizens Capital.
Section 9.5 INVESTMENT COMPANY OR TAX ACTIONS.
The General Partner is authorized and directed to conduct
its affairs and to operate Citizens Capital in such a way
that Citizens Capital would not be deemed to be an
"investment company" required to be registered under the
Investment Company Act of 1940 (the "1940 Act") or
classified as an association taxable as a corporation for
federal income tax purposes and so that the Convertible
Debentures will be treated as indebtedness of Citizens
for federal income tax purposes. In this connection, the
General Partner is authorized to take any action not
inconsistent with applicable law or this Agreement, and
that does not materially and adversely affect the
interests of Holders, that the General Partner determines
in its discretion to be necessary or desirable for such
purposes.
Section 9.6 OUTSIDE BUSINESSES. Any Partner
or Affiliate thereof may engage in or possess an interest
in other business ventures of any nature or description,
independently or with others, similar or dissimilar to
the business of Citizens Capital, and Citizens Capital
and the Partners shall have no rights by virtue of this
Agreement in and to such independent ventures or the
income or profits derived therefrom and the pursuit of
any such venture, even if competitive with the business
of Citizens Capital, shall not be deemed wrongful or
improper. No Partner or Affiliate thereof shall be
obligated to present any particular investment
opportunity to Citizens Capital even if such opportunity
is of a character that, if presented to Citizens Capital,
could be taken by Citizens Capital, and any Partner or
Affiliate thereof shall have the right to take for its
own account (individually or as a partner or fiduciary)
or to recommend to others any such particular investment
opportunity.
Section 9.7 LIMITS ON GENERAL PARTNER'S
POWERS. (a) Anything in this Agreement to the contrary
notwithstanding, the General Partner (or, upon
appointment pursuant to Section 6.2(h), the Special
Representative) shall not cause or permit Citizens
Capital to:
(i) acquire any assets other than as
expressly provided herein;
(ii) do any act which would make it
impractical or impossible to carry on the ordinary
business of Citizens Capital;
(iii) possess Partnership property for
other than a Partnership purpose;
(iv) admit a Person as a Partner,
except as expressly provided in this Agreement;
(v) make any loans to the General
Partner or its Affiliates, other than loans
represented by the Convertible Debentures;
(vi) perform any act that would subject
any Limited Partner to liability as a general
partner in any jurisdiction;
(vii) engage in any activity that is
not consistent with the purposes of Citizens
Capital, as set forth in Section 2.3;
(viii) without the written consent of
66-2/3% in Liquidation Preference of the Partnership
Preferred Securities have an order for relief
entered with respect to Citizens Capital or commence
a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in
effect, or consent to the entry of an order for
relief in an involuntary case under any such law, or
consent to the appointment of or taking possession
by a receiver, trustee or other custodian for all or
a substantial part of Citizens Capital's property,
or make any assignment for the benefit of creditors
of Citizens Capital; or
(ix) borrow money or become liable for
the borrowings of any third party or to engage in
any financial or others trade or business.
(b) So long as the Convertible Debentures are
held by Citizens Capital, the General Partner shall not:
(i) direct the time, method and place
of conducting any proceeding for any remedy
available to the Special Representative, or
exercising any trust or power conferred on the
Special Representative with respect to the
Convertible Debentures,
(ii) waive any past default which is
waivable under the Convertible Debentures,
(iii) exercise any right to rescind or
annul a declaration that the principal of all the
Convertible Debentures shall be due and payable,
(iv) consent to any amendment,
modification or termination of the Convertible
Debentures or of the Indenture without, in each
case, obtaining the prior approval of the Holders of
not less than 66-2/3% in Liquidation Preference of
the Partnership Preferred Securities; provided,
however, that where a consent under the Convertible
Debentures would require the consent of each holder
of Convertible Debentures affected thereby, no such
consent shall be given by the General Partner
without the prior consent of each Holder of
Partnership Preferred Securities.
(c) The General Partner shall not revoke any
action previously authorized or approved by the Special
Representative or by a vote of Holders without the
approval of the Holders of not less than 66-2/3% in
Liquidation Preference of the Partnership Preferred
Securities. The General Partner shall notify all Holders
of any notice of default received from the Indenture
Trustee with respect to the Convertible Debentures.
Section 9.8 TAX MATTERS PARTNER.
(a) For purposes of Code Section 6231(a)(7),
the "Tax Matters Partner" shall be the General Partner as
long as it remains the general partner of Citizens
Capital. The Tax Matters Partner shall keep the Limited
Partners fully informed of any inquiry, examination or
proceeding.
(b) The General Partner shall not make an
election in accordance with Section 754 of the Code.
(c) The General Partner and the Partnership
Preferred Security Holders acknowledge that they intend,
for U.S. federal income tax purposes, that Citizens
Capital shall be treated as a partnership and that the
General Partner and the Partnership Preferred Security
Holders shall be treated as Partners of such Partnership
for such purposes.
(d) The General Partner shall retain, at the
expense of Citizens Capital and at its sole discretion, a
nationally recognized firm of certified public
accountants which shall prepare all federal, state, local
or other tax returns (including information returns) of
Citizens Capital, as required by law, and the Schedule K-
1's or any successor or similar forms or schedules
required by law.
Section 9.9 CONSOLIDATION, MERGER OR SALE OF
ASSETS.
(a) Citizens may not merge or consolidate with
or into another entity or permit another entity to merge
or consolidate with or into, or be replaced by, or sell,
transfer or lease all or substantially all of its assets
to another entity (each such event, a "Transaction")
unless (i) at the time of such Transaction, no Event of
Default (as defined in the Fiscal Agency Agreement) shall
have occurred and be continuing, or would occur as a
result of such Transaction, (ii) the survivor of such
merger or consolidation or the entity to which Citizens'
assets are sold, transferred or leased is an entity
organized under the laws of the United States or any
state thereof, such entity becomes a party to this
Agreement and becomes the General Partner, assumes all of
Citizens' obligations under this Agreement, and has a net
worth equal to at least 10% of the total capital
contributions made by the Partners to Citizens Capital,
and (iii) prior to such Transaction, Citizens obtains an
opinion of nationally recognized independent counsel
experienced in such matters to the effect that Citizens
Capital will continue to be taxable as a partnership for
federal income tax purposes after such Transaction and
(iv) in the case of any sale, transfer or lease of all or
substantially all of Citizens' assets that includes
Citizens' Interest in Citizens Capital, Citizens has
obtained the consent of the Holders of not less than 66-
2/3% in Liquidation Preference of the Partnership
Preferred Securities to the sale, transfer or lease of
its Interest in Citizens Capital.
(b) In addition, Citizens shall not cause or
allow Citizens Capital to enter into a Transaction,
except as described below and as permitted or required
under Section 11.3 of this Agreement. Citizens Capital
may, for purposes of changing its state of domicile in
order to avoid 1940 Act consequences adverse to Citizens,
itself or the Holders, merge or without the consent of
the Holders, merge or consolidate with or into, or be
replaced by, a limited partnership or trust organized as
such under the laws of any state of the United States of
America; provided, that (i) such successor entity either
(x) expressly assumes all of the obligations of Citizens
Capital under the Partnership Preferred Securities or (y)
substitutes for the Partnership Preferred Securities
other securities having substantially the same terms as
the Partnership Preferred Securities (the "Successor
Securities") so long as the Successor Securities rank,
with respect to participation in the profits or assets of
the successor entity, at least as high as the Partnership
Preferred Securities rank, with respect to participation
in the profits or assets of Citizens Capital, (ii)
Citizens expressly acknowledges such successor entity as
the holder of the Convertible Debentures, (iii) only if
the Trust is liquidated and the Partnership Preferred
Securities have been listed on a national securities
exchange or other organization, such Transaction does not
cause the Partnership Preferred Securities (or the
Successor Securities) to be delisted by any national
securities exchange or other organization on which the
Partnership Preferred Securities are then listed, (iv)
only if the Trust is liquidated and Partnership Preferred
Securities are distributed to holders of Trust
Securities, such Transaction does not cause the
Partnership Preferred Securities (or the Successor
Securities) to be downgraded by any nationally recognized
statistical rating organization, as that term is defined
by the Securities and Exchange Commission for purposes of
Rule 436(g)(2) under the Securities Act, (v) such
Transaction does not adversely affect the powers,
preferences and other special rights of Holders of
Partnership Preferred Securities (including Successor
Securities) in any material respect (other than with
respect to any dilution of the holders' interest in the
new entity), (vi) prior to such Transaction the Company
has received an opinion of nationally recognized
independent counsel to Citizens Capital experienced in
such matters to the effect that (x) such successor entity
will be treated as a partnership for federal income tax
purposes, (y) following such Transaction, Citizens and
such successor entity will be in compliance with the 1940
Act without registering thereunder as an investment
company, and (z) such Transaction will not adversely
affect the limited liability of the Holders.
ARTICLE X
TRANSFERS OF INTERESTS BY PARTNERS
Section 10.1 TRANSFER OF INTERESTS.
(a) Partnership Preferred Securities shall be
freely transferable by a Holder.
(b) Except as provided in the next sentence,
the General Partner may not assign or transfer its
Interest in Citizens Capital in whole or in part unless,
prior to such assignment or transfer, the General Partner
has obtained the consent of the Holders of not less than
66-2/3% in Liquidation Preference of the Partnership
Preferred Securities. The General Partner may assign or
transfer its interest in Citizens Capital without such
consent only to an entity that is the survivor of a
merger or consolidation of the General Partner in a
transaction that meets the requirements of Section 9.9(a)
and only if prior to such assignment or transfer the
Company has received an opinion of nationally recognized
independent tax counsel to Citizens Capital experienced
in such matters to the effect that after such assignment
or transfer Citizens Capital will continue to be treated
as a partnership for U.S. federal income tax purposes.
"Permitted Successor" shall mean an entity that is an
assignee or transferee of the Interest of the General
Partner as permitted by this Section 10.1(b).
(c) Except as provided above, no Interest
shall be transferred, in whole or in part, except in
accordance with the terms and conditions set forth in
this Agreement. Any transfer or purported transfer of
any Interest not made in accordance with this Agreement
shall be null and void.
Section 10.2 TRANSFER OF LP CERTIFICATES. The
General Partner shall provide for the registration of LP
Certificates and of transfers of LP Certificates. Upon
surrender for registration of transfer of any LP
Certificate, the General Partner shall cause one or more
new LP Certificates to be issued in the name of the
designated transferee or transferees. Every LP
Certificate surrendered for registration of transfer
shall be accompanied by a written instrument of transfer
in form satisfactory to the General Partner duly executed
by the Partnership Preferred Security Holder or his or
her attorney duly authorized in writing. Each LP
Certificate surrendered for registration of transfer
shall be cancelled by the General Partner. A transferee
of an LP Certificate shall be admitted to Citizens
Capital as a Limited Partner and shall be entitled to the
rights and subject to the obligations of a Partnership
Preferred Security Holder hereunder upon the receipt by a
transferee of an LP Certificate.
Section 10.3 PERSONS DEEMED PARTNERSHIP
PREFERRED SECURITY HOLDERS. Citizens Capital may treat
the Person in whose name any LP Certificate shall be
registered on the books and records of Citizens Capital
as the sole holder of such LP Certificate and of the
Partnership Preferred Securities represented by such LP
Certificate for purposes of receiving Distributions and
for all other purposes whatsoever (including without
limitation, tax returns and information reports) and,
accordingly, shall not be bound to recognize any
equitable or other claim to or interest in such LP
Certificate or in the Partnership Preferred Securities
represented by such LP Certificate on the part of any
other Person, whether or not Citizens Capital shall have
actual or other notice thereof.
Section 10.4 BOOK ENTRY PROVISIONS.
(a) General. The provisions of this Section
10.4 shall apply only in the event that the Partnership
Preferred Securities are distributed to the holders of
Trust Securities. The LP Certificates, on original
issuance, will be issued in the form of a global LP
Certificate or LP Certificates representing the Book-
Entry Interests, to be delivered to DTC, the initial
Clearing Agency, by, or on behalf of, the Partnership.
Such LP Certificate or LP Certificates shall initially be
registered on the books and records of the Partnership in
the name of Cede & Co., the nominee of DTC, and no
Partnership Preferred Security Owner will receive a
definitive LP Certificate representing such Partnership
Preferred Security Owner's interests in such LP
Certificate, except as provided in Section 10.6. Unless
and until definitive, fully registered LP Certificates
(the "Definitive LP Certificates") have been issued to
the Partnership Preferred Security Owners pursuant to
Section 10.6:
(i) The provisions of this Section shall be in
full force and effect;
(ii) The Partnership, the General Partner and
any Special Representative shall be entitled to deal
with the Clearing Agency for all purposes of this
Agreement (including the payment of Distributions,
Redemption Price and liquidation proceeds on the LP
Certificates and receiving approvals, votes or
consents hereunder) as the Partnership Preferred
Security Holder and the sole holder of the LP
Certificates and shall have no obligation to the
Partnership Preferred Security Owner; and
(iii) None of the Partnership, the General
Partner, any Special Representative or any agent of
the General Partner, the Partnership or any Special
Representative shall have any liability with respect
to or responsibility for the records of the Clearing
Agency.
(b) NOTICES TO CLEARING AGENCY. Whenever a
notice or other communication to the Partnership
Preferred Security Holders is required under this
Agreement, unless and until Definitive LP Certificates
shall have been issued to the Partnership Preferred
Security Owners pursuant to Section 10.6, the General
Partner and any Special Representative shall give all
such notices and communications specified herein to be
given to the Partnership Preferred Security Holders to
the Clearing Agency, and shall have no obligations to the
Partnership Preferred Security Owners.
(c) DEFINITIVE LP CERTIFICATES. If (i) the
Clearing Agency elects to discontinue its services as
securities depository, (ii) the Partnership elects to
terminate the book-entry system through the Clearing
Agency, or (iii) there is an Event of Default under the
Convertible Debentures, then Definitive LP Certificates
shall be prepared by the Partnership. Upon surrender of
the global LP Certificate or LP Certificates representing
the Book-Entry Interests by the Clearing Agency,
accompanied by registration instructions, the General
Partner shall cause Definitive LP Certificates to be
delivered to Partnership Preferred Security Owners in
accordance with the instructions of the Clearing Agency.
Neither the General Partner nor the Partnership shall be
liable for any delay in delivery of such instructions and
may conclusively rely on, and shall be protected in
relying on, such instructions. Any Person receiving a
Definitive LP Certificate in accordance with this Article
X shall be admitted to the Partnership as a Limited
Partner upon receipt of such Definitive LP Certificate
and shall be registered on the books and records of the
Partnership as a Partnership Preferred Security Holder.
The Definitive LP Certificates shall be printed,
lithographed or engraved or may be produced in any other
manner as may be required by any national securities
exchange on which the Partnership Preferred Securities
may be listed and is reasonably acceptable to the General
Partner, as evidenced by its execution thereof.
Section 10.5 REGISTRAR, PAYING AGENT AND
CONVERSION AGENT. Citizens Capital shall maintain in the
Borough of Manhattan, City of New York, State of New York
(i) an office or agency where Partnership Preferred
Securities may be presented for registration of transfer
or for exchange ("Registrar"), (ii) an office or agency
where Partnership Preferred Securities may be presented
for payment ("Paying Agent") and an office or agency
where Partnership Preferred Securities may be presented
for conversion ("Conversion Agent"). The Registrar shall
keep a register of the Partnership Preferred Securities
and of their transfer and exchange. Citizens Capital may
appoint the Registrar, the Paying Agent and the
Conversion Agent and may appoint one or more co-
registrars, one or more additional paying agents and one
or more additional conversion agents in such other
locations as it shall determine. The term "Paying Agent"
includes any additional paying agent and the term
"Conversion Agent" includes any additional conversion
agent. Citizens Capital may change any Paying Agent,
Registrar, co-registrar or Conversion Agent without prior
notice to any Holder. If Citizens Capital fails to
appoint or maintain another entity as Registrar, Paying
Agent or Conversion Agent, the General Partner shall act
as such. Citizens Capital or any of its Affiliates may
act as Paying Agent, Registrar, or Conversion Agent.
Citizens Capital initially appoints Chemical
Bank as Registrar, Paying Agent and Conversion Agent for
the Partnership Preferred Securities.
ARTICLE XI
WITHDRAWAL, DISSOLUTION;
LIQUIDATION AND DISTRIBUTION OF ASSETS
Section 11.1 WITHDRAWAL OF PARTNERS. The
General Partner shall not at any time retire or withdraw
from Citizens Capital except as otherwise permitted
hereunder. If the General Partner retires or withdraws
in contravention of this Section 11.1, it shall
indemnify, defend and hold harmless Citizens Capital and
the other Partners from and against any losses, expenses,
judgments, fines, settlements or damages suffered or
incurred by Citizens Capital or such other Partners
arising out of or resulting from such retirement or
withdrawal.
Section 11.2 DISSOLUTION OF CITIZENS CAPITAL.
(a) Citizens Capital shall not be dissolved by
the admission of Partners in accordance with the terms of
this Agreement. Except as provided in Section
11.2(b)(ii), the death, retirement, resignation,
expulsion, bankruptcy or dissolution of a Partner, or the
occurrence of any other event which terminates the
Interest of a Partner in Citizens Capital, shall not
cause Citizens Capital to be dissolved and its affairs
wound up so long as Citizens Capital at all times has at
least two Partners. Upon the occurrence of any such
event, the business of Citizens Capital shall be
continued without dissolution.
(b) Citizens Capital shall be dissolved and
terminated and its affairs shall be wound up upon the
earliest to occur of any of the following events:
(i) the expiration of the term of Citizens
Capital, as provided in Section 2.4 of this
Agreement;
(ii) upon the bankruptcy, insolvency,
expulsion or dissolution of the General Partner;
(iii) the entry of a decree of judicial
dissolution under Section 17-802 of the Act;
(iv) the written consent of all Partners; or
(v) in accordance with the terms of the
Partnership Preferred Securities.
(c) Upon dissolution of Citizens Capital, the
Liquidator shall promptly notify the Partners of such
dissolution.
Section 11.3 LIQUIDATION.
(a) In the event of the dissolution of
Citizens Capital for any reason, the General Partner (or,
if Citizens Capital is dissolved pursuant to Section
11.2(b)(ii), then a liquidating agent appointed by
Holders of not less than 66 2/3% in Liquidation
Preference of the Partnership Preferred Securities (the
General Partner or such Person so appointed is
hereinafter referred to as the "Liquidator")) shall
commence to wind up the affairs of Citizens Capital and
to liquidate Citizens Capital's assets, including
Citizens Capital's Eligible Investments and/or amounts
deposited in the Eligible Investment Account; provided,
however, that a reasonable time shall be allowed for the
orderly liquidation of the assets of Citizens Capital and
the satisfaction of liabilities to creditors so as to
enable the Partners to minimize the normal losses
attendant upon liquidation. The Partners shall continue
to share all income, losses and distributions during the
period of liquidation in accordance with Articles IV and
V. Subject to the provisions of this Article XI, the
Liquidator shall have full right and unlimited discretion
to determine the time, manner and terms of any sale or
sales of Partnership property pursuant to such
liquidation, giving due regard to the activity and
condition of the relevant market and general financial
and economic conditions.
(b) The Liquidator shall have all of the
rights and powers with respect to the assets and
liabilities of Citizens Capital in connection with the
liquidation and termination of Citizens Capital that the
General Partner would have with respect to the assets and
liabilities of Citizens Capital during the term of
Citizens Capital, and the Liquidator is hereby expressly
authorized and empowered to execute any and all documents
necessary or desirable to effectuate the liquidation and
termination of Citizens Capital and the transfer of any
assets.
(c) Notwithstanding the foregoing, a
Liquidator that is not a General Partner shall not be
deemed a Partner in this Partnership and shall not have
any of the economic interests in Citizens Capital of a
Partner; and such Liquidator may be compensated for its
services to Citizens Capital at normal customary and
competitive rates for its services to Citizens Capital as
reasonably determined by all the Limited Partners.
Section 11.4 DISTRIBUTION IN LIQUIDATION.
Subject to Section 9.3, the proceeds of liquidation shall
be applied in the following order of priority (and
without regard to the provisions of Section 17-804 of the
Act):
(i) to creditors of Citizens Capital,
including Partnership Preferred Security Holders who
are creditors, to the extent otherwise permitted by
law, in satisfaction of the liabilities of Citizens
Capital (whether by payment or the making of
reasonable provisions for payment thereof), other
than liabilities for distributions (including
Distributions) to Partners; and
(ii) following any allocations required under
Section 4.1(c) of the Agreement, to the Partners in
proportion to the Partner's positive Capital Account
balances.
Section 11.5 RIGHTS OF LIMITED PARTNERS. Each
Limited Partner shall look solely to the assets of
Citizens Capital for all distributions with respect to
Citizens Capital and such Partner's capital contribution
(including returns thereof), and such Partner's share of
profits or losses thereof, and shall have no recourse
therefor (upon dissolution or otherwise) against the
General Partner, except under the Partnership Guarantee
Agreement. Except as provided in Section 6.3 and 6.4 of
this Agreement, no Partner shall have any right to demand
or receive property other than cash upon dissolution and
termination of Citizens Capital.
Section 11.6 TERMINATION. Citizens Capital
shall terminate when all of the assets of Citizens
Capital shall have been disposed of and the assets shall
have been distributed as provided in Section 11.4. The
Liquidator shall then execute and cause to be filed a
certificate of cancellation of Citizens Capital.
ARTICLE XII
AMENDMENTS AND MEETINGS
Section 12.1 AMENDMENTS. Except as provided
by Section 6.2(i), this Agreement may be amended by a
written instrument executed by the General Partner
without the consent of any Limited Partner; provided,
however, that no amendment shall be made, and any such
purported amendment shall be void and ineffective, to the
extent the result thereof would be to cause Citizens
Capital to be treated as anything other than a
partnership for purposes of United States income taxation
or require Citizens Capital to register under the 1940
Act. Notwithstanding any provision to the contrary, in
the event of (i) a liquidation of the Trust for any
reason or (ii) any other distribution which effectively
causes Partnership Preferred Securities to be distributed
to holders of Trust Securities, the General Partner may
amend this Agreement without the consent of the Limited
Partners to provide for (A) orderly dissemination,
purchase, sale, exchange and replacement of such
Partnership Preferred Securities, (B) all other matters
to the extent required by or desirable under then
applicable law and (C) such other matters reasonably
incidental or related thereto; provided, however, that no
such amendment may materially adversely effect the
rights, preferences and value of any class of such
Partnership Securities without the consent of a majority
in interest of the Partners so effected.
Section 12.2 AMENDMENT OF CERTIFICATE. In the
event this Agreement shall be amended pursuant to Section
12.1, the General Partner shall amend the Certificate to
reflect such change if it deems such amendment of the
Certificate to be necessary or appropriate.
Section 12.3 MEETINGS OF PARTNERS.
(a) Meetings of the Limited Partners who are
Holders may be called at any time by the General Partner
to consider and act on any matter on which Limited
Partners are entitled to act under the terms of this
Agreement or the Act. The General Partner shall call a
meeting of Holders if directed to do so by Holders of no
less than 10% in Liquidation Preference as permitted by
this Agreement. Such direction shall be given by
delivering to the General Partner a request in writing
stating that the signing Limited Partners desire to call
a meeting and indicating the general or specific purpose
for which the meeting is to be called.
(b) Notice of any such meeting shall be given
to all Partners not less than seven Business Days nor
more than 60 days prior to the date of such meeting.
Each such notice shall set forth the date, time and place
of the meeting, a description of any matter on which
Holders are entitled to vote and instructions for the
delivery of proxies of written consents.
(c) Any action that may be taken at a meeting
of the Limited Partners may be taken without a meeting if
a consent in writing setting forth the action so taken is
signed by Limited Partners owning not less than the
minimum Interests that would be necessary to authorize or
take such action at a meeting in which all Limited
Partners having a right to vote thereon were present and
voting. Prompt notice of the taking of action without a
meeting shall be given to the Limited Partners entitled
to vote who have not consented in writing. The General
Partner may provide that any written ballot submitted to
the Limited Partners for the purpose of taking any action
without a meeting shall be refunded to Citizens Capital
within a specified time.
(d) Each Partner may authorize any Person to
act for it by proxy on all matters as to which a Partner
is entitled to participate, including waiving notice of
any meeting, or voting or participating at a meeting.
Every proxy must be signed by the Partner or its
attorney-in-fact. No proxy shall be valid after the
expiration of 11 months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the Partner executing it.
(e) Each meeting of Partners shall be
conducted by the General Partner or by such other Person
that the General Partner may designate.
(f) The General Partner may establish all
other reasonable procedures relating to meetings of
Partners or the giving of written consents, in addition
to those expressly provided, including notice of time,
place or purpose of any meeting at which any matter is to
be voted on by any Partners, waiver of any such notice,
action by consent without a meeting, the establishment of
a record date, quorum requirements, voting in person or
by proxy or any other matter with respect to the exercise
of any such right to vote.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 NOTICES. All notices provided
for in this Agreement shall be in writing, and shall be
delivered or mailed by first class or registered or
certified mail or, with respect to Citizens Capital and
General Partner, telecopied, as follows:
(a) if given to Citizens Capital, in care of
the General Partner at Citizens Capital's mailing
address set forth below:
Citizens Utilities Capital L.P.
c/o Citizens Utilities Company
High Ridge Park
P.O. Box 3801
Stamford, Connecticut 06905
Attention: ________________
Telecopy: ________________
(b) if given to the General Partner, at its
mailing address set forth below:
Citizens Utilities Company
High Ridge Park
P.O. Box 3801
Stamford, Connecticut 06905
Attention: ______________
Telecopy: ______________
(c) if given to any other Partner at the
address set forth on the books and records of
Citizens Capital.
Section 13.2 POWER OF ATTORNEY. Each Holder
does hereby constitute and appoint the General Partner,
and if applicable, any Special Representative appointed
pursuant to Section 6.2(g) of this Agreement, as its true
and lawful representative and attorney-in-fact, in its
name, place and stead to make, execute, sign, deliver and
file (a) any amendment of the Certificate required
because of an amendment of this Agreement or in order to
effect any change in Citizens Capital, (b) this
Agreement, (c) any amendments to this Agreement and (d)
all such other instruments, documents and certificates
which from time to time may be required by the laws of
the United States of America, the State of Delaware or
any other jurisdiction, or any political subdivision or
agency thereof, to effectuate, implement and continue the
valid and subsisting existence of Citizens Capital or to
dissolve Citizens Capital for any other purpose
consistent with this agreement and the transactions
contemplated hereby.
The power of attorney granted hereby is coupled
with an interest and shall (a) survive and not be
affected by the subsequent death, incapacity, disability,
dissolution, termination, or bankruptcy of the Holder
granting the same or the transfer of all or any portion
of such Holder's Interest and (b) extend to such Holder's
successors, assigns and legal representatives.
Section 13.3 ENTIRE AGREEMENT. This Agreement
constitutes the entire agreement among the parties. It
supersedes any prior agreement or understandings among
them, and it may not be modified or amended in any manner
other than as set forth herein.
Section 13.4 GOVERNING LAW. THIS AGREEMENT
AND THE RIGHTS OF THE PARTIES HEREUNDER SHALL BE GOVERNED
BY AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE
STATE OF DELAWARE AND ALL RIGHTS AND REMEDIES SHALL BE
GOVERNED BY SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS.
Section 13.5 EFFECT. Except as herein
otherwise specifically provided, this Agreement shall be
binding upon and inure to the benefit of the parties and
their legal representatives, successors and assigns.
Section 13.6 PRONOUNS AND NUMBER. Wherever
from the context it appears appropriate, each term stated
in either the singular or the plural shall include the
singular and the plural, and pronouns stated in either
the masculine, feminine or neuter shall include the
masculine, feminine and neuter.
Section 13.7 CAPTIONS. Captions contained in
this Agreement are inserted only as a matter of
convenience and in no way define, limit or extend the
scope or intent of this Agreement or any provisions
hereof.
Section 13.8 PARTIAL ENFORCEABILITY. If any
provision of this Agreement, or the application of such
provision to any Person or circumstance, shall be held
invalid, the remainder of this Agreement, or the
application of such provision to persons or circumstances
other than those to which it is held invalid, shall not
be affected thereby.
Section 13.9 COUNTERPARTS. This Agreement may
contain more than one counterpart of the signature page
and this Agreement may be executed by the affixing of the
signature of each of the Partners to one of such
counterpart signature pages. All of such counterpart
signature pages shall be read as though one, and they
shall have the same force and effect as though all of the
signers had signed a single signature page.
Section 13.10 REMEDIES. The failure of any
party to seek redress for violation of, or to insist upon
the strict performance of, any provision of this
Agreement shall not prevent a subsequent act, which would
have originally constituted a violation, from having the
effect of an original violation. The rights and remedies
provided by this Agreement are cumulative and the use of
any one right or remedy by any party shall not preclude
or waive its right to use any or all other remedies.
Said rights and remedies are given in addition to any
other rights the parties may have by law, statute,
ordinance or otherwise.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first above
stated.
GENERAL PARTNER:
CITIZENS UTILITIES COMPANY
a Delaware corporation
By:
Name:
Title:
INITIAL LIMITED PARTNER:
a _________ corporation
By:
Name:
Title:
ANNEX A
FORM OF PARTNERSHIP PREFERRED SECURITY
[FORM OF FACE OF SECURITY]
Number of Partnership
Certificate Number Preferred Securities
[CUSIP NO. ]
Certificate Evidencing Partnership Preferred Securities
of
Citizens Utilities Capital L.P.
___% Convertible Partnership
Preferred Securities (liquidation
preference $50 per Partnership
Preferred Security)
Citizens Utilities Capital L.P., a limited
partnership formed under the laws of the State of
Delaware (the "Partnership"), hereby certifies that
(the "Holder") is the registered owner of
preferred securities of Citizens Capital representing
limited partnership interests in Citizens Capital, which
are designated the __% Convertible Partnership Preferred
Securities (liquidation preference $50 per Preferred
Security) (the "Partnership Preferred Securities"). The
Partnership Preferred Securities are fully paid and are
nonassessable interests in Citizens Capital, as to which
the Partners in Citizens Capital who hold the Partnership
Preferred Securities (the "Partnership Preferred Security
Holders"), in their capacities as Partners in Citizens
Capital, will have no liability solely by reason of being
Partnership Preferred Security Holders (subject to the
obligation of a Partnership Preferred Security Holder to
repay any funds wrongfully distributed to it), and are
freely transferable on the books and records of Citizens
Capital, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper
form for transfer. The powers, preferences and special
rights and limitations of the Partnership Preferred
Securities are set forth in, and this certificate and the
Partnership Preferred Securities are set forth in, and
this certificate and the Partnership Preferred Securities
represented hereby are issued and shall in all respects
be subject to the terms and provisions of, the Amended
and Restated Limited Partnership Agreement of Citizens
Capital dated as of _________ ___, 1995, as the same may
be amended from time to time in accordance with its terms
(the "Limited Partnership Agreement"), authorizing the
issuance of the Partnership Preferred Securities and
determining the powers, preferences and other special
rights and limitations, regarding Distributions, voting,
return of capital and otherwise, and other matters
relating to the Partnership Preferred Securities.
Capitalized terms used herein but not defined herein
shall have the meaning given them in the Limited
Partnership Agreement. The Holder is entitled to the
benefits of the Partnership Preferred Securities
Guarantee Agreement dated as of ____________, 1995 (the
"Partnership Guarantee Agreement") executed by Citizens
Utilities Company (the "Company") to the extent provided
therein. Citizens Capital will furnish a copy of the
Limited Partnership Agreement and the Partnership
Guarantee Agreement to the Holder without charge upon
written request to Citizens Capital at its principal
place of business or registered office.
IN WITNESS WHEREOF, Citizens Capital has
executed this certificate this _____ day of ___________
1995.
CITIZENS UTILITIES CAPITAL L.P.
By: CITIZENS UTILITIES COMPANY
its General Partner
By:
Name:
Title:
[FORM OF REVERSE OF SECURITY]
The Holder, by accepting this certificate, is
deemed to have agreed (i) to be bound by the provisions
of the Limited Partnership Agreement and (ii) that the
Convertible Debentures acquired by Citizens Capital with
the proceeds from the issuance of the Partnership
Preferred Securities are subordinated and junior in right
of payment to all Senior Indebtedness of Citizens as and
to the extent provided in the Convertible Debentures and
(iii) that the Partnership Guarantee Agreement ranks (x)
subordinate and junior in right of payment to all Senior
Indebtedness of Citizens, and (y) PARI PASSU with the
most senior preferred or preference stock now or
hereafter issued by Citizens and with any guarantee now
or hereafter entered into by Citizens in respect of any
preferred or preference stock of any Affiliate of
Citizens, and (z) senior to Common Stock and any other
classes or series of capital stock of Citizens or any of
its Affiliates which by its express terms ranks junior in
the payment of distributions and amounts on liquidation,
dissolution, and winding-up to the Partnership Preferred
Securities, in each case, as and to the extent provided
in the Partnership Guarantee Agreement. Upon receipt of
this certificate, the Holder is admitted to the
Partnership as a Limited Partner, is bound by the Limited
Partnership Agreement and is entitled to the benefits
thereunder.
Distributions payable on each Partnership
Preferred Security will be fixed at a rate per annum of
% (the "Coupon Rate") of the stated liquidation
preference of $50 per Partnership Preferred Security,
such rate being the rate of interest payable on the
Convertible Debentures to be held by Citizens Capital.
Distributions in arrears for more than one quarter will
bear interest thereon compounded quarterly at the Coupon
Rate (to the extent permitted by applicable law). The
term "Distributions" as used herein includes payment in
the form of cash or shares of common stock of the Company
("Common Stock"). A Distribution is payable only to the
extent that payments are made in respect of the
Convertible Debentures held by Citizens Capital and to
the extent Citizens Capital has funds available therefor.
The amount of Distributions payable for any period will
be computed for any full quarterly Distribution period on
the basis of a 360-day year of twelve 30-day months, and
for any period shorter than a full quarterly Distribution
period for which Distributions are computed,
Distributions will be computed on the basis of the actual
number of days elapsed per 30-day month.
Except as otherwise described below,
distributions on the Partnership Preferred Securities
will be cumulative, will accrue from the date of original
issuance and will be payable quarterly in arrears, on
__________ ___, ________ ___, __________ ___ and
__________ ___ of each year, commencing on __________
___, 1996, to Holders of record on the relevant Regular
Record Dates (as such term is defined in the Indenture),
which payment dates shall correspond to the interest
payment dates on the Convertible Debentures. The
Debenture Issuer has the right under the Indenture to
defer payments of interest from time to time on the
Convertible Debentures for a period not exceeding 20
consecutive quarters (each an "Extension Period") and, as
a consequence of such deferral, Distributions will also
be deferred. Despite such deferral, quarterly
Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at
the Coupon Rate compounded quarterly during any such
Extension Period. Prior to the termination of any such
Extension Period, the Debenture Issuer may further extend
such Extension Period; provided that such Extension
Period together with all such previous and further
extensions thereof may not exceed 20 consecutive
quarters. Payments of accrued Distributions will be
payable to Holders as they appear on the books and
records of the Trust on the first record date after the
end of the Extension Period. Upon the termination of any
Extension Period and the payment of all amounts then due,
the Debenture Issuer may commence a new Extension Period,
subject to the above requirements.
The Partnership Preferred Securities shall be
redeemable as provided in the Limited Partnership
Agreement.
The Partnership Preferred Securities shall be
convertible into shares of Common Stock, through (i) the
exchange of Partnership Preferred Securities for a
portion of the Convertible Debentures and (ii) the
immediate conversion of such Convertible Debentures into
Common Stock, in the manner and according to the terms
set forth in the Limited Partnership Agreement.
NOTICE OF CONVERSION
To: [Name of Bank],
As Conversion Agent
Citizens Utilities Capital L.P.
The undersigned owner of these Partnership Preferred
Securities hereby irrevocably exercises the option to convert
these Partnership Preferred Securities, or the portion below
designated, into shares of Common Stock, Series A, par value $.25
per share, of CITIZENS UTILITIES COMPANY ("Common Stock") in
accordance with the terms of the Amended and Restated Agreement
of Limited Partnership (the "Limited Partnership Agreement"),
dated as of _________ ___, 1995, by and among Citizens Utilities
Company, as the general partner, ____________, as initial limited
partner, and such other Persons (as defined therein) who become
Limited Partners (as defined therein) as provided in the Limited
Partnership Agreement. Pursuant to the aforementioned exercise
of the option to convert these Partnership Preferred Securities,
the undersigned hereby directs the Conversion Agent (as that term
is defined in the Limited Partnership Agreement) to (i) exchange
such Partnership Preferred Securities for a portion of the
Convertible Debentures (as that term is defined in the Limited
Partnership Agreement) held by the Limited Partnership (as such
term is defined in the Limited Partnership Agreement) (at the
rate of exchange specified in the Limited Partnership Agreement)
and (ii) immediately convert such Convertible Debentures on
behalf of the undersigned, into Common Stock (at the conversion
rate specified in the Limited Partnership Agreement).
The undersigned does also hereby direct the Conversion
Agent that the shares issuable and deliverable upon conversion,
together with any check in payment for fractional shares, be
issued in the name of and delivered to the undersigned, unless a
different name has been indicated in the assignment below. If
shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable
with respect thereto.
This Notice of Conversion and any action taken
hereunder shall be governed by the terms of the Limited
Partnership Agreement.
Date: ____________, ____
in whole __ in part
Number of Partnership Preferred
Securities to be converted:
___________________
If a name or names other than the
undersigned, please indicate in the
spaces below the name or names in
which the shares of Common Stock
are to be issued, along with the
address or addresses of such person
or persons
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other
Identifying Number
ANNEX B
NOTICE OF DISTRIBUTION ELECTION
TO: _________________,
As Election Agent
Citizens Utilities Capital L.P.
The undersigned owner of ____% Convertible Partnership
Preferred Securities (liquidation preference $50 per preferred
security) (the "Partnership Preferred Securities"), issued
pursuant to the Amended and Restated Agreement of Limited
Partnership (the "Limited Partnership Agreement"), dated as of
___________ ___, 1995, by and among Citizens Utilities Company,
as the general partner, ____________, as initial limited partner,
and such other Persons (as defined therein) who become Limited
Partners (as defined therein) as provided in the Limited
Partnership Agreement, hereby irrevocably elects to receive, in
the form prescribed below, Distributions (as such term is defined
in the Limited Partnership Agreement) due and payable to the
undersigned on the four Distribution Payment Dates (as such term
is defined in the Limited Partnership Agreement) occurring after
the Election Period during which this Notice of Distribution
Election is being submitted.
The Undersigned, as Holder of [NUMBER OF PARTNERSHIP
PREFERRED SECURITIES HELD] Partnership Preferred Securities,
elects to receive payment of Distributions due and payable on the
next four Distribution Payment Dates in the form:
Choose one:
( ) Cash
( ) An Equivalent Value of shares Common Stock Series A,
par value $.25 per share, of Citizens Utilities Company
("Common Stock")
[(A) ( ) Cash for [NO. OF PARTNERSHIP PREFERRED SECURITIES
TO RECEIVE DISTRIBUTIONS IN CASH];
(B) ( ) Shares of Common Stock Series A, par value $.25
per share, of Citizens Utilities Company ("Common
Stock") [NO. OF PARTNERSHIP PREFERRED SECURITIES
TO RECEIVE DISTRIBUTIONS IN COMMON STOCK].](1)
_____________________
1 Only holders of Partnership Preferred Securities who
hold on behalf of more than one beneficial owner of
Partnership Preferred Securities may choose more
than one form in which to receive Distributions.
Furthermore, such holder of multiple beneficial
owners' interests in Partnership Preferred
Securities may elect only one form of Distribution
for each such beneficial owner.
The undersigned does also hereby direct the addressee
that any and all Distributions in the form of Common Stock made
pursuant to this Notice of Distribution Election be delivered to
and issued in the name of the undersigned, unless a different
name/different names has/have been indicated in the assignment
below. If such shares are to be issued in the name/names of a
person/persons other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto.
This Notice of Distribution Election and any action
taken hereunder shall be governed by the terms of the Limited
Partnership Agreement.
Date: ____________, ____
(Applicable only if box (B) has
been checked.) If a name or names
other than the undersigned, please
indicate in the spaces below the
name or names in which shares of
Common Stock are to be issued,
along with the address or addresses
of such person or persons
Signature
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other
Identifying Number
ANNEX C
STATEMENT OF COMMON DEFINITIONS
TABLE OF CONTENTS
Page
ARTICLE I
DEFINED TERMS
Section 1.1 DEFINITIONS . . . . . . . . . . . . . . . . . 4
Section 1.2 HEADINGS . . . . . . . . . . . . . . . . . . . 14
ARTICLE II
CONTINUATION OF CITIZENS CAPITAL;
ADMISSION OF PARTNERSHIP PREFERRED SECURITIES HOLDERS;
WITHDRAWAL OF INITIAL LIMITED PARTNER
Section 2.1 CONTINUATION OF CITIZENS CAPITAL . . . . . . . 14
Section 2.2 NAME . . . . . . . . . . . . . . . . . . . . . 14
Section 2.3 BUSINESS OF CITIZENS CAPITAL . . . . . . . . . 14
Section 2.4 TERM . . . . . . . . . . . . . . . . . . . . . 15
Section 2.5 REGISTERED AGENT AND OFFICE . . . . . . . . . 15
Section 2.6 PRINCIPAL PLACE OF BUSINESS . . . . . . . . . 15
Section 2.7 NAME AND BUSINESS ADDRESS OF
GENERAL PARTNER . . . . . . . . . . . . . . . 16
Section 2.8 QUALIFICATION TO DO BUSINESS . . . . . . . . . 16
Section 2.9 ADMISSION OF HOLDERS OF PARTNERSHIP
PREFERRED SECURITIES; WITHDRAWAL
OF INITIAL LIMITED PARTNER . . . . . . . . . . 16
ARTICLE III
CAPITAL CONTRIBUTIONS; REPRESENTATION OF
PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST;
CAPITAL ACCOUNTS
Section 3.1 CAPITAL CONTRIBUTIONS . . . . . . . . . . . . 17
Section 3.2 PARTNERSHIP PREFERRED SECURITY
HOLDER'S INTEREST REPRESENTED
BY L.P. CERTIFICATE . . . . . . . . . . . . . 17
Section 3.3 CAPITAL ACCOUNTS . . . . . . . . . . . . . . . 18
Section 3.4 INTEREST ON CAPITAL CONTRIBUTIONS . . . . . . 18
Section 3.5 WITHDRAWAL AND RETURN OF CAPITAL
CONTRIBUTIONS . . . . . . . . . . . . . . . . 18
Section 3.6 INVESTMENT OF CAPITAL CONTRIBUTIONS . . . . . 18
ARTICLE IV
ALLOCATIONS
Section 4.1 PROFITS AND LOSSES . . . . . . . . . . . . . . 19
Section 4.2 SPECIAL ALLOCATIONS . . . . . . . . . . . . . 21
Section 4.3 OTHER ALLOCATION PROVISIONS . . . . . . . . . 22
Section 4.4 ALLOCATIONS FOR INCOME TAX PURPOSES . . . . . 24
Section 4.5 WITHHOLDING . . . . . . . . . . . . . . . . 24
ARTICLE V
DISTRIBUTIONS
Section 5.1 DISTRIBUTIONS . . . . . . . . . . . . . . . . 25
Section 5.2 LIMITATIONS ON DISTRIBUTIONS . . . . . . . . . 25
ARTICLE VI
ISSUANCE OF PARTNERSHIP PREFERRED SECURITIES
Section 6.1 GENERAL PROVISIONS REGARDING
PARTNERSHIP PREFERRED SECURITIES . . . . . . . 25
Section 6.2 PARTNERSHIP PREFERRED SECURITIES . . . . . . . 27
Section 6.3 CONVERSION RIGHTS OF PARTNERSHIP
PREFERRED SECURITIES . . . . . . . . . . . . . 34
Section 6.4 DISTRIBUTION ELECTION . . . . . . . . . . . . 40
ARTICLE VII
BOOKS OF ACCOUNT, RECORDS AND REPORTS
Section 7.1 BOOKS AND RECORDS . . . . . . . . . . . . . . 44
Section 7.2 ACCOUNTING METHOD . . . . . . . . . . . . . . 44
Section 7.3 ANNUAL AUDIT . . . . . . . . . . . . . . . . . 45
ARTICLE VIII
POWERS, RIGHTS AND DUTIES
OF THE LIMITED PARTNERS
Section 8.1 LIMITATIONS . . . . . . . . . . . . . . . . . 45
Section 8.2 LIABILITY . . . . . . . . . . . . . . . . . 45
Section 8.3 PRIORITY . . . . . . . . . . . . . . . . . . 46
ARTICLE IX
POWERS, RIGHTS AND DUTIES
OF THE GENERAL PARTNER
Section 9.1 AUTHORITY . . . . . . . . . . . . . . . . . . 46
Section 9.2 POWER AND DUTIES OF GENERAL PARTNER . . . . . 46
Section 9.3 OBLIGATIONS AND EXPENSES PAYABLE
BY GENERAL PARTNER . . . . . . . . . . . . . . 48
Section 9.4 LIABILITY . . . . . . . . . . . . . . . . . . 49
Section 9.5 INVESTMENT COMPANY OR TAX ACTIONS . . . . . . 49
Section 9.6 OUTSIDE BUSINESSES . . . . . . . . . . . . . . 50
Section 9.7 LIMITS ON GENERAL PARTNER'S POWERS . . . . . . 50
Section 9.8 TAX MATTERS PARTNER . . . . . . . . . . . . . 52
Section 9.9 CONSOLIDATION, MERGER OR SALE OF ASSETS . . . 53
ARTICLE X
TRANSFERS OF INTERESTS BY PARTNERS
Section 10.1 TRANSFER OF INTERESTS . . . . . . . . . . . . 54
Section 10.2 TRANSFER OF LP CERTIFICATES . . . . . . . . . 55
Section 10.3 PERSONS DEEMED PARTNERSHIP PREFERRED
SECURITY HOLDERS . . . . . . . . . . . . . . . 56
Section 10.4 BOOK ENTRY PROVISIONS . . . . . . . . . . . . 56
Section 10.5 REGISTRAR, PAYING AGENT AND
CONVERSION AGENT . . . . . . . . . . . . . . . 58
ARTICLE XI
WITHDRAWAL, DISSOLUTION;
LIQUIDATION AND DISTRIBUTION OF ASSETS
Section 11.1 WITHDRAWAL OF PARTNERS . . . . . . . . . . . . 58
Section 11.2 DISSOLUTION OF CITIZENS CAPITAL . . . . . . . 59
Section 11.3 LIQUIDATION . . . . . . . . . . . . . . . . . 59
Section 11.4 DISTRIBUTION IN LIQUIDATION . . . . . . . . . 60
Section 11.5 RIGHTS OF LIMITED PARTNERS . . . . . . . . . . 61
Section 11.6 TERMINATION . . . . . . . . . . . . . . . . . 61
ARTICLE XII
AMENDMENTS AND MEETINGS
Section 12.1 AMENDMENTS . . . . . . . . . . . . . . . . . . 61
Section 12.2 AMENDMENT OF CERTIFICATE . . . . . . . . . . . 62
Section 12.3 MEETINGS OF PARTNERS . . . . . . . . . . . . . 62
ARTICLE XIII
MISCELLANEOUS
Section 13.1 NOTICES . . . . . . . . . . . . . . . . . . . 63
Section 13.2 POWER OF ATTORNEY . . . . . . . . . . . . . . 64
Section 13.3 ENTIRE AGREEMENT . . . . . . . . . . . . . . . 64
Section 13.4 GOVERNING LAW . . . . . . . . . . . . . . . . 65
Section 13.5 EFFECT . . . . . . . . . . . . . . . . . . . . 65
Section 13.6 PRONOUNS AND NUMBER . . . . . . . . . . . . . 65
Section 13.7 CAPTIONS . . . . . . . . . . . . . . . . . . . 65
Section 13.8 PARTIAL ENFORCEABILITY . . . . . . . . . . . . 65
Section 13.9 COUNTERPARTS . . . . . . . . . . . . . . . . . 65
Section 13.10 REMEDIES . . . . . . . . . . . . . . . . . . . 65
EXECUTION COPY
--------------------------------------
PARTNERSHIP PREFERRED SECURITIES GUARANTEE AGREEMENT
CITIZENS UTILITIES COMPANY
Dated as of January 15, 1996
--------------------------------------
<PAGE>
PARTNERSHIP PREFERRED SECURITIES GUARANTEE AGREEMENT
EXECUTION COPY
--------------------------------------
PARTNERSHIP PREFERRED SECURITIES GUARANTEE AGREEMENT
CITIZENS UTILITIES COMPANY
Dated as of January 15, 1996
--------------------------------------
<PAGE>
PARTNERSHIP PREFERRED SECURITIES GUARANTEE AGREEMENT
This PARTNERSHIP PREFERRED SECURITIES GUARANTEE AGREEMENT
("Guarantee Agreement"), dated as of January 15, 1996, is executed and delivered
by Citizens Utilities Company, a Delaware corporation (the "Guarantor"), and
Chemical Bank, a New York banking corporation, as trustee (the "Guarantee
Trustee"), for the benefit of the Holders (as defined herein) from time to time
of the Partnership Preferred Securities (as defined herein) of Citizens
Utilities Capital L.P., a Delaware limited partnership ("Citizens Capital").
WHEREAS, pursuant to the Limited Partnership Agreement (as defined
herein), Citizens Capital is issuing on the date hereof up to 3,608,260
Partnership Preferred Securities (plus up to an additional 541,240 Partnership
Preferred Securities, solely to cover over-allotments, if any), designated the
5% Partnership Preferred Securities (the "Partnership Preferred Securities");
and
WHEREAS, as incentive for the Holders to purchase the Partnership
Preferred Securities, the Guarantor desires irrevocably and unconditionally to
agree, to the extent set forth in this Guarantee Agreement, to pay to the
Holders of the Partnership Preferred Securities the Guarantee Payments (as
defined herein) and to make certain other payments on the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of the purchase by each Holder of
Partnership Preferred Securities, which purchase the Guarantor hereby agrees
shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee
Agreement for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation. In this Guaran
------------------------------
tee Agreement, unless the context otherwise requires:
(a) Capitalized terms used in this Guarantee Agreement have the
respective meanings assigned to them in this Sec tion 1.1, or, to the extent not
inconsistent with this Guarantee Agreement, in the Statement of Common Defini
tions annexed hereto as Annex A;
(b) unless otherwise defined herein, all capitalized items used
herein shall have the meanings ascribed to them in the Limited Partnership
Agreement;
(c) a term defined anywhere in this Guarantee Agreement has the
same meaning throughout;
(d) all references to "the Guarantee Agreement" or "this
Guarantee Agreement" are to this Guarantee Agreement as modified, supplemented
or amended from time to time;
(e) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(f) a term defined in the Trust Indenture Act has the same
meaning when used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires; and
(g) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in
---------
Rule 405 of the Securities Act of 1933, or any successor rule thereunder.
"Business Day" is defined in the Statement of Common Defini
------------
tions.
"Citizens Capital" shall have the meaning set forth in the
----------------
Preamble to this Guarantee Agreement.
" Common Stock Series A" is defined in the Statement of
-------------------
Common Definitions.
"Conversion Agent" is defined in the Statement of Common
----------------
Definitions.
"Convertible Debentures" is defined in the Statement of
----------------------
Common Definitions.
"Covered Person" means any Holder or beneficial owner of
--------------
Partnership Preferred Securities.
"Declaration" is defined in the Statement of Common Defini
-----------
tions.
"Designated Senior Holder" is defined in the Indenture.
------------------------
"Distributions" shall have the meaning as set forth in the
-------------
Limited Partnership Agreement.
"Event of Default" means a default by the Guarantor on any of
- ----------------
its payment or other obligations under this Guarantee Agreement.
"First Supplemental Indenture" is defined in the Statement of
- ----------------------------
Common Definitions.
"Guarantee Payments" means the following payments or distri
------------------
butions, without duplication, with respect to the Partnership Preferred
Securities, to the extent not paid or made by Citizens Capital: (i) any accrued
or deferred and unpaid Distributions that are required to be paid on such
Partnership Preferred Securities to the extent Citizens Capital shall have cash
and/or Common Stock legally available therefor, (ii) the redemption price,
including all accrued or deferred and unpaid Distributions to the date of
redemption (the "Redemption Price"), to the extent Citizens Capital has cash
and/or Common Stock legally available therefor, with respect to any Partnership
Preferred Securities called for redemption by Citizens Capital, and (iii) upon a
voluntary or involuntary dissolution, winding-up or termination of Citizens
Capital other than in connection with the distribution of Convertible Debentures
to the Holders in exchange for Partnership Preferred Securities as provided in
the Limited Partnership Agreement or the redemption of all the Partnership
Preferred Securities, the lesser of (a) the aggregate of the liquidation amount,
payable in cash, and all accrued or deferred and unpaid Distributions, payable
in either cash or Common Stock, on the Partnership Preferred Securities to the
date of payment (a "Liquidation Distribution"), to the extent Citizens Capital
shall have cash and/or Common Stock legally available therefor, and (b) the
amount of assets of Citizens Capital available for distribution to Holders in
liquidation of Citizens Capital.
"Guarantee Subordinated Payment" has the meaning specified in
- ------------------------------
Section 7.2.
"Guarantee Trustee" means Chemical Bank until a Successor
-----------------
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee Agreement and thereafter means each such
Successor Guarantee Trustee.
"Guarantor" shall have the meaning set forth in the Preamble
---------
to this Guarantee Agreement.
"Holder" shall mean any holder, as registered on the books
------
and records of Citizens Capital, of any Partnership Preferred Securities;
provided, however, that, in determining whether the holders of the requi
- --------
site percentage of Partnership Preferred Securities have given any request,
notice, consent or waiver hereunder, "Holder" shall not include the Guarantor or
any Affiliate of the Guarantor.
"Indebtedness" is defined in the Indenture.
------------
"Indemnified Person" means the Guarantee Trustee, any Affili
------------------
ate of the Guarantee Trustee, or any officers, directors, shareholders, members,
partners, employees, representatives or agents of the Guarantee Trustee.
"Indenture" is defined in the Statement of Common Defini
---------
tions.
"Junior Subordinated Payment" has the meaning specified in
---------------------------
Section 7.2.
"Limited Partnership Agreement" is defined in the Statement
-----------------------------
of Common Definitions.
"Liquidation Distribution" shall have the meaning set forth
------------------------
in this Section 1.1.
"List of Holders" shall have the meaning set forth in Section
- -----------
2.2.
"Majority in aggregate liquidation amount of the Partnership
- -----------------------------------------------------------
Preferred Securities" means, except as provided by the Trust Indenture
- --------------------
Act, a vote by Holder(s) of Partnership Preferred Securities, voting separately
as a class, of more than 50% of the liquidation amount of all Partnership
Preferred Securities.
"Officers' Certificate" is defined in the Statement of Common
- ---------------------
Definitions.
"Opinion of Counsel" is defined in the Indenture.
------------------
"Other Subordinated Indebtedness" is defined in the Inden
-------------------------------
ture.
"Paying Agent" is defined in the Statement of Common Defini
-----------
tions.
"Payment Blockage Period" has the meaning specified in
-----------------------
Section 7.3.
"Person" is defined in the Statement of Common Definitions.
------
"Partnership Preferred Securities" shall have the meaning set
- --------------------------------
forth in the Recitals to this Guarantee Agreement.
"Proceeding" shall have the meaning set forth in Section 7.2.
----------
"Redemption Price" shall have the meaning set forth in this
----------------
Section 1.1.
"Responsible Officer" means, with respect to the Guarantee
-------------------
Trustee, any vice-president, any assistant vice-president, the secretary or any
officer of the Guarantee Trustee with direct responsibility for the
administration of this Guarantee Agreement and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.
"Senior Indebtedness" and all capitalized terms used therein
-------------------
is defined in the Statement of Common Definitions.
"Senior Nonmonetary Default" has the meaning specified in
--------------------------
Section 7.3.
"Senior Payment Default" has the meaning specified in Section
- ----------------------
7.3.
"Subsidiary" is defined in the Statement of Common Defini
----------
tions.
"Successor Guarantee Trustee" means a successor Guarantee
---------------------------
Trustee possessing the qualifications to act as Guarantee Trustee under Section
4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application. This Guaran
--------------------------------
tee Agreement is subject to the provisions of the Trust Indenture Act that are
required to be part of this Guarantee Agreement and shall, to the extent
applicable, be governed by such provisions; and
(b) if and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the duties imposed by Section 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
SECTION 2.2 Lists of Holders of Securities. The Guarantor
------------------------------
shall provide the Guarantee Trustee with a list, in such form as the Guarantee
Trustee may reasonably require, of the names and addresses of the Holders of the
Partnership Preferred Securities ("List of Holders") as of such date, (i) within
one Business Day after January 1 and June 30 of each year and (ii) at any other
time within 30 days of receipt by the Guarantor of a written request for a List
of Holders as of a date no more than 14 days before such List of Holders is
given to the Guarantee Trustee; provided that the Guarantor shall not be
obligated to provide such --------
List of Holders at any time the List of Holders does not differ from the most
recent List of Holders given to the Guarantee Trustee by the Guarantor. The
Guarantee Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations under
Section 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
(c) Every Holder, by receiving and holding the same, agrees with
the Guarantor and the Guarantee Trustee that neither the Guarantor nor the
Guarantee Trustee nor any agent of either of them shall be held accountable by
reason of any disclosure of information as to names and addresses of Holders
made pursuant to the Trust Indenture Act.
SECTION 2.3 Reports by the Guarantee Trustee. Within 60 days
- --------------------------------
after May 15 of each year, the Guarantee Trustee shall provide to the Holders of
the Partnership Preferred Securities such reports as are required by Section 313
of the Trust Indenture Act, if any, in the form and in the manner provided by
Section 313 of the Trust Indenture Act. The Guarantee Trustee shall also comply
with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Guarantee Trustee. The Guar
-------------------------------------
antor shall provide to the Guarantee Trustee such documents, reports and
information as required by Section 314 (if any) and the compliance certificate
required by Section 314 of the Trust Indenture Act in the form, in the manner
and at the times required by Section 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
- ------------------------------------------------
The Guarantor shall provide to the Guarantee Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Guarantee Agreement
that relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) may be given in the form of an Officers'
Certificate.
SECTION 2.6 Events of Default; Waiver. The Holders of a
-------------------------
Majority in aggregate liquidation amount of Partnership Preferred Securities
may, by vote, on behalf of the Holders of all of the Partnership Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Guarantee Agreement, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.
SECTION 2.7 Event of Default; Notice. The Guarantee
------------------------
Trustee shall, within 90 days after the occurrence of an Event of Default,
transmit by mail, first class postage prepaid, to the Holders of the Partnership
Preferred Securities, notices of all Events of Default known to the Guarantee
Trustee, unless such defaults have been cured before the giving of such notice;
provided that the Guarantee Trustee shall be
--------
protected in withholding such notice if and so long as the board of directors,
the executive committee, or a trust committee of directors and/or Responsible
Officers of the Guarantee Trustee in good faith determines that the withholding
of such notice is in the interests of the Holders of the Partnership Preferred
Securities.
(b) The Guarantee Trustee shall not be deemed to have knowledge of
any Event of Default unless the Guarantee Trustee shall have received written
notice of such Event of Default.
SECTION 2.8 Conflicting Interests. The Limited Partnership
---------------------
Agreement shall be deemed to be specifically described in this Guarantee
Agreement for the purposes of clause (i) of the first proviso contained in
Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee Trustee.
------------------------------------------
This Guarantee Agreement shall be held by the Guarantee Trustee for the benefit
of the Holders of the Partnership Preferred Securities, and the Guarantee
Trustee shall not transfer this Guarantee Agreement to any Person except a
Holder of Partnership Preferred Securities exercising his or her rights pursuant
to Section 5.4(b) or to a Successor Guarantee Trustee on acceptance by such
Successor Guarantee Trustee of its appointment to act as Successor Guarantee
Trustee. The right, title and interest of the Guarantee Trustee shall
automatically vest in any Successor Guarantee Trustee, and such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered pursuant to the appointment of such Successor
Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the
Holders of the Partnership Preferred Securities.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Guarantee Trustee. In case an Event of Default
has occurred (that has not been cured or waived pursuant to Section 2.6), the
Guarantee Trustee shall exercise such of the rights and powers vested in it by
this Guarantee Agreement, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Guarantee
Trustee shall be determined solely by the express provisions of this Guarantee
Agreement, and the Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in this
Guarantee Agreement, and no implied covenants or obligations shall be read into
this Guarantee Agreement against the Guarantee Trustee; and
(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee 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 Guarantee Trustee and conforming
to the requirements of this Guarantee Agreement; but in the case of any such
certificates or opinions that by any provision hereof are specifically required
to be furnished to the Guar antee Trustee, the Guarantee Trustee shall be under
a duty to examine the same to determine whether or not they conform to the
requirements of this Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was negligent in
ascertaining the per tinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a Majority in aggregate
liquidation amount of the Partnership Preferred Securities relating to the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee or exercising any trust or power conferred upon the Guaran tee
Trustee under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require
the Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if the Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such funds or liability
is not reasonably assured to it under the terms of this Guarantee Agree ment or
adequate indemnity against such risk or liability is not reasonably assured to
it.
(e) If:
(1) default occurs in the payment of the principal of any
Partnership Preferred Security when and as the same shall be due and payable and
such failure shall continue for 15 days; or
(2) default occurs in the payment of any distribution on
any Partnership Preferred Security when such distribution becomes due and
payable and such failure continues for a period of 60 days;
the Guarantee Trustee shall be authorized to recover judgment, in its own name
and as trustee of an express trust, against the Guarantor for the whole amount
of principal and distributions owing and unpaid.
(f) In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Guarantor or any other obligor upon
the Partnership Preferred Securities or the property of the Guarantor or of such
other obligor or their creditors, the Guarantee Trustee shall be authorized to
file and prove a claim for the whole amount of principal and distributions owing
and unpaid in respect of the Partnership Preferred Securities and to file such
other papers or documents as may be necessary or advisable in order to have the
claims of the Guarantee Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Guarantee Trustee, its
agents and counsel) and of the Holders allowed in such judicial proceeding.
SECTION 3.2 Certain Rights of Guarantee Trustee. (a) Subject
- -----------------------------------
to the provisions of Section 3.1:
(i) The Guarantee Trustee may rely and shall be fully
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, re quest, 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, sent or presented
by the proper party or parties.
(ii) Any direction or act of the Guarantor contem plated by
this Guarantee Agreement shall be sufficiently evidenced by a written direction
or an Officers' Certificate.
(iii) Whenever, in the administration of this Guarantee
Agreement, the Guarantee Trustee shall deem it desirable that a matter be proved
or established before taking, suffering or omit ting any action hereunder, the
Guarantee Trustee (unless other evidence is herein specifically prescribed) may,
in the absence of bad faith on its part, request and rely upon an Officers'
Certifi cate which, upon receipt of such request, shall be promptly deliv ered
by the Guarantor.
(iv) The Guarantee Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or any rerecording,
refiling or reregistration thereof).
(v) The Guarantee Trustee may consult with counsel, and the
written advice or opinion of such counsel with respect to legal matters shall be
full and complete authorization and protec tion in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with such
advice or opin ion. Such counsel may be counsel to the Guarantor or any of its
Affiliates and may include any of its employees. The Guarantee Trustee shall
have the right at any time to seek instructions concerning the administration of
this Guarantee Agreement from any court of competent jurisdiction.
(vi) The Guarantee Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Guarantee Agreement at the
request or direction of any Holder, unless such Holder shall have provided to
the Guarantee Trustee such adequate security and indemnity as would satisfy a
reasonable person in the position of the Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses) and liabilities that might be
incurred by it in complying with such request or direction, including such
reasonable advances as may be requested by the Guarantee Trustee; provided that,
nothing contained in this Section -------
3.2(a)(vi) shall be taken to relieve the Guarantee Trustee, upon the
occurrence of an Event of Default, of its obligation to exer cise the rights and
powers vested in it by this Guarantee Agree ment.
(vii) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolu tion, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.
(viii)The Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys, and the Guarantee Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder.
(ix) Any action taken by the Guarantee Trustee or its agents
hereunder shall bind the Holders of the Partnership Pre ferred Securities, and
the signature of the Guarantee Trustee or its agents alone shall be sufficient
and effective to perform any such action. No third party shall be required to
inquire as to the authority of the Guarantee Trustee to so act or as to its com
pliance with any of the terms and provisions of this Guarantee Agreement, both
of which shall be conclusively evidenced by the Guarantee Trustee's or its
agent's taking such action.
(x) Whenever in the administration of this Guarantee
Agreement the Guarantee Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other action
hereunder, the Guarantee Trustee (i) may request instructions from the Holders
of a Majority in aggregate liquidation amount of the Partnership Preferred
Securities, (ii) may refrain from enforcing such remedy or right or taking such
other action until such instructions are received and (iii) shall be protected
in acting in accordance with such instructions.
(b) No provision of this Guarantee Agreement shall be deemed to
impose any duty or obligation on the Guarantee Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on it
in any jurisdiction in which it shall be illegal, or in which the Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of Guar
------------------------------------------------
antee. The recitals contained in this Guarantee shall be taken as the
- -----
statements of the Guarantor, and the Guarantee Trustee does not assume any
responsibility for their correctness. The Guarantee Trustee makes no
representation as to the validity or sufficiency of this Guarantee Agreement.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1 Guarantee Trustee; Eligibility. There shall at
- -------------------------------
all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person meeting the requirements of an
institutional trustee under the Trust Indenture Act, authorized under such laws
to exercise corporate trust powers, having a combined capital and surplus of at
least fifty million U.S. dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or District of Columbia authority. If
such corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of the supervising or examining authority referred to
above, then, for the purposes of this Section 4.1(a)(ii), the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
(b) If at any time the Guarantee Trustee shall cease to be eligible
to so act under Section 4.1(a), the Guarantee Trustee shall immediately resign
in the manner and with the effect set out in Section 4.2(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of Guarantee
- -------------------------------------------------
Trustees. Subject to Section 4.2(b), the Guarantee
Trustee may be ap
- --------
pointed or removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed in accordance with
Section 4.2 until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor.
(c) The Guarantee Trustee appointed to office shall hold office
until a Successor Guarantee Trustee shall have been appointed or until its
removal or resignation. The Guarantee Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing executed by
the Guarantee Trustee and delivered to the Guarantor, which resignation shall
not take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition any court of competent jurisdiction for
appointment of a Successor Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Guarantee Trustee.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee. The Guarantor irrevocably and uncon
---------
ditionally agrees to pay in full to the Holders the Guarantee Payments (without
duplication of amounts theretofore paid by Citizens Capital), as and when due,
regardless of any defense, right of set-off or counterclaim that Citizens
Capital may have or assert. The Guarantor's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by the
Guarantor to the Holders or by causing Citizens Capital to pay such amounts to
the Holders.
SECTION 5.2 Waiver of Notice and Demand. The Guarantor
---------------------------
hereby waives notice of acceptance of this Guarantee Agreement and of any
liability to which it applies or may apply, presentment, demand for payment, any
right to require a proceeding first against Citizens Capital or any other Person
before proceeding against the Guarantor, protest, notice of nonpayment, notice
of dishonor, notice of redemption and all other notices and demands.
SECTION 5.3 Obligations Not Affected. The obligations, cove
------------------------
nants, agreements and duties of the Guarantor under this Guarantee Agreement
shall in no way be affected or impaired by reason of the happening from time to
time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by Citizens Capital of any express or implied
agreement, covenant, term or condition relating to the Partnership Preferred
Securities to be performed or observed by Citizens Capital;
(b) the extension of time for the payment by Citizens Capital of
all or any portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Partnership
Preferred Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Partnership
Preferred Securities (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or other sum payable
that results from the deferral of any interest payment on the Convertible
Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part
of the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Partnership
Preferred Securities, or any action on the part of Citizens Capital granting
indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, Citizens Capital or any of the
assets of Citizens Capital;
(e) any invalidity of, or defect or deficiency in the
Partnership Preferred Seceurities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders. (b) The Holders of a Majori
-----------------
ty in aggregate liquidation amount of the Partnership Preferred Securities have
the right (i) to direct the time, method and place of conducting of any
proceeding for any remedy available to the Guarantee Trustee in respect of this
Guarantee Agreement or to direct the exercise of any trust or power conferred
upon the Guarantee Trustee under this Guarantee Agreement and (ii) on behalf of
the Holders of all Partnership Preferred Securities to consent to the waiver of
any past default and its consequences.
(b) If the Guarantee Trustee fails to enforce this Guarantee
Agreement, any Holder of Partnership Preferred Securities may institute a legal
proceeding directly against the Guarantor to enforce the Guarantee Trustee's
rights under this Guarantee Agreement, without first instituting a legal
proceeding against Citizens Capital, the Guarantee Trustee or any other Person.
SECTION 5.5 Guarantee of Payment. This Guarantee Agreement
--------------------
creates a guarantee of payment and not of collection.
SECTION 5.6 Subrogation. The Guarantor shall be subrogated
-----------
to all (if any) rights of the Holders of Partnership Preferred Securities
against Citizens Capital in respect of any amounts paid to such Holders by the
Guarantor under this Guarantee Agreement; provided, however, that the
--------
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any right that it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Guarantee Agreement, if, at the time of any such
payment, any amounts are due and unpaid under this Guarantee Agreement. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders.
SECTION 5.7 Independent Obligations. The Guarantor acknowl
------------------------
edges that its obligations hereunder are independent of the obligations of
Citizens Capital with respect to the Partnership Preferred Securities, and that
the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Guarantee Agreement
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
COVENANTS
SECTION 6.1 Limitation of Transactions. So long as any
--------------------------
Partnership Preferred Securities remain outstanding, if (i) there shall have
occurred an Event of Default hereunder or an event of default under the Limited
Partnership Agreement or (ii) if the Guarantor exercises its right to defer
interest payments on the Convertible Debentures, then the Guarantor will comply
with Section 9.1 (1) (i), (ii), (iii) and (iv) of the First Supplemental
Indenture (and references therein to "the Company" shall be deemed to refer to
the Guarantor).
ARTICLE VII
SUBORDINATION
SECTION 7.1 Subordination. This Guarantee Agreement will
-------------
constitute an unsecured obligation of the Guarantor and will rank subordinate
and subject in right of payment to the prior payment in full in cash of Senior
Indebtedness of the Guarantor.
Article VII shall constitute a continuing offer to all Persons who
become holders of, or continue to hold, Senior Indebtedness, and such provisions
are made for the benefit of the holders of Senior Indebtedness and such holders
are made obligees hereunder and any one or more of them may enforce such
provisions. Holders of Senior Indebtedness need not prove reliance on the
subordination provisions hereof.
SECTION 7.2 Payment Over of Proceeds Upon Dissolution, etc.
-----------------------------------------------
Upon any payment or distribution of assets of the Guarantor to creditors upon
any liquidation, dissolution, winding-up, reorganization, assignment for the
benefit of creditors, marshalling of assets or liabilities or any bankruptcy,
insolvency or similar proceedings of the Guarantor (each such event, if any,
herein sometimes referred to as a "Proceeding"):
(i) the holders of Senior Indebtedness shall be entitled to receive
payment in full in cash of all amounts due on or to become due on or in respect
of all Senior Indebtedness, before the Holders are entitled to receive any
payment (including any payment to Holders made in respect of any other
Indebtedness of the Guarantor subordinated to the payment of the Guarantee, such
payment or distribution being hereinafter referred to as a "Junior Subordinated
Payment"), on account of the Guarantee or on account of any purchase, redemption
or other acquisition of the Guarantee by the Guarantor, any Subsidiary of the
Guarantor, the Guarantee Trustee or any Paying Agent (all such payments,
distributions, purchases, redemptions and acquisitions, whether or not in
connection with a Proceeding, herein referred to, individually and collectively,
as a "Guarantee Subordinated Payment"); and
(ii) any payment or distribution of assets of the Guarantor of any
kind or character, whether in cash, property or securities, by set-off or
otherwise, to which the Holders or the Guarantee Trustee would be entitled but
for the provisions of this Article (including, without limitation, any Junior
Subordinated Payment) shall be paid by the liquidating trustee or agent or other
Person making such payment or distribution, whether a trustee in bankruptcy, a
receiver or liquidating trustee or otherwise, directly to the holders of 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 the Senior Indebtedness held or
represented by each, to the extent necessary to make payment in full in cash of
all Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment to the holders of such Senior Indebtedness.
In the event that, notwithstanding the foregoing provisions of this
Section, the Guarantee Trustee or a Holder shall have received in connection
with any Proceeding any Guarantee Subordinated Payment before all Senior
Indebtedness is paid in full or payment thereof provided for in cash, then and
in such event such Guarantee Subordinated Payment shall be paid over or
delivered forthwith to the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or other Person making payment or distribution of
assets of the Guarantor for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all Senior
Indebtedness in full in cash after giving effect to any concurrent payment to or
for the holders of Senior Indebtedness.
For purposes of this Article only, the words "any payment or
distribution of any kind or character, whether in cash, property or securities"
shall not be deemed to include a payment or distribution of stock or securities
of the Guarantor provided for by a plan of reorganization or readjustment
authorized by an order or decree of a court of competent jurisdiction in a
reorganization proceeding under any applicable bankruptcy law or of any other
corporation provided for by such plan of reorganization or readjustment which
stock or securities are subordinated in right of payment to all then outstanding
Senior Indebtedness to substantially the same extent, or to a greater extent
than, the Guarantee is so subordinated as provided in this Article. The
consolidation of the Guarantor with, or the merger of the Guarantor into,
another Person or the liquidation or dissolution of the Guarantor following the
conveyance or transfer of all or substantially all of its properties and assets
as an entirety to another Person upon the terms and conditions set forth in
Article Eight of the Indenture shall not be deemed a Proceeding for the purposes
of this Section if the Person formed by such consolidation or into which the
Guarantor is merged or the Person which acquires by conveyance or transfer such
properties and assets as an entirety, as the case may be, shall, as a part of
such consolidation, merger, conveyance or transfer, comply with the conditions
set forth in Article Eight of the Indenture.
SECTION 7.3 No Payment When Senior Indebtedness In Senior
----------------------------------------------
Payment Default or Senior Indebtedness Accelerated. In the event that (a)
- --------------------------------------------------
any Senior Payment Default (as defined below) shall have occurred and such
Senior Indebtedness shall have become, by reason thereof, due and payable prior
to the stated maturity thereof, then no Guarantee Subordinated Payment shall be
made (except that, so long as Citizens Capital shall be the holder of all of the
Outstanding Convertible Debentures, payment may be made in shares of capital
stock), unless and until such Senior Payment Default shall have been cured or
waived in writing or shall have ceased to exist or all amounts then due and
payable in respect of such Senior Indebtedness (including amounts that have
become and remain due by acceleration) shall have been paid in full in cash.
"Senior Payment Default" means any default (which default has continued beyond
any applicable grace and/or cure period (if any), in the payment of principal of
(or premium, if any) or interest on any Senior Indebtedness when due, whether at
the stated maturity of any such payment or by declaration of acceleration, call
for redemption, mandatory payment or prepayment or otherwise.
In the event that any Senior Nonmonetary Default (as defined below)
shall have occurred and be continuing, then, upon the receipt by the Guarantor
and the Guarantee Trustee of written notice of such Senior Nonmonetary Default
from the Designated Senior Holder of such certain Senior Indebtedness, no
Guarantee Subordinated Payment (except that, so long as Citizens Capital shall
be the holder of all of the Outstanding Convertible Debentures, payment may be
made in shares of capital stock) shall be made, during the period (the "Payment
Blockage Period") commencing on the date of such receipt of such written notice
and ending (subject to any blockage of payments that may then or thereafter be
in effect as the result of any Senior Payment Default) on the earlier of (i) the
date on which the Senior Indebtedness to which such Senior Nonmonetary Default
relates is discharged or such Senior Nonmonetary Default shall have been cured
or waived in writing or shall have ceased to exist and any acceleration of
Senior Indebtedness to which such Senior Nonmonetary Default relates shall have
been rescinded or annulled or (ii) the 179th day after the date of such receipt
of such written notice. No more than one Payment Blockage Period may be
commenced with respect to the Guarantee during any period of 360 consecutive
days and there shall be a period of at least 181 consecutive days in each period
of 360 consecutive days when no Payment Blockage Period is in effect. Following
the commencement of any Payment Blockage Period, the holders of the Senior
Indebtedness will be precluded from commencing a subsequent Payment Blockage
Period until the conditions set forth in the preceding sentence are satisfied.
For all purposes of this paragraph, no Senior Nonmonetary Default that existed
or was continuing on the date of commencement of any Payment Blockage Period
with respect to the Senior Indebtedness initiating such Payment Blockage Period
shall be, or be made, the basis for the commencement of a subsequent Payment
Blockage Period by holders of Senior Indebtedness or their representatives
unless such Senior Nonmonetary Default shall have been cured for a period of not
less than 90 consecutive days. "Senior Nonmonetary Default" means any default
(other than a Senior Payment Default) or any event which, after notice or lapse
of time (or both), would become an event of default, under the terms of any
instrument or agreement pursuant to which any Senior Indebtedness is
outstanding, permitting (after notice or lapse of time or both) one or more
holders of such Senior Indebtedness (or a trustee or agent on behalf of the
holders thereof) to declare such Senior Indebtedness due and payable prior to
the date on which it would otherwise become due and payable.
In the event that, notwithstanding the foregoing, the Guarantor
shall make any Guarantee Subordinated Payment to the Guarantee Trustee or any
Holder prohibited by the foregoing provisions of this Section, then and in such
event such Guarantee Subordinated Payment shall be paid over and delivered
forthwith to the Designated Senior Holders under the Senior Indebtedness or, if
such Senior Indebtedness has been repaid in full, to the Guarantor.
The provisions of this Section shall not apply to any Guarantee
Subordinated Payment with respect to which Section 7.2 hereof would be
applicable.
SECTION 7.4 Payment Permitted If No Default. Nothing con
-------------------------------
tained in this Article or elsewhere in this Guarantee Agreement shall prevent
the Guarantor, at any time except during the pendency of any Proceeding referred
to in Section 7.2 hereof or under the conditions described in Section 7.3
hereof, from making Guarantee Subordinated Payments.
SECTION 7.5 Subrogation To Rights Of Holders Of Senior
-------------------------------------------
Indebtedness. Subject to the payment in full in cash of all Senior
- ------------
Indebtedness, the Holders shall be subrogated to the rights of the holders of
such Senior Indebtedness to receive payments and distributions of cash, property
and securities applicable to the Senior Indebtedness until the principal of and
interest on the Guarantee shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the Holders or the
Guarantee Trustee would be entitled except for the provisions of this Article,
and no payments pursuant to the provisions of this Article to the holders of
Senior Indebtedness by Holders or the Guarantee Trustee, shall, as among the
Guarantor, its creditors other than holders of Senior Indebtedness and the
Holders, be deemed to be a payment or distribution by the Guarantor to or on
account of the Senior Indebtedness.
SECTION 7.6 Provisions Solely To Define Relative Rights.
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
Senior Indebtedness on the other hand. Nothing contained in this Article or
elsewhere in this Guarantee Agreement is intended to or shall (a) impair, as
among the Guarantor, its creditors (other than holders of Senior Indebtedness)
and the Holders, the obligation of the Guarantor, which is absolute and
unconditional (and which, subject to the rights under this Article of the
holders of Senior Indebtedness, is intended to rank equally with all other
general obligations of the Guarantor), to pay to the Holders the Guarantee
Subordinated Payments as and when the same shall become due and payable in
accordance with their terms; or (b) affect the relative rights against the
Guarantor of the Holders and creditors of the Guarantor, other than the holders
of Senior Indebtedness; or (c) prevent the Guarantee Trustee or a Holder from
exercising all remedies otherwise permitted by applicable law upon default under
this Guarantee Agreement, subject to the rights, if any, under this Article of
the holders of Senior Indebtedness to receive cash, property and securities
otherwise payable or deliverable to the Guarantee Trustee or such Holder or,
under the conditions specified in Section 7.3, to prevent any payment prohibited
by such Section or enforce their rights pursuant to the penultimate paragraph in
Section 7.3.
SECTION 7.7 Guarantee Trustee To Effectuate Subordination.
----------------------------------------------
Each Holder of the Guarantee by his acceptance thereof authorizes and directs
the Guarantee Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Guarantee Trustee his attorney-in-fact for any and all such
purposes, including, in the event of any dissolution, winding-up, liquidation or
reorganization of the Guarantor whether in bankruptcy, insolvency, receivership
proceedings, or otherwise, the timely filing of a claim for the unpaid balance
of the Indebtedness of the Guarantor owing to such Holder in the form required
in such proceedings and the causing of such claim to be approved. If the
Guarantee Trustee does not file a proper claim at least 30 days before the
expiration of the time to file such claim, then the holders of the Senior
Indebtedness and their agents, trustees or other representatives are authorized
to do so (but shall in no event be liable for any failure to do so) for and on
behalf of the Holders.
SECTION 7.8 No Waiver Of Subordination Provisions. No right
-------------------------------------
of any present or future holder of any Senior Indebtedness to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Guarantor or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance by
the Guarantor with the terms, provisions and covenants of this Guarantee
Agreement, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Guarantee Trustee or the Holders,
without incurring responsibility to the Holders and without impairing or
releasing the subordination provided in this Article or the obligations
hereunder of the Holders to the holders of the Senior Indebtedness, do any one
or more of the following: (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, Senior Indebtedness, or
otherwise amend or supplement in any manner Senior Indebtedness or any
instrument evidencing the same or any agreement under which Senior Indebtedness
is outstanding; (ii) permit the Guarantor to borrow, repay and then reborrow any
or all of the Senior Indebtedness; (iii) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iv) release any Person liable in any manner for the collection of
Senior Indebtedness; (v) exercise or refrain from exercising any rights against
the Guarantor and any other Person; and (vi) apply any sums received by them to
Senior Indebtedness.
SECTION 7.9 Notice To Guarantee Trustee. The Guarantor shall
- ----------------------------
give prompt written notice to the Guarantee Trustee of any fact known to the
Guarantor which would prohibit the making of any payment to or by the Guarantee
Trustee in respect of the Guarantee. Notwithstanding the provision of this
Article or any other provision of this Guarantee Agreement, the Guarantee
Trustee shall not be charged with knowledge of the existence of any facts which
would prohibit the making of any payment to or by the Guarantee Trustee in
respect of the Guarantee, unless and until a Responsible Officer of the
Guarantee Trustee shall have received written notice thereof from the Guarantor,
any holder of Senior Indebtedness, any Designated Senior Holder or from any
trustee, fiduciary or agent therefore; and, prior to the receipt of any such
written notice, the Guarantee Trustee, subject to the provisions of Section 3.1,
shall be entitled in all respects to assume that no such facts exist; provided,
however, that
--------
if the Guarantee Trustee shall not have received the notice provided for in this
Section at least three Business Days prior to the date upon which by the terms
hereof any money may become payable for any purpose (including, without
limitation, the payment of any amounts due under the Guarantee), then, anything
herein contained to the contrary notwithstanding, but without limiting the
rights and remedies of the holders of Senior Indebtedness or any trustee,
fiduciary or agent therefor, the Guarantee Trustee shall have full power and
authority to receive such money and to apply the same to the purpose for which
such money was received and shall not be affected by any notice to the contrary
which may be received by it within three Business Days prior to such date. Any
notice required or permitted to be given to the Guarantee Trustee by a holder of
Senior Indebtedness or by any Designated Senior Holder shall be in writing and
shall be sufficient for every purpose hereunder if in writing and either (i)
sent via facsimile to the Guarantee Trustee, the receipt of which shall be
confirmed via telephone, or (ii) mailed, first class postage prepaid, or sent by
overnight carrier, to the Guarantee Trustee addressed to it at the address of
its principal office specified herein or at any other address furnished in
writing to such holder of Senior Indebtedness by the Guarantee Trustee.
Subject to the provisions of Section 3.1, the Guarantee Trustee
shall be entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness or Designated Senior
Holder (or a trustee, fiduciary or agent therefor) to establish that such notice
has been given by a holder of Senior Indebtedness or Designated Senior Holder
(or a trustee, fiduciary or agent therefor). In the event that the Guarantee
Trustee determines in good faith that further evidence is required with respect
to the right of any Person as a holder of Senior Indebtedness or Designated
Senior Holder to participate in any payment or distribution pursuant to this
Article, the Guarantee Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Guarantee Trustee as to the amount of Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article, and if such evidence is not furnished,
the Guarantee Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
Notwithstanding anything else contained herein, no notice, request
or other communication to or with the Guarantee Trustee shall be deemed given
unless received by a Responsible Officer at the Guarantee Trustee's principal
corporate trust office.
SECTION 7.10 Reliance On Judicial Order Or Certificate Of
---------------------------------------------
Liquidating Agent. Upon any payment or distribution of assets of the
- -----------------
Guarantor referred to in this Article, the Guarantee Trustee, subject to the
provisions of Section 3.1, and the Holders shall be entitled to rely upon any
order or decree entered by any court of competent jurisdiction in which such
Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee for the benefit of creditors, agent or
other Person making such payment or distribution, delivered to the Guarantee
Trustee or to the Holders, for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of the Senior
Indebtedness and other Indebtedness of the Guarantor, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article, provided that the foregoing shall
apply only if such court has been apprised of the provisions of this Article.
SECTION 7.11 Guarantee Trustee Not Fiduciary For Holders Of
----------------------------------------------
Senior Indebtedness. The Guarantee 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 in good faith mistakenly pay
over or distribute to Holders or to the Guarantor or to 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 7.12 Rights of Guarantee Trustee As Holder Of Senior
------------------------------------------------
Indebtedness;Preservation Of Guarantee Trustee's Rights. The Guarantee
- -------------------------------------------------------
Trustee in its individual capacity shall be entitled to all the rights set forth
in this Article with respect to any Senior Indebtedness which may at any time be
held by it, to the same extent as any other holder of Senior Indebtedness, and
nothing in this Guarantee Agreement shall deprive the Guarantee Trustee of any
of its rights as a holder of Senior Indebtedness.
Nothing in this Article shall apply to claims of, or payments to,
the Guarantee Trustee under or pursuant to this Guarantee Agreement or Section
6.7 of the Indenture.
SECTION 7.13 Article Applicable to Paying Agents. In case at
- -----------------------------------
any time any Paying Agent other than the Guarantee Trustee shall have been
appointed by the Guarantor and be then acting hereunder, the term "Guarantee
Trustee" as used in this Article shall in such case (unless the context
otherwise requires) 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 Guarantee Trustee;
provided, however, that Section 7.11
-------- -------
hereof shall not apply to the Guarantor or any Affiliate of the Guarantor if it
or such Affiliate acts as Paying Agent.
ARTICLE VIII
TERMINATION
SECTION 8.1 Termination. This Guarantee Agreement shall
-----------
terminate upon (i) full payment of the Redemption Price of all Partnership
Preferred Securities, (ii) the distribution of the Convertible Debentures to the
Holders in exchange for all of such Holders' Partnership Preferred Securities,
(iii) full payment of the amounts payable in accordance with the Limited
Partnership Agreement upon liquidation of Citizens Capital or (iv) distribution
of Common Stock to Holders in respect of the conversion of all of such Holders'
Partnership Preferred Securities into Common Stock. Notwithstanding the
foregoing, this Guarantee Agreement will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of Partnership
Preferred Securities must restore payment of any sums paid under the Partnership
Preferred Securities or under this Guarantee Agreement.
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Exculpation. No Indemnified Person shall be
-----------
liable, responsible or accountable in damages or otherwise to the Guarantor or
any Covered Person for any loss, damage or claim incurred by reason of any act
or omission performed or omitted by such Indemnified Person in good faith in
accordance with this Guarantee Agreement and in a manner that such Indemnified
Person reasonably believed to be within the scope of the authority conferred on
such Indemnified Person by this Guarantee Agreement or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Indemnified Person's negligence or willful misconduct with
respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Partnership Preferred Securities might
properly be paid.
SECTION 9.2 Indemnification. (c) To the fullest extent
----------------
permitted by applicable law, the Guarantor shall indemnify and hold harmless
each Indemnified Person from and against any loss, damage or claim incurred by
such Indemnified Person arising out of the acceptance by the Guarantee Trustee
of its duties and obligations hereunder by reason of any act or omission
performed or omitted by such Indemnified Person in good faith in accordance with
this Guarantee Agreement and in a manner such Indemnified Person reasonably
believed to be within the scope of authority conferred on such Indemnified
Person in accordance with this Guarantee Agreement, except that no Indemnified
Person shall be entitled to be indemnified in respect of any loss, damage or
claim incurred by such Indemnified Person by reason of its negligence or willful
misconduct with respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the
Guarantor prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Guarantor of an undertaking by or on behalf of
the Indemnified Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as authorized in Section
9.2(a).
ARTICLE X
CONVERSION OF PARTNERSHIP PREFERRED SECURITIES
SECTION 10.1 Issuance of Common Stock Series A. The Guaran
---------------------------------
tor hereby agrees that, upon the request of the Conversion Agent, on behalf of
one or more Holders of Partnership Preferred Securities, to convert Convertible
Debentures into Common Stock Series A pursuant to the request of such Holders to
effect such conversion in accordance with the terms of the Limited Partnership
Agreement, the Guarantor shall deliver to the Conversion Agent certificates
representing the full number of shares of Common Stock Series A issuable upon
conversion of such Convertible Debentures in accordance with the terms of the
Indenture and such Convertible Debentures. The Guarantor has reserved and will
keep available for issuance, solely for the purpose of affecting the conversion
of the Convertible Debentures, the full number of shares of Common Stock Series
A deliverable by the Conversion Agent to the Holders upon the conversion of all
outstanding Partnership Preferred Securities not theretofore converted by the
Holders.
SECTION 10.2 Validity of Common Stock Series A. All shares
---------------------------------
of Common Stock Series A delivered by the Guarantor upon such conversion will be
duly and validly issued and fully paid and nonassessable.
SECTION 10.3 Termination of Obligation to Issue Common Stock
-----------------------------------------------
Series A. The Guarantor's obligations under this Article IX to issue
- --------
Common Stock Series A shall terminate upon the termination of the right of
holders of Partnership Preferred Securities to request the Conversion Agent to
effect such conversion as set forth in the Limited Partnership Agreement and,
with respect to a particular holder, upon such conversion.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Successors and Assigns. All guarantees and
----------------------
agreements contained in this Guarantee Agreement shall bind the successors,
assigns, receivers, trustees and representatives of the Guarantor and shall
inure to the benefit of the Holders of the Partnership Preferred Securities then
outstanding.
SECTION 11.2 Amendments. Except with respect to any changes
----------
that do not adversely affect the rights of Holders (in which case no consent of
Holders will be required), this Guarantee Agreement may only be amended with the
prior approval of the Holders of at least 66-2/3% in aggregate liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all the outstanding Partnership
Preferred Securities. The provisions of Section 12.3 of the Limited Partnership
Agreement with respect to meetings of Partners apply to the giving of such
approval. In executing any amendment to this Guarantee Agreement, the Guarantee
Trustee shall be entitled to receive, and shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Guarantee Agreement.
SECTION 11.3 Notices. All notices provided for in this
-------
Guarantee Agreement shall be in writing, duly signed by the party giving such
notice, and shall be delivered, telecopied or mailed by registered or certified
mail, as follows:
(a) If given to the Guarantee Trustee, at the Guarantee Trustee's
mailing address set forth below (or such other address as the Guarantee Trustee
may give notice of to the Holders of the Partnership Preferred Securities):
Chemical Bank
450 West 33rd Street, 15th Floor
New York, New York 10001
Attention: Corporate Trustee Administration Department
Fax No.: (212) 946-7799
(b) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders of the Partnership Preferred Securities):
Citizens Utilities Company
High Ridge Park, Bldg. No. 3
Stamford, Connecticut 06905
Attention: Robert J. DeSantis, Vice President
and Treasurer
Fax No.: (203) 329-4625
copy to:
Boulanger, Hicks & Churchill
135 East 57th Street
New York, New York 10022
Attention: Jonathan H. Churchill
Fax No.: (212) 753-6971
(c) If given to any Holder of Partnership Preferred Securities, at
the address of such Holder set forth on the books and records of Citizens
Capital.
All such notices shall be deemed to have been given when (i)
received in person, (ii) telecopied with receipt confirmed, or (iii) the third
Business Day after having been mailed by first class mail, postage prepaid,
except that if a notice or other document is refused delivery or cannot be
delivered because of a changed address of which no notice was given, such notice
or other document shall be deemed to have been delivered on the date of such
refusal or inability to deliver.
SECTION 11.4 Benefit. This Guarantee Agreement is solely for
- -------
the benefit of the Guarantee Trustee and the Holders of the Partnership
Preferred Securities and, subject to Section 3.1(a), is not separately
transferable from the Partnership Preferred Securities.
SECTION 11.5 Governing Law. This Guarantee Agreement shall
-------------
be governed by and construed and interpreted in accordance with the laws of the
State of New York.
SECTION 11.6 Counterparts. This Guarantee Agreement may be
------------
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.
<PAGE>
THIS GUARANTEE AGREEMENT is executed as of the day and year
first above written.
CITIZENS UTILITIES COMPANY
By:_______________________
Robert J. DeSantis
Vice President and Treasurer
CHEMICAL BANK, as Guarantee Trustee
By:________________________
Name:
Title:
<PAGE>
CITIZENS UTILITIES COMPANY
Reconciliation and tie between Trust Indenture Act of 1939 and Guarantee,
dated as of January 15, 1996.
Trust Indenture
Act Section Guarantee Section
----------- -----------------
subsection 310(a)(1) 4.1(a)
(a)(2) 4.1(a)
(a)(3) Not Applicable
(a)(4) Not Applicable
(a)(5) 4.1(a)
(b) 4.1(c), 4.2(d)
subsection 311(a) 2.2(b)
(b) 2.2(b)
subsection 312(a) 2.2(a)
(b) 2.2(b)
(c) 2.2(c)
subsection 313(a) 2.3
(b) 2.3
(c) 2.3
(d) 2.3
subsection 314(a) 2.4
(b) Not Applicable
(c)(1) 2.4, 2.5
(c)(2) 2.4, 2.5
(c)(3) Not Applicable
(d) Not Applicable
(e) 1.1
subsecton 315(a) 3.1(c), 3.1(d)(i)
(b) 2.7
(c) 3.1(c)
(d) 3.1(d)
(d)(1) 3.1(d)(i)
(d)(2) 3.1(d)(ii)
(d)(3) 3.1(d)(iii)
(e) None
subsection 316(a) 5.4
(a)(1) (A)5.4
(a)(1)(B) 5.4
(a)(2) None
(b) 5.1, 5.3
(c) None
subsection 317(a)(1) 3.1(e)
(a)(2) 3.1(f)
(b) Not applicable
subsection 318(a) . .2.1
NOTE: This reconciliation and tie shall not, for any
purpose, be deemed to be a part of the Guarantee.
<PAGE>
TABLE OF CONTENTS
------------------
ARTIICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application 5
SECTION 2.2 Lists of Holders of Securities 5
SECTION 2.3 Reports by the Guarantee Trustee 5
SECTION 2.4 Periodic Reports to Guarantee Trustee 6
SECTION 2.5 Evidence of Compliance with Conditions Precedent 6
SECTION 2.6 Events of Default; Waiver 6
SECTION 2.7 Event of Default; Notice 6
SECTION 2.8 Conflicting Interests 6
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee Trustee 7
SECTION 3.2 Certain Rights of Guarantee Trustee 9
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee 11
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1 Guarantee Trustee; Eligibility 11
SECTION 4.2 Appointment, Removal and Resignation of Guarantee
Trustees 12
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee 12
SECTION 5.2 Waiver of Notice and Demand 13
SECTION 5.3 Obligations Not Affected 13
SECTION 5.4 Rights of Holders 14
SECTION 5.5 Guarantee of Payment 14
SECTION 5.6 Subrogation 14
SECTION 5.7 Independent Obligations 14
ARTICLE VI
COVENANTS
SECTION 6.1 Limitation of Transactions 14
ARTICLE VII
SUBORDINATION
SECTION 7.1 Subordination 15
SECTION 7.2 Payment Over of Proceeds Upon Dissolution, etc. 15
SECTION 7.3 No Payment When Senior Indebtedness In Senior Payment
Default or Senior Indebtedness Accelerated 16
SECTION 7.4 Payment Permitted If No Default 18
SECTION 7.5 Subrogation To Rights Of Holders Of Senior Indebtedness 18
SECTION 7.6 Provisions Solely To Define Relative Rights 18
SECTION 7.7 Guarantee Trustee To Effectuate Subordination 18
SECTION 7.8 No Waiver Of Subordination Provisions 19
SECTION 7.9 Notice To Guarantee Trustee 19
SECTION 7.10 Reliance On Judicial Order Or Certificate
Of Liquidating Agent 20
SECTION 7.11 Guarantee Trustee Not Fiduciary For Holders
Of Senior Indebtedness 21
SECTION 7.12 Rights of Guarantee Trustee As Holder Of Senior
Indebtedness; Preservation Of Guarantee Trustee's Rights 21
SECTION 7.13 Article Applicable to Paying Agents 21
ARTICLE VIII
TERMINATION
SECTION 8.1 Termination 21
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Exculpation 22
SECTION 9.2 Indemnification 22
ARTICLE X
CONVERSION OF PARTNERSHIP PREFERRED SECURITIES
SECTION 10.1 Issuance of Common Stock Series A 23
SECTION 10.2 Validity of Common Stock Series A 23
SECTION 10.3 Termination of Obligation to Issue Common Stock Series A 23
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Successors and Assigns 23
SECTION 11.2 Amendments 23
SECTION 11.3 Notices 24
SECTION 11.4 Benefit 25
SECTION 11.5 Governing Law 25
SECTION 11.6 Counterparts. 25
EXECUTION COPY
--------------------------------------
CONVERTIBLE PREFERRED SECURITIES GUARANTEE AGREEMENT
CITIZENS UTILITIES COMPANY
Dated as of January 15, 1996
--------------------------------------
<PAGE>
CONVERTIBLE PREFERRED SECURITIES GUARANTEE AGREEMENT
This CONVERTIBLE PREFERRED SECURITIES GUARANTEE AGREEMENT ("Guarantee
Agreement"), dated as of January 15, 1996, is executed and delivered by Citizens
Utilities Company, a Delaware corporation (the "Guarantor"), and Chemical Bank,
a New York banking corporation, as trustee (the "Guarantee Trustee"), for the
benefit of the Holders (as defined herein) from time to time of the Convertible
Preferred Securities (as defined herein) of Citizens Utilities Trust, a Delaware
statutory business trust (the "Trust").
WHEREAS, pursuant to the Declaration (as defined herein), the Trust is
issuing on the date hereof up to 3,500,000 Convertible Preferred Securities
(plus up to an additional 525,000 Convertible Preferred Securities, solely to
cover over-allotments, if any), designated the 5% Citizens Utilities Convertible
Preferred Securities (the "Convertible Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Convertible
Preferred Securities, the Guarantor desires irrevocably and unconditionally to
agree, to the extent set forth in this Guarantee Agreement, to pay to the
Holders of the Convertible Preferred Securities the Guarantee Payments (as
defined herein) and to make certain other payments on the terms and conditions
set forth herein; and
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Convertible Common Securities Guarantee Agreement") in
substantially identical terms to this Guarantee Agreement for the benefit of the
holders of the Convertible Common Securities (as defined herein) except that if
an event of default under the Indenture (as defined herein), has occurred and is
continuing, the rights of holders of the Convertible Common Securities to
receive guarantee payments under the Convertible Common Securities Guarantee
Agreement are subordinated to the rights of Holders of Convertible Preferred
Securities to receive Guarantee Payments under this Guarantee Agreement.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Convertible Preferred Securities, which purchase the Guarantor hereby agrees
shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee
Agreement for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation. In this Guarantee
------------------------------
Agreement, unless the context otherwise requires:
(a) Capitalized terms used in this Guarantee Agreement have the
respective meanings assigned to them in this Section 1.1, or, to the extent not
inconsistent with this Guarantee Agreement, in the Statement of Common
Definitions annexed hereto as Annex A;
(b) unless otherwise defined herein, all capitalized items used
herein shall have the meanings ascribed to them in the Declaration;
(c) a term defined anywhere in this Guarantee Agreement has the
same meaning throughout;
(d) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or amended
from time to time;
(e) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(f) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee Agreement unless otherwise defined in this Guarantee
Agreement or unless the context otherwise requires; and
(g) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in Rule
---------
405 of the Securities Act of 1933, or any successor rule thereunder.
"Business Day" is defined in the Statement of Common Defini
------------
tions.
"Citizens Capital" is defined in the Statement of Common
----------------
Definitions.
"Common Stock Series A" is defined in the Statement of Common
---------------------
Definitions.
"Conversion Agent" is defined in the Statement of Common
----------------
Definitions.
"Convertible Common Securities" is defined in the Statement of
- -----------------------------
Common Definitions.
"Convertible Common Securities Guarantee Agreement" shall have
- -------------------------------------------------
the meaning set forth in the Recitals to this Guarantee Agreement.
"Convertible Debentures" is defined in the Statement of Common
----------------------
Definitions.
"Convertible Preferred Securities" shall have the meaning set forth
in the Recitals to this Guarantee Agreement.
"Covered Person" means any Holder or beneficial owner of
--------------
Convertible Preferred Securities.
"Declaration" is defined in the Statement of Common Defini
-----------
tions.
"Designated Senior Holder" is defined in the Indenture.
------------------------
"Distributions" shall have the meaning as set forth in the
-------------
Declaration.
"Event of Default" means a default by the Guarantor on any of
----------------
its payment or other obligations under this Guarantee Agreement.
"First Supplemental Indenture" is defined in the Statement of
----------------------------
Common Definitions.
"Guarantee Payments" means the following payments or distribu
------------------
tions, without duplication, with respect to the Convertible Preferred
Securities, to the extent not paid or made by the Trust: (i) any accrued or
deferred and unpaid Distributions that are required to be paid on such
Convertible Preferred Securities to the extent the Trust shall have cash and/or
Common Stock available therefor, (ii) the redemption price, including all
accrued or deferred and unpaid Distributions to the date of redemption (the
"Redemption Price"), to the extent the Trust has cash and/or Common Stock
available therefor, with respect to any Convertible Preferred Securities called
for redemption by the Trust, and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Trust other than in connection
with the distribution of Partnership Preferred Securities or Convertible
Debentures to the Holders in exchange for Convertible Preferred Securities as
provided in the Declaration or the redemption of all the Convertible Preferred
Securities, the lesser of (a) the aggregate of the liquidation amount, payable
in cash, and all accrued or deferred and unpaid Distributions, payable in either
cash or Common Stock, on the Convertible Preferred Securities to the date of
payment (a "Liquidation Distribution"), to the extent the Trust shall have cash
and/or Common Stock available therefor, and (b) the amount of assets of the
Trust available for distribution to Holders in liquidation of the Trust. If an
event of default under the Indenture has occurred and is continuing, the rights
of holders of the Convertible Common Securities to receive guarantee payments
under the Convertible Common Securities Guarantee Agreement are subordinated to
the rights of Holders of Convertible Preferred Securities to receive Guarantee
Payments under this Guarantee Agreement.
"Guarantee Subordinated Payment" has the meaning specified in
------------------------------
Section 7.2.
"Guarantee Trustee" means Chemical Bank until a Successor
------------------
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee Agreement, and thereafter means each such
Successor Guarantee Trustee.
"Guarantor" shall have the meaning set forth in the Preamble
---------
to this Guarantee Agreement.
"Holder" shall mean any holder, as registered on the books and
- ------
records of the Trust, of any Convertible Preferred Securities; provided,
--------
however, that, in determining whether the holders of the requisite percentage of
Convertible Preferred Securities have given any request, notice, consent or
waiver hereunder, "Holder" shall not include the Guarantor or any Affiliate of
the Guarantor.
"Indebtedness" is defined in the Indenture.
------------
"Indemnified Person" means the Guarantee Trustee, any Affili
------------------
ate of the Guarantee Trustee, or any officers, directors, shareholders, members,
partners, employees, representatives or agents of the Guarantee Trustee.
"Indenture" is defined in the Statement of Common Definitions.
---------
"Junior Subordinated Payment" has the meaning specified in
---------------------------
Section 7.2.
"Limited Partnership Agreement" is defined in the Statement of
- -----------------------------
Common Definitions.
"Liquidation Distribution" shall have the meaning set forth in
- ------------------------
this Section 1.1.
"List of Holders" shall have the meaning set forth in Section
---------------
2.2.
"Majority in aggregate liquidation amount of the Convertible
------------------------------------------------------------
Preferred Securities" means, except as provided by the Trust Indenture
- --------------------
Act, a vote by Holder(s) of Convertible Preferred Securities, voting
separately as a class, of more than 50% of the liquidation amount of all
Convertible Preferred Securities.
"Officers' Certificate" is defined in the Statement of Common
Definitions.
"Opinion of Counsel" is defined in the Indenture.
------------------
"Other Subordinated Indebtedness" is defined in the Indenture.
-------------------------------
"Partnership Preferred Securities" is defined in the Statement
- --------------------------------
of Common Definitions.
"Paying Agent" is defined in the Statement of Common Defini
------------
tions.
"Payment Blockage Period" has the meaning specified in Section
- -----------------------
7.3.
"Person" is defined in the Statement of Common Definitions.
------
"Proceeding" shall have the meaning set forth in Section 7.2.
----------
"Redemption Price" shall have the meaning set forth in this
-----------------
Section 1.1.
"Responsible Officer" means, with respect to the Guarantee
-------------------
Trustee, any vice-president, any assistant vice-president, the secretary or any
officer of the Guarantee Trustee with direct responsibility for the
administration of this Guarantee Agreement and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.
"Senior Indebtedness" and all capitalized terms used therein
-------------------
is defined in the Indenture.
"Senior Nonmonetary Default" has the meaning specified in
--------------------------
Section 7.3.
"Senior Payment Default" has the meaning specified in Section
----------------------
7.3.
"Subsidiary" is defined in the Statement of Common Defini
----------
tions.
"Successor Guarantee Trustee" means a successor Guarantee
---------------------------
Trustee possessing the qualifications to act as Guarantee Trustee under Section
4.1.
"Trust" shall have the meaning set forth in the Preamble to
----
this Guarantee Agreement.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
-------------------
as amended from time to time.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application. (a) This
--------------------------------
Guarantee Agreement is subject to the provisions of the Trust Indenture Act that
are required to be part of this Guarantee Agreement and shall, to the extent
applicable, be governed by such provisions; and
(b) if and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the duties imposed by Section 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
SECTION 2.2 Lists of Holders of Securities. (b) The Guaran
------------------------------
tor shall provide the Guarantee Trustee with a list, in such form as the
Guarantee Trustee may reasonably require, of the names and addresses of the
Holders of the Convertible Preferred Securities ("List of Holders") as of such
date, (i) within one Business Day after January 1 and June 30 of each year and
(ii) at any other time within 30 days of receipt by the Guarantor of a written
request for a List of Holders as of a date no more than 14 days before such List
of Holders is given to the Guarantee Trust ee; provided that the Guarantor shall
not be obligated to provide such
--------
List of Holders at any time the List of Holders does not differ from the most
recent List of Holders given to the Guarantee Trustee by the Guarantor. The
Guarantee Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations under
Section 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
(c) Every Holder, by receiving and holding the same, agrees with the
Guarantor and the Guarantee Trustee that neither the Guarantor nor the Guarantee
Trustee nor any agent of either of them shall be held accountable by reason of
any disclosure of information as to names and addresses of Holders made pursuant
to the Trust Indenture Act.
SECTION 2.3 Reports by the Guarantee Trustee. Within 60 days
--------------------------------
after May 15 of each year, the Guarantee Trustee shall provide to the Holders of
the Convertible Preferred Securities such reports as are required by Section 313
of the Trust Indenture Act, if any, in the form and in the manner provided by
Section 313 of the Trust Indenture Act. The Guarantee Trustee shall also comply
with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Guarantee Trustee. The Guar
-------------------------------------
antor shall provide to the Guarantee Trustee such documents, reports and
information as required by Section 314 (if any) and the compliance certificate
required by Section 314 of the Trust Indenture Act in the form, in the manner
and at the times required by Section 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
- ------------------------------------------------
The Guarantor shall provide to the Guarantee Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Guarantee Agreement
that relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) may be given in the form of an Officers'
Certificate.
SECTION 2.6 Events of Default; Waiver. The Holders of a
-------------------------
Majority in aggregate liquidation amount of Convertible Preferred Securities
may, by vote, on behalf of the Holders of all of the Convertible Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Guarantee Agreement, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.
SECTION 2.7 Event of Default; Notice. (c) The Guarantee
------------------------
Trustee shall, within 90 days after the occurrence of an Event of Default,
transmit by mail, first class postage prepaid, to the Holders of the Convertible
Preferred Securities, notices of all Events of Default known to the Guarantee
Trustee, unless such defaults have been cured before the giving of such notice;
provided that the Guarantee Trustee shall be
--------
protected in withholding such notice if and so long as the board of directors,
the executive committee, or a trust committee of directors and/or Responsible
Officers of the Guarantee Trustee in good faith determines that the withholding
of such notice is in the interests of the Holders of the Convertible Preferred
Securities.
(b) The Guarantee Trustee shall not be deemed to have knowledge of
any Event of Default unless the Guarantee Trustee shall have received written
notice of such Event of Default.
SECTION 2.8 Conflicting Interests. The Declaration shall be
---------------------
deemed to be specifically described in this Guarantee Agreement for the purposes
of clause (i) of the first proviso contained in Section 310(b) of the Trust
Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee Trustee. (d)
------------------------------------------
This Guarantee Agreement shall be held by the Guarantee Trustee for the benefit
of the Holders of the Convertible Preferred Securities, and the Guarantee
Trustee shall not transfer this Guarantee Agreement to any Person except a
Holder of Convertible Preferred Securities exercising his or her rights pursuant
to Section 5.4(b) or to a Successor Guarantee Trustee on acceptance by such
Successor Guarantee Trustee of its appointment to act as Successor Guarantee
Trustee. The right, title and interest of the Guarantee Trustee shall
automatically vest in any Successor Guarantee Trustee, and such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered pursuant to the appointment of such Successor
Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the
Holders of the Convertible Preferred Securities.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Guarantee Trustee. In case an Event of Default
has occurred (that has not been cured or waived pursuant to Section 2.6), the
Guarantee Trustee shall exercise such of the rights and powers vested in it by
this Guarantee Agreement, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Guarantee
Trustee shall be determined solely by the express provisions of this Guarantee
Agreement, and the Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in this
Guarantee Agreement, and no implied covenants or obligations shall be read into
this Guarantee Agreement against the Guarantee Trustee; and
(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed therein, upon
any certificates or opin ions furnished to the Guarantee Trustee and conforming
to the requirements of this Guarantee Agreement; but in the case of any such
certificates or opinions that by any provision hereof are specifically required
to be furnished to the Guarantee Trustee, the Guarantee Trustee shall be under a
duty to examine the same to determine whether or not they conform to the
requirements of this Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a Majority in aggregate
liquidation amount of the Convertible Preferred Securities relating to the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee or exercising any trust or power conferred upon the Guaran tee
Trustee under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require
the Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if the Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such funds or liability
is not reasonably assured to it under the terms of this Guarantee Agreement or
adequate indemnity against such risk or liability is not reasonably assured to
it.
(e) If:
(1) default occurs in the payment of the principal of any
Convertible Preferred Security when and as the same shall be due and payable and
such failure shall continue for 15 days; or
(2) default occurs in the payment of any distribution on any
Convertible Preferred Security when such distribution becomes due and payable
and such failure continues for a period of 60 days;
the Guarantee Trustee shall be authorized to recover judgment, in its own name
and as trustee of an express trust, against the Guarantor for the whole amount
of principal and distributions owing and unpaid.
(f) In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Guarantor or any other obligor upon
the Convertible Preferred Securities or the property of the Guarantor or of such
other obligor or their creditors, the Guarantee Trustee shall be authorized to
file and prove a claim for the whole amount of principal and distributions owing
and unpaid in respect of the Convertible Preferred Securities and to file such
other papers or documents as may be necessary or advisable in order to have the
claims of the Guarantee Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Guarantee Trustee, its
agents and counsel) and of the Holders allowed in such judicial proceeding.
SECTION 3.2 Certain Rights of Guarantee Trustee. (e) Subject
-----------------------------------
to the provisions of Section 3.1:
(i) The Guarantee Trustee may rely 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, sent or presented
by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Guarantee Agreement shall be sufficiently evidenced by a written direction
or an Officers' Certificate.
(iii) Whenever, in the administration of this Guarantee
Agreement, the Guarantee Trustee shall deem it desirable that a matter be proved
or established before taking, suffering or omitting any action hereunder, the
Guarantee Trustee (unless other evidence is herein specifically prescribed) may,
in the absence of bad faith on its part, request and rely upon an Officers'
Certificate which, upon receipt of such request, shall be promptly delivered by
the Guarantor.
(iv) The Guarantee Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or any rerecording,
refiling or reregistration thereof).
(v) The Guarantee Trustee may consult with counsel, and the
written advice or opinion of such counsel with respect to legal matters shall be
full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with such
advice or opinion. Such counsel may be counsel to the Guarantor or any of its
Affiliates and may include any of its employees. The Guarantee Trustee shall
have the right at any time to seek instructions concerning the administration of
this Guarantee Agreement from any court of competent jurisdiction.
(vi) The Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee Agreement at
the request or direction of any Holder, unless such Holder shall have provided
to the Guarantee Trustee such adequate security and indemnity as would satisfy a
reasonable person in the position of the Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses) and liabilities that might be
incurred by it in complying with such request or direction, including such
reasonable advances as may be requested by the Guarantee Trustee; provided that,
nothing contained in ------- this Section 3.2(a)(vi) shall be taken to relieve
the Guarantee Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by this Guarantee
Agreement.
(vii) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.
(viii)The Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys, and the Guarantee Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder.
(ix) Any action taken by the Guarantee Trustee or its agents
hereunder shall bind the Holders of the Convertible Preferred Securities, and
the signature of the Guarantee Trustee or its agents alone shall be sufficient
and effective to perform any such action. No third party shall be required to
inquire as to the authority of the Guarantee Trustee to so act or as to its
compliance with any of the terms and provisions of this Guarantee Agreement,
both of which shall be conclusively evidenced by the Guarantee Trustee's or its
agent's taking such action.
(x) Whenever in the administration of this Guarantee Agreement
the Guarantee Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action hereunder,
the Guarantee Trustee (i) may request instructionsfrom the Holders of a Majority
in aggregate liquidation amount of the Convertible Preferred Securities, (ii)
may refrain from enforcing such remedy or right or taking such other action
until such instructions are received and (iii) shall be protected in acting in
accordance with such instructions.
(b) No provision of this Guarantee Agreement shall be deemed to
impose any duty or obligation on the Guarantee Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on it
in any jurisdiction in which it shall be illegal, or in which the Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of Guaran
--------------------------------------------------
tee. The recitals contained in this Guarantee shall be taken as the
- ---
statements of the Guarantor, and the Guarantee Trustee does not assume any
responsibility for their correctness. The Guarantee Trustee makes no
representation as to the validity or sufficiency of this Guarantee Agreement.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1 Guarantee Trustee; Eligibility. There shall at
------------------------------
all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person meeting the requirements of an
institutional trustee under the Trust Indenture Act, authorized under such laws
to exercise corporate trust powers, having a combined capital and surplus of at
least fifty million U.S. dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or Dis trict of Columbia authority.
If such corporation publishes reports of condition at least annually, pursuant
to law or to the require ments of the supervising or examining authority
referred to above, then, for the purposes of this Section 4.1(a)(ii), the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published.
(b) If at any time the Guarantee Trustee shall cease to be eligible
to so act under Section 4.1(a), the Guarantee Trustee shall immediately resign
in the manner and with the effect set out in Section 4.2(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of Guarantee
--------------------------------------------------
Trustees. Subject to Section 4.2(b), the Guarantee Trustee may be
- --------
appointed or removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed in accordance with
Section 4.2 until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor.
(c) The Guarantee Trustee appointed to office shall hold office
until a Successor Guarantee Trustee shall have been appointed or until its
removal or resignation. The Guarantee Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing executed by
the Guarantee Trustee and delivered to the Guarantor, which resignation shall
not take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition any court of competent jurisdiction for
appointment of a Successor Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Guarantee Trustee.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee. The Guarantor irrevocably and
---------
unconditionally agrees to pay in full to the Holders the Guarantee Payments
(without duplication of amounts theretofore paid by the Trust), as and when due,
regardless of any defense, right of set-off or counterclaim that the Trust may
have or assert. The Guarantor's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Guarantor to the
Holders or by causing the Trust to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand. The Guarantor hereby
- ---------------------------
waives notice of acceptance of this Guarantee Agreement and of any liability to
which it applies or may apply, presentment, demand for payment, any right to
require a proceeding first against the Trust or any other Person before
proceeding against the Guarantor, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.
SECTION 5.3 Obligations Not Affected. The obligations, cove
------------------------
nants, agreements and duties of the Guarantor under this Guarantee Agreement
shall in no way be affected or impaired by reason of the happening from time to
time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Trust of any express or implied agreement,
covenant, term or condition relating to the Convertible Preferred Securities to
be performed or observed by the Trust;
(b) the extension of time for the payment by the Trust of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Convertible Preferred Securities or
the extension of time for the performance of any other obligation under, arising
out of, or in connection with, the Convertible Preferred Securities (other than
an extension of time for payment of Distributions, Redemption Price, Liquidation
Distribution or other sum payable that results from the deferral of any interest
payment on the Convertible Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Convertible Preferred
Securities, or any action on the part of the Trust granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Trust or any of the assets of
the Trust;
(e) any invalidity of, or defect or deficiency in the Convertible
Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders. (a) The Holders of a Majority
-----------------
in aggregate liquidation amount of the Convertible Preferred Securities have the
right (i) to direct the time, method and place of conducting of any proceeding
for any remedy available to the Guarantee Trustee in respect of this Guarantee
Agreement or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under this Guarantee Agreement and (ii) on behalf of the
Holders of all Convertible Preferred Securities to consent to the waiver of any
past default and its consequences.
(b) If the Guarantee Trustee fails to enforce this Guarantee
Agreement, any Holder of Convertible Preferred Securities may institute a legal
proceeding directly against the Guarantor to enforce the Guarantee Trustee's
rights under this Guarantee Agreement, without first instituting a legal
proceeding against the Trust, the Guarantee Trustee or any other Person.
SECTION 5.5 Guarantee of Payment. This Guarantee Agreement
--------------------
creates a guarantee of payment and not of collection.
SECTION 5.6 Subrogation. The Guarantor shall be subrogated to
all (if any) rights of the Holders of Convertible Preferred Securities against
the Trust in respect of any amounts paid to such Holders by the Guarantor under
this Guarantee Agreement; provided, however, that the
--------
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any right that it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Guarantee Agreement, if, at the time of any such
payment, any amounts are due and unpaid under this Guarantee Agreement. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders.
SECTION 5.7 Independent Obligations. The Guarantor acknowl
------------------------
edges that its obligations hereunder are independent of the obligations of the
Trust with respect to the Convertible Preferred Securities, and that the
Guarantor shall be liable as principal and as debtor hereunder to make Guarantee
Payments pursuant to the terms of this Guarantee Agreement notwithstanding the
occurrence of any event referred to in subsections (a) through (g), inclusive,
of Section 5.3 hereof.
ARTICLE VI
COVENANTS
SECTION 6.1 Limitation of Transactions. So long as any
--------------------------
Convertible Preferred Securities remain outstanding, if (i) there shall have
occurred an Event of Default hereunder or an event of default under the
Declaration or (ii) if the Guarantor exercises its right to defer interest
payments on the Convertible Debentures, then the Guarantor will comply with
Section 9.1 (1) (i), (ii), (iii) and (iv) of the First Supplemental Indenture
(and references therein to "the Company" shall be deemed
<PAGE>
to refer to the Guarantor).
ARTICLE VII
SUBORDINATION
SECTION 7.1 Subordination. This Guarantee Agreement will
-------------
constitute an unsecured obligation of the Guarantor and will rank subordinate
and subject in right of payment to the prior payment in full in cash of Senior
Indebtedness of the Guarantor.
Article VII shall constitute a continuing offer to all Persons who
become holders of, or continue to hold, Senior Indebtedness, and such provisions
are made for the benefit of the holders of Senior Indebtedness and such holders
are made obligees hereunder and any one or more of them may enforce such
provisions. Holders of Senior Indebtedness need not prove reliance on the
subordination provisions hereof.
SECTION 7.2 Payment Over of Proceeds Upon Dissolution, etc.
----------------------------------------------
Upon any payment or distribution of assets of the Guarantor to creditors upon
any liquidation, dissolution, winding-up, reorganization, assignment for the
benefit of creditors, marshalling of assets or liabilities or any bankruptcy,
insolvency or similar proceedings of the Guarantor (each such event, if any,
herein sometimes referred to as a "Proceeding"):
(i) the holders of Senior Indebtedness shall be entitled to
receive payment in full in cash of all amounts due on or to become due on or in
respect of all Senior Indebtedness, before the Holders are entitled to receive
any payment (including any payment to Holders made in respect of any other
Indebtedness of the Guarantor subordinated to the payment of the Guarantee, such
payment or distribution being hereinafter referred to as a "Junior Subordinated
Payment"), on account of the Guarantee or on account of any purchase, redemption
or other acquisition of the Guarantee by the Guarantor, any Subsidiary of the
Guarantor, the Guarantee Trustee or any Paying Agent (all such payments,
distributions, purchases, redemptions and acquisitions, whether or not in
connection with a Proceeding, herein referred to, individually and collectively,
as a "Guarantee Subordinated Payment"); and
(ii) any payment or distribution of assets of the Guarantor of
any kind or character, whether in cash, property or securities, by setoff or
otherwise, to which the Holders or the Guarantee Trustee would be entitled but
for the provisions of this Article (including, without limitation, any Junior
Subordinated Payment) shall be paid by the liquidating trustee or agent or other
Person making such payment or distribution, whether a trustee in bankruptcy, a
receiver or liquidating trustee or otherwise, directly to the holders of 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 the Senior Indebtedness held or
represented by each, to the extent necessary to make payment in full in cash of
all Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment to the holders of such Senior Indebtedness.
In the event that, notwithstanding the foregoing provisions of this
Section, the Guarantee Trustee or a Holder shall have received in connection
with any Proceeding any Guarantee Subordinated Payment before all Senior
Indebtedness is paid in full or payment thereof provided for in cash, then and
in such event such Guarantee Subordinated Payment shall be paid over or
delivered forthwith to the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or other Person making payment or distribution of
assets of the Guarantor for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all Senior
Indebtedness in full in cash after giving effect to any concurrent payment to or
for the holders of Senior Indebtedness.
For purposes of this Article only, the words "any payment or distribution
of any kind or character, whether in cash, property or securities" shall not be
deemed to include a payment or distribution of stock or securities of the
Guarantor provided for by a plan of reorganization or readjustment authorized by
an order or decree of a court of competent jurisdiction in a reorganization
proceeding under any applicable bankruptcy law or of any other corporation
provided for by such plan of reorganization or readjustment which stock or
securities are subordinated in right of payment to all then outstanding Senior
Indebtedness to substantially the same extent, or to a greater extent than, the
Guarantee is so subordinated as provided in this Article. The consolidation of
the Guarantor with, or the merger of the Guarantor into, another Person or the
liquidation or dissolution of the Guarantor following the conveyance or transfer
of all or substantially all of its properties and assets as an entirety to
another Person upon the terms and conditions set forth in Article Eight of the
Indenture shall not be deemed a Proceeding for the purposes of this Section if
the Person formed by such consolidation or into which the Guarantor is merged or
the Person which acquires by conveyance or transfer such properties and assets
as an entirety, as the case may be, shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions set forth in Article
Eight of the Indenture.
SECTION 7.3 No Payment When Senior Indebtedness In Senior
-------------------------------------------
Payment Default or Senior Indebtedness Accelerated. In the event that (a)
- --------------------------------------------------
any Senior Payment Default (as defined below) shall have occurred and such
Senior Indebtedness shall have become, by reason thereof, due and payable prior
to the stated maturity thereof, then no Guarantee Subordinated Payment shall be
made (except that, so long as Citizens Capital shall be the holder of all of the
Outstanding Convertible Debentures, payment may be made in shares of capital
stock), unless and until such Senior Payment Default shall have been cured or
waived in writing or shall have ceased to exist or all amounts then due and
payable in respect of such Senior Indebtedness (including amounts that have
become and remain due by acceleration) shall have been paid in full in cash.
"Senior Payment Default" means any default (which default has continued beyond
any applicable grace and/or cure period (if any), in the payment of principal of
(or premium, if any) or interest on any Senior Indebtedness when due, whether at
the stated maturity of any such payment or by declaration of acceleration, call
for redemption, mandatory payment or prepayment or otherwise.
In the event that any Senior Nonmonetary Default (as defined below) shall
have occurred and be continuing, then, upon the receipt by the Guarantor and the
Guarantee Trustee of written notice of such Senior Nonmonetary Default from the
Designated Senior Holder of such certain Senior Indebtedness, no Guarantee
Subordinated Payment (except that, so long as Citizens Capital shall be the
holder of all of the Outstanding Convertible Debentures, payment may be made in
shares of capital stock) shall be made, during the period (the "Payment Blockage
Period") commencing on the date of such receipt of such written notice and
ending (subject to any blockage of payments that may then or thereafter be in
effect as the result of any Senior Payment Default) on the earlier of (i) the
date on which the Senior Indebtedness to which such Senior Nonmonetary Default
relates is discharged or such Senior Nonmonetary Default shall have been cured
or waived in writing or shall have ceased to exist and any acceleration of
Senior Indebtedness to which such Senior Nonmonetary Default relates shall have
been rescinded or annulled or (ii) the 179th day after the date of such receipt
of such written notice. No more than one Payment Blockage Period may be
commenced with respect to the Guarantee during any period of 360 consecutive
days and there shall be a period of at least 181 consecutive days in each period
of 360 consecutive days when no Payment Blockage Period is in effect. Following
the commencement of any Payment Blockage Period, the holders of the Senior
Indebtedness will be precluded from commencing a subsequent Payment Blockage
Period until the conditions set forth in the preceding sentence are satisfied.
For all purposes of this paragraph, no Senior Nonmonetary Default that existed
or was continuing on the date of commencement of any Payment Blockage Period
with respect to the Senior Indebtedness initiating such Payment Blockage Period
shall be, or be made, the basis for the commencement of a subsequent Payment
Blockage Period by holders of Senior Indebtedness or their representatives
unless such Senior Nonmonetary Default shall have been cured for a period of not
less than 90 consecutive days. "Senior Nonmonetary Default" means any default
(other than a Senior Payment Default) or any event which, after notice or lapse
of time (or both), would become an event of default, under the terms of any
instrument or agreement pursuant to which any Senior Indebtedness is
outstanding, permitting (after notice or lapse of time or both) one or more
holders of such Senior Indebtedness (or a trustee or agent on behalf of the
holders thereof) to declare such Senior Indebtedness due and payable prior to
the date on which it would otherwise become due and payable.
In the event that, notwithstanding the foregoing, the Guarantor shall make
any Guarantee Subordinated Payment to the Guarantee Trustee or any Holder
prohibited by the foregoing provisions of this Section, then and in such event
such Guarantee Subordinated Payment shall be paid over and delivered forthwith
to the Designated Senior Holders under the Senior Indebtedness or, if such
Senior Indebtedness has been repaid in full, to the Guarantor.
The provisions of this Section shall not apply to any Guarantee
Subordinated Payment with respect to which Section 7.2 hereof would be
applicable.
SECTION 7.4 Payment Permitted If No Default. Nothing con
-------------------------------
tained in this Article or elsewhere in this Guarantee Agreement shall prevent
the Guarantor, at any time except during the pendency of any Proceeding referred
to in Section 7.2 hereof or under the conditions described in Section 7.3
hereof, from making Guarantee Subordinated Payments.
SECTION 7.5 Subrogation To Rights Of Holders Of Senior Indebt
------------------------------------------------
edness. Subject to the payment in full in cash of all Senior Indebted
- ------
ness, the Holders shall be subrogated to the rights of the holders of such
Senior Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness until the principal of and
interest on the Guarantee shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the Holders or the
Guarantee Trustee would be entitled except for the provisions of this Article,
and no payments pursuant to the provisions of this Article to the holders of
Senior Indebtedness by Holders or the Guarantee Trustee, shall, as among the
Guarantor, its creditors other than holders of Senior Indebtedness and the
Holders, be deemed to be a payment or distribution by the Guarantor to or on
account of the Senior Indebtedness.
SECTION 7.6 Provisions Solely To Define Relative Rights. 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
Senior Indebtedness on the other hand. Nothing contained in this Article or
elsewhere in this Guarantee Agreement is intended to or shall (a) impair, as
among the Guarantor, its creditors (other than holders of Senior Indebtedness)
and the Holders, the obligation of the Guarantor, which is absolute and
unconditional (and which, subject to the rights under this Article of the
holders of Senior Indebtedness, is intended to rank equally with all other
general obligations of the Guarantor), to pay to the Holders the Guarantee
Subordinated Payments as and when the same shall become due and payable in
accordance with their terms; or (b) affect the relative rights against the
Guarantor of the Holders and creditors of the Guarantor, other than the holders
of Senior Indebtedness; or (c) prevent the Guarantee Trustee or a Holder from
exercising all remedies otherwise permitted by applicable law upon default under
this Guarantee Agreement, subject to the rights, if any, under this Article of
the holders of Senior Indebtedness to receive cash, property and securities
otherwise payable or deliverable to the Guarantee Trustee or such Holder or,
under the conditions specified in Section 7.3, to prevent any payment prohibited
by such Section or enforce their rights pursuant to the penultimate paragraph in
Section 7.3.
SECTION 7.7 Guarantee Trustee To Effectuate Subordination.
----------------------------------------------
Each Holder of the Guarantee by his acceptance thereof authorizes and directs
the Guarantee Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Guarantee Trustee his attorney-in-fact for any and all such
purposes, including, in the event of any dissolution, windingup, liquidation or
reorganization of the Guarantor whether in bankruptcy, insolvency, receivership
proceedings, or otherwise, the timely filing of a claim for the unpaid balance
of the Indebtedness of the Guarantor owing to such Holder in the form required
in such proceedings and the causing of such claim to be approved. If the
Guarantee Trustee does not file a proper claim at least 30 days before the
expiration of the time to file such claim, then the holders of the Senior
Indebtedness and their agents, trustees or other representatives are authorized
to do so (but shall in no event be liable for any failure to do so) for and on
behalf of the Holders.
SECTION 7.8 No Waiver Of Subordination Provisions. No right
--------------------------------------
of any present or future holder of any Senior Indebtedness to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Guarantor or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance by
the Guarantor with the terms, provisions and covenants of this Guarantee
Agreement, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Guarantee Trustee or the Holders,
without incurring responsibility to the Holders and without impairing or
releasing the subordination provided in this Article or the obligations
hereunder of the Holders to the holders of the Senior Indebtedness, do any one
or more of the following: (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, Senior Indebtedness, or
otherwise amend or supplement in any manner Senior Indebtedness or any
instrument evidencing the same or any agreement under which Senior Indebtedness
is outstanding; (ii) permit the Guarantor to borrow, repay and then reborrow any
or all of the Senior Indebtedness; (iii) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iv) release any Person liable in any manner for the collection of
Senior Indebtedness; (v) exercise or refrain from exercising any rights against
the Guarantor and any other Person; and (vi) apply any sums received by them to
Senior Indebtedness.
SECTION 7.9 Notice To Guarantee Trustee. The Guarantor shall
---------------------------
give prompt written notice to the Guarantee Trustee of any fact known to the
Guarantor which would prohibit the making of any payment to or by the Guarantee
Trustee in respect of the Guarantee. Notwithstanding the provision of this
Article or any other provision of this Guarantee Agreement, the Guarantee
Trustee shall not be charged with knowledge of the existence of any facts which
would prohibit the making of any payment to or by the Guarantee Trustee in
respect of the Guarantee, unless and until a Responsible Officer of the
Guarantee Trustee shall have received written notice thereof from the Guarantor,
any holder of Senior Indebtedness, any Designated Senior Holder or from any
trustee, fiduciary or agent therefore; and, prior to the receipt of any such
written notice, the Guarantee Trustee, subject to the provisions of Section 3.1,
shall be entitled in all respects to assume that no such facts exist; provided,
however, that
-------- --------
if the Guarantee Trustee shall not have received the notice provided for in this
Section at least three Business Days prior to the date upon which by the terms
hereof any money may become payable for any purpose (including, without
limitation, the payment of any amounts due under the Guarantee), then, anything
herein contained to the contrary notwithstanding, but without limiting the
rights and remedies of the holders of Senior Indebtedness or any trustee,
fiduciary or agent therefor, the Guarantee Trustee shall have full power and
authority to receive such money and to apply the same to the purpose for which
such money was received and shall not be affected by any notice to the contrary
which may be received by it within three Business Days prior to such date. Any
notice required or permitted to be given to the Guarantee Trustee by a holder of
Senior Indebtedness or by any Designated Senior Holder shall be in writing and
shall be sufficient for every purpose hereunder if in writing and either (i)
sent via facsimile to the Guarantee Trustee, the receipt of which shall be
confirmed via telephone, or (ii) mailed, first class postage prepaid, or sent by
overnight carrier, to the Guarantee Trustee addressed to it at the address of
its principal office specified herein or at any other address furnished in
writing to such holder of Senior Indebtedness by the Guarantee Trustee.
Subject to the provisions of Section 3.1, the Guarantee Trustee
shall be entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness or Designated Senior
Holder (or a trustee, fiduciary or agent therefor) to establish that such notice
has been given by a holder of Senior Indebtedness or Designated Senior Holder
(or a trustee, fiduciary or agent therefor). In the event that the Guarantee
Trustee determines in good faith that further evidence is required with respect
to the right of any Person as a holder of Senior Indebtedness or Designated
Senior Holder to participate in any payment or distribution pursuant to this
Article, the Guarantee Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Guarantee Trustee as to the amount of Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article, and if such evidence is not furnished,
the Guarantee Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
Notwithstanding anything else contained herein, no notice, request
or other communication to or with the Guarantee Trustee shall be deemed given
unless received by a Responsible Officer at the Guarantee Trustee's principal
corporate trust office.
SECTION 7.10 Reliance On Judicial Order Or Certificate Of
---------------------------------------------
Liquidating Agent. Upon any payment or distribution of assets of the
- -----------------
Guarantor referred to in this Article, the Guarantee Trustee, subject to the
provisions of Section 3.1, and the Holders shall be entitled to rely upon any
order or decree entered by any court of competent jurisdiction in which such
Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee for the benefit of creditors, agent or
other Person making such payment or distribution, delivered to the Guarantee
Trustee or to the Holders, for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of the Senior
Indebtedness and other Indebtedness of the Guarantor, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article, provided that the foregoing shall
apply only if such court has been apprised of the provisions of this Article.
SECTION 7.11 Guarantee Trustee Not Fiduciary For Holders Of
-----------------------------------------------
Senior Indebtedness. The Guarantee 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 in good faith mistakenly pay
over or distribute to Holders or to the Guarantor or to 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 7.12 Rights of Guarantee Trustee As Holder Of Senior
------------------------------------------------
Indebtedness; Preservation Of Guarantee Trustee's Rights. The Guarantee
- --------------------------------------------------------
Trustee in its individual capacity shall be entitled to all the rights set forth
in this Article with respect to any Senior Indebtedness which may at any time be
held by it, to the same extent as any other holder of Senior Indebtedness, and
nothing in this Guarantee Agreement shall deprive the Guarantee Trustee of any
of its rights as a holder of Senior Indebtedness.
Nothing in this Article shall apply to claims of, or payments to,
the Guarantee Trustee under or pursuant to this Guarantee Agreement or Section
6.7 of the Indenture.
SECTION 7.13 Article Applicable to Paying Agents. In case at
-----------------------------------
any time any Paying Agent other than the Guarantee Trustee shall have been
appointed by the Guarantor and be then acting hereunder, the term "Guarantee
Trustee" as used in this Article shall in such case (unless the context
otherwise requires) 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 Guarantee Trustee;
provided, however, that Section 7.11
-------- --------
hereof shall not apply to the Guarantor or any Affiliate of the Guarantor if it
or such Affiliate acts as Paying Agent.
ARTICLE VIII
TERMINATION
SECTION 8.1 Termination. This Guarantee Agreement shall
-----------
terminate upon (i) full payment of the Redemption Price of all Convertible
Preferred Securities, (ii) the distribution of the Partnership Preferred
Securities or the Convertible Debentures to the Holders in exchange for all of
such Holders' Convertible Preferred Securities, (iii) full payment of the
amounts payable in accordance with the Declaration upon liquidation of the Trust
or (iv) distribution of Common Stock to Holders in respect of the conversion of
all of such Holders' Convertible Preferred Securities into Common Stock.
Notwithstanding the foregoing, this Guarantee Agreement will continue to be
effective or will be reinstated, as the case may be, if at any time any Holder
of Convertible Preferred Securities must restore payment of any sums paid under
the Convertible Preferred Securities or under this Guarantee Agreement.
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Exculpation. No Indemnified Person shall be
------------
liable, responsible or accountable in damages or otherwise to the Guarantor or
any Covered Person for any loss, damage or claim incurred by reason of any act
or omission performed or omitted by such Indemnified Person in good faith in
accordance with this Guarantee Agreement and in a manner that such Indemnified
Person reasonably believed to be within the scope of the authority conferred on
such Indemnified Person by this Guarantee Agreement or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Indemnified Person's negligence or willful misconduct with
respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Convertible Preferred Securities might
properly be paid.
SECTION 9.2 Indemnification. To the fullest extent permitted by
applicable law, the Guarantor shall indemnify and hold harmless each Indemnified
Person from and against any loss, damage or claim incurred by such Indemnified
Person arising out of the acceptance by the Guarantee Trustee of its duties and
obligations hereunder by reason of any act or omission performed or omitted by
such Indemnified Person in good faith in accordance with this Guarantee
Agreement and in a manner such Indemnified Person reasonably believed to be
within the scope of authority conferred on such Indemnified Person in accordance
with this Guarantee Agreement, except that no Indemnified Person shall be
entitled to be indemnified in respect of any loss, damage or claim incurred by
such Indemnified Person by reason of its negligence or willful misconduct with
respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the
Guarantor prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Guarantor of an undertaking by or on behalf of
the Indemnified Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as authorized in Section
9.2(a).
ARTICLE X
CONVERSION OF CONVERTIBLE PREFERRED SECURITIES
SECTION 10.1 Issuance of Common Stock Series A. The Guarantor
- ----------------------------------
hereby agrees that, upon the request of the Conversion Agent, on behalf of one
or more Holders of Convertible Preferred Securities, to convert Convertible
Debentures into Common Stock Series A pursuant to the request of such Holders to
effect such conversion in accordance with the terms of the Declaration, the
Guarantor shall deliver to the Conversion Agent certificates representing the
full number of shares of Common Stock Series A issuable upon conversion of such
Convertible Debentures in accordance with the terms of the Indenture and such
Convertible Debentures. The Guarantor has reserved and will keep available for
issuance, solely for the purpose of affecting the conversion of the Convertible
Debentures, the full number of shares of Common Stock Series A deliverable by
the Conversion Agent to the Holders upon the conversion of all outstanding
Convertible Preferred Securities not theretofore converted by the Holders.
SECTION 10.2 Validity of Common Stock Series A. All shares of
- ---------------------------------
Common Stock Series A delivered by the Guarantor upon such conversion will be
duly and validly issued and fully paid and nonassessable.
SECTION 10.3 Termination of Obligation to Issue Common Stock
------------------------------------------------
Series A. The Guarantor's obligations under this Article X to issue
- --------
Common Stock Series A shall terminate upon the termination of the right of
holders of Convertible Preferred Securities to request the Conversion Agent to
effect such conversion as set forth in the Declaration and, with respect to a
particular holder, upon such conversion.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Successors and Assigns. All guarantees and
-----------------------
agreements contained in this Guarantee Agreement shall bind the successors,
assigns, receivers, trustees and representatives of the Guarantor and shall
inure to the benefit of the Holders of the Convertible Preferred Securities then
outstanding.
SECTION 11.2 Amendments. Except with respect to any changes
-----------
that do not adversely affect the rights of Holders (in which case no consent of
Holders will be required), this Guarantee Agreement may only be amended with the
prior approval of the Holders of at least 66-2/3% in aggregate liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all the outstanding Convertible
Preferred Securities. The provisions of Section 12.2 of the Declaration with
respect to meetings of Holders of the Securities apply to the giving of such
approval. In executing any amendment to this Guarantee Agreement, the Guarantee
Trustee shall be entitled to receive, and shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Guarantee Agreement.
SECTION 11.3 Notices. All notices provided for in this
-------
Guarantee Agreement shall be in writing, duly signed by the party giving such
notice, and shall be delivered, telecopied or mailed by registered or certified
mail, as follows:
(a) If given to the Guarantee Trustee, at the Guarantee Trustee's
mailing address set forth below (or such other address as the Guarantee Trustee
may give notice of to the Holders of the Convertible Preferred Securities):
Chemical Bank
450 West 33rd Street, 15th Floor
New York, New York 10001
Attention: Corporate Trustee
Administration Department
Fax No.: (212) 946-7799
(b) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders of the Convertible Preferred Securities):
Citizens Utilities Company
High Ridge Park, Bldg. No. 3
Stamford, Connecticut 06905
Attention: Robert J. DeSantis,
Vice President and Treasurer
Fax No.: (203) 329-4625
copy to:
Boulanger, Hicks & Churchill
135 East 57th Street
New York, New York 10022
Attention: Jonathan H. Churchill
Fax No.: (212) 753-6971
(c) If given to any Holder of Convertible Preferred Securities, at
the address of such Holder set forth on the books and records of the Trust.
All such notices shall be deemed to have been given when (i)
received in person, (ii) telecopied with receipt confirmed, or (iii) the third
Business Day after having been mailed by first class mail, postage prepaid,
except that if a notice or other document is refused delivery or cannot be
delivered because of a changed address of which no notice was given, such notice
or other document shall be deemed to have been delivered on the date of such
refusal or inability to deliver.
SECTION 11.4 Benefit. This Guarantee Agreement is solely for
-------
the benefit of the Guarantee Trustee and the Holders of the Convertible
Preferred Securities and, subject to Section 3.1(a), is not separately
transferable from the Convertible Preferred Securities.
SECTION 11.5 Governing Law. This Guarantee Agreement shall be
- -------------
governed by and construed and interpreted in accordance with the laws of the
State of New York.
SECTION 11.6 Counterparts. This Guarantee Agreement may be
------------
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.
<PAGE>
THIS GUARANTEE AGREEMENT is executed as of the day and year first
above written.
CITIZENS UTILITIES COMPANY
By:________________________
Robert J. DeSantis
Vice President and Treasurer
CHEMICAL BANK, as Guarantee Trustee
By:__________________________
Name:
Title:
<PAGE>
CITIZENS UTILITIES COMPANY
Reconciliation and tie between Trust Indenture Act of 1939 and Guarantee,
dated as of January 15, 1996.
Trust Indenture
Act Section Guarantee Section
----------- -----------------
subsection 310(a)(1) 4.1(a)
(a)(2) 4.1(a)
(a)(3) Not Applicable
(a)(4) Not Applicable
(a)(5) 4.1(a)
(b) 4.1(c), 4.2(d)
subsection 311(a) 2.2(b)
(b) 2.2(b)
subsection 312(a) 2.2(a)
(b) 2.2(b)
(c) 2.2(c)
subsection 313(a) 2.3
(b) 2.3
(c) 2.3
(d) 2.3
subsectio 314(a) 2.4
(b) Not Applicable
(c)(1) 2.4, 2.5
(c)(2) 2.4, 2.5
(c)(3) Not Applicable
(d) Not Applicable
(e) 1.1
subsection 315(a) 3.1(c), 3.1(d)(i)
(b) 2.7
(c) 3.1(c)
(d) 3.1(d)
(d)(1) 3.1(d)(i)
(d)(2) 3.1(d)(ii)
(d)(3) 3.1(d)(iii)
(e) None
subsection 316(a) 5.4
(a)(1)(A) 5.4
(a)(1)(B) 5.4
(a)(2) None
(b) 5.1, 5.3
(c) None
subsecton 317(a)(1) 3.1(e)
(a)(2) 3.1(f)
(b) Not applicable
subsection 318(a) 2.1
NOTE: This reconciliation and tie shall not, for any
purpose, be deemed to be a part of the Guarantee.
<PAGE>
TABLE OF CONTENTS
------------------
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application 5
SECTION 2.2 Lists of Holders of Securities 6
SECTION 2.3 Reports by the Guarantee Trustee 6
SECTION 2.4 Periodic Reports to Guarantee Trustee 6
SECTION 2.5 Evidence of Compliance with Conditions Precedent 6
SECTION 2.6 Events of Default; Waiver 7
SECTION 2.7 Event of Default; Notice 7
SECTION 2.8 Conflicting Interests 7
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee Trustee 7
SECTION 3.2 Certain Rights of Guarantee Trustee 9
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee 11
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1 Guarantee Trustee; Eligibility 12
SECTION 4.2 Appointment, Removal and Resignation of Guarantee
Trustees 12
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee 13
SECTION 5.2 Waiver of Notice and Demand 13
SECTION 5.3 Obligations Not Affected 13
SECTION 5.4 Rights of Holders 14
SECTION 5.5 Guarantee of Payment 14
SECTION 5.6 Subrogation 14
SECTION 5.7 Independent Obligations 15
ARTICLE VI
COVENANTS
SECTION 6.1 Limitation of Transactions 15
ARTICLE VII
SUBORDINATION
SECTION 7.1 Subordination 15
SECTION 7.2 Payment Over of Proceeds Upon Dissolution, etc. 15
SECTION 7.3 No Payment When Senior Indebtedness In Senior Payment
Default or Senior Indebtedness Accelerated 17
SECTION 7.4 Payment Permitted If No Default 18
SECTION 7.5 Subrogation To Rights Of Holders Of Senior
Indebtedness 18
SECTION 7.6 Provisions Solely To Define Relative Rights 18
SECTION 7.7 Guarantee Trustee To Effectuate Subordination 19
SECTION 7.8 No Waiver Of Subordination Provisions 19
SECTION 7.9 Notice To Guarantee Trustee 20
SECTION 7.10 Reliance On Judicial Order Or Certificate
Of Liquidating Agent 21
SECTION 7.11 Guarantee Trustee Not Fiduciary For Holders Of
Senior Indebtedness 21
SECTION 7.12 Rights of Guarantee Trustee As Holder Of Senior
Indebtedness; Preservation Of Guarantee Trustee's
Rights 21
SECTION 7.13 Article Applicable to Paying Agents 21
ARTICLE VIII
TERMINATION
SECTION 8.1 Termination 21
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Exculpation 22
SECTION 9.2 Indemnification 22
ARTICLE X
CONVERSION OF CONVERTIBLE PREFERRED SECURITIES
SECTION 10.1 Issuance of Common Stock Series A 23
SECTION 10.2 Validity of Common Stock Series A 23
SECTION 10.3 Termination of Obligation to Issue Common Stock
Series A 23
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Successors and Assigns 23
SECTION 11.2 Amendments 23
SECTION 11.3 Notices 24
SECTION 11.4 Benefit 25
SECTION 11.5 Governing Law 25
SECTION 11.6 Counterparts 25
Letter of Representations
(To be Completed by Issuer and Agent)
Citizens Utilities Trust
(Name of Issuer)
Chemical Bank
(Name of Agent)
January 18, 1996
Attention: General Counsel's Office
The Depository Trust Company
55 Water Street, 49th Floor
New York, New York 10041-0099
Attention: General Counsel's Office
Re: Citizens Utilities Trust
5% Convertible Preferred Securities
Ladies and Gentlemen:
The purpose of this letter is to set out certain matters relating to
the above-referenced Convertible Preferred Securities (CUSIP No. 177351 20 2)
(the "Securities") of Citizens Utilities Trust, a Delaware statutory business
trust (the "Trust"). The Securities are guaranteed to the extent set forth in
the Prospectus relating to the Securities dated January 16, 1996, by Citizens
Utilities Company, a Delaware corporation. The Trust is selling the Securities
to certain underwriters (the "Underwriters") pursuant to an Underwriting
Agreement dated January 16, 1996, and the Underwriters wish to take delivery of
the Securities through The Depository Trust Company ("DTC"). The Trust is acting
as transfer agent and registrar with respect to the Securities. Chemical Bank,
not in its individual capacity but solely as Property Trustee of the Trust, will
act as paying agent in relation to the Securities (the "Property Trustee"). The
actions specified herein to be taken by or on behalf of the Trust shall be taken
by the Regular Trustees, unless the Property Trustee is designated herein to
take such actions.
To induce DTC to accept the Securities as eligible for deposit at DTC, and to
act in accordance with its rules with respect to the Securities, the Trust and
the Property Trustee severally, as set forth below each make the following
representations to DTC.
<PAGE>
1. Before the closing of the sale of the Securities to the
Underwriters, which is expected to occur on or about January 22, 1996, there
shall be deposited with DTC one or more global certificates (the "Global
Certificate") registered in the name of DTC's nominee, Cede & Co., for 4,025,000
Securities.
2. The Amended and Restated Declaration of Trust of the Trust dated
as of January 15, 1996, provides for the voting by holders of the Securities
under certain circumstances (with no provision for revocation of consents or
votes by subsequent holders). The Trust shall establish a record date for such
purposes and shall, to the extent possible, give DTC notice of such record date
not less than 15 calendar days in advance of such record date. Notices to DTC
pursuant to this paragraph by telecopy shall be sent to DTC's Reorganization
Department at (212) 709-6896 or (212) 709-6897, and receipt of such notices
shall be confirmed by telephoning (212) 709-6870. Notices to DTC pursuant to
this paragraph by mail or by other means shall be sent to DTC's Reorganization
Department as indicated in paragraph 6.
3. In the event of stock split, conversion, recapitalization,
reorganization or any other similar transaction resulting in the cancellation of
all or any part of the Securities outstanding, the Trust shall send DTC a notice
of such event 5 business days prior to the effective date of such event.
4. In the event of a distribution payment or other distribution with
respect to the Securities outstanding, the Property Trustee shall send DTC a
notice specifying: (a) whether the payment or distribution will be made in cash
or in shares of the Common Stock Series A, $.25 par value, of the Company
("Common Stock Series A"); (b) if such payment or distribution is to be made in
cash, the cash amount of such payment or distribution; (c) if such payment or
distribution is to be made in shares of Common Stock Series A, that the Company
will notify DTC as provided in the last sentence of this paragraph as to the
number of shares of Common Stock Series A to be paid at such payment or
distribution; (d) the conditions, if any, applicable to, such payment or
distribution; and (e) the date any required notice is to be mailed to holders of
Securities or published (the "Publication Date"). Such notice shall be sent to
DTC by a secure means (e.g., legible telecopy, registered or certified mail,
overnight delivery) in a timely manner designed to assure that such notice is in
DTC's possession no later than the close of business on the business day before
the Publication Date. (The Property Trustee shall have a method to verify
subsequently the use of such means and the timeliness of such notice). To the
extent practicable, the Publication Date
<PAGE>
shall be not less than 30 days nor more than 60 days prior to such distribution
payment or distribution with respect to the Securities. Ten (10) business days
prior to the date of any payment or distribution DTC shall notify the Company as
to the number of Securities held of record by holders which have chosen that
payments or distributions are to be made in shares of Common Stock Series A.
After establishing the amount of cash and/or the number of shares of Common
Stock Series A to be paid on the Securities, the Property Trustee will notify
DTC's Dividend Department of such amount and/or number of shares of Common Stock
Series A five (5) business days prior to payment date.
5. In the event of a redemption by the Trust of the Securities,
notice to holders of the Securities by the Trust specifying the terms of the
redemption and the Publication Date of such notice shall be sent to DTC not less
than 30 days prior to such event by a secure means in the manner set forth in
the preceding paragraph. Such redemption notice shall be sent by telecopy to
DTC's Call Notification Department at (516) 227-4039 or 4190, and receipt of
such notice shall be confirmed by telephoning (516) 227-4070. Notice by mail or
by any other means shall be sent to:
Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, New York 11530-4719
6. In the event of any invitation to tender the Securities, notice
by the Trust to holders of the Securities specifying the terms of the tender and
the Publication Date of such notice shall be sent to DTC by the Trust by a
secure means and in a timely manner as described in paragraph 4. Notices to DTC
pursuant to this paragraph and notices of other corporate actions (including
mandatory tenders, exchanges and capital changes), shall be sent by telecopy to
DTC's Reorganization Department at (212) 709-1093 or (212) 709-1094, and receipt
of such notices shall be confirmed by telephoning (212) 709-6884, or by mail or
any other means to:
Manager, Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
7. All notices and payment advices sent to DTC shall contain the
CUSIP number of the Securities and the accompanying description of the
Securities, which, as of the date of this letter, is "Citizens Utilities Trust
5% Convertible Preferred Securities."
8. Notices to DTC's Dividend Department by telecopy shall
be sent to (212)709-1723. Such notices by mail or by any other means shall
be sent to:
Manager, Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square, 22nd Floor
New York, New York 10004-2695
The Trust shall confirm DTC's receipt of such telecopy by telephoning the
Dividend Department at (212) 709-1270.
9. Payments of cash distributions with respect to the Securities
evidenced by the Global Certificate shall be received by Cede & Co., as nominee
of DTC, or its registered assigns in same day funds on each payment date (or in
accordance with existing arrangements between the Property Trustee and DTC).
Such payments shall be made payable to the order of Cede & Co. Absent any other
arrangements between Property Trustee and DTC, such funds shall be wired as
follows:
Chemical Bank
ABA 021000128
For credit to A/C The Depository Trust Company
Dividend Deposit Account 066-026776
Payments of distributions in shares of Common Stock with respect to the
Securities evidenced by the Global Certificate shall be received by Cede & Co.,
as nominee of DTC, or its registered assigns in shares of Common Series A on
each payment date (or in accordance with existing arrangements between the
Property Trustee and DTC). Such shares shall be issued in the name of Cede & Co.
<PAGE>
10. Other cash payments shall be received by Cede & Co., as a
nominee of DTC, or its registered assigns in same day funds by Property Trustee
in the manner set forth in the SDFS Paying Agent Operating Procedures, a copy of
which previously has been furnished to Property Trustee.
11. DTC may direct the Trust and the Property Trustee to use any
other telecopy number or address of DTC as the number of address to which
notices of payments may be sent.
12. In the event of a conversion, redemption, or any other
similar transaction (e.g., tender made and accepted in response to the
----
Trust's invitation) necessitating a reduction in the aggregate number of
Securities outstanding, DTC, in its discretion: (a) may request the Trust to
issue and countersign a new Security certificate; or (b) may make an appropriate
notation on the Security certificate indicating the date and amount of such
reduction.
13. DTC may discontinue its services as a securities depositary with
respect to the Global Certificate at any time by giving reasonable notice to the
Trust (at which time DTC will confirm with the Trust the aggregate number of
Securities deposited with it) and discharging its responsibilities with respect
thereto under applicable law. Under such circumstances, at DTC's request the
Trust shall cooperate fully with DTC by taking prompt appropriate action to make
alternative arrangements for book-entry settlement for the Securities or to make
available one or more separate certificates evidencing Securities, to any
participant having Securities credited to its DTC account.
14. In the event that the Trust determines that beneficial owners of
Securities shall be able to obtain certificated Securities, the Trust shall
notify DTC of the availability of certificates. In such event, the Trust shall
issue, transfer and exchange certificates in appropriate amounts, as required by
DTC and others.
15. Issuer: (a) understands that DTC has no obligation to, and will
not, communicate to its Participants or to any person having an interest in the
Securities any information contained in the Security certificate(s); and (b)
acknowledges that neither DTC's Participants nor any person having an interest
in the Securities shall be deemed to have notice of the provisions of the
Security certificates by virtue of submission of such certificate(s) to DTC.
16. The "Principal and Income Payments Rider" attached hereto as
Exhibit A is incorporated herein, and made a part hereof, by this reference.
17. The "Representations for Deposit/Withdrawal at Custodian
("DWAC")" attached hereto as Exhibit B are incorporated herein, and made a part
hereof, by this reference.
18. The "Representations for Conversions" attached hereto as Exhibit
C are incorporated herein, and made part hereof, by this reference.
<PAGE>
This letter may be executed in any number of counterparts, each of which when so
executed shall be agreed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
Very truly yours,
CITIZENS UTILITIES TRUST
By:________________________________
Robert J. DeSantis
Regular Trustee
By:________________________________
Edward O. Kipperman
Regular Trustee
CHEMICAL BANK
Not in its individual capacity but
solely as Property Trustee of Citizens
Utilities Trust
By:___________________________________ Name:
Title:
RECEIVED AND ACCEPTED:
THE DEPOSITORY TRUST COMPANY
By:__________________________
Authorized Officer
f:\clients\cuc\ps\dtc
<PAGE>
177351202 $201,250,000 January 15, 2036 5%
