<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 26, 1997
FILE NO. 333-20661
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PENNSYLVANIA POWER & LIGHT COMPANY PENNSYLVANIA 23-0959590
PP&L CAPITAL TRUST DELAWARE 23-7879922
(EXACT NAME OF REGISTRANT AS (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
SPECIFIED IN ITS CHARTER) OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
TWO NORTH NINTH STREET
ALLENTOWN, PENNSYLVANIA 18101
610/774-5151
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JOHN R. BIGGAR
VICE PRESIDENT-FINANCE
PENNSYLVANIA POWER & LIGHT COMPANY
TWO NORTH NINTH STREET
ALLENTOWN, PENNSYLVANIA 18101
610/774-5151
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
VINCENT PAGANO, JR. ROBERT B. HIDEN, JR.
SIMPSON THACHER & BARTLETT SULLIVAN & CROMWELL
425 LEXINGTON AVENUE 125 BROAD STREET
NEW YORK, NEW YORK 10017 NEW YORK, NEW YORK 10004
(212) 455-2000 (212) 558-1000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS
PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
___________________________
IF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED
PURSUANT TO DIVIDEND OR INTEREST REINVESTMENT PLANS, CHECK THE FOLLOWING BOX.[ ]
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON
A DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933 OTHER THAN SECURITIES OFFERED ONLY IN CONNECTION WITH DIVIDEND OR INTEREST
REINVESTMENT PLANS, CHECK THE FOLLOWING BOX. [ ]
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING
PURSUANT TO RULE 462(b) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING BOX
AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER
EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. [ ]
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(c)
UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING. [ ]
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434,
PLEASE CHECK THE FOLLOWING BOX. [ ]
___________________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS SUBJECT TO COMPLETION, DATED MARCH 26, 1997
4,000,000 PREFERRED SECURITIES
PP&L CAPITAL TRUST
% TRUST ORIGINATED PREFERRED SECURITIES SM ("TOPRS SM")
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS SET FORTH HEREIN, BY
PENNSYLVANIA POWER & LIGHT COMPANY
----------
The % Trust Originated Preferred Securities SM (the "Preferred Securities")
offered hereby evidence undivided beneficial ownership interests in the assets
of PP&L Capital Trust, a statutory business trust created under the laws of the
State of Delaware (the "Trust"). Pennsylvania Power & Light Company, a
Pennsylvania corporation (the "Company" or "PP&L"), will own all the common
securities (the "Common Securities" and, together with the Preferred
Securities, the "Trust Securities") representing the remaining undivided
beneficial ownership interests in the assets of the Trust. The Trust exists for
the sole purpose of issuing the Trust Securities and investing the proceeds
thereof in an equivalent amount of the Company's % junior subordinated
deferrable interest debentures due , 2027 (the "Subordinated Debentures").
SEE "RISK FACTORS" BEGINNING ON PAGE 9 OF THIS PROSPECTUS FOR CERTAIN
INFORMATION RELEVANT TO AN INVESTMENT IN THE PREFERRED SECURITIES, INCLUDING
THE PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS OF DISTRIBUTIONS
ON THE PREFERRED SECURITIES MAY BE DEFERRED AND THE RELATED UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES OF SUCH DEFERRAL.
The Preferred Securities have been approved for listing on the New York Stock
Exchange, Inc. (the "NYSE"), subject to official notice of issuance. Trading of
the Preferred Securities on the NYSE is expected to commence within a 30-day
period after the initial delivery of the Preferred Securities. See
"Underwriting."
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) COMMISSION(2) TRUST(3)(4)
- --------------------------------------------------------------------------------
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Per Preferred Security............. $ (3) $
- --------------------------------------------------------------------------------
Total.............................. $ (3) $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Plus accrued distributions, if any, from , 1997.
(2) The Company and the Trust have agreed to indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting."
(3) In view of the fact that the proceeds of the sale of the Preferred
Securities will be invested in the Subordinated Debentures, the Company has
agreed to pay to the Underwriters, as compensation for their arranging the
investment therein of such proceeds, $ per Preferred Security (or $ in
the aggregate). See "Underwriting."
(4) Expenses of the offering to be paid by the Company are estimated to be
approximately $ .
----------
The Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them
and subject to their right to reject any order in whole or in part. It is
expected that delivery of the Preferred Securities will be made only in book-
entry form through the facilities of The Depository Trust Company on or about
, 1997.
----------
MERRILL LYNCH & CO.
A.G. EDWARDS & SONS, INC.
LEGG MASON WOOD WALKER
INCORPORATED
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
----------
The date of this Prospectus is , 1997.
- -----
SM "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE PREFERRED
SECURITIES. SUCH TRANSACTIONS MAY INCLUDE STABILIZING, THE PURCHASE OF
PREFERRED SECURITIES TO COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITION
OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
___________________________
(CONTINUED FROM COVER PAGE)
The Subordinated Debentures when issued will be unsecured obligations of
the Company and will be subordinate and junior in right of payment to
certain other indebtedness of the Company, as described herein. Upon an
event of default under the Trust Agreement (as defined herein), the holders
of the Preferred Securities will have a preference over the holders of the
Common Securities with respect to payments in respect of distributions and
payments upon redemption, liquidation and otherwise.
Holders of the Preferred Securities will be entitled to receive
cumulative cash distributions accumulating from the date of original
issuance and payable quarterly in arrears on the first day of January,
April, July and October of each year, commencing , 1997, at the
annual rate of % (the "Securities Rate") of the stated Liquidation Amount
(as defined below) of $25 per Preferred Security ("Distributions"). Subject
to certain exceptions, as described herein, the Company has the right to
defer payment of interest on the Subordinated Debentures at any time or from
time to time for a period not exceeding 20 consecutive quarters with respect
to each deferral period (each, an "Extension Period"), during which
Extension Periods the Company shall have the right to make full or partial
payments of interest on any Interest Payment Date (as defined herein),
provided that no Extension Period may extend beyond the Stated Maturity (as
defined herein) of the Subordinated Debentures. No interest shall be due and
payable during an Extension Period, except at the end thereof. Upon the
termination of any such Extension Period and the payment of all amounts then
due on any Interest Payment Date, the Company may elect to begin a new
Extension Period subject to the requirements set forth herein. If interest
payments on the Subordinated Debentures are so deferred, cash distributions
on the Preferred Securities will also be deferred and the Company may not,
and may not permit any subsidiary of the Company to, subject to certain
exceptions set forth herein, among other things, declare or pay any cash
distributions with respect to the Company's capital stock or debt securities
that rank pari passu with or junior to the Subordinated Debentures. During
an Extension Period interest on the Subordinated Debentures will continue to
accrue (and the amount of Distributions to which holders of the Preferred
Securities are entitled will accumulate at the Securities Rate, compounded
quarterly), and holders of the Preferred Securities will be required to
accrue interest income for United States federal income tax purposes prior
to receipt of the cash related to such interest income. See "Description of
Subordinated Debentures--Option to Extend Interest Payment Period" and
"Certain Federal Income Tax Consequences--Interest Income and Original Issue
Discount."
The Company has, through the Guarantee, the Trust Agreement, the
Subordinated Debentures and the Indenture (each, as defined herein), taken
together, fully, irrevocably and unconditionally guaranteed all of the
Trust's obligations under the Preferred Securities. See "Relationship Among
the Preferred Securities, the Subordinated Debentures and the Guarantee."
The Company guarantees the payment of Distributions and payments on
liquidation of the Trust or redemption of the Preferred Securities, but only
in each case to the extent of funds held by the Trust, as described herein
(the "Guarantee"). See "Description of Guarantee" herein. If the Company
does not make interest payments on the Subordinated Debentures held by the
Trust, the Trust will have insufficient funds to pay Distributions on the
Preferred Securities. The Guarantee does not cover payment of Distributions
when the Trust does not have sufficient funds to pay such Distributions. In
the event a Debenture Event of Default (as defined below) has occurred and
is continuing and such default is attributable to the failure of the Company
to pay interest or principal on the Subordinated Debentures, a holder of
Preferred Securities may institute a legal proceeding directly against the
Company to enforce payment of such Distributions to such holder. The
obligations of the Company under the Guarantee and the Subordinated
Debentures are subordinate and junior in right of payment to all Senior Debt
(as defined in "Description of Subordinated Debentures--Subordination"
herein) of the Company.
The Preferred Securities are subject to mandatory redemption, in whole or
in part, upon repayment of the Subordinated Debentures at maturity or their
earlier redemption in an amount equal to the amount of related Subordinated
Debentures maturing or being redeemed at a redemption price equal to the
aggregate liquidation preference of such Preferred Securities plus
accumulated and unpaid Distributions thereon to the date of redemption. The
Subordinated Debentures are redeemable prior to maturity at the option of
the Company (i) on or after , 2002, in whole at any time or in part
from time to time, at a redemption price equal to the accrued and unpaid
interest on the Subordinated Debentures so redeemed to the date fixed for
redemption, plus 100% of the principal amount thereof or (ii) at any time,
in whole (but not in part), upon the occurrence and continuation of a
Special Event (as defined herein), at any time within 90 days following the
occurrence of such Special Event, at a redemption price equal to the accrued
and unpaid interest on the Subordinated Debentures so redeemed to the date
2
<PAGE>
fixed for redemption, plus 100% of the principal amount thereof, in each
case subject to the further conditions described under "Description of
Subordinated Debentures--Redemption."
At any time, the Company will have the right to liquidate the Trust and
cause the Subordinated Debentures to be distributed to the holders of the
Preferred Securities and the Common Securities in liquidation of the Trust.
See "Description of Preferred Securities--Redemption--Special Event
Redemption or Distribution of Subordinated Debentures."
At any time, the Company shall have the right to shorten or extend the
maturity of the Subordinated Debentures, provided that it can not shorten
the maturity to a date earlier than , 2002 and can extend the
maturity only if certain conditions are met. See "Description of
Subordinated Debentures--General."
The Subordinated Debentures are subordinate and junior in right of
payment to all Senior Debt (as defined herein) of the Company. As of
December 31, 1996, the Company had approximately $3.0 billion aggregate
principal amount of Senior Debt outstanding. The terms of the Subordinated
Debentures place no limitation on the amount of Senior Debt that may be
incurred by the Company. See "Description of Subordinated Debentures--
Subordination."
In the event of the liquidation of the Trust, after satisfaction of the
creditors of the Trust, if any, as provided by applicable law, the holders
of the Preferred Securities will be entitled to receive the stated
Liquidation Amount of $25 per Preferred Security plus accumulated and unpaid
Distributions thereon to the date of payment, which may be in the form of a
distribution of such amount in Subordinated Debentures, subject to certain
exceptions. See "Description of Preferred Securities--Liquidation
Distribution Upon Termination."
The Preferred Securities will be represented by global certificates
registered in the name of The Depository Trust Company ("DTC") or its
nominee. Beneficial interests in the Preferred Securities will be shown on,
and transfers thereof will be effected only through, records maintained by
participants in DTC. Except as described herein, Preferred Securities in
certificated form will not be issued in exchange for the global
certificates. See "Description of the Preferred Securities--Book-Entry
Issuance."
___________________________
3
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed with the Securities and Exchange
Commission (the "Commission") are incorporated by reference in this
Prospectus:
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1996.
2. The Company's Current Report on Form 8-K dated March 3, 1997.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), after the date of this Prospectus and prior to the termination of the
offering made hereunder shall be deemed to be incorporated by reference into
this Prospectus and to be a part of this Prospectus from the respective
dates of the filing of such documents. The Company will provide without
charge to each person to whom this Prospectus is delivered, on the written
or oral request of such person, a copy of any or all of the documents
incorporated by reference herein (other than exhibits not specifically
incorporated by reference into the text of such documents). Requests should
be directed to Pennsylvania Power & Light Company, Two North Ninth Street,
Allentown, PA 18101, Attention: Investor Services Department (800/345-3085).
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained in this Prospectus or in any other subsequently filed document
which also is or is deemed to be incorporated herein by reference modifies
or supersedes such statement. Any statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports and other information with
the Commission. Reports, proxy statements and other information filed by the
Company with the Commission pursuant to the informational requirements of
the Exchange Act may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549, and at the following Regional
Offices of the Commission: Chicago Regional Office, Suite 1400, Citicorp
Center, 14th Floor, 500 West Madison Street, Chicago, Illinois 60661; and
New York Regional Office, 7 World Trade Center, 13th Floor, Suite 1300, New
York, New York 10048. Copies of such material can be obtained at prescribed
rates from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549. The Commission also
maintains a Web site (http://www.sec.gov) that contains reports, proxy
statements and other information regarding the Company. In addition,
reports, proxy statements and other information concerning the Company may
be inspected at the offices of the NYSE, 20 Broad Street, New York, New York
10005 and the Philadelphia Stock Exchange, 1900 Market Street, Philadelphia,
Pennsylvania 19103.
The Company and the Trust have filed with the Commission a Registration
Statement on Form S-3 (together with all amendments and exhibits thereto,
the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the securities offered hereby. This
Prospectus omits, in accordance with the rules and regulations of the
Commission, certain of the information contained in the Registration
Statement. Reference is hereby made to the Registration Statement and the
exhibits and the financial statements, notes and schedules filed as a part
thereof or incorporated by reference therein for further information with
respect to the Company, the Trust and the securities offered hereby.
Statements contained herein concerning the provisions of any document are
not necessarily complete and, in each instance, where a copy of such
document has been filed as an exhibit to the Registration Statement or
otherwise has been filed with the Commission, reference is made to the copy
so filed. Each such statement is qualified in its entirety by such
reference.
No separate financial statements of the Trust have been included herein.
The Company and the Trust do not consider that such financial statements
would be material to holders of the Preferred Securities because the Trust
is a newly formed special purpose entity, has no operating history or
independent operations and is not engaged in and does not propose to engage
in any activity other than holding as trust assets the Subordinated
Debentures of the Company and issuing the Preferred Securities and Common
Securities. See "PP&L Capital Trust", "Description of Preferred Securities",
"Description of Guarantee" and "Description of Subordinated Debentures."
4
<PAGE>
SUMMARY OF OFFERING
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. See "Risk
Factors" for a discussion of certain information prospective investors
should carefully review in connection with an investment in the securities
offered hereby.
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The Company........................... The Company is an operating electric
utility, incorporated under the laws
of the Commonwealth of Pennsylvania
in 1920. PP&L serves approximately
1.2 million customers in a 10,000
square mile territory in 29 counties
of central eastern Pennsylvania with
a population of approximately 2.6
million persons. This service area
has 129 communities with populations
over 5,000, the largest cities of
which are Allentown, Bethlehem,
Harrisburg, Hazleton, Lancaster,
Scranton, Wilkes-Barre and
Williamsport.
The Trust............................. PP&L Capital Trust is a statutory
business trust formed under Delaware
law solely for the purpose of issuing
the Preferred Securities and the
Common Securities and investing the
proceeds thereof in the Subordinated
Debentures (and engaging in
activities necessary or incidental
thereto).
The Trustees.......................... The Chase Manhattan Bank will act as
property trustee (the "Property
Trustee") of the Trust. Two employees
of the Company also will act as
trustees (the "Administrative
Trustees") of the Trust. Chase
Manhattan Bank Delaware will be an
additional trustee (the "Delaware
Trustee") of the Trust. The Chase
Manhattan Bank also will act as
trustee (the "Indenture Trustee")
under the indenture pursuant to which
the Subordinated Debentures will be
issued and will act as trustee under
the Guarantee (the "Guarantee
Trustee"). The Property Trustee,
Delaware Trustee and Administrative
Trustees are sometimes referred to as
the "Trust Trustees."
Preferred Securities Offered.......... The Trust will offer 4,000,000
Preferred Securities evidencing
undivided beneficial ownership
interests in the assets of the Trust.
Holders of the Preferred Securities
are entitled to receive
Distributions, accumulating from the
date of original issuance and payable
quarterly in arrears on January 1,
April 1, July 1 and October 1 of each
year, commencing on , 1997
(each, a "Distribution Date").
Holders of the Preferred Securities
will have a preference under certain
circumstances with respect to
Distributions and amounts payable on
liquidation or redemption over the
Common Securities. See "Description
of Preferred
Securities--Subordination of Common
Securities." The Securities Rate and
the Distribution Dates for the
Preferred Securities will correspond
to the interest rate and payment
dates on the Subordinated Debentures,
which will constitute all the assets
of the Trust. As a result, if
principal or interest is not paid on
the Subordinated Debentures, no
amounts will be paid on the Preferred
Securities. See "Description of
Preferred Securities" herein.
Record Date........................... The record date for Distributions on
the Preferred Securities (other than
on a Redemption Date) will, for so
long as the Preferred Securities
remain in book-entry form, be the
close of business one Business Day
prior to the relevant Distribution
Date.
Subordinated Debentures............... The Trust will invest the proceeds
from the issuance of the Trust
Securities in an equivalent amount of
Subordinated Debentures. The
Subordinated Debentures will mature
on , 2027. At any time, the
Company shall have the right to
shorten or extend the maturity of
the
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5
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Subordinated Debentures, provided
that it can not shorten the maturity
to a date earlier than ,2002
and can extend the maturity only if
certain conditions are met. See
"Description of Subordinated
Debentures--General." The
Subordinated Debentures will be
subordinate and junior in right of
payment to all Senior Debt of the
Company. See "Description of
Subordinated
Debentures--Subordination."
Guarantee............................. The Company has, through the
Guarantee, the Trust Agreement, the
Subordinated Debentures and the
Indenture, taken together, fully,
irrevocably and unconditionally
guaranteed all of the Trust's
obligations under the Preferred
Securities. See "Relationship Among
the Preferred Securities, the
Subordinated Debentures and the
Guarantee." The Company guarantees
the payment of Distributions and
payments on liquidation of the Trust
or redemption of the Preferred
Securities, but only in each case to
the extent of funds held by the
Trust, as described herein (the
"Guarantee"). See "Description of
Guarantee" herein. If the Company
does not make interest payments on
the Subordinated Debentures held by
the Trust, the Trust will have
insufficient funds to pay
Distributions on the Preferred
Securities. The Guarantee does not
cover payment of Distributions when
the Trust does not have sufficient
funds to pay such Distributions. In
the event a Debenture Event of
Default has occurred and is
continuing and such default is
attributable to the failure of the
Company to pay interest or principal
on the Subordinated Debentures, a
holder of Preferred Securities may
institute a legal proceeding directly
against the Company to enforce
payment of such Distributions to such
holder. The obligations of the
Company under the Guarantee and the
Subordinated Debentures are
subordinate and junior in right of
payment to all Senior Debt of the
Company.
Interest Deferral..................... Subject to certain exceptions, as
described herein, the Company has the
right to defer payment of interest on
the Subordinated Debentures at any
time or from time to time for a
period not exceeding 20 consecutive
quarters with respect to each
deferral period (each, an "Extension
Period"), during which Extension
Periods the Company shall have the
right to make full or partial
payments on any Interest Payment Date
(as defined herein), provided that no
Extension Period may extend beyond
the Stated Maturity (as defined
herein) of the Subordinated
Debentures. No interest shall be due
and payable during any Extension
Period, except at the end thereof.
Upon the termination of any such
Extension Period and the payment of
all amounts then due on any Interest
Payment Date, the Company may elect
to begin a new Extension Period
subject to the requirements set forth
herein. If interest payments on the
Subordinated Debentures are so
deferred, distributions on the
Preferred Securities will also be
deferred and the Company may not, and
may not permit any subsidiary of the
Company to, subject to certain
exceptions set forth herein, among
other things, declare or pay any cash
distributions with respect to the
Company's capital stock or debt
securities that rank pari passu with
or junior to the Subordinated
Debentures. During an Extension
Period, interest on the Subordinated
Debentures will continue to accrue
(and the amount of Distributions to
which holders of the Preferred
Securities are entitled will
accumulate at the Securities Rate,
compounded quarterly), and holders of
the Preferred Securities will be
required to accrue interest income
for United States federal income tax
purposes prior to receipt of the cash
related to such interest income. See
"Description of Subordinated
Debentures--Option to Extend Interest
Payment Period" and "Certain Federal
Income Tax Consequences--Interest
Income and Original Issue Discount."
Redemption; Distribution.............. The Preferred Securities are subject
to mandatory redemption, in whole or
in part, upon repayment of the
Subordinated Debentures at maturity
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6
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or their earlier redemption in an
amount equal to the amount of related
Subordinated Debentures maturing or
being redeemed at a redemption price
equal to the aggregate liquidation
preference of such Preferred
Securities plus accumulated and
unpaid Distributions thereon to the
date of redemption. The Subordinated
Debentures are redeemable prior to
maturity at the option of the Company
(i) on or after , 2002, in whole
at any time or in part from time to
time, at a redemption price equal to
the accrued and unpaid interest on
the Subordinated Debentures so
redeemed to the date fixed for
redemption, plus 100% of the
principal amount thereof or (ii) at
any time, in whole (but not in part),
upon the occurrence and continuation
of a Special Event (as defined
herein), at any time within 90 days
following the occurrence of such
Special Event, at a redemption price
equal to the accrued and unpaid
interest on the Subordinated
Debentures so redeemed to the date
fixed for redemption, plus 100% of
the principal amount thereof, in each
case subject to the further
conditions described under
"Description of Subordinated
Debentures--Redemption."
At any time, the Company will have
the right to liquidate the Trust and
cause the Subordinated Debentures to
be distributed to the holders of the
Preferred Securities and the Common
Securities in liquidation of the
Trust. See "Description of Preferred
Securities--Redemption--Special Event
Redemption or Distribution of
Subordinated Debentures."
Special Event........................ A "Special Event" means a Tax Event
or an Investment Company Event. A
"Tax Event" means the receipt by the
Trust of an opinion of counsel
experienced in such matters to the
effect that, as a result of any
amendment to, or change (including
any announced proposed change) in,
the laws (or any regulations
thereunder) of the United States or
any political subdivision or taxing
authority thereof or therein, or as a
result of any official administrative
pronouncement or judicial decision
interpreting or applying such laws or
regulations, which amendment or
change is effective or which proposed
change, pronouncement or decision is
announced on or after the date of
original issuance of the Preferred
Securities under the Trust Agreement,
there is more than an insubstantial
risk that (i) the Trust is, or will
be within 90 days of the date of such
opinion, subject to United States
federal income tax with respect to
income received or accrued on the
Subordinated Debentures, (ii)
interest payable by the Company on
such Subordinated Debentures is not,
or within 90 days of the date of such
opinion, will not be, deductible by
the Company, in whole or in part, for
United States federal income tax
purposes, or (iii) the Trust is, or
will be within 90 days of the date of
such opinion, subject to more than a
de minimis amount of other taxes,
duties or other governmental charges.
"Investment Company Event" means the
receipt by the Trust of an opinion of
counsel experienced in such matters
to the effect that, as a result of
the occurrence of a change in law or
regulation or a change in
interpretation or application of law
or regulation by any legislative
body, court, governmental agency or
regulatory authority (a "Change in
1940 Act Law"), the Trust is or will
be considered an "investment company"
that is required to be registered
under the Investment Company Act of
1940, as amended, which Change in
1940 Act Law becomes effective on or
after the date of original issuance
of the Preferred Securities under the
Trust Agreement.
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
Redemption Price In the event of the redemption of the
Trust Securities or other termination
of the Trust without distribution of
the Subordinated Debentures, each
Preferred Security shall be entitled
to receive a liquidation amount of
$25 plus accrued and unpaid
Distributions thereon to the date of
payment.
</TABLE>
8
<PAGE>
RISK FACTORS
Prospective purchasers of the Preferred Securities should carefully
review the information contained elsewhere in this Prospectus and should
particularly consider the following matters. In addition, because holders of
the Preferred Securities may receive Subordinated Debentures in exchange
therefor upon liquidation of the Trust, prospective purchasers of Preferred
Securities are also making an investment decision with regard to the
Subordinated Debentures and should carefully review all the information
regarding the Subordinated Debentures contained herein.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND THE SUBORDINATED
DEBENTURES
The obligations of the Company under the Guarantee issued by the Company
for the benefit of the holders of Preferred Securities and under the
Subordinated Debentures are unsecured and rank subordinate and junior in
right of payment to all Senior Debt of the Company. At December 31, 1996,
the Senior Debt of the Company aggregated approximately $3.0 billion.
Neither the Indenture, the Guarantee nor the Trust Agreement places any
limitation on the amount of secured or unsecured debt, including Senior
Debt, that may be incurred by the Company. See "Description of Guarantee--
Status of the Guarantee" and "Description of Subordinated Debentures--
Subordination."
The ability of the Trust to pay amounts due on the Preferred Securities
is solely dependent upon the Company making payments on the Subordinated
Debentures as and when required.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES; MARKET PRICE
CONSEQUENCES
So long as no Debenture Event of Default has occurred and is continuing,
the Company has the right under the Indenture (as defined herein) to defer
the payment of interest on the Subordinated Debentures at any time or from
time to time for a period not exceeding 20 consecutive quarters with respect
to each Extension Period, during which Extension Periods the Company shall
have the right to make full or partial payments of interest on any Interest
Payment Date, provided that no Extension Period may extend beyond the Stated
Maturity (as defined below) of the Subordinated Debentures. As a consequence
of any such deferral, quarterly Distributions on the Preferred Securities by
the Trust will also be deferred (and the amount of Distributions to which
holders of the Preferred Securities are entitled will accumulate additional
Distributions thereon at the Securities Rate, compounded quarterly from the
relevant payment date for such Distributions) during any such Extension
Period. During any such Extension Period, the Company shall not, and shall
not permit any subsidiary of the Company to, (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock or
(ii) make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company that rank
pari passu with or junior in interest to the Subordinated Debentures or make
any guarantee payments with respect to any guarantee by the Company of the
debt securities of any subsidiary of the Company if such guarantee ranks
pari passu with or junior in interest to the Subordinated Debentures (other
than (a) dividends or distributions in capital stock of the Company, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan or the redemption or repurchase of any such rights
pursuant thereto and (c) payments under the Guarantee). Prior to the
termination of any such Extension Period, the Company may further extend the
interest payment period, provided that no Extension Period may exceed 20
consecutive quarters or extend beyond the Stated Maturity of the
Subordinated Debentures. Upon the termination of any Extension Period and
the payment of all amounts then due on any Interest Payment Date, the
Company may elect to begin a new Extension Period subject to the above
requirements. No interest shall be due and payable during an Extension
Period, except at the end thereof. There is no limitation on the number of
times that the Company may elect to begin an Extension Period. See
"Description of Preferred Securities--Distributions" and "Description of
Subordinated Debentures--Option to Extend Interest Payment Period."
Should an Extension Period occur, a holder of Preferred Securities will
be required to accrue income (in the form of original issue discount) in
respect of its pro rata share of the Subordinated Debentures held by the
Trust for United States federal income tax purposes. As a result, a holder
of Preferred Securities will include such income in gross income for United
States federal income tax purposes in advance of receipt of the cash related
to such income, and will not receive the cash related to such income from
the Trust if the holder disposes of the Preferred Securities prior to the
record date for the payment of Distributions. See "Certain Federal Income
Tax Consequences--Interest Income and Original Issue Discount" and "--Sale
or Redemption of Preferred Securities."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the
Subordinated Debentures. However, should the Company elect to exercise such
right in the future, the market price of the Preferred Securities is likely
to be affected. A holder that disposes of its Preferred Securities during an
9
<PAGE>
Extension Period, therefore, might not receive the same return on its
investment as a holder that continues to hold its Preferred Securities.
SPECIAL EVENT REDEMPTION
Upon the occurrence and continuation of a Special Event (as defined
below), the Company has the right to redeem the Subordinated Debentures in
whole (but not in part) at a redemption price equal to the principal amount
of the Subordinated Debentures so redeemed plus accrued and unpaid interest
thereon to the date fixed for redemption within 90 days following the
occurrence of such Special Event and thereby cause a mandatory redemption of
the Preferred Securities and Common Securities.
A "Special Event" means a Tax Event or an Investment Company Event. A
"Tax Event" means the receipt by the Trust of an opinion of counsel
experienced in such matters to the effect that, as a result of any amendment
to, or change (including any announced proposed change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying
such laws or regulations, which amendment or change is effective or which
proposed change, pronouncement or decision is announced on or after the date
of original issuance of the Preferred Securities under the Trust Agreement,
there is more than an insubstantial risk that (i) the Trust is, or will be
within 90 days of the date of such opinion, subject to United States federal
income tax with respect to income received or accrued on the Subordinated
Debentures, (ii) interest payable by the Company on such Subordinated
Debentures is not, or within 90 days of the date of such opinion, will not
be, deductible by the Company, in whole or in part, for United States
federal income tax purposes, or (iii) the Trust is, or will be within 90
days of the date of such opinion, subject to more than a de minimis amount
of other taxes, duties or other governmental charges. "Investment Company
Event" means the receipt by the Trust of an opinion of counsel experienced
in such matters to the effect that, as a result of the occurrence of a
change in law or regulation or a change in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority (a "Change in 1940 Act Law"), the Trust is or will be
considered an "investment company" that is required to be registered under
the Investment Company Act of 1940, as amended, which Change in 1940 Act Law
becomes effective on or after the date of original issuance of the Preferred
Securities under the Trust Agreement.
See "Risk Factors--Possible Tax Law Changes Affecting the Preferred
Securities" for a discussion of certain legislative proposals that, if
adopted, could give rise to a Tax Event, which may permit the Company to
cause a redemption of the Preferred Securities prior to , 2002.
EXCHANGE OF PREFERRED SECURITIES FOR SUBORDINATED DEBENTURES
The Company will have the right at any time to liquidate the Trust and,
after satisfaction of liabilities to creditors of the Trust as required by
applicable law, cause the Subordinated Debentures to be distributed to the
holders of the Preferred Securities in exchange therefor upon liquidation of
the Trust. See "Description of Preferred Securities--Redemption--Special
Event Redemption or Distribution of Subordinated Debentures."
Under current United States federal income tax law and interpretations
and assuming, as expected, the Trust is classified as a grantor trust for
such purposes, a distribution of the Subordinated Debentures upon a
liquidation of the Trust would not be a taxable event to holders of the
Preferred Securities. However, if a Tax Event were to occur which would
cause the Trust to be subject to United States federal income tax with
respect to income received or accrued on the Subordinated Debentures, a
distribution of the Subordinated Debentures by the Trust could be a taxable
event to the Trust and the holders of the Preferred Securities. See "Certain
Federal Income Tax Consequences--Distribution of Subordinated Debentures to
Holders of Preferred Securities."
SHORTENING OR EXTENSION OF STATED MATURITY OF SUBORDINATED DEBENTURES
The Company will have the right at any time to shorten the maturity of
the Subordinated Debentures to a date not earlier than , 2002 and
thereby cause the Preferred Securities to be redeemed on such earlier date.
The Company will also have the right to extend the maturity of the
Subordinated Debentures, whether or not the Trust is liquidated and the
Subordinated Debentures are distributed to holders of the Preferred
Securities, to a date no later than the 49th anniversary of the initial
issuance of the Preferred Securities, provided that the Company can extend
the maturity only if at the time such election is made and at the time of
such extension (i) the Company is not in bankruptcy, otherwise insolvent or
in liquidation, (ii) the Company is not in default in the payment of any
interest or principal on the Subordinated Debentures, (iii) if the Trust has
not been liquidated, the Trust is not in arrears on payments of
Distributions on the Preferred
10
<PAGE>
Securities and no deferred Distributions are accumulated and (iv) the
Subordinated Debentures are rated not less than BBB-by Standard & Poor's
Ratings Services or Baa3 by Moody's Investors Service, Inc. or the
equivalent by any other nationally recognized statistical rating
organization. To the extent that the Stated Maturity of the Subordinated
Debentures is extended at such time as the Preferred Securities are
outstanding, the Preferred Securities would remain outstanding until such
extended date or until redeemed at an earlier date.
MARKET PRICES
There can be no assurance as to the market prices for Preferred
Securities or Subordinated Debentures that may be distributed in exchange
for Preferred Securities upon liquidation of the Trust. Accordingly, the
Preferred Securities that an investor may purchase, whether pursuant to the
offer made hereby or in the secondary market, or the Subordinated Debentures
that a holder of Preferred Securities may receive on liquidation of the
Trust, may trade at a discount to the price that the investor paid to
purchase the Preferred Securities offered hereby. As a result of the
existence of the Company's right to defer interest payments, the market
price of the Preferred Securities (which represent undivided beneficial
ownership interests in the assets of the Trust) may be more volatile than
the market prices of other securities that are not subject to such optional
deferrals. In addition, because the Company has the right (i) to shorten the
Stated Maturity of the Subordinated Debentures or (ii) to extend the
maturity of the Subordinated Debentures (subject to the conditions described
above), there can be no assurance that the Company will not exercise its
option to change the maturity of the Subordinated Debentures as permitted by
the terms thereof and of the Indenture.
RIGHTS UNDER THE GUARANTEE
The Guarantee guarantees to the holders of the Preferred Securities the
following payments, to the extent not paid by the Trust: (i) any accumulated
and unpaid Distributions required to be paid on the Preferred Securities, to
the extent that the Trust has funds on hand available therefor at such time,
(ii) the redemption price including all accrued and unpaid Distributions to
the date of redemption with respect to any Preferred Securities called for
redemption by the Trust, to the extent that the Trust has funds on hand
available therefor at such time, and (iii) upon a voluntary or involuntary
dissolution, winding-up or liquidation of the Trust (unless the Subordinated
Debentures are distributed to holders of the Preferred Securities), the
lesser of (a) the aggregate of the liquidation preference and all accrued
and unpaid Distributions to the date of payment or (b) the amount of assets
of the Trust remaining available for distribution to holders of the
Preferred Securities in liquidation of the Trust after satisfaction of
liabilities to creditors of the Trust as required by applicable law. The
Guarantee will be qualified as an indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). The Chase Manhattan Bank will
act as the indenture trustee under the Guarantee (the "Guarantee Trustee")
for the purposes of compliance with the Trust Indenture Act and will hold
the Guarantee for the benefit of the holders of the Preferred Securities.
The Chase Manhattan Bank will also act as Debenture Trustee for the
Subordinated Debentures and as Property Trustee under the Trust Agreement
and Chase Manhattan Bank Delaware will act as Delaware Trustee under the
Trust Agreement.
The holders of not less than a majority in aggregate liquidation amount
of the Preferred Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of the Guarantee or to direct the exercise of any trust
or power conferred upon the Guarantee Trustee under the Guarantee.
Notwithstanding the foregoing, any holder of the Preferred Securities may
institute a legal proceeding directly against the Company to enforce its
rights under the Guarantee without first instituting a legal proceeding
against the Trust, the Guarantee Trustee or any other person or entity. If
the Company were to default on its obligation to pay amounts payable under
the Subordinated Debentures, the Trust would lack available funds for the
payment of Distributions or amounts payable on redemption of the Preferred
Securities or otherwise, and, in such event, holders of the Preferred
Securities would not be able to rely upon the Guarantee for payment of such
amounts. Instead, in the event a Debenture Event of Default shall have
occurred and be continuing and such default is attributable to the failure
of the Company to pay interest on or principal of the Subordinated
Debentures, then a holder of Preferred Securities may directly institute a
proceeding against the Company for enforcement of payment to such holder of
the interest on or the principal of such Subordinated Debentures having a
principal amount equal to the aggregate liquidation preference of the
Preferred Securities of such holder (a "Direct Action"). In connection with
such Direct Action, the Company will be subrogated to the rights of such
holder of Preferred Securities under the Trust Agreement to the extent of
any payment made by the Company to such holder of Preferred Securities in
such Direct Action. Except as set forth herein, holders of Preferred
Securities will not be able to exercise directly any other remedy available
to the holders of Subordinated Debentures or assert directly any other
rights in respect of the Subordinated Debentures. See "Description of
Preferred Securities--Enforcement of Certain Rights by Holders of Preferred
Securities", "Description of Guarantee" and "Description of Subordinated
Debentures--Debenture Events of Default." The Trust Agreement provides that
each holder of Preferred Securities by acceptance thereof agrees to the
provisions of the Guarantee (including the subordination provisions thereof)
and the Indenture.
11
<PAGE>
LIMITED VOTING RIGHTS
Holders of Preferred Securities will generally have limited voting rights
relating only to the modification of the Preferred Securities and certain
other matters described herein. Holders of Preferred Securities will not be
entitled to vote to appoint, remove or replace the Property Trustee, the
Delaware Trustee or any Administrative Trustee, which voting rights are
vested exclusively in the holder of the Common Securities, except, with
respect to the Property Trustee and the Delaware Trustee, upon the
occurrence of certain events described herein. The Trust Trustees (as
defined below) and the Company may amend the Trust Agreement without the
consent of holders of Preferred Securities to ensure that the Trust will not
be taxable as a corporation or classified as other than a grantor trust for
federal income tax purposes unless such action adversely affects in any
material respect the interests of such holders. See "Description of
Preferred Securities--Voting Rights; Amendment of the Trust Agreement" and
"--Removal of Trust Trustees."
TRADING CHARACTERISTICS OF PREFERRED SECURITIES
The Preferred Securities have been approved for listing on the NYSE,
subject to official notice of issuance. The Preferred Securities may trade
at prices that do not fully reflect the value of accrued and unpaid interest
with respect to the underlying Subordinated Debentures. See "Certain Federal
Income Tax Consequences--Interest Income and Original Issue Discount" and "-
-Sales or Redemption of Preferred Securities" for a discussion of the United
States federal income tax consequences that may result from a taxable
disposition of the Preferred Securities.
As indicated above, application will be made to list the Preferred
Securities on the NYSE. If the Preferred Securities are not listed on a
national securities exchange or the NASDAQ National Market and the
underwriters do not make a market for the securities, the liquidity of the
Preferred Securities could be adversely affected.
POSSIBLE TAX LAW CHANGES AFFECTING THE PREFERRED SECURITIES
Legislation was proposed by the United States Department of the Treasury
on February 6, 1997 as part of President Clinton's Fiscal 1998 Budget
Proposal (the "Proposed Legislation") that contains a provision which
generally would deny the interest deduction for interest paid or accrued on
an instrument issued by a corporation that has a weighted average maturity
of more than 40 years. The Proposed Legislation also contains a provision
which generally would deny an interest deduction for interest paid or
accrued on an instrument issued by a corporation that (i) has a maximum term
of more than 15 years and (ii) is not shown as indebtedness on the separate
balance sheet of the issuer or, where the instrument is issued to a related
party (other than a corporation), where the holder or some other related
party issues a related instrument that is not shown as indebtedness on the
issuer's consolidated balance sheet. For purposes of determining the
weighted average maturity or the term of an instrument, any right to extend
the maturity of such instrument would be treated as exercised. The above-
described provisions were proposed to be effective generally for instruments
issued on or after the date of the first Congressional committee action on
the Proposed Legislation. If either provision were to apply to the
Subordinated Debentures, the Company would not be able to deduct the
interest on the Subordinated Debentures. There can be no assurance that the
Proposed Legislation or future legislative proposals will not adversely
affect the ability of the Company to deduct interest on the Subordinated
Debentures or otherwise affect the tax treatment of the transactions
described herein. Such a change could give rise to a Tax Event, which would
permit the Company to cause a redemption of the Preferred Securities before
, 2002. See "Description of Subordinated Debentures--Redemption" and
"Description of Preferred Securities--Redemption." See also "Certain Federal
Income Tax Consequences--Possible Tax Law Changes."
PP&L CAPITAL TRUST
The Trust is a statutory business trust formed under Delaware law
pursuant to (i) the Amended and Restated Trust Agreement (the "Trust
Agreement") executed by the Company, as Depositor, The Chase Manhattan Bank,
as Property Trustee, Chase Manhattan Bank Delaware, as Delaware Trustee, and
the Administrative Trustees named therein, and (ii) the filing of a
certificate of trust with the Delaware Secretary of State on January 28,
1997. The Trust's business and affairs are conducted by The Chase Manhattan
Bank, as Property Trustee, Chase Manhattan Bank Delaware, as Delaware
Trustee, and two individual Administrative Trustees who are employees of the
Company (collectively, the "Trust Trustees"). The Trust exists for the
exclusive purposes of (i) issuing and selling the Preferred Securities and
Common Securities, (ii) using the proceeds from the sale of the Preferred
Securities and Common Securities to acquire the Subordinated Debentures and
(iii) engaging in only those other activities necessary or incidental
thereto. Accordingly, the Subordinated Debentures (and any cash on deposit
or owing and proceeds in respect of the Subordinated Debentures) will be the
sole assets of the Trust, and payments under the Subordinated Debentures
will be the sole revenue of the Trust. All of the Common Securities will be
owned by
12
<PAGE>
the Company. The Common Securities will rank pari passu, and payments will
be made thereon pro rata, with the Preferred Securities, except that upon
the occurrence and continuance of an Event of Default (as defined herein)
under the Trust Agreement resulting from a Debenture Event of Default (as
defined herein) under the Indenture, the rights of the Company as holder of
the Common Securities to payment in respect of Distributions and payments
upon liquidation, redemption or otherwise will be subordinated to the rights
of the holders of the Preferred Securities. See "Description of Preferred
Securities--Subordination of Common Securities." The Company will acquire
Common Securities in an aggregate liquidation amount equal to 3% of the
total capital of the Trust. The Trust has a term of 55 years, but may
terminate earlier as provided in the Trust Agreement. The principal
executive office of the Trust is located at Two North Ninth Street,
Allentown, PA 18101, and its telephone number is 610/774-5151.
The Trust Agreement will be substantially in the form filed as an exhibit
to the Registration Statement of which this Prospectus forms a part. The
Trust Agreement will be qualified as an indenture under the Trust Indenture
Act. The Chase Manhattan Bank, as Property Trustee, will act as sole
indenture trustee under the Trust Agreement for purposes of compliance with
the Trust Indenture Act. The Chase Manhattan Bank will also act as trustee
under the Guarantee and the Indenture (each as defined herein). See
"Description of Guarantee" and "Description of Subordinated Debentures." The
holder of the Common Securities, unless a Debenture Event of Default has
occurred and is continuing, or the holders of a majority in liquidation
preference of the Preferred Securities if any Debenture Event of Default has
occurred and is continuing, will be entitled to appoint, remove or replace
the Property Trustee and the Delaware Trustee. In no event will the holders
of the Preferred Securities have the right to vote to appoint, remove or
replace the Administrative Trustees; such voting rights are vested
exclusively in the holder of the Common Securities. The duties and
obligations of each Trust Trustee are governed by the Trust Agreement and,
in the case of the Property Trustee, by the Trust Indenture Act. The Company
will pay all fees and expenses related to the Trust and the offering of the
Preferred Securities and will pay, directly or indirectly, all ongoing
costs, expenses and liabilities of the Trust.
It is anticipated that the Trust will not be subject to the reporting
requirements of the Exchange Act.
PENNSYLVANIA POWER & LIGHT COMPANY
The Company is an operating electric utility, incorporated under the laws
of the Commonwealth of Pennsylvania in 1920. PP&L serves approximately 1.2
million customers in a 10,000 square mile territory in 29 counties of
central eastern Pennsylvania with a population of approximately 2.6 million
persons. This service area has 129 communities with populations over 5,000,
the largest cities of which are Allentown, Bethlehem, Harrisburg, Hazleton,
Lancaster, Scranton, Wilkes-Barre and Williamsport. The Company's offices
are located at Two North Ninth Street, Allentown, PA 18101, and its
telephone number is 610/774-5151.
PP&L operates its generation and transmission facilities as part of the
Pennsylvania-New Jersey-Maryland Interconnection Association ("PJM"). The
PJM, one of the world's largest power pools, includes eleven companies
serving about 22 million people in a 50,000 square mile territory covering
all or part of Pennsylvania, New Jersey, Maryland, Delaware, Virginia and
Washington, D.C.
During the year ended December 31, 1996, about 98% of total operating
revenues was derived from electric energy sales, with 35% coming from
residential customers, 28% from commercial customers, 20% from industrial
customers, 13% from contractual sales to other major utilities, 1% from
energy sales to members of the PJM and 3% from others.
All of the outstanding shares of common stock of the Company is owned by
PP&L Resources, Inc., a Pennsylvania corporation ("Resources").
USE OF PROCEEDS
All of the proceeds from the sale of Preferred Securities will be
invested by the Trust in Subordinated Debentures. The proceeds from such
sale of such Subordinated Debentures will be loaned (either directly or
indirectly) to Resources to finance a portion of the purchase price for
Resources' outstanding tender offer for any and all outstanding shares of
preferred stock of the Company.
13
<PAGE>
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as a
subsidiary of the Company and, accordingly, the accounts of the Trust will
be included in the consolidated financial statements of the Company. The
Preferred Securities will be presented as a separate line item in the
consolidated balance sheet of the Company and appropriate disclosures about
the Preferred Securities, the Guarantee and the Subordinated Debentures will
be included in the notes to the consolidated financial statements.
SELECTED FINANCIAL DATA
The following selected consolidated financial data of the Company for the
three years ended December 31, 1996 have been derived from audited financial
statements. This financial data is qualified by the detailed information and
financial statements appearing in the documents incorporated by reference.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1994(a) 1995(b) 1996
----------------------------------
(IN MILLIONS, EXCEPT RATIOS)
<S> <C> <C> <C>
Operating Revenues................................ $2,725 $2,752 $2,910
Operating Income.................................. $ 501 $ 574 $ 556
Net Income........................................ $ 243 $ 352 $ 357
Ratio of Earnings to Fixed Charges(c)............. 2.70 3.48 3.50
Ratio of Earnings to Combined Fixed Charges and
Preferred Dividend Requirements(d).............. 2.26 2.92 2.93
</TABLE>
- -----------
(a) Earnings for 1994 were adversely affected by several one-time charges to
income. These charges related to a voluntary early retirement program; a
write-down in the carrying value of a subsidiary's investment in
undeveloped coal reserves; the disallowance of replacement power costs
through the Company's energy cost rate; and a decision of the
Commonwealth Court of Pennsylvania related to the deferral of post-
retirement benefit costs.
(b) Earnings for 1995 were positively affected by the final order of the
Pennsylvania Public Utility Commission issued on September 27, 1995
pertaining to PP&L's base rate case filed in December 1994. The decision
increased revenues and permitted recovery of voluntary early retirement
and post-retirement benefits other than pensions and disallowed certain
costs applicable to the construction of Susquehanna Unit 1. In addition,
the Company realized a gain on the sale of subsidiary coal reserves
which were previously written down in 1994.
(c) Fixed charges include interest expense and the estimated interest
component of rentals. The ratios for 1992 and 1993 were 3.15 and 3.31,
respectively.
(d) Combined fixed charges and preferred dividend requirements include
interest expense, preferred dividend requirements and the estimated
interest component of rentals. The ratios for 1992 and 1993 were 2.53
and 2.71, respectively.
14
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as of December 31, 1996, and as adjusted to reflect (i) the issuance
of the $100,000,000 of Preferred Securities offered hereby, (ii) the
redemption on April 1, 1997 of $30 million of 6.75% First Mortgage Bonds due
November 1997, $40 million of 7.00% First Mortgage Bonds due January 1999,
$60 million of 7.25% First Mortgage Bonds due February 2001 and $80 million
of 7.50% First Mortgage Bonds due January 2003 and (iii) the consummation of
Resources' outstanding tender offer for any and all outstanding shares of
preferred stock of the Company (assuming all of such outstanding shares are
tendered and purchased). The following data is qualified by the detailed
information and financial statements appearing in the documents incorporated
by reference.
<TABLE>
<CAPTION>
As of December 31, 1996
---------------------------------
PERCENTAGE
ACTUAL AS ADJUSTED (%)
---------------------------------
(IN MILLIONS, EXCEPT PERCENTAGES)
<S> <C> <C> <C>
Long Term Debt (including current maturities).. $ 2,832 $ 2,622 49.1%
Preferred Securities offered hereby(1).............. 0 100 1.9
Preferred Stock:
With Sinking Funds................................. 295 0 0.0
Without Sinking Funds.............................. 171 0 0.0
Common Equity....................................... 2,617 2,617 49.0
-------- -------- ------
Total Capitalization......................... $ 5,915 $ 5,339 100.0%
======== ======== ======
</TABLE>
- ----------
(1) As described herein, the sole assets of the Trust will be approximately
$103,092,800 principal amount of Subordinated Debentures issued by the
Company. The Subordinated Debentures will bear interest at a rate of
% per annum and will mature on , 2027. The Company will own
all of the Common Securities of the Trust.
15
<PAGE>
DESCRIPTION OF PREFERRED SECURITIES
Pursuant to the terms of the Trust Agreement, the Administrative Trustees
on behalf of the Trust will issue the Preferred Securities and the Common
Securities. The Preferred Securities will represent undivided beneficial
ownership interests in the assets of the Trust and the holders thereof will
be entitled to a preference in certain circumstances with respect to
Distributions and amounts payable on redemption or liquidation over the
Common Securities, as well as other benefits as described in the Trust
Agreement. All of the Common Securities will be owned, directly or
indirectly, by the Company. The following summary of material terms and
provisions of the Preferred Securities and the Trust Agreement does not
purport to be complete and is subject to, and is qualified in its entirety
by reference to, all the provisions of the Trust Agreement, including the
definitions therein of certain terms, and the Trust Indenture Act. Wherever
particular defined terms of the Trust Agreement (as supplemented or amended
from time to time) are referred to herein, the definitions of such defined
terms are incorporated herein by reference. The form of the Trust Agreement
has been filed as an exhibit to the Registration Statement of which this
Prospectus forms a part.
GENERAL
The Preferred Securities will rank pari passu, and payments will be made
thereon pro rata, with the Common Securities except as described under "--
Subordination of Common Securities." Legal title to the Subordinated
Debentures will be held by the Property Trustee in trust for the benefit of
the holders of the Preferred Securities and the Common Securities. The
Guarantee executed by the Company for the benefit of the holders of the
Preferred Securities will be a guarantee on a subordinated basis with
respect to the Preferred Securities but will not guarantee payment of
Distributions or amounts payable on redemption or liquidation of the
Preferred Securities when the Trust does not have funds on hand available to
make such payments. See "Description of Guarantee."
DISTRIBUTIONS
The Preferred Securities represent undivided beneficial ownership
interests in the assets of the Trust and Distributions on the Preferred
Securities will be payable at the annual rate of % (the "Securities
Rate") of the stated Liquidation Amount of $25, payable quarterly in arrears
on January 1, April 1, July 1 and October 1 of each year. Distributions will
accumulate from , 1997, the date of original issuance. The first
Distribution payment date for the Preferred Securities will be ,
1997. The amount of Distributions payable in the first payment period will
be computed on the basis of days in a 360-day year. The amount of
Distributions payable for any period thereafter will be computed on the
basis of a 360-day year of twelve 30-day months. In the event that any date
on which Distributions are payable on the Preferred Securities is not a
Business Day, then payment of the Distributions payable on such date will be
made on the next succeeding day that is a Business Day (and without any
additional Distributions or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year,
such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on the date such payment
was originally payable (each date on which Distributions are payable in
accordance with the foregoing, a "Distribution Date"). A "Business Day"
shall mean 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 required by
law or executive order to remain closed or a day on which the corporate
trust office of the Property Trustee or the Debenture Trustee is closed for
business.
The revenue of the Trust available for distribution to holders of its
Preferred Securities will be limited to payments under the Subordinated
Debentures in which the Trust will invest the proceeds from the issuance and
sale of the Preferred Securities and the Common Securities. See "Description
of Subordinated Debentures." If the Company does not make interest payments
on the Subordinated Debentures, the Property Trustee will not have funds
available to pay Distributions on the Preferred Securities. The payment of
Distributions (if and to the extent the Trust has funds legally available
for the payment of such Distributions) is guaranteed by the Company on a
limited basis as set forth herein under "Description of Guarantee."
Distributions on the Preferred Securities (other than distributions on a
Redemption Date) will be payable to the holders thereof as they appear on
the register of the Trust on the relevant record dates, which, as long as
the Preferred Securities remain in book-entry form, will be the close of
business one Business Day prior to the relevant Distribution Date. Subject
to any applicable laws and regulations and the provisions of the Trust
Agreement, each such payment will be made as described under "--Book-Entry
Issuance." In the event the Preferred Securities are not in book-entry form,
the relevant record date for the Preferred Securities shall be the fifteenth
day of the month prior to the relevant Distribution Date (whether or not
such record date is a Business Day).
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So long as no Debenture Event of Default under the Indenture has occurred
and is continuing, the Company has the right under the Indenture to defer
the payment of interest on the Subordinated Debentures at any time or from
time to time for a period not exceeding 20 consecutive quarters (each, an
"Extension Period"), during which Extension Periods the Company shall have
the right to make full or partial payments of interest on any Interest
Payment Date, provided that no Extension Period may extend beyond the Stated
Maturity (as defined below) of the Subordinated Debentures. As a consequence
of any such extension, quarterly Distributions on the Preferred Securities
will also be deferred by the Trust during any such Extension Period.
Distributions to which holders of the Preferred Securities are entitled will
accumulate additional Distributions thereon at the Securities Rate,
compounded quarterly from the relevant payment date for such Distributions.
The term "Distributions" as used herein shall include any such additional
Distributions. During any such Extension Period, the Company shall not, and
shall not permit any subsidiary of the Company to, (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock or
(ii) make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company that rank
pari passu with or junior in interest to the Subordinated Debentures or make
any guarantee payments with respect to any guarantee by the Company of the
debt securities of any subsidiary of the Company if such guarantee ranks
pari passu with or junior in interest to the Subordinated Debentures (other
than (a) dividends or distributions in capital stock of the Company, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan or the redemption or repurchase of any such rights
pursuant thereto and (c) payments under the Guarantee). Prior to the
termination of any such Extension Period, the Company may further extend the
interest payment period, provided that no Extension Period may exceed 20
consecutive quarters or extend beyond the Stated Maturity of the
Subordinated Debentures. Upon the termination of any such Extension Period
and the payment of all amounts then due on any Interest Payment Date, the
Company may elect to begin a new Extension Period. No interest shall be due
and payable during an Extension Period, except at the end thereof. There is
no limitation on the number of times that the Company may elect to begin an
Extension Period. See "Description of the Subordinated Debentures--Option to
Extend Interest Payment Period" and "Certain Federal Income Tax
Consequences--Interest Income and Original Issue Discount."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period of the
Subordinated Debentures.
REDEMPTION
MANDATORY REDEMPTION. Upon the repayment or redemption, in whole or in
part, of the Subordinated Debentures, whether at Stated Maturity or upon
earlier redemption as provided in the Indenture, the proceeds from such
repayment or redemption shall be applied by the Property Trustee to redeem a
Like Amount (as defined below) of the Preferred Securities and Common
Securities, upon not less than 30 nor more than 60 days notice prior to the
date fixed for repayment or redemption, at a redemption price (the
"Redemption Price"), with respect to the Preferred Securities, equal to the
aggregate Liquidation Amount of such Preferred Securities plus accrued and
unpaid Distributions thereon to the date of redemption (the "Redemption
Date"). If less than all of the Subordinated Debentures are to be repaid or
redeemed on a Redemption Date, then the proceeds from such repayment or
redemption shall be allocated to the redemption on a pro rata basis among
the Preferred Securities and the Common Securities.
The Company will have the right to redeem the Subordinated Debentures (i)
on or after , 2002, in whole at any time or in part from time to
time, at a redemption price equal to the accrued and unpaid interest on the
Subordinated Debentures so redeemed to the date fixed for redemption, plus
100% of the principal amount thereof or (ii) at any time, in whole (but not
in part), upon the occurrence and continuation of a Special Event, within 90
days following the occurrence of such Special Event, at a redemption price
equal to the accrued and unpaid interest on the Subordinated Debentures so
redeemed to the date fixed for redemption, plus 100% of the principal amount
thereof, in each case subject to the further conditions described under
"Description of Subordinated Debentures--Redemption" and "Description of
Subordinated Debentures--Optional Redemption."
SPECIAL EVENT REDEMPTION OR DISTRIBUTION OF SUBORDINATED DEBENTURES. If a
Special Event shall occur and be continuing, the Company will have the right
to redeem the Subordinated Debentures in whole (but not in part) and thereby
cause a mandatory redemption of the Preferred Securities in whole (but not
in part) at the Redemption Price within 90 days following the occurrence of
such Special Event. At any time, the Company will have the right to
liquidate the Trust and, after satisfaction of the liabilities of creditors
of the Trust as provided by applicable law, cause the Subordinated
Debentures to be distributed to the holders of the Preferred Securities in
liquidation of the Trust. Under current United States federal income tax law
and interpretations and assuming, as expected, the Trust is treated as a
grantor trust, a distribution of the Subordinated Debentures would not be a
taxable event to holders of the Preferred Securities. However, should there
be a change in law or a change in legal interpretation as a result of the
occurrence of a Tax Event or otherwise, the distribution could be a taxable
event to holders of the Preferred Securities. See "Certain Federal Income
Tax Consequences--Distribution of Subordinated
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Debentures to Holders of Preferred Securities." If the Company does not
elect either option described above, the Preferred Securities will remain
outstanding until the repayment of the Subordinated Debentures.
If the Company elects to liquidate the Trust and thereby causes the
Subordinated Debentures to be distributed to holders of the Preferred
Securities in liquidation of the Trust, the Company shall continue to have
the right to shorten the Stated Maturity of the Subordinated Debentures to a
date not earlier than 2002 or extend the maturity of the Subordinated
Debentures, provided that it can extend the maturity only if certain
conditions are met. See "Description of Subordinated Debentures--General."
If the Subordinated Debentures are distributed to the holders of the
Preferred Securities in liquidation of the Trust the Company will use its
best efforts to cause the Subordinated Debentures to be listed on the NYSE
or on such other stock exchange or automated quotation systems, if any, on
which the Preferred Securities are then listed or quoted.
"Like Amount" means (i) with respect to a redemption of the Preferred
Securities and the Common Securities, Preferred Securities and the Common
Securities having a Liquidation Amount (as defined below) equal to the
principal amount of the Subordinated Debentures to be contemporaneously
redeemed in accordance with the Indenture allocated 3% to the Common
Securities and 97% to the Preferred Securities and the proceeds of which
will be used to pay the Redemption Price of such Preferred Securities and to
redeem such Common Securities, and (ii) with respect to a distribution of
the Subordinated Debentures to holders of Preferred Securities and Common
Securities in connection with a dissolution or liquidation of the Trust,
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of the Preferred Securities or the Common Securities, as the case may
be, of the holder to whom such Subordinated Debentures are distributed.
"Liquidation Amount" means the stated amount of $25 per Preferred Security
or Common Security. After the liquidation date fixed for any distribution of
Subordinated Debentures (i) the Preferred Securities will no longer be
deemed to be outstanding, (ii) The Depository Trust Company ("DTC") or its
nominee, as the record holder of such Preferred Securities, will receive a
registered global certificate or certificates representing the Subordinated
Debentures to be delivered upon such distribution, (iii) the Company shall
use its best efforts to have the Subordinated Debentures listed on the NYSE
or on such other exchange, interdealer quotation system or self-regulatory
organization as the Preferred Securities are then listed or traded, (iv) any
certificates representing Preferred Securities not held by DTC or its
nominee will be deemed to represent Subordinated Debentures having a
principal amount equal to the stated liquidation preference of such
Preferred Securities, and bearing accrued and unpaid interest in an amount
equal to the accrued and unpaid Distributions on such Preferred Securities
until such certificates are presented to the Administrative Trustees or
their agent for transfer or reissuance (and until such certificates are so
surrendered, no payments of interest or principal will be made to holders of
Preferred Securities Certificates with respect to such Subordinated
Debentures) and (v) all rights of holders of Preferred Securities will
cease, except the right of such holders to receive Subordinated Debentures
upon surrender of Preferred Securities Certificates.
There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated Debentures that may be distributed in
exchange for Preferred Securities if a dissolution and liquidation of the
Trust were to occur. Accordingly, the Preferred Securities that an investor
may purchase, whether pursuant to the offer made hereby or in the secondary
market, or the Subordinated Debentures that the investor may receive on
dissolution and liquidation of the Trust, may trade at a discount to the
price that the investor paid to purchase Preferred Securities offered
hereby.
REDEMPTION PROCEDURES
Preferred Securities redeemed on each Redemption Date shall be redeemed
at the Redemption Price with the applicable proceeds from the
contemporaneous redemption or payment at Stated Maturity of the Subordinated
Debentures. Redemptions of the Preferred Securities shall be made and the
Redemption Price shall be payable on each Redemption Date only to the extent
that the Trust has funds available for the payment of such Redemption Price.
See also "--Subordination of Common Securities."
If the Property Trustee gives a notice of redemption in respect of the
Preferred Securities, then, on the Redemption Date, to the extent funds are
available, the Property Trustee will deposit irrevocably with DTC funds
sufficient to pay the applicable Redemption Price and will give DTC
irrevocable instructions and authority to pay the Redemption Price to the
holders of the Preferred Securities. See "--Book-Entry Issuance." If the
Preferred Securities are no longer in book-entry form, the Property Trustee,
to the extent funds are available, will irrevocably deposit with the paying
agent for the Preferred Securities funds sufficient to pay the applicable
Redemption Price and will give the paying agent irrevocable instructions and
authority to pay the Redemption Price to the holders thereof upon surrender
of their certificates evidencing the Preferred Securities. Notwithstanding
the foregoing, Distributions payable on or prior to the Redemption Date for
any Preferred Securities called for redemption shall be payable to the
holders of such Preferred Securities on the relevant record dates for the
related Distribution Dates. If notice of redemption shall have been given
and funds deposited as required, then upon the date of such deposit, all
rights of the holders of such Preferred Securities so called for redemption
will cease, except the right of the holders of such Preferred Securities to
receive the Redemption Price and any Distribution payable on or prior to the
Redemption Date, but without interest on such Redemption Price, and such
Preferred Securities will cease to be
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outstanding. In the event that any date fixed for redemption of Preferred
Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding day 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 each case with the same force and effect as if made on the date such
payment was originally payable. In the event that payment of the Redemption
Price in respect of Preferred Securities called for redemption is improperly
withheld or refused and not paid either by the Trust or by the Company
pursuant to the Guarantee as described under "Description of Guarantee",
Distributions on such Preferred Securities will continue to accrue at the
Securities Rate, from the Redemption Date originally established by the
Trust for the Preferred Securities to the date such Redemption Price is
actually paid, in which case the actual payment date will be the date fixed
for redemption for purposes of calculating the Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities law), the Company or its subsidiaries may at any time and
from time to time purchase outstanding Preferred Securities by tender, in
the open market or by private agreement.
If less than all of the Preferred Securities and Common Securities issued
by the Trust are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of such Preferred Securities and Common Securities to be
redeemed shall be allocated pro rata among the Preferred Securities and the
Common Securities. The particular Preferred Securities to be redeemed shall
be selected on a pro rata basis not more than 60 days prior to the
Redemption Date by the Property Trustee from the outstanding Preferred
Securities not previously called for redemption, by such method as the
Property Trustee shall deem fair and appropriate and which may provide for
the selection for redemption of portions (equal to $25 or an integral
multiple of $25 in excess thereof) of the Liquidation Amount of Preferred
Securities of a denomination larger than $25. The Property Trustee shall
promptly notify the trust registrar in writing of the Preferred Securities
selected for redemption and, in the case of any Preferred Securities
selected for partial redemption, the Liquidation Amount thereof to be
redeemed. For all purposes of the Trust Agreement, unless the context
otherwise requires, all provisions relating to the redemption of Preferred
Securities shall relate, in the case of any Preferred Securities redeemed or
to be redeemed only in part, to the portion of the aggregate Liquidation
Amount of Preferred Securities which has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the Redemption Date to each Holder of Preferred
Securities to be redeemed at its registered address. Unless the Trust
defaults in payment of the Redemption Price, on and after the Redemption
Date, Distributions will cease to accrue on such Preferred Securities or
portions thereof called for redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, the Preferred
Securities and the Common Securities, as applicable, shall be made pro rata
based on the Liquidation Amount of such Preferred Securities and Common
Securities; provided, however, that if on any Distribution Date or
Redemption Date, any Event of Default resulting from a Debenture Event of
Default under the Indenture shall have occurred and be continuing, no
payment of any Distribution on, or Redemption Price of, any of the Common
Securities, and no other payment on account of the redemption, liquidation
or other acquisition of such Common Securities, shall be made unless payment
in full in cash of all accumulated and unpaid Distributions on all of the
outstanding Preferred Securities for all Distribution periods terminating on
or prior thereto, or in the case of payment of the Redemption Price the full
amount of such Redemption Price on all of the outstanding Preferred
Securities then called for redemption, shall have been made or provided for,
and all funds available to the Property Trustee shall first be applied to
the payment in full in cash of all Distributions on, or Redemption Price of,
the Preferred Securities then due and payable.
In the case of any Event of Default resulting from a Debenture Event of
Default, the Company as holder of the Common Securities will be deemed to
have waived any right to act with respect to any such Event of Default under
the Trust Agreement until all such Events of Default with respect to the
Preferred Securities have been cured, waived or otherwise eliminated. Until
any such Events of Default under the Trust Agreement with respect to the
Preferred Securities have been so cured, waived or otherwise eliminated, the
Property Trustee shall act solely on behalf of the holders of the Preferred
Securities and not on behalf of the Company as holder of the Common
Securities, and only the holders of the Preferred Securities will have the
right to direct the Property Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON TERMINATION
Pursuant to the Trust Agreement, the Trust shall automatically terminate
on December 31, 2051 (the "Expiration Date") or on the first to occur of any
of the following events (each, an "Early Termination Event"): (i) certain
events of bankruptcy, dissolution or liquidation of the Company as the
holder of the Common Securities; (ii) the distribution of a
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Like Amount of the Subordinated Debentures to the holders of the Preferred
Securities and Common Securities after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, if the Company, as
Depositor, has given written direction to the Property Trustee to terminate
the Trust (which direction is optional and wholly within the discretion of
the Company, as Depositor); (iii) the redemption of all of the Preferred
Securities in connection with the redemption of all of the Subordinated
Debentures; and (iv) the entry by a court of competent jurisdiction of an
order for the dissolution of the Trust.
If an Early Termination Event occurs as described in clause (i), (ii) or
(iv) above or upon the Expiration Date, the Trust shall be liquidated by the
Trust Trustees as expeditiously as the Trust Trustees determine to be
possible by distributing, after satisfaction of liabilities to creditors of
the Trust as provided by applicable law, to the holders of the Preferred
Securities and Common Securities a Like Amount of the Subordinated
Debentures, unless such distribution is determined by the Property Trustee
not to be practical, in which event such holders will be entitled to receive
out of the assets of the Trust available for distribution to holders, after
satisfaction of liabilities to creditors of the Trust as provided by
applicable law, an amount equal to, in the case of holders of Preferred
Securities, the aggregate of the Liquidation Amount plus accrued and unpaid
Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If such 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 by the
Trust on the Trust Securities shall be paid on a pro rata basis.
Notwithstanding the foregoing sentence, the holder(s) of the Common
Securities will be entitled to receive distributions upon any such
liquidation pro rata with the holders of the Preferred Securities, except
that if an Event of Default resulting from a Debenture Event of Default
under the Indenture has occurred and is continuing, the Preferred Securities
shall have a priority over the Common Securities.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under
the Trust Agreement (an "Event of Default") with respect to the Preferred
Securities issued thereunder (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):
(i) the occurrence of a Debenture Event of Default under the
Indenture (see "Description of Subordinated Debentures--Debenture Events of
Default"); or
(ii) default in the payment of any Distribution when it becomes due
and payable, and continuation of such default for a period of 30 days; or
(iii) default in the payment of any Redemption Price of any
Preferred Security or Common Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect,
of any covenant or warranty of the Trust Trustees in the Trust Agreement
(other than a covenant or warranty a default in the performance or breach of
which is dealt with in clause (ii) or (iii) above), and continuation of such
default or breach for a period of 90 days after there has been given, by
registered or certified mail, to the defaulting Trust Trustee or Trustees by
the holders of at least 25% in aggregate Liquidation Amount of the
outstanding Preferred Securities, a written notice specifying such default
or breach and requiring it to be remedied and stating that such notice is a
"Notice of Default" under the Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee if a successor Property Trustee has not been
appointed within 90 days thereof.
Within ten Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of the Preferred Securities,
the Administrative Trustees and the Company, as Depositor, unless such Event
of Default shall have been cured or waived. The Company, as Depositor, and
the Administrative Trustees are required to file annually with the Property
Trustee a certificate as to whether or not they are in compliance with all
the conditions and covenants applicable to them under the Trust Agreement.
If a Debenture Event of Default has occurred and is continuing, the
Preferred Securities shall have a preference over the Common Securities upon
termination of the Trust as described above. See "--Liquidation Distribution
Upon Termination." The existence of an Event of Default does not entitle the
holders of Preferred Securities to accelerate the maturity thereof.
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ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If an Event of Default has occurred and is continuing, then the holders
of Preferred Securities would rely on the enforcement by the Property
Trustee of its rights as a holder of the Subordinated Debentures against the
Company. Notwithstanding the foregoing, if a Debenture Event of Default has
occurred and is continuing and such default is attributable to the failure
of the Company to pay any amounts payable in respect of the Subordinated
Debentures, then a holder of Preferred Securities has the right to institute
a legal proceeding directly against the Company for enforcement of payment
to such holder of the principal of or interest on the Subordinated
Debentures having a principal amount equal to the Liquidation Amount of the
Preferred Securities of such holder (a "Direct Action"). In connection with
such Direct Action, the Company will be subrogated to the rights of such
holder of Preferred Securities under the Trust Agreement to the extent of
any payment made by the Company to such holder of Preferred Securities in
such Direct Action.
REMOVAL OF TRUST TRUSTEES
Unless a Debenture Event of Default shall have occurred and be
continuing, any Trust Trustee may be removed at any time by the holder of
the Common Securities. If a Debenture Event of Default has occurred and is
continuing, the Property Trustee or the Delaware Trustee, or both of them,
may be removed at such time by the holders of a majority in Liquidation
Amount of the Preferred Securities. In no event will the holders of the
Preferred Securities have the right to vote to appoint, remove or replace
the Administrative Trustees, which voting rights are vested exclusively in
the Company as the holder of the Common Securities. No resignation or
removal of a Trust Trustee and no appointment of a successor trustee shall
be effective until the acceptance of appointment by the successor trustee in
accordance with the applicable requirements of the Trust Agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default shall have occurred and be continuing, at any
time or times, for the purpose of meeting the legal requirements of the
Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property may at the time be located, the Company, as the holder of the
Common Securities, and the Administrative Trustees shall have power to
appoint one or more persons either to act as a co-trustee, jointly with the
Property Trustee, of all or any part of such Trust Property, or to act as
separate trustee of any such property, in either case with such powers as
may be provided in the instrument of appointment, and to vest in such person
or persons in such capacity any property, title, right or power deemed
necessary or desirable, subject to the provisions of the Trust Agreement. In
case a Debenture Event of Default has occurred and is continuing, the
Property Trustee alone shall have power to make such appointment.
MERGER OR CONSOLIDATION OF TRUST TRUSTEES
Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or
converted or with which it may be consolidated, or any Person resulting from
any merger, conversion or consolidation to which such Trustee shall be a
party, or any Person succeeding to all or substantially all the corporate
trust business of such Trustee, shall be the successor of such Trustee under
the Trust Agreement, provided such Person shall be otherwise qualified and
eligible under the Trust Agreement.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The Trust may not merge, consolidate or amalgamate 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 Person, except as
described below. The Trust may, at the request of the Company, with the
consent of the Administrative Trustees and without the consent of the
holders of the Preferred Securities, merge, consolidate or amalgamate with
or into, be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to a trust organized as such under the
laws of any State; provided that (i) such successor entity either (a)
expressly assumes all of the obligations of the Trust with respect to the
Preferred Securities or (b) substitutes for the Preferred Securities other
securities having substantially the same terms as the Preferred Securities
(the "Successor Securities") so long as the Successor Securities rank the
same as the Preferred Securities rank in priority with respect to
distributions and payments upon liquidation, redemption and otherwise, (ii)
the Company expressly appoints a trustee of such successor entity possessing
substantially the same powers and duties as the Property Trustee as the
holder of the Subordinated Debentures, (iii) the Successor Securities are
listed or traded, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or other
organization on which the Preferred Securities are then listed or traded, if
any, (iv) such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not cause the Preferred Securities (including any
Successor Securities) to be downgraded by any nationally recognized
statistical rating organization, (v) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights,
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preferences and privileges of the holders of the Preferred 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, replacement, conveyance,
transfer or lease, the Company and the Property Trustee has received an
opinion from independent counsel to the Trust experienced in such matters to
the effect that (a) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the Preferred Securities
(including any Successor Securities) in any material respect and (b)
following such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, neither the Trust nor such successor entity will be
required to register as an investment company under the Investment Company
Act, (viii) the Company or any permitted successor or assignee owns all of
the Common Securities of such successor entity and guarantees the
obligations of such successor entity under the Successor Securities at least
to the extent provided by the Guarantee and (ix) the Company has delivered
to the Property Trustee an officers' certificate and an opinion of counsel,
each to the effect that all conditions precedent to such transactions have
been satisfied. Notwithstanding the foregoing, the Trust shall not, except
with the consent of holders of 100% in Liquidation Amount of the Preferred
Securities, consolidate, amalgamate or merge with or into, be replaced by or
convey, transfer or lease its properties and assets substantially as an
entirety to any other entity or permit any other entity to consolidate,
amalgamate or merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause
the Trust or the successor entity to be classified as other than a grantor
trust for United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT
Except as provided below and under "Description of Guarantee--Amendments
and Assignment" and as otherwise required by law and the Trust Agreement,
the holders of the Preferred Securities will have no voting rights.
The Trust Agreement may be amended from time to time by the holders of
the Common Securities and the Trust Trustees, without the consent of the
holders of the Preferred Securities (i) to cure any ambiguity, correct or
supplement any provisions in the Trust Agreement that may be inconsistent
with any other provision, or to make any other provisions with respect to
matters or questions arising under the Trust Agreement that shall not be
inconsistent with the other provisions of the Trust Agreement, or (ii) to
modify, eliminate or add to any provisions of the Trust Agreement to such
extent as shall be necessary to ensure that the Trust will be classified for
United States federal income tax purposes as a grantor trust at all times
that any Preferred Securities and Common Securities are outstanding or to
ensure that the Trust will not be required to register as an "investment
company" under the Investment Company Act, provided, however, that in the
case of either clause (i) or (ii), such action shall not adversely affect in
any material respect the interests of any holder of Preferred Securities,
and any amendments of the Trust Agreement shall become effective when notice
thereof is given to the holders of Preferred Securities and Common
Securities. The Trust Agreement may be amended by the Trust Trustees and the
Company with (i) the consent of holders representing not less than a
majority (based upon Liquidation Amounts) of the outstanding Preferred
Securities and Common Securities and (ii) receipt by the Trust Trustees of
an opinion of counsel to the effect that such amendment or the exercise of
any power granted to the Trust Trustees in accordance with such amendment
will not affect the Trust's status as a grantor trust for United States
federal income tax purposes or the Trust's exemption from status of an
"investment company" under the Investment Company Act, provided, further
that without the consent of each holder of Preferred Securities and Common
Securities affected thereby, the Trust Agreement may not be amended to (i)
change the amount or timing of any Distribution on the Preferred Securities
and Common Securities or otherwise adversely affect the amount of any
Distribution required to be made in respect of the Preferred Securities and
Common Securities as of a specified date or (ii) restrict the right of a
holder of Preferred Securities or Common Securities to institute suit for
the enforcement of any such payment on or after such date.
So long as any Subordinated Debentures are held by the Property Trustee,
the Trust Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee
or executing any trust or power conferred on the Debenture Trustee with
respect to such Subordinated Debentures, (ii) waive any past default that is
waivable under the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Subordinated Debentures shall be
due and payable or (iv) consent to any amendment, modification or
termination of the Indenture or such Subordinated Debentures, where such
consent shall be required, without, in each case, obtaining the prior
approval of the holders of at least a majority in Liquidation Amount of all
outstanding Preferred Securities; provided, however, that where a consent
under the Indenture would require the consent of each holder of Subordinated
Debentures affected thereby, no such consent shall be given by the Property
Trustee without the prior written consent of each holder of Preferred
Securities. The Trust Trustees shall not revoke any action previously
authorized or approved by a vote of the holders of the Preferred Securities
except pursuant to a subsequent vote of the holders of the Preferred
Securities. The Property Trustee shall notify each holder of record of the
Preferred Securities of any notice of default which it receives with respect
to the Subordinated Debentures. In addition to obtaining the foregoing
approvals of the holders of the Preferred Securities, prior to taking any of
the foregoing actions, the Trust Trustees shall at the expense of the
Company obtain an opinion of
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counsel experienced in such matters to the effect that the Trust will not be
classified as other than a grantor trust for United States federal income
tax purposes on account of such action.
Any required approval of holders of Preferred Securities may be given at
a meeting of holders of Preferred Securities convened for such purpose or
pursuant to written consent. The Property Trustee will cause a notice of any
meeting at which holders of 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 given to each holder of record of Preferred Securities in the
manner set forth in the Trust Agreement.
No vote or consent of the holders of Preferred Securities will be
required for the Trust to redeem and cancel its Preferred Securities in
accordance with the Trust Agreement.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Company, the Administrative
Trustees or any affiliate of the Company or any Administrative Trustees,
shall, for purposes of such vote or consent, be treated as if they were not
outstanding.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities shall be made to DTC,
which shall credit the relevant accounts at DTC on the applicable
Distribution Dates or, if the Preferred Securities are not held by DTC, such
payments shall be made by check mailed to the address of the holder entitled
thereto as such address shall appear on the Register. The paying agent (the
"Paying Agent") shall initially be the Property Trustee and any co-paying
agent chosen by the Property Trustee (which may be the Company) and
acceptable to the Administrative Trustees and the Company. The Paying Agent
shall be permitted to resign as Paying Agent upon 30 days' written notice to
the Administrative Trustees, the Property Trustee and the Company. In the
event that the Property Trustee shall no longer be the Paying Agent, the
Administrative Trustees shall appoint a successor (which shall be a bank or
trust company acceptable to the Property Trustee and the Company) to act as
Paying Agent.
BOOK-ENTRY ISSUANCE
DTC will act as securities depositary for all of the Preferred
Securities. The Preferred Securities will be issued only as fully-registered
securities registered in the name of Cede & Co. (DTC's nominee). One or more
fully-registered global certificates will be issued for the Preferred
Securities, representing in the aggregate the total number of Preferred
Securities, and will be deposited with DTC.
DTC is a limited purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and
a "clearing agency" registered pursuant to the provisions of Section 17A of
the Exchange Act. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement
of securities certificates. Direct Participants include securities brokers
and dealers, banks, trust companies, clearing corporations and certain other
organizations ("Direct Participants"). DTC is owned by a number of its
Direct Participants and by the New York Stock Exchange, Inc., the American
Stock Exchange, Inc. and the National Association of Securities Dealers,
Inc. Access to the DTC system is also available to others such as securities
brokers and dealers, banks and trust companies that clear through or
maintain custodial relationships with Direct Participants, either directly
or indirectly ("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the Commission.
Purchases of Preferred Securities within the DTC system must be made by
or through Direct Participants, which will receive a credit for the
Preferred Securities on DTC's records. The ownership interest of each actual
purchaser of each Preferred Security ("Beneficial Owner") is in turn to be
recorded on the Direct and Indirect Participants' records. Beneficial Owners
will not receive written confirmation from DTC of their purchases, but
Beneficial Owners are expected to receive written confirmations providing
details of the transactions, as well as periodic statements of their
holdings, from the Direct or Indirect Participants through which the
Beneficial Owners purchased Preferred Securities. Transfers of ownership
interests in the Preferred Securities are to be accomplished by entries made
on the books of Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in Preferred Securities, except in the event that use of the book-
entry system for the Preferred Securities of the Trust is discontinued.
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DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Preferred Securities are credited, which
may or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their
customers.
Redemption notices shall be sent to Cede & Co. as the registered holder
of the Preferred Securities. If less than all of the Preferred Securities
are being redeemed, DTC's current practice is to determine by lot the amount
of the interest of each Direct Participant to be redeemed.
Although voting with respect to the Preferred Securities is limited to
the holders of record of the Preferred Securities, in those instances in
which a vote is required, neither DTC nor Cede & Co. will itself consent or
vote with respect to Preferred Securities. Under its usual procedures, DTC
would mail an omnibus proxy (the "Omnibus Proxy") to the Property Trustee as
soon as possible after the record date. The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose
accounts such Preferred Securities are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners
will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Distribution payments on the Preferred Securities will be made by the
Property Trustee to DTC. DTC's practice is to credit Direct Participants'
accounts on the relevant payment date in accordance with their respective
holdings shown on DTC's records, unless DTC has reason to believe that it
will not receive payments on such payment date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices and will be the responsibility of such Participant and not of DTC,
the Property Trustee, the Trust or the Company, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
Distributions to DTC is the responsibility of the Property Trustee,
disbursement of such payments to Direct Participants is the responsibility
of DTC, and disbursements of such payments to the Beneficial Owners is the
responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depositary with
respect to any of the Preferred Securities at any time by giving reasonable
notice to the Property Trustee and the Company. In the event that a
successor securities depositary is not obtained, definitive Preferred
Securities certificates representing such Preferred Securities are required
to be printed and delivered. The Company, at its option, may decide to
discontinue use of the system of book-entry transfers through DTC (or a
successor depositary). After a Debenture Event of Default, the holders of a
majority in liquidation preference of Preferred Securities may determine to
discontinue the system of book-entry transfers through DTC. In any such
event, definitive certificates for the Preferred Securities will be printed
and delivered. Except as provided herein, a Beneficial Owner of an interest
in a global Preferred Securities certificate will not be entitled to receive
physical delivery of Preferred Securities. Accordingly, each Beneficial
Owner must rely on the procedures of DTC to exercise any rights under the
Preferred Securities.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the Trust or the Company believe
to be accurate, but the Trust and the Company assume no responsibility for
the accuracy thereof. None of the Trust Trustees, the Trust or the Company
has any responsibility for the performance by DTC or its Participants of
their respective obligations as described herein or under the rules and
procedures governing their respective operations.
REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as registrar and transfer agent for the
Preferred Securities.
Registration of transfers of Preferred Securities will be effected
without charge by or on behalf of the Trust, but only upon payment of any
tax or other governmental charges that may be imposed in connection with any
transfer or exchange. The Trust will not be required (i) to register or
cause to be registered the transfer or exchange of the Preferred Securities
during a period beginning at the opening of business 15 days before the day
of the mailing of the relevant notice of redemption and ending at the close
of business on the day of mailing of such notice of redemption or (ii) to
register or cause to be registered the transfer or exchange of any Preferred
Securities so selected for redemption, except in the case of any Preferred
Securities being redeemed in part, any portion thereof not to be redeemed.
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INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Company and its affiliates utilize various of the banking services
offered by the Property Trustee. Such services include providing lines of
credit.
The Property Trustee, other than during the occurrence and continuance of
an Event of Default, undertakes to perform only such duties as are
specifically set forth in the Trust Agreement and, after such Event of
Default, must exercise the same degree of care and skill as a prudent person
would exercise or use in the conduct of his or her own affairs. Subject to
this provision, the Property Trustee is under no obligation to exercise any
of the powers vested in it by the Trust Agreement at the request of any
holder of Preferred Securities unless it is offered reasonable indemnity by
such holder against the costs, expenses and liabilities that might be
incurred thereby. If no Event of Default has occurred and is continuing and
the Property Trustee is required to decide between alternative causes of
action, construe ambiguous provisions in the Trust Agreement or is unsure of
the application of any provision of the Trust Agreement, and the matter is
not one on which holders of Preferred Securities are entitled under the
Trust Agreement to vote, then the Property Trustee may, but shall be under
no duty to, take such action as is directed by the Company and, if not so
directed, shall take such action as it deems advisable and in the best
interests of the holders of the Preferred Securities and the Common
Securities and will have no liability except for its own bad faith,
negligence or willful misconduct. The Property Trustee also serves as
Trustee under the Guarantee and the Indenture.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Trust in such a way that the Trust will not be
deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as an association taxable as a
corporation or as other than a grantor trust for United States federal
income tax purposes and so that the Subordinated Debentures will be treated
as indebtedness of the Company for United States federal income tax
purposes. In this connection, the Company and the Administrative Trustees
are authorized to take any action, not inconsistent with applicable law, the
certificate of trust of the Trust, the certificate of incorporation of the
Company or the Trust Agreement, that the Company and the Administrative
Trustees determine in their discretion to be necessary or desirable for such
purposes, as long as such action does not adversely affect in any material
respect the interests of the holders of the Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar rights.
The Trust may not borrow money, issue debt or mortgage or pledge any of
its assets.
GOVERNING LAW
The Trust Agreement and the Trust Securities will be governed by and
construed in accordance with the laws of the State of Delaware.
DESCRIPTION OF SUBORDINATED DEBENTURES
The Subordinated Debentures are to be issued under a Junior Subordinated
Indenture (the "Indenture"), between the Company and The Chase Manhattan
Bank, as trustee (the "Debenture Trustee"). The following summary of
material terms and provisions of the Subordinated Debentures and the
Indenture does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the Indenture, the form of which
is filed as an exhibit to the Registration Statement of which this
Prospectus forms a part, and to the Trust Indenture Act. Whenever particular
defined terms of the Indenture are referred to herein, such defined terms
are incorporated herein by reference.
GENERAL
Concurrently with the issuance of the Preferred Securities, the Trust
will invest the proceeds thereof and the consideration paid by the Company
for the Common Securities in the Subordinated Debentures issued by the
Company. The Subordinated Debentures will be in the principal amount equal
to the aggregate stated Liquidation Amount of the Preferred Securities plus
the Company's concurrent investment in the Common Securities. The
Subordinated Debentures will bear interest at the annual rate of % of the
principal amount thereof, payable quarterly in arrears on January 1, April
1, July 1 and October 1 of each year (each, an "Interest Payment Date"),
commencing , 1997, to the person in
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whose name each of the Subordinated Debentures is registered, subject to
certain exceptions, at the close of business on the Business Day next
preceding such Interest Payment Date (other than interest payable on a
Redemption Date or the maturity date). In the event the Subordinated
Debentures are not in book-entry form, the relevant record date for the
Subordinated Debentures shall be the fifteenth day of the month prior to the
relevant Interest Payment Date. It is anticipated that, until the
liquidation, if any, of the Trust, each Subordinated Debentures will be held
in the name of the Property Trustee in trust for the benefit of the holders
of the Preferred Securities and the Common Securities. The amount of
interest payable in the first payment period will be computed on the basis
of days in a 360-day year. The amount of interest payable for any period
thereafter will be computed on the basis of a 360-day year of twelve 30-day
months. In the event that any date on which interest is payable on the
Subordinated Debentures is not a Business Day, then payment of the interest
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 the
date such payment was originally payable. Accrued interest that is not paid
on the applicable Interest Payment Date will bear additional interest on the
amount thereof (to the extent permitted by law) at the rate per annum of %
thereof, compounded quarterly. The term "interest" as used herein shall
include quarterly interest payments and interest on quarterly interest
payments not paid on the applicable Interest Payment Date.
The Subordinated Debentures will mature on , 2027 (such date, as
it may be shortened or extended as hereinafter described, the "Stated
Maturity"). Such date may be shortened at any time by the Company to any
date not earlier than , 2002. Such date may also be extended at
any time at the election of the Company to any date not later than
, 2046, provided that at the time such election is made and at the time of
extension (i) the Company is not in bankruptcy, otherwise insolvent or in
liquidation, (ii) the Company is not in default in the payment of any
interest or principal on the Subordinated Debentures, (iii) in the case of
Subordinated Debentures held by the Trust, the Trust is not in arrears on
payments of Distributions on the Preferred Securities and no deferred
Distributions are accumulated and (iv) the Subordinated Debentures are rated
not less than BBB- by Standard & Poor's Ratings Services or Baa3 by Moody's
Investors Service, Inc. or the equivalent by any other nationally recognized
statistical rating organization.
The Subordinated Debentures will be unsecured and will rank junior and be
subordinate in right of payment to all Senior Debt (as defined below) of the
Company. The Indenture does not limit the incurrence or issuance of other
secured or unsecured debt of the Company, whether under the Indenture or any
existing or other indenture that the Company may enter into in the future or
otherwise. See "--Subordination."
Under certain circumstances involving the dissolution of the Trust
following the occurrence of a Special Event, Subordinated Debentures may be
distributed to the holders of the Trust Securities in liquidation of the
Trust. See "Description of Preferred Securities - Special Event Redemption
or Distribution of Subordinated Debentures."
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no Event of Default under the Indenture has occurred and is
continuing, the Company has the right under the Indenture to defer the
payment of interest at any time or from time to time for a period not
exceeding 20 consecutive quarters with respect to each Extension Period,
during which Extension Periods the Company shall have the right to make full
or partial payments of interest on any Interest Payment Date, provided that
no Extension Period may extend beyond the Stated Maturity of the
Subordinated Debentures. At the end of such Extension Period, the Company
must pay all interest then accrued and unpaid (together with interest
thereon at the annual rate of %, compounded quarterly, to the extent
permitted by applicable law). During an Extension Period, interest will
continue to accrue and holders of Subordinated Debentures (or holders of
Preferred Securities while the Preferred Securities are outstanding) will be
required to accrue interest income for United States federal income tax
purposes. See "Certain Federal Income Tax Consequences--Interest Income and
Original Issue Discount."
During any such Extension Period, the Company may not, and may not permit
any subsidiary of the Company to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation
payment with respect to, any of the Company's capital stock or (ii) make any
payment of principal, interest or premium, if any, on or repay, repurchase
or redeem any debt securities of the Company that rank pari passu with or
junior in interest to the Subordinated Debentures or make any guarantee
payments with respect to any guarantee by the Company of debt securities of
any subsidiary of the Company if such guarantee ranks pari passu with or
junior in interest to the Subordinated Debentures (other than (a) dividends
or distributions in capital stock of the Company, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights
plan or the redemption or repurchase of any such rights pursuant thereto and
(c) payments under the Guarantee). Prior to the termination of any such
Extension Period, the Company may further extend the interest payment
period, provided that no Extension Period may exceed 20 consecutive quarters
or extend beyond the Stated Maturity of the Subordinated Debentures. Upon
the termination of any such Extension Period and upon the payment
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of all amounts then due on any Interest Payment Date, the Company may elect
to begin a new Extension Period subject to the above requirements. No
interest shall be due and payable during an Extension Period, except at the
end thereof. The Company must give the Debenture Trustee and the holders of
Subordinated Debentures notice of its election of such Extension Period at
least one Business Day prior to the earlier of (i) the date the
Distributions on the Preferred Securities would have been payable except for
the election to begin such Extension Period or (ii) the date the
Administrative Trustees are required to give notice to the NYSE, the Nasdaq
National Market or other applicable stock exchange or automated quotation
system on which the Preferred Securities are then listed or quoted or to
holders of such Preferred Securities of the record date or the date
such Distributions are payable, but in any event not less than one Business
Day prior to such record date. The Property Trustee shall give notice of the
Company's election to begin a new Extension Period to the holders of the
Preferred Securities. There is no limitation on the number of times that the
Company may elect to begin an Extension Period.
CERTAIN COVENANTS OF THE COMPANY
The Company will covenant that it will not, and will not permit any
subsidiary of the Company to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation
payment with respect to, any of the Company's capital stock or (ii) make any
payment of principal, interest or premium, if any, on or repay or repurchase
or redeem any debt securities of the Company that rank pari passu with or
junior in interest to the Subordinated Debentures or make any guarantee
payments with respect to any guarantee by the Company of debt securities of
any subsidiary of the Company if such guarantee ranks pari passu with or
junior in interest to the Subordinated Debentures (other than (a) dividends
or distributions in capital stock of the Company, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights
plan or the redemption or repurchase of any such rights pursuant thereto and
(c) payments under the Guarantee) if at such time (i) there shall have
occurred any event of which the Company has actual knowledge that (a) with
the giving of notice or the lapse of time, or both, would constitute a
Debenture Event of Default under the Indenture with respect to Subordinated
Debentures and (b) in respect of which the Company shall not have taken
reasonable steps to cure, (ii) the Company shall be in default with respect
to its payment of any obligations under the Guarantee or (iii) the Company
shall have given notice of its election to begin an Extension Period as
provided in the Indenture and shall not have rescinded such notice, or such
Extension Period, or any extension thereof, shall be continuing. The Company
will also covenant (i) to maintain directly or indirectly 100% ownership of
the Common Securities of the Trust, provided that certain successors which
are permitted pursuant to the Indenture may succeed to the Company's
ownership of the Common Securities, (ii) not to voluntarily terminate, wind-
up or liquidate the Trust, except (a) in connection with a distribution of
Subordinated Debentures to the holders of the Preferred Securities in
liquidation of the Trust or (b) in connection with certain mergers,
consolidations or amalgamations permitted by the Trust Agreement, and (iii)
to use its reasonable efforts, consistent with the terms and provisions of
the Trust Agreement, to cause the Trust to remain classified as a grantor
trust and not as an association taxable as a corporation for United States
federal income tax purposes.
REDEMPTION
The Subordinated Debentures are redeemable prior to maturity at the
option of the Company (i) on or after , 2002, in whole at any time
or in part from time to time, at a redemption price equal to the accrued and
unpaid interest on the Subordinated Debentures so redeemed to the date fixed
for redemption, plus 100% of the principal amount thereof or (ii) at any
time in whole (but not in part), within 90 days of the occurrence of a
Special Event, at a redemption price equal to the accrued and unpaid
interest on the Subordinated Debentures so redeemed to the date fixed for
redemption, plus 100% of the principal amount thereof.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each Holder of Subordinated
Debentures to be redeemed at its registered address. Unless the Company
defaults in payment of the redemption price, on and after the redemption
date, interest will cease to accrue on such Subordinated Debentures or
portions thereof called for redemption on or after such date.
DISTRIBUTIONS OF SUBORDINATED DEBENTURES
Under certain circumstances involving the liquidation of the Trust,
Subordinated Debentures may be distributed to the holders of the Preferred
Securities in liquidation of the Trust after satisfaction of liabilities to
creditors of the Trust as provided by applicable law. If distributed to
holders of Preferred Securities in liquidation, the Subordinated Debentures
will initially be issued in the form of one or more global securities and
DTC, or any successor depositary for the Preferred Securities, will act as
depositary for the Subordinated Debentures. It is anticipated that the
depositary arrangements for the Subordinated Debentures would be
substantially identical to those in effect for the Preferred Securities. If
the Subordinated Debentures are distributed to the holders of Preferred
Securities upon the liquidation of the Trust, the Company will use its best
efforts to list the Subordinated Debentures on the NYSE or such other stock
exchanges or interdealer quotation
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systems, if any, on which the Preferred Securities are then listed or
traded. There can be no assurance as to the market price of any Subordinated
Debentures that may be distributed to the holders of Preferred Securities.
For a description of DTC and the terms of the depositary matters, see
"Description of Preferred Securities--Book-Entry Issuance."
Under current United States federal income tax law and interpretations
thereof and assuming, as expected, the Trust is treated as a grantor trust
for United States federal income tax purposes, a distribution by the Trust
of the Subordinated Debentures pursuant to a liquidation of the Trust will
not be a taxable event to the Trust or to holders of the Preferred
Securities and will result in a holder of the Preferred Securities receiving
directly such holder's pro rata share of the Subordinated Debentures
(previously held indirectly through the Trust). If, however, the liquidation
of the Trust were to occur because the Trust is subject to United States
federal income tax with respect to income accrued or received on the
Subordinated Debentures as a result of the occurrence of a Tax Event or
otherwise, the distribution of Subordinated Debentures to holders of the
Preferred Securities by the Trust could be a taxable event to the Trust and
each holder, and holders of the Preferred Securities may be required to
recognize gain or loss as if they had exchanged their Preferred Securities
for the Subordinated Debentures they received upon the liquidation of the
Trust. See "Certain United States Federal Income Tax Consequences--
Distribution of Subordinated Debentures to Holders of Preferred Securities."
GLOBAL SUBORDINATED DEBENTURES
The Subordinated Debentures may be issued in whole or in part in the form
of a Global Subordinated Debentures that will be deposited with, or on
behalf of, a depositary, which initially will be DTC (the "Depositary").
Global Subordinated Debentures may be issued only in fully registered form
and in either temporary or permanent form. Unless and until it is exchanged
in whole or in part for the individual Subordinated Debentures represented
thereby, Global Subordinated Debentures may not be transferred except as a
whole by the Depositary for such Global Subordinated Debentures to a nominee
of such Depositary or by a nominee of such Depositary to such Depositary or
another nominee of such Depositary or by the Depositary or any nominee to a
successor Depositary or any nominee of such successor.
Upon the issuance of a Global Subordinated Debentures and the deposit of
such Global Subordinated Debentures with or on behalf of the Depositary, the
Depositary for such Global Subordinated Debentures or its nominee will
credit on its book-entry registration and transfer system the respective
principal amounts of the individual Subordinated Debentures represented by
such Global Subordinated Debentures to the accounts of persons that have
accounts with such Depositary ("Participants"). Such accounts shall be
designated by the dealers, underwriters or agents with respect to such
Subordinated Debentures or by the Company if such Subordinated Debentures
are offered and sold directly by the Company. Ownership of beneficial
interests in a Global Subordinated Debentures will be limited to
Participants or persons that may hold interests through Participants.
Ownership of beneficial interests in such Global Subordinated Debentures
will be shown on, and the transfer of that ownership will be effected only
through, records maintained by the applicable Depositary or its nominee
(with respect to interests of Participants) and the records of Participants
(with respect to interests of persons who hold through Participants). The
laws of some states require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such limits and
such laws may impair the ability to transfer beneficial interests in a
Global Subordinated Debentures.
So long as the Depositary for a Global Subordinated Debentures, or its
nominee, is the registered owner of such Global Subordinated Debentures,
such Depositary or such nominee, as the case may be, will be considered the
sole owner or holder of the Subordinated Debentures represented by such
Global Subordinated Debentures for all purposes under the Indenture
governing such Subordinated Debentures. Except as provided below, owners of
beneficial interests in a Global Subordinated Debentures will not be
entitled to have any of the individual Subordinated Debentures of the series
represented by such Global Subordinated Debentures registered in their
names, will not receive or be entitled to receive physical delivery of any
such Subordinated Debentures of such series in definitive form and will not
be considered the owners or holders thereof under the Indenture.
Payments of principal of and interest on individual Subordinated
Debentures represented by a Global Subordinated Debentures registered in the
name of a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global
Subordinated Debentures representing such Subordinated Debentures. None of
the Company, the Debenture Trustee, any Paying Agent or the Securities
Registrar for such Subordinated Debentures will have any responsibility or
liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests of the Global Subordinated
Debentures representing such Subordinated Debentures or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
The Company expects that the Depositary or its nominee, upon receipt of
any payment of principal or interest in respect of a permanent Global
Subordinated Debentures representing any of such Subordinated Debentures,
immediately will credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interest in the principal
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amount of such Global Subordinated Debentures representing such Subordinated
Debentures as shown on the records of such Depositary or its nominee. The
Company also expects that payments by Participants to owners of beneficial
interests in such Global Subordinated Debentures held through such
Participants will be governed by standing instructions and customary
practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name." Such payments will
be the responsibility of such Participants.
If the Depositary is at any time unwilling, unable or ineligible to
continue as depositary and a successor depositary is not appointed by the
Company within 90 days, the Company will issue individual Subordinated
Debentures in exchange for the Global Subordinated Debentures representing
such Subordinated Debentures. In addition, the Company may at any time and
in its sole discretion, determine not to have any Subordinated Debentures
represented by one or more Global Subordinated Debentures and, in such
event, will issue individual Subordinated Debentures in exchange for the
Global Subordinated Debentures representing such Subordinated Debentures.
Further, if the Company so specifies with respect to the Subordinated
Debentures, an owner of a beneficial interest in a Global Subordinated
Debentures representing Subordinated Debentures may, on terms acceptable to
the Company, the Debenture Trustee and the Depositary for such Global
Subordinated Debentures, receive individual Subordinated Debentures in
exchange for such beneficial interests. In any such instance, an owner of a
beneficial interest in a Global Subordinated Debentures will be entitled to
physical delivery of individual Subordinated Debentures of the series
represented by such Global Subordinated Debentures equal in principal amount
to such beneficial interest and to have such Subordinated Debentures
registered in its name. Individual Subordinated Debentures so issued will be
issued in denominations, unless otherwise specified by the Company, of $25
and integral multiples thereof.
PAYMENT AND PAYING AGENTS
Payment of principal of and any interest on Subordinated Debentures will
be made at the office of the Debenture Trustee in the City of New York or at
the office of such Paying Agent or Paying Agents (which may include the
Company) as the Company may designate from time to time, except that at the
option of the Company payment of any interest may be made by check mailed to
the address of the Person entitled thereto as such address shall appear in
the Securities Register or by wire or electronic funds transfer. Payment of
any interest on Subordinated Debentures (other than interest payable on a
Redemption Date or the maturity date) will be made to the Person in whose
name such Subordinated Debentures is registered at the close of business on
the Regular Record Date for such interest, except in the case of Defaulted
Interest. The Company may at any time designate additional Paying Agents or
rescind the designation of any Paying Agent; however the Company will at all
times be required to maintain a Paying Agent in each Place of Payment.
Any moneys deposited with the Debenture Trustee or any Paying Agent, or
then held by the Company in trust, for the payment of the principal of or
interest on any Subordinated Debentures and remaining unclaimed for two
years after such principal or interest has become due and payable shall, at
the request of the Company, be repaid to the Company and the holder of such
Subordinated Debentures shall thereafter look, as a general unsecured
creditor, only to the Company for payment thereof.
REGISTRATION AND TRANSFER OF SUBORDINATED DEBENTURES
If the Depositary is DTC, a global security shall be exchangeable for
Subordinated Debentures registered in the names of persons other than DTC or
its nominee only if (i) DTC notifies the Company that it is unwilling or
unable to continue as a depository for such global security and no successor
depository shall have been appointed by the Company within 90 days or if at
any time DTC ceases to be a clearing agency registered under the Exchange
Act, (ii) the Company in its sole discretion determines that such global
security shall be so exchangeable, or (iii) there shall have occurred and be
continuing a Debenture Event of Default with respect to such global
security. Any global security that is exchangeable pursuant to the preceding
sentence shall be exchangeable for definitive certificates registered in
such names as DTC shall direct. It is expected that such instructions will
be based upon directions received by DTC from its Participants with respect
to ownership of beneficial interests in such global security. In the event
that Subordinated Debentures are issued in definitive form, such
Subordinated Debentures will be in denominations of $25 and integral
multiples thereof and may be transferred or exchanged at the offices
described below. Payments on Subordinated Debentures represented by a global
security will be made to DTC, as the Depositary for the Subordinated
Debentures. In the event Subordinated Debentures are issued in definitive
form, principal and interest will be payable, the transfer of the
Subordinated Debentures will be registrable, and Subordinated Debentures
will be exchangeable for Subordinated Debentures of other denominations of a
like aggregate principal amount, at the corporate office of the Debenture
Trustee in New York, New York or at the offices of any paying agent or
transfer agent appointed by the Company, provided that payment of interest
may be made at the option of the Company by check mailed to the address of
the persons entitled thereto or by wire or electronic funds transfer. In
addition, if the Subordinated Debentures are issued in certificated form,
the record dates for payment of interest will be the 15th day of the last
month of each calendar quarter. For a description of DTC and the terms of
the depositary arrangements relating to payments, transfers,
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voting rights, redemptions and other notices and other matters, see
"Description of Preferred Securities--Book-Entry Issuance."
Subordinated Debentures may be presented for exchange as provided above,
and may be presented for registration of transfer (with the form of transfer
endorsed thereon, or a satisfactory written instrument of transfer, duly
executed), at the office of the Securities Registrar or at the office of any
transfer agent designated by the Company for such purpose with respect to
the Subordinated Debentures, without service charge and upon payment of any
taxes and other governmental charges as described in the Indenture. The
Company will appoint the Debenture Trustee as Securities Registrar under the
Indenture. The Company may at any time rescind the designation of any
transfer agent or approve a change in the location through which any
transfer agent acts, provided that the Company maintains a transfer agent in
each Place of Payment. The Company may at any time designate additional
transfer agents with respect to the Subordinated Debentures.
In the event of any redemption, neither the Company nor the Debenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Subordinated Debentures during a period beginning at the opening of business
15 days before the day of selection for redemption of the Subordinated
Debentures pursuant to the Indenture and ending at the close of business on
the day of mailing of such notice of redemption or (ii) transfer or exchange
any Subordinated Debentures so selected for redemption, except, in the case
of any Subordinated Debentures being redeemed in part, any portion thereof
not to be redeemed.
MODIFICATION OF INDENTURE
From time to time the Company and the Debenture Trustee may, without the
consent of the holders of the Subordinated Debentures, amend, waive or
supplement the Indenture for specified purposes, including, among other
things, curing ambiguities, defects or inconsistencies (provided that any
such action does not adversely affect in any material respect the interest
of the holders of Subordinated Debentures or, for so long as the Preferred
Securities shall remain outstanding, the holders of the Preferred
Securities) and qualifying, or maintaining the qualification of, the
Indenture under the Trust Indenture Act. The Indenture contains provisions
permitting the Company and the Debenture Trustee, with the consent of the
holders of not less than a majority in principal amount of outstanding
Subordinated Debenture affected, to modify the Indenture in a manner
affecting the rights of the holders of such Subordinated Debentures;
provided that no such modification may, without the consent of the holder of
each outstanding Subordinated Debenture so affected, among others, (i)
change the stated maturity of the Subordinated Debentures, reduce the
principal amount thereof, change the method of calculating the rate of
interest thereon or reduce the rate or extend the time of payment of
interest thereon (except such change or extension as is contemplated by the
Indenture) or (ii) reduce the percentage of principal amount of the
Subordinated Debentures, the holders of which are required to consent to any
such modification of the Indenture, provided that, so long as any Preferred
Securities remain outstanding, no such modification may be made that
adversely affects the interests of holders of such Preferred Securities in
any material respect, and no termination of the Indenture may occur, and no
waiver of any Debenture Event of Default or compliance with any covenant
under the Indenture may be effective, without the prior consent of the
holders of at least a majority of the aggregate Liquidation Amount of the
Preferred Securities unless and until the principal of the Subordinated
Debentures and all accrued and unpaid interest thereon have been paid in
full and certain other conditions are satisfied.
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to the Subordinated Debentures that has occurred and is
continuing constitutes a "Debenture Event of Default" (a "Debenture Event of
Default") with respect to the Subordinated Debentures:
(i) failure for 30 days to pay any interest on the Subordinated
Debentures, when due (subject to the deferral of any due date in the case of
an Extension Period); or
(ii) failure to pay any principal of the Subordinated Debentures when
due whether at maturity or upon redemption; or
(iii) failure to observe or perform certain other covenants
contained in the Indenture for 90 days after written notice to the Company
from the Debenture Trustee or from the holders of at least 25% in
outstanding principal amount of outstanding Subordinated Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of
the Company.
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The holders of a majority in aggregate outstanding principal amount of
Subordinated Debentures have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Debenture
Trustee. The Debenture Trustee or the holders of not less than 25% in
aggregate outstanding principal amount of Subordinated Debentures may
declare the principal due and payable immediately upon a Debenture Event of
Default resulting from the Company's failure to make payments with respect
to the Subordinated Debentures when due and payable or failure to observe or
perform covenants contained in the Indenture, and, should the Debenture
Trustee or such holders of such Subordinated Debentures fail to make such
declaration, the holders of at least 25% in Liquidation Amount of the
Preferred Securities shall have such right. Upon a Debenture Event of
Default resulting from certain events of bankruptcy of the Company, the
principal of the Subordinated Debentures shall automatically, and without
any declaration or any further action on the part of the Debenture Trustee
or any holder, become immediately due and payable. The holders of a majority
in aggregate outstanding principal amount of Subordinated Debentures may
rescind or annul such declaration and waive the default if the default
(other than the non-payment of the principal of Subordinated Debentures
which has become due solely by such acceleration) has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debenture
Trustee, and should the holders of such Subordinated Debentures fail to
rescind or annul such declaration and waive such default, the holders of a
majority in Liquidation Amount of the Preferred Securities shall have such
right.
The holders of a majority in aggregate outstanding principal amount of
the Subordinated Debentures affected thereby and the holders of at least a
majority in Liquidation Amount of the Preferred Securities may, on behalf of
the holders of all the Subordinated Debentures or the holders of all the
Preferred Securities, as the case may be, waive any past default, except a
default in the payment of principal or interest (unless such default has
been cured and a sum sufficient to pay all matured installments of interest
and principal due otherwise than by acceleration has been deposited with the
Debenture Trustee) or a default in respect of a covenant or provision which
under the Indenture cannot be modified or amended without the consent of the
holder of each outstanding Subordinated Debenture. The Company is required
to file annually with the Debenture Trustee a certificate as to whether or
not the Company is in compliance with all the conditions and covenants
applicable to it under the Indenture.
In case a Debenture Event of Default shall occur and be continuing, the
Debenture Trustee will have the right to declare the principal of and the
interest on such Subordinated Debentures and any other amounts payable under
the Indenture, to be forthwith due and payable and to enforce its other
rights as a creditor with respect to such Subordinated Debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest or
principal on the Subordinated Debentures on the date such interest or
principal is otherwise payable, a holder of Preferred Securities may
institute a Direct Action for payment. The Company may not amend the
Indenture to remove the foregoing right to bring a Direct Action without the
prior written consent of the holders of all of the Preferred Securities.
Notwithstanding any payment made to such holder of Preferred Securities by
the Company in connection with a Direct Action, the Company shall remain
obligated to pay the principal of or interest on the Subordinated Debentures
held by the Trust or the Property Trustee and the Company shall be
subrogated to the rights of the holder of such Preferred Securities with
respect to payments on the Preferred Securities to the extent of any
payments made by the Company to such holder in any Direct Action. Except as
provided above, holders of Preferred Securities will not be able to exercise
directly any other remedy available to the holders of the Subordinated
Debentures.
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that 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, unless (i) in case the
Company consolidates with or merges into another Person or conveys,
transfers or leases its properties and assets substantially as an entirety
to any Person, the successor Person is organized under the laws of the
United States or any state or the District of Columbia, and such successor
Person expressly assumes the Company's obligations on the Subordinated
Debentures issued under the Indenture; (ii) immediately after giving effect
thereto, no Debenture Event of Default, and no event which, after notice or
lapse of time or both, would become a Debenture Event of Default, shall have
happened and be continuing; (iii) if at the time any Preferred Securities
are outstanding, such transaction is not precluded by the Trust Agreement or
Guarantee and does not give rise to any breach or violation of the Trust
Agreement or the Guarantee, and (iv) certain other conditions as prescribed
in the Indenture are met.
The general provisions of the Indenture do not afford holders of the
Subordinated Debentures protection in the event of a highly leveraged or
other transaction involving the Company that may adversely affect holders of
the Subordinated Debentures.
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SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Subordinated
Debentures not previously delivered to the Debenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and
payable at their Stated Maturity within one year or (iii) are to be called
for redemption within one year under arrangements satisfactory to the
Debenture Trustee for the giving of notice of redemption, and the Company
deposits or causes to be deposited with the Debenture Trustee funds, in
trust, for such purpose and in an amount sufficient to pay and discharge the
entire indebtedness on the Subordinated Debentures not previously delivered
to the Debenture Trustee for cancellation, for the principal and interest to
the date of the deposit or to the Stated Maturity or the Redemption Date, as
the case may be, then the Indenture will cease to be of further effect
(except as to the Company's obligations to pay all other sums due pursuant
to the Indenture and to provide the officers' certificates and opinions of
counsel described therein), and the Company will be deemed to have satisfied
and discharged the Indenture.
SUBORDINATION
In the Indenture, the Company has covenanted and agreed that any
Subordinated Debentures issued thereunder will be subordinate and junior in
right of payment to all Senior Debt to the extent provided in the Indenture.
Upon any payment or distribution of assets of the Company upon any
liquidation, dissolution, winding-up, reorganization, assignment for the
benefit of creditors, marshaling of assets or any bankruptcy, insolvency,
debt restructuring or similar proceedings in connection with any insolvency
or bankruptcy proceeding of the Company, the holders of Senior Debt will
first be entitled to receive payment in full of principal of (and premium,
if any) and interest, if any, on such Senior Debt before the holders of
Subordinated Debentures or the Property Trustee on behalf of the holders of
Preferred Securities will be entitled to receive or retain any payment in
respect of the principal of or interest, if any, on the Subordinated
Debentures; provided, however, that holders of Senior Debt shall not be
entitled to receive payment of any such amounts to the extent that such
holders would be required by the subordination provisions of such Senior
Debt to pay such amounts over to the obligees on trade accounts payable or
other liabilities arising in the ordinary course of the Company's business.
In the event of the acceleration of the maturity of any Subordinated
Debentures, the holders of all Senior Debt outstanding at the time of such
acceleration will first be entitled to receive payment in full of all
amounts due thereon (including any amounts due upon acceleration) before the
holders of Subordinated Debentures will be entitled to receive or retain any
payment or distribution in respect of the principal of or interest, if any,
on the Subordinated Debentures; provided, however, that holders of Senior
Debt shall not be entitled to receive payment of any such amounts to the
extent that such holders would be required by the subordination provisions
of such Senior Debt to pay such amounts over to the obligees on trade
accounts payable or other liabilities arising in the ordinary course of the
Company's business.
No payments on account of principal or interest in respect of the
Subordinated Debentures may be made if there shall have occurred and be
continuing a default in any payment with respect to Senior Debt or an event
of default with respect to any Senior Debt resulting in the acceleration of
the maturity thereof, or if any judicial proceeding shall be pending with
respect to any such default.
"Debt" means with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i)
every obligation of such Person for money borrowed; (ii) every obligation of
such Person evidenced by bonds, debentures, notes or other similar
instruments, including obligations incurred in connection with the
acquisition of property, assets or businesses; (iii) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person;
(iv) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts payable
or accrued liabilities arising in the ordinary course of business); (v)
every capital lease obligation of such Person; (vi) every obligation of such
Person for claims in respect of derivative products, including interest
rate, foreign exchange rate and commodity forward contracts, options, swaps
and similar arrangements; and (vii) every obligation of the type referred to
in clauses (i) through (vi) of another Person and all dividends of another
Person the payment of which, in either case, such Person has guaranteed or
is responsible or liable for, directly or indirectly, as obligor or
otherwise.
"Senior Debt" means the principal of (and premium, if any) and interest,
if any (including interest accruing on or after the filing of any petition
in bankruptcy or for reorganization relating to the Company whether or not
such claim for post-petition interest is allowed in such proceeding), on
Debt of the Company, whether incurred on or prior to the date of the
Indenture or thereafter incurred, unless, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is
provided that such obligations are not superior in right of payment to the
Subordinated Debentures or to other Debt which is pari passu with, or
subordinated to, the Subordinated Debentures; provided, however, that Senior
Debt shall not be deemed to include (i) any Debt of the Company to any of
its subsidiaries or affiliates, (ii) Debt of the Company to any employee of
the Company, (iii) Debt which by its terms is subordinated to trade accounts
payable or accrued liabilities
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arising in the ordinary course of business to the extent that payments made
to the holders of such Debt by the holders of the Subordinated Debentures as
a result of the subordination provisions of the Indenture would be greater
than such payments otherwise would have been (absent giving effect to this
clause (iii)) as a result of any obligation of such holders of such Debt to
pay amounts over to the obligees on such trade accounts payable or accrued
liabilities arising in the ordinary course of business as a result of
subordination provisions to which such Debt is subject, and (iv) any other
debt securities issued pursuant to the Indenture.
The Indenture places no limitation on the amount of additional Senior
Debt that may be incurred by the Company.
TRUST COSTS AND EXPENSES
In the Indenture, the Company, as borrower, has agreed to pay all debts
and other obligations (other than with respect to the Trust Securities) and
all costs and expenses of the Trust (including costs and expenses relating
to the organization of the Trust, the fees and expenses of the Trustees and
the costs and expenses relating to the operation of the Trust) and to pay
any and all taxes and all costs and expenses with respect thereto (other
than United States withholding taxes) to which the Trust might become
subject.
GOVERNING LAW
The Indenture and the Subordinated Debentures will be governed by and
construed in accordance with the laws of the State of New York.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Company and its affiliates utilize various of the banking services
offered by the Debenture Trustee. Such services include providing lines of
credit.
The Debenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the
Trust Indenture Act. Subject to such provisions, the Debenture Trustee is
under no obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of Subordinated Debentures, unless
offered reasonable indemnity by such holder against the costs, expenses and
liabilities which might be incurred thereby. The Debenture Trustee is not
required to expend or risk its own funds or otherwise incur personal
financial liability in the performance of its duties if the Debenture
Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it.
DESCRIPTION OF GUARANTEE
The Guarantee will be executed and delivered by the Company concurrently
with the issuance by the Trust of the Trust Securities for the benefit of
the holders from time to time of such Trust Securities. The Chase Manhattan
Bank will act as indenture trustee ("Guarantee Trustee") under the Guarantee
for the purposes of compliance with the Trust Indenture Act and the
Guarantee will be qualified as an Indenture under the Trust Indenture Act.
The following summary of material terms and provisions of the Guarantee does
not purport to be complete and is subject to, and qualified in its entirety
by reference to, all of the provisions of the Guarantee, including the
definitions therein of certain terms, and the Trust Indenture Act. The form
of the Guarantee has been filed as an exhibit to the Registration Statement
of which this Prospectus forms a part. The Guarantee Trustee will hold the
Guarantee for the benefit of the holders of the Trust Securities.
GENERAL
The Company will irrevocably and unconditionally agree to pay in full on
a subordinated basis, to the extent set forth herein, the Guarantee Payments
(as defined below) to the holders of the Trust Securities, as and when due,
regardless of any defense, right of set-off or counterclaim that the Trust
may have or assert other than the defense of payment. The following payments
with respect to the Trust Securities, to the extent not paid by or on behalf
of the Trust (the "Guarantee Payments"), will be subject to the Guarantee:
(i) any accumulated and unpaid Distributions required to be paid on the
Trust Securities, to the extent that the Trust has funds on hand available
therefor at the time, (ii) the Redemption Price with respect to any Trust
Securities called for redemption to the extent that the Trust has funds on
hand available therefor at such time, and (iii) upon a voluntary or
involuntary termination, winding up or liquidation of the Trust (unless the
Subordinated
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Debentures are distributed to holders of the Trust Securities), the lesser
of (a) the aggregate of the Liquidation Amount plus accrued and unpaid
Distributions to the date of payment and (b) the amount of assets of the
Trust remaining available for distribution to holders of Trust Securities in
liquidation of the Trust after satisfaction of liabilities to creditors of
the Trust as required by applicable law. The Company's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts
by the Company to the holders of the applicable Trust Securities or by
causing the Trust to pay such amounts to such holders.
The Guarantee will be an irrevocable guarantee on a subordinated basis of
the Trust's obligations under the Trust Securities, but will apply only to
the extent that the Trust has funds on hand available to make such payments,
and is not a guarantee of collection.
If the Company does not make interest payments on the Subordinated
Debentures held by the Trust, the Trust will not be able to pay
Distributions on the Trust Securities and will not have funds legally
available therefor. The Guarantee will rank subordinate and junior in right
of payment to all Senior Debt of the Company. See "--Status of the
Guarantee." The Guarantee does not limit the incurrence or issuance of
additional Debt of the Company, whether secured or unsecured or whether
under the Indenture or any existing or other indenture that the Company may
enter into in the future or otherwise.
The Company has, through the Guarantee, the Trust Agreement, the
Subordinated Debentures and the Indenture, taken together, fully,
irrevocably and unconditionally guaranteed all of the Trust's obligations
under the Preferred Securities. No single document standing alone or
operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of these
documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Trust's obligations under the Preferred
Securities. See "Relationship Among the Preferred Securities, the
Subordinated Debentures and the Guarantee--General."
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior Debt of
the Company in the same manner as the Subordinated Debentures, except that
upon the occurrence and continuance of an Event of Default under the Trust
Agreement resulting from a Debenture Event of Default under the Indenture,
the rights of the Company as holder of the Common Securities to payment in
respect of Distributions and payments upon liquidation, redemption or
otherwise will be subordinated to the rights to payment of the holders of
the Preferred Securities. See "Description of Preferred Securities--
Subordination of Common Securities."
The Guarantee will constitute a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding
directly against the Guarantor to enforce its rights under the Guarantee
without first instituting a legal proceeding against any other person or
entity). The Guarantee will be held for the benefit of the holders of the
Trust Securities. The Guarantee will not be discharged except by payment of
the Guarantee Payments in full (without duplication of amounts theretofore
paid by the Trust) or upon distribution of the Subordinated Debentures to
the holders of the Trust Securities in exchange for all of the Trust
Securities as provided in the Trust Agreement. The Guarantee does not limit
the incurrence or issuance of additional Debt of the Company, whether
secured or unsecured or whether under the Indenture or any existing or other
indenture that the Company may enter into in the future or otherwise.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not adversely affect in any
material respect the rights of holders of the Trust Securities (in which
case consent of the holders or the Guarantee Trustee, as the case may be,
will be required), the Guarantee may not be amended without the prior
approval of the holders of not less than a majority in Liquidation Amount of
the outstanding Preferred Securities. The manner of obtaining any such
approval will be as set forth under "Description of the Preferred
Securities--Voting Rights; Amendment of the Trust Agreement." All guarantees
and agreements contained in the Guarantee shall bind the successors,
assigns, receivers, trustees and representatives of the Company and shall
inure to the benefit of the holders of the Trust Securities then
outstanding.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of
the Company to perform any of its payment or other obligations thereunder.
The holders of not less than a majority in aggregate Liquidation Amount of
the Preferred Securities have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of the Guarantee or to direct the exercise of any trust
or power conferred upon the Guarantee Trustee under the Guarantee.
34
<PAGE>
Any holder of the Preferred Securities may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee
without first instituting a legal proceeding against the Trust, the
Guarantee Trustee or any other person or entity.
The Company, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Company and its affiliates utilize various of the banking services
offered by the Guarantee Trustee. Such services include providing lines of
credit.
The Guarantee Trustee, other than during the occurrence and continuance
of a default by the Company in performance of the Guarantee, undertakes to
perform only such duties as are specifically set forth in the Guarantee and,
after default with respect to the Guarantee, must exercise the same degree
of care and skill as a prudent person would exercise or use in the conduct
of his or her own affairs. Subject to this provision, the Guarantee Trustee
is under no obligation to exercise any of the powers vested in it by the
Guarantee at the request of any holder of any Preferred Securities unless it
is offered reasonable indemnity against the costs, expenses and liabilities
that might be incurred thereby.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of the Trust Securities, upon full
payment of the amounts payable upon liquidation of the Trust or upon
distribution of Subordinated Debentures to the holders of the Trust
Securities in exchange for all of the Trust Securities. The Guarantee will
continue to be effective or will be reinstated, as the case may be, if at
any time any holder of the Trust Securities must restore payment of any sums
paid under the Trust Securities or the Guarantee.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the
laws of the State of New York.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE SUBORDINATED DEBENTURES AND THE GUARANTEE
Payments of Distributions and other amounts due on the Trust Securities
(to the extent the Trust has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Company as and to the
extent set forth under "Description of Guarantee." Taken together, the
Company's obligations under the Subordinated Debentures, the Indenture, the
Trust Agreement and the Guarantee provide, in the aggregate, a full,
irrevocable and unconditional guarantee of payments of distributions and
other amounts due on the Preferred Securities. No single document standing
alone or operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of these
documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Trust's obligations under the Preferred
Securities. If and to the extent that the Company does not make payments on
the Subordinated Debentures, the Trust will not pay Distributions or other
amounts due on the Preferred Securities. The Guarantee does not cover
payment of Distributions when the Trust does not have sufficient funds to
pay such Distributions. In the event a Debenture Event of Default has
occurred and is continuing and such default is attributable to the failure
of the Company to pay interest or principal on the Subordinated Debentures,
a holder of Preferred Securities may institute a legal proceeding directly
against the Company to enforce payment of such Distributions to such holder.
The obligations of the Company under the Guarantee are subordinate and
junior in right of payment to all Senior Debt of the Company.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on
the Subordinated Debentures, such payments will be sufficient to cover
Distributions and other payments due on the Preferred Securities, primarily
because (i) the aggregate principal amount of the Subordinated Debentures
will be equal to the sum of the aggregate stated Liquidation Amount of the
Preferred Securities and the Common Securities; (ii) the interest rate and
interest and other payment dates on the Subordinated Debentures will match
the Securities Rate and Distributions and other payment dates for the
related Preferred Securities; (iii)
35
<PAGE>
the Company shall pay for all and any costs, expenses and liabilities of the
Trust except the Trust's obligations to holders of its Preferred Securities
under the Preferred Securities; and (iv) the Trust Agreement further
provides that the Trust will not engage in any activity that is not
consistent with the limited purposes of the Trust.
Notwithstanding anything to the contrary in the Indenture, the Company
has the right to set-off any payment it is otherwise required to make
thereunder with and to the extent the Company has theretofore made, or is
concurrently on the date of such payment making, a payment under the
Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of Preferred Securities may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee
without first instituting a legal proceeding against the Guarantee Trustee,
the Trust or any other person or entity.
A default or event of default under any Senior Debt of the Company will
not constitute an Event of Default or a Debenture Event of Default. However,
in the event of payment defaults under, or acceleration of, Senior Debt of
the Company, the subordination provisions of the Indenture provide that no
payments may be made in respect of the Subordinated Debentures until such
Senior Debt has been paid in full or any payment default thereunder has been
cured or waived. Failure to make required payments on the Subordinated
Debentures would constitute an Event of Default under the Indenture.
LIMITED PURPOSE OF TRUST
The Preferred Securities evidence a beneficial ownership interest in the
Trust, and the Trust exists for the sole purpose of issuing the Preferred
Securities and the Common Securities and investing the proceeds thereof in
Subordinated Debentures (and engaging in activities necessary or incidental
thereto). A principal difference between the rights of a holder of Preferred
Securities and a holder of Subordinated Debentures is that a holder of
Subordinated Debentures is entitled to receive from the Company the
principal amount of and interest accrued on Subordinated Debentures held,
while a holder of Preferred Securities is entitled to receive Distributions
from the Trust (or from the Company under the Guarantee) if and to the
extent the Trust has funds available for the payment of such Distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or liquidation
of the Trust involving the liquidation of the Subordinated Debentures, after
satisfaction of liabilities to creditors of the Trust in accordance with
applicable law, the holders of the Preferred Securities will be entitled to
receive, out of assets held by the Trust, the Liquidation Distribution in
cash. See "Description of Preferred Securities--Liquidation Distribution
Upon Termination." Upon any voluntary or involuntary liquidation or
bankruptcy of the Company, the Property Trustee, as holder of the
Subordinated Debentures, would be a subordinated creditor of the Company,
subordinated in right of payment to all Senior Debt, but entitled to receive
payment in full of principal and interest before any stockholders of the
Company receive payments or distributions. Since the Company is the
guarantor under the Guarantee and has agreed to pay for all costs, expenses
and liabilities of the Trust (other than the Trust's obligations to the
holders of the Preferred Securities), the positions of a holder of Preferred
Securities and a holder of the Subordinated Debentures relative to other
creditors and to stockholders of the Company in the event of liquidation or
bankruptcy of the Company would be substantially the same.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
In the opinion of Simpson Thacher & Bartlett, special tax counsel to the
Company and the Trust ("Tax Counsel"), the following summary accurately
describes the material United States federal income tax consequences that
may be relevant to the purchase, ownership and disposition of Preferred
Securities. Unless otherwise stated, this summary deals only with Preferred
Securities held as capital assets by United States Persons (defined below)
who purchase the Preferred Securities upon original issuance. As used
herein, a "United States Person" means a person that is (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof, (iii) an estate the income of which is
subject to United States federal income taxation regardless of its source,
or (iv) any trust if a court within the United States is able to exercise
primary supervision over the administration of such trust and one or more
United States fiduciaries have the authority to control all substantial
decisions
36
<PAGE>
of such trust. The tax treatment of a holder may vary depending on his, her
or its particular situation. This summary does not address all the tax
consequences that may be relevant to a particular holder or to holders who
may be subject to special tax treatment, such as banks, real estate
investment trusts, regulated investment companies, insurance companies,
dealers in securities or currencies, tax-exempt investors, or foreign
investors. In addition, this summary does not include any description of any
alternative minimum tax consequences or the tax laws of any state, local or
foreign government that may be applicable to a holder of Preferred
Securities. This summary is based on the Internal Revenue Code of 1986, as
amended (the "Code"), the Treasury regulations promulgated thereunder and
administrative and judicial interpretations thereof, as of the date hereof,
all of which are subject to change, possibly on a retroactive basis.
The following discussion does not discuss the tax consequences that might
be relevant to persons that are not United States Persons ("non-United
States Persons"). Non-United States Persons should consult their own tax
advisors as to the specific United States federal income tax consequences of
the purchase, ownership and disposition of Preferred Securities.
The authorities on which this summary is based are subject to various
interpretations and the opinions of Tax Counsel are not binding on the
Internal Revenue Service ("IRS") or the courts, either of which could take a
contrary position. Moreover, no rulings have been or will be sought from the
IRS with respect to the transactions described herein. Accordingly, there
can be no assurance that the IRS will not challenge the opinions expressed
herein or that a court would not sustain such a challenge. Nevertheless, Tax
Counsel has advised that it is of the view that, if challenged, the opinions
expressed herein would be sustained by a court with jurisdiction in a
properly presently case.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN, AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED
STATES FEDERAL OR OTHER TAX LAWS. FOR A DISCUSSION OF THE POSSIBLE
REDEMPTION OF THE PREFERRED SECURITIES UPON THE OCCURRENCE OF CERTAIN TAX
EVENTS SEE "DESCRIPTION OF PREFERRED SECURITIES--REDEMPTION."
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Preferred Securities, Tax Counsel
is of the opinion that, under current law and assuming compliance with the
terms of the Trust Agreement, and based on certain facts and assumptions
contained in such opinion, the Trust will be classified as a grantor trust
and not as an association taxable as a corporation for United States federal
income tax purposes. As a result, each beneficial owner of Preferred
Securities (a "Securityholder") will be treated as owning an undivided
beneficial interest in the Subordinated Debentures. Accordingly, each
Securityholder will be required to include in its gross income its pro rata
share of the interest income or original issue discount that is paid or
accrued on the Subordinated Debentures. See "--Interest Income and Original
Issue Discount."
CLASSIFICATION OF THE SUBORDINATED DEBENTURES
The Company, the Trust and the holders of the Preferred Securities (by
acceptance of a beneficial interest in a Preferred Security) will agree to
treat the Subordinated Debentures as indebtedness for all United States tax
purposes. In connection with the issuance of the Subordinated Debentures,
Tax Counsel is of the opinion that, under current law, and based on certain
representations, facts and assumptions set forth in such opinion, the
Subordinated Debentures will be classified as indebtedness for United States
federal income tax purposes.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under the applicable Treasury regulations, the Subordinated Debentures
will not be considered to have been issued with "original issue discount"
("OID") within the meaning of Section 1273(a) of the Code. Accordingly,
except as set forth below, stated interest on the Subordinated Debentures
generally will be included in income by a Securityholder at the time such
interest income is paid or accrued in accordance with such Securityholder's
regular method of tax accounting.
If, however, the Company exercises its right to defer payments of
interest on the Subordinated Debentures, the Subordinated Debentures will
become OID instruments at such time and all Securityholders will be required
to accrue the stated interest on the Subordinated Debentures on a daily
basis during the Extension Period, even though the Company will not pay such
interest until the end of the Extension Period, and even though some
Securityholders may use the cash method of tax accounting. Moreover,
thereafter the Subordinated Debentures will be taxed as OID instruments for
as long as they remain outstanding. Thus, even after the end of the
Extension Period, all Securityholders would be required to continue to
include the stated interest on the Subordinated Debentures in income on a
daily economic accrual basis, regardless of their
37
<PAGE>
method of tax accounting and in advance of receipt of the cash attributable
to such interest income. Under the OID economic accrual rules, a
Securityholder would accrue an amount of interest income each year that
approximates the stated interest payments called for under the terms of the
Subordinated Debentures, and actual cash payments of interest on the
Subordinated Debentures would not be reported separately as taxable income.
Any amount of OID included in a Securityholder's gross income (whether or
not during an Extension Period) will increase such Securityholder's tax
basis in its Preferred Securities, and the amount of Distributions received
by a Securityholder with respect to such Preferred Securities will reduce
the tax basis of such Preferred Securities.
The Treasury regulations described above have not yet been addressed in
any rulings or other interpretations by the IRS, and it is possible that the
IRS could take a contrary position. If the IRS were to assert successfully
that the stated interest on the Subordinated Debentures was OID regardless
of whether the Company exercises its right to defer payments of interest on
such debentures, all Securityholders would be required to include such
stated interest in income on a daily economic accrual basis as described
above.
Corporate Securityholders will not be entitled to a dividends-received
deduction with respect to any income recognized with respect to the
Preferred Securities.
DISTRIBUTION OF SUBORDINATED DEBENTURES TO HOLDERS OF PREFERRED SECURITIES
Under current law, a distribution by the Trust of the Subordinated
Debentures as described under the caption "Description of Preferred
Securities--Liquidation of Trust and Distribution of Subordinated Debentures
to Holders" will be non-taxable and will result in the Securityholder
receiving directly its pro rata share of the Subordinated Debentures
previously held indirectly through the Trust, with a holding period and
aggregate tax basis equal to the holding period and aggregate tax basis such
Securityholder had in its Preferred Securities before such distribution. If,
however, the liquidation of the Trust were to occur because the Trust is
subject to United States federal income tax with respect to income accrued
or received on the Subordinated Debentures, the distribution of Subordinated
Debentures to Securityholders by the Trust would be a taxable event to the
Trust and each Securityholder, and a Securityholder would recognize gain or
loss as if the Securityholder had exchanged its Preferred Securities for the
Subordinated Debentures it received upon the liquidation of the Trust. A
Securityholder will accrue interest in respect of Subordinated Debentures
received from the Trust in the manner described above under "--Interest
Income and Original Issue Discount."
SALES OR REDEMPTION OF PREFERRED SECURITIES
Gain or loss will be recognized by a Securityholder on a sale of
Preferred Securities (including a redemption for cash) in an amount equal to
the difference between the amount realized by the Securityholder on the sale
or redemption of the Preferred Securities (except to the extent that such
amount realized is characterized as a payment in respect of accrued but
unpaid interest on such Securityholder's allocable share of the Subordinated
Debentures that such Securityholder has not included in gross income
previously) and the Securityholder's adjusted tax basis in the Preferred
Securities sold or redeemed. Such gain or loss generally will be taxable as
long-term capital gain or loss if the Securityholder held the Preferred
Securities that it sold or redeemed for more than one year. Subject to
certain limited exceptions, capital losses cannot be applied to offset
ordinary income for federal income tax purposes.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of interest (including any OID) accrued in respect of the
Preferred Securities held of record by United States Persons (other than
corporations and other exempt Securityholders), if any, will be reported to
the Internal Revenue Service. "Backup" withholding at a rate of 31% will
apply to payments of interest to non-exempt United States Persons unless the
Securityholder furnishes its taxpayer identification number in the manner
prescribed in applicable Treasury Regulations, certifies that such number is
correct, certifies as to no loss of exemption from backup withholding and
meets certain other conditions.
Payment of the proceeds from the disposition of Preferred Securities to
or through the United States office of a broker is subject to information
reporting and backup withholding unless the holder or beneficial owner
establishes an exemption from information reporting and backup withholding.
Any amounts withheld from a Securityholder under the backup withholding
rules will be allowed as a refund or a credit against such Securityholder's
United States federal income tax liability, provided the required
information is furnished to the Internal Revenue Service.
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<PAGE>
It is anticipated that income on the Preferred Securities will be
reported to holders on Form 1099 and mailed to holders of the Preferred
Securities by January 31 following each calendar year.
POSSIBLE TAX LAW CHANGES
Legislation was proposed by the United States Department of the Treasury
on February 6, 1997 as part of President Clinton's Fiscal 1998 Budget
Proposal (the "Proposed Legislation") that contains a provision which
generally would deny the interest deduction for interest paid or accrued on
an instrument issued by a corporation that has a weighted average maturity
of more than 40 years. The Proposed Legislation also contains a provision
which generally would deny an interest deduction for interest paid or
accrued on an instrument issued by a corporation that (i) has a maximum term
of more than 15 years and (ii) is not shown as indebtedness on the separate
balance sheet of the issuer or, where the instrument is issued to a related
party (other than a corporation), where the holder or some other related
party issues a related instrument that is not shown as indebtedness on the
issuer's consolidated balance sheet. For purposes of determining the
weighted average maturity or the term of an instrument, any right to extend
the maturity of such instrument would be treated as exercised. The above-
described provisions were proposed to be effective generally for instruments
issued on or after the date of the first Congressional committee action on
the Proposed Legislation. If either provision were to apply to the
Subordinated Debentures, the Company would not be able to deduct the
interest on the Subordinated Debentures. There can be no assurance that the
Proposed Legislation or future legislative proposals or final legislation
will not adversely affect the ability of the Company to deduct interest on
the Subordinated Debentures or otherwise affect the tax treatment of the
transactions described herein. Moreover, such a change could give rise to a
Tax Event, which would permit the Company to cause a redemption of the
Preferred Securities, as described more fully under "Description of
Preferred Securities--Redemption."
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting
agreement (the "Underwriting Agreement"), the Trust has agreed to sell to
each of the Underwriters named below, and each of the Underwriters, for whom
Merrill Lynch, Pierce, Fenner & Smith Incorporated, A.G. Edwards & Sons,
Inc., Legg Mason Wood Walker, Incorporated, PaineWebber Incorporated and
Prudential Securities Incorporated are acting as representatives (the
"Representatives"), has severally agreed to purchase the number of Preferred
Securities set forth opposite its name below. In the Underwriting Agreement,
the several Underwriters have agreed, subject to the terms and conditions
set forth therein, to purchase all of the Preferred Securities offered
hereby if any of the Preferred Securities are purchased. In the event of
default by an Underwriter, the Underwriting Agreement provides that, in
certain circumstances, the purchaser commitments of the nondefaulting
Underwriters may be increased or the Underwriting Agreement may be
terminated.
<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF
PREFERRED SECURITIES
--------------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated......................
A.G. Edwards & Sons, Inc................
Legg Mason Wood Walker, Incorporated....
PaineWebber Incorporated................
Prudential Securities Incorporated......
Total............................. 4,000,000
==========
</TABLE>
The Underwriters propose to offer the Preferred Securities in part
directly to the public at the initial public offering price, as set forth on
the cover page of this Prospectus, and in part to certain securities dealers
at such price less a concession of $ per Preferred Security. The
Underwriters may allow, and such dealers may reallow, a concession not in
excess of $ per Preferred Security to certain brokers and dealers.
After the Preferred Securities are released for sale to the public, the
offering price and other selling terms may from time to time be varied by
the Representatives.
In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Subordinated Debentures of the
Company, the Underwriting Agreement provides that the Company will agree to
pay as compensation (the "Underwriters' Compensation") to the Underwriters
for the Underwriters' arranging the investment therein of such proceeds, an
amount in immediately available funds of $ per Preferred Security (or
$ in the aggregate) for the accounts of the several Underwriters.
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<PAGE>
During a period of 30 days from the date of this Prospectus, neither the
Trust nor the Company will, without the prior written consent of the
Representatives, directly or indirectly, sell, offer to sell, grant any
option for the sale of, or otherwise dispose of, any Preferred Securities,
any security convertible into or exchangeable into or exercisable for
Preferred Securities or the Subordinated Debentures or any debt securities
substantially similar to the Subordinated Debentures or any equity
securities substantially similar to the Preferred Securities (except for the
Subordinated Debentures and the Preferred Securities offered hereby).
The Preferred Securities have been approved for listing on the NYSE,
subject to official notice of issuance under the symbol "PPLPRC." Trading of
the Preferred Securities on the NYSE is expected to commence within a 30-day
period after the initial delivery of the Preferred Securities. The
Representatives have advised the Trust that they intend to make a market in
the Preferred Securities prior to the commencement of trading on the NYSE.
The Representatives will have no obligation to make a market in the
Preferred Securities, however, and may cease market making activities, if
commenced, at any time.
Prior to this offering, there has been no public market for the Preferred
Securities. In order to meet one of the requirements for listing the
Preferred Securities on the NYSE, the Underwriters will undertake to sell
lots of 100 or more Preferred Securities to a minimum of 400 beneficial
holders.
Until the distribution of the Preferred Securities is completed, rules of
the Commission may limit the ability of the Underwriters and certain selling
group members to bid for and purchase the Preferred Securities. As an
exception to these rules, the Representatives are permitted to engage in
certain transactions that stabilize the price of the Preferred Securities.
Such transactions consist of bids or purchases for the purpose of pegging,
fixing or maintaining the price of the Preferred Securities.
If the Underwriters create a short position in the Preferred Securities
in connection with the offering, i.e., if they sell more Preferred
Securities than are set forth on the cover page of this Prospectus, the
Representatives may reduce that short position by purchasing Preferred
Securities in the open market.
The Representatives may also impose a penalty bid on certain Underwriters
and selling group members. This means that if the Representatives purchase
Preferred Securities in the open market to reduce the Underwriters' short
position or to stabilize the price of the Preferred Securities, they may
reclaim the amount of the selling concession from the Underwriters and
selling group members who sold those shares as part of the offering.
In general, purchases of a security for the purpose of stabilization or
to reduce a short position could cause the price of the security to be
higher than it might be in the absence of such purchases. The imposition of
a penalty bid might also have an effect on the price of a security to the
extent that it were to discourage resales of the security.
Neither the Company nor any of the Underwriters makes any representation
or prediction as to the direction or magnitude of any effect that the
transactions described above may have on the price of the Preferred
Securities. In addition, neither the Company nor any of the Underwriters
makes any representation that the Representatives will engage in such
transactions or that such transactions, once commenced, will not be
discontinued without notice.
The Company and the Trust have agreed to indemnify the Underwriters
against, or contribute to payments that the Underwriters may be required to
make in respect of, certain liabilities, including liabilities under the
Securities Act.
Certain of the Underwriters engage in transactions with, and, from time
to time, perform services for, the Company and its affiliates in the
ordinary course of business.
VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of the Preferred
Securities, the enforceability of the Trust Agreement and the formation of
the Trust will be passed upon by Richards, Layton & Finger, special Delaware
Counsel to the Company and the Trust. The legality of the Guarantee and the
Subordinated Debentures will be passed upon for the Company by Michael A.
McGrail, Esq., Senior Counsel of the Company, and Simpson Thacher & Bartlett
(a partnership which includes professional corporations), and for the
Underwriters by Sullivan & Cromwell. Certain matters relating to United
States federal income tax considerations will be passed upon for the Company
by Simpson Thacher & Bartlett. However, all matters pertaining to the
organization of the Company will be passed upon only by Mr. McGrail. As to
matters involving the law of the Commonwealth of Pennsylvania, Simpson
Thacher & Bartlett and Sullivan & Cromwell will rely on the opinion of Mr.
McGrail, and as to matters involving the law of the State of Delaware, Mr.
McGrail, Simpson Thacher
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<PAGE>
& Bartlett and Sullivan & Cromwell will rely on the opinion of Richards
Layton & Finger. Mr. McGrail is a full-time employee of the Company.
EXPERTS
The consolidated financial statements and related financial statement
schedule of the Company as of December 31, 1996 and 1995 and for the two
years then ended incorporated in this Prospectus by reference to PP&L's
Annual Report on Form 10-K have been so incorporated in reliance on the
report (which contains an explanatory paragraph relating to the Company's
reorganization) of Price Waterhouse LLP, independent accountants, given on
the authority of said firm as experts in auditing and accounting.
The consolidated financial statements, prior to restatement (not
presented separately therein), and related financial statement schedules as
of December 31, 1994 and for the year ended December 31, 1994 incorporated
in this Prospectus by reference from the Company's 1996 Annual Report on
Form 10-K have been audited by Deloitte & Touche LLP, independent auditors,
as stated in their reports which are incorporated herein by reference, and
have been so incorporated in reliance upon such reports given upon the
authority of that firm as experts in accounting and auditing.
Statements made herein and in the documents incorporated by reference in
this Prospectus as to matters of law and legal conclusions (except with
respect to any Delaware law or tax matters) have been reviewed by Michael A.
McGrail, Esq., Senior Counsel of the Company, and have been made in reliance
upon his authority as an expert.
41
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE TRUST OR
THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER OR THEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THE TRUST SINCE
THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION
BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO
DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Incorporation of Certain Documents by Reference........................... 4
Available Information..................................................... 4
Summary of Offering....................................................... 5
Risk Factors.............................................................. 9
PP&L Capital Trust........................................................ 12
Pennsylvania Power & Light Company........................................ 13
Use of Proceeds........................................................... 13
Accounting Treatment...................................................... 14
Selected Financial Data................................................... 14
Capitalization............................................................ 15
Description of Preferred Securities....................................... 16
Description of Subordinated Debentures.................................... 25
Description of Guarantee.................................................. 33
Relationship Among the Preferred Securities, the Subordinated Debentures
and the Guarantee........................................................ 35
Certain Federal Income Tax Consequences................................... 36
Underwriting.............................................................. 39
Validity of Securities.................................................... 41
Experts................................................................... 41
</TABLE>
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4,000,000 PREFERRED SECURITIES
PP&L CAPITAL TRUST
% TRUST ORIGINATED PREFERRED SECURITIES SM ("TOPRS SM")
(LIQUIDATION AMOUNT
$25 PER PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY
GUARANTEED, AS SET FORTH HEREIN, BY
PENNSYLVANIA POWER &
LIGHT COMPANY
---------------
PROSPECTUS
---------------
MERRILL LYNCH & CO.
A.G. EDWARDS & SONS, INC.
LEGG MASON WOOD WALKER
INCORPORATED
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
(a) SEC registration fee........................................ 30,303
(b) Printing fees and expenses.................................. 50,000
(c) Legal fees and expenses..................................... 150,000
(d) Accounting fees and expenses................................ 40,000
(e) Blue Sky fees and expenses.................................. 10,000
(f) New York Stock Exchange Listing Fee......................... 44,300
(g) Rating Agency Fees.......................................... 68,500
(h) Trustees' fees and expenses................................. 6,500
(i) Other....................................................... 15,397
--------
Total.................................................... $415,000
========
</TABLE>
- ----------
All of the above except the SEC registration fee are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 7.02 of the By-laws of the Company reads as follows:
"Section 7.02. Indemnification of Directors and Officers.
(a) RIGHT TO INDEMNIFICATION. Except as prohibited by law, every
director and officer of the Company shall be entitled as of right to be
indemnified by the Company against reasonable expense and any liability
paid or incurred by such person in connection with any actual or
threatened claim, action, suit or proceeding, civil, criminal,
administrative, investigative or other, whether brought by or in the
right of the Company or otherwise, in which he or she may be involved, as
a party or otherwise, by reason of such person being or having been a
director or officer of the Company or by reason of the fact that such
person is or was serving at the request of the Company as a director,
officer, employee, fiduciary or other representative of another
corporation, partnership, joint venture, trust, employee benefit plan or
other entity (such claim, action, suit or proceeding hereinafter being
referred to as "action"). Such indemnification shall include the right to
have expenses incurred by such person in connection with an action paid
in advance by the Company prior to final disposition of such action,
subject to such conditions as may be prescribed by law. Persons who are
not directors or officers of the Company may be similarly indemnified in
respect of service to the Company or to another such entity at the
request of the Company to the extent the Board of Directors at any time
denominates such person as entitled to the benefits of this Section 7.02.
As used herein, "expense" shall include fees and expenses of counsel
selected by such persons; and "liability" shall include amounts of
judgments, excise taxes, fines and penalties, and amounts paid in
settlement.
(b) RIGHT OF CLAIMANT TO BRING SUIT. If a claim under paragraph (a)
of this Section 7.02 is not paid in full by the Company within thirty
days after a written claim has been received by the Company, the claimant
may at any time thereafter bring suit against the Company to recover the
unpaid amount of the claim, and, if successful in whole or in part, the
claimant shall also be entitled to be paid the expense of prosecuting
such claim. It shall be a defense to any such action that the conduct of
the claimant was such that under Pennsylvania law the Company would be
prohibited from indemnifying the claimant for the amount claimed, but the
burden of proving such defense shall be on the Company. Neither the
failure of the Company (including its Board of Directors, independent
legal counsel and its shareholders) to have made a determination prior to
the commencement of such action that indemnification of the claimant is
proper in the circumstances because the conduct of the claimant was not
such that indemnification would be prohibited by law, nor an actual
determination by the Company (including its Board of Directors,
independent legal counsel or its shareholders) that the conduct of the
claimant was such that indemnification would be prohibited by law, shall
be a defense to the action or create a presumption that the conduct of
the claimant was such that indemnification would be prohibited by law.
(c) INSURANCE AND FUNDING. The Company may purchase and maintain
insurance to protect itself and any person eligible to be indemnified
hereunder against any liability or expense asserted or incurred by such
person in connection with any action, whether or not the Company would
have the power to indemnify such person against such liability or
II-1
<PAGE>
expense by law or under the provisions of this Section 7.02. The Company
may create a trust fund, grant a security interest, cause a letter of
credit to be issued or use other means (whether or not similar to the
foregoing) to ensure the payment of such sums as may become necessary to
effect indemnification as provided herein.
(d) NON-EXCLUSIVITY; NATURE AND EXTENT OF RIGHTS. The right of
indemnification provided for herein (1) shall not be deemed exclusive of
any other rights, whether now existing or hereafter created, to which
those seeking indemnification hereunder may be entitled under any
agreement, by-law or charter provision, vote of shareholders or directors
or otherwise, (2) shall be deemed to create contractual rights in favor
of persons entitled to indemnification hereunder, (3) shall continue as
to persons who have ceased to have the status pursuant to which they were
entitled or were denominated as entitled to indemnification hereunder and
shall inure to the benefit of the heirs and legal representatives of
persons entitled to indemnification hereunder and (4) shall be applicable
to actions, suits or proceedings commenced after the adoption hereof,
whether arising from acts or omissions occurring before or after the
adoption hereof. The right of indemnification provided for herein may not
be amended, modified or repealed so as to limit in any way the
indemnification provided for herein with respect to any acts or omissions
occurring prior to the effective date of any such amendment, modification
or repeal."
Directors and officers of the Company may also be indemnified in certain
circumstances pursuant to the statutory provisions of general application
contained in Pennsylvania law.
Reference is also made to the Form of Underwriting Agreement, filed as
Exhibit 1 hereto, which contains provisions for indemnification of the
Company and its directors and officers by the several Underwriters against
certain liabilities for information furnished by the Underwriters.
The Company presently has insurance policies which, among other things,
include liability insurance coverage for officers and directors under which
officers and directors are covered against any "loss" by reason of payment
of damages, judgments, settlements and costs, as well as charges and
expenses incurred in the defense of actions, suits or proceedings. "Loss" is
specifically defined to exclude fines and penalties, as well as matters
deemed uninsurable under the law pursuant to which the insurance policy
shall be construed. The policies also contain other specific exclusions,
including illegally obtained personal profit or advantage, and dishonesty.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
Reference is made to the Exhibit Index filed herewith.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in
the form of prospectus filed by the registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of
this Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person
II-2
<PAGE>
of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication of such
issue.
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<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, PENNSYLVANIA
POWER & LIGHT COMPANY CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE
THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILLING ON FORM S-3 AND HAS DULY
CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
ALLENTOWN, AND COMMONWEALTH OF PENNSYLVANIA, ON THE 25TH DAY OF MARCH, 1997.
PENNSYLVANIA POWER & LIGHT COMPANY
By: /s/ William F. Hecht
---------------------------------------
William F. Hecht, Chairman, President
and Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED ON THE 25TH DAY OF MARCH,
1997.
SIGNATURE TITLE
--------- -----
/s/ William F. Hecht Principal Executive
- --------------------------------------------------- Officer and Director
WILLIAM F. HECHT, CHAIRMAN, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
/s/ R.E. Hill Principal Financial
- --------------------------------------------------- Officer
R.E. HILL, SENIOR VICE PRESIDENT--FINANCIAL
/s/ J.J. McCabe Principal Accounting
- --------------------------------------------------- Officer
J.J. MCCABE, VICE PRESIDENT AND CONTROLLER
E. ALLEN DEAVER, NANCE K. DICCIANI, WILLIAM J. } Directors
FLOOD, ELMER D. GATES, DEREK C. HATHAWAY, }
STUART HEYDT, CLIFFORD L. JONES, RUTH LEVENTHAL, }
FRANK A. LONG AND NORMAN ROBERTSON }
By /s/ William F. Hecht
-------------------------------------
WILLIAM F. HECHT, ATTORNEY-IN-FACT
II-4
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, PP&L
CAPITAL TRUST CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT
MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED
THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
ALLENTOWN, AND COMMONWEALTH OF PENNSYLVANIA, ON THE 25TH DAY OF MARCH, 1997.
PP&L CAPITAL TRUST
By: Pennsylvania Power & Light Company,
as Depositor
By: /s/ William F. Hecht
-------------------------------------
William F. Hecht, Chairman, President
and Chief Executive Officer
II-5
<PAGE>
PENNSYLVANIA POWER AND LIGHT COMPANY
EXHIBIT INDEX
The following Exhibits indicated by an asterisk preceding the Exhibit
number are filed herewith. The balance of the Exhibits will be filed by
amendment.
*1.1 Proposed form of Underwriting Agreement for Preferred Securities.
*4.1 Form of Junior Subordinated Indenture between the Company and The
Chase Manhattan Bank, as Debenture Trustee.
*4.2 Certificate of Trust of PP&L Capital Trust.
*4.3 Trust Agreement of PP&L Capital Trust.
*4.4 Form of Amended and Restated Trust Agreement.
*4.5 Form of Preferred Security Certificate for PP&L Capital Trust.
*4.6 Form of Guarantee Agreement.
*5.1 Opinion of Michael A. McGrail, Esq., relating to the legality of the
Subordinated Debentures and the Guarantee.
*5.2 Opinion of Simpson Thacher & Bartlett, relating to the legality of
the Subordinated Debentures and the Guarantee.
*5.3 Opinion of Richards, Layton & Finger, special Delaware counsel,
relating to the legality of the Preferred Securities of PP&L Capital
Trust.
*8.1 Opinion of Simpson Thacher & Bartlett, as to certain United States
federal income tax matters.
*12.1 Statement re: Computation of Ratio of Earnings to Fixed Charges
*12.2 Statement re: Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Dividends.
*23.1 Consent of Price Waterhouse LLP.
*23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of Simpson Thacher & Bartlett (included in Exhibit 5.2
hereto).
23.4 Consent of Richards, Layton & Finger, special Delaware counsel
(included in Exhibit 5.3 hereto).
23.5 Consent of Simpson Thacher & Bartlett (included in Exhibit 8.1
hereto).
24.1 Powers of Attorney (previously filed).
*25.1 Statement of Eligibility under the Trust Indenture Act of 1939 of
The Chase Manhattan Bank, as Trustee under the Junior Subordinated
Indenture.
*25.2 Statement of Eligibility under the Trust Indenture Act of 1939 of
The Chase Manhattan Bank, as Property Trustee under the Amended and
Restated Trust Agreement of PP&L Capital Trust.
*25.3 Statement of Eligibility under the Trust Indenture Act of 1939 of
The Chase Manhattan Bank, as Guarantee Trustee under the Guarantee
for PP&L Capital Trust.
<PAGE>
EXHIBIT 1.1
4,000,000 PREFERRED SECURITIES
PP&L CAPITAL TRUST
(a Delaware Trust)
Trust Originated Preferred Securities ("TOPrS")/SM/
UNDERWRITING AGREEMENT
----------------------
March __, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
As Underwriters,
c/o Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
Merrill Lynch World Headquarters,
North Tower,
World Financial Center,
New York, New York 10281.
Dear Sirs:
1. Introductory.
------------
PP&L Capital Trust (the "Trust"), a statutory business trust organized
under the Business Trust Act (the "Delaware Act") of the State of Delaware
(Chapter 38, Title
- ---------------
/SM/ "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
<PAGE>
12, of the Delaware Code, 12 Del. C. (S)(S) 3801 et seq.),
-- ---
and Pennsylvania Power & Light Company, a Pennsylvania corporation (the
"Company" and, together with the Trust, the "Offerors"), confirm their agreement
(the "Agreement") with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch"), and the other
underwriters named in Schedule A hereto (collectively the "Underwriters" which
term shall also include any underwriter substituted as hereinafter provided in
Section 10 hereof), with respect to the sale by the Trust and the purchase by
the Underwriters, acting severally and not jointly, of the respective numbers of
Trust Originated Preferred Securities (Liquidation Amount of $25 per Preferred
Security) of the Trust ("Preferred Securities") set forth in Schedule A hereto.
The Preferred Securities will be fully, irrevocably and unconditionally
guaranteed by the Company as and to the extent described in the Prospectus (the
"Guarantee") pursuant to the Guarantee Agreement (the "Guarantee Agreement"),
dated as of _________, 1997, between the Company and The Chase Manhattan Bank,
as trustee (the "Guarantee Trustee"). The Preferred Securities and the related
Guarantee are referred to herein as the "Securities". Certain terms of the
Securities are set forth in Schedule B hereto.
The Offerors understand that the Underwriters propose to make a public
offering of the Securities. The entire proceeds from the sale of the Securities
will be combined with the entire proceeds from the sale by the Trust to the
Company of its common securities (the "Common Securities"), as guaranteed by the
Company as and to the extent set forth in the Prospectus pursuant to the
Guarantee Agreement, and will be used by the Trust to purchase junior
subordinated deferrable interest debentures (the "Junior Subordinated
Debentures") issued by the Company. The Preferred Securities and the Common
Securities will be issued pursuant to the Amended and Restated Trust Agreement
of the Trust, dated as of _______________, 1997 (the "Trust Agreement"), among
the Company, as Depositor, ______________
- ---------------
/SM/ "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
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<PAGE>
and _______________, as administrative trustees (each of whom
is an employee of the Company) (the "Administrative
Trustees"), The Chase Manhattan Bank, as property trustee (the "Property
Trustee"), and Chase Manhattan Bank Delaware, as Delaware trustee (the "Delaware
Trustee" and, together with the Administrative Trustees and the Property
Trustees, the "Trustees"). The Junior Subordinated Debentures will be issued
pursuant to an indenture, dated as of _________, 1997 (the "Indenture"), between
the Company and The Chase Manhattan Bank, as trustee (the "Indenture Trustee").
In connection with the foregoing, the Offerors have filed with the
Securities and Exchange Commission (the "Commission") a registration statement
on Form S-3 (No. 333-20661) for the registration under the Securities Act of
1933, as amended (the "1933 Act"), of the Securities, and the Junior
Subordinated Debentures. A prospectus setting forth the terms of the Securities
and the Junior Subordinated Debentures and of their sale and distribution has
been or will be prepared and will be filed or transmitted for filing pursuant to
Rule 424 under the 1933 Act. Such registration statement (as amended, if
applicable) and the prospectus constituting a part thereof, as from time to time
amended or supplemented pursuant to the 1933 Act, the Securities Exchange Act of
1934, as amended (the "1934 Act"), or otherwise, are hereinafter referred to as
the "Registration Statement" and the "Basic Prospectus", respectively; and the
Basic Prospectus, as it may be amended or supplemented, is herein referred to as
the "Prospectus" (including, in each case, all documents incorporated or deemed
to be incorporated by reference therein pursuant to Item 12 of Form S-3 under
the 1933 Act and the information, if any, deemed to be part thereof pursuant to
Rule 430A(b) of the published rules and regulations of the Commission under the
1933 Act (the "1933 Act Regulations")), except that, if any revised prospectus
shall be provided to the Underwriters by the Offerors for use in connection with
the offering of the Preferred Securities which differs from the Prospectus on
file at the Commission at the time the Registration Statement becomes effective
(whether or not such revised prospectus is required to be filed by the Offerors
pursuant to Rule 424(b) of the 1933 Act Regulations), the term "Prospectus"
shall refer to such
-3-
<PAGE>
revised prospectus from and after the time it is first provided
to the Underwriters for such use. All references in this Agreement to
financial statements and schedules and other information that is "contained,"
"included" or "stated" in the Registration Statement or the Prospectus (and all
other references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information that are or are deemed
to be incorporated by reference in the Registration Statement or the Prospectus,
as the case may be; and all references in this Agreement to amendments or
supplements to the Registration Statement or the Prospectus shall be deemed to
mean and include the filing of any document under the 1934 Act that is or is
deemed to be incorporated by reference in the Registration Statement or the
Prospectus, as the case may be.
2. Representations and Warranties.
------------------------------
(a) The Offerors jointly and severally represent and warrant to, and agree
with, each Underwriter that:
(i) The Registration Statement, when it became or becomes effective, and
the Prospectus and any amendment or supplement thereto, when filed or
transmitted for filing with the Commission and on the date of this Agreement,
complied or will comply in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations and the Trust Indenture Act of 1939, as
amended (the "1939 Act") and the rules and regulations of the Commission under
the 1939 Act (the "1939 Act Regulations"), and did not or will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
provided, however, that the representations and warranties in this subsection
shall not apply to statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with the information
furnished to the Offerors in writing by any Underwriter through Merrill Lynch
expressly for use in the Registration Statement or Prospectus.
-4-
<PAGE>
(ii) The documents incorporated or deemed to be incorporated by reference in
the Registration Statement or Prospectus, at the time they were or hereafter are
filed with the Commission, complied and will comply in all material respects
with the requirements of the 1933 Act, the 1933 Act Regulations, the 1934 Act
and the rules and regulations of the Commission under the 1934 Act (the "1934
Act Regulations"), as applicable, and, at the time the Registration Statement
and any amendments thereto become effective and at the Closing Date, will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in this subsection
shall not apply to statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information furnished to
the Offerors in writing by any Underwriter through Merrill Lynch expressly for
use in the Registration Statement or Prospectus.
(iii) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the Commonwealth of Pennsylvania
with corporate power and authority to enter into and perform its obligations
under this Agreement, the Trust Agreement, the Indenture, and the Guarantee and
to purchase, own, and hold the Common Securities issued by the Trust.
(iv) The Trust has been duly created and is validly existing in good
standing as a business trust under the laws of the State of Delaware with the
power and authority to own property and to conduct its business as described in
the Registration Statement and Prospectus and to enter into and perform its
obligations under this Agreement, the Preferred Securities, the Common
Securities and the Trust Agreement; the Trust is not a party to or otherwise
bound by any agreement other than those described in the Prospectus; the Trust
is and will be classified for
-5-
<PAGE>
United States federal income tax purposes as a grantor trust and not as an
association taxable as a corporation; and the Trust is and will be treated as a
consolidated subsidiary of the Company pursuant to generally accepted accounting
principles.
(v) The Common Securities have been duly authorized by the Trust Agreement
and, when issued and delivered by the Trust to the Company against payment
therefor as described in the Registration Statement and Prospectus, will be
validly issued and (subject to the terms of the Trust Agreement) fully paid and
non-assessable undivided beneficial interests in the assets of the Trust and
will conform in all material respects to the statements relating thereto
contained in the Prospectus; the issuance of the Common Securities is not
subject to preemptive or other similar rights; and at the Closing Date all of
the issued and outstanding Common Securities of the Trust will be directly owned
by the Company free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity.
(vi) This Agreement has been duly authorized, executed and delivered by
each of the Offerors.
(vii) The Trust Agreement has been duly authorized by the Company and, at
the Closing Date, will have been duly executed and delivered by the Company and,
assuming due authorization, execution and delivery of the Trust Agreement by the
Trustees, the Trust Agreement will be a valid and binding obligation enforceable
in accordance with its terms except to the extent that enforcement thereof may
be limited by bankruptcy, insolvency or reorganization laws relating to or
affecting the enforcement of creditors' rights and by general equity principles
(the "Bankruptcy Exceptions"), and will conform in all material respects to the
statements relating thereto contained in the Prospectus; and at the effective
date of the Registration Statement, the Trust Agreement was or will have been
duly qualified under the 1939 Act.
-6-
<PAGE>
(viii) The Guarantee Agreement has been duly authorized by the Company and,
at the Closing Date, will have been duly executed and delivered by the Company
and, assuming due authorization, execution and delivery of the Guarantee by the
Guarantee Trustee, will constitute a valid and binding obligation of the Company
enforceable in accordance with its terms except to the extent that enforcement
thereof may be limited by the Bankruptcy Exceptions, and the Guarantee and the
Guarantee Agreement will conform in all material respects to the statements
relating thereto contained in the Prospectus; and at the effective date of the
Registration Statement the Guarantee Agreement was or will have been duly
qualified under the 1939 Act.
(ix) The Preferred Securities have been duly authorized by the Trust
Agreement and, when issued and delivered pursuant to this Agreement, will be
validly issued and (subject to the terms of the Trust Agreement) fully paid and
non-assessable undivided beneficial interests in the Trust, will be entitled to
the benefits of the Trust Agreement and will conform in all material respects to
the statements relating thereto contained in the Prospectus; the issuance of the
Preferred Securities is not subject to preemptive or other similar rights.
(x) The Indenture has been duly authorized by the Company and, at the
Closing Date, will have been duly executed and delivered by the Company and,
assuming due authorization, execution and delivery by the Indenture Trustee,
will constitute a valid and binding agreement of the Company enforceable in
accordance with its terms except to the extent that enforcement thereof may be
limited by the Bankruptcy Exceptions, and will conform in all material respects
to the statements relating thereto contained in the Prospectus; and at the
effective date of the Registration Statement, the Indenture was or will have
been duly qualified under the 1939 Act.
(xi) The Junior Subordinated Debentures have been duly authorized by the
Company and, at the Closing
-7-
<PAGE>
Date, will have been duly executed by the Company
and, when authenticated in the manner provided for in the Indenture and
delivered against payment therefor as described in the Prospectus, will
constitute valid and binding obligations of the Company enforceable in
accordance with their terms except to the extent that enforcement thereof may be
limited by the Bankruptcy Exceptions; will be in the form contemplated by, and
entitled to the benefits of, the Indenture; and will conform in all material
respects to the statements relating thereto contained in the Prospectus.
(b) Each of the several Underwriters represents and warrants to, and agrees
with, the Offerors, their respective directors and such of their respective
officers who shall have signed the Registration Statement, and to each other
Underwriter, that the information set forth in Schedule C hereto furnished to
the Offerors by or through you on behalf of such Underwriter expressly for use
in the Registration Statement or the Prospectus does not contain an untrue
statement of a material fact and does not omit to state a material fact in
connection with such information required to be stated therein or necessary to
make such information not misleading.
3. Purchase and Sale of Preferred Securities.
-----------------------------------------
On the basis of the representations, warranties and agreements herein
contained, but subject to the terms and conditions herein contained, the Trust
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees, to purchase from the Trust the
number of Preferred Securities set forth in Schedule A opposite the name of such
Underwriter, plus any additional number of Preferred Securities that such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof at the price per security set forth in Schedule B hereto.
4. Delivery and Payment.
--------------------
Payment of the full purchase price of the Preferred
Securities shall be made by or on behalf of the
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<PAGE>
several Underwriters by the wire transfer of immediately available funds to the
Trust's account (No. _________) at _________________ (ABA Routing No. _________)
by 10:00 A.M., New York Time, on the Closing Date (as hereinafter defined). Such
payment shall be made against delivery to The Depository Trust Company ("DTC")
for the respective accounts of the Underwriters of a global certificate for the
Preferred Securities to be purchased by them. Certificates for the Preferred
Securities shall be in such denominations and registered in such names as
Merrill Lynch may request in writing at least two business days before the
Closing Date, or to the extent not so requested, registered in the names of the
several Underwriters in such authorized denominations as the Offerors may
determine. It is understood that each Underwriter has authorized Merrill Lynch,
for its account, to accept delivery of, receipt for, and make payment of the
purchase price for, the Preferred Securities which it has agreed to purchase.
Merrill Lynch, individually and not as representative of the Underwriters, may
(but shall not be obligated to) make payment of the purchase price for the
Preferred Securities to be purchased by any Underwriter whose wire transfer has
not been received by the Closing Date, but such payment shall not relieve such
Underwriter from its obligations hereunder.
At the Closing Date, the Company will pay, or cause to be paid, the
commission payable at such time to the Underwriters set forth in Schedule B
hereto by the wire transfer of immediately available funds to the account of
Merrill Lynch, Pierce, Fenner & Smith Incorporated (No. ________) at
_____________ (ABA Routing No. _________) to the attention of
___________________.
For the purpose of expediting the checking and packaging of the
certificates evidencing the Preferred Securities, the Offerors will make the
global certificate for the Preferred Securities available for inspection by the
Underwriters at the offices of _____________________________ not later than
10:00 A.M., New York time, on the business day next preceding the Closing Date.
The term "Closing Date" wherever used in this Agreement shall mean the date
set forth in Schedule B
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<PAGE>
hereto, or such other date (i) not later than the eighth
full business day thereafter as may be agreed upon in writing by the Company,
the Trust and the Underwriters, or (ii) as shall be determined by postponement
pursuant to the provisions of Section 10 hereof.
5. Certain Covenants of the Offerors.
---------------------------------
Each of the Offerors jointly and severally covenant with the several
Underwriters as follows:
(a) To notify the Underwriters promptly, and confirm the notice in writing,
(i) of any request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus or for additional
information, and (ii) the institution by the Commission of any stop order
proceedings in respect of the Registration Statement, or the initiation of
proceedings for that purpose, and to use its best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible its lifting,
if issued;
(b) To file the Prospectus with the Commission pursuant to Rule 424(b)
under the 1933 Act not later than the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the 1933 Act; to advise you promptly
of any such filing; and to advise you promptly of any proposal to file or
prepare (i) any amendment to the Registration Statement (including any post-
effective amendment), (ii) any amendment or supplement to the Prospectus
(including any revised prospectus which the Offerors propose for use by the
Underwriters in connection with the offering of the Preferred Securities which
differs from the prospectus on file at the Commission at the time the
Registration Statement becomes effective, whether or not such revised prospectus
is required to be filed pursuant to Rule 424(b) of the 1933 Act Regulations), or
(iii) any document that would as a result thereof be incorporated by reference
in the Prospectus whether pursuant to the 1933 Act, the 1934
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Act or otherwise; and will furnish the Underwriters with copies of any such
amendment, supplement or other document a reasonable amount of time prior to
such proposed filing or use, as the case may be, and will not file any such
amendment, supplement or other document or use any such prospectus to which the
Underwriters or counsel for the Underwriters shall reasonably object in writing;
(c) To use their best efforts, in cooperation with the
Underwriters, to qualify the Preferred Securities (and the Guarantee) and the
Junior Subordinated Debentures for offer and sale under the securities or blue
sky laws of such states and the other jurisdictions of the United States as the
Underwriters may designate, to continue such qualifications in effect so long as
required for the distribution of the Preferred Securities and to reimburse you
for any expenses (including filing fees and fees and disbursements of counsel)
paid by you or on your behalf to qualify the Preferred Securities for offer and
sale, to continue such qualification, to determine the eligibility of the
Preferred Securities for investment and to print the memoranda relating thereto;
provided that none of the Offerors shall be required to qualify as a foreign
corporation in any jurisdiction in which it is not so qualified, to consent to
service of process in any jurisdiction other than with respect to claims arising
out of the offering or sale of the Preferred Securities, or to meet any other
requirement in connection with this paragraph (c) deemed by such Offeror to be
unduly burdensome; and the Company will advise Merrill Lynch promptly of any
order or communication of any public authority known to the Company suspending
or threatening to suspend the qualification of the Preferred Securities for
sale, or the eligibility of the Preferred Securities for purchase by such
institutions, in any jurisdiction;
(d) Promptly to deliver to you two signed copies of the Registration
Statement as originally filed and of all amendments thereto heretofore or
hereafter filed, including conformed copies of all exhibits
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except those incorporated by reference, and such number of unsigned copies of
the Registration Statement (but excluding the exhibits), each related
preliminary prospectus, the Prospectus, and any amendments and supplements
thereto, as the Underwriters may reasonably request;
(e) Promptly to furnish to each Underwriter, from time to time during the
period when the Prospectus is required to be delivered under the 1933 Act, such
number of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request for the purposes contemplated by the 1933 Act
or the 1933 Act Regulations;
(f) If, at any time when the Prospectus relating to
the Preferred Securities is required to be delivered under the 1933 Act in
connection with sales of the Preferred Securities, any event occurs as a result
of which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, or if it is necessary at any time to amend the
Registration Statement or amend or supplement the Prospectus to comply with the
1933 Act or the 1933 Act Regulations, to advise the Underwriters of such event
or necessity, as the case may be, and, promptly upon request made by the
Underwriters, to prepare and file with the Commission subject to paragraph (b)
above an amendment or supplement which will correct such statement or omission
or an amendment which will effect such compliance; provided that the expense of
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preparing and filing any such amendment or supplement (i) which is necessary in
connection with such a delivery of the Prospectus more than nine months after
the date of this Agreement or (ii) which relates solely to the activities of any
Underwriter shall be borne by the Underwriter or Underwriters or the dealer or
dealers requiring the same; and provided further that the Underwriters shall,
upon inquiry by the Company, advise the Company whether or not any Underwriter
or dealer
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<PAGE>
which shall have been selected by you retains any unsold Preferred
Securities and, for the purposes of this paragraph (f), the Company shall be
entitled to assume that the distribution of the Preferred Securities has been
completed when it is advised by you that no Underwriter or such dealer retains
any Preferred Securities;
(g) As soon as practicable, the Trust will make generally available to its
security holders an earnings statement of the Company covering a period of at
least twelve months beginning after the "effective date of the registration
statement" within the meaning of Rule 158 under the 1933 Act which will satisfy
the provisions of Section 11(a) of the 1933 Act;
(h) The Offerors will use best efforts to effect the listing of the
Preferred Securities on the New York Stock Exchange; if the Preferred Securities
are exchanged for Junior Subordinated Debentures, the Company will use its best
efforts to effect the listing of the Junior Subordinated Debentures on the
exchange on which the Preferred Securities were then listed;
(i) During a period of 30 days from the date of this Agreement, neither the
Trust nor the Company will, without the Underwriters' prior written consent,
directly or indirectly, sell, offer to sell, grant any option for the sale of,
or otherwise dispose of, any Preferred Securities, any security convertible into
or exchangeable into or exercisable for Preferred Securities or the Junior
Subordinated Debentures or any debt securities substantially similar to the
Junior Subordinated Debentures or equity securities substantially similar to the
Preferred Securities (except for the Junior Subordinated Debentures and the
Preferred Securities issued pursuant to this Agreement); and
(j) The Trust will apply the net proceeds from the sale of the Preferred
Securities for the purposes set forth in the Prospectus.
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<PAGE>
6. Payment of Expenses.
-------------------
The Company will pay or bear (i) all expenses in connection with the
matters herein required to be performed by the Offerors, including all expenses
(except as provided in Section 5(f) hereof) in connection with the preparation
and filing of the Registration Statement and the Prospectus, and any amendment
or supplement thereto, and the furnishing of copies thereof to the Underwriters,
and all audits, statements or reports in connection therewith, and all expenses
in connection with the original issue and delivery of the Preferred Securities
to the Underwriters at the place designated in Section 4 hereof, and all Federal
and State taxes (if any) payable (not including any transfer taxes) upon the
original issue of the Preferred Securities, the Guarantee or the Junior
Subordinated Debentures, any fee charged by securities ratings services for
rating the Preferred Securities, the Guarantee and the Junior Subordinated
Debentures, the fees and expenses incurred in connection with the listing of the
Preferred Securities, and the fee of the National Association of Securities
Dealers, Inc., if any, (ii) all expenses in connection with the printing,
reproduction and delivery of this Agreement and the printing, reproduction and
delivery of such other documents or certificates as may be required in
connection with the offering, purchase, sale, issuance or delivery of the
Preferred Securities, the Guarantee and the Junior Subordinated Debentures, and
to reimburse the Underwriters for expenses incurred in distributing any
preliminary prospectus or supplement to the Underwriters, and (iii) any
additional costs of effecting payment of the purchase price of the Preferred
Securities in immediately available funds as compared with New York Clearing
House (next day) funds.
7. Conditions of Underwriters' Obligations.
---------------------------------------
The obligations of the Underwriters hereunder are subject to the following
conditions:
(a) The Underwriters shall have received from Price Waterhouse LLP, a
letter, dated the date of this Agreement, in form and substance satisfactory to
you, to the effect that:
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(i) They are independent accountants with respect to the Trust and the
Company within the meaning of the 1933 Act and the 1933 Act Regulations;
(ii) In their opinion, the consolidated financial statements of the Company
and its subsidiaries audited by them and incorporated by reference in the
Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the 1934 Act and the
published rules and regulations thereunder with respect to registration
statements on Form S-3.
(iii) On the basis of procedures (but not an audit in accordance with
generally accepted auditing standards) consisting of:
(A) Reading the minutes of the stockholders and the Board of Directors of
the company and its consolidated subsidiaries since December 31, 1996 as set
forth in the minute books through a specified date nor more than five business
days prior to the date of delivery of such letter;
(B) Reading the unaudited interim financial data for the period from the
date of the latest balance sheet included in the Registration Statement to the
date of the latest available interim financial data; and
(C) Making inquiries of certain officials of the Company who have
responsibility for financial and accounting matters regarding the specific items
for which representations are requested below;
nothing has come to their attention as a result of the foregoing procedures that
caused them to believe that (i) at the date of the latest available interim
financial data and at a
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specified date not more than five business days prior to the date of delivery of
such letter, there was any change in the capital stock (except for shares of
certain series of the Company's preferred and preference stocks redeemed for, or
purchased and retired in anticipation of, sinking fund requirements for such
series or for shares of common stock issued pursuant to the Company's Employee
Stock Ownership Plan), or increase in long-term debt of the Company and
subsidiaries consolidated as compared with amounts shown in the latest balance
sheet incorporated by reference in the Registration Statement or (ii) for the
period from the closing date of the latest consolidated income statement
incorporated by reference in the Registration Statement to the date of the
latest available interim financial data there were any decreases, as compared
with the corresponding period in the preceding year, in consolidated net income
before dividends on preferred and preference stock, except in all instances for
changes or decreases which the Registration Statement discloses have occurred or
may occur, or they shall state any specific changes or decreases.
(iv) The letter shall also state that the information set forth in Schedule
D hereto, which is expressed in dollars (or percentages derived from such dollar
amounts) and has been obtained from accounting records which are subject to the
internal controls of the Company's accounting system or which has been derived
directly from such accounting records by analysis or computation, is in
agreement with such records or computations made therefrom, except as otherwise
specified in such letter.
(b) The Prospectus shall have been filed with the Commission in accordance
with the 1933 Act Regulations and Section 5(b) of this Agreement and prior to
the Closing Date no stop order suspending the effectiveness of the Registration
Statement shall have been issued
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and no proceedings for that purpose shall have been instituted, or, to the
knowledge of the Offerors, shall be contemplated by the Commission and the
Underwriters shall have received at the Closing Date certificates, dated the
Closing Date, of the Company and of the Trust.
(c) Subsequent to the execution of this Agreement, there shall not have
occurred (i) any change or any development involving a prospective change not
contemplated by the Prospectus in or affecting particularly the business or
properties of the Trust or the Company, which, in the judgment of Merrill Lynch,
materially impairs the investment quality of the Preferred Securities; (ii) any
suspension or limitation of trading in securities generally on the New York
Stock Exchange, or any setting of minimum prices for trading on such exchange,
or any suspension of trading of any securities of the Company on any exchange or
in the over-the-counter market; (iii) a general banking moratorium declared by
Federal or New York authorities; (iv) any outbreak or escalation of major
hostilities in which the United States is involved, any declaration of war by
Congress or any other substantial national or international calamity or
emergency if, in the reasonable judgment of Merrill Lynch, the effect of any
such outbreak, escalation, declaration, calamity or emergency makes it
impractical and inadvisable to proceed with completion of the sale of and
payment for the Preferred Securities and Merrill Lynch makes a similar
determination with respect to all other underwritings of Trust Originated
Preferred Securities in which it is participating and has the contractual right
to make such a determination; or (v) any decrease in the ratings of the
Preferred Securities by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the 1933 Act) or
such organization shall have publicly announced that it has under surveillance
or review, with possible negative implications, its rating of the Preferred
Securities.
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(d) On the Closing Date the Underwriters shall have received:
(1) The favorable opinions, dated as of the Closing Date, of Michael A.
McGrail, Esq., Senior Counsel (or such other counsel for the Company as may be
acceptable to you), Simpson Thacher & Bartlett, special counsel to the Company,
and Richards, Layton & Finger, P.A., special Delaware counsel to the Offerors,
each in form and substance satisfactory to counsel for the Underwriters, to the
cumulative effect that:
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the Commonwealth of Pennsylvania
with power and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectus;
(ii) The Trust has been duly created and is validly existing in good
standing as a business trust under the laws of the State of Delaware; all
filings required under the laws of the State of Delaware with respect to the
creation and valid existence of the Trust as a business trust have been made;
the Trust has all necessary power and authority to own property and to conduct
its business as described in the Prospectus and to enter into and perform its
obligations under this Agreement, the Preferred Securities and the Common
Securities;
(iii) The Trust Agreement has been duly authorized, executed and delivered
by the Company and, assuming due authorization, execution and delivery of the
Trust Agreement by the Trustees, is a valid and binding obligation enforceable
in accordance with its terms, except to the extent that enforcement thereof may
be limited by the Bankruptcy Exceptions; and the Trust Agreement has been duly
qualified under the 1939 Act;
(iv) The Common Securities have been duly authorized for issuance and,
when issued, delivered and
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paid for in accordance with the Trust Agreement and as described in the
Prospectus, will be validly issued and fully paid and non-assessable undivided
beneficial interests in the assets of the Trust, and the issuance of the Common
Securities is not subject to preemptive or other similar rights;
(v) The Preferred Securities have been duly authorized for issuance and,
when issued, delivered and paid for in accordance with this Agreement, will be
validly issued, fully paid and non-assessable undivided beneficial interests in
the assets of the Trust; the holders of the Preferred Securities will be
entitled to the same limitation of personal liability under Delaware law as is
extended to stockholders of private corporations for profit; and the issuance of
the Preferred Securities is not subject to preemptive or other similar rights.
Such counsel may note that the Preferred Securities holders may be obligated,
pursuant to the Trust Agreement, to (a) provide indemnity and/or security in
connection with and pay taxes or governmental charges arising from transfers of
Preferred Securities and the issuance of replacement Preferred Securities, and
(b) provide security and indemnity in connection with requests of or directions
to the Trustees to exercise their rights and powers under the Trust Agreement;
(vi) The holders of the Preferred Securities and Common Securities (other
than those holders who reside or are domiciled in the State of Delaware) will
have no liability for income taxes imposed by the State of Delaware or any
taxing authority thereof solely as a result of their participation in the Trust,
and the Trust will not be liable for any income tax imposed by the State of
Delaware or any taxing authority thereof;
(vii) The statements in the Prospectus under the captions "PP&L Capital
Trust", "Description of Preferred Securities", "Description of Subordinated
Debentures", "Description of Guarantee" and "Relationship Among the Preferred
Securities, the Subordinated Debentures and the Guarantee", insofar as
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they purport to constitute summaries of certain terms of the Preferred
Securities, the Junior Subordinated Debentures, the Guarantee and the Company
agreements with respect thereto, in each case constitute accurate summaries of
the terms of such documents and securities, in all material respects;
(viii) The portions of the information contained in the Prospectus, which
are stated therein to have been made on the authority of any such counsel, have
been reviewed by such counsel and, as to matters of law and legal conclusions,
are correct;
(ix) Each of the Company and PP&L Resources, Inc. are exempt from the
provisions of the Public Utility Holding Company Act of 1935, as amended,
applicable to it as a holding company;
(x) Except as described in the Registration Statement and the Prospectus,
the Company holds all franchises, certificates of public convenience, licenses
and permits necessary to own and to operate its properties and to carry on the
utility business in which it is engaged;
(xi) The Registration Statement has become effective under the 1933 Act
and the Prospectus was filed with the Commission pursuant to the subparagraph of
Rule 424(b) specified in such opinion on the date specified therein, and, to the
best of the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement or any part thereof has been issued
and no proceeding for that purpose have been instituted or are pending or
contemplated under the 1933 Act, and the Registration Statement, as of its
effective date, and any amendment or supplement thereto, as of its date, and the
Prospectus, as of the date of this Agreement, and each amendment or supplement
thereto, as of its date, complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations, and nothing has come
to the attention of such counsel which would lead such counsel to believe
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either that the Registration Statement or any such amendment or supplement, as
of such dates, contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus, as of the date of
this Agreement and as of the Closing Date, contained or contains any untrue
statement of a material fact or omitted or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; it being understood that such
counsel need express no opinion as to the financial statements and other
financial data contained or incorporated by reference in the Registration
Statement or the Prospectus and that only Simpson Thacher & Bartlett will pass
on federal income tax consequences;
(xii) The descriptions in the Registration Statement and the Prospectus of
statutes, legal and governmental proceedings and contracts and other documents
are accurate and fairly present the information required to be shown; and such
counsel does not know of any legal or governmental proceedings required to be
described in the Registration Statement or Prospectus which are not described,
or of any contracts or documents of a character required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement which are not described and filed as required; it being
understood that such counsel need express no opinion as to the financial
statements and other financial data contained or incorporated by reference in
the Registration Statement or the Prospectus and that only Simpson Thacher &
Bartlett will pass on federal income tax consequences pursuant to Section
7(d)(3);
(xiii) This Agreement has been duly authorized, executed and delivered by
each of the Trust and the Company;
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(xiv) The Guarantee Agreement has been duly authorized, executed and
delivered by the Company; the Guarantee Agreement, assuming it is duly
authorized, executed, and delivered by the Guarantee Trustee, constitutes a
valid and binding obligation of the Company enforceable in accordance with its
terms, except to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions; and the Guarantee Agreement has been duly qualified under
the 1939 Act;
(xv) The Indenture has been duly executed and delivered by the Company
and, assuming due authorization, execution, and delivery by the Indenture
Trustee, is a valid and binding obligation of the Company enforceable in
accordance with its terms, except to the extent that enforcement thereof may be
limited by the Bankruptcy Exceptions; and the Indenture has been duly qualified
under the 1939 Act;
(xvi) The Junior Subordinated Debentures are in the form contemplated by
the Indenture, have been duly authorized, executed and delivered by the Company
and, when authenticated by the Indenture Trustee in the manner provided for in
the Indenture and delivered against payment therefor, will constitute valid and
binding obligations of the Company enforceable in accordance with their terms,
except to the extent that enforcement thereof may be limited by the Bankruptcy
Exceptions, and are entitled to the benefits of the Indenture;
(xvii) Neither the Company nor the Trust is now, and giving effect to the
transactions contemplated by this Agreement, the Prospectus, and the application
of the proceeds from the sale of the Preferred Securities will be, an
"investment company" within the meaning of the 1940 Act; and
(xviii) No approval, authorization, consent or other order of any public
board or body is legally required for the authorization of the issuance and sale
of the Common Securities or the offering, issuance and sale of the Preferred
Securities, the Junior
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<PAGE>
Subordinated Debentures or the Guarantee, except (a) such as may be required
under the 1933 Act or the 1933 Act Regulations or the securities or "blue sky"
laws of any jurisdiction, (b) the qualification of the Trust Agreement, the
Guarantee Agreement and the Indenture under the 1939 Act and 1939 Act
Regulations and (c) the approvals by the Pennsylvania Public Utility Commission
which have been received.
In rendering their opinion, Simpson Thacher & Bartlett and Richards, Layton
& Finger, P.A. may rely as to matters governed by Pennsylvania law upon the
opinion of Michael A. McGrail, Esq. or such other counsel referred to in Section
7(d) of this Agreement, and as to matters governed by Delaware law Simpson
Thacher & Bartlett may rely upon the opinion of Richards, Layton & Finger, P.A.
In rendering his opinion, Michael A. McGrail, Esq., or such other counsel
referred to in Section 7(d) of this Agreement, may rely as to matters governed
by Delaware law upon the opinion of Richards, Layton & Finger, P.A. All such
counsel may also state that, insofar as such opinion involves factual matters,
they have relied, to the extent they deem proper, upon representations of
officers of the Company and of the Trustees and certificates of public
officials; provided that such certificates have been delivered to the
Underwriters.
(2) The favorable opinion, dated as of the Closing Date, of Pryor, Cashman,
Sherman & Flynn, counsel for The Chase Manhattan Bank and Chase Manhattan Bank
Delaware, in their respective capacities as Trustees under the Trust Agreement,
the Guarantee Agreement, and the Indenture, in form and substance satisfactory
to counsel for the Underwriters, to the effect that:
(i) Such Trustees are banking corporations with trust powers, duly
organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation, with all necessary power and
authority to execute and deliver, and to carry out and perform their respective
obligations
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under the terms of, the Trust Agreement, the Guarantee Agreement and
the Indenture;
(ii) The execution, delivery and performance of the Trust Agreement, the
Guarantee Agreement and the Indenture have been duly authorized by all necessary
corporate action on the part of such Trustees, and constitute valid and binding
obligations of such Trustees in accordance with their terms, except as
enforcement thereof may be limited by the Bankruptcy Exceptions;
(iii) The execution, delivery and performance of the Trust Agreement, the
Guarantee Agreement and the Indenture by such Trustees do not conflict with or
constitute a breach of the Articles of Incorporation or Bylaws or other
governing instruments of such Trustees; and
(iv) 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 Trustees, the Trust Agreement, the Guarantee
Agreement or the Indenture.
Such opinion may be conditioned on, among other things, the initial and
continuing accuracy of the facts, financial and other information, covenants
and representations set forth in certificates of officers of the Company and
the Trust and other documents deemed necessary for such opinion.
(3) The opinion of Simpson Thacher & Bartlett, special tax counsel to the
Company and the Trust, generally to the effect that the statements made in the
Prospectus under the caption "Certain Federal Income Tax Consequences," insofar
as they purport to constitute summaries of matters of United States federal tax
law and regulations or legal conclusions with respect thereto, constitute
accurate summaries of the matters described therein in all material respects.
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(4) The favorable opinion or opinions, dated as of the Closing Date, of
Sullivan & Cromwell, counsel for the Underwriters, with respect to the
incorporation and legal existence of the Company, the validity of the Guarantee
and the Junior Subordinated Debentures, this Agreement, the Registration
Statement, the Prospectus and other related matters as the Underwriters may
require, and the Company shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon such matters. In
rendering such opinion, Sullivan & Cromwell may rely as to matters governed by
Pennsylvania law upon the opinion of Michael A. McGrail, Esq. or such other
counsel for the Company referred to in Section 7(d), and as to matters governed
by Delaware law upon the opinion of Richards, Layton & Finger, P.A.
(e) The Underwriters shall have received a certificate, dated the Closing
Date, of the President or a Vice President and a financial or accounting officer
of the Company and a certificate of an Administrative Trustee of the Trust in
which such officers or trustee, as the case may be, to the best of their
knowledge after reasonable investigation, shall state that (i) the
representations and warranties of the Company or the Trust, as the case may be,
in this Agreement are true and correct (except for immaterial details) as of the
Closing Date, (ii) the Company and or Trust, as the case may be, has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Date, (iii) no stop order suspending the
effectiveness of the Registration Statement has been issued, and no proceedings
for that purpose have been instituted or are pending by the Commission, and (iv)
subsequent to the date of the latest financial statements in the Prospectus,
there has been no material adverse change in the financial position or results
of operations of the Company or the Trust, as the case may be, except as set
forth or contemplated in the Prospectus or as described in such certificate.
(f) The Underwriters shall have received a letter from
Price Waterhouse LLP, dated the Closing Date,
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which meets the requirements of Section 7(a) of this Agreement, except that the
specified date referred to in paragraph (D) of Section 7(a)(iii) will be a date
not more than five days prior to the Closing Date for the purposes of this
Section 7(f).
(g) At the Closing Date, the Preferred Securities and the Junior
Subordinated Debentures shall be rated in one of the four highest rating
categories for long term debt ("Investment Grade") by any nationally recognized
statistical rating agency, and the Company or the Trust shall have delivered to
the Underwriters a letter, dated the Closing Date, from such nationally
recognized statistical rating agency, or other evidence satisfactory to the
Underwriters, confirming that the Preferred Securities and the Junior
Subordinated Debentures have Investment Grade ratings.
(h) At the Closing Date, the Preferred Securities shall have been approved
for listing on the New York Stock Exchange subject to notice of issuance.
The Company will furnish the Underwriters as promptly as practicable after
the Closing Date with such conformed copies of such opinions, certificates,
letters and documents as the Underwriters may reasonably request.
In case any such condition shall not have been satisfied, this Agreement
may be terminated by the Underwriters upon notice in writing or by telegram to
the Offerors without liability or obligation of any party, except as provided in
Sections 5(c), 6, 9, 11 and 13 hereof.
8. Conditions of Offeror's Obligations.
-----------------------------------
The obligations of the Offerors to sell and deliver the Preferred
Securities on the Closing Date are subject to the following conditions:
At the Closing Date no stop order suspending the effectiveness of the
Registration Statement shall be in effect or proceeding therefor shall have been
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instituted or, to the knowledge of the Offerors, shall be contemplated.
(b) At or before the Closing Date, the Pennsylvania Utility Commission and
any other regulatory authority whose consent or approval shall be required for
the issue and the sale of the Securities, the Guarantee and the Junior
Subordinated Debentures as herein provided shall have taken all requisite
action, or all requisite action shall be deemed in fact and law to have been
taken, to authorize such issue and sale on the terms set forth in the
Prospectus.
If either of the foregoing conditions shall not have been satisfied, then
the Offerors shall be entitled, by notice in writing or by telegram to the
Underwriters, to terminate this Agreement without any liability of any party,
except as provided in Sections 5(c), 6, 9, 11 and 13 hereof.
9. Indemnification and Contribution.
--------------------------------
The Offerors agree that they will jointly and severally indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the 1933 Act, against any and all loss,
expense, claim, damage or liability to which, jointly or severally, such
Underwriter or such controlling person may become subject, under the 1933 Act or
otherwise, insofar as such loss, expense, claim, damage or liability (or actions
in respect thereof) arises out of or is based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, the Prospectus, any related preliminary prospectus, or any amendment
or supplement to any thereof, or arises out of or is based upon the omission or
alleged omission to state therein any material fact required to be stated
therein or necessary to make the statements therein not misleading; and, except
as hereinafter in this Section provided, the Offerors agree to reimburse each
Underwriter and each person who controls any Underwriter as aforesaid for any
reasonable legal or other expenses as incurred by such Underwriter or such
controlling person in connection with investigating or defending any such loss,
expense, claim, damage or
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liability; provided, however, that the Offerors shall not be liable in any such
-------- -------
case to the extent that any such loss, expense, claim, damage or liability
arises out of or is based on an untrue statement or alleged untrue statement or
omission or alleged omission made in any such document in reliance upon, and in
conformity with, written information specified in Schedule B hereto furnished to
the Trust or the Company by any Underwriter through Merrill Lynch expressly for
use in any such document; and provided further, that with respect to any untrue
-------- -------
statement or alleged untrue statement or omission or alleged omission made in
any preliminary prospectus or supplement, the indemnity agreement contained in
this subsection (a) shall not inure to the benefit of any Underwriter from whom
the person asserting any such loss, expense, claim, damage or liability
purchased the Securities concerned (or to the benefit of any person controlling
such Underwriter), if a copy of the Prospectus (not including documents
incorporated by reference therein) or of the Prospectus as then amended or
supplemented (not including documents incorporated by reference therein) was not
sent or given to such person at or prior to the written confirmation of the sale
of such Securities to such person and any untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in any
preliminary prospectus or supplement thereto was corrected in the Prospectus,
provided that the Company has delivered the Prospectus to the several
Underwriters in requisite quantity on a timely basis to permit such sending or
delivery.
(b) The Company agrees to indemnify the Trust against all loss, expense,
claim, damage or liability as due from the Trust under Section 9(a) hereunder.
(c) Each Underwriter severally agrees that it will indemnify and hold
harmless the Offerors, their officers, directors and Trustees, and each of them,
and each person, if any, who controls the Offerors within the meaning of Section
15 of the 1933 Act, against any loss, expense, claim, damage or liability to
which it or they may become subject, under the 1933 Act or otherwise, insofar as
such loss, expense, claim, damage or liability (or actions in respect thereof)
arises out of or is based on any untrue
-28-
<PAGE>
statement or alleged untrue statement of any material fact contained in the
Registration Statement, the Prospectus, any related preliminary prospectus, or
any amendment or supplement to any thereof, or arises out of or is based upon
the omission or alleged omission to state therein any material fact required to
be stated therein or necessary to make the statements therein not misleading, in
each case to the extent, and only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any such
documents in reliance upon, and in conformity with, written information
specified in Schedule B hereto furnished to the Trust or the Company by any
Underwriter through Merrill Lynch expressly for use in any such document; and,
except as hereinafter in this Section provided, each Underwriter agrees to
reimburse the Offerors, their officers, directors and Trustees, and each of
them, and each person, if any, who controls the Offerors within the meaning of
Section 15 of the 1933 Act, for any reasonable legal or other expenses incurred
by it or them in connection with investigating or defending any such loss,
expense, claim, damage or liability.
(d) Upon receipt of notice of the commencement of any action against an
indemnified party, the indemnified party shall, with reasonable promptness, if a
claim in respect thereof is to be made against an indemnifying party under its
agreement contained in this Section 9, notify such indemnifying party in writing
of the commencement thereof; but the omission so to notify an indemnifying party
shall not relieve it from any liability which it may have to the indemnified
party otherwise than under its agreement contained in this Section 9. In the
case of any such notice to an indemnifying party, it shall be entitled to
participate at its own expense in the defense, or if it so elects, to assume the
defense, of any such action, but, if it elects to assume the defense, such
defense shall be conducted by counsel chosen by it and satisfactory to the
indemnified party and to any other indemnifying party, defendant in the suit.
In the event that any indemnifying party elects to assume the defense of any
such action and retain such counsel, the indemnified party shall bear the fees
and expenses of any additional counsel retained by it. No indemnifying party
shall be liable in the event of any
-29-
<PAGE>
settlement of any such action effected without its consent except as provided in
Section 9(f) hereof. Each indemnified party agrees promptly to notify each
indemnifying party of the commencement of any litigation or proceedings against
it in connection with the issue and sale of the Securities.
(e) If any Underwriter or person entitled to indemnification by the terms
of subsection (a) of this Section 9 shall have given notice to the Offerors of a
claim in respect thereof pursuant to Section 9(d) hereunder, and if such claim
for indemnification is thereafter held by a court to be unavailable for any
reason other than by reason of the terms of this Section 9 or if such claim is
unavailable under controlling precedent, such Underwriter or person shall be
entitled to contribution from the Offerors to liabilities and expenses, except
to the extent that contribution is not permitted under Section 11(f) of the 1933
Act. In determining the amount of contribution to which such Underwriter or
person is entitled, there shall be considered the relative benefits received by
such Underwriter or person and the Offerors from the offering of the Securities
(taking into account the portion of the proceeds of the offering realized by
each), the Underwriter or person's relative knowledge and access to information
concerning the matter with respect to which the claim was asserted, the
opportunity to correct and prevent any statement or omission, and any other
equitable considerations appropriate under the circumstances. The Offerors and
the Underwriters agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation (even if the
Underwriters were treated as one entity for such purpose).
(f) No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 9 (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement,
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<PAGE>
compromise or consent (i) includes an unconditional release of each indemnified
party and all liability arising out of such litigation, investigation,
proceeding or claim, and (ii) does not include a statement as to or an admission
of fault, culpability or the failure to act by or on behalf of any indemnified
party.
(g) The indemnity and contribution provided for in this Section 9 and the
representations and warranties of the Company, the Trust and the several
Underwriters set forth in this Agreement shall remain operative and in full
force and effect regardless of (i) any investigation made by or on behalf of any
Underwriter or any person controlling any Underwriter, the Company, its
directors or officers, the Trust or any person controlling the Trust or any
Trustee, (ii) acceptance of any Preferred Securities and payment therefor under
this Agreement, and (iii) any termination of this Agreement.
10. Default of Underwriters.
-----------------------
If one or more of the Underwriters shall fail at the Closing Date to
purchase the Preferred Securities which it or they are obligated to purchase
under this Agreement (the "Defaulted Securities"), Merrill Lynch shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Default Securities in such amounts as may be agreed upon
and upon the terms herein set forth in this Agreement. If, however, Merrill
Lynch shall not have completed such arrangements within such 24-hour period,
then: (i) if the number of Defaulted Securities does not exceed 10% of the
number of Preferred Securities to be purchased on such date, each of the non-
defaulting Underwriters shall be obligated, severally and not jointly, to
purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or (ii) if the number of Defaulted Securities
exceeds 10% of the number of Securities to be purchased on such date, this
Agreement shall terminate without liability on the part of any non-defaulting
Underwriter. In the event of any such default
-31-
<PAGE>
which does not result in a termination of this Agreement, either Merrill Lynch
or the Company shall have the right to postpone the Closing Date for a period
not exceeding seven days in order to effect any required changes in the
Registration Statement or Prospectus or in an any other documents or
arrangements, and the Offerors will promptly file any amendments to the
Registration Statement or supplements to the Prospectus which may thereby be
necessary. As used in this Agreement, the term "Underwriter" includes for all
purposes of this Agreement any person substituted for an Underwriter under this
Section 10.
Nothing in this Section 10 shall relieve an Underwriter from liability for
its default.
11. Survival of Certain Representations and Obligations.
---------------------------------------------------
The respective indemnities, agreements, representations and warranties of
the Company and the Trust and of or on behalf of the Underwriters set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation, or statement as to the results thereof, made by
or on behalf of any Underwriter or the Offerors or any of their
respective officers, directors, Trustees or any controlling person, and will
survive delivery of and payment for the Preferred Securities. If for any reason
the purchase of the Preferred Securities by the Underwriters is not consummated,
the Company shall remain responsible for the expenses to be paid or reimbursed
by it pursuant to Sections 5(c) and 6, and the respective obligations of the
Company, the Trust and the Underwriters pursuant to Section 9 hereof shall
remain in effect.
12. Notices.
-------
The Offerors shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of each of the Underwriters if the same shall have
been made or given by the Underwriters jointly or by Merrill Lynch. All
statements, requests, notices, consents and agreements hereunder shall be in
writing, or by telegraph subsequently
-32-
<PAGE>
confirmed in writing, and, if to the Company or the Trust, shall be sufficient
in all respects if delivered or mailed to the Company, attention of its
Treasurer, at Two North Ninth Street, Allentown, Pennsylvania 18101, and, if to
an Underwriter, shall be sufficient in all respects if delivered or mailed to
c/o Merrill Lynch, Merrill Lynch World Headquarters, North Tower, World
Financial Center, New York, New York 10281-1201, attention of Richard Vaccari,
Managing Director; provided, however, that any notice to an Underwriter pursuant
to Section 9 hereof will also be delivered or mailed to such Underwriter at the
address, if any, of such Underwriter furnished to the Company in writing for the
purpose of communications hereunder.
13. Parties in Interest.
-------------------
This Agreement shall each inure solely to the benefit of the Company, the
Trust and the Underwriters and, to the extent provided in Section 9 hereof, to
any person who controls any Underwriter, to the officers and directors of the
Company and the Trust and the Trustees of the Trust, and to any person who
controls the Company or the Trust, and their respective successors. No other
person, partnership, association or corporation shall acquire or have any right
under or by virtue of this Agreement. The term "successor" shall not include
any assignee of an Underwriter (other than a person substituted for an
Underwriter under Section 10 hereof or one who shall acquire all or
substantially all of an Underwriter's business and properties), nor shall it
include any purchaser of Securities from any Underwriter merely because of such
purchase.
14. Applicable Law.
--------------
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York.
-33-
<PAGE>
15. Counterparts.
------------
This Agreement may be executed by any one or more of the parties hereto in
any number of counterparts, each of which shall be deemed to be an original, but
all such respective counterparts shall together constitute one and the same
instrument.
Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose, whereupon
this letter shall constitute a binding agreement between the Company and the
Trust and the several Underwriters in accordance with its terms.
Yours very truly,
PENNSYLVANIA POWER & LIGHT COMPANY
By:________________________________
Name: John R. Biggar
Title: Vice President - Finance
PP&L CAPITAL TRUST
By:________________________________
Name:
Title: Trustee
___________________________________
By:________________________________
Name:
Title: Trustee
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<PAGE>
The foregoing Underwriting Agreement is
hereby confirmed and accepted as of the date
first above written.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By:_______________________________
Name: Robert D. Craig
Title: Vice President
For itself and each of the other
Underwriters named in Schedule A hereto.
-35-
<PAGE>
SCHEDULE A
NUMBER
OF
NAME OF UNDERWRITER SECURITIES
------------------- ----------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..........................
..................
..................
..................
..................
..................
..................
..................
..................
==========
Total.................................. 4,000,000
-36-
<PAGE>
SCHEDULE B
----------
Certain Information Regarding The
Securities And The Sale Thereof
-------------------------------
1. Title of Securities: ____% Trust Originated Preferred Securities/SM/
-------------------
("TOPrS"/SM/)
2. (a) Title of Senior Subordinated Debentures:
---------------------------------------
___ % Junior
Subordinated Deferrable Interest Debentures due ___, 2027
(b) Aggregate Principal Amount of Junior Subordinated Debentures: $______.
------------------------------------------------------------
4. Liquidation Amount per Security: $25
-------------------------------
5. Initial Public Offering Price per Security: $25 plus accrued
------------------------------------------
distributions, if any, from the date of issuance
6. Proceeds Per Security to be Paid to the Trust: $25, plus accrued
---------------------------------------------
distributions, if any, from the date of issuance
7. Compensation Payable to Underwriters: $_________
------------------------------------
8. Closing Date: _____________, 1997; 10:00 a.m. New York Time
------------
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<PAGE>
SCHEDULE C
----------
Information Represented and
Warranted by the Underwriters
Pursuant to Section 2(b) of
Underwriting Agreement.
-----------------------------
1. The first sentence in the last paragraph or the cover page of the
Prospectus (page 1).
2. The stabilization legend on page 2 of the Prospectus.
3. Under the caption "Underwriting" in the Prospectus, the following:
(a) The first paragraph of text following the table.
(b) The last two sentences in the fourth paragraph following the table.
(c) The second sentence in the fifth paragraph following the table.
(d) The twelfth paragraph following the table.
-38-
<PAGE>
SCHEDULE D
----------
Additional Matters to be Included
in Accountants' Comfort Letter Pursuant to
Section 7(a)(iv) of Underwriting Agreement
__________________________________________
PROSPECTUS CAPTION PAGE ITEMS
- ----------------------- ---- --------------------------
"SELECTED FINANCIAL 14 "Ratio of Earnings to
DATA" Combined Fixed Charges
and Preferred Dividend
Requirements" and
supporting calculations
shown on Exhibit 12.2 too
the Registration
Statement; and
"CAPITALIZATION" 15 Dollar amounts and
percentages in "As
Adjusted" and
"Percentage" columns
after giving effect to
footnote (1) thereto.
FORM 10-K CAPTION PAGE ITEMS
- ----------------------- ---- --------------------------
"REVIEW OF THE 26 Table with respect to
FINANCIAL CONDITION increases in total
AND RESULTS OF operating revenues
OPERATIONS OF PP&L
RESOURCES, INC. AND
PENNSYLVANIA POWER &
LIGHT COMPANY --
"Operating Revenues"
"REVIEW OF THE 32 The Company's actual
FINANCIAL CONDITION construction expenditures
AND RESULTS OF during the year ended
OPERATIONS OF PP&L 1996.
RESOURCES, INC. AND
PENNSYLVANIA POWER &
LIGHT COMPANY --
Capital Expenditure
Requirements"
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<PAGE>
"REVIEW OF THE 34 The Company's ratio
FINANCIAL CONDITION of pre-tax income to
AND RESULTS OF interest charges for 1995
OPERATIONS OF PP&L and 1996.
RESOURCES, INC. AND
PENNSYLVANIA POWER &
LIGHT COMPANY --
"Financial Indicators"
(Third sentence)
-40-
<PAGE>
EXHIBIT 4.1
- --------------------------------------------------------------------------------
PENNSYLVANIA POWER & LIGHT COMPANY
TO
THE CHASE MANHATTAN BANK
TRUSTEE
-----------------------------
JUNIOR SUBORDINATED INDENTURE
DATED AS OF APRIL 1, 1997
-----------------------------
- --------------------------------------------------------------------------------
<PAGE>
PENNSYLVANIA POWER & LIGHT COMPANY
Reconciliation and tie between the Trust Indenture Act of 1939 (including
cross-references to provisions of Sections 310 to and including 317 which,
pursuant to Section 318(c) of the Trust Indenture Act of 1939, as amended by
the Trust Reform Act of 1990, are a part of and govern the Indenture whether or
not physically contained therein) and the Junior Subordinated Indenture, dated
as of April 1, 1997.
TRUST INDENTURE INDENTURE
ACT SECTION SECTION
----------
(S) 310 (a) (1), (2) and (5)................................... 6.9
(a) (3)................................................ Not Applicable
(a) (4)................................................ Not Applicable
(b).................................................... 6.8, 6.10
(c).................................................... Not Applicable
(S) 311 (a).................................................... 6.13(a)
(b).................................................... 6.13(b)
(b) (2)................................................ 7.3(a) (2)
(S) 312 (a).................................................... 7.1, 7.2(a)
(b).................................................... 7.2(b)
(c).................................................... 7.2(c)
(S) 313 (a).................................................... 7.3(a)
(b).................................................... 7.3(b)
(c).................................................... 7.3(a), 7.3(b)
(d).................................................... 7.3(c)
(S) 314 (a) (1), (2) and (3)................................... 7.4
(a) (4)................................................ 10.4
(b).................................................... Not Applicable
(c) (1)................................................ 1.2
(c) (2)................................................ 1.2
(c) (3)................................................ Not Applicable
(d).................................................... Not Applicable
(e).................................................... 1.2
(f).................................................... Not Applicable
(S) 315 (a).................................................... 6.1(a)
(b).................................................... 6.2, 7.3(a)
(c).................................................... 6.1(b)
(d).................................................... 6.1(c)
(d) (1)................................................ 6.1(a) (1)
(d) (2)................................................ 6.1(c) (2)
(d) (3)................................................ 6.1(c) (3)
(e).................................................... 5.14
(S) 316 (a).................................................... 1.1
(a) (1) (A)............................................ 5.12
(a) (1) (B)............................................ 5.13
(a) (2)................................................ Not Applicable
<PAGE>
(b).................................................... 5.8
(c).................................................... 1.4(f)
(S) 317 (a) (1)................................................ 5.3
(a) (2)................................................ 5.4
(b).................................................... 10.3
(S) 318 (a).................................................... 1.7
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Junior Subordinated Indenture.
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION......... 1
Section 1.1. Definitions............................................ 1
Section 1.2. Compliance Certificate and Opinions.................... 9
Section 1.3. Forms of Documents Delivered to Trustee................ 9
Section 1.4. Acts of Holders........................................ 10
Section 1.5. Notices, Etc. to Trustee and Company................... 12
Section 1.6. Notice to Holders; Waiver.............................. 12
Section 1.7. Conflict with Trust Indenture Act...................... 13
Section 1.8. Effect of Headings and Table of Contents............... 13
Section 1.9. Successors and Assigns................................. 13
Section 1.10. Separability Clause................................... 13
Section 1.11. Benefits of Indenture................................. 13
Section 1.12. Governing Law......................................... 13
Section 1.13. Non-Business Days..................................... 14
ARTICLE II
SECURITY FORMS...............................14
Section 2.1. Forms Generally........................................ 14
Section 2.2. Form of Face of Security............................... 15
Section 2.3. Form of Reverse of Security............................ 18
Section 2.4. Additional Provisions Required in Global Security...... 21
Section 2.5. Form of Trustee's Certificate of Authentication........ 21
ARTICLE III
THE SECURITIES............................... 22
Section 3.1. Title and Terms........................................ 22
Section 3.2. Denominations.......................................... 25
Section 3.3. Execution, Authentication, Delivery and Dating......... 25
Section 3.4. Temporary Securities................................... 26
Section 3.5. Registration, Transfer and Exchange.................... 27
Section 3.6. Mutilated, Destroyed, Lost and Stolen Securities....... 28
Section 3.7. Payment of Interest and Additional Interest; Interest
Rights Preserved...................................... 29
Section 3.8. Persons Deemed Owners.................................. 31
Section 3.9. Cancellation........................................... 31
-i-
<PAGE>
Section 3.10. Computation of Interest............................... 31
Section 3.11. Deferrals of Interest Payment Dates................... 31
Section 3.12. Right of Set-Off...................................... 32
Section 3.13. Agreed Tax Treatment.................................. 33
Section 3.14. Shortening or Extension of Stated Maturity............ 33
Section 3.15. CUSIP Numbers......................................... 33
ARTICLE IV
SATISFACTION AND DISCHARGE........................ 34
Section 4.1. Satisfaction and Discharge of Indenture................ 34
Section 4.2. Application of Trust Money............................. 35
ARTICLE V
REMEDIES................................. 35
Section 5.1. Events of Default...................................... 35
Section 5.2. Acceleration of Maturity; Rescission and Annulment..... 36
Section 5.3. Collection of Indebtedness and Suits for Enforcement by
Trustee............................................... 37
Section 5.4. Trustee May File Proofs of Claim....................... 38
Section 5.5. Trustee May Enforce Claims Without Possession of
Securities............................................ 39
Section 5.6. Application of Money Collected......................... 39
Section 5.7. Limitation on Suits.................................... 40
Section 5.8. Unconditional Right of Holders to Receive Principal,
Premium and Interest; Direct Action by Holders of
Preferred Securities.................................. 40
Section 5.9. Restoration of Rights and Remedies..................... 41
Section 5.10. Rights and Remedies Cumulative........................ 41
Section 5.11. Delay or Omission Not Waiver.......................... 41
Section 5.12. Control by Holders.................................... 41
Section 5.13. Waiver of Past Defaults............................... 42
Section 5.14. Undertaking for Costs................................. 43
Section 5.15. Waiver of Usury, Stay or Extension Laws............... 43
ARTICLE VI
THE TRUSTEE............................... 43
Section 6.1. Certain Duties and Responsibilities.................... 43
Section 6.2. Notice of Defaults..................................... 44
Section 6.3. Certain Rights of Trustee.............................. 45
Section 6.4. Not Responsible for Recitals or Issuance of Securities. 46
-ii-
<PAGE>
Section 6.5. May Hold Securities.................................... 46
Section 6.6. Money Held in Trust.................................... 46
Section 6.7. Compensation and Reimbursement......................... 46
Section 6.8. Disqualification; Conflicting Interests................ 47
Section 6.9. Corporate Trustee Required; Eligibility................ 47
Section 6.10. Resignation and Removal; Appointment of Successor..... 48
Section 6.11. Acceptance of Appointment by Successor................ 49
Section 6.12. Merger, Conversion, Consolidation or Succession to
Business.............................................. 50
Section 6.13. Preferential Collection of Claims Against Company..... 50
Section 6.14. Appointment of Authenticating Agent................... 51
ARTICLE VII
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY............ 53
Section 7.1. Company to Furnish Trustee Names and Addresses of
Holders............................................... 53
Section 7.2. Preservation of Information, Communications to Holders. 53
Section 7.3. Reports by Trustee..................................... 53
Section 7.4. Reports by Company..................................... 54
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE........... 54
Section 8.1. Company May Consolidate, Etc., Only on Certain Terms... 54
Section 8.2. Successor Corporation Substituted...................... 55
ARTICLE IX
SUPPLEMENTAL INDENTURES......................... 56
Section 9.1. Supplemental Indentures without Consent of Holders..... 56
Section 9.2. Supplemental Indentures with Consent of Holders........ 57
Section 9.3. Execution of Supplemental Indentures................... 58
Section 9.4. Effect of Supplemental Indentures...................... 58
Section 9.5. Conformity with Trust Indenture Act.................... 58
Section 9.6. Reference in Securities to Supplemental Indentures..... 59
ARTICLE X
COVENANTS................................ 59
Section 10.1. Payment of Principal, Premium and Interest............ 59
Section 10.2. Maintenance of Office or Agency....................... 59
-iii-
<PAGE>
Section 10.3. Money for Security Payments to be Held in Trust....... 60
Section 10.4. Statement as to Compliance............................ 61
Section 10.5. Waiver of Certain Covenants........................... 61
Section 10.6. Payment of Trust Costs and Expenses................... 62
Section 10.7. Additional Covenants.................................. 62
Section 10.8. Calculation of Original Issue Discount................ 63
ARTICLE XI
REDEMPTION OF SECURITIES......................... 63
Section 11.1. Applicability of This Article......................... 63
Section 11.2. Election to Redeem; Notice to Trustee................. 63
Section 11.3. Selection of Securities to be Redeemed................ 63
Section 11.4. Notice of Redemption.................................. 64
Section 11.5. Deposit of Redemption Price........................... 65
Section 11.6. Payment of Securities Called for Redemption........... 65
Section 11.7. Right of Redemption of Securities Initially Issued
to a Trust............................................ 66
ARTICLE XII
SINKING FUNDS.............................. 66
Section 12.1. Applicability of Article.............................. 66
Section 12.2. Satisfaction of Sinking Fund Payments with Securities. 67
Section 12.3. Redemption of Securities for Sinking Fund............. 67
ARTICLE XIII
SUBORDINATION OF SECURITIES....................... 69
Section 13.1. Securities Subordinate to Senior Debt................. 69
Section 13.2. Payment Over of Proceeds Upon Dissolution, Etc. ...... 69
Section 13.3. Prior Payment to Senior Debt Upon Acceleration of
Securities............................................ 70
Section 13.4. No Payment When Senior Debt in Default................ 71
Section 13.5. Payment Permitted If No Default....................... 71
Section 13.6. Subrogation to Rights of Holders of Senior Debt....... 72
Section 13.7. Provisions Solely to Define Relative Rights........... 72
Section 13.8. Trustee to Effectuate Subordination................... 73
Section 13.9. No Waiver of Subordination Provisions................. 73
Section 13.10. Notice to Trustee..................................... 73
Section 13.11. Reliance on Judicial Order or Certificate of
Liquidating Agent..................................... 74
Section 13.12. Trustee Not Fiduciary for Holders of Senior Debt...... 74
-iv-
<PAGE>
Section 13.13. Rights of Trustee as Holder of Senior Debt;
Preservation of Trustee's Rights..................... 74
Section 13.14. Article Applicable to Paying Agents.................. 75
Section 13.15. Certain Conversions or Exchanges Deemed Payment...... 75
Section 13.16. Trust Moneys Not Subordinated........................ 75
-v-
<PAGE>
JUNIOR SUBORDINATED INDENTURE, dated as of April 1, 1997, between
PENNSYLVANIA POWER & LIGHT COMPANY, a Pennsylvania corporation (hereinafter
called the "Company"), having its principal office at Two North Ninth Street,
Allentown, Pennsylvania 18101, and THE CHASE MANHATTAN BANK, a New York banking
corporation, as Trustee (hereinafter called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured junior
subordinated debt securities in one or more series (hereinafter called the
"Securities") of substantially the tenor hereinafter provided, including,
without limitation, Securities issued to evidence loans made to the Company of
the proceeds from the issuance from time to time by one or more business trusts
(each a "Trust," and, collectively, the "Trusts") of undivided beneficial
interests in the assets of such Trusts (the "Preferred Securities") and
undivided beneficial ownership interests in the assets of such Trusts (the
"Common Securities" and, collectively with the Preferred Securities, the "Trust
Securities"), and to provide the terms and conditions upon which the Securities
are to be authenticated, issued and delivered.
All things necessary to make the Securities, when executed by the Company
and authenticated and delivered hereunder and duly issued by the Company, the
valid obligations of the Company, and to make this Indenture a valid agreement
of the Company, in accordance with their and 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 any series thereof, as follows:
ARTICLE I
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;
<PAGE>
2
(3) All accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles,
and the term "generally accepted accounting principles" with respect to any
computation required or permitted hereunder shall mean such accounting
principles which are generally accepted at the date or time of such
computation; provided, that when two or more principles are so generally
accepted, it shall mean that set of principles consistent with those in use by
the Company; 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.
"Additional Interest" means the interest, if any, that shall accrue on
any interest on the Securities of any series the payment of which has not been
made on the applicable Interest Payment Date and which shall accrue at the rate
per annum specified or determined as specified in such Security from the
applicable Interest Payment Date.
"Administrative Trustee" means, in respect of any Trust, each Person
identified as an "Administrative Trustee" in the related Trust Agreement,
solely in such Person's capacity as Administrative Trustee of such Trust under
such Trust Agreement and not in such Person's individual capacity, or any
successor administrative trustee appointed as therein provided.
"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
pursuant to Section 6.14 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"Board of Directors" means any of the board of directors of the Company,
the Finance Committee of that board or any other committee of that board duly
authorized to act hereunder or any officers of the Company to which that board
or any such committee shall have delegated its authority.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors, and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day other than (i) a Saturday or Sunday, (ii) a
day on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed or (iii) a day on which the
Corporate Trust Office of the Trustee, or, with respect to the Securities of a
series initially issued to a Trust, the principal office of the Property
Trustee under the related Trust Agreement, is closed for business.
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3
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act, or if at any time after
the execution of this Indenture such Commission is not existing and performing
the duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Securities" has the meaning specified in the first recital of
this Indenture.
"Company" means the Person named as the "Company" in the first paragraph
of this Indenture until a successor Person shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall
mean such successor Person.
"Company Request" and "Company Order" mean, respectively, the written
request or order signed in the name of the Company by the Chairman or a Vice
Chairman of the Board of Directors, its President or a Vice President, and by
its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary
of the Company, and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be
administered, which at the date hereof is 450 West 33rd Street, 15th Floor, New
York, New York 10001.
"corporation" includes a corporation, association, company, joint-stock
company or business trust.
"Debt" means, with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Person; (vi) every
obligation of such Person for claims in respect of derivative products,
including interest rate, foreign exchange rate and commodity forward contracts,
options and swaps and similar arrangements; and (vii) every obligation of the
type referred to in clauses (i) through (vi) of another Person and all
dividends of another Person the payment of which, in either case, such Person
has guaranteed or is responsible or liable for, directly or indirectly, as
obligor or otherwise.
"Defaulted Interest" has the meaning specified in Section 3.7.
"Depositary" means, with respect to the Securities of any series issuable
or issued in whole or in part in the form of one or more Global Securities, the
Person designated as Depositary by the Company pursuant to Section 3.1 with
respect to such series (or any successor thereto).
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4
"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.
"Distributions," with respect to the Trust Securities issued by a Trust,
means amounts payable in respect of such Trust Securities as provided in the
related Trust Agreement and referred to therein as "Distributions."
"Dollar" means the currency of the United States of America that, as at
the time of payment, is legal tender for the payment of public and private
debts.
"Event of Default" unless otherwise specified with respect to a series of
Securities contemplated by Section 3.1 has the meaning specified in Article V.
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 1.4(f).
"Extension Period" has the meaning specified in Section 3.11.
"Global Security" means a Security in the form prescribed in Section 2.4
evidencing all or part of a series of Securities, issued to the Depositary or
its nominee for such series, and registered in the name of such Depositary or
its nominee.
"Guarantee", with respect to the Trust Securities issued by a Trust,
means the guarantee by the Company of Distributions on such Trust Securities to
the extent provided in the Guarantee Agreement.
"Guarantee Agreement", with respect to the Trust Securities issued by a
Trust, means the Guarantee Agreement executed by the Company for the benefit of
the holders of the Trust Securities issued by such Trust as modified, amended
or supplemented from time to time.
"Holder" means a Person in whose name a Security is registered in the
Securities 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 each particular series of Securities established
as contemplated by Section 3.1.
"Interest Payment Date" means, as to each series of Securities, the
Stated Maturity of an installment of interest on such Securities.
"Investment Company Event", with respect to a Trust, means the receipt by
such Trust of an Opinion of Counsel (as defined in the relevant Trust
Agreement) experienced in such matters
<PAGE>
5
to the effect that, as a result of the occurrence of a change in law or
regulation or a change in interpretation or application of law or regulation by
any legislative body, court, governmental agency or regulatory authority (a
"Change in 1940 Act Law"), such Trust is or will be considered an "investment
company" that is required to be registered under the Investment Company Act of
1940, as amended, which Change in 1940 Act Law becomes effective on or after
the date of original issuance of the Preferred Securities of such Trust under
the Trust Agreement.
"Junior Subordinated Payment" has the meaning specified in Section 13.2.
"Maturity" when used with respect to any Security means the date on which
the principal of such Security or any 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.
"Moody's" means Moody's Investors Service, Inc. or its successors.
"Notice of Default" means a written notice of the kind specified in
Section 5.1(3).
"Officers' Certificate" means a certificate signed by the Chairman or a
Vice Chairman of the Board of Directors, 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 Date" means the date of issuance specified as such in
each Security.
"Outstanding" means, when used in reference to any Securities, 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 price money in the
necessary amount has been theretofore deposited with the Trustee or any Paying
Agent in trust for the Holders of such Securities; and
(iii) Securities in substitution for or in lieu of which other Securities
have been authenticated and delivered or which have been paid pursuant to
Section 3.6, unless proof satisfactory to the Trustee is presented that any
such Securities are held by Holders in whose hands such Securities are valid,
binding and legal obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not to
<PAGE>
6
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 actually knows to
be so owned shall be so disregarded. Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect
to such Securities and that the pledgee is not the Company or any other obligor
upon the Securities or any Affiliate of the Company or such other obligor. Upon
the written request of the Trustee, the Company shall furnish to the Trustee
promptly an Officers' Certificate listing and identifying all Securities, if
any, known by the Company to be owned or held by or for the account of the
Company or any other obligor on the Securities or any Affiliate of the Company
or such obligor, and, subject to the provisions of Section 6.1, the Trustee
shall be entitled to accept such Officers' Certificate as conclusive evidence
of the facts therein set forth and of the fact that all Securities not listed
therein are Outstanding for the purpose of any such determination.
Notwithstanding anything herein to the contrary, Securities of any series
initially issued to a Trust and that are owned by such Trust shall be deemed to
be Outstanding notwithstanding the ownership by the Company or an Affiliate of
any beneficial interest in such Trust.
"Paying Agent" means the Trustee or any Person (which may include the
Company) authorized by the Company to pay the principal of (or premium, if any)
or interest on any Securities on behalf of the Company.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof or any entity of whatever nature.
"Place of Payment" means, with respect to the Securities of any series,
the place or places where the principal of (and premium, if any) and interest
(including any Additional Interest) on the Securities of such series are
payable pursuant to Sections 3.1 and 3.11.
"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 lieu of a lost, destroyed or
stolen Security shall be deemed to evidence the same debt as the mutilated,
lost, destroyed or stolen Security.
"Preferred Securities" has the meaning specified in the first recital of
this Indenture.
"Proceeding" has the meaning specified in Section 13.2.
"Property Trustee" means, with respect to any Trust, the Person
identified as the "Property Trustee" in the related Trust Agreement, solely in
its capacity as Property Trustee of such Trust under such Trust Agreement and
not in its individual capacity, or its successor in interest in such capacity,
or any successor property trustee appointed as therein provided.
"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 or
the terms of such Security.
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7
"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 with respect to the Securities of a series means, unless otherwise
provided pursuant to Section 3.1 with respect to Securities of a series, (i) in
the case of Securities of a series represented by one or more Global
Securities, the Business Day next preceding such Interest Payment Date and (ii)
in the case of Securities of a series not represented by one or more Global
Securities, the date which is fifteen days next preceding such Interest Payment
Date (whether or not a Business Day).
"Responsible Officer" when used with respect to the Trustee means any
officer of the Trustee assigned by the Trustee from time to time to administer
this Indenture.
"S&P" means Standard & Poor's Ratings Services or its successors.
"Securities" or "Security" means any debt securities or debt security, as
the case may be, authenticated and delivered under this Indenture.
"Securities Act" means the Securities Act of 1933 or any successor
statute thereto, in each case as amended from time to time.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 3.5.
"Senior Debt" means the principal of (and premium, if any) and interest,
if any (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not such
claim for post-petition interest is allowed in such proceeding), on Debt of the
Company, whether incurred on or prior to the date of this Indenture or
thereafter incurred, unless, in the instrument creating or evidencing the same
or pursuant to which the same is outstanding, it is provided that such
obligations are not superior in right of payment to the Securities or to other
Debt which is pari passu with, or subordinated to, the Securities, provided,
however, that Senior Debt shall not be deemed to include (a) any Debt of the
Company to any of its Subsidiaries or Affiliates, (b) Debt of the Company to
any employee of the Company, (c) Debt which by its terms is subordinated to
trade accounts payable or accrued liabilities arising in the ordinary course of
business to the extent that payments made to the holders of such Debt by the
holders of the Securities as a result of the subordination provisions of this
Indenture would be greater than such payments otherwise would have been (absent
giving effect to this clause (c)) as a result of any obligation of such holders
of such Debt to pay amounts over to the obligees on such trade accounts payable
or accrued liabilities arising in the ordinary course of business as a result
of subordination provisions to which such Debt is subject, and (d) any
Securities.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.7.
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8
"Stated Maturity" when used with respect to any Security or any
installment of principal thereof (or premium, if any) or interest (including
Additional Interest) thereon means the fixed date specified pursuant to the
terms of such Security as the fixed date on which the principal (or premium, if
any) of such Security or such installment of interest (including Additional
Interest) is due and payable, as such date may, in the case of the stated
maturity of principal on any Security, be shortened or extended as provided
pursuant to the terms of such Security and this Indenture and, in the case of
any installment of interest, subject to the deferral of any such date in the
case of any Extension Period.
"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.
For purposes of this definition, "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.
"Tax Event", with respect to a Trust, means the receipt by such Trust of
an Opinion of Counsel (as defined in the relevant Trust Agreement) experienced
in such matters to the effect that, as a result of any amendment to, or change
(including any announced proposed change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or which proposed change,
pronouncement or decision is announced on or after the date of original
issuance of the Preferred Securities of such Trust, there is more than an
insubstantial risk that (i) such Trust is, or will be within 90 days of the
date of such Opinion of Counsel, subject to United States federal income tax
with respect to income received or accrued on the corresponding series of
Securities issued by the Company to such Trust, (ii) interest payable by the
Company on such corresponding series of Securities is not, or within 90 days of
the date of such Opinion of Counsel, will not be, deductible by the Company, in
whole or in part, for United States federal income tax purposes or (iii) such
Trust is, or will be within 90 days of the date of such Opinion of Counsel,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges.
"Trust" has the meaning specified in the first recital of this Indenture.
"Trust Agreement", with respect to a Trust, means the trust agreement or
other governing instrument of such Trust, as modified, amended or supplemented
from time to time.
"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.
"Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C. (S)
77aaa-77bbb), as amended and as in effect on the date as of this Indenture,
except as provided in Section 9.5;
<PAGE>
9
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 as so amended.
"Trust Securities" has the meaning specified in the first recital of this
Indenture.
"Vice President", when used with respect to the Company means any duly
appointed vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
Section 1.2. Compliance Certificate 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
(including covenants compliance with which constitutes a condition 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 (including covenants compliance with
which constitutes a condition 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 (other than the certificates
provided pursuant to Section 10.4) shall include:
(1) a statement by each individual signing such certificate or opinion
that such individual 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 of such individual
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he or she has
made or caused to be made such examination or investigation as is necessary to
enable him or her 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 such individual, such
condition or covenant has been complied with.
Section 1.3. Forms 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
<PAGE>
10
document, but one such Person may certify or give an opinion with respect to
some matters and one or more other such Persons as to other matters, and any
such Person may certify or give an opinion as to such matters in one or several
documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer or counsel 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 or her certificate
or opinion is based are erroneous. Any Opinion of Counsel may be based, insofar
as it relates to factual matters, upon a certificate or opinion of, or
representations by, any employee of the Company stating that the information
with respect to such factual matters is in the possession of the Company,
unless such counsel rendering such Opinion of 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 to 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 or
proxy duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or
instruments is or 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 or
proxy 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 the certificate of any 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 or her the
execution thereof. Where such execution is by a Person acting in a capacity
other than his or her individual capacity, such certificate or affidavit shall
also constitute sufficient proof of his or her authority.
(c) The fact and date of the execution by any Person 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 and in
accordance with such reasonable rules as the Trustee may determine.
(d) The ownership of Securities shall be proved by the Securities
Register.
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11
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other action by 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.
(f) The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or
take any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Indenture to be given, made or taken
by Holders of Securities of such series, provided that the Company may not set
a record date for, and the provisions of this paragraph shall not apply with
respect to, the giving or making of any notice, declaration, request or
direction referred to in the next paragraph. If any record date is set pursuant
to this paragraph, the Holders of the relevant Outstanding Securities on such
record date, and no other Holders, shall be entitled to take the relevant
action, whether or not such Holders remain Holders after such record date,
provided that no such action shall be effective hereunder unless taken on or
prior to the applicable Expiration Date (as defined below) by Holders of the
requisite principal amount of the relevant Outstanding Securities on such
record date. Nothing in this paragraph shall be construed to prevent the
Company from setting a new record date for any action for which a record date
has previously been set pursuant to this paragraph (whereupon the record date
previously set shall automatically and with no action by any Person be
cancelled and of no effect), and nothing in this paragraph shall be construed
to render ineffective any action taken by Holders of the requisite principal
amount of the relevant Outstanding Securities on the date such action is taken.
Promptly after any record date is set pursuant to this paragraph, the Company,
at its own expense, shall cause notice of such record date, the proposed action
by Holders and the applicable Expiration Date to be given to the Trustee in
writing and to each Holder of the relevant Securities in the manner set forth
in Section 1.6.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to join in the
giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration referred to in Section 5.2, (iii) any request to institute
proceedings referred to in Section 5.7(2) or (iv) any direction referred to in
Section 5.12, in each case with respect to the relevant Securities. If any
record date is set pursuant to this paragraph, the Holders of the relevant
Outstanding Securities on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date, provided that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of the relevant
Outstanding Securities on such record date. Nothing in this paragraph shall be
construed to prevent the Trustee from setting a new record date for any action
for which a record date has previously been set pursuant to this paragraph
(whereupon the record date previously set shall automatically and with no
action by any Person be cancelled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of the relevant Outstanding Securities on the
date such action is taken. Promptly after any record date is set pursuant to
this paragraph, the Trustee, at the Company's expense, shall cause notice of
such record date, the proposed action by Holders
<PAGE>
12
and the applicable Expiration Date to be given to the Company in writing and to
each Holder of the relevant Securities in the manner set forth in Section 1.6.
With respect to any record date set pursuant to this Section, the party
hereto which sets such record date may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day, provided that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of the relevant Outstanding Securities in the manner set forth
in Section 1.6, on or prior to the existing Expiration Date. If an Expiration
Date is not designated with respect to any record date set pursuant to this
Section, the party hereto which set such record date shall be deemed to have
initially designated the 180th day after such record date as the Expiration
Date with respect thereto, subject to its right to change the Expiration Date
as provided in this paragraph. Notwithstanding the foregoing, no Expiration
Date shall be later than the 180th day after the applicable record date.
(g) Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.
Section 1.5. Notices, Etc. to Trustee and 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, any holder of Preferred Securities or 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, any Holder or any holder of Preferred
Securities shall be sufficient for every purpose (except as otherwise provided
in Section 5.1) hereunder if in writing and mailed, first class, postage
prepaid, to the Company addressed to it at the address of its principal 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 the address of such Holder as it appears in the Securities
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. If, by reason of the
suspension of or irregularities in regular mail service or for any other
reason, it shall be impossible or impracticable to mail notice of any event to
Holders when said notice is required to be given pursuant to any provision of
this Indenture or of the relevant Securities, then any manner of giving such
notice as shall be
<PAGE>
13
satisfactory to the Trustee shall be deemed to be a sufficient 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.
Section 1.7. Conflict with Trust Indenture Act.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by any of Sections 310 to 317, inclusive, of the Trust
Indenture Act through operation of Section 318(c) thereof, such imposed duties
shall control. If any provision of this Indenture modifies or expressly
excludes any provision of the Trust Indenture Act which, pursuant to the terms
of the Trust Indenture Act, may be so modified or excluded, the Trust Indenture
Act provision shall apply to this Indenture as so modified or 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 of 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 1.11. 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 and
assigns, the holders of Senior Debt, the Holders of the Securities and, to the
extent expressly provided in Sections 5.2, 5.8, 5.9, 5.11, 5.13, 9.1 and 9.2,
the holders of Preferred Securities, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
<PAGE>
14
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, WITHOUT REGARD TO CONFLICTS
OF LAW PRINCIPLES THEREOF.
Section 1.13. Non-Business Days.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or the Securities) payment of interest or
principal (and premium, if any) or other amounts in respect of such Security
need not be made on such date, but may be made on the next succeeding Business
Day (and no interest shall accrue in respect of the amount whose payment is so
delayed for the period from and after such Interest Payment Date, Redemption
Date or Stated Maturity, as the case may be, until such next succeeding
Business Day) except that, if such Business Day falls 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 Interest
Payment Date or Redemption Date or at the Stated Maturity).
ARTICLE II
SECURITY FORMS
Section 2.1. Forms Generally.
The Securities of each series and the Trustee's certificate of
authentication shall be in substantially the forms set forth in this Article,
or in such other form or forms as shall be established by or pursuant to a
Board Resolution or in one or more indentures supplemental hereto, in each case
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture and may have such letters,
numbers or other marks of identification and such legends or endorsements
placed thereon as may be required to comply with applicable tax laws or the
rules of any securities exchange or automated quotation system on which the
Securities may be listed or traded or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution of the Securities. If the form of Securities of any series is
established by action taken pursuant to a Board Resolution, a copy of an
appropriate record of such action shall be certified by the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Company Order contemplated by Section 3.3 with respect to
the authentication and delivery of such Securities.
The Trustee's certificates of authentication shall be substantially in
the form set forth in this Article.
The definitive Securities shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods, if required by any
securities exchange or
<PAGE>
15
automated quotation system on which the Securities may be listed or traded, on
a steel engraved border or steel engraved borders or may be produced in any
other manner permitted by the rules of any securities exchange or automated
quotation system on which the Securities may be listed or traded, all as
determined by the officers executing such Securities, as evidenced by their
execution of such securities.
Section 2.2. Form of Face of Security.
PENNSYLVANIA POWER & LIGHT COMPANY CUSIP ____
__% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
No. $
PENNSYLVANIA POWER & LIGHT COMPANY, a corporation organized and existing
under the laws of the state of Pennsylvania (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 __________
__, ____ [if the Security is a Global Security, then insert, if applicable-, or
such other principal amount represented hereby as may be set forth in the
records of the Securities Registrar hereinafter referred to in accordance with
the Indenture,] [; provided that the Company may, subject to certain conditions
set forth in Section 3.14 of the Indenture, (i) shorten the Stated Maturity of
the principal of this Security to a date not earlier than __________, and (ii)
extend the Stated Maturity of the principal of this Security at any time on one
or more occasions, but in no event to a date later than __________]. The
Company further promises to pay interest on said principal sum from __________
__, ____ or from the most recent interest payment date (each such date, an
"Interest Payment Date") to which interest has been paid or duly provided for,
[monthly] [quarterly] [semi-annually] [if applicable, insert - (subject to
deferral as set forth herein)] in arrears on [insert applicable Interest
Payment Dates] of each year, commencing ___________ __, ____, at the rate of
___% per annum, until the principal hereof shall have become due and payable,
[if applicable, insert plus Additional Interest, if any,] until the principal
hereof is paid or duly provided for or made available for payment [if
applicable, insert - and on any overdue principal or premium 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 rate of __%
per annum, compounded [monthly] [quarterly] [semi-annually] from the dates such
amounts are due until they are paid or made available for payment, and such
interest shall be payable on demand]. The amount of interest payable for any
period shall be computed on the basis of twelve 30-day months and a 360-day
year. The amount of interest payable for any partial period shall be computed
on the basis of the number of days elapsed in a 360-day year of twelve 30-day
months. In the event that any date on which interest is payable on this
Security is not a Business Day, then a 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 date the payment was
originally payable. A "Business Day" shall mean any day other than (i) a
Saturday or Sunday, (ii) a day on which banking institutions in The City of New
York are authorized or required by
<PAGE>
16
law or executive order to remain closed or (iii) a day on which the Corporate
Trust Office of the Trustee [if applicable, insert, or the principal office of
the Property Trustee under the Trust Agreement hereinafter referred to for
__________________,] is closed for business. The interest installment so
payable, and punctually paid or duly provided for, on any Interest Payment Date
will, as provided in the Indenture, be paid to the Person in whose name this
Security (or one or more Predecessor Securities is registered at the close of
business on the Regular Record Date for such interest installment, which shall
be the [insert definition of Regular Record Dates]. Any such interest
installment not so punctually paid or duly provided for shall forthwith cease
to be payable to the Holder on such Regular Record Date and may either be paid
to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities of this series not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
or automated quotation system on which the Securities of this series may be
listed or traded, and upon such notice as may be required by such exchange or
self-regulatory organization, all as more fully provided in said Indenture.
[If applicable, insert - So long as no Event of Default has occurred and
is continuing, the Company shall have the right at any time during the term of
this Security to defer payment of interest on this Security, at any time or
from time to time, for up to _______ consecutive [monthly] [quarterly]
[semi-annual] interest payment periods with respect to each deferral period
(each an "Extension Period"), during which Extension Periods the Company shall
have the right to make partial payments of interest on any Interest Payment
Date, and at the end of which the Company shall pay all interest then accrued
and unpaid (together with Additional Interest thereon to the extent permitted
by applicable law); provided, however, that no Extension Period shall extend
beyond the Stated Maturity of the principal of this Security; provided,
further, that during any such Extension Period, the Company shall not, and
shall not permit any Subsidiary of the Company to, (i) declare or pay any
dividends or distributions on or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock or (ii)
make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt security of the Company that ranks pari passu
with or junior in interest to this Security or (iii) make any guarantee
payments with respect to any guarantee by the Company of the debt securities of
any Subsidiary of the Company if such guarantee ranks pari passu with or junior
in interest to this Security (other than (a) dividends or distributions in the
Company's capital stock, (b) any declaration of a dividend in connection with
the implementation of a stockholder rights plan or the redemption or repurchase
of any rights distributed pursuant to a stockholder rights plan and (c)
payments under the Guarantee with respect to this Security). Prior to the
termination of any such Extension Period, the Company may further defer the
payment of interest, provided that no Extension Period shall exceed __
consecutive [months] [quarters] [semi-annual] periods or extend beyond the
Stated Maturity of the principal of this Security. Upon the termination of any
such Extension Period and upon the payment of all accrued and unpaid interest
and any Additional Interest then due, the Company may elect to begin a new
Extension Period, subject to the above conditions. No interest shall be due and
payable during an Extension Period except at the end thereof, but each
installment of interest that would otherwise have been due and payable during
such Extension Period shall bear Additional Interest (to the extent that
<PAGE>
17
the payment of such interest shall be legally enforceable) at the rate of ____%
per annum, compounded [monthly] [quarterly] [semi-annually] and calculated as
set forth in the first paragraph of this Security, from the dates on which
amounts would otherwise have been due and payable until paid or made available
for payment. The Company shall give the Holder of this Security and the Trustee
notice of its election to begin any Extension Period at least one Business Day
prior to the next succeeding Interest Payment Date on which interest on this
Security would be payable but for such deferral [if applicable, insert - or,
with respect to the Securities issued to a Trust, so long as such Securities
are held by such Trust, prior to the earlier of (i) the next succeeding date on
which Distributions on the Preferred Securities would be payable but for such
deferral or (ii) the date the Administrative Trustees are required to give
notice to any securities exchange or other applicable self-regulatory
organization or to holders of such Preferred Securities of the record date or
the date such Distributions are payable, but in any event not less than one
Business Day prior to such record date]].
Payment of principal of (and premium, if any) and interest (including any
Additional Interest) on this Security will be made at the office or agency of
the Company maintained for that purpose in the United States, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts [if applicable, insert -;
provided, however, that at the option of the Company payment of interest may be
made (i) by check mailed to the address of the Person entitled thereto as such
address shall appear in the Securities Register or (ii) by wire or electronic
funds transfer in immediately available funds at such place and to such account
as may be designated in writing at least 15 days before the relevant Interest
Payment Date by the Person entitled thereto as specified in the Securities
Register].
The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, subordinate and subject in right of payment to the prior payment
in full of all Senior Debt, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Security,
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 actions as
may be necessary or appropriate to effectuate the subordination so provided and
(c) appoints the Trustee his attorney-in-fact for any and all such purposes.
Each Holder hereof, by his or her acceptance hereof, waives all notice of the
acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior Debt, whether now outstanding or hereafter
incurred, and waives reliance by each such holder upon said provisions.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
<PAGE>
18
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
PENNSYLVANIA POWER & LIGHT COMPANY
By:
-------------------------------
[President or Vice President]
Attest:
- ------------------------------------------
[Secretary or Assistant Secretary]
Section 2.3. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or
more series under a Junior Subordinated Indenture, dated as of April 1, 1997
(herein called the "Indenture"), between the Company and The Chase Manhattan
Bank, as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Trustee,
the Company and the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This Security is
one of the series designated on the face hereof [, limited in aggregate
principal amount to $ _____________].
All terms used in this Security that are defined in the Indenture [if
applicable, insert - or in the Amended and Restated Trust Agreement, dated as
of _______ __, _____, as amended (the "Trust Agreement"), for
_________________, among Pennsylvania Power & Light Company, as Depositor, the
Trustees named therein and the holders from time to time of the Trust
Securities issued pursuant thereto, shall have the meanings assigned to them in
the Indenture [if applicable, insert - or the Trust Agreement, as the case may
be].
[If applicable, insert--The Company may at any time, at its option, on or
after _________, ____, and subject to the terms and conditions of Article XI of
the Indenture, redeem this Security in whole at any time or in part from time
to time, without premium or penalty, at a redemption price equal to 100% of the
principal amount thereof plus accrued and unpaid interest [if applicable,
insert - including Additional Interest, if any] to the Redemption Date.]
[If applicable, insert - Upon the occurrence and during the continuation
of a Tax Event or an Investment Company Event in respect of a Trust, the
Company may, at its option, at any time within 90 days of the occurrence of
such Tax Event or Investment Company Event, redeem this Security, in whole but
not in part, subject to the provisions of Section 11.7 and the other provisions
of Article XI of the Indenture, at a redemption price equal to 100% of the
principal
<PAGE>
19
amount thereof plus accrued and unpaid interest, including Additional Interest,
if any, to the Redemption Date.]
In the event of redemption of this Security in part only, a new Security
or Securities of this series for the unredeemed portion hereof will be issued
in the name of the Holder hereof upon the cancellation hereof.
The Indenture contains provisions for satisfaction and discharge of the
entire indebtedness of this Security upon compliance by the Company with
certain conditions set forth in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee at any time to enter into a supplemental indenture or
indentures for the purpose of modifying in any manner the rights and
obligations of the Company and of the Holders of the Securities, with the
consent of the Holders of not less than a majority in principal amount of the
Outstanding Securities of all series to be affected by such supplemental
indenture. The Indenture also contains provisions permitting Holders of
specified percentages in principal amount of the Securities of all series at
the time Outstanding, on behalf of the Holders of all Securities of such
series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and
of any Security issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security.
[If the Security is not a Discount Security, insert - As provided in and
subject to the provisions of the Indenture, if an Event of Default with respect
to the Securities of this series at the time Outstanding occurs and is
continuing, then and in every such case the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Outstanding Securities of this
series may declare the principal amount of all the Securities of this series to
be due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by Holders), provided that, in the case of the Securities
of this series issued to a Trust, if upon an Event of Default, the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities of this series fails to declare the principal of all the Securities
of this series to be immediately due and payable, the holders of at least 25%
in aggregate Liquidation Amount of the Preferred Securities then outstanding
shall have the right to make such declaration by a notice in writing to the
Company and the Trustee; and upon any such declaration the principal amount of
and the accrued interest (including any Additional Interest) on all the
Securities of this series shall become immediately due and payable, provided
that the payment of principal and interest (including any Additional Interest)
on such Securities shall remain subordinated to the extent provided in Article
XIII of the Indenture.]
[If the Security is a Discount Security, insert - As provided in and
subject to the provisions of the Indenture, if an Event of Default with respect
to the Securities of this series at the time Outstanding occurs and is
continuing, then and in every such case the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Outstanding Securities of this
<PAGE>
20
series may declare an amount of principal of the Securities of this series to
be due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by Holders), provided that, in the case of the Securities
of this series issued to a Trust, if upon an Event of Default, the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities of this series fails to declare the principal of all the Securities
of this series to be immediately due and payable, the holders of at least 25%
in aggregate Liquidation Amount of the Preferred Securities then outstanding
shall have the right to make such declaration by a notice in writing to the
Company and the Trustee. Such amount shall be equal to - insert formula for
determining the amount. Upon any such declaration, such amount of the principal
of and the accrued interest (including any Additional Interest) on all the
Securities of this series shall become immediately due and payable, provided
that the payment of principal and interest (including any Additional Interest)
on such Securities shall remain subordinated to the extent provided in Article
XIII of the Indenture. Upon payment (i) of the amount of principal so declared
due and payable and (ii) of interest on any overdue principal and overdue
interest (in each case to the extent that the payment of such interest shall be
legally enforceable), all of the Company's obligations in respect of the
payment of the principal of and interest, if any, on this Security shall
terminate.]
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest [insert, if applicable - (including any Additional Interest)] on this
Security at the times, place and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Securities
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained under Section 10.2 of the Indenture,
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Securities Registrar duly executed by, the
Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more new Securities of this series, of like tenor, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees. No service charge shall be
made for any such registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for
all purposes, whether or not this Security be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.
The Securities of this series are issuable only in registered form
without coupons in denominations of $________________ and any integral multiple
of $_____ in excess thereof. As provided in the Indenture and subject to
certain limitations therein set forth, Securities of this series are
exchangeable for a like aggregate principal amount of Securities of such series
and of
<PAGE>
21
like tenor of a different authorized denomination, as requested by the Holder
surrendering the same.
The Company and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Security agree that for United States federal, state and
local tax purposes it is intended that this Security constitute indebtedness.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES THEREOF.
Section 2.4. Additional Provisions Required in Global Security.
Unless otherwise contemplated by Section 3.1, any Global Security issued
hereunder shall, in addition to the provisions contained in Sections 2.2 and
2.3, bear a legend in substantially the following form:
"This Security is a Global Security within the meaning of the Indenture
hereinafter referred to and is registered in the name of a Depositary or a
nominee of a Depositary. This Security is exchangeable for Securities
registered in the name of a person other than the Depositary or its nominee
only in the limited circumstances described in the Indenture and may not be
transferred except 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, except in the limited circumstances described in the Indenture."
Section 2.5. Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in substantially
the following form:
This is one of the Securities of the series designated on the face hereof
and referred to in the within mentioned Indenture.
THE CHASE MANHATTAN BANK,
as Trustee
By:
Authorized Officer
-----------------------------
<PAGE>
22
ARTICLE III
THE SECURITIES
Section 3.1. Title and Terms.
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is unlimited.
The Securities may be issued from time to time in one or more series. The
following matters shall be established in or pursuant to a Board Resolution,
and, subject to Section 3.3, set forth in, or determined in the manner provided
in, an Officers' Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of a series:
(a) the title of the Securities of such series, which shall distinguish
the Securities of the series from all other Securities;
(b) the limit, if any, upon the aggregate principal amount of the
Securities of such 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 11.6 and except for any
Securities which, pursuant to the last paragraph of Section 3.3, are deemed
never to have been authenticated and delivered hereunder); provided, however,
that the authorized aggregate principal amount of such series may be increased
above such amount by a Board Resolution to such effect;
(c) the Person to whom any interest on a Security of the series shall be
payable, if other than 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;
(d) the Stated Maturity or Maturities on which the principal of the
Securities of such series is payable or the method of determination thereof,
and any dates on which or circumstances under which, the Company shall have the
right to extend or shorten such Stated Maturity or Maturities;
(e) the rate or rates, if any, or method for calculating the rate of
rates, at which the Securities of such series shall bear interest, if any, the
rate or rates or method for calculating the rate or rates, which and extent to
which Additional Interest, if any, shall be payable in respect of any
Securities of such series, the date or dates from which any such interest or
Additional Interest shall accrue, the Interest Payment Dates on which such
interest shall be payable, the right, pursuant to Section 3.11 or as otherwise
set forth therein, of the Company to defer or extend an Interest Payment Date,
and the Regular Record Date for the interest payable on any Interest Payment
Date or the method by which any of the foregoing shall be determined;
(f) the place or places where the principal of (and premium, if any) and
interest (including any Additional Interest) on the Securities of such series
shall be payable, the place or places where the Securities of such series may
be presented for registration of transfer or exchange, any
<PAGE>
23
restrictions that may be applicable to any such registration of transfer or
exchange in addition to or in lieu of those set forth herein, and the place or
places where notices and demands to or upon the Company in respect of the
Securities of such series may be made;
(g) the period or periods within which, or the date or dates on which, if
any, the price or prices at which and the terms and conditions upon which the
Securities of such series may be redeemed, in whole or in part, at the option
of the Company, and if other than by a Board Resolution, the manner in which
any election by the Company to redeem such Securities shall be evidenced;
(h) the obligation or the right, if any, of the Company to redeem, repay
or purchase the Securities of such series pursuant to any sinking fund,
amortization or analogous provisions or upon the happening of a specified
event, or at the option of a Holder thereof, and the period or periods within
which, the price or prices at which, the currency or currencies (including
currency unit or units) in which and the other terms and conditions upon which
Securities of the series shall be redeemed, repaid or purchased, in whole or in
part, pursuant to such obligation;
(i) the denominations in which any Securities of such series shall be
issuable, if other than denominations of $25 and any integral multiple thereof;
(j) if other than Dollars, the currency or currencies (including any
currency unit or units) in which the principal of (and premium, if any) and
interest (including any Additional Interest), if any, on the Securities of the
series shall be payable, or in which the Securities of the series shall be
denominated and the manner of determining the equivalent thereof in Dollars for
purposes of the definition of Outstanding;
(k) the additions, modifications or deletions, if any, in the Events of
Default or covenants of the Company set forth herein with respect to the
Securities of such series;
(l) if other than the principal amount thereof, the portion of the
principal amount of Securities of such series that shall be payable upon
declaration of acceleration of the Maturity thereof;
(m) if the principal amount payable at the Stated Maturity of any
Securities of the series will not be determinable as of any one or more dates
prior to the Stated Maturity, the amount which shall be deemed to be the
principal amount of such Securities as of any such date for any purpose
thereunder or hereunder, including the principal amount thereof which shall be
due and payable upon any Maturity other than the Stated Maturity or which shall
be deemed to be Outstanding as of any date prior to the Stated Maturity (or, in
any such case, the manner in which such amount deemed to be the principal
amount shall be determined);
(n) the additions or changes, if any, to this Indenture with respect to
the Securities of such series as shall be necessary to permit or facilitate the
issuance of the Securities of such series in bearer form, registrable or not
registrable as to principal, and with or without interest coupons;
<PAGE>
24
(o) any index or indices used to determine the amount of payments of
interest, principal of and/or premium, if any, on the Securities of such series
or the manner in which such amounts will be determined;
(p) if applicable, that any Securities of the series shall be issuable in
whole or in part in the form of one or more Global Securities and, in such
case, the respective Depositaries for such Global Securities, the form of any
legend or legends which shall be borne by any such Global Security in addition
to or in lieu of that set forth in Section 2.4 and any circumstances in
addition to or in lieu of those set forth in Section 3.5 in which any such
Global Security may be exchanged in whole or in part for Securities registered,
and any transfer of such Global Security in whole or in part may be registered,
in the name or names of Persons other than the Depositary for such Global
Security or a nominee thereof;
(q) the appointment of any Paying Agent or Agents (which may be the
Company) for the Securities of such series;
(r) the terms of any right to convert or exchange Securities of such
series into any other securities or property of the Company, and the additions
or changes, if any, to this Indenture with respect to the Securities of such
series to permit or facilitate such conversion or exchange;
(s) if such Securities are to be issued to a Trust, the form or forms of
the Trust Agreement and Guarantee Agreement (as defined in the related Trust
Agreement) relating thereto;
(t) if other than as set forth herein, the relative degree, if any, to
which the Securities of the series shall be senior to or be subordinated to
other series of Securities in right of payment, whether such other series of
Securities are Outstanding or not;
(u) any change in the right of the Trustee or the requisite Holders of
such Securities to declare the principal amount thereof due and payable
pursuant to Section 5.2; and
(v) any other terms of the Securities of such series (which terms shall
not be inconsistent with the provisions of this Indenture, except as permitted
by Section 9.1(6)).
All Securities of any one series shall be substantially identical except
as to denomination and except as may otherwise be provided herein or in or
pursuant to such Board Resolution and set forth in, or determined in the manner
provided in, such Officers' Certificate or in any such indenture supplemental
hereto.
If any of the terms of the Securities of any 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.
The Securities shall be subordinated in right of payment to Senior Debt
as provided in Article XIII.
<PAGE>
25
Section 3.2. Denominations
The Securities of each series shall be in registered form without coupons
and shall be issuable in denominations of $25 and any integral multiple
thereof, unless otherwise specified as contemplated by Section 3.1.
Section 3.3. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
President or one of its Vice Presidents under its corporate seal reproduced or
impressed thereon and 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 the Company
Order shall authenticate and make such Securities available for delivery. If
the form or terms of the Securities of the series have been established by or
pursuant to one or more Board Resolutions 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, in addition to the documents required by
Section 1.2, an Opinion of Counsel stating,
(1) if the form of such Securities has been established by or
pursuant to Board Resolution as permitted by Section 2.1, that such form
has been established in conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been established by or
pursuant to Board Resolution as permitted by Section 3.1, that such terms
have been established in conformity with the provisions of this
Indenture;
(3) 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 their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles; and
(4) that all laws and requirements in respect of the execution and
delivery by the Company of such Securities have been complied with.
<PAGE>
26
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
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
authentication of each Security of such series if such documents are delivered
at or prior to the 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 the manual signature of one of its authorized
signatories, and such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been duly authenticated
and delivered hereunder. 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, for all purposes of this Indenture
such Security shall be deemed never to have been authenticated and delivered
hereunder and shall not 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
make available for delivery, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive
Securities of such series in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities of any series are issued, the Company will cause
definitive Securities of such series to be prepared without unreasonable delay.
After the preparation of definitive Securities, the temporary Securities shall
be exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for that purpose
without charge to the Holder. Upon surrender for cancellation of any one or
more temporary Securities, the Company shall execute and the Trustee shall
authenticate and make available for delivery in exchange therefor one or more
definitive Securities of the same series, of any authorized denominations
having the same Original Issue Date and Stated Maturity and having the same
terms as such temporary Securities. 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.
<PAGE>
27
Section 3.5. Registration, Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a 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. Such register is herein sometimes referred to as the
"Securities Register." The Trustee is hereby appointed "Securities Registrar"
for the purpose of registering Securities and transfers of Securities as herein
provided.
Upon surrender for registration of transfer of any Security at the office
or agency of the Company designated for that purpose the Company shall execute,
and the Trustee shall authenticate and make available for delivery, in the name
of the designated transferee or transferees, one or more new Securities of the
same series of any authorized denominations of like tenor and aggregate
principal amount.
At the option of the Holder, Securities may be exchanged for other
Securities of the same series of any authorized denominations, of a like tenor
and aggregate principal amount, upon surrender of the Securities to be
exchanged at such office or agency. Whenever any Securities are so surrendered
for exchange, the Company shall execute, and the Trustee shall authenticate and
make available for delivery, 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
exchange shall (if so required by the Company or the Securities Registrar) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Securities Registrar, duly executed by the
Holder thereof or such Holder's attorney duly authorized in writing.
No service charge shall be made to a Holder 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.
The provisions of Clauses (1), (2), (3) and (4) below shall apply
only to Global Securities:
(1) Each Global Security authenticated under this Indenture shall
be registered in the name of the Depositary designated for such Global
Security or a nominee thereof and delivered to such Depositary or a
nominee thereof or custodian therefor, and each such Global Security
shall constitute a single Security for all purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture, no
Global Security may be exchanged in whole or in part for Securities
registered, and no transfer of a Global
<PAGE>
28
Security in whole or in part may be registered, in the name of any Person
other than the Depositary for such Global Security or a nominee thereof
unless (A) such Depositary (i) has notified the Company that it is
unwilling or unable to continue as Depositary for such Global Security or
(ii) has ceased to be a clearing agency registered under the Exchange Act
at a time when the Depositary is required to be so registered to act as
depositary, in either case unless the Company has approved a successor
Depositary within 90 days, (B) there shall have occurred and be
continuing an Event of Default with respect to such Global Security, (C)
the Company in its sole discretion determines that such Global Security
will be so exchangeable or transferable or (D) there shall exist such
circumstances, if any, in addition to or in lieu of the foregoing as have
been specified for this purpose as contemplated by Section 3.1.
(3) Subject to Clause (2) above, any exchange of a Global Security
for other Securities may be made in whole or in part, and all Securities
issued in exchange for a Global Security or any portion thereof shall be
registered in such names as the Depositary for such Global Security shall
direct.
(4) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any
portion thereof, whether pursuant to this Section, Section 3.4, 3.6, 9.6
or 11.6 or otherwise, shall be authenticated and delivered in the form
of, and shall be, a Global Security, unless such Security is registered
in the name of a Person other than the Depositary for such Global
Security or a nominee thereof.
Neither the Company nor the Trustee shall be required, pursuant to the
provisions of this Section, (a) to issue, register the transfer of or exchange
any Security of any series during a period beginning at the opening of business
15 days before the day of selection for redemption of Securities of that series
pursuant to Article XI and ending at the close of business on the day of
mailing of notice of redemption or (b) to register the transfer of or exchange
any Security so selected for redemption in whole or in part, except, in the
case of any such Security to be redeemed in part, any portion thereof not to be
redeemed.
Section 3.6. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee together with
such security or indemnity as may be required by the Company or the Trustee to
save each of them harmless, the Company shall execute and the Trustee shall
authenticate and make available for delivery in exchange therefor a new
Security of the same series of like tenor and aggregate principal amount and
bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and to 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 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
make available for delivery, in lieu of any such destroyed, lost or stolen
Security, a new Security of the same
<PAGE>
29
series of like tenor and aggregate principal amount as such destroyed, lost or
stolen Security, 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 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 and Additional Interest; Interest
Rights Preserved.
Interest and Additional Interest on any Security of any series which is
payable, and is punctually paid or duly provided for, on any Interest Payment
Date, shall be paid to the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest in respect of Securities of such series, except
that, unless otherwise provided in the Securities of such series, interest and
any Additional Interest payable on the Stated Maturity of the principal of a
Security shall be paid to the Person to whom principal is paid. The initial
payment of interest on any Security of any series which is issued between a
Regular Record Date and the related Interest Payment Date shall be payable as
provided in such Security or in the Board Resolution pursuant to Section 3.1
with respect to the related series of Securities. At the option of the Company,
interest on any series of Securities may be paid (i) by check mailed to the
address of the Person entitled thereto as it shall appear on the Securities
Register of such series or (ii) by wire or electronic funds transfer in
immediately available funds at such place and to such account as designated by
the Person entitled thereto as specified in the Securities Register of such
series.
Any interest on any Security which is payable, but is not timely paid or
duly provided for, on any Interest Payment Date for Securities of such series
(herein called "Defaulted Interest"), shall forthwith cease to be payable to
the registered Holder on the relevant Regular Record Date by virtue of having
been such Holder, and such Defaulted Interest may be paid by the Company, at
its election in each case, as provided in Clause (1) or (2) below:
<PAGE>
30
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities of such series in respect of which
interest is in default (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security and the date of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such
deposit on or prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this Clause provided. Thereupon the Trustee shall fix
a Special Record Date for the payment of such Defaulted Interest which shall be
not more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee of
the notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be mailed, first class, postage
prepaid, to each Holder of a Security of such series at the address of such
Holder as it appears in the Securities Register not less than 10 days prior to
such Special Record Date. The Trustee may, in its discretion, in the name and
at the expense of the Company, cause a similar notice to be published at least
once in a newspaper, customarily published in the English language on each
Business Day and of general circulation in the Borough of Manhattan, The City
of New York, but such publication shall not be a condition precedent to the
establishment of such Special Record Date. Notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor having been mailed
as aforesaid, such Defaulted Interest shall be paid to the Persons in whose
names the Securities of such series (or their respective Predecessor
Securities) are registered on such Special Record Date and shall no longer be
payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities exchange
or automated quotation system on which the Securities of the series in respect
of which interest is in default may be listed or traded and, upon such notice
as may be required by such exchange (or by the Trustee if the Securities are
not listed), if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this Clause, such payment shall be deemed
practicable by the Trustee.
Any interest on any Security which is deferred or extended pursuant to
Section 3.11 shall not be Defaulted Interest for the purposes of this Section
3.7.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon 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.
<PAGE>
31
Section 3.8. Persons Deemed Owners.
The Company, the Trustee and any agent of the Company or the Trustee
shall treat the Person in whose name any Security is registered as the owner of
such Security for the purpose of receiving payment of principal of and (subject
to Sections 3.7 and 3.11) any 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 shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee, and any such Securities and Securities
surrendered directly to the Trustee for any such purpose 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 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 shall be returned by the Trustee to the
Company and destroyed by the Company.
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 for any
period shall be computed on the basis of a 360-day year of twelve 30-day months
and interest on the Securities of each series for any partial period shall be
computed on the basis of the number of days elapsed in a 360-day year of twelve
30-day months.
Section 3.11. Deferrals of Interest Payment Dates.
If specified as contemplated by Section 2.1 or Section 3.1 with respect
to the Securities of a particular series, so long as no Event of Default has
occurred and is continuing, the Company shall have the right, at any time
during the term of such series, from time to time to defer the payment of
interest on such Securities for such period or periods as may be specified as
contemplated by Section 3.1 (each, an "Extension Period") during which
Extension Periods the Company shall, if so specified as contemplated by Section
3.1, have the right to make partial payments of interest on any Interest
Payment Date. No Extension Period shall end on a date other than an Interest
Payment Date. At the end of any such Extension Period the Company shall pay all
interest then accrued and unpaid on the Securities (together with Additional
Interest thereon, if any, at the rate specified for the Securities of such
series to the extent permitted by applicable law) to the Persons in whose names
that Securities are registered at the close of business on the Regular Record
Date with respect to the Interest Payment Date at the end of such Extension
Period; provided, however, that no Extension Period shall extend beyond the
Stated Maturity of the principal of the Securities of such series; provided,
further, that during any such Extension
<PAGE>
32
Period, the Company shall not, and shall not permit any Subsidiary to, (i)
declare or pay any dividends or distributions on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any of the Company's capital
stock, (ii) make any payment of principal of or interest or premium, if any, on
or repay, repurchase or redeem any debt security of the Company that ranks pari
passu with or junior in interest to the Securities of such series or (iii) make
any guarantee payments with respect to any guarantee by the Company of the debt
securities of any Subsidiary of the Company that by their terms rank pari passu
with or junior in interest to the securities of such series (other than (a)
dividends or distributions in the Company's capital stock, (b) any declaration
of a dividend in connection with the implementation of a stockholder rights
plan, or the redemption or repurchase of any rights distributed pursuant to a
stockholder rights plan and (c) payments under the Guarantee with respect to
such Security). Prior to the termination of any such Extension Period, the
Company may further defer the payment of interest, provided that no Extension
Period shall exceed the period or periods specified in such Securities or
extend beyond the Stated Maturity of the principal of such Securities. Upon
termination of any Extension Period and upon the payment of all accrued and
unpaid interest and any Additional Interest then due on any Interest Payment
Date, the Company may elect to begin a new Extension Period, subject to the
above conditions. No interest shall be due and payable during an Extension
Period, except at the end thereof, but each installment of interest that would
otherwise have been due and payable during such Extension Period shall bear
Additional Interest as and to the extent as may be specified as contemplated by
Section 3.1. The Company shall give the Holders of the Securities of such
series and the Trustee written notice of its election to begin any such
Extension Period at least one Business Day prior to the next succeeding
Interest Payment Date on which interest on Securities of such series would be
payable but for such deferral or, with respect to the Securities of a series
issued to a Trust, so long as such Securities are held by such Trust, prior to
the earlier of (i) the next succeeding date on which Distributions on the
Preferred Securities of such Trust would be payable but for such deferral or
(ii) the date the Administrative Trustees of such Trust are required to give
notice to any securities exchange or other applicable self-regulatory
organization or to holders of such Preferred Securities of the record date or
the date such Distributions are payable, but in any event not less than one
Business Day prior to such record date.
The Trustee shall promptly give notice, in the name and at the expense of
the Company, of the Company's election to begin any such Extension Period to
the Holders of the Outstanding Securities of such series.
Section 3.12. Right of Set-Off.
With respect to the Securities of a series initially issued to a Trust,
notwithstanding anything to the contrary herein, the Company shall have the
right to set off any payment it is otherwise required to make in respect of any
such Security to the extent the Company has theretofore made, or is
concurrently on the date of such payment making, a payment under the Guarantee
Agreement relating to such Security or to a holder of Preferred Securities
pursuant to an action undertaken under Section 5.8 of this Indenture.
<PAGE>
33
Section 3.13. Agreed Tax Treatment.
Each Security issued hereunder shall provide that the Company and, by its
acceptance of a Security or a beneficial interest therein, the Holder of, and
any Person that acquires a beneficial interest in, such Security intend that
such Security constitutes indebtedness and agree to treat such Security as
indebtedness for United States federal, local and state tax purposes.
Section 3.14. Shortening or Extension of Stated Maturity.
If specified as contemplated by Section 2.1 or Section 3.1 with respect
to the Securities of a particular series, the Company shall have the right to
(i) shorten the Stated Maturity of the principal of the Securities of such
series at any time to any date not earlier than the first date on which the
Company has the right to redeem the Securities of such series, and (ii) extend
the Stated Maturity of the principal of the Securities of such series at any
time at its election for one or more periods, but in no event to a date later
than the 49th anniversary of the Original Issue Date of the Securities of such
series; provided that, if the Company elects to exercise its right to extend
the Stated Maturity of the principal of the Securities of such series pursuant
to clause (ii) above, at the time such election is made and at the time of
extension (A) the Company shall not be in bankruptcy, otherwise insolvent or in
liquidation, (B) the Company shall not be in default in the payment of any
interest or principal on such Securities, (C) in the case of any series of
Securities initially issued to a Trust, if the Trust has not been liquidated,
such Trust shall not be in arrears on payments of Distributions on the
Preferred Securities issued by such Trust and no deferred Distributions are
accumulated and (D) such Securities shall not be rated not less than BBB- by
S&P or Baa3 by Moody's or the equivalent by any other nationally recognized
statistical rating organization. In the event the Company elects to shorten or
extend the Stated Maturity of the Securities, it shall give written notice to
the Trustee, and the Trustee shall give notice of such shortening or extension
to the Holders, no less than 30 and no more than 60 days prior to the
effectiveness thereof.
Section 3.15. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption and other similar or related material as a convenience to
Holders; provided that any such notice or other material may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption or other
material and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be
affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the CUSIP numbers.
<PAGE>
34
ARTICLE IV
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 registration of transfer or exchange of
Securities herein expressly provided for and as otherwise provided in this
Section 4.1) and the Trustee, on 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 within
one year of the date of deposit, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the
expense, of the Company,
and the Company, in the case of subclause (B) (i), (ii) or (iii)
above, has deposited or caused to be deposited with the Trustee as
trust funds in trust for such purpose an amount in the currency or
currencies in which the Securities of such series are payable
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
(including any Additional 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
<PAGE>
35
(3) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7, the obligations of
the Company to any Authenticating Agent under Section 6.14 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 4.2 and the last
paragraph of Section 10.3 shall survive.
Section 4.2. Application of Trust Money.
Subject to the 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 the Trustee, 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 its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest (including any Additional Interest) for the payment of which
such money or obligations have been deposited with or received by the Trustee.
ARTICLE V
REMEDIES
Section 5.1. Events of Default.
"Event of Default", wherever used herein with respect to the 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), except as may be specified pursuant to Section 3.1:
(1) default in the payment of any interest upon any Security of that
series, including any Additional Interest in respect thereof, when it becomes
due and payable, and continuance of such default for a period of 30 days
(subject to the deferral of any interest payment date in the case of an
Extension Period); 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 performance, or breach of any covenant or warranty of
the Company in this Indenture with respect to that series (other than a
covenant or warranty a default in the performance of which or the breach of
which is elsewhere in this Section specifically dealt with), 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
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36
by the Holders of at least 25% in aggregate principal amount of the Outstanding
Securities of that series a written notice specifying such default or breach
and requiring it to be remedied; or
(4) the entry of a decree or order by a court having jurisdiction in the
premises 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 bankruptcy, insolvency, reorganization or other similar law, or
appointing a 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 of
any such decree or order unstayed and in effect for a period of 60 consecutive
days; or
(5) the institution by the Company of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable federal or
state bankruptcy, insolvency, reorganization or other similar law, or the
consent by it to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or of any substantial part of its property, or the
making by it of an assignment for the benefit for creditors, or the admission
by it in writing of its inability to pay its debts generally as they become due
and its willingness to be adjudicated a bankrupt, or the taking of corporate
action by the Company in furtherance of any such action; or
(6) any other Event of Default provided with respect to Securities of
that series.
Section 5.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 5.1(4) or 5.1(5)) 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 not less than 25% in aggregate principal amount of the
Outstanding Securities of that series may declare the principal amount of all
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), provided that,
in the case of the Securities of a series issued to a Trust, if, upon an Event
of Default, the Trustee or the Holders of not less than 25% in principal amount
of the Outstanding Securities of that series fail to declare the principal
amount of all the Securities of that series to be immediately due and payable,
the holders of at least 25% in aggregate Liquidation Amount (as defined in the
related Trust Agreement) of the related series of Preferred Securities then
outstanding shall have such right to make such declaration by a notice in
writing to the Company and the Trustee; and upon any such declaration such
principal amount (or specified portion thereof) of and the accrued interest
(including any Additional Interest) on all the Securities of such series shall
become immediately due and payable. Payment of principal and interest
(including any Additional Interest) on such Securities shall remain
subordinated to the extent provided in Article XIII notwithstanding that such
amount shall become immediately due and payable as herein provided. If an Event
of Default specified in Section 5.1(4) or 5.1(5) with respect to Securities of
any series at the time Outstanding occurs, the principal amount of all the
Securities of that series (or, if the Securities
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37
of that series are Discount Securities, such portion of the principal amount of
such Securities as may be specified by the terms of that series) shall
automatically, and without any declaration or other action on the part of the
Trustee or any Holder, become immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in
this Article provided, the Holders of a majority in aggregate principal amount
of the 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 installments of interest (including any Additional
Interest) on all Securities of that series,
(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 borne by the Securities, and
(C) 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 all other amounts due the Trustee pursuant to Section 6.7; 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
has become due solely by such acceleration, have been cured or waived as
provided in Section 5.13;
provided that, in the case of Securities of a series held by a Trust, if the
Holders of at least a majority in principal amount of the Outstanding
Securities of that series fails to rescind and annul such declaration and its
consequences, the holders of a majority in aggregate Liquidation Amount (as
defined in the related Trust Agreement) of the related series of Preferred
Securities then outstanding shall have such right by written notice to the
Company and the Trustee, subject to the satisfaction of the conditions set
forth in Clauses (1) and (2) above of this Section 5.2.
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 is made in the payment of any installment of interest
(including any Additional Interest) on any Security of any series when such
interest becomes due and payable and such default continues for a period of 30
days, or
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38
(2) default is made in the payment of the principal of (and premium, if
any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities, the whole amount then due and
payable on such Securities for principal, including any sinking fund payment or
analogous obligations (and premium, if any) and interest (including any
Additional Interest); and, in addition thereto, all amounts owing the Trustee
under Section 6.7. Payment of principal, including any sinking fund payment or
analogous obligations (and premium, if any) and interest (including Additional
Interest) on such Securities shall remain subordinated to the extent provided
in Article XIII notwithstanding that such amount shall become immediately due
and payable as herein provided.
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, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon the 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 the 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,
(a) the Trustee (irrespective of whether the principal of the Securities
of any series shall then be due and payable as therein expressed or by
declaration of acceleration or otherwise and irrespective of whether the
Trustee shall have made any demand on the Company for the payment of overdue
principal (and premium, if any) or interest (including any Additional
Interest)) shall be entitled and empowered, by intervention in such proceeding
or otherwise,
(i) to file and prove a claim for the whole amount of principal (or, if
the Securities of that series are Discount Securities, such portion of the
principal amount as may be due and payable pursuant to a declaration in
accordance with Section 5.2) (and premium, if any) and interest (including any
Additional Interest) owing and unpaid in respect to the Securities and to file
such other papers or documents as may be necessary or advisable and to take any
and all actions as are authorized under the Trust Indenture Act in order to
have the claims of the Holders
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39
and the claims of the Trustee and any predecessor to the Trustee under Section
6.7 allowed in any such judicial proceedings; and
(ii) in particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same in accordance with Section 5.6; and
(b) 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 for distribution
in accordance with Section 5.6, 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 to it and any predecessor 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; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
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,
subject to Article XIII and after provision for the payment of all the amounts
owing the Trustee and any predecessor Trustee under Section 6.7, 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 or property collected or to be applied by the Trustee with
respect to a series of Securities 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 or property on account of principal (or premium,
if any) or interest (including any Additional 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 and any predecessor
Trustee under Section 6.7;
SECOND: Subject to Article XIII, to the payment of the amounts then due
and unpaid upon such series of Securities for principal (and premium, if any)
and interest (including any Additional Interest) in respect of which or for the
benefit of which such money has been
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40
collected, ratably, without preference or priority of any kind, according to
the amounts due and payable on such series of Securities for principal (and
premium, if any) and interest (including any Additional Interest),
respectively; and
THIRD: The balance, if any, to the Person or Persons entitled thereto.
Section 5.7. Limitation on Suits.
Subject to Section 5.8, no Holder of any Securities 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, assignee, trustee,
liquidator, sequestrator (or other similar official) or for any other remedy
hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities of that series;
(2) the Holders of not less than 25% in aggregate principal amount of the
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
security or indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request and
offer of security or 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 60-day period by the Holders of a majority in aggregate
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 itself of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Securities, 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 such Holders.
Section 5.8. Unconditional Right of Holders to Receive Principal,
Premium and Interest; Direct Action by Holders of Preferred Securities.
Notwithstanding any other provision in this Indenture, the Holder of any
Security of any series shall have the right, which is absolute and
unconditional, to receive payment of the principal of (and premium, if any) and
(subject to Sections 3.7 and 3.11) interest (including any Additional Interest)
on such Security on the respective Stated Maturities expressed in such Security
(or, in the case of redemption, on the Redemption Date) and to institute suit
for the enforcement of any such payment, and such right shall not be impaired
without the consent of such Holder. In the case of Securities of a series held
by a Trust, any registered holder of the
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41
corresponding series of Preferred Securities held by such Trust shall have the
right, upon the occurrence of an Event of Default described in Section 5.1(1)
or 5.1(2), to institute a suit directly against the Company for enforcement of
payment to such holder of principal of (and premium, if any) and (subject to
Sections 3.7 and 3.11) interest (including any Additional Interest) on the
Securities having a principal amount equal to the aggregate Liquidation Amount
(as defined in the related Trust Agreement) of such Preferred Securities held
by such holder.
Section 5.9. Restoration of Rights and Remedies.
If the Trustee, any Holder or any holder of Preferred Securities issued
by any Trust 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, such Holder or such
holder of Preferred Securities, then and in every such case the Company, the
Trustee, such Holder and such holder of Preferred Securities shall, subject to
any determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee, such Holder and the holders of Preferred Securities shall continue as
though no such proceeding had been instituted.
Section 5.10. Rights and Remedies Cumulative
Except as otherwise provided in the last paragraph of Section 3.6, no
right or remedy herein conferred upon or reserved to the Trustee or 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, any Holder of any Security or any
holder of any Preferred Security, in each case with respect to the Securities
of the related series, to exercise any right or remedy accruing upon any Event
of Default with respect to the Securities of the related series 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 and the right and remedy given to the holders of Preferred
Securities by Section 5.8 may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee, the Holders or the holders of
Preferred Securities, as the case may be.
Section 5.12. Control by Holders.
The Holders of not less than a majority in aggregate principal amount of
the Outstanding Securities of any series shall have the right to direct the
time, method and place of conducting
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42
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,
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(3) subject to the provisions of Section 6.1, the Trustee shall have the
right to decline to follow such direction if a Responsible Officer or Officers
of the Trustee shall, in good faith, determine that the proceeding so directed
would be unjustly prejudicial to the Holders not joining in any such direction
or would involve the Trustee in personal liability.
Section 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal amount of
the Outstanding Securities of any series affected thereby and, in the case of
any Securities of a series initially issued to a Trust, the holders of a
majority in Liquidation Amount (as defined in the related Trust Agreement) of
Preferred Securities issued by such Trust may waive any past default hereunder
and its consequences with respect to such series except a default:
(1) in the payment of the principal of (or premium, if any) or interest
(including any Additional Interest) on any Security of such series (unless 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 has become due
solely by such acceleration, have been cured or annulled as provided in Section
5.3 and the Company has paid or deposited with the Trustee a sum sufficient to
pay all overdue installments of interest (including any Additional Interest) on
all Securities of that series, 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 borne by the
Securities, and 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 all other amounts due the Trustee pursuant to
Section 6.7), or
(2) in respect of a covenant or provision hereof which under Article IX
cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series affected.
Any such waiver shall be deemed to be on behalf of the Holders of all the
Securities of such series or, in the case of a waiver by holders of Preferred
Securities issued by such Trust, by all holders of Preferred Securities issued
by such Trust.
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.
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43
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
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 and
expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section shall not apply 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 aggregate principal amount of the Outstanding
Securities of any series, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of (or premium, if any) or interest
(including any Additional Interest) on any Security on or after the respective
Stated Maturities expressed in such Security.
Section 5.15. Waiver of Usury, 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 usury, 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 VI
THE TRUSTEE
Section 6.1. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such duties as
are specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but in the case of any such
certificates or opinions which by any provisions hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements
of this Indenture.
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(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, 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.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of
Holders pursuant to Section 5.12 relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this Indenture
with respect to the Securities of a series.
(d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) 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.
Within 90 days after actual knowledge by a Responsible Officer of the
Trustee of the occurrence of any default hereunder with respect to the
Securities of any series, the Trustee shall transmit by mail to all Holders of
Securities of such series, as their names and addresses appear in the
Securities Register, notice of such default, unless such default shall have
been cured or waived; provided, however, that, except in the case of a default
in the payment of the principal of (or premium, if any) or interest (including
any Additional Interest) on any Security of such series, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determines that the withholding of such
notice is in the interests of the Holders of Securities of such series; and
provided, further, that, in the case of any default of the character specified
in Section 5.1(3), no such notice to Holders of Securities of such series shall
be given until at least 30 days after the occurrence thereof. For the purpose
of this Section,
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the term "default" means any event which is, or after notice or lapse of time
or both would become, an Event of Default with respect to Securities of such
series.
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, Security
or other paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors shall be sufficiently evidenced by a Board
Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel of its selection and the advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, indenture,
Security or other paper or document, but the Trustee in its discretion may make
such inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through 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;
(h) the Trustee shall not be liable for any action taken, suffered, or
omitted to be taken by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Indenture; and
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(i) the Trustee shall not be charged with knowledge of any default or
Event of Default with respect to the Securities of any series for which it is
acting as Trustee unless either (1) a Responsible Officer shall have actual
knowledge of such default or Event of Default or (2) written notice of such
default or Event of Default shall have been given to the Trustee by the Company
or any other obligor on such Securities or by any Holder of such Securities.
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 neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture or of the Securities. Neither
the Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of the Securities or the proceeds thereof.
Section 6.5. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Securities
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to
Sections 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,
Securities Registrar or such other agent.
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 any money received by it hereunder except as
otherwise agreed in writing with the Company.
Section 6.7. Compensation and Reimbursement.
The Company, as borrower, agrees
(1) to pay to the Trustee from time to time such compensation as shall be
agreed in writing between the Company and the Trustee 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) 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 its
negligence or bad faith; and
(3) to indemnify each of the Trustee and any predecessor Trustee for, and
to hold it harmless against, any and all loss, liability, damage, claim or
expense (including the reasonable
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47
compensation and the expenses and disbursements of its agents and counsel)
incurred without negligence or willful misconduct, arising out of or in
connection with the acceptance or administration of this trust or the
performance of its duties 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. This indemnification
shall survive the termination of this Indenture.
To secure the Company's payment obligations in this Section, the Company
and the Holders agree that the Trustee shall have a lien prior to the
Securities on all money or property held or collected by the Trustee. Such lien
shall survive the resignation or removal of the Trustee and the defeasance or
other satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 5.1(4) or (5) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under the Bankruptcy Reform Act of 1978 or any successor
statute.
Section 6.8. Disqualification; Conflicting Interests.
(a) The Trustee for the Securities of any series issued hereunder shall
be subject to the provisions of Section 310(b) of the Trust Indenture Act.
Nothing herein shall prevent the Trustee from filing with the Commission the
application referred to in the second to last paragraph of said Section 310(b).
(b) The Trust Agreement and the Guarantee Agreement with respect to each
Trust shall be deemed to be specifically described in this Indenture for the
purposes of clause (i) of the first proviso contained in Section 310(b) of the
Trust Indenture Act.
Section 6.9. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
(a) a corporation organized and doing business under the laws of the
United States of America or of any state or territory thereof or the District
of Columbia, authorized under such laws to exercise corporate trust powers and
subject to supervision or examination by federal, state, territorial or
District of Columbia authority, or
(b) a corporation or other Person organized and doing business under the
laws of a foreign government that is permitted to act as Trustee pursuant to a
rule, regulation or order of the Commission, authorized under such laws to
exercise corporate trust powers, and subject to supervision or examination by
authority of such foreign government or a political subdivision thereof
substantially equivalent to supervision or examination applicable to United
States institutional trustees,
in either case having a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by federal or state authority. If such
corporation publishes reports of
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48
condition at least annually, pursuant to law or to the requirements of the
aforesaid 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. Neither the Company nor any Person directly or indirectly controlling,
controlled by or under common control with the Company shall serve as Trustee
for the Securities of any series issued hereunder.
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 under 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 an
instrument of acceptance by a successor Trustee shall not have been delivered
to the Trustee within 30 days after the giving of such notice of resignation,
the resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in aggregate
principal amount of the Outstanding Securities of such series, delivered to the
Trustee and to the Company. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days after such
removal, the Trustee being removed may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.8 after written
request therefor by the Company or by 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 by any such
Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, (i) the Company, acting pursuant to the authority of 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 such Holder and all others
similarly situated, petition any court of competent jurisdiction for the
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49
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 with respect to the
Securities of that or those series. If, within one year after such resignation,
removal or incapability, or the occurrence of such vacancy, a successor Trustee
with respect to the Securities of any series shall be appointed by Act of the
Holders of a majority in aggregate principal amount of the Outstanding
Securities of such series delivered to the Company and the retiring Trustee,
the successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Trustee with respect to the Securities of
such series and 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 hereinafter provided, any Holder who has been a bona fide Holder of a
Security for at least six months may, subject to Section 5.14, 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 the Holders of Securities of such series as their names and addresses appear
in the Securities 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 to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such 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
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50
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 rights, powers and trusts referred to in
paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept 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 of 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, and in case
any Securities shall not have been authenticated, any successor to the Trustee
may authenticate such Securities either in the name of any predecessor Trustee
or in the name of such successor Trustee, and in all cases the certificate of
authentication shall have the full force which it is provided anywhere in the
Securities or in this Indenture that the certificate of the Trustee shall have.
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51
Section 6.13. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
Section 6.14. Appointment of Authenticating Agent.
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 original
issue and 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. 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, or of any state or territory 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 all or substantially all of
the corporate trust business of an Authenticating Agent shall be the successor
Authenticating Agent hereunder, provided such corporation shall be otherwise
eligible under this Section, without the execution or filing of any paper or
any further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 1.6 to all Holders of Securities
of the series with respect to which such Authenticating Agent will serve. Any
successor Authenticating Agent upon acceptance of its appointment
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52
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 provision 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 alternative
certificate of authentication in the following form:
This is one of the Securities of the series designated on the face hereof
and referred to in the within mentioned Indenture.
THE CHASE MANHATTAN BANK
As Trustee
By:
As Authenticating Agent
-----------------------------------
By:
Authorized Officer
-----------------------------------
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53
ARTICLE VII
HOLDER'S 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:
(a) semi-annually, not more than 15 days after January 15 and July 15 in
each year, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such January 1 and July 1, and
(b) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished,
; provided, however, that no such list need be furnished to the Trustee at any
time when the Trustee is serving as Securities 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 Securities
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 privileges of the Trustee, shall be as provided in 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 the
disclosure of information as to the names and addresses of the Holders made
pursuant to the Trust Indenture Act.
Section 7.3. Reports by Trustee.
(a) 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 at the times and in the manner provided pursuant thereto.
If required by Section 313(a) of the Trust Indenture Act, the Trustee shall,
within sixty days after each May 15 following the date of this Indenture
deliver to Holders a brief report, dated as of such May 15, which complies with
the provisions of such Section 313(a).
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54
(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 and also with the Commission. The Company will promptly
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 with 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 in the Trust Indenture Act; provided that
any such information, documents or reports required to be filed with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act shall be
filed with the Trustee within 15 days after the same is required to be filed
with the Commission. Notwithstanding that the Company may not be required to
remain subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Company shall continue to provide the Trustee with the annual
reports and the information, documents and other reports which are specified in
Sections 13 and 15(d) of the Exchange Act. The Company also shall comply with
the other provisions of Trust Indenture Act Section 314(a). Delivery of such
reports, information and documents to the Trustee is for informational purposes
only and the Trustee's receipt of such shall not constitute constructive notice
of any information contained therein, including the Company's compliance with
any of its covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officers' Certificates).
ARTICLE VIII
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 no Person shall 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) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, the Person formed by such consolidation or into
which the Company is merged or the Person which acquires by conveyance or
transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a corporation, partnership or trust
organized and existing under the laws of the United States of America or any
State or the District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the principal of
(and premium, if any) and interest (including any Additional Interest) on all
the Securities of every series and the performance of every covenant of this
Indenture on the part of the Company to be performed or observed;
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55
(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
constitute an Event of Default, shall have happened and be continuing;
(3) in the case of the Securities of a series held by a Trust, such
consolidation, merger, conveyance, transfer or lease is not precluded by the
related Trust Agreement and Guarantee and does not give rise to any breach or
violation of the related Trust Agreement or Guarantee; and
(4) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease and any such supplemental indenture
complies with this Article and that all conditions precedent herein provided
for relating to such transaction have been complied with; and the Trustee,
subject to Section 6.1, may rely upon such Officers' Certificate and Opinion of
Counsel as conclusive evidence that such transaction complies with this Section
8.1.
Section 8.2. Successor Corporation Substituted.
Upon any consolidation or merger by the Company with or into any other
Person, or any conveyance, transfer or lease by the Company of its properties
and assets substantially as an entirety to any Person 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 in the event of any
such conveyance, transfer or lease the Company shall be discharged from all
obligations and covenants under the Indenture and the Securities and may be
dissolved and liquidated.
Such successor Person may cause to be executed, and may issue either in
its own name or in the name of the Company, any or all of the Securities
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Trustee; and, upon the written order of such successor
Person instead of the Company and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee shall authenticate and
shall make available for delivery any Securities which previously shall have
been executed and delivered by the officers of the Company to the Trustee for
authentication pursuant to such provisions and any Securities which such
successor Person thereafter shall cause to be signed and delivered to the
Trustee on its behalf for the purpose pursuant to such provisions. All the
Securities so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Securities theretofore or thereafter issued in
accordance with the terms of this Indenture as though all of such Securities
had been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale, conveyance or lease,
such changes in phraseology and form may be made in the Securities thereafter
to be issued as may be appropriate.
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56
ARTICLE IX
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 reasonably
satisfactory to the Trustee, for any of the following purposes:
(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 contained; or
(2) to convey, transfer, assign, mortgage or pledge any property to or
with the Trustee or to surrender any right or power herein conferred upon the
Company; or
(3) to establish the form or terms of Securities of any series as
permitted by Sections 2.1 or 3.1; or
(4) 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
(5) to add any additional Events of Default for the benefit of the
Holders of all or any series of Securities (and if such additional Events of
Default are to be for the benefit of less than all series of Securities,
stating that such additional Events of Default are expressly being included
solely for the benefit of such series); or
(6) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall (a) 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 (b) not apply to any Outstanding Securities; or
(7) to cure any ambiguity, to correct or supplement any provision herein
which may be defective or inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising under
this Indenture, provided that such action pursuant to this clause (7) shall not
adversely affect the interest of the Holders of Securities of any series in any
material respect or, in the case of the Securities of a series issued to a
Trust and for so long as any of the corresponding series of Preferred
Securities issued by such Trust shall remain outstanding, the holders of such
Preferred Securities; or
(8) to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee with respect to the Securities of one or more series and
to add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration
<PAGE>
57
of the trusts hereunder by more than one Trustee, pursuant to the requirements
of Section 6.11(b); or
(9) to comply with the requirements of the Commission in order to effect
or maintain the qualification of this Indenture under the Trust Indenture Act.
Section 9.2. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities of each series affected by such
supplemental indenture, 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 of each series affected thereby,
(1) except to the extent permitted by Section 3.11 or as otherwise
specified as contemplated by Section 2.1 or Section 3.1 with respect to the
deferral of the payment of interest on the Securities of any series, change the
Stated Maturity of the principal of, or any installment of interest (including
any Additional Interest) on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or reduce any premium payable upon the
redemption thereof, change the manner in calculating the rate of interest
thereon, or reduce the amount of principal of a Discount Security that would be
due and payable upon a declaration of acceleration of the Maturity thereof
pursuant to Section 5.2, or change the place of payment where, or the coin or
currency in which, any Security or interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date), or
(2) reduce the percentage in aggregate principal amount of the
Outstanding Securities of any series, 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, Section 5.13 or Section
10.5, 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 Security affected thereby; or
(4) modify the provisions in Article XIII of this Indenture with respect
to the subordination of Outstanding Securities of any series in a manner
adverse to the Holders thereof; provided, further, that, in the case of the
Securities of a series issued to a Trust, so long as any of the corresponding
series of Preferred Securities issued by such Trust remains outstanding, (i) no
such amendment shall be made that adversely affects the interest of the holders
of such Preferred Securities in any material respect, and no termination of
this Indenture shall occur, and no waiver of any Event of Default or compliance
with any covenant under this Indenture shall
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58
be effective, without the prior consent of the holders of at least a majority
of the aggregate Liquidation Amount (as defined in the related Trust Agreement)
of such Preferred Securities then outstanding unless and until the principal of
(and premium, if any, on) the Securities of such series and all accrued and,
subject to Sections 3.7 and 3.11, unpaid interest (including any Additional
Interest) thereon have been paid in full and (ii) no amendment shall be made to
Section 5.8 of this Indenture that would impair the rights of the holders of
Preferred Securities issued by any Trust provided therein without the prior
consent of the holders of each Preferred Security then outstanding unless and
until the principal of (and premium, if any, on) the Securities of such series
and all accrued and (subject to Sections 3.7 and 3.11) unpaid interest
(including any Additional Interest) thereon have been paid in full.
A supplemental indenture that changes or eliminates any covenant or other
provision of this Indenture that has expressly been included solely for the
benefit of one or more particular series of Securities or any related series of
Preferred Securities of a Trust that holds Securities of any series, or which
modifies the rights of the Holders of Securities or holders of such Preferred
Securities of such related 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 or holders of Preferred 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 Officers' Certificate and an Opinion of Counsel stating that the execution
of such supplemental indenture is authorized or permitted by this Indenture,
and that all conditions precedent herein provided for relating to such action
have been complied with. The Trustee may, but shall not be obligated to, enter
into any such supplemental indenture which affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise.
Section 9.4. 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.
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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 Company, bear a notation in form approved by the Company 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
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities of such series.
ARTICLE X
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 (including Additional Interest) on the Securities of that
series in accordance with the terms of such 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 and an office or agency, where Securities of that
series may be surrendered for registration of transfer 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 initially appoints the
Trustee, acting through its Corporate Trust Office, as its agent for said
purposes. The Company will give prompt written notice to the Trustee of any
change in the location of any such office or agency. If at any time the Company
shall fail to maintain such 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 may be presented or surrendered for
any or all of 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 and any change in the location of any such office or agency.
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Section 10.3. Money for Security 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 (including Additional Interest)
on any of the Securities of such 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 (including Additional 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, it will, prior
to 12:00 noon New York City time on each due date of the principal of (and
premium, if any) or interest (including Additional Interest) on any Securities,
deposit with a Paying Agent a sum sufficient to pay the principal (and premium,
if any) or interest (including Additional Interest) so becoming due, such sum
to be held in trust for the benefit of the Persons entitled to such principal
(and premium, if any) or interest (including Additional Interest), and (unless
such Paying Agent is the Trustee) the Company will promptly notify the Trustee
of its failure so to act.
The Company will cause each Paying Agent 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 (including Additional Interest) on Securities in
trust for the benefit of the Persons entitled thereto until such sums shall be
paid to such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any other
obligor upon the Securities) in the making of any payment of principal (and
premium, if any) or interest (including Additional Interest);
(3) at any time during the continuance of any such default with respect
to Securities of a series, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held in trust by such Paying Agent with respect
to such series; and
(4) comply with the provisions of the Trust Indenture Act applicable to
it as a 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 the Company or any
Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
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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 (including Additional Interest) on any Security and remaining
unclaimed for two years after such principal (and premium, if any) or interest
(including Additional Interest) has become due and payable shall (unless
otherwise required by mandatory provision of applicable escheat or abandoned or
unclaimed property law) be paid on Company Request to the Company, or (if then
held by the Company) shall (unless otherwise required by mandatory provision of
applicable escheat or abandoned or unclaimed property law) 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. Statement as to Compliance.
The Company shall deliver to the Trustee, within 120 days after the end
of each calendar year of the Company ending after the date hereof, an Officers'
Certificate, one of the signatories of which shall be the principal executive,
principal financial or principal accounting officer of the Company, covering
the preceding calendar year, stating whether or not to the best knowledge of
the signers thereof the Company is in default in the performance, observance or
fulfillment of or compliance with any of the terms, provisions, covenants and
conditions of this Indenture, and if the Company shall be in default,
specifying all such defaults and the nature and status thereof of which they
may have knowledge. For the purpose of this Section 10.4, compliance shall be
determined without regard to any grace period or requirement of notice provided
pursuant to the terms of this Indenture.
Section 10.5. Waiver of Certain Covenants.
Subject to the rights of holders of Preferred Securities specified in
Section 9.2, if any, the Company may omit in any particular instance to comply
with any covenant or condition provided pursuant to Section 3.1, 9.1(3) or
9.1(4) with respect to the Securities of any series, if before or after the
time for such compliance the Holders of at least a majority in aggregate
principal amount of the Outstanding Securities of such series shall, by Act of
such Holders, either waive such compliance in such instance or generally waive
compliance with such covenant or condition, but no such waiver shall extend to
or affect such covenant or condition except to the extent so expressly waived,
and, until such waiver shall become effective, the obligations of the Company
in respect of any such covenant or condition shall remain in full force and
effect.
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Section 10.6. Payment of Trust Costs and Expenses.
Since each Trust is being formed solely to facilitate an investment in
the Securities, the Company, in its capacity as the issuer of the Securities,
hereby covenants to pay all debts and obligations (other than with respect to
the Preferred Securities and Common Securities) and all costs and expenses of
each Trust (including, but not limited to, all costs and expenses relating to
the organization of the Trust, the fees and expenses of the trustees of the
Trust and all costs and expenses relating to the operation of the Trust) and to
pay any and all taxes, duties, assessments or governmental charges of whatever
nature (other than United States federal withholding taxes) imposed on the
Trust by the United States, or any other taxing authority, so that the net
amounts received and retained by the Trust and the Property Trustee after
paying such expenses will be equal to the amounts the Trust and the Property
Trustee would have received had no such costs or expenses been incurred by or
imposed on the Trust. The obligations of the Company to pay all debts,
obligations, costs and expenses of each Trust (other than with respect to the
Preferred Securities and Common Securities) shall constitute additional
indebtedness hereunder and shall survive the satisfaction and discharge of this
Indenture.
Section 10.7. Additional Covenants.
The Company covenants and agrees with each Holder of Securities of each
series that it shall not, and it shall not permit any Subsidiary of the Company
to, (i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any shares of the
Company's capital stock, or (ii) make any payment of principal of or interest
or premium, if any, on or repay, repurchase or redeem any debt securities of
the Company that rank pari passu with or junior in interest to the Securities
of such series or (iii) make any guarantee payments with respect to any
guarantee by the Company of debt securities of any subsidiary of the Company if
such guarantee ranks pari passu with or junior in interest to the Securities
(other than (a) dividends or distributions in the Company's capital stock, (b)
any declaration of a dividend in connection with the implementation of a
stockholder rights plan or the redemption or repurchase of any rights
distributed pursuant to a stockholder rights plan and (c) payments under the
Guarantee with respect to the Securities of such series) if at such time (x)
there shall have occurred any event of which the Company has actual knowledge
that (A) with the giving of notice or the lapse of time or both, would
constitute an Event of Default with respect to the Securities of such series
and (B) in respect of which the Company shall not have taken reasonable steps
to cure, (y) if the Securities of such series are held by a Trust, the Company
shall be in default with respect to its payment of any obligations under the
Guarantee relating to the Preferred Securities issued by such Trust or (z) the
Company shall have given notice of its election to begin an Extension Period
with respect to the Securities of such series as provided herein and shall not
have rescinded such notice, or such Extension Period, or any extension thereof,
shall be continuing.
The Company also covenants with each Holder of Securities of a series
issued to a Trust (i) to hold, directly or indirectly, 100% ownership of the
Common Securities of such Trust; provided, however, that any permitted
successor of the Company hereunder may succeed to the Company's ownership of
such Common Securities, (ii) as holder of such Common Securities, not to
voluntarily terminate, wind-up or liquidate such Trust, except (a) in
connection with a
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distribution of the Securities of such series to the holders of the related
Trust Securities of such Trust in liquidation of such Trust or (b) in
connection with certain mergers, consolidations or amalgamations permitted by
the related Trust Agreement and (iii) to use its reasonable efforts, consistent
with the terms and provisions of such Trust Agreement, to cause such Trust to
continue not to be taxable as a corporation for United States federal income
tax purposes.
Section 10.8. Calculation of Original Issue Discount.
The Company shall file with the Trustee promptly at the end of each
calendar year a written notice specifying the amount of original issue discount
(including daily rates and accrual periods) accrued on Outstanding Securities
as of the end of such year, if any.
ARTICLE XI
REDEMPTION OF SECURITIES
Section 11.1. Applicability of This Article.
Redemption of Securities of any series (whether by operation of a sinking
fund or otherwise) as permitted or required by any form of Security issued
pursuant to this Indenture shall be made in accordance with such form of
Security and this Article; provided, however, that if any provision of any such
form of Security shall conflict with any provision of this Article, the
provision of such form of Security shall govern. Except as otherwise set forth
in the form of Security for such series, each Security of a series shall be
subject to partial redemption only in the amount of $25 or integral multiples
thereof.
Section 11.2. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced
by or pursuant to a Board Resolution. In case of any redemption at the election
of the Company of the Securities, the Company shall, at least 30 days prior to
the Redemption Date (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee, and in the case of Securities of a series held by
a Trust, the Property Trustee under the related Trust Agreement, of such date
and of the principal amount of Securities of that 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, the
Company shall furnish the Trustee with an Officers' Certificate and an Opinion
of Counsel evidencing compliance with such restriction.
Section 11.3. Selection of Securities to be Redeemed.
If less than all the Securities of any series are to be redeemed (unless
all the Securities of such series and of a specified tenor are to be redeemed
or unless such redemption affects only a single Security), the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities of such series
not previously called for redemption, by lot or such other method as the
Trustee shall deem fair
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and appropriate and which may provide for the selection for redemption of a
portion of the principal amount of any Security of such series, provided that
the unredeemed portion of the principal amount of any Security shall be in an
authorized denomination (which shall not be less than the minimum authorized
denomination) for such Security.
The Trustee shall promptly notify the Company in writing of the
Securities selected for partial redemption and 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 Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security which has been or is to be
redeemed. If the Company shall so direct, Securities registered in the name of
the Company, any Affiliate or any Subsidiary thereof shall not be included in
the Securities selected for redemption.
Section 11.4. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not later than the thirtieth day, and not earlier than the sixtieth day,
prior to the Redemption Date, to each Holder of Securities to be redeemed, at
the address of such Holder as it appears in the Securities Register.
With respect to Securities of each series to be redeemed, each notice of
redemption shall identify the Securities to be redeemed (including CUSIP
number, if a CUSIP number has been assigned to such Securities of such Series)
and shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all Outstanding Securities of such particular series and
having the same terms are to be redeemed, the identification (and, in the case
of partial redemption, the respective principal amounts) of the particular
Securities to be redeemed;
(d) that on the Redemption Date, the Redemption Price will become due and
payable upon each such Security or portion thereof, and that interest
(including Additional Interest) thereon, if any, shall cease to accrue on and
after said date;
(e) the place or places where such Securities are to be surrendered for
payment of the Redemption Price;
(f) that the redemption is for a sinking fund, if such is the case; and
(g) such other provisions as may be required in respect of the terms of a
particular series of Securities.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the
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expense of the Company and shall not be irrevocable. The notice if mailed in
the manner herein provided shall be conclusively presumed to have been duly
given, whether or not the Holder receives such notice. In any case, a failure
to give such notice by mail or any defect in the notice to the Holder of any
Security designated for redemption as a whole or in part shall not affect the
validity of the proceedings for the redemption of any other Security.
If at the time of mailing of any notice of redemption the Company shall
not have deposited with the Trustee and/or irrevocably directed the Trustee to
apply, from money held by it available to be used for the redemption of
Securities, an amount in cash sufficient to redeem all of the Securities called
for redemption, together with accrued interest (including Additional Interest)
to such date fixed for redemption, such notice shall state that it is subject
to the receipt of the redemption moneys by the Trustee before the date fixed
for redemption and such notice shall be of no effect unless such moneys are so
received before such date.
Section 11.5. Deposit of Redemption Price.
Prior to 12:00 noon New York City time on the Redemption Date specified
in the notice of redemption given as provided in Section 11.4, the Company will
deposit with the Trustee or with one or more Paying Agents (or if the Company
is acting as its own Paying Agent, the Company will segregate and hold in trust
as provided in Section 10.3) an amount of money sufficient to pay the
Redemption Price of, and any accrued interest (including Additional Interest)
on, all the Securities (or portion thereof) which are to be redeemed on that
date.
Section 11.6. Payment of Securities Called for Redemption.
If any notice of redemption has been given as provided in Section 11.4,
the Securities or portion of Securities with respect to which such notice has
been given shall become due and payable on the date and at the place or places
stated in such notice at the applicable Redemption Price, together with accrued
interest (including Additional Interest) to the Redemption Date. On
presentation and surrender of such Securities at a Place of Payment in said
notice specified, the said securities or the specified portions thereof shall
be paid and redeemed by the Company at the applicable Redemption Price,
together with accrued interest (including any Additional Interest) to the
Redemption Date; provided, however, that, unless otherwise specified as
contemplated by Section 3.1, installments of interest (including Additional
Interest) whose Stated Maturity is on or prior to the Redemption Date will 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.
Upon presentation of any Security redeemed in part only, the Company
shall execute and the Trustee shall authenticate and make available for
delivery to the Holder thereof, at the expense of the Company, a new Security
or Securities of the same series, of authorized denominations, in aggregate
principal amount equal to the unredeemed portion of the Security so presented
and having the same Original Issue Date, Stated Maturity and terms. If a Global
Security is so surrendered, such new Security will also be a new Global
Security.
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If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal of and premium, if any, on such Security
shall, until paid, bear interest from the Redemption Date at the rate
prescribed therefor in the Security.
Section 11.7. Right of Redemption of Securities Initially Issued to a
Trust.
In the case of the Securities of a series initially issued to a Trust,
except as otherwise established pursuant to Section 3.1 for the Securities of a
Series, the Company, at its option, may redeem such Securities (i) on or after
the date five years after the Original Issue Date of such Securities, in whole
at any time or in part from time to time, or (ii) upon the occurrence and
during the continuation of a Tax Event or an Investment Company Event, at any
time within 90 days following the occurrence of such Tax Event or Investment
Company Event in respect of such Trust, in whole (but not in part), in each
case at a Redemption Price equal to 100% of the principal amount thereof,
together with accrued interest (including Additional Interest) to the
Redemption Date.
If less than all the Securities of any such series are to be redeemed,
the aggregate principal amount of such Securities remaining Outstanding after
giving effect to such redemption shall be sufficient to satisfy any provisions
of the Trust Agreement related to the Trust to which such Securities were
issued, including any requirement in such Trust Agreement as to the minimum
Liquidation Amount (as defined in such Trust Agreement) of Preferred Securities
that may be held by a holder of Preferred Securities thereunder.
ARTICLE XII
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 any series except as otherwise specified as
contemplated by Section 3.1 for such Securities.
The minimum amount of any sinking fund payment provided for by the terms
of any Securities of any series is herein referred to as a "mandatory sinking
fund payment", and any sinking fund payment in excess of such minimum amount
which is permitted to be made by the terms of such Securities of any series is
herein referred to as an "optional sinking fund payment". If provided for by
the terms of any 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 such Securities.
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Section 12.2. Satisfaction of Sinking Fund Payments with Securities.
In lieu of making all or any part of a mandatory sinking fund payment
with respect to any Securities of a series in cash, the Company may at its
option, at any time no more than 16 months and no less than 30 days prior to
the date on which such sinking fund payment is due, deliver to the Trustee
Securities of such series (together with the unmatured coupons, if any,
appertaining thereto) theretofore purchased or otherwise acquired by the
Company, except Securities of such series that have been redeemed through the
application of mandatory or optional sinking fund payments pursuant to the
terms of the Securities of such series, accompanied by a Company Order
instructing the Trustee to credit such obligations and stating that the
Securities of such series were originally issued by the Company by way of bona
fide sale or other negotiation for value; provided that the Securities to be so
credited have not been previously so credited. The Securities to be so credited
shall be received and credited for such purpose by the Trustee at the
redemption price for such Securities, as specified in the Securities so to be
redeemed, 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
such Securities pursuant to the terms of such Securities, the portion thereof,
if any, which is to be satisfied by payment of cash in the currency in which
the Securities of such series are payable (except as provided pursuant to
Section 3.1) and the portion thereof, if any, which is to be satisfied by
delivering and crediting Securities pursuant to Section 12.2 and will also
deliver to the Trustee any Securities to be so delivered. Such Officers'
Certificate shall be irrevocable and upon its delivery the Company shall be
obligated to make the cash payment or payments therein referred to, if any, on
or before the succeeding sinking fund payment date. In the case of the failure
of the Company to deliver such Officers' Certificate (or, as required by this
Indenture, the Securities and coupons, if any, specified in such Officers'
Certificate), the sinking fund payment due on the succeeding sinking fund
payment date for such series shall be paid entirely in cash and shall be
sufficient to redeem the principal amount of the Securities of such series
subject to a mandatory sinking fund payment without the right to deliver or
credit securities as provided in Section 12.2 and without the right to make the
optional sinking fund payment with respect to such series at such time.
Any sinking fund payment or payments (mandatory or optional) made in cash
plus any unused balance of any preceding sinking fund payments made with
respect to the Securities of any particular series shall be applied by the
Trustee (or by the Company if the Company is acting as its own Paying Agent) on
the sinking fund payment date on which such payment is made (or, if such
payment is made before a sinking fund payment date, on the sinking fund payment
date immediately following the date of such payment) to the redemption of
Securities of such series at the Redemption Price specified in such Securities
with respect to the sinking fund. Any sinking fund moneys not so applied or
allocated by the Trustee (or, if the Company is acting as its own Paying Agent,
segregated and held in trust by the Company as provided in Section 10.3) for
such series and together with such payment (or such amount so segregated) shall
be applied in
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accordance with the provisions of this Section 12.3. Any and all sinking fund
moneys with respect to the Securities of any particular series held by the
Trustee (or if the Company is acting as its own Paying Agent, segregated and
held in trust as provided in Section 10.3) on the last sinking fund payment
date with respect to Securities of such series and not held for the payment or
redemption of particular Securities of such series shall be applied by the
Trustee (or by the Company if the Company is acting as its own Paying Agent),
together with other moneys, if necessary, to be deposited (or segregated)
sufficient for the purpose, to the payment of the principal of the Securities
of such series at Maturity. 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 Section 11.6. On or before each
sinking fund payment date, the Company shall pay to the Trustee (or, if the
Company is acting as its own Paying Agent, the Company shall segregate and hold
in trust as provided in Section 10.3) in cash a sum in the currency in which
Securities of such series are payable (except as provided pursuant to Section
3.1) equal to the principal (and premium, if any) and any interest (including
Additional Interest) accrued to the Redemption Date for Securities or portions
thereof to be redeemed on such sinking fund payment date pursuant to this
Section 12.3.
Neither the Trustee nor the Company shall redeem any Securities of a
series with sinking fund moneys or mail any notice of redemption of Securities
of such series by operation of the sinking fund for such series during the
continuance of a default in payment of interest, if any, on any Securities of
such series or of any Event of Default (other than an Event of Default
occurring as a consequence of this paragraph) with respect to the Securities of
such series, except that if the notice of redemption shall have been provided
in accordance with the provisions hereof, the Trustee (or the Company, if the
Company is then acting as its own Paying Agent) shall redeem such Securities if
cash sufficient for that purpose shall be deposited with the Trustee (or
segregated by the Company) for that purpose in accordance with the terms of
this Article XII. Except as aforesaid, any moneys in the sinking fund for such
series at the time when any such default or Event of Default shall occur and
any moneys thereafter paid into such sinking fund shall, during the continuance
of such default or Event of Default, be held as security for the payment of the
Securities and coupons, if any, of such series; provided, however, that in case
such default or Event of Default shall have been cured or waived herein, such
moneys shall thereafter be applied on the next sinking fund payment date for
the Securities of such series on which such moneys may be applied pursuant to
the provisions of this Section 12.3.
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ARTICLE XIII
SUBORDINATION OF SECURITIES
Section 13.1. Securities Subordinate to Senior Debt.
The Company covenants and agrees, and each Holder of a Security, by its
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article, the payment of the principal
of (and premium, if any) and interest (including any Additional Interest) on
each and all of the Securities are hereby expressly made subordinate and
subject in right of payment to the prior payment in full of all Senior Debt.
Section 13.2. Payment Over of Proceeds Upon Dissolution, Etc.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company (each such event, if any, herein
sometimes referred to as a "Proceeding"), then the holders of Senior Debt shall
be entitled to receive payment in full of all amounts due or to become due on
such Senior Debt, or provision shall be made for such payment in cash or cash
equivalents or otherwise in a manner satisfactory to the holders of Senior
Debt, before the Holders of the Securities are entitled to receive or retain
any payment or distribution of any kind or character, whether in cash, property
or securities (including any payment or distribution which may be payable or
deliverable by reason of the payment of any other Debt of the Company
(including any series of the Securities) subordinated to the payment of the
Securities, such payment or distribution being hereinafter referred to as a
"Junior Subordinated Payment"), on account of principal of (or premium, if any)
or interest (including any Additional Interest) on the Securities or on account
of the purchase or other acquisition of Securities by the Company or any
Subsidiary and to that end the holders of Senior Debt shall be entitled to
receive, for application to the payment thereof, any payment or distribution of
any kind or character, whether in cash, property or securities, including any
Junior Subordinated Payment, which may be payable or deliverable in respect of
the Securities in any such Proceeding; provided, however, that holders of
Senior Debt shall not be entitled to receive payment of any such amounts to the
extent that such holders would be required by the subordination provisions of
such Senior Debt to pay such amounts over to the obligees on trade accounts
payable or other liabilities arising in the ordinary course of the Company's
business.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any Junior Subordinated
Payment, before all amounts due or to become due on all Senior Debt are paid in
full or payment thereof is provided for in cash or cash equivalents or
otherwise in a manner satisfactory to the holders of Senior Debt, and if such
fact shall, at or prior to the time of such payment or distribution, have been
made known to the Trustee or, as the case may be, such Holder, then and in such
event such payment or distribution 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
<PAGE>
70
payment of all amounts due or to become due on all Senior Debt remaining
unpaid, to the extent necessary to pay all amounts due or to become due on all
Senior Debt in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt; provided, however, that
holders of Senior Debt shall not be entitled to receive payment of any such
amounts to the extent that such holders would be required by the subordination
provisions of such Senior Debt to pay such amounts over to the obligees on
trade accounts payable or other liabilities arising in the ordinary course of
the Company's business.
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 shares of stock of the Company as reorganized or readjusted,
or securities of the Company or any other corporation provided for by a plan of
reorganization or readjustment which securities are subordinated in right of
payment to all then outstanding Senior Debt to substantially the same extent as
the Securities are so subordinated as provided in this Article. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the sale 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 VIII 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 sale such properties and assets as an entirety, as the case may be,
shall, as a part of such consolidation, merger, or sale comply with the
conditions set forth in Article VIII.
Section 13.3. Prior Payment to Senior Debt Upon Acceleration of
Securities.
In the event that any Securities are declared due and payable before
their Stated Maturity, then and in such event the holders of the Senior Debt
outstanding at the time such Securities so become due and payable shall be
entitled to receive payment in full of all amounts due on or in respect of such
Senior Debt (including any amounts due upon acceleration), or provision shall
be made for such payment in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of Senior Debt, before the Holders of the
Securities are entitled to receive or retain any payment or distribution of any
kind or character, whether in cash, properties or securities (including any
Junior Subordinated Payment) by the Company on account of the principal of (or
premium, if any) or interest (including any Additional Interest) on the
Securities or on account of the purchase or other acquisition of Securities by
the Company or any Subsidiary; provided, however, that nothing in this Section
shall prevent the satisfaction of any sinking fund payment in accordance with
this Indenture or as otherwise specified as contemplated by Section 3.1 for the
Securities of any series by delivering and crediting pursuant to Section 12.2
or as otherwise specified as contemplated by Section 3.1 for the Securities of
any series Securities which have been acquired (upon redemption or otherwise)
prior to such declaration of acceleration; provided, however, that holders of
Senior Debt shall not be entitled to receive payment of any such amounts to the
extent that such holders would be required by the subordination provisions of
such Senior Debt to pay such amounts over to the obligees on trade accounts
payable or other liabilities arising in the ordinary course of the Company's
business.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this
<PAGE>
71
Section, and if such fact shall, at or prior to the time of such payment, have
been made known to the Trustee or, as the case may be, such Holder, then and in
such event such payment shall be paid over and delivered forthwith to the
Company.
The provisions of this Section shall not apply to any payment with
respect to which Section 13.2 would be applicable.
Section 13.4. No Payment When Senior Debt in Default.
(a) In the event and during the continuation of any default in the
payment of principal of (or premium, if any) or interest on any Senior Debt, or
in the event that any event of default with respect to any Senior Debt shall
have occurred and be continuing and shall have resulted in such Senior Debt
becoming or being declared due and payable prior to the date on which it would
otherwise have become due and payable, unless and until such event of default
shall have been cured or waived or shall have ceased to exist and such
acceleration shall have been rescinded or annulled, or (b) in the event any
judicial proceeding shall be pending with respect to any such default in
payment or such event or default, then no payment or distribution of any kind
or character, whether in cash, properties or securities (including any Junior
Subordinated Payment) shall be made by the Company on account of principal of
(or premium, if any) or interest (including any Additional Interest), if any,
on the Securities or on account of the purchase or other acquisition of
Securities by the Company or any Subsidiary, in each case unless and until all
amounts due or to become due on such Senior Debt are paid in full; provided,
however, that nothing in this Section shall prevent the satisfaction of any
sinking fund payment in accordance with this Indenture or as otherwise
specified as contemplated by Section 3.1 for the Securities of any series by
delivering and crediting pursuant to Section 12.2 or as otherwise specified as
contemplated by Section 3.1 for the Securities of any series Securities which
have been acquired (upon redemption or otherwise) prior to such default in
payment or event of default; provided, however, that holders of Senior Debt
shall not be entitled to receive payment of any such amounts to the extent that
such holders would be required by the subordination provisions of such Senior
Debt to pay such amounts over to the obligees on trade accounts payable or
other liabilities arising in the ordinary course of the Company's business.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to
the time of such payment, have been made known to the Trustee or, as the case
may be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with
respect to which Section 13.2 would be applicable.
Section 13.5. Payment Permitted If No Default.
Nothing contained in this Article or elsewhere in this Indenture or in
any of the Securities shall prevent (a) the Company, at any time except during
the pendency of any Proceeding referred to in Section 13.2 or under the
conditions described in Sections 13.3 and 13.4, from
<PAGE>
72
making payments at any time of principal of (and premium, if any) or interest
(including Additional Interest) on the Securities, or (b) the application by
the Trustee of any moneys deposited with it hereunder to the payment of or on
account of the principal of (and premium, if any) or interest (including any
Additional Interest) on the Securities or the retention of such payment by the
Holders, if, at the time of such application by the Trustee, a Responsible
Officer of the Trustee did not have knowledge that such payment would have been
prohibited by the provisions of this Article.
Section 13.6. Subrogation to Rights of Holders of Senior Debt.
Subject to the payment in full of all amounts due or to become due on all
Senior Debt, or the provision for such payment in cash or cash equivalents or
otherwise in a manner satisfactory to the holders of Senior Debt, the Holders
of the Securities shall be subrogated to the extent of the payments or
distributions made to the holders of such Senior Debt pursuant to the
provisions of this Article (equally and ratably with the holders of all
indebtedness of the Company which by its express terms is subordinated to
Senior Debt of the Company to substantially the same extent as the Securities
are subordinated to the Senior Debt and is entitled to like rights of
subrogation by reason of any payments or distributions made to holders of such
Senior Debt) to the rights of the holders of such Senior Debt to receive
payments and distributions of cash, property and securities applicable to the
Senior Debt until the principal of (and premium, if any) and interest
(including Additional Interest) on the Securities shall be paid in full. For
purposes of such subrogation, no payments or distributions to the holders of
the Senior Debt of any cash, property or securities to which the Holders of the
Securities or the Trustee would be entitled except for the provisions of this
Article, and no payments over pursuant to the provisions of this Article to the
holders of Senior Debt by Holders of the Securities or the Trustee, shall, as
among the Company, its creditors other than holders of Senior Debt, and the
Holders of the Securities, be deemed to be a payment or distribution by the
Company to or on account of the Senior Debt.
Section 13.7. 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 of the Securities on the
one hand and the holders of Senior Debt on the other hand. Nothing contained in
this Article or elsewhere in this Indenture or in the Securities is intended to
or shall (a) impair, as between the Company and the Holders of the Securities,
the obligations of the Company, which are absolute and unconditional, to pay to
the Holders of the Securities the principal of (and premium, if any) and
interest (including any Additional Interest) on the Securities 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 Securities and
creditors of the Company other than their rights in relation to the holders of
Senior Debt; or (c) prevent the Trustee or the Holder of any Security (or to
the extent provided herein, the holder of any Preferred Security) from
exercising all remedies otherwise permitted by applicable law upon default
under this Indenture including, without limitation, filing and voting claims in
any Proceeding, subject to the rights, if any, under this Article of the
holders of Senior Debt to receive cash, property and securities otherwise
payable or deliverable to the Trustee or such Holder.
<PAGE>
73
Section 13.8. Trustee to Effectuate Subordination.
Each Holder of a Security by his or her acceptance thereof 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
provided in this Article and appoints the Trustee his or her attorney-in-fact
for any and all such purposes.
Section 13.9. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Debt 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 Indenture,
regardless of any knowledge thereof that any such holder may have or be
otherwise charged with.
Without in any way limiting the generality of the immediately preceding
paragraph, the holders of Senior Debt may, at any time and from to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article
or the obligations hereunder of the Holders of the Securities to the holders of
Senior Debt, 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
Debt, or otherwise amend or supplement in any manner Senior Debt or any
instrument evidencing the same or any agreement under which Senior Debt is
outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Debt; (iii) release any Person
liable in any manner for the collection of Senior Debt; and (iv) exercise or
refrain from exercising any rights against the Company and any other Person.
Section 13.10. 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 Securities. Notwithstanding the provisions of
this Article or any other provision of this 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 Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Debt or from any trustee, agent or representative
therefor; provided, however, that if the Trustee shall not have received the
notice provided for in this Section at least two Business Days prior to the
date upon which by the terms hereof any monies may become payable for any
purpose (including, without limitation, the payment of the principal of (and
premium, if any) or interest (including any Additional Interest) on any
Security), then, anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such monies and to apply
the same to the purpose for which they were received and shall not be affected
by any notice to the contrary which may be received by it within two Business
Days prior to such date.
<PAGE>
74
Subject to the provisions of Section 6.1, 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 Debt (or a trustee therefor) to establish that
such notice has been given by a holder of Senior Debt (or a trustee 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 Debt 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 Debt 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.
Section 13.11. 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, and the
Holders of the Securities 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 Securities, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior Debt and
other indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article.
Section 13.12. Trustee Not Fiduciary for Holders of Senior Debt.
The Trustee, in its capacity as trustee under this Indenture, shall not
be deemed to owe any fiduciary duty to the holders of Senior Debt and shall not
be liable to any such holders if it shall in good faith mistakenly pay over or
distribute to Holders of Securities or to the Company or to any other Person
cash, property or securities to which any holders of Senior Debt shall be
entitled by virtue of this Article or otherwise. With respect to the holders of
Senior Debt, the Trustee undertakes to perform or to observe only such of its
covenants or obligations as are specifically set forth in this Article and no
implied covenants or obligations with respect to holders of Senior Debt shall
be read into this Indenture against the Trustee.
Section 13.13. Rights of Trustee as Holder of Senior Debt; 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 Debt which may at
any time be held by it, to the same extent as any other holder of Senior Debt,
and nothing in this Indenture shall deprive the Trustee of any of its rights as
such holder. Nothing in this Article shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 6.7.
<PAGE>
75
Section 13.14. 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.
Section 13.15. Certain Conversions or Exchanges Deemed Payment.
For the purposes of this Article only, (a) the issuance and delivery of
junior securities upon conversion or exchange of Securities shall not be deemed
to constitute a payment or distribution on account of the principal of (or
premium, if any) or interest (including any Additional Interest) on Securities
or on account of the purchase or other acquisition of Securities, and (b) the
payment, issuance or delivery of cash, property or securities (other than
junior securities) upon conversion or exchange of a Security shall be deemed to
constitute payment on account of the principal of such security. For the
purposes of this Section, the term "junior securities" means (i) shares of any
stock of any class of the Company and (ii) securities of the Company which are
subordinated in right of payment to all Senior Debt which may be outstanding at
the time of issuance or delivery of such securities to substantially the same
extent as, or to a greater extent than, the Securities are so subordinated as
provided in this Article.
Section 13.16. Trust Moneys Not Subordinated.
Notwithstanding anything contained herein to the contrary, payments from
money held in trust under Article IV by the Trustee for the payment of
principal of (and premium, if any) and interest (including Additional Interest)
on the Securities shall not be subordinated to the prior payment of any Senior
Debt of the Company or subject to the restrictions set forth in this Article
XIII and none of the Holders shall be obligated to pay over any such amount to
the Company or any holder of Senior Debt of the Company or any other creditor
of the Company.
<PAGE>
76
* * * *
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.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
PENNSYLVANIA POWER & LIGHT COMPANY
By:
-----------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Trustee
By:
-----------------------------------
Name:
Title:
<PAGE>
EXHIBIT 4.2
CERTIFICATE OF TRUST OF
PP&L CAPITAL TRUST
THIS Certificate of Trust of PP&L Capital Trust (the "Trust"), dated as of
___________ __, 1997, is being duly executed and filed by Chase Manhattan Bank
Delaware, a Delaware banking corporation, as trustee, to create a business trust
under the Delaware Business Trust Act (12 Del. C. Section 3801 et seq.).
1. Name. The name of the business trust being created hereby is PP&L
----
Capital Trust.
2. Delaware Trustee. The name and business address of the trustee of the
----------------
Trust in the State of Delaware is Chase Manhattan Bank Delaware, 1201 Market
Street, 9th Floor, Wilmington, Delaware 19801.
3. Effective Date. This Certificate of Trust shall be effective upon its
--------------
filing with the Secretary of State.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the Trust,
has executed this Certificate of Trust as of the date first above written.
CHASE MANHATTAN BANK DELAWARE,
as trustee
By:
Name:
Title:
<PAGE>
EXHIBIT 4.3
TRUST AGREEMENT
---------------
This TRUST AGREEMENT, dated as of January 28, 1997, between
Pennsylvania Power & Light Company, a Pennsylvania corporation, as "Depositor"
and Chase Manhattan Bank Delaware, a Delaware banking corporation as "Trustee".
The Depositor and the Trustee hereby agree as follows:
1. The trust created hereby shall be known as PP&L Capital Trust, in
which name the Trustee, or the Depositor to the extent provided herein, may
conduct the business of the Trust, make and execute contracts, and sue and be
sued.
2. The Depositor hereby assigns, transfers, conveys and sets over to
the Trustee the sum of $10. The Trustee hereby acknowledges receipt of such
amount in trust from the Depositor, which amount shall constitute the initial
trust estate. The Trustee hereby declares that it will hold the trust estate in
trust for the Depositor. It is the intention of the parties hereto that the
Trust created hereby constitute a business trust under Chapter 38 of Title 12 of
the Delaware Code, 12 Del. C. (S)3801, et seq. (the "Business Trust Act"), and
-- ---
that this document constitutes the governing instrument of the Trust. The
Trustee is hereby authorized and directed to execute and file a certificate of
trust with the Delaware Secretary of State in the form attached hereto.
3. The Depositor and the Trustee will enter into an amended and
restated Trust Agreement, satisfactory to each such party and substantially in
the form included as Exhibit 4.4 to the 1933 Act Registration Statement (as
defined below), to provide for the contemplated operation of the Trust created
hereby and the issuance of the Preferred Securities and Common Securities
referred to therein. Prior to the execution and delivery of such amended and
restated Trust Agreement, the Trustee shall not have any duty or obligation
hereunder or with respect to the trust estate, except as otherwise required by
applicable law or as may be necessary to obtain prior to such execution and
delivery any licenses, consents or approvals required by applicable law or
otherwise.
4. The Depositor and the Trustee hereby authorize and direct the
Depositor, as the sponsor of the Trust,
(i) to file with the Securities and Exchange Commission (the
"Commission") and execute, in each case on behalf of the Trust, (a) the
Registration Statement on Form S-3 (the "1933 Act Registration Statement"),
including any pre-effective or post-effective amendments to such 1933 Act
Registration Statement (including the prospectus and the exhibits contained
therein), relating to the registration under the Securities Act of 1933, as
amended, of the Preferred Securities of the Trust and certain other securities
and (b) a Registration Statement on Form 8-A (the "1934 Act Registration
Statement") (including all pre-effective and post-effective amendments thereto)
relating to the registration of the Preferred Securities of the Trust under
Section 12 of the Securities Exchange Act of 1934, as amended;
<PAGE>
2
(ii) to file with one or more national securities exchange (each, an
"Exchange") or the National Association of Securities Dealers ("NASD") and
execute on behalf of the Trust a listing application or applications and all
other applications, statements, certificates, agreements and other instruments
as shall be necessary or desirable to cause the Preferred Securities to be
listed on any such Exchange or the NASD's Nasdaq National Market ("NASDAQ");
(iii) to file and execute on behalf of the Trust such applications,
reports, surety bonds, irrevocable consents, appointments of attorney for
service of process and other papers and documents as the Depositor, on behalf of
the Trust, may deem necessary or desirable to register the Preferred Securities
under the securities or "Blue Sky" laws of any jurisdiction; and
(iv) to execute on behalf of the Trust such Underwriting Agreements
with one or more underwriters relating to the offering of the Preferred
Securities as the Depositor, on behalf of the Trust, may deem necessary or
desirable.
In the event that any filing referred to in clauses (i), (ii) and
(iii) above is required by the rules and regulations of the Commission, any
Exchange, the NASD or state securities or Blue Sky laws, to be executed on
behalf of the Trust by a Trustee, the Depositor and any Trustee appointed
pursuant to Section 6 hereof are hereby authorized to join in any such filing
and to execute on behalf of the Trust any and all of the foregoing.
5. This Trust Agreement may be executed in one or more counterparts.
6. The number of Trustees initially shall be one (1) and thereafter
the number of Trustees shall be such number as shall be fixed from time to time
by a written instrument signed by the Depositor which may increase or decrease
the number of Trustees; provided, however, that to the extent required by the
Business Trust Act, one Trustee shall either be a natural person who is a
resident of the State of Delaware or, if not a natural person, an entity which
has its principal place of business in the State of Delaware and otherwise meets
the requirements of applicable Delaware law. Subject to the foregoing, the
Depositor is entitled to appoint or remove without cause any Trustee at any
time. The Trustee may resign upon thirty days' prior notice to the Depositor.
7. This Trust Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without regard to conflict
of laws principles).
<PAGE>
3
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed as of the day and year first above written.
PENNSYLVANIA POWER & LIGHT
COMPANY, as Depositor
By:
---------------------------
Name: John R. Biggar
Title: Vice President - Finance
CHASE MANHATTAN BANK DELAWARE, as
Trustee
By:
---------------------------
Name:
Title:
<PAGE>
EXHIBIT 4.4
- -------------------------------------------------------------------------------
AMENDED AND RESTATED
TRUST AGREEMENT
among
PENNSYLVANIA POWER & LIGHT COMPANY, as Depositor,
THE CHASE MANHATTAN BANK
as Property Trustee,
CHASE MANHATTAN BANK DELAWARE,
as Delaware Trustee,
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
and
THE SEVERAL HOLDERS OF THE TRUST SECURITIES
Dated as of _________ __, 1997
PP&L CAPITAL TRUST
- --------------------------------------------------------------------------------
<PAGE>
PP&L CAPITAL TRUST
Certain Sections of this Trust Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
Trust Indenture Trust Agreement
Act Section Section
- --------------- ----------------
(s)(s) 310(a)(1)....................................... 8.7
(a)(2).......................................... 8.7
(a)(3).......................................... 8.9
(a)(4).......................................... 2.7(a)(ii)
(b)............................................. 8.8
(s)(s) 311(a).......................................... 8.13
(b)............................................. 8.13
(s)(s) 312(a).......................................... 5.7
(b)............................................. 5.7
(c)............................................. 5.7
(s)(s) 313(a).......................................... 8.14(a)
(a)(4).......................................... 8.14(b)
(b)............................................. 8.14(b)
(c)............................................. 10.9
(d)............................................. 8.14(c)
(s)(s) 314(a).......................................... 8.15
(b)............................................. Not Applicable
(c)(1).......................................... 8.16
(c)(2).......................................... 8.16
(c)(3).......................................... Not Applicable
(d)............................................. Not Applicable
(e)............................................. 1.1, 8.16
(s)(s) 315(a).......................................... 8.1(a), 8.3(a)
(b)............................................. 8.2, 10.9
(c)............................................. 8.1(a)
(d)............................................. 8.1, 8.3
(e)............................................. Not Applicable
(s)(s) 316(a).......................................... Not Applicable
(a)(1)(A)....................................... Not Applicable
(a)(1)(B)....................................... Not Applicable
(a)(2).......................................... Not Applicable
(b)............................................. 5.14
(c)............................................. 6.7
(s)(s) 317(a)(1)....................................... Not Applicable
(a)(2).......................................... Not Applicable
(b)............................................. 5.9
(s)(s) 318(a).......................................... 10.11
- ------------
Note: This reconciliation and tie sheet shall not, for any purpose, be deemed
to be a part of the Trust Agreement.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINED TERMS............................. 1
Section 1.1 Definitions............................................. 1
ARTICLE II
CONTINUATION OF THE TRUST....................... 10
Section 2.1 Name.................................................... 10
Section 2.2 Office of the Delaware Trustee;
Principal Place of Business............................ 10
Section 2.3 Initial Contribution of Trust Property;
Organizational Expenses................................ 10
Section 2.4 Issuance of the Preferred Securities.................... 11
Section 2.5 Issuance of the Common Securities;
Subscription and Purchase of Debentures................ 11
Section 2.6 Continuation of Trust................................... 11
Section 2.7 Authorization to Enter into Certain Transactions........ 12
Section 2.8 Assets of Trust......................................... 16
Section 2.9 Title to Trust Property................................. 16
ARTICLE III
PAYMENT ACCOUNT............................ 16
Section 3.1 Payment Account......................................... 16
ARTICLE IV
DISTRIBUTIONS; REDEMPTION....................... 17
Section 4.1 Distributions........................................... 17
Section 4.2 Redemption.............................................. 18
Section 4.3 Subordination of Common Securities...................... 20
Section 4.4 Payment Procedures...................................... 20
Section 4.5 Tax Returns and Reports................................. 21
Section 4.6 Payment of Expenses of the Trust........................ 21
Section 4.7 Payments under Indenture or Pursuant to Direct Actions.. 21
i
<PAGE>
ARTICLE V
Page
TRUST SECURITIES CERTIFICATES..................... 21
Section 5.1 Initial Ownership....................................... 21
Section 5.2 The Trust Securities Certificates....................... 22
Section 5.3 Execution and Delivery of Trust Securities Certificates. 22
Section 5.4 Registration of Transfer and Exchange of Preferred
Securities Certificates................................ 22
Section 5.5 Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates........................................... 23
Section 5.6 Persons Deemed Securityholders.......................... 23
Section 5.7 Access to List of Securityholders' Names and Addresses.. 24
Section 5.8 Maintenance of Office or Agency......................... 24
Section 5.9 Appointment of Paying Agent............................. 24
Section 5.10 Ownership of Common Securities by Depositor............ 25
Section 5.11 Book-Entry Preferred Securities Certificates; Common
Securities Certificate................................ 25
Section 5.12 Notices to Clearing Agency............................. 26
Section 5.13 Definitive Preferred Securities Certificates........... 26
Section 5.14 Rights of Securityholders.............................. 27
Section 5.15 CUSIP Numbers.......................................... 29
ARTICLE VI
ACTS OF SECURITYHOLDERS; MEETINGS; VOTING............... 29
Section 6.1 Limitations on Voting Rights............................ 29
Section 6.2 Notice of Meetings...................................... 30
Section 6.3 Meetings of Preferred Securityholders................... 30
Section 6.4 Voting Rights........................................... 31
Section 6.5 Proxies, etc. .......................................... 31
Section 6.6 Securityholder Action by Written Consent................ 31
Section 6.7 Record Date for Voting and Other Purposes............... 32
Section 6.8 Acts of Securityholders................................. 32
Section 6.9 Inspection of Records................................... 33
ARTICLE VII
REPRESENTATIONS AND WARRANTIES..................... 33
Section 7.1 Representations and Warranties of Property Trustee...... 33
Section 7.2 Representations and Warranties of Delaware Trustee...... 34
Section 7.3 Representations and Warranties of Depositor............. 35
ii
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ARTICLE VIII
Page
THE TRUSTEES.............................. 35
Section 8.1 Certain Duties and Responsibilities..................... 35
Section 8.2 Certain Notices......................................... 37
Section 8.3 Certain Rights of Property Trustee...................... 37
Section 8.4 Not Responsible for Recitals or Issuance of Securities.. 40
Section 8.5 May Hold Securities..................................... 40
Section 8.6 Compensation; Indemnity; Fees........................... 40
Section 8.7 Corporate Property Trustee Required; Eligibility of
Trustees............................................... 41
Section 8.8 Conflicting Interests................................... 42
Section 8.9 Co-Trustees and Separate Trustee........................ 42
Section 8.10 Resignation and Removal; Appointment of Successor...... 44
Section 8.11 Acceptance of Appointment by Successor................. 45
Section 8.12 Merger, Conversion, Consolidation or Succession to
Business.............................................. 46
Section 8.13 Preferential Collection of Claims Against Depositor or
Trust................................................. 46
Section 8.14 Reports by Property Trustee............................ 47
Section 8.15 Reports to the Property Trustee........................ 47
Section 8.16 Evidence of Compliance with Conditions Precedent....... 47
Section 8.17 Number of Trustees..................................... 47
Section 8.18 Delegation of Power.................................... 48
ARTICLE IX
TERMINATION, LIQUIDATION AND MERGER.................. 48
Section 9.1 Termination Upon Expiration Date........................ 48
Section 9.2 Early Termination....................................... 48
Section 9.3 Termination............................................. 49
Section 9.4 Liquidation............................................. 49
Section 9.5 Mergers, Consolidations, Amalgamations or Replacements
of the Trust.......................................... 51
ARTICLE X
MISCELLANEOUS PROVISIONS........................ 52
Section 10.1 Limitation of Rights of Securityholders................ 52
Section 10.2 Liability of the Common Securityholder................. 52
Section 10.3 Amendment.............................................. 52
Section 10.4 Separability........................................... 53
Section 10.5 Governing Law.......................................... 53
Section 10.6 Payments Due on Non-Business Day....................... 54
iii
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Page
Section 10.7 Successors............................................. 54
Section 10.8 Headings............................................... 54
Section 10.9 Reports, Notices and Demands........................... 54
Section 10.10 Agreement Not to Petition............................. 55
Section 10.11 Trust Indenture Act; Conflict with Trust Indenture Act 55
Section 10.12 Acceptance of Terms of Trust Agreement, Guarantee and
Indenture............................................ 55
Section 10.13 Counterparts.......................................... 56
iv
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT, dated as of _________ __, 1997,
among (i) Pennsylvania Power & Light Company, a Pennsylvania corporation
(including any successors or assigns, the "Depositor"), (ii) The Chase
Manhattan Bank, a New York banking corporation, as property trustee (in such
capacity, the "Property Trustee" and, in its separate corporate capacity and
not in its capacity as Property Trustee, the "Bank"), (iii) Chase Manhattan
Bank Delaware, a banking corporation organized under the laws of the State of
Delaware, as Delaware trustee (the "Delaware Trustee"), (iv) John R. Biggar, an
individual, and James E. Abel, an individual, each of whose address is c/o
Pennsylvania Power & Light Company, Two North Ninth Street, Allentown,
Pennsylvania 18101 (each an "Administrative Trustee" and collectively the
"Administrative Trustees") (the Property Trustee, the Delaware Trustee and the
Administrative Trustees referred to collectively as the "Trustees") and (v) the
several Holders, as hereinafter defined.
WITNESSETH
Whereas, the Depositor and the Delaware Trustee have heretofore duly
declared and established a business trust pursuant to the Delaware Business
Trust Act by the entering into that certain Trust Agreement, dated as of
January 28, 1997 (the "Original Trust Agreement"), and by the execution and
filing with the Secretary of State of the State of Delaware of the Certificate
of Trust, filed on January 28, 1997, a copy of which is attached as Exhibit A
(the "Certificate of Trust"); and
Whereas, the parties hereto desire to amend and restate the Original
Trust Agreement in its entirety as set forth herein to provide for, among other
things, (i) the issuance of the Common Securities by the Trust to the
Depositor, (ii) the issuance and sale of the Preferred Securities by the Trust
pursuant to the Underwriting Agreement and (iii) the acquisition by the Trust
from the Depositor of all of the right, title and interest in the Debentures;
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 is hereby acknowledged, each party, for the benefit of the
other parties and for the benefit of the Securityholders, hereby amends and
restates the Original Trust Agreement in its entirety and agrees as follows:
ARTICLE I
DEFINED TERMS
Section 1.1 Definitions.
For all purposes of this Trust Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular;
<PAGE>
2
(b) all other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to
them therein;
(c) unless the context otherwise requires, any reference to an "Article"
or a "Section" refers to an Article or a Section, as the case may be, of this
Trust Agreement; and
(d) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision.
"Act" has the meaning specified in Section 6.8.
"Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and/or a given period, the amount of Additional Interest (as
defined in the Indenture) paid by the Depositor on a Like Amount of Debentures
for such period.
"Administrative Trustee" means each of the individuals identified as an
"Administrative Trustee" in the preamble to this Trust Agreement solely in such
individual's capacity as Administrative Trustee of the Trust formed and
continued hereunder and not in such individual's individual capacity, or such
Administrative Trustee's successor in interest in such capacity, or any
successor trustee appointed as herein provided.
"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.
"Bank" has the meaning specified in the preamble to this Trust Agreement.
"Bankruptcy Event" means, with respect to any Person:
(a) the entry of a decree or order by a court having jurisdiction in the
premises judging such Person a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjudication or
composition of or in respect of such Person under any applicable federal or
state bankruptcy, insolvency, reorganization or other similar law, or
appointing a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of such Person or of any substantial part of its property or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order unstayed and in effect for a period of 60 consecutive
days; or
(b) the institution by such Person of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable federal or
state bankruptcy, insolvency, reorganization or other similar
<PAGE>
3
law, or the consent by it to the filing of any such petition or to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
similar official) of such Person or of any substantial part of its property, or
the making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally as they
become due and its willingness to be adjudicated a bankrupt, or the taking of
corporate action by such Person in furtherance of any such action.
"Bankruptcy Laws" has the meaning specified in Section 10.10.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Depositor to have been duly adopted
by the Depositor's Board of Directors, the Finance Committee of the Depositor's
Board of Directors or such other committee of the Board of Directors or
officers of the Depositor to which authority to act on behalf of the Board of
Directors has been delegated, and to be in full force and effect on the date of
such certification, and delivered to the Trustees.
"Book-Entry Preferred Securities Certificates" means a beneficial
interest in the Preferred Securities Certificates, ownership and transfers of
which shall be made through book entries by a Clearing Agency as described in
Section 5.11.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a day
on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed, or (c) a day on which the
Property Trustee's Corporate Trust Office or the Corporate Trust Office of the
Debenture Trustee is closed for business.
"Certificate Depository Agreement" means the agreement among the Trust,
the Depositor and The Depository Trust Company, as the initial Clearing Agency,
dated as of the Closing Date, relating to the Trust Securities Certificates,
substantially in the form attached as Exhibit B, as the same may be amended and
supplemented from time to time.
"Certificate of Trust" has the meaning specified in the recitals hereof,
as amended from time to time.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. The
Depository Trust Company will be the initial Clearing Agency.
"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 securities deposited with
the Clearing Agency.
"Closing Date" means the date of execution and delivery of this Trust
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
<PAGE>
4
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934, as
amended, 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.
"Common Securities Certificate" means a certificate evidencing ownership
of Common Securities, substantially in the form attached as Exhibit C.
"Common Security" means an undivided beneficial ownership interest in the
assets of the Trust, having a Liquidation Amount of $25 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution to the extent provided herein.
"Corporate Trust Office" means (i) when used with respect to the Property
Trustee, the principal corporate trust office of the Property Trustee located
in New York, New York, and (ii) when used with respect to the Debenture
Trustee, the principal corporate trust office of the Debenture Trustee located
in New York, New York.
"Debenture Event of Default" means an "Event of Default" as defined in
the Indenture.
"Debenture Redemption Date" means, with respect to any Debentures to be
redeemed under the Indenture, the date fixed for redemption of such Debentures
under the Indenture.
"Debenture Tax Event" means a "Tax Event" as defined in the Indenture.
"Debenture Trustee" means The Chase Manhattan Bank, a New York banking
corporation, as trustee under the Indenture, and any successor trustee
appointed as provided therein.
"Debentures" means the $103,092,800 aggregate principal amount of the
Depositor's [______%] Junior Subordinated Deferrable Interest Debentures due
_______ __, 2027 issued pursuant to the Indenture.
"Definitive Preferred Securities Certificates" means either or both (as
the context requires) of (a) Preferred Securities Certificates issued as
Book-Entry Preferred Securities Certificates as provided in Section 5.11(a) and
(b) Preferred Securities Certificates issued in certificated, fully registered
form as provided in Section 5.13.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. 3801, et seq., as it may be amended from time to
time.
"Delaware Trustee" means the Person identified as the "Delaware Trustee"
in the preamble to this Trust Agreement solely in its capacity as Delaware
Trustee of the Trust
<PAGE>
5
heretofore created and continued hereunder and not in its individual capacity,
or its successor in interest in such capacity, or any successor trustee
appointed as herein provided.
"Depositor" has the meaning specified in the preamble to this Trust
Agreement.
"Distribution Date" has the meaning specified in Section 4.1(a).
"Distributions" means amounts payable in respect of the Trust Securities
as provided in Section 4.1.
"Early Termination Event" has the meaning specified in Section 9.2.
"Event of Default" means any one of the following events (whatever the
reason for such event 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):
(a) the occurrence of a Debenture Event of Default; or
(b) default by the Trust in the payment of any Distribution when it
becomes due and payable, and continuation of such default for a period of 30
days; or
(c) default by the Trust in the payment of any Redemption Price of any
Trust Security when it becomes due and payable; or
(d) default in the performance, or breach of any covenant or warranty of
the Trustees in this Trust Agreement (other than a covenant or warranty a
default in the performance or breach of which is dealt with in clause (b) or
(c) above) and continuation of such default or breach for a period of 90 days
after there has been given, by registered or certified mail, to the Trustees
and the Depositor by the Holders of at least 25% in aggregate Liquidation
Amount of the Outstanding Preferred Securities, a written notice specifying
such default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder; or
(e) the occurrence of a Bankruptcy Event with respect to the Property
Trustee if a successor Property Trustee has not been appointed within 90 days
thereof.
"Expiration Date" has the meaning specified in Section 9.1.
"Guarantee" means the Guarantee Agreement executed and delivered by the
Depositor and The Chase Manhattan Bank, as trustee, contemporaneously with the
execution and delivery of this Trust Agreement, for the benefit of the Holders
of the Trust Securities, as amended from time to time.
"Indemnified Person" has the meaning specified in Section 8.6(c).
<PAGE>
6
"Indenture" means the Junior Subordinated Indenture, dated as of April 1,
1997, between the Depositor and the Debenture Trustee, as trustee, as amended
or supplemented from time to time.
"Investment Company Event" means the receipt by the Trust of an Opinion
of Counsel experienced in such matters to the effect that, as a result of the
occurrence of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"), the Trust is or
will be considered an "investment company" that is required to be registered
under the 1940 Act, which Change in 1940 Act Law becomes effective on or after
the date of original issuance of the Preferred Securities under this Trust
Agreement.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of any Trust
Securities, Trust Securities having a Liquidation Amount equal to the principal
amount of Debentures to be contemporaneously redeemed in accordance with the
Indenture the proceeds of which will be used to pay the Redemption Price of
such Trust Securities, (b) with respect to a distribution of Debentures to
Holders of Trust Securities in connection with a dissolution or liquidation of
the Trust, Debentures having a principal amount equal to the Liquidation Amount
of the Trust Securities of the Holder to whom such Debentures are distributed,
and (c) with respect to any distribution of Additional Amounts to Holders of
Trust Securities, Debentures having a principal amount equal to the Liquidation
Amount of the Trust Securities in respect of which such distribution is made.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
"Liquidation Date" means the date on which Debentures are to be
distributed to Holders of Trust Securities in connection with a termination and
liquidation of the Trust pursuant to Section 9.4(a).
"Liquidation Distribution" has the meaning specified in Section 9.4(d).
"Majority in Liquidation Amount of the Preferred Securities" or "Majority
in Liquidation Amount of the Common Securities" means, except as provided by
the Trust Indenture Act, Preferred Securities or Common Securities, as the case
may be, representing more than 50% of the aggregate Liquidation Amount of all
then Outstanding Preferred Securities or Common Securities, as the case may be.
"1940 Act" means the Investment Company Act of 1940, as amended.
"Officers' Certificate" means a certificate signed by the Chairman or a
Vice Chairman of the Board of Directors, President or a Vice President, and by
the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary,
of the Depositor, and delivered to the
<PAGE>
7
appropriate Trustee. One of the officers signing the compliance certificate
given pursuant to the first sentence of Section 8.15 shall be the principal
executive, financial or accounting officer of the Depositor. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Trust Agreement shall include:
(a) a statement by each officer signing the Officers' Certificate that
such officer has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by such officer in rendering the Officers'
Certificate;
(c) a statement that 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 such officer, such
condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Trust, the Property Trustee or the Depositor, and who shall be
reasonably acceptable to the Property Trustee.
"Original Trust Agreement" has the meaning specified in the recitals to
this Trust Agreement.
"Outstanding", when used with respect to Trust Securities, means, as of
the date of determination, all Trust Securities theretofore executed and
delivered under this Trust Agreement, except:
(a) Trust Securities theretofore cancelled by the Securities Registrar or
delivered to the Securities Registrar for cancellation;
(b) Trust Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Property Trustee or
any Paying Agent; provided that, if such Trust Securities are to be redeemed,
notice of such redemption has been duly given pursuant to this Trust Agreement;
and
(c) Trust Securities which have been paid or in exchange for or in lieu
of which other Preferred Securities have been executed and delivered pursuant
to this Trust Agreement, including pursuant to Sections 5.4, 5.5, 5.11 and
5.13;
provided, however, that in determining whether the Holders of the requisite
Liquidation Amount of the Outstanding Preferred Securities have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Preferred Securities owned by the Depositor, any Administrative Trustee or any
Affiliate of the Depositor or of any Administrative Trustee shall be
disregarded and deemed not to be Outstanding, except that (a)
<PAGE>
8
in determining whether any Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Preferred Securities that such Trustee actually knows to be so owned shall be
so disregarded and (b) the foregoing shall not apply at any time when all of
the outstanding Preferred Securities are owned by the Depositor, one or more of
the Administrative Trustees and/or any such Affiliate. Preferred Securities so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Administrative Trustees the
pledgee's right so to act with respect to such Preferred Securities and that
the pledgee is not the Depositor or any Affiliate of the Depositor.
"Owner" means each Person who is the beneficial owner of Book-Entry
Preferred Securities as reflected in the records of the Clearing Agency or, if
a Clearing Agency Participant is not the beneficial owner, then as reflected in
the records of a Person maintaining an account with such Clearing Agency
(directly or indirectly, in accordance with the rules of such Clearing Agency).
"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 5.9 and shall initially be the Property Trustee.
"Payment Account" means a segregated non-interest-bearing corporate trust
account maintained by the Property Trustee with the Bank in its corporate trust
department for the benefit of the Securityholders in which all amounts paid in
respect of the Debentures will be held and from which the Property Trustee,
through the Paying Agent, shall make payments to the Securityholders in
accordance with Sections 4.1 and 4.2.
"Person" means any individual, corporation, partnership, joint venture,
trust, limited liability company or corporation, unincorporated organization or
government or any agency or political subdivision thereof or any other entity
of whatever nature.
"Preferred Security" means an undivided beneficial ownership interest in
the assets of the Trust, having a Liquidation Amount of $25 and having the
rights provided therefor in this Trust Agreement, including the right to
receive Distributions and a Liquidation Distribution as provided herein.
"Preferred Securities Certificate" means a certificate evidencing
ownership of Preferred Securities, substantially in the form attached as
Exhibit D.
"Property Trustee" means the Person identified as the "Property Trustee"
in the preamble to this Trust Agreement solely in its capacity as Property
Trustee of the Trust heretofore created and continued hereunder and not in its
individual capacity, or its successor in interest in such capacity, or any
successor property trustee appointed as herein provided.
"Redemption Date" means, with respect to any Trust Security to be
redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Debenture Redemption Date and the stated maturity
of the Debentures shall be a Redemption Date for a Like Amount of Trust
Securities.
<PAGE>
9
"Redemption Price" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, plus the related amount of the premium,
if any, paid by the Depositor upon the concurrent redemption of a Like Amount
of Debentures, allocated on a pro rata basis (based on Liquidation Amounts)
among the Trust Securities.
"Relevant Trustee" shall have the meaning specified in Section 8.10.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 5.4.
"Securityholder" or "Holder" means a Person in whose name a Trust
Security or Trust Securities is registered in the Securities Register; any such
Person shall be a beneficial owner within the meaning of the Delaware Business
Trust Act; provided, however, that in determining whether the Holders of the
requisite amount of Preferred Securities have voted on any matter provided for
in this Trust Agreement, then for the purpose of any such determination, so
long as Definitive Preferred Securities Certificates have not been issued, the
term Securityholders or Holders as used herein shall refer to the Owners.
"Tax Event" means the receipt by the Trust of an Opinion of Counsel
experienced in such matters to the effect that, as a result of any amendment
to, or change (including any announced proposed change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or which proposed
change, pronouncement or decision is announced on or after the date of original
issuance of the Preferred Securities under this Trust Agreement, there is more
than an insubstantial risk that (i) the Trust is, or will be within 90 days
after the date of such Opinion of Counsel, subject to United States federal
income tax with respect to income received or accrued on the Debentures, (ii)
interest payable by the Depositor on the Debentures is not, or within 90 days
after the date of such Opinion of Counsel, will not be, deductible by the
Depositor, in whole or in part, for United States federal income tax purposes
or (iii) the Trust is, or will be within 90 days after the date of such Opinion
of Counsel, subject to more than a de minimis amount of other taxes, duties or
other governmental charges.
"Trust" means the Delaware business trust created and continued hereby
and identified on the cover page to this Trust Agreement.
"Trust Agreement" means this Amended and Restated Trust Agreement, as the
same may be modified, amended or supplemented in accordance with the applicable
provisions hereof, including (i) all exhibits hereto and (ii) for all purposes
of this Trust Agreement and any such modification, amendment or supplement, the
provisions of the Trust Indenture Act that are deemed to be a part of and
govern this Trust Agreement and any such modification, amendment or supplement,
respectively.
<PAGE>
10
"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.
"Trust Property" means (a) the Debentures, (b) any cash on deposit in, or
owing to, the Payment Account and (c) all proceeds and rights in respect of the
foregoing.
"Trust Security" means any one of the Common Securities or the Preferred
Securities.
"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Preferred Securities Certificates.
"Trustees" means, collectively, the Property Trustee, the Delaware
Trustee and the Administrative Trustees.
"Underwriting Agreement" means the Underwriting Agreement, dated as of
__________ __, 1997, among the Trust, the Depositor and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, for itself and on behalf of the underwriters named
therein.
ARTICLE II
CONTINUATION OF THE TRUST
Section 2.1 Name.
The Trust continued hereby shall be known as "PP&L Capital Trust," as
such name may be modified from time to time by the Administrative Trustees
following written notice to the Holders of Trust Securities and the other
Trustees, in which name the Trustees engage in the transactions contemplated
hereby, make and execute contracts and other instruments on behalf of the Trust
and sue and be sued.
Section 2.2 Office of the Delaware Trustee; Principal Place of Business.
The address of the Delaware Trustee in the State of Delaware is c/o Chase
Manhattan Bank Delaware, 1201 Market Street, 9th Floor, Wilmington, Delaware
19801, Attention: Corporate Trust Department, or such other address in the
State of Delaware as the Delaware Trustee may designate by written notice to
the Securityholders and the Depositor. The principal executive office of the
Trust is c/o Pennsylvania Power & Light Company, Two North Ninth Street,
Allentown, Pennsylvania 18101, Attention: Treasurer.
Section 2.3 Initial Contribution of Trust Property; Organizational
Expenses.
The Property Trustee acknowledges receipt in trust from the Depositor in
connection with the Original Trust Agreement of the sum of $10, which
constituted the initial Trust
<PAGE>
11
Property. The Depositor shall pay organizational expenses of the Trust as they
arise or shall, upon request of any Trustee, promptly reimburse such Trustee
for any such expenses paid by such Trustee. The Depositor shall make no claim
upon the Trust Property for the payment of such expenses.
Section 2.4 Issuance of the Preferred Securities.
The Depositor, both on its own behalf and on behalf of the Trust and
pursuant to the Original Trust Agreement, has executed and delivered the
Underwriting Agreement. Contemporaneously with the execution and delivery of
this Trust Agreement, an Administrative Trustee, on behalf of the Trust, shall
execute in accordance with Section 5.2 and deliver to the Underwriters named in
the Underwriting Agreement Preferred Securities Certificates, registered in the
name of the nominee of the initial Clearing Agency, in an aggregate amount of
4,000,000 Preferred Securities having an aggregate Liquidation Amount of
$100,000,000, against receipt of an aggregate purchase price plus accrued
distributions from _________ __, 1997 of such Preferred Securities of
[$______________], which amount, if any, such Administrative Trustee shall
promptly deliver to the Property Trustee.
Section 2.5 Issuance of the Common Securities; Subscription and Purchase
of Debentures.
Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrative Trustee, on behalf of the Trust, shall execute in
accordance with Section 5.2 and deliver to the Depositor Common Securities
Certificates, registered in the name of the Depositor, in an aggregate amount
of 123,712 Common Securities having an aggregate Liquidation Amount of
$3,092,800 against payment by the Depositor of an aggregate purchase price
therefor of $3,092,800, which amount such Administrative Trustee shall promptly
deliver to the Property Trustee. Contemporaneously therewith, an Administrative
Trustee, on behalf of the Trust, shall subscribe to and purchase from the
Depositor Debentures, registered in the name of the Property Trustee on behalf
of the Trust and having an aggregate principal amount equal to $103,092,800,
and, in satisfaction of the purchase price plus accrued interest, if any, from
_________ __, 1997 for such Debentures, the Property Trustee, on behalf of the
Trust, shall deliver to the Depositor the sum of $103,092,800 (being the sum of
the amounts delivered to the Property Trustee pursuant to (i) the second
sentence of Section 2.4 and (ii) the first sentence of this Section 2.5).
Section 2.6 Continuation of Trust.
The exclusive purposes and functions of the Trust are (a) to issue and
sell Trust Securities, (b) to use the proceeds from such sale to acquire the
Debentures and (c) to engage in those activities necessary or incidental
thereto. The Depositor hereby appoints the Property Trustee and Administrative
Trustees and reaffirms the appointment of the Delaware Trustee as trustees of
the Trust, to have all the rights, powers and duties to the extent set forth
herein, and the Trustees hereby accept such appointment. The Property Trustee
hereby declares that it will hold the Trust Property in trust upon and subject
to the conditions set forth herein for the benefit of the Trust and the
Securityholders. The Administrative Trustees shall have all rights,
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12
powers and duties set forth herein and in accordance with applicable law with
respect to accomplishing the purposes of the Trust. 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 Property Trustee or the
Administrative Trustees set forth herein. The Delaware Trustee shall be one of
the Trustees of the Trust for the sole and limited purpose of fulfilling the
requirements of Section 3807 of the Delaware Business Trust Act and for taking
such actions as are required to be taken by a Delaware trustee under the
Delaware Business Trust Act. In the event the Delaware Trustee shall at any
time be required to take any action or perform any duty hereunder with respect
to the Trust, the Delaware Trustee shall be entitled to all of the same rights
as the Property Trustee listed in Section 8.3.
Section 2.7 Authorization to Enter into Certain Transactions.
(a) The Trustees shall conduct the affairs of the Trust in accordance
with the terms of this Trust Agreement. Subject to the limitations set forth in
paragraph (b) of this Section, Article VIII and in accordance with the
following provisions (i) and (ii), the Trustees shall have the authority to
enter into all transactions and agreements determined by the Trustees to be
appropriate in exercising the authority, express or implied, otherwise granted
to the Trustees under this Trust Agreement, and to perform all acts in
furtherance thereof, including without limitation, the following:
(i) As among the Trustees, each Administrative Trustee shall have
the power and authority to act on behalf of the Trust with respect to the
following matters:
(A) the issuance and sale of the Trust Securities;
(B) to cause the Trust to enter into, and to execute,
deliver and perform on behalf of the Trust, the Certificate
Depository Agreement and such other agreements as may be necessary
or desirable in connection with the purposes and function of the
Trust;
(C) assisting in the registration of the Preferred
Securities under the Securities Act of 1933, as amended, and under
state securities or blue sky laws and the qualification of this
Trust Agreement as a trust indenture under the Trust Indenture Act;
(D) assisting in the listing, if any, of the Preferred
Securities upon such national securities exchange or exchanges or
automated quotation system or systems as shall be determined by the
Depositor, with the registration of the Preferred Securities under
the Securities Exchange Act of 1934, as amended, and with the
preparation and filing of all periodic and other reports and other
documents pursuant to the foregoing;
(E) assisting in the sending of notices (other than notices
of default) and other information regarding the Trust Securities
and the Debentures to the Securityholders in accordance with this
Trust Agreement;
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13
(F) consent to the appointment of a Paying Agent and
Securities Registrar in accordance with this Trust Agreement;
(G) registering issuance and transfer of the Trust
Securities in accordance with this Trust Agreement;
(H) to the extent provided in this Trust Agreement, the
winding up of the affairs of and liquidation of the Trust and the
execution and filing of the certificate of cancellation with the
Secretary of State of the State of Delaware;
(I) execution and delivery of closing certificates, if any,
pursuant to the Underwriting Agreement and application for a
taxpayer identification number for the Trust;
(J) unless otherwise determined by the Depositor, the
Property Trustee or the Administrative Trustees, or as otherwise
required by the Delaware Business Trust Act or the Trust Indenture
Act, to execute on behalf of the Trust (either acting alone or
together with any or all of the Administrative Trustees) any
documents that the Administrative Trustees have the power to
execute pursuant to this Trust Agreement;
(K) to the extent provided in this Trust Agreement, the
winding up of the affairs of and liquidation of the Trust and the
preparation, execution and filing of the certificate of
cancellation with the Secretary of State of the State of Delaware;
(L) to duly prepare and file all applicable tax returns and
tax information reports that are required to be filed with respect
to the Trust on behalf of the Trust;
(M) 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 Preferred Securities or
to enable the Trust to effect the purposes for which the trust was
created; and
(N) the taking of any action incidental to the foregoing as
the Trustees may from time to time determine is necessary or
advisable to give effect to the terms of this Trust Agreement for
the benefit of the Securityholders (without consideration of the
effect of any such action on any particular Securityholder).
(ii) As among the Trustees, the Property Trustee shall have the
power, duty and authority to act on behalf of the Trust with respect to
the following matters:
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14
(A) the establishment of the Payment Account;
(B) the receipt of the Debentures;
(C) the collection of interest, principal and any other
payments made in respect of the Debentures and holding of such
amounts in the Payment Account;
(D) the distribution through the Paying Agent of amounts
distributable to the Securityholders in respect of the Trust
Securities;
(E) the exercise of all of the rights, powers and privileges
of a holder of the Debentures;
(F) the sending of notices of default and other information
regarding the Trust Securities and the Debentures to the
Securityholders in accordance with this Trust Agreement;
(G) the distribution of the Trust Property in accordance
with the terms of this Trust Agreement;
(H) to the extent provided in this Trust Agreement, the
winding up of the affairs of and liquidation of the Trust and the
execution and filing of the certificate of cancellation with the
Secretary of State of the State of Delaware;
(I) after an Event of Default (other than under paragraph
(b), (c), (d) or (e) of the definition of such term if such Event
of Default is by or with respect to the Property Trustee) the
taking of any action incidental to the foregoing as the Property
Trustee may from time to time determine is necessary or advisable
to give effect to the terms of this Trust Agreement and protect and
conserve the Trust Property for the benefit of the Holders (without
consideration of the effect of any such action on any particular
Holder); and
(J) any of the duties, powers or the authority of the
Administrative Trustees set forth in Section 2.7(a)(i)(E) herein;
and in the event of a conflict between the action of the
Administrative Trustees and the action of the Property Trustee, the
action of the Property Trustee shall prevail.
(b) So long as this Trust Agreement remains in effect, the Trust (or the
Trustees acting on behalf of the Trust) shall not undertake any business,
activities or transaction except as expressly provided herein or contemplated
hereby. In particular, the Trustees shall not (i) acquire any investments or
engage in any activities not authorized by this Trust Agreement, (ii) sell,
assign, transfer, exchange, mortgage, pledge, set-off or otherwise dispose of
any of the Trust Property or interests therein, including to Securityholders,
except as expressly provided herein, (iii) take any action that would
reasonably be expected to cause the Trust to fail or cease to qualify as a
"grantor trust" for United States federal income tax purposes, (iv)
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15
incur any indebtedness for borrowed money or issue any other debt, (v) take or
consent to any action that would result in the placement of a Lien on any of
the Trust Property, (vi) invest any proceeds received by the Trust from holding
the Debentures, but shall distribute all such proceeds to Holders of Trust
Securities pursuant to the terms of this Trust Agreement and of the Securities;
(vii) acquire any assets other than the Trust Property, (viii) possess any
power or otherwise act in such a way as to vary the Trust Property, (ix)
possess any power or otherwise act in such a way as to vary the terms of the
Securities in any way whatsoever (except to the extent expressly authorized in
this Trust Agreement or by the terms of the Trust Securities) or (x) issue any
securities or other evidences of beneficial ownership of, or beneficial
interest in, the Trust other than the Trust Securities. The Administrative
Trustees shall at the sole cost and expense of the Trust defend all claims and
demands of all Persons at any time claiming any Lien on any of the Trust
Property adverse to the interest of the Trust or the Securityholders in their
capacity as Securityholders.
(c) In connection with the issue and sale of the Preferred Securities,
the Depositor shall have the right and responsibility to assist the Trust with
respect to, or effect on behalf of the Trust, the following (and any actions
taken by the Depositor in furtherance of the following prior to the date of
this Trust Agreement are hereby ratified and confirmed in all respects):
(i) the preparation and filing by the Trust with the Commission
and the execution on behalf of the Trust of a registration statement on
the appropriate form in relation to the Preferred Securities, including
any amendments thereto and the taking of any action necessary or
desirable to sell the Preferred Securities in a transaction or a series
of transactions pursuant thereto;
(ii) the determination of the states in which to take appropriate
action to qualify or register for sale all or part of the Preferred
Securities and the determination of any and all such acts, other than
actions which must be taken by or on behalf of the Trust, and the advice
to the Trustees of actions they must take on behalf of the Trust, and the
preparation for execution and filing of any documents to be executed and
filed by the Trust or on behalf of the Trust, as the Depositor deems
necessary or advisable in order to comply with the applicable laws of any
such states in connection with the sale of the Preferred Securities;
(iii) the preparation for filing by the Trust and execution on
behalf of the Trust of an application to the New York Stock Exchange or
any other national securities exchange or the Nasdaq National Market or
any other automated quotation system for listing upon notice of issuance
of any Preferred Securities and filing with such exchange or
self-regulatory organization such notifications and documents as may be
necessary from time to time to maintain such listing;
(iv) the negotiation of the terms of, and the execution and
delivery of, the Underwriting Agreement providing for the sale of the
Preferred Securities; and
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16
(v) the taking of any other actions necessary or desirable to
carry out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the Trustees are
authorized and directed to conduct the affairs of the Trust and to operate the
Trust so that the Trust will not be deemed to be an "investment company"
required to be registered under the 1940 Act, or fail to be classified as a
grantor trust for United States federal income tax purposes and so that the
Debentures will be treated as indebtedness of the Depositor for United States
federal income tax purposes; provided, however, that neither the Property
Trustee nor the Delaware Trustee are required to take any action pursuant to
this paragraph (d) that is not otherwise required of such Trustee pursuant to
the terms of this Trust Agreement. The Depositor, the Property Trustee and the
Administrative Trustees are, however, authorized to take any action, not
inconsistent with applicable law, the Certificate of Trust or this Trust
Agreement, that each of the Depositor, the Property Trustee and any
Administrative Trustee determines in its discretion to be necessary or
desirable for such purposes, as long as such action does not adversely affect
in any material respect the interests of the Holders of the Preferred
Securities.
Section 2.8 Assets of Trust.
The assets of the Trust shall consist solely of the Trust Property.
Section 2.9 Title to Trust Property.
Legal title to all Trust Property shall be vested at all times in the
Property Trustee (in its capacity as such) and shall be held and administered
by the Property Trustee in trust for the benefit of the Trust and the
Securityholders in accordance with this Trust Agreement.
ARTICLE III
Payment Account
Section 3.1 Payment Account.
(a) On or prior to the Closing Date, the Property Trustee shall
establish the Payment Account. The Property Trustee and any agent of the
Property Trustee shall have exclusive control and sole right of withdrawal with
respect to the Payment Account for the purpose of making deposits in and
withdrawals from the Payment Account in accordance with this Trust Agreement.
All monies and other property deposited or held from time to time in the
Payment Account shall be held by the Property Trustee in the Payment Account
for the exclusive benefit of the Securityholders and for distribution as herein
provided, including (and subject to) any priority of payments provided for
herein.
(b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal of or interest or premium on, and any
other payments or
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17
proceeds with respect to, the Debentures. Amounts held in the Payment Account
shall not be invested by the Property Trustee.
ARTICLE IV
DISTRIBUTIONS; REDEMPTION
Section 4.1 Distributions.
(a) The Trust Securities represent undivided beneficial ownership
interests in the Trust Property, and Distributions (including of Additional
Amounts) will be made on the Trust Securities at the rate and on the dates that
payments of interest (including of Additional Interest, as defined in the
Indenture) are made on the Debentures. Accordingly:
(i) Distributions on the Trust Securities shall be cumulative,
and will accumulate whether or not there are funds of the Trust available
for the payment of Distributions. Distributions shall accumulate from
_________ __, 1997, and, except in the event (and to the extent) that the
Depositor exercises its right to defer the payment of interest on the
Debentures pursuant to the Indenture, shall be payable quarterly in
arrears on January 1, April 1, July 1 and October 1 of each year,
commencing on _________ ___, 1997. If any date on which a Distribution
is otherwise payable on the Trust Securities is not a Business Day, then
the payment of such Distribution shall be made on the next succeeding day
that is a Business Day (and without any interest or other payment in
respect of any such delay) with the same force and effect as if made on
such date (each date on which Distributions are payable in accordance
with this Section 4.1(a), a "Distribution Date").
(ii) Distributions on the Trust Securities shall be payable at a
rate of [_____%] per annum of the Liquidation Amount of the Trust
Securities. The amount of Distributions payable for any full Distribution
period shall be computed by dividing the per annum rate by four. The
amount of Distributions for any partial Distribution period shall be
computed on the basis of the number of days elapsed in a 360-day year of
twelve 30-day months. The amount of Distributions payable for any period
shall include the Additional Amounts, if any.
(iii) Distributions on the Trust Securities shall be made by the
Property Trustee from the Payment Account and shall be payable on each
Distribution Date only to the extent that the Trust has funds then on
hand and available in the Payment Account for the payment of such
Distributions.
(b) Distributions on the Trust Securities with respect to a Distribution
Date shall be payable to the Holders thereof as they appear on the Securities
Register for the Trust Securities on the relevant record date, which shall be
one Business Day prior to such Distribution Date; provided, however, that in
the event that the Preferred Securities do not
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remain in book-entry-only form, the relevant record date shall be the 15th day
of the month prior to the relevant Distribution Date (whether or not such
record date is a Business Day).
Section 4.2 Redemption.
(a) On each Debenture Redemption Date and on the stated maturity of the
Debentures, the Trust will be required to redeem a Like Amount of Trust
Securities at the Redemption Price.
(b) Notice of redemption shall be given by the Property Trustee 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 Trust Securities to be
redeemed, at such Holder's address appearing in the Security Register. All
notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the CUSIP number;
(iv) if less than all the Outstanding Trust Securities are to be
redeemed, the identification and the aggregate Liquidation Amount of the
particular Trust Securities to be redeemed;
(v) that on the Redemption Date the Redemption Price will become
due and payable upon each such Trust Security to be redeemed and that
Distributions thereon will cease to accumulate on and after said date
except as provided in Section 4.2(d) below; and
(vi) if the Preferred Securities are no longer in book-entry-only
form, the place and address where the Holders shall surrender their
Preferred Securities Certificates.
(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the proceeds from the contemporaneous
redemption or payment at stated maturity of Debentures. Redemptions of the
Trust Securities shall be made and the Redemption Price shall be payable on
each Redemption Date only to the extent that the Trust has funds then on hand
and available in the Payment Account for the payment of such Redemption Price.
(d) If the Property Trustee gives a notice of redemption in respect of
any Preferred Securities, then, by 12:00 noon, New York City time, on the
Redemption Date, subject to Section 4.2(c), the Property Trustee will, so long
as the Preferred Securities are in book-entry-only form, irrevocably deposit
with the Clearing Agency for the Preferred Securities funds sufficient to pay
the applicable Redemption Price and will give such Clearing Agency irrevocable
instructions and authority to pay the Redemption Price to the Holders thereof.
If
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19
the Preferred Securities are no longer in book-entry-only form, the Property
Trustee, subject to Section 4.2(c), will irrevocably deposit with the Paying
Agent funds sufficient to pay the applicable Redemption Price and will give the
Paying Agent irrevocable instructions and authority to pay the Redemption Price
to the Holders thereof upon surrender of their Preferred Securities
Certificates. Notwithstanding the foregoing, Distributions payable on or prior
to the Redemption Date for any Trust Securities called for redemption shall be
payable to the Holders of such Trust Securities as they appear on the
Securities Register for the Trust Securities on the relevant record dates for
the related Distribution Dates. If notice of redemption shall have been given
and funds deposited as required, then upon the date of such deposit, all rights
of Securityholders holding Trust Securities so called for redemption will
cease, except the right of such Securityholders to receive the Redemption Price
and any Distribution payable on or prior to the Redemption Date, but without
interest thereon, and such Trust Securities will cease to be Outstanding. In
the event that any date on which any Redemption Price is payable is not a
Business Day, then payment of the Redemption Price payable on such date will be
made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day, in each case, with the same force and
effect as if made on such date. In the event that payment of the Redemption
Price in respect of any Trust Securities called for redemption is improperly
withheld or refused and not paid either by the Trust or by the Depositor
pursuant to the Guarantee, Distributions on such Trust Securities will continue
to accumulate, at the then applicable rate, from the Redemption Date originally
established by the Trust for such Trust Securities to the date such Redemption
Price is actually paid, in which case the actual payment date will be the date
fixed for redemption for purposes of calculating the Redemption Price.
(e) Payment of the Redemption Price on the Trust Securities shall be
made to the recordholders thereof as they appear on the Securities Register for
the Trust Securities on the relevant record date, which shall be one Business
Day prior to the relevant Redemption Date; provided, however, that in the event
that the Preferred Securities do not remain in book-entry-only form, the
relevant record date shall be the date fifteen days prior to the relevant
Redemption Date.
(f) Subject to Section 4.3(a), if less than all the Outstanding Trust
Securities are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of Trust Securities to be redeemed shall be allocated on a
pro rata basis (based on Liquidation Amounts) among the Common Securities and
the Preferred Securities. The particular Preferred Securities to be redeemed
shall be selected on a pro rata basis (based upon Liquidation Amounts) not more
than 60 days prior to the Redemption Date by the Property Trustee from the
Outstanding Preferred Securities not previously called for redemption, by such
method as the Property Trustee shall deem fair and appropriate and which may
provide for the selection for redemption of portions (equal to $25 or an
integral multiple of $25 in excess thereof) of the Liquidation Amount of
Preferred Securities of a denomination larger than $25. The Property Trustee
shall promptly notify the Securities Registrar in writing of the Preferred
Securities selected for redemption and, in the case of any Preferred Securities
selected for partial redemption, the Liquidation Amount thereof to be redeemed.
For all purposes of this Trust
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20
Agreement, unless the context otherwise requires, all provisions relating to
the redemption of Preferred Securities shall relate, in the case of any
Preferred Securities redeemed or to be redeemed only in part, to the portion of
the aggregate Liquidation Amount of Preferred Securities that has been or is to
be redeemed.
Section 4.3 Subordination of Common Securities.
(a) Payment of Distributions (including Additional Amounts, if
applicable) on, and the Redemption Price of, the Trust Securities, as
applicable, shall be made, subject to Section 4.2(f), pro rata among the Common
Securities and the Preferred Securities based on the Liquidation Amount of the
Trust Securities; provided, however, that if on any Distribution Date or
Redemption Date any Event of Default resulting from a Debenture Event of
Default shall have occurred and be continuing, no payment of any Distribution
(including Additional Amounts, if applicable) on, or Redemption Price of, any
Common Security, and no other payment on account of the redemption, liquidation
or other acquisition of Common Securities, shall be made unless payment in full
in cash of all accumulated and unpaid Distributions (including Additional
Amounts, if applicable) on all Outstanding Preferred Securities for all
Distribution periods terminating on or prior thereto, or in the case of payment
of the Redemption Price the full amount of such Redemption Price on all
Outstanding Preferred Securities then called for redemption, shall have been
made or provided for, and all funds immediately available to the Property
Trustee shall first be applied to the payment in full in cash of all
Distributions (including Additional Amounts, if applicable) on, or the
Redemption Price of, Preferred Securities then due and payable.
(b) In the case of the occurrence of any Event of Default resulting from
any Debenture Event of Default, the Holder of the Common Securities shall be
deemed to have waived any right to act with respect to any such Event of
Default under this Trust Agreement until the effect of all such Events of
Default with respect to the Preferred Securities has been cured, waived or
otherwise eliminated. Until any such Event of Default under this Trust
Agreement with respect to the Preferred Securities has been so cured, waived or
otherwise eliminated, the Property Trustee shall act solely on behalf of the
Holders of the Preferred Securities and not the Holder of the Common
Securities, and only the Holders of the Preferred Securities will have the
right to direct the Property Trustee to act on their behalf.
Section 4.4 Payment Procedures.
Payments of Distributions (including Additional Amounts, if applicable)
or the Redemption Price, Liquidation Amount or any other amounts in respect of
the Preferred Securities shall be made by check mailed to the address of the
Person entitled thereto as such address shall appear on the Securities Register
or, if the Preferred Securities are held by a Clearing Agency, such
Distributions shall be made to the Clearing Agency in immediately available
funds, which shall credit the relevant Persons' accounts at such Clearing
Agency on the applicable Distribution Dates. Payments in respect of the Common
Securities shall be made in such manner as shall be mutually agreed in writing
between the Property Trustee and the Common Securityholder.
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Section 4.5 Tax Returns and Reports.
The Administrative Trustees shall prepare (or cause to be prepared), at
the Depositor's expense, and file all United States federal, state and local
tax and information returns and reports required to be filed by or in respect
of the Trust. In this regard, the Administrative Trustees shall (a) prepare and
file (or cause to be prepared and filed) the appropriate Internal Revenue
Service Form required to be filed in respect of the Trust in each taxable year
of the Trust and (b) prepare and furnish (or cause to be prepared and
furnished) to each Securityholder the appropriate Internal Revenue Service form
and the information required to be provided on such form. The Administrative
Trustees shall provide the Depositor and the Property Trustee with a copy of
all such returns and reports promptly after such filing or furnishing. The
Trustees shall comply with United States federal withholding and backup
withholding tax laws and information reporting requirements with respect to any
payments to Securityholders under the Trust Securities.
Section 4.6 Payment of Expenses of the Trust.
Pursuant to Sections 6.7 and 10.6 of the Indenture, the Depositor, as
borrower, has agreed to pay to the Trust, and reimburse the Trust for, the full
amount of any costs, expenses or liabilities of the Trust (other than
obligations of the Trust to pay the Holders of any Preferred Securities or
other similar interests in the Trust the amounts due such Holders pursuant to
the terms of the Preferred Securities or such other similar interests, as the
case may be), including, without limitation, any taxes, duties or other
governmental charges of whatever nature (other than withholding taxes) imposed
on the Trust by the United States or any other taxing authority. Such payment
obligation includes any such costs, expenses or liabilities of the Trust that
are required by applicable law to be satisfied in connection with a termination
of the Trust.
Section 4.7 Payments under Indenture or Pursuant to Direct Actions.
Any amount payable hereunder to any Holder of Preferred Securities shall
be reduced by the amount of any corresponding payment such Holder (or an Owner
with respect to the Holder's Preferred Securities) has directly received
pursuant to Section 5.8 of the Indenture or Section 5.14 of this Trust
Agreement.
ARTICLE V
TRUST SECURITIES CERTIFICATES
Section 5.1 Initial Ownership.
Upon the creation of the Trust and the contribution by the Depositor
pursuant to Section 2.3 and until the issuance of the Trust Securities, and at
any time during which no Trust Securities are Outstanding, the Depositor shall
be the sole beneficial owner of the Trust.
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Section 5.2 The Trust Securities Certificates.
The Preferred Securities Certificates shall be issued in minimum
denominations of $25 Liquidation Amount and integral multiples of $25 in excess
thereof, and the Common Securities Certificates shall be issued in
denominations of $25 Liquidation Amount and integral multiples thereof. The
Trust Securities Certificates shall be (i) executed on behalf of the Trust by
manual or facsimile signature of at least one Administrative Trustee and (ii)
authenticated by the Property Trustee by manual signature of an authorized
officer thereof. Trust Securities Certificates bearing the manual or facsimile
signatures of individuals who were, at the time when such signatures shall have
been affixed, authorized to sign on behalf of the Trust or the Property
Trustee, shall be validly issued and entitled to the benefits of this Trust
Agreement, notwithstanding that such individuals or any of them shall have
ceased to be so authorized prior to the delivery of such Trust Securities
Certificates or did not hold such offices at the date of delivery of such Trust
Securities Certificates. A transferee of a Trust Securities Certificate shall
become a Securityholder, and shall be entitled to the rights and subject to the
obligations of a Securityholder hereunder, upon due registration of such Trust
Securities Certificate in such transferee's name pursuant to Sections 5.4, 5.11
and 5.13.
Section 5.3 Execution and Delivery of Trust Securities Certificates.
On the Closing Date, the Administrative Trustees shall cause Trust
Securities Certificates, in an aggregate Liquidation Amount as provided in
Sections 2.4 and 2.5, to be executed on behalf of the Trust, and the Property
Trustee shall cause such Trust Certificates to be authenticated and delivered
to or upon the written order of the Depositor, signed by its chairman of the
board, its president, any executive vice president or any vice president,
treasurer or assistant treasurer or controller without further corporate action
by the Depositor, in authorized denominations.
Section 5.4 Registration of Transfer and Exchange of Preferred
Securities Certificates.
The Property Trustee shall keep or cause to be kept, at the office or
agency maintained pursuant to Section 5.8, a register or registers for the
purpose of registering Trust Securities Certificates and transfers and
exchanges of Trust Securities Certificates (the "Securities Register") in which
the transfer agent and registrar (the "Securities Registrar"), subject to such
reasonable regulations as it may prescribe, shall provide for the registration
of Preferred Securities Certificates and Common Securities Certificates
(subject to Section 5.10 in the case of the Common Securities Certificates) and
registration of transfers and exchanges of Preferred Securities Certificates as
herein provided. The Property Trustee shall at all times be the Securities
Registrar.
Upon surrender for registration of transfer of any Preferred Securities
Certificate at the office or agency maintained pursuant to Section 5.8, the
Administrative Trustees or any one of them shall execute on behalf of the Trust
and deliver to the Property Trustee, and the Property Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Preferred Securities Certificates in authorized
denominations of
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a like aggregate Liquidation Amount dated the date of authentication by the
Property Trustee. The Securities Registrar shall not be required to register
the transfer of any Preferred Securities that have been called for redemption
during a period beginning at the opening of business 15 days before the day of
selection for such redemption.
At the option of a Holder, Preferred Securities Certificates may be
exchanged for other Preferred Securities Certificates in authorized
denominations of the same class and of a like aggregate Liquidation Amount upon
surrender of the Preferred Securities Certificates to be exchanged at the
office or agency maintained pursuant to Section 5.8.
Every Preferred Securities Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to an Administrative Trustee and
the Securities Registrar duly executed by the Holder or his attorney duly
authorized in writing. Each Preferred Securities Certificate surrendered for
registration of transfer or exchange shall be cancelled and subsequently
disposed of by the Property Trustee in accordance with such Person's customary
practice.
No service charge shall be made for any registration of transfer or
exchange of Preferred Securities Certificates, but the Securities Registrar may
require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of Preferred
Securities Certificates.
Section 5.5 Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates.
If (a) any mutilated Trust Securities Certificate shall be surrendered to
the Securities Registrar, or if the Securities Registrar shall receive evidence
to its satisfaction of the destruction, loss or theft of any Trust Securities
Certificate and (b) there shall be delivered to the Securities Registrar and
the Administrative Trustees such security or indemnity as may be required by
them to save each of the Securities Registrar and the Trustees harmless, then
in the absence of notice that such Trust Securities Certificate shall have been
acquired by a bona fide purchaser, the Administrative Trustees, or any one of
them, on behalf of the Trust shall execute by manual or facsimile signature and
the Property Trustee shall authenticate and make available for delivery, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Trust
Securities Certificate, a new Trust Securities Certificate of like class, tenor
and denomination. In connection with the issuance of any new Trust Securities
Certificate under this Section, the Administrative Trustees or the Securities
Registrar 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
Trust Securities Certificate issued pursuant to this Section shall constitute
conclusive evidence of an undivided beneficial interest in the Trust Property,
as if originally issued, whether or not the lost, stolen or destroyed Trust
Securities Certificate shall be found at any time.
Section 5.6 Persons Deemed Securityholders.
The Trustees and the Securities Registrar shall treat each Person in
whose name any Trust Securities Certificate shall be registered in the
Securities Register as the owner of such
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24
Trust Securities Certificate for the purpose of receiving Distributions and for
all other purposes whatsoever, and none of the Trustees shall be bound by any
notice to the contrary.
Section 5.7 Access to List of Securityholders' Names and Addresses.
Each Holder and each Owner shall be deemed to have agreed not to hold the
Depositor or the Trustees accountable by reason of the disclosure of its name
and address, regardless of the source from which such information was derived.
Section 5.8 Maintenance of Office or Agency.
The Property Trustee shall designate, with the consent of the
Administrative Trustees, which consent shall not be unreasonably withheld, an
office or offices or agency or agencies where Preferred Securities Certificates
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Trustees in respect of the Trust Securities
Certificates may be served. The Property Trustee initially designates The
Chase Manhattan Bank, Global Trust Services, 450 W. 33rd Street, 15th Floor,
New York, New York 10001-2697, as its principal corporate trust office for such
purposes. The Property Trustee shall give prompt written notice to the
Depositor, the Administrative Trustees and to the Securityholders of any change
in the location of the Securities Register or any such office or agency.
Section 5.9 Appointment of Paying Agent.
The Paying Agent shall make Distributions to Securityholders from the
Payment Account and shall report the amounts of such Distributions to the
Property Trustee (if the Paying Agent is not the Property Trustee) and the
Administrative Trustees. Any Paying Agent shall have the revocable power to
withdraw funds from the Payment Account solely for the purpose of making the
Distributions referred to above. The Administrative Trustees may revoke such
power and remove the Paying Agent if such Trustees determine in their sole
discretion that the Paying Agent shall have failed to perform its obligations
under this Trust Agreement in any material respect. The Paying Agent shall
initially be the Property Trustee, and any co-paying agent chosen by the
Property Trustee (which may be the Depositor), and acceptable to the
Administrative Trustees and the Depositor. Any Person acting as Paying Agent
shall be permitted to resign as Paying Agent upon 30 days' written notice to
the Administrative Trustees, the Property Trustee (if the Paying Agent is not
the Property Trustee) and the Depositor. In the event that the Property Trustee
shall no longer be the Paying Agent or a successor Paying Agent shall resign or
its authority to act be revoked, the Administrative Trustees shall appoint a
successor that is acceptable to the Property Trustee and the Depositor to act
as Paying Agent (which shall be a bank or trust company). The Administrative
Trustees shall cause such successor Paying Agent or any additional Paying Agent
appointed by the Administrative Trustees to execute and deliver to the Trustees
an instrument in which such successor Paying Agent or additional Paying Agent
shall agree with the Trustees that as Paying Agent, such successor Paying Agent
or additional Paying Agent will hold all sums, if any, held by it for payment
to the Securityholders in trust for the benefit of the Securityholders entitled
thereto until such sums shall be paid to such Securityholders.
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25
The Paying Agent shall return all unclaimed funds to the Property Trustee and
upon resignation or removal of a Paying Agent such Paying Agent shall also
return all funds in its possession to the Property Trustee. The provisions of
Sections 8.1, 8.3 and 8.6 herein shall apply to the Property Trustee also in
its role as Paying Agent, for so long as the Property Trustee shall act as
Paying Agent and, to the extent applicable, to any other paying agent appointed
hereunder, and any Paying Agent shall be bound by the requirements with respect
to paying agents of securities issued pursuant to the Trust Indenture Act. Any
reference in this Agreement to the Paying Agent shall include any co-paying
agent unless the context requires otherwise.
Section 5.10 Ownership of Common Securities by Depositor.
On the Closing Date, the Depositor shall acquire and thereafter shall
retain beneficial and record ownership of the Common Securities. To the fullest
extent permitted by law, other than a transfer in connection with a
consolidation or merger of the Depositor into another Person, or any
conveyance, transfer or lease by the Depositor of its properties and assets
substantially as an entirety to any Person, pursuant to Section 8.1 of the
Indenture, any attempted transfer of the Common Securities shall be void. The
Administrative Trustees shall cause each Common Securities Certificate issued
to the Depositor to contain a legend stating "THIS CERTIFICATE IS NOT
TRANSFERABLE TO ANY PERSON EXCEPT TO THE DEPOSITOR OR AN AFFILIATE OF THE
DEPOSITOR IN COMPLIANCE WITH APPLICABLE LAW AND SECTION 5.10 OF THE TRUST
AGREEMENT".
Section 5.11 Book-Entry Preferred Securities Certificates; Common
Securities Certificate.
(a) The Preferred Securities Certificates, upon original issuance, will
be issued in the form of a typewritten Preferred Securities Certificate or
Certificates representing Book-Entry Preferred Securities Certificates, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Trust. Such Preferred Securities Certificate or Certificates
shall initially be registered on the Securities Register in the name of Cede &
Co., the nominee of the initial Clearing Agency, and no Owner will receive a
Definitive Preferred Securities Certificate representing such Owner's interest
in such Preferred Securities, except as provided in Section 5.13. Unless and
until Definitive Preferred Securities Certificates have been issued to Owners
pursuant to Section 5.13:
(i) the provisions of this Section 5.11(a) shall be in full force
and effect;
(ii) the Securities Registrar and the Trustees shall be entitled
to deal with the Clearing Agency for all purposes of this Trust Agreement
relating to the Book-Entry Preferred Securities Certificates (including
the payment of the Liquidation Amount of and Distributions on the
Preferred Securities evidenced by Book-Entry Preferred Securities
Certificates and the giving of instructions or directions to Owners of
Preferred Securities evidenced by Book-Entry Preferred Securities
Certificates) as the sole Holder of Preferred Securities evidenced by
Book-Entry Preferred Securities Certificates and shall have no
obligations to the Owners thereof;
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26
(iii) to the extent that the provisions of this Section 5.11
conflict with any other provisions of this Trust Agreement, the
provisions of this Section 5.11 shall control; and
(iv) the rights of the Owners of the Book-Entry Preferred
Securities Certificates shall be exercised only through the Clearing
Agency and shall be limited to those established by law and agreements
between such Owners and the Clearing Agency and/or the Clearing Agency
Participants. Pursuant to the Certificate Depository Agreement, unless
and until Definitive Preferred Securities Certificates are issued
pursuant to Section 5.13, the initial Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and receive
and transmit payments on the Preferred Securities to such Clearing Agency
Participants.
(b) A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a typewritten Common
Securities Certificate.
Section 5.12 Notices to Clearing Agency.
To the extent that a notice or other communication to the Holders of
Preferred Securities is required under this Trust Agreement, unless and until
Definitive Preferred Securities Certificates shall have been issued to Owners
pursuant to Section 5.13, the Trustees shall give all such notices and
communications specified herein to be given to the Clearing Agency and shall
have no obligations to the Owners.
Section 5.13 Definitive Preferred Securities Certificates.
If (a) the Depositor advises the Trustees in writing that the Clearing
Agency is no longer willing or able to properly discharge its responsibilities
with respect to the Preferred Securities Certificates, and the Depositor is
unable to locate a qualified successor, (b) the Depositor at its option advises
the Trustees in writing that it elects to terminate the book-entry system
through the Clearing Agency or (c) after the occurrence of a Debenture Event of
Default, Owners of Preferred Securities Certificates representing beneficial
interests aggregating at least a majority of the Liquidation Amount advise the
Administrative Trustees in writing that the continuation of a book-entry system
through the Clearing Agency is no longer in the best interest of the Owners of
Preferred Securities Certificates, then the Administrative Trustees shall
notify other Trustees and the Clearing Agency, and the Clearing Agency, in
accordance with its customary rules and procedures, shall notify all Clearing
Agency Participants for whom it holds Preferred Securities of the occurrence of
any such event and of the availability of the Definitive Preferred Securities
Certificates to Owners of such class or classes, as applicable, requesting the
same. Upon surrender to the Administrative Trustees of the typewritten
Preferred Securities Certificate or Certificates representing the Book-Entry
Preferred Securities Certificates by the Clearing Agency, accompanied by
registration instructions, the Administrative Trustees, or any one of them,
shall execute, and the Property Trustee shall authenticate and deliver, the
Definitive Preferred Securities Certificates in accordance with the
instructions of the Clearing Agency. Neither the Securities Registrar nor the
Trustees shall be liable for any delay in delivery of such instructions and
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27
may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Preferred Securities
Certificates, the Trustees shall recognize the Holders of the Definitive
Preferred Securities Certificates as Securityholders. The Definitive Preferred
Securities Certificates shall be typewritten, printed, lithographed or engraved
or may be produced in any other manner as is reasonably acceptable to the
Administrative Trustees that meets the requirements of any stock exchange or
automated quotation system on which the Preferred Securities are then listed or
approved for trading, as evidenced by the execution thereof by the
Administrative Trustees or any one of them.
Section 5.14 Rights of Securityholders.
(a) The legal title to the Trust Property is vested exclusively in the
Property Trustee (in its capacity as such) in accordance with Section 2.9, and
the Securityholders shall not have any right or title therein other than the
undivided beneficial ownership interest in the assets of the Trust conferred by
their Trust Securities. The Securityholders shall have no right to call for
any partition or division of property, profits or rights of the Trust except as
described below. The Trust Securities shall be personal property giving only
the rights specifically set forth therein and in this Trust Agreement. The
Trust Securities shall have no preemptive or similar rights and when issued and
delivered to Securityholders against payment of the purchase price therefor
will be fully paid and nonassessable by the Trust. The Holders of the Preferred
Securities, in their capacities as such, shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the
State of Delaware.
(b) For so long as any Preferred Securities remain Outstanding, if, upon
a Debenture Event of Default, the Debenture Trustee fails or the holders of not
less than 25% in principal amount of the outstanding Debentures fail to declare
the principal of all of the Debentures to be immediately due and payable, the
Holders of at least 25% in Liquidation Amount of the Preferred Securities then
Outstanding shall have such right by a notice in writing to the Depositor and
the Debenture Trustee; and upon any such declaration such principal amount of
and the accrued interest on all of the Debentures shall become immediately due
and payable as set forth in the Indenture, provided that the payment of
principal, premium and interest on such Debentures shall remain subordinated to
the extent provided in the Indenture.
At any time after a declaration of acceleration with respect to the
Debentures has been made and before a judgment or decree for payment of the
money due has been obtained by the Debenture Trustee as in the Indenture
provided, the Holders of at least a Majority in Liquidation Amount of the
Preferred Securities, by written notice to the Property Trustee, the Depositor
and the Debenture Trustee, may rescind and annul such declaration and its
consequences if:
(i) the Depositor has paid or deposited with the Debenture
Trustee a sum sufficient to pay
(A) all overdue installments of interest (including any
Additional Interest (as defined in the Indenture)) on all of the
Debentures,
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(B) the principal of (and premium, if any, on) any
Debentures which have become due otherwise than by such declaration
of acceleration and interest thereon at the rate borne by the
Debentures, and
(C) all sums paid or advanced by the Debenture Trustee under
the Indenture and the reasonable compensation, expenses,
disbursements and advances of the Debenture Trustee and the
Property Trustee, their agents and counsel and all other amounts
due to the Debentures Trustee under Section 6.7 of the Indenture or
to the Property Trustee under Section 8.6 hereof; and
(ii) all Events of Default with respect to the Debentures, other
than the non-payment of the principal of the Debentures which has become
due solely by such acceleration, have been cured or waived as provided in
Section 5.13 of the Indenture.
The Holders of at least a Majority in Liquidation Amount of the Preferred
Securities may, on behalf of the Holders of all the Preferred Securities, waive
any past default under the Indenture, except a default in the payment of
principal, premium or interest (unless all Events of Default with respect to
the Debentures, other than the non-payment of the principal of the Debentures
which has become due solely by such acceleration, have been cured or annulled
as provided in Section 5.3 of the Indenture and the Depositor has paid or
deposited with the Debenture Trustee a sum sufficient to pay all overdue
installments of interest (including any Additional Interest (as defined in the
Indenture)) on the Debentures, the principal of (and premium, if any, on) any
Debentures which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Debentures, and all
sums paid or advanced by the Debenture Trustee under the Indenture and the
reasonable compensation, expenses, disbursements and advances of the Debenture
Trustee and the Property trustee, their agents and counsel and all other
amounts due to the Debentures Trustee under Section 6.7 of the Indenture or to
the Property Trustee under Section 8.6 hereof) or a default in respect of a
covenant or provision which under the Indenture cannot be modified or amended
without the consent of the holder of each outstanding Debenture. No such
rescission shall affect any subsequent default or impair any right consequent
thereon.
Upon receipt by the Property Trustee of written notice declaring such an
acceleration, or rescission and annulment thereof, by Holders of the Preferred
Securities all or part of which is represented by Book-Entry Preferred
Securities Certificates, a record date shall be established for determining
Holders of Outstanding Preferred Securities entitled to join in such notice,
which record date shall be at the close of business on the day the Property
Trustee receives such notice. The Holders of Outstanding Preferred Securities
on such record date, or their duly designated proxies, and only such Persons,
shall be entitled to join in such notice, whether or not such Holders remain
Holders after such record date; provided, that, unless such declaration of
acceleration, or rescission and annulment, as the case may be, shall have
become effective by virtue of the requisite percentage having joined in such
notice prior to the day which is 90 days after such record date, such notice of
declaration of acceleration, or rescission and annulment, as the case may be,
shall automatically and without further action by any Holder be canceled and of
no further effect. Nothing in this paragraph shall prevent a Holder, or a proxy
of a Holder, from giving, after expiration of such 90-day period,
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29
a new written notice of declaration of acceleration, or rescission and
annulment thereof, as the case may be, that is identical to a written notice
which has been canceled pursuant to the proviso to the preceding sentence, in
which event a new record date shall be established pursuant to the provisions
of this Section 5.14(b).
(c) For so long as any Preferred Securities remain Outstanding, to the
fullest extent permitted by law and subject to the terms of this Trust
Agreement and the Indenture, upon a Debenture Event of Default specified in
Section 5.1(1) or 5.1(2) of the Indenture, any Holder of Preferred Securities
shall have the right to institute a proceeding directly against the Depositor,
pursuant to Section 5.8 of the Indenture, for enforcement of payment to such
Holder of any amounts payable in respect of Debentures having an aggregate
principal amount equal to the Liquidation Amount of the Preferred Securities of
such Holder (a "Direct Action"). Except as set forth in Section 5.14(b) and
this Section 5.14(c), the Holders of Preferred Securities shall have no right
to exercise directly any right or remedy available to the holders of, or in
respect of, the Debentures.
Section 5.15 CUSIP Numbers.
The Administrative Trustees in issuing the Preferred Securities may use
"CUSIP" numbers (if then generally in use), and, if so, the Property Trustee
shall use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided that any such notice may state that no representation is made as
- --------
to the correctness of such numbers either as printed on the Preferred
Securities or as contained in any notice of a redemption and that reliance may
be placed only on the other identification numbers printed on the Preferred
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Administrative Trustees will promptly notify the
Property Trustee of any change in the CUSIP numbers.
ARTICLE VI
ACTS OF SECURITYHOLDERS; MEETINGS; VOTING
Section 6.1 Limitations on Voting Rights.
(a) Except as provided in this Section, in Sections 5.14, 8.10 and 10.3
and in the Indenture and as otherwise required by law, no Holder of Preferred
Securities shall have any right to vote or in any manner otherwise control the
administration, operation and management of the Trust or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in the terms
of the Trust Securities Certificates, be construed so as to constitute the
Securityholders from time to time as partners or members of an association.
(b) So long as any Debentures are held by the Property Trustee on behalf
of the Trust, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
execute any trust or power conferred on the Debenture Trustee with respect to
such Debentures, (ii) waive any past default which is waivable under Section
5.13 of the Indenture, (iii) exercise any right to
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30
rescind or annul a declaration that the principal of all the Debentures shall
be due and payable or (iv) consent to any amendment, modification or
termination of the Indenture or the Debentures, where such consent shall be
required, without, in each case, obtaining the prior approval of the Holders of
at least a majority in Liquidation Amount of the Preferred Securities,
provided, however, that where a consent under the Indenture would require the
consent of each holder of Debentures affected thereby, no such consent shall be
given by the Property Trustee without the prior written consent of each Holder
of Preferred Securities. The Trustees shall not revoke any action previously
authorized or approved by a vote of the Holders of Preferred Securities, except
by a subsequent vote of the Holders of Preferred Securities. The Property
Trustee shall notify all Holders of the Preferred Securities of any notice of
default received from the Debenture Trustee with respect to the Debentures. In
addition to obtaining the foregoing approvals of the Holders of the Preferred
Securities, prior to taking any of the foregoing actions, the Administrative
Trustees, at the request of the Property Trustee, shall, at the expense of the
Depositor, obtain an Opinion of Counsel experienced in such matters to the
effect that such action shall not cause the Trust to fail to be classified as a
grantor trust for United States federal income tax purposes.
(c) If any proposed amendment to this Trust Agreement provides for, or
the Trustees otherwise propose to effect, (i) any action that would adversely
affect in any material respect the powers, preferences or special rights of the
Preferred Securities, whether by way of amendment to the Trust Agreement or
otherwise, or (ii) the dissolution, winding-up or termination of the Trust,
other than pursuant to the terms of this Trust Agreement, then the Holders of
Outstanding Preferred Securities as a 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 the Holders of at least a Majority in Liquidation
Amount of the Preferred Securities. Notwithstanding any other provision of this
Trust Agreement, no amendment to this Trust Agreement may be made if, as a
result of such amendment, it would cause the Trust to fail to be classified as
a grantor trust for United States federal income tax purposes.
Section 6.2 Notice of Meetings.
Notice of all meetings of the Preferred Securityholders, stating the
time, place and purpose of the meeting, shall be given by the Property Trustee,
at the request of the Administrative Trustees, pursuant to Section 10.9 to each
Preferred Securityholder of record, at such Holder's registered address, at
least 15 days and not more than 90 days before the meeting. At any such
meeting, any business properly before the meeting may be so considered whether
or not stated in the notice of the meeting. Any adjourned meeting may be held
as adjourned without further notice.
Section 6.3 Meetings of Preferred Securityholders.
No annual meeting of Securityholders is required to be held. The
Administrative Trustees, however, shall call a meeting of Preferred
Securityholders to vote on any matter upon the written request of the Preferred
Securityholders of record of 25% of the Outstanding Preferred Securities (based
upon their Liquidation Amount), and the Administrative Trustees or the Property
Trustee may, at any time in their discretion, call a meeting of Preferred
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31
Securityholders to vote on any matters as to which Preferred Securityholders
are entitled to vote.
The Holders of at least a Majority in Liquidation Amount of the Preferred
Securities, present in person or by proxy, shall constitute a quorum at any
meeting of Preferred Securityholders.
If a quorum is present at a meeting, an affirmative vote by the Preferred
Securityholders of record present, in person or by proxy, holding Preferred
Securities representing at least a Majority in Liquidation Amount of the
Preferred Securities present, either in person or by proxy, at such meeting
shall constitute the action of the Preferred Securityholders, unless this Trust
Agreement requires a greater number of affirmative votes.
Section 6.4 Voting Rights.
Securityholders shall be entitled to one vote for each $25 of Liquidation
Amount represented by their Outstanding Trust Securities in respect of any
matter as to which such Securityholders are entitled to vote.
Section 6.5 Proxies, etc.
At any meeting of Securityholders, any Securityholder entitled to vote
thereat may vote by proxy, provided that no proxy shall be voted at any meeting
unless it shall have been placed on file with the Administrative Trustees, or
with such other officer or agent of the Trust as the Administrative Trustees
may direct, for verification prior to the time at which such vote shall be
taken. Only Securityholders of record shall be entitled to vote. When Trust
Securities are held jointly by several Persons, any one of them may vote at any
meeting in person or by proxy in respect of such Trust Securities, but if more
than one of them shall be present at such meeting in person or by proxy, and
such joint owners or their proxies so present disagree as to any vote to be
cast, such vote shall not be received in respect of such Trust Securities. A
proxy purporting to be executed by or on behalf of a Securityholder shall be
deemed valid unless challenged at or prior to its exercise, and the burden of
proving invalidity shall rest on the challenger. No proxy shall be valid more
than three years after its date of execution.
Section 6.6 Securityholder Action by Written Consent.
Any action which may be taken by Securityholders at a meeting may be
taken without a meeting if Securityholders holding more than a majority of all
Outstanding Trust Securities (based upon their Liquidation Amount) entitled to
vote in respect of such action (or such larger proportion thereof as shall be
required by any express provision of this Trust Agreement) shall consent to the
action in writing.
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Section 6.7 Record Date for Voting and Other Purposes.
For the purposes of determining the Securityholders who are entitled to
notice of and to vote at any meeting or by written consent, or to participate
in any Distribution on the Trust Securities in respect of which a record date
is not otherwise provided for in this Trust Agreement, or for the purpose of
any other action, the Administrative Trustees or the Property Trustee may from
time to time fix a date, not more than 90 days prior to the date of any meeting
of Securityholders or the payment of a Distribution or other action, as the
case may be, as a record date for the determination of the identity of the
Securityholders of record for such purposes.
Section 6.8 Acts of Securityholders.
Any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Trust Agreement to be given, made or
taken by Securityholders or Owners may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such Securityholders
or Owners in person or by an agent duly appointed in writing; and, except as
otherwise expressly provided herein, such action shall become effective when
such instrument or instruments are delivered to an Administrative Trustee. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Securityholders
or Owners 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 Trust Agreement and (subject to Section 8.1) conclusive
in favor of the Trustees, if made in the manner provided in this Section.
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 any Trustee receiving the same deems sufficient.
The ownership of Trust Securities shall be proved by the Securities
Register.
Any request, demand, authorization, direction, notice, consent, waiver or
other Act of the Securityholder of any Trust Security shall bind every future
Securityholder of the same Trust Security and the Securityholder of every Trust
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 Trustees or the Trust in reliance thereon, whether or not
notation of such action is made upon such Trust Security.
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Without limiting the foregoing, a Securityholder entitled hereunder to
take any action hereunder with regard to any particular Trust Security may do
so with regard to all or any part of the Liquidation Amount of such Trust
Security or by one or more duly appointed agents each of which may do so
pursuant to such appointment with regard to all or any part of such Liquidation
Amount.
If any dispute shall arise among the Securityholders and the Trustees
with respect to the authenticity, validity or binding nature of any request,
demand, authorization, direction, consent, waiver or other Act of such
Securityholder or Trustee under this Article VI, then the determination of such
matter by the Property Trustee shall be conclusive with respect to such matter.
Section 6.9 Inspection of Records.
Upon reasonable notice to the Administrative Trustees and the Property
Trustee, the records of the Trust shall be open to inspection by
Securityholders during normal business hours for any purpose reasonably related
to such Securityholder's interest as a Securityholder.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.1 Representations and Warranties of Property Trustee. The
initial Property Trustee represents and warrants to the Trust and to the
Depositor at the date of this Trust Agreement, and each successor Property
Trustee represents and warrants to the Trust and the Depositor at the time of
the successor Property Trustee's acceptance of its appointment as Property
Trustee, that:
(a) the Property Trustee is a banking corporation or a national
banking association with the trust powers, duly organized, validly
existing and in good standing under the laws of the United States with
trust power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of this Trust Agreement;
(b) the execution, delivery and performance by the Property
Trustee of this Trust Agreement has been duly authorized by all necessary
corporate action on the part of the Property Trustee. This Trust
Agreement 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 considered in a proceeding in equity or at law);
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(c) the execution, delivery and performance of this Trust
Agreement by the Property Trustee does not conflict with or constitute a
breach of the charter or by-laws of the Property Trustee;
(d) no consent, approval or authorization of, or registration with
or notice to, any state of federal banking authority governing the trust
powers of the Property Trustee is required for the execution, delivery or
performance by the Property Trustee of this Trust Agreement; and
(e) there are no proceedings pending or, to the best of the
Property Trustee's knowledge, threatened against or affecting the
Property Trustee in any court or before any governmental authority,
agency or arbitration board or tribunal which, individually or in the
aggregate, would question the right, power and authority of the Property
Trustee to enter into or perform its obligations as one of the Trustees
under this Trust Agreement.
Section 7.2 Representations and Warranties of Delaware Trustee. The
Delaware Trustee represents and warrants to the Trust and to the Depositor at
the date of this Trust Agreement, and each successor Delaware Trustee
represents and warrants to the Trust and the Depositor at the time of the
successor Delaware Trustee's acceptance of its appointment as Delaware Trustee,
that:
(a) the Delaware Trustee is duly organized, validly existing and
in good standing under the laws of the State of Delaware, with power and
authority or execute and deliver, and to carry out and perform its
obligations under the terms of, this Trust Agreement;
(b) the Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and this Trust Agreement by
all necessary action on the part of the Delaware Trustee. This Trust
Agreement 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 (regardless of
whether 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 governing the trust
powers of the Delaware Trustee is required for the execution, delivery or
performance by the Delaware Trustee of this Trust Agreement;
(d) the Delaware Trustee is a natural person who is a resident of
the State of Delaware or, if not a natural person, an entity which has
its principal place of business in the State of Delaware and, in either
case, a Person that satisfied for the Trust the requirements of Section
3807 of the Business Trust Act;
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(e) the execution, delivery and performance of this Trust
Agreement by the Delaware Trustee will not (i) violate the charter or
by-laws of the Delaware Trustee, (ii) violate any provision of, or
constitute, with or without notice or lapse of time, a default under, or
result in the creation or imposition of, any Lien on any properties
included in the Trust Property pursuant to the provisions of, any
indenture, mortgage, credit agreement, license or other agreement or
instrument to which the Delaware Trustee is a party or by which it is
bound, or (iii) violate any law, governmental rule or regulation of the
State of Delaware governing the banking, trust or general powers of the
Delaware Trustee (as appropriate in context) or any order, judgment or
decree applicable to the Property Trustee or the Delaware Trustee; and
(f) there are no proceedings pending or, to the best of the
Delaware Trustee's knowledge, threatened against or affecting the
Delaware Trustee in any court or before any governmental authority,
agency or arbitration board or tribunal which, individually or in the
aggregate, would question the right, power and authority of the Delaware
Trustee, to enter into or perform its obligations as one of the Trustees
under this Trust Agreement.
Section 7.3 Representations and Warranties of Depositor.
The Depositor hereby represents and warrants for the benefit of the
Securityholders that:
(a) the Trust Securities Certificates issued at the Closing Date on
behalf of the Trust have been duly authorized and will have been, duly and
validly executed, issued and delivered by the Trustees pursuant to the terms
and provisions of, and in accordance with the requirements of, this Trust
Agreement and the Securityholders will be, as of such date, entitled to the
benefits of this Trust Agreement; and
(b) there are no taxes, fees or other governmental charges payable by
the Trust (or the Trustees on behalf of the Trust) under the laws of the State
of Delaware or any political subdivision thereof in connection with the
execution, delivery and performance by the Property Trustee or the Delaware
Trustee, as the case may be, of this Trust Agreement.
ARTICLE VIII
THE TRUSTEES
Section 8.1 Certain Duties and Responsibilities.
(a) The duties and responsibilities of the Trustees shall be as provided
by this Trust Agreement and, in the case of the Property Trustee, by the Trust
Indenture Act. Notwithstanding the foregoing, no provision of this Trust
Agreement shall require the Trustees to expend or risk their own funds or
otherwise incur any financial liability in the performance of any of their
duties hereunder, or in the exercise of any of their rights or
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powers, if they shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to them. Whether or not therein expressly so provided, every
provision of this Trust Agreement relating to the conduct or affecting the
liability of or affording protection to the Trustees shall be subject to the
provisions of this Section. Nothing in this Trust Agreement shall be construed
to release an Administrative Trustee from liability for its own gross negligent
action, its own gross negligent failure to act, or its own willful misconduct.
To the extent that, at law or in equity, an Administrative Trustee has duties
(including fiduciary duties) and liabilities relating thereto to the Trust or
to the Securityholders, such Administrative Trustee shall not be liable to the
Trust or to any Securityholder for such Trustee's good faith reliance on the
provisions of this Trust Agreement. The provisions of this Trust Agreement, to
the extent that they restrict the duties and liabilities of the Administrative
Trustees otherwise existing at law or in equity, are agreed by the Depositor
and the Securityholders to replace such other duties and liabilities of the
Administrative Trustees.
(b) All payments made by the Property Trustee or a Paying Agent in
respect of the Trust Securities shall be made only from the revenue and
proceeds from the Trust Property and only to the extent that there shall be
sufficient revenue or proceeds from the Trust Property to enable the Property
Trustee or a Paying Agent to make payments in accordance with the terms hereof.
Each Securityholder, by its acceptance of a Trust Security, agrees that it will
look solely to the revenue and proceeds from the Trust Property to the extent
legally available for distribution to it as herein provided and that the
Trustees are not personally liable to it for any amount distributable in
respect of any Trust Security or for any other liability in respect of any
Trust Security. This Section 8.1(b) does not limit the liability of the
Trustees expressly set forth elsewhere in this Trust Agreement or, in the case
of the Property Trustee, in the Trust Indenture Act.
(c) No provision of this Trust Agreement shall be construed to relieve
the Property Trustee or the Delaware Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) such Trustee shall not be liable for any error of judgment
made in good faith by an authorized officer of such Trustee, unless it
shall be proved that such Trustee was negligent in ascertaining the
pertinent facts;
(ii) such Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a Majority in Liquidation
Amount of the Preferred Securities relating to the time, method and place
of conducting any proceeding for any remedy available to such Trustee, or
exercising any trust or power conferred upon the Property Trustee under
this Trust Agreement;
(iii) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Debentures and the Payment
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
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liability afforded to the Property Trustee under this Trust Agreement and
the Trust Indenture Act;
(iv) 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 Depositor; and money held by the Property Trustee need not be
segregated from other funds held by it except in relation to the Payment
Account maintained by the Property Trustee pursuant to Section 3.1 and
except to the extent otherwise required by law; and
(v) such Trustee shall not be responsible for monitoring the
compliance by the Administrative Trustees or the Depositor with their
respective duties under this Trust Agreement, nor shall such Trustee be
liable for the default or misconduct of the Administrative Trustees or
the Depositor.
(d) The Administrative Trustees shall not be responsible for monitoring
the compliance by the other Trustees or the Depositor with their respective
duties under this Trust Agreement, nor shall any Administrative Trustee be
liable for the default or misconduct of any other Administrative Trustee, the
other Trustees or the Depositor.
Section 8.2 Certain Notices.
Within ten Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit, in
the manner and to the extent provided in Section 10.9, notice of such Event of
Default to the Securityholders, the Administrative Trustees and the Depositor,
unless such Event of Default shall have been cured or waived.
Within five Business Days after the receipt of notice of the Depositor's
exercise of its right to defer the payment of interest on the Debentures
pursuant to the Indenture, the Property Trustee shall transmit, in the manner
and to the extent provided in Section 10.9, notice of such exercise to the
Securityholders and the Administrative Trustees, unless such exercise shall
have been revoked.
Section 8.3 Certain Rights of Property Trustee.
Subject to the provisions of Section 8.1:
(a) the Property Trustee may rely and shall be protected in acting or
refraining from acting in good faith upon any resolution, Opinion of Counsel,
certificate, written representation of a Holder or transferee, certificate of
auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, 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) if (i) in performing its duties under this Trust Agreement the
Property Trustee is required to decide between alternative courses of action,
(ii) in construing any of the
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provisions of this Trust Agreement the Property Trustee finds the same
ambiguous or inconsistent with any other provisions contained herein or (iii)
the Property Trustee is unsure of the application of any provision of this
Trust Agreement, then, except as to any matter as to which the Preferred
Securityholders are entitled to vote under the terms of this Trust Agreement,
the Property Trustee shall deliver a notice to the Depositor requesting written
instructions of the Depositor as to the course of action to be taken and the
Property Trustee shall take such action, or refrain from taking such action, as
the Property Trustee shall be instructed in writing to take, or to refrain from
taking, by the Depositor; provided, however, that if the Property Trustee does
not receive such instructions of the Depositor within ten Business Days after
it has delivered such notice, or such reasonably shorter period of time set
forth in such notice (which to the extent practicable shall not be less than
two Business Days), it may, but shall be under no duty to, take or refrain from
taking such action not inconsistent with this Trust Agreement as it shall deem
advisable and in the best interests of the Securityholders, in which event the
Property Trustee shall have no liability except for its own bad faith,
negligence or willful misconduct;
(c) any direction or act of the Depositor contemplated by this Trust
Agreement shall be sufficiently evidenced by an Officers' Certificate and any
direction or act of an Administrative Trustee contemplated by this Trust
Agreement shall be sufficiently evidenced by a certificate executed by such
Administrative Trustee and setting forth such direction or act;
(d) whenever in the administration of this Trust Agreement, the Property
Trustee shall deem it desirable that a matter be established before
undertaking, 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 Depositor or
the Administrative Trustees;
(e) 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 reregistration thereof;
(f) the Property Trustee may consult with counsel of its selection
(which counsel may be counsel to the Depositor or any of its Affiliates, and
may include any of its employees) and the advice of such 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 and
in accordance with such advice; the Property Trustee shall have the right at
any time to seek instructions concerning the administration of this Trust
Agreement from any court of competent jurisdiction;
(g) the Property Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Securityholders pursuant to this Trust Agreement,
unless such Securityholders shall have offered to the Property Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or direction;
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39
provided that, nothing contained in this Section 8.3(g) shall be taken to
relieve the Property Trustee, upon the occurrence of an Event of Default, of
its obligation to exercise the rights and powers vested in it by this Trust
Agreement;
(h) 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, consent, order, approval, bond,
debenture, note or other evidence of indebtedness or other paper or document,
unless requested in writing to do so by one or more Securityholders, but the
Property Trustee may make such further inquiry or investigation into such facts
or matters as it may see fit;
(i) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through its
agents or attorneys and the Property Trustee shall not be responsible for any
misconduct or negligence on the part of, or for the supervision of, any such
agent or attorney appointed by the Property Trustee with due care;
(j) whenever in the administration of this Trust Agreement the Property
Trustee shall deem it desirable to receive written instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the
Property Trustee (i) may request written instructions from the Holders of the
Trust Securities (which written instructions may only be given by the Holders
of the same proportion in Liquidation Amount of the Trust Securities as would
be entitled to direct the Property Trustee under the terms of the Trust
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 written
instructions are received and (iii) shall be protected in acting in accordance
with such written instructions;
(k) except as otherwise expressly provided by this Trust Agreement, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Trust Agreement;
(l) without prejudice to any other rights available to the Property
Trustee under applicable law, when the Property Trustee incurs expenses or
renders services in connection with a Bankruptcy Event, such expenses
(including the fees and expenses of its counsel) and the compensation for such
services are intended to constitute expenses of administration under any
bankruptcy law or law relating to creditors rights generally;
(m) the Property Trustee shall not be charged with knowledge of an Event
of Default unless a Responsible Officer of the Property Trustee obtains actual
knowledge of such event or the Property Trustee receives written notice of such
event from Holders holding more than a Majority in Liquidation Amount of the
Preferred Securities; and
(n) any action taken by the Property Trustee or its agents hereunder
shall bind the Trust and the Holders of such Securities, and the signature of
the Property Trustee or one of its agents shall by itself 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
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its compliance with any of the terms and provisions of this Trust Agreement,
both of which shall be conclusively evidenced by the Property Trustee's or its
agent's taking such action.
No provision of this Trust Agreement 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 8.4 Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Trust Securities Certificates
shall be taken as the statements of the Trust and the Depositor, and the
Trustees do not assume any responsibility for their correctness. The Trustees
shall not be accountable for the use or application by the Depositor of the
proceeds of the Debentures.
Section 8.5 May Hold Securities.
Any Trustee or any other agent of any Trustee or the Trust, in its
individual or any other capacity, may become the owner or pledgee of Trust
Securities and, subject to Sections 8.8 and 8.13, and except as provided in the
definition of the term "Outstanding" in Article I, may otherwise deal with the
Trust with the same rights it would have if it were not a Trustee or such other
agent.
Section 8.6 Compensation; Indemnity; Fees.
Pursuant to Sections 6.7 and 10.6 of the Indenture, the Depositor, as
borrower, agrees:
(a) to pay to the Trustees from time to time such compensation as shall
be agreed in writing with the Depositor for all services rendered by 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
Trustees upon request for all reasonable expenses, disbursements and advances
incurred or made by the Trustees in accordance with any provision of this Trust
Agreement (including the reasonable compensation and the expenses and
disbursements of their agents and counsel), except any such expense,
disbursement or advance as may be attributable to their negligence or bad
faith; and
(c) to the fullest extent permitted by applicable law, to indemnify and
hold harmless (i) each Trustee, (ii) any Affiliate of any Trustee, (iii) any
officer, director, shareholder, employee, representative or agent of any
Trustee, and (iv) any employee or agent of the Trust or its Affiliates
(referred to herein as an "Indemnified Person"), from and against any and all
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loss, damage, liability, tax, penalty, expense 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 Trust 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
negligence or willful misconduct with respect to such acts or omissions. When
the Property Trustee incurs expenses or renders services in connection with an
Event of Default specified in Section 5.1(4) or Section 5.1(5) of the
Indenture, the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section 8.6 shall survive the resignation or
removal of each Trustee and the termination of this Trust Agreement.
No Trustee may claim any lien or charge on any Trust Property as a result
of any amount due pursuant to this Section 8.6.
The Depositor and any Trustee (in the case of the Property Trustee,
subject to Section 8.8 hereof) 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 Trust Securities shall have no rights by virtue of this Trust
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 the Trust, shall not be deemed wrongful or improper. Neither the
Depositor nor any Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the Trust, and the
Depositor or any Trustee shall have the right to take for its own account
(individually or as a partner or fiduciary) or to recommend to others any such
particular investment or other opportunity. Any Trustee may engage or be
interested in any financial or other transaction with the Depositor or any
Affiliate of the Depositor, or may act as depository for, trustee or agent for,
or act on any committee or body of holders of, securities or other obligations
of the Depositor or its Affiliates.
Section 8.7 Corporate Property Trustee Required; Eligibility of
Trustees.
(a) There shall at all times be a Property Trustee hereunder with
respect to the Trust Securities. The Property Trustee shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such and has a combined
capital and surplus of at least $50,000,000. If any such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of its supervising or examining authority, then for the purposes of this
Section and to the extent permitted by the Trust Indenture Act, the combined
capital and surplus of such Person 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 Property Trustee with respect to the
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Trust Securities 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. At the time of appointment, the Property
Trustee must have securities rated in one of the three highest rating
categories by a nationally recognized statistical rating organization.
(b) There shall at all times be one or more Administrative Trustees
hereunder with respect to the Trust Securities. Each Administrative 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 persons authorized to bind that
entity.
(c) There shall at all times be a Delaware Trustee with respect to the
Trust Securities. The Delaware Trustee shall either be (i) a natural person who
is at least 21 years of age and a resident of the State of Delaware or (ii) a
legal entity with its principal place of business in the State of Delaware and
that otherwise meets the requirements of applicable Delaware law and that shall
act through one or more persons authorized to bind such entity.
Section 8.8 Conflicting Interests.
(a) If the Property Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Property 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
Trust Agreement.
(b) The Guarantee Agreement and the Indenture shall be deemed to be
specifically described in this Trust Agreement for the purposes of clause (i)
of the first proviso contained in Section 310(b) of the Trust Indenture Act.
Section 8.9 Co-Trustees and Separate Trustee.
Unless an Event of Default shall have occurred and be continuing, at any
time or times, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of the Trust Property
may at the time be located, the Depositor and the Administrative Trustees, by
agreed action of the majority of such Trustees, shall have power to appoint,
and upon the written request of the Administrative Trustees, the Depositor
shall for such purpose join with the Administrative Trustees in the execution,
delivery and performance of all instruments and agreements necessary or proper
to appoint, one or more Persons approved by the Property Trustee either to act
as co-trustee, jointly with the Property Trustee, of all or any part of such
Trust Property, or to the extent required by law to act as separate trustee of
any such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such Person or Persons in the
capacity aforesaid, any property, title, right or power deemed necessary or
desirable, subject to the other provisions of this Section. If the Depositor
does not join in such appointment within 15 days after the receipt by it of a
request so to do, or in case a Debenture Event of Default has occurred and is
continuing, the Property Trustee alone shall have power to make such
appointment. Any co-trustee or separate trustee appointed pursuant to this
Section shall either be (i) a natural person who is at least 21 years of age
and a resident of the United States or
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(ii) a legal entity with its principal place of business in the United States
that shall act through one or more persons authorized to bind such entity.
Should any written instrument from the Depositor be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right, or power, any and
all such instruments shall, on request, be executed, acknowledged and delivered
by the Depositor.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms,
namely:
(a) The Trust Securities shall be executed by one or more Administrative
Trustees and delivered by the Property Trustee and all rights, powers, duties
and obligations hereunder in respect of the custody of securities, cash and
other personal property held by, or required to be deposited or pledged with,
the Property Trustee specified hereunder shall be exercised solely by such
Property Trustee and not by such co-trustee or separate trustee.
(b) The rights, powers, duties and obligations hereby conferred or
imposed upon the Property Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed by
the Property Trustee or by the Property Trustee and such co-trustee or separate
trustee jointly, as shall be provided in the instrument appointing such
co-trustee or separate trustee, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed, the Property
Trustee shall be incompetent or unqualified to perform such act, in which event
such rights, powers, duties and obligations shall be exercised and performed by
such co-trustee or separate trustee.
(c) The Property Trustee at any time, by an instrument in writing
executed by it, with the written concurrence of the Depositor, may accept the
resignation of or remove any co-trustee or separate trustee appointed under
this Section, and, in case a Debenture Event of Default has occurred and is
continuing, the Property Trustee shall have power to accept the resignation of,
or remove, any such co-trustee or separate trustee without the concurrence of
the Depositor. Upon the written request of the Property Trustee, the Depositor
shall join with the Property Trustee in the execution, delivery and performance
of all instruments and agreements necessary or proper to effectuate such
resignation or removal. A successor to any co-trustee or separate trustee so
resigning or removed may be appointed in the manner provided in this Section.
(d) No co-trustee or separate trustee hereunder shall be personally
liable by reason of any act or omission of the Property Trustee or any other
trustee hereunder.
(e) The Property Trustee shall not be liable by reason of any act of a
co-trustee or separate trustee.
(f) Any Act of Holders delivered to the Property Trustee shall be deemed
to have been delivered to each such co-trustee and separate trustee.
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Section 8.10 Resignation and Removal; Appointment of Successor.
No resignation or removal of any Trustee (the "Relevant 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 8.11.
Subject to the immediately preceding paragraph, the Relevant Trustee may
resign at any time by giving written notice thereof to the Securityholders. If
the instrument of acceptance by the successor Trustee required by Section 8.11
shall not have been delivered to the Relevant Trustee within 30 days after the
giving of such notice of resignation, the Relevant Trustee may petition, at the
expense of the Trust, any court of competent jurisdiction for the appointment
of a successor Relevant Trustee.
Unless a Debenture Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by Act of the Common
Securityholder. If a Debenture Event of Default shall have occurred and be
continuing, the Property Trustee or the Delaware Trustee, or both of them, may
be removed at such time by Act of the Holders of a majority in Liquidation
Amount of the Preferred Securities, delivered to the Relevant Trustee (in its
individual capacity and on behalf of the Trust). An Administrative Trustee may
be removed by the Common Securityholder at any time. If the instrument of
acceptance by the successor Trustee required by Section 8.11 shall not have
been delivered to the Relevant Trustee within 30 days after such removal, the
Relevant Trustee may petition, at the expense of the Trust, any court of
competent jurisdiction for the appointment of a successor Relevant Trustee.
If any Trustee shall resign, be removed or become incapable of acting as
Trustee, or if a vacancy shall occur in the office of any Trustee for any
cause, at a time when no Debenture Event of Default shall have occurred and be
continuing, the Common Securityholder, by Act of the Common Securityholder
delivered to the retiring Trustee, shall promptly appoint a successor Trustee
or Trustees, and the retiring Trustee shall comply with the applicable
requirements of Section 8.11. If the Property Trustee or the Delaware Trustee
shall resign, be removed or become incapable of continuing to act as the
Property Trustee or the Delaware Trustee, as the case may be, at a time when a
Debenture Event of Default shall have occurred and be continuing, the Preferred
Securityholders, by Act of the Securityholders of a majority in Liquidation
Amount of the Preferred Securities then Outstanding delivered to the retiring
Relevant Trustee, shall promptly appoint a successor Relevant Trustee or
Trustees, and such successor Trustee shall comply with the applicable
requirements of Section 8.11. If an Administrative Trustee shall resign, be
removed or become incapable of acting as Administrative Trustee, at a time when
a Debenture Event of Default shall have occurred and be continuing, the Common
Securityholder by Act of the Common Securityholder delivered to the
Administrative Trustee shall promptly appoint a successor Administrative
Trustee or Administrative Trustees and such successor Administrative Trustee or
Trustees shall comply with the applicable requirements of Section 8.11. If no
successor Relevant Trustee shall have been so appointed by the Common
Securityholder or the Preferred Securityholders and accepted appointment in the
manner required by Section 8.11, any Securityholder who has been a
Securityholder of Trust Securities for at least six months may, on behalf of
himself
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and all others similarly situated, petition any court of competent jurisdiction
for the appointment of a successor Relevant Trustee.
The Property Trustee shall give notice of each resignation and each
removal of a Trustee and each appointment of a successor Trustee to all
Securityholders in the manner provided in Section 10.9 and shall give notice to
the Depositor. Each notice shall include the name of the successor Relevant
Trustee and the address of its Corporate Trust Office if it is the Property
Trustee.
Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee or a Delaware Trustee who is
a natural person dies or becomes, in the opinion of the Depositor, incompetent
or incapacitated, the vacancy created by such death, incompetence or incapacity
may be filled by (a) the unanimous act of the remaining Administrative Trustees
if there were at least two of them prior to such vacancy or (b) otherwise by
the Depositor (with the successor in each case being a Person who satisfies the
eligibility requirement for Administrative Trustees or Delaware Trustee, as the
case may be, set forth in Section 8.7).
Section 8.11 Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Relevant Trustee, the
retiring Relevant Trustee and each successor Relevant Trustee with respect to
the Trust Securities shall execute and deliver an amendment hereto wherein each
successor Relevant Trustee shall accept such appointment and which (a) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Relevant Trustee all the rights,
powers, trusts and duties of the retiring Relevant Trustee with respect to the
Trust Securities and the Trust and (b) shall add to or change any of the
provisions of this Trust Agreement as shall be necessary to provide for or
facilitate the administration of the Trust by more than one Relevant Trustee,
it being understood that nothing herein or in such amendment shall constitute
such Relevant Trustees co-trustees and upon the execution and delivery of such
amendment the resignation or removal of the retiring Relevant Trustee shall
become effective to the extent provided therein and each such successor
Relevant Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Relevant
Trustee; but, on written request of the Trust or any successor Relevant Trustee
such retiring Relevant Trustee shall duly assign, transfer and deliver to such
successor Relevant Trustee all Trust Property, all proceeds thereof and money
held by such retiring Relevant Trustee hereunder with respect to the Trust
Securities and the Trust.
Upon written request of any such successor Relevant Trustee, the Trust
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Relevant Trustee all such rights, powers and
trusts referred to in the first or second preceding paragraph, as the case may
be.
No successor Relevant Trustee shall accept its appointment unless at the
time of such acceptance such successor Relevant Trustee shall be qualified and
eligible under this Article.
<PAGE>
46
Section 8.12 Merger, Conversion, Consolidation or Succession to
Business.
Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural Person may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Relevant Trustee shall be a party, or
any Person succeeding to all or substantially all the corporate trust business
of such Relevant Trustee, shall be the successor of such Relevant Trustee
hereunder, provided such Person shall be otherwise qualified and eligible under
this Article, without the execution or filing of any paper or any further act
on the part of any of the parties hereto.
Section 8.13 Preferential Collection of Claims Against Depositor or
Trust.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
similar judicial proceeding relative to the Trust or any other obligor upon the
Trust Securities or the property of the Trust or of such other obligor or their
creditors, the Property Trustee (irrespective of whether any Distributions on
the Trust Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Property Trustee shall
have made any demand on the Trust for the payment of any past due
Distributions) shall be entitled and empowered, to the fullest extent permitted
by law, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of any Distributions
owing and unpaid in respect of the Trust Securities and to file such other
papers or documents as may be necessary or advisable in order to have the
claims of the Property Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel and any other amounts due to the Property Trustee or the
Delaware Trustee pursuant to Section 8.6) and of the Holders allowed in such
judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Property Trustee and, in the event the
Property Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Property Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel, and any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement adjustment or compensation affecting
the Trust Securities or the rights of any Holder thereof or to authorize the
Property Trustee to vote in respect of the claim of any Holder in any such
proceeding.
<PAGE>
47
Section 8.14 Reports by Property Trustee.
(a) The Property Trustee shall transmit to Securityholders such reports
concerning the Property Trustee and its actions under this Trust Agreement as
may be required pursuant to the Trust Indenture Act at the times and in the
manner provided pursuant thereto. If required by Section 313(a) of the Trust
Indenture Act, the Property Trustee shall, within sixty days after each May 15
following the date of this Trust Agreement deliver to Securityholders a brief
report, dated as of such May 15, which complies with the provisions of such
Section 313(a).
(b) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Property Trustee with each national securities
exchange, the Nasdaq National Market or such other interdealer quotation system
or self-regulatory organization upon which the Trust Securities are listed or
traded, if any, with the Commission and with the Depositor. The Depositor will
promptly notify the Property Trustee of any such listing or trading.
Section 8.15 Reports to the Property Trustee.
Each of the Depositor and the Administrative Trustees 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(a) of the Trust Indenture Act in the form, in the
manner and at the times required by Section 314 of the Trust Indenture Act.
Delivery of such reports, information and documents to the Property Trustee is
for informational purposes only and the Property Trustee's receipt of such
shall not constitute constructive notice of any information contained therein
or determinable from information contained therein, including the Trust's
compliance with any of its covenants hereunder (as to which the Property
Trustee is entitled to rely exclusively on Officers' Certificates).
Section 8.16 Evidence of Compliance with Conditions Precedent.
Each of the Depositor and the Administrative Trustees shall provide to
the Property Trustee such evidence of compliance with any conditions precedent,
if any, provided for in this Trust 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) of the
Trust Indenture Act shall be given in the form of an Officers' Certificate.
Section 8.17 Number of Trustees.
(a) The number of Trustees shall be four, provided that the Holder of
all of the Common Securities by written instrument may increase or decrease the
number of Administrative Trustees. The Property Trustee and the Delaware
Trustee may be the same Person.
<PAGE>
48
(b) If a Trustee ceases to hold office for any reason and the number of
Administrative Trustees is not reduced pursuant to Section 8.17(a), or if the
number of Trustees is increased pursuant to Section 8.17(a), a vacancy shall
occur. The vacancy shall be filled with a Trustee appointed in accordance with
Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of a Trustee shall not operate
to dissolve, terminate or annul the Trust. Whenever a vacancy in the number of
Administrative Trustees shall occur, until such vacancy is filled by the
appointment of an Administrative Trustee in accordance with Section 8.10, the
Administrative Trustees in office, regardless of their number (and
notwithstanding any other provision of this Agreement), shall have all the
powers granted to the Administrative Trustees and shall discharge all the
duties imposed upon the Administrative Trustees by this Trust Agreement.
Section 8.18 Delegation of Power.
(a) Any Administrative 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
2.7(a), including any registration statement or amendment thereto filed with
the Commission, or making any other governmental filing; and
(b) The Administrative Trustees shall have power to delegate from time
to time to such of their number or to the Depositor the doing of such things
and the execution of such instruments either in the name of the Trust or the
names of the Administrative Trustees or otherwise as the Administrative
Trustees may deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of this Trust Agreement, as set
forth herein.
ARTICLE IX
TERMINATION, LIQUIDATION AND MERGER
Section 9.1 Termination Upon Expiration Date.
Unless earlier terminated, the Trust shall automatically terminate on
December 31, 2051 (the "Expiration Date"), following the distribution of the
Trust Property in accordance with Section 9.4.
Section 9.2 Early Termination.
The first to occur of any of the following events is an "Early
Termination Event":
(a) the occurrence of a Bankruptcy Event in respect of, or the
dissolution or liquidation of, the Holder of the Common Securities;
<PAGE>
49
(b) the written direction to the Property Trustee from the Depositor at
any time to terminate the Trust and, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, distribute Debentures to
Securityholders in exchange for the Preferred Securities (which direction is
optional and wholly within the discretion of the Depositor);
(c) the redemption of all of the Preferred Securities in connection with
the redemption of all of the Debentures; and
(d) the entry of an order for dissolution of the Trust by a court of
competent jurisdiction.
Section 9.3 Termination.
The respective obligations and responsibilities of the Trustees and the
Trust created and continued hereby shall terminate upon the latest to occur of
the following: (a) the distribution by the Property Trustee to Securityholders
upon the liquidation of the Trust pursuant to Section 9.4, or upon the
redemption of all of the Trust Securities pursuant to Section 4.2, of all
amounts required to be distributed hereunder upon the final payment of the
Trust Securities; (b) the payment of any expenses owed by the Trust; and (c)
the discharge of all administrative duties of the Administrative Trustees,
including the performance of any tax reporting obligations with respect to the
Trust or the Securityholders.
Section 9.4 Liquidation.
(a) If an Early Termination Event specified in clause (a), (b) or (d) of
Section 9.2 occurs or upon the Expiration Date, the Trust shall be liquidated
by the Trustees as expeditiously as the Trustees determine to be possible by
distributing, after satisfaction or the making of reasonable provisions for the
payment of liabilities to creditors of the Trust as provided by applicable law,
to each Securityholder a Like Amount of Debentures, subject to Section 9.4(d).
Notice of liquidation shall be given by the Property Trustee by first-class
mail, postage prepaid mailed not less than 30 nor more than 60 days prior to
the Liquidation Date to each Holder of Trust Securities at such Holder's
address appearing in the Securities Register. All such notices of liquidation
shall:
(i) state the CUSIP Number of the Trust Securities;
(ii) state the Liquidation Date;
(iii) state that from and after the Liquidation Date, the Trust
Securities will no longer be deemed to be Outstanding and any Trust
Securities Certificates not surrendered for exchange will be deemed to
represent a Like Amount of Debentures; and
(iv) provide such information with respect to the mechanics by
which Holders may exchange Trust Securities Certificates for Debentures,
or if Section 9.4(d)
<PAGE>
50
applies receive a Liquidation Distribution, as the Administrative
Trustees or the Property Trustee shall deem appropriate.
(b) Except where Section 9.2(c) or 9.4(d) applies, in order to effect
the liquidation of the Trust and distribution of the Debentures to
Securityholders, the Administrative Trustees shall establish a record date for
such distribution (which shall be not more than 45 days prior to the
Liquidation Date) and, either itself acting as exchange agent or through the
appointment of the Property Trustee as a separate exchange agent, shall
establish such procedures as it shall deem appropriate to effect the
distribution of Debentures in exchange for the Outstanding Trust Securities
Certificates.
(c) Except where Section 9.2(c) or 9.4(d) applies, after the Liquidation
Date, (i) the Trust Securities will no longer be deemed to be Outstanding, (ii)
certificates representing a Like Amount of Debentures will be issued to Holders
of Trust Securities Certificates, upon surrender of such certificates to the
Administrative Trustees or their agent for exchange, (iii) the Depositor shall
use its best efforts to have the Debentures listed on the New York Stock
Exchange or on such other exchange, interdealer quotation system or
self-regulatory organization as the Preferred Securities are then listed or
traded, (iv) any Trust Securities Certificates not so surrendered for exchange
will be deemed to represent a Like Amount of Debentures, accruing interest at
the rate provided for in the Debentures from the last Distribution Date on
which a Distribution was made on such Trust Securities Certificates until such
certificates are so surrendered (and until such certificates are so
surrendered, no payments of interest or principal will be made to Holders of
Trust Securities Certificates with respect to such Debentures) and (v) all
rights of Securityholders holding Trust Securities will cease, except the right
of such Securityholders to receive Debentures upon surrender of Trust
Securities Certificates.
(d) In the event that, notwithstanding the other provisions of this
Section 9.4, whether because of an order for dissolution entered by a court of
competent jurisdiction or otherwise, distribution of the Debentures in the
manner provided herein is determined by the Administrative Trustees not to be
practical, the Trust Property shall be liquidated, and the Trust shall be
dissolved, wound-up or terminated, by the Administrative Trustees. In such
event, on the date of the dissolution, winding-up or other termination of the
Trust, Securityholders will be entitled to receive out of the assets of the
Trust available for distribution to Securityholders, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, an amount
equal to the Liquidation Amount per Trust Security plus accumulated and unpaid
Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If, upon any such dissolution, winding-up or
termination, 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, subject to the next succeeding sentence, the
amounts payable by the Trust on the Trust Securities shall be paid on a pro
rata basis (based upon Liquidation Amounts). The Holder of the Common
Securities will be entitled to receive Liquidation Distributions upon any such
dissolution, winding-up or termination pro rata (determined as aforesaid) with
Holders of Preferred Securities, except that, if a Debenture Event of Default
has occurred and is continuing, the Preferred Securities shall have a priority
over the Common Securities.
<PAGE>
51
Section 9.5 Mergers, Consolidations, Amalgamations or Replacements of
the Trust.
The Trust may not merge, consolidate, amalgamate with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any other Person, except pursuant to this
Article IX. At the request of the Depositor, with the consent of the
Administrative Trustees and without the consent of the Holders of at least a
Majority in Liquidation Amount of the Preferred Securities, the Property
Trustee or the Delaware Trustee, the Trust may merge, consolidate, amalgamate
with or into, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to a trust organized as such under the laws
of any State; provided, that (i) such successor entity either (a) expressly
assumes all of the obligations of the Trust with respect to the Preferred
Securities or (b) substitutes for the Preferred Securities other securities
having substantially the same terms as the Preferred Securities (the "Successor
Securities") so long as the Successor Securities rank the same as the Preferred
Securities rank in priority with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) a trustee of such successor entity
possessing substantially the same powers and duties as the Property Trustee is
appointed to hold the Debentures, (iii) the Successor Securities are listed or
traded, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or other organization on which
the Preferred Securities are then listed or traded, if any, (iv) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does
not cause the Preferred Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization, (v)
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not adversely affect the rights, preferences and privileges of the
holders of the Preferred Securities (including any Successor Securities) in any
material respect, (vi) such successor entity has a purpose substantially
identical to that of the Trust, (vii) prior to such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Depositor has
received an Opinion of Counsel to the effect that (a) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does
not adversely affect the rights, preferences and privileges of the holders of
the Preferred Securities (including any Successor Securities) in any material
respect, and (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor such
successor entity will be required to register as an investment company under
the 1940 Act and (viii) the Depositor or its permitted transferee owns all of
the common securities of such successor entity and guarantees the obligations
of such successor entity under the Successor Securities at least to the extent
provided by the Guarantee. Notwithstanding the foregoing, the Trust shall not,
except with the consent of Holders of all of the Preferred Securities,
consolidate, amalgamate or merge with or into, or be replaced by or convey,
transfer or lease its properties and assets substantially as an entirety to any
other Person or permit any other Person to consolidate, amalgamate or merge
with or into, or replace it if such consolidation, amalgamation, merger,
replacement, conveyance, transfer or lease would cause the Trust or the
successor entity to be classified as other than a grantor trust for United
States federal income tax purposes.
<PAGE>
52
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1 Limitation of Rights of Securityholders.
Except as provided in Section 9.2, the death, incapacity, liquidation,
dissolution, termination or bankruptcy of any Person having an interest,
beneficial or otherwise, in Trust Securities shall not operate to terminate
this Trust Agreement, nor entitle the legal representatives or heirs of such
Person or any Securityholder for such Person, to claim an accounting, take any
action or bring any proceeding in any court for a partition or winding up of
the arrangements contemplated hereby, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
Section 10.2 Liability of the Common Securityholder.
The Holder of the 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.
Section 10.3 Amendment.
(a) This Trust Agreement may be amended from time to time by the
Property Trustee, the Administrative Trustees and the Depositor, without the
consent of any Securityholders, (i) to cure any ambiguity, 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 Trust Agreement, which shall not be inconsistent
with the other provisions of this Trust Agreement, or (ii) to modify, eliminate
or add to any provisions of this Trust Agreement to such extent as shall be
necessary to ensure that the Trust will be classified for United States federal
income tax purposes as a grantor trust at all times that any Trust Securities
are Outstanding or to ensure that the Trust will not be required to register as
an investment company under the 1940 Act; provided, however, that in the case
of clause (i) or clause (ii), such action shall not adversely affect in any
material respect the interests of any Securityholder, and any amendments of
this Trust Agreement shall become effective when notice thereof is given to the
Securityholders.
(b) Except as provided in Section 10.3(c) hereof, any provision of this
Trust Agreement may be amended by the Trustees and the Depositor with (i) the
consent of Trust Securityholders representing not less than a majority (based
upon Liquidation Amounts) of the Trust Securities then Outstanding and (ii)
receipt by the Trustees of an Opinion of Counsel to the effect that such
amendment or the exercise of any power granted to the Trustees in accordance
with such amendment will not affect the Trust's status as a grantor trust for
United States federal income tax purposes or affect the Trust's exemption from
status as an investment company under the 1940 Act.
<PAGE>
53
(c) In addition to and notwithstanding any other provision in this Trust
Agreement, without the consent of each affected Securityholder (such consent
being obtained in accordance with Section 6.3 or 6.6 hereof), this Trust
Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount
of any Distribution required to be made in respect of the Trust Securities as
of a specified date or (ii) restrict the right of a Securityholder to institute
suit for the enforcement of any such payment on or after such date;
notwithstanding any other provision herein, without the unanimous consent of
the Securityholders (such consent being obtained in accordance with Section 6.3
or 6.6 hereof), this paragraph (c) of this Section 10.3 may not be amended.
(d) Notwithstanding any other provisions of this Trust Agreement, no
Trustee shall enter into or consent to any amendment to this Trust Agreement
which would cause the Trust to fail or cease to qualify for the exemption from
status of an investment company under the 1940 Act or fail or cease to be
classified as a grantor trust for United States federal income tax purposes.
(e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Depositor and the Administrative Trustees, this
Trust Agreement may not be amended in a manner which imposes any additional
obligation on the Depositor and the Administrative Trustees.
(f) In the event that any amendment to this Trust Agreement is made, the
Administrative Trustees shall promptly provide to the Depositor a copy of such
amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall be
required to enter into any amendment to this Trust Agreement which affects its
own rights, duties or immunities under this Trust Agreement. The Property
Trustee shall be entitled to receive an Opinion of Counsel and an Officers'
Certificate stating that any amendment to this Trust Agreement is in compliance
with this Trust Agreement and that all conditions precedent to the execution
and delivery of such amendment have been satisfied.
Section 10.4 Separability.
In case any provision in this Trust Agreement or in the Trust Securities
Certificates 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 10.5 Governing Law.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
SECURITYHOLDERS, THE TRUST, THE DEPOSITOR AND THE TRUSTEES WITH RESPECT TO THIS
TRUST AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO CONFLICT
OF LAWS PRINCIPLES).
<PAGE>
54
Section 10.6 Payments Due on Non-Business Day.
If the date fixed for any payment on any Trust Security shall be a day
that is not a Business Day, then such payment need not be made on such date but
may be made on the next succeeding day that is a Business Day (except as
otherwise provided in Sections 4.1(a) and 4.2(d)), with the same force and
effect as though made on the date fixed for such payment, and no Distributions
shall accumulate on such unpaid amount shall accrue thereon for the period
after such date.
Section 10.7 Successors.
This Trust Agreement shall be binding upon and shall inure to the benefit
of any successor to the Depositor, the Trust and the Trustees, including any
successor by operation of law. Except in connection with a consolidation,
merger or sale involving the Depositor that is permitted under Article VIII of
the Indenture and pursuant to which the assignee agrees in writing to perform
the Depositor's obligations hereunder, the Depositor shall not assign its
obligations hereunder.
Section 10.8 Headings.
The Article and Section headings are for convenience only and shall not
affect the construction of this Trust Agreement.
Section 10.9 Reports, Notices and Demands.
Any report, notice, demand or other communication which by any provision
of this Trust Agreement is required or permitted to be given or served to or
upon any Securityholder or the Depositor may be given or served in writing by
deposit thereof, first-class postage prepaid, in the United States mail, hand
delivery or facsimile transmission, in each case, addressed, (a) in the case of
a Preferred Securityholder, to such Preferred Securityholder as such
Securityholder's name and address may appear on the Securities Register; and
(b) in the case of the Common Securityholder or the Depositor, to Pennsylvania
Power & Light Company, Two North Ninth Street, Allentown, Pennsylvania 18101,
Attention: Treasurer, facsimile no.: (610) 774-5106. Such notice, demand or
other communication to or upon a Securityholder shall be deemed to have been
sufficiently given or made, for all purposes, upon hand delivery, mailing or
transmission.
Any notice, demand or other communication which by any provision of this
Trust Agreement is required or permitted to be given or served to or upon the
Trust, the Property Trustee, the Delaware Trustee or the Administrative
Trustees shall be given in writing addressed (until another address is
published by the Trust) as follows: (a) with respect to the Property Trustee to
The Chase Manhattan Bank, Global Trust Services, 450 W. 33rd Street, 15th
Floor, New York, New York 10001-2697, Attention: Corporate Trust
Administration; (b) with respect to the Delaware Trustee, to Chase Manhattan
Bank Delaware, 1201 Market Street, 9th Floor, Wilmington, Delaware 19801, with
a copy to the Property Trustee at the address set forth in Clause (a); and (c)
with respect to the Administrative Trustees, to them at
<PAGE>
55
the address above for notices to the Depositor, marked "Attention
Administrative Trustees of PP&L Capital Trust." Such notice, demand or other
communication to or upon the Trust or the Property Trustee shall be deemed to
have been sufficiently given or made only upon actual receipt of the writing by
the Trust or the Property Trustee.
Section 10.10 Agreement Not to Petition.
Each of the Trustees and the Depositor agree for the benefit of the
Securityholders that, until at least one year and one day after the Trust has
been terminated in accordance with Article IX, they shall not file, or join in
the filing of, a petition against the Trust under any bankruptcy, insolvency,
reorganization or other similar law (including, without limitation, the United
States Bankruptcy Code) (collectively, "Bankruptcy Laws") or otherwise join in
the commencement of any proceeding against the Trust under any Bankruptcy Law.
In the event the Depositor takes action in violation of this Section 10.10, the
Property Trustee agrees, for the benefit of Securityholders, that at the
expense of the Depositor, it shall file an answer with the bankruptcy court or
otherwise properly contest the filing of such petition by the Depositor against
the Trust or the commencement of such action and raise the defense that the
Depositor has agreed in writing not to take such action and should be stopped
and precluded therefrom and such other defenses, if any, as counsel for the
Trustee or the Trust may assert. The provisions of this Section 10.10 shall
survive the termination of this Trust Agreement.
Section 10.11 Trust Indenture Act; Conflict with Trust Indenture Act.
(a) This Trust Agreement is subject to the provisions of the Trust
Indenture Act that are required or deemed to be part of this Trust Agreement
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 any provision hereof limits, qualifies or conflicts with the
duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act
through operation of Section 318(c) thereof, such imposed duties shall control.
If any provision of this Trust Agreement modifies or excludes any provision of
the Trust Indenture Act which may be so modified or excluded, the latter
provision shall be deemed to apply to this Trust Agreement as so modified or
excluded, as the case may be.
(d) The application of the Trust Indenture Act to this Trust Agreement
shall not affect the nature of the Trust Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
Section 10.12 Acceptance of Terms of Trust Agreement, Guarantee and
Indenture.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY
OR ON BEHALF OF A SECURITYHOLDER OR ANY
<PAGE>
56
BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR FURTHER MANIFESTATION OF ASSENT,
SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE BY THE SECURITYHOLDER AND ALL
OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST SECURITY OF ALL THE TERMS AND
PROVISIONS OF THIS TRUST AGREEMENT AND AGREEMENT TO THE SUBORDINATION
PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND THE INDENTURE, AND SHALL
CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH SECURITYHOLDER AND SUCH OTHERS THAT
THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT SHALL BE BINDING, OPERATIVE
AND EFFECTIVE AS BETWEEN THE TRUST AND SUCH SECURITYHOLDER AND SUCH OTHERS.
Section 10.13 Counterparts.
This Trust Agreement may contain more than one counterpart of the
signature page and this Trust Agreement may be executed by the affixing of the
signature of each of the Trustees of 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.
PENNSYLVANIA POWER & LIGHT COMPANY
By:
-----------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Property Trustee
By:
-----------------------------------
Name:
Title:
CHASE MANHATTAN BANK DELAWARE,
as Delaware Trustee
By:
-----------------------------------
Name:
Title:
<PAGE>
EXHIBIT 4.5
This Preferred Security is registered in the name of The Depository Trust
Company (the "Depositary") or a nominee of the Depositary. This Preferred
Security is exchangeable for Preferred Securities registered in the name of a
person other than the Depositary or its nominee only in the limited
circumstances described in the Trust Agreement and no transfer of this
Preferred Security (other than a transfer of this 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 such limited circumstances.
Unless this Preferred Security is presented by an authorized
representative of the Depositary to PP&L Capital Trust or its agent for
registration of transfer, exchange or payment, and any Preferred Security
issued is registered in the name of Cede & Co. or such other name as requested
by an authorized representative of the Depositary and any payment hereon is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of the Depositary, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY A PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
CERTIFICATE NO.: NUMBER OF PREFERRED SECURITIES:
P-1 4,000,000
CUSIP NO. ______ __ _
CERTIFICATE EVIDENCING PREFERRED SECURITIES
OF
PP&L CAPITAL TRUST
____% TRUST ORIGINATED PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
PP&L Capital Trust, a statutory business trust created under the laws of
the State of Delaware (the "Trust"), hereby certifies that Cede & Co.(the
"Holder") is the registered owner of preferred securities in the aggregate
liquidation amount of $100,000,000 of the Trust representing an undivided
beneficial ownership interest in the assets of the Trust and designated the
PP&L Capital Trust ___% Trust Originated Preferred Securities (liquidation
amount $25 per Preferred Security) (the "Preferred Securities"). The Preferred
Securities are transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer as provided in Section 5.4 of the Trust
Agreement (as defined below). The designations, rights, privileges,
restrictions, preferences and other terms and provisions of the Preferred
Securities are set forth in, and this certificate and the Preferred Securities
represented hereby are issued and shall in all respects be subject to, the
terms and
<PAGE>
2
provisions of, the Amended and Restated Trust Agreement of the Trust dated as
of _______ __, 1997, as the same may be amended from time to time (the "Trust
Agreement") including the designation of the terms of Preferred Securities as
set forth therein. The Holder is entitled to the benefits of the Guarantee
Agreement entered into by Pennsylvania Power & Light Company, a Pennsylvania
corporation ("PP&L"), and The Chase Manhattan Bank, a New York banking
corporation ("Chase"), as guarantee trustee, dated as of _________ __, 1997,
(the "Guarantee"), to the extent provided therein. The Trust will furnish a
copy of the Trust Agreement and the Guarantee to the Holder without charge upon
written request to the Trust at its principal place of business or registered
office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder and by acceptance hereof
agrees to the provisions of (i) the Guarantee and (ii) the Junior Subordinated
Indenture entered into by PP&L and Chase, as trustee, dated as of April 1,
1997.
In Witness Whereof, one of the Administrative Trustees of the Trust has
executed this certificate.
PP&L Capital Trust
By:
-----------------------------------
Name:
Administrative Trustee
This is one of the Securities referred to in the within mentioned Trust
Agreement.
Date of Authentication:
________ __, 1997
By:
-------------------------------------------------------
Name:
Title: Property Trustee
<PAGE>
3
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security 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 Securities 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)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.1
<PAGE>
EXHIBIT 4.6
- --------------------------------------------------------------------------------
GUARANTEE AGREEMENT
BETWEEN
PENNSYLVANIA POWER & LIGHT COMPANY
(AS GUARANTOR)
AND
THE CHASE MANHATTAN BANK
(AS TRUSTEE)
RELATING TO
PP&L CAPITAL TRUST
DATED AS OF
__________ __, 1997
- --------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Guarantee Agreement
- ------------------- -------------------
310(a)...........................................................4.1(a)
310(b)...........................................................4.1(c), 2.8
310(c)...........................................................Inapplicable
311(a)...........................................................2.2(b)
311(b)...........................................................2.2(b)
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(e)...........................................................1.1, 2.5, 3.2
314(f)...........................................................2.1, 3.2
315(a)...........................................................3.1(d)
315(b)...........................................................2.7
315(c)...........................................................3.1
315(d)...........................................................3.1(d)
316(a)...........................................................1.1, 2.6, 5.4
316(b)...........................................................5.3
316(c)...........................................................8.2
317(a)...........................................................Inapplicable
317(b)...........................................................Inapplicable
318(a)...........................................................2.1(b)
318(b)...........................................................2.1
318(c)...........................................................2.1(a)
- ----------------
* This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms or
provisions.
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I. DEFINITIONS .................................................. 1
Section 1.1. Definitions........................................... 1
ARTICLE II. TRUST INDENTURE ACT ......................................... 4
Section 2.1. Trust Indenture Act; Application...................... 4
Section 2.2. List of Holders....................................... 4
Section 2.3. Reports by the Guarantee Trustee...................... 4
Section 2.4. Periodic Reports to the Guarantee Trustee............. 5
Section 2.5. Evidence of Compliance with Conditions Precedent...... 5
Section 2.6. Events of Default; Waiver............................. 5
Section 2.7. Event of Default; Notice.............................. 5
Section 2.8. Conflicting Interests................................. 6
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE
TRUSTEE..................................................... 6
Section 3.1. Powers and Duties of the Guarantee Trustee............ 6
Section 3.2. Certain Rights of Guarantee Trustee................... 7
Section 3.3. Indemnity............................................. 9
ARTICLE IV. GUARANTEE TRUSTEE............................................ 9
Section 4.1. Guarantee Trustee; Eligibility........................ 9
Section 4.2. Appointment, Removal and Resignation of the Guarantee
Trustee.............................................. 9
ARTICLE V. GUARANTEE..................................................... 10
Section 5.1. Guarantee............................................. 10
Section 5.2. Waiver of Notice and Demand........................... 10
Section 5.3. Obligations Not Affected.............................. 10
Section 5.4. Rights of Holders..................................... 11
Section 5.5. Guarantee of Payment.................................. 12
Section 5.6. Subrogation........................................... 12
Section 5.7. Independent Obligations............................... 12
ARTICLE VI. COVENANTS AND SUBORDINATION.................................. 12
Section 6.1. Subordination......................................... 12
Section 6.2. Pari Passu Guarantees................................. 12
<PAGE>
ARTICLE VII. TERMINATION................................................. 13
Section 7.1. Termination........................................... 13
ARTICLE VIII. MISCELLANEOUS.............................................. 13
Section 8.1. Successors and Assigns................................ 13
Section 8.2. Amendments............................................ 13
Section 8.3. Notices............................................... 13
Section 8.4. Benefit............................................... 15
Section 8.5. Interpretation........................................ 15
Section 8.6. Governing Law......................................... 15
-ii-
<PAGE>
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of ______ __, 1997, is executed and
delivered by PENNSYLVANIA POWER & LIGHT COMPANY, a Pennsylvania corporation
(the "Guarantor"), having its principal office at Two North Ninth Street,
Allentown, Pennsylvania 18101, and THE CHASE MANHATTAN 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 Preferred Securities and
Common Securities (each as defined herein and together, the "Securities") of
PP&L Capital Trust, a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Trust Agreement, dated as of
________ __, 1997 (the "Trust Agreement"), among the Guarantor, as Depositor,
the Property Trustee and the Delaware Trustee named therein, the Administrative
Trustees named therein and the Holders from time to time of undivided
beneficial interests in the assets of the Issuer, the Issuer is issuing
$100,000,000 aggregate Liquidation Amount (as defined in the Trust Agreement)
of its ___% Trust Originated Preferred Securities, (Liquidation Amount $25 per
preferred security) (the "Preferred Securities") representing undivided
beneficial ownership interests in the assets of the Issuer and having the terms
set forth in the Trust Agreement;
WHEREAS, the Preferred Securities will be issued by the Issuer and the
proceeds thereof, together with the proceeds from the issuance of the Issuer's
Common Securities (as defined herein), will be used to purchase the Debentures
(as defined in the Trust Agreement) of the Guarantor, which Debentures will be
deposited with The Chase Manhattan Bank, as Property Trustee under the Trust
Agreement, as trust assets; and
WHEREAS, as an incentive for the Holders to purchase Securities, the
Guarantor desires irrevocably and unconditionally to agree, to the extent set
forth herein, to pay to the Holders of the 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
Securities, which purchase the Guarantor hereby acknowledges shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee Agreement for the
benefit of the Holders from time to time of the Securities.
ARTICLE I. DEFINITIONS
Section 1.1. Definitions.
As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings. Capitalized
or otherwise defined terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Trust Agreement as in effect on the date
hereof.
<PAGE>
2
"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.
"Board of Directors" means any of the board of directors of the
Guarantor, the Finance Committee of that board or any other committee of that
board duly authorized to act hereunder or any officers of the Guarantor to
which that board or any such committee shall have delegated its authority.
"Common Securities" means the common securities representing undivided
beneficial ownership interests in the assets of the Issuer that will be issued
to the Guarantor.
"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Guarantee Agreement; provided, however, that,
except with respect to a default in payment of any Guarantee Payments, the
Guarantor shall have received notice of default and shall not have cured such
default within 90 days after receipt of such notice.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Securities, to the extent not paid or
made by or on behalf of the Issuer: (i) any accumulated and unpaid
Distributions (as defined in the Trust Agreement) required to be paid on the
Securities, to the extent the Issuer shall have funds on hand available
therefor at such time, (ii) the redemption price, including all accrued and
unpaid Distributions to the date of redemption (the"Redemption Price"), with
respect to any Securities called for redemption by the Issuer, to the extent
the Issuer shall have funds on hand available therefor at such time, and (iii)
upon a voluntary or involuntary termination, winding up or liquidation of the
Issuer, unless Debentures are distributed to the Holders, the lesser of (a) the
aggregate of the Liquidation Amount plus accrued and unpaid Distributions to
the date of payment or (b) the amount of assets of the Issuer remaining
available for distribution to Holders on liquidation of the Issuer after
satisfaction of liabilities to creditors of the Issuer as required by
applicable law (in either case, the "Liquidation Distribution").
"Guarantee Trustee" means The Chase Manhattan 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.
"Holder" means any holder, as registered on the books and records of the
Issuer, of any Securities; provided, however, that in determining whether the
holders of the requisite percentage of Securities have given any request,
notice, consent or waiver hereunder, "Holder" shall not include the Guarantor
or any Affiliate of the Guarantor.
"Indenture" means the Junior Subordinated Indenture dated as of April 1,
1997, as supplemented and amended, between the Guarantor and The Chase
Manhattan Bank, as trustee.
<PAGE>
3
"List of Holders" has the meaning specified in Section 2.2(a).
"Majority in aggregate Liquidation Amount of the Securities" means,
except as provided by the Trust Indenture Act, a vote by the Holder(s), voting
separately as a class, of more than 50% of the aggregate Liquidation Amount of
all then outstanding Securities issued by the Issuer.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chairman or a Vice Chairman of the Board of Directors of such
Person or the President or a Vice President of such Person, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
such Person, and delivered to the Guarantee Trustee. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Guarantee Agreement shall include:
(a) a statement by each officer signing the Officers' Certificate that
such officer has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by such officer in rendering the Officers'
Certificate;
(c) a statement that 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 such officer, such
condition or covenant has been complied with.
"Person" means a legal person, including 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, or any other entity of whatever
nature.
"Responsible Officer" when used with respect to the Guarantee Trustee
means any officer of the Guarantee Trustee assigned by the Guarantee Trustee
from time to time to administer this Guarantee Agreement.
"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.
<PAGE>
4
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.
(b) If and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act through the operation of Section 318(c)
thereof, such imposed duties shall control.
Section 2.2. List of Holders.
(a) The Guarantor will furnish or cause to be furnished to the Guarantee
Trustee:
(i) semi-annually, not more than 15 days after January 15 and July
15 in each year, a list, in such form as the Guarantee Trustee may
reasonably require, of the names and addresses of the Holders as of such
January 1 and July 1, and
(ii) at such other times as the Guarantee Trustee may request in
writing, within 30 days after the receipt by the Guarantor of any such
request, a list of similar form and content as of a date not more than 15
days prior to the time such list is furnished,
; provided, however, that no such list need be furnished to the Trustee
at any time when the Trustee is serving as Securities Registrar.
(b) The Guarantee Trustee shall comply with its obligations under Section
311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.
Section 2.3. Reports by the Guarantee Trustee.
The Guarantee Trustee shall transmit to Holders such reports concerning
the Guarantee Trustee and its actions under this Guarantee Agreement as may be
required pursuant to the Trust Indenture Act at the times and in the manner
provided pursuant thereto. If required by Section 313(a) of the Trust
Indenture Act, the Guarantee Trustee shall, within sixty days after each May 15
following the date of this Guarantee Agreement deliver to Holders a brief
report, dated as of such May 15, which complies with the provisions of such
Section 313(a).
<PAGE>
5
Section 2.4. Periodic Reports to the Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee, the Securities and
Exchange Commission and the Holders such documents, reports and information, if
any, as required by Section 314 of the Trust Indenture Act and the compliance
certificate (signed by the principal executive, principal financial or
principal accounting officer of the Guarantor) 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. Delivery of such reports, information
and documents to the Guarantee Trustee is for informational purposes only and
the Guarantee Trustee's receipt of such shall not constitute constructive
notice of any information contained therein, including the Guarantor's
compliance with any of its covenants hereunder (as to which the Guarantee
Trustee is entitled to rely exclusively on Officers' Certificates).
Section 2.5. Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with such 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 at least a Majority in aggregate Liquidation Amount of the
Securities may, by vote, on behalf of the Holders, 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 therefrom.
Section 2.7. Event of Default; Notice.
(a) 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, notice of any such Events of Default actually known to the Guarantee
Trustee, unless such defaults have been cured before the giving of such notice,
provided, that, except in the case of a default in the payment of a Guarantee
Payment, 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.
(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, or a Responsible Officer charged with the administration of this
Guarantee Agreement shall have obtained written notice, of such Event of
Default.
<PAGE>
6
Section 2.8. Conflicting Interests.
The Trust Agreement and the Indenture 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 THE GUARANTEE TRUSTEE
Section 3.1. Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee Trustee for
the benefit of the Holders, and the Guarantee Trustee shall not transfer this
Guarantee Agreement to any Person except a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment to act as
Guarantee Trustee hereunder. The right, title and interest of the Guarantee
Trustee shall automatically vest in any Successor Guarantee Trustee, upon
acceptance by such Successor Guarantee Trustee of its appointment hereunder,
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.
(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. If an Event of Default has occurred
and is continuing, 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
(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
<PAGE>
7
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 or of the Trust Indenture Act 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 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 Guarantee 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.
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, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document reasonably 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 an Officers'
Certificate unless otherwise prescribed herein.
(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 to take any action
hereunder, the Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
<PAGE>
8
request and rely upon an Officers' Certificate which, upon receipt of
such request from the Guarantee Trustee, shall be promptly delivered by
the Guarantor.
(iv) The Guarantee Trustee may consult with legal counsel of its
selection, and the written advice or opinion of such legal counsel with
respect to legal matters shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted to be
taken by it hereunder in good faith and in accordance with such advice or
opinion. Such legal counsel may be legal counsel to the Guarantor or any
of its Affiliates and may be one 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.
(v) 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)(v) 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.
(vi) 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.
(vii) The Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through its agents or attorneys, and the Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any such
agent or attorney appointed by it with due care hereunder.
(viii) Whenever in the administration of this Guarantee Agreement
the Guarantee Trustee shall deem it desirable to receive written
instructions with respect to enforcing any remedy or right or taking any
other action hereunder, the Guarantee Trustee (A) may request
instructions from the Holders, (B) may refrain from enforcing such remedy
or right or taking such other action until such written instructions are
received, and (C) shall be protected in acting in accordance with such
written instructions.
(ix) The Guarantee Trustee shall not be liable for any action
taken, suffered, or omitted to be taken by it in good faith and
reasonably believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Guarantee Agreement.
<PAGE>
9
(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 to act in accordance with such power and
authority.
Section 3.3. Indemnity.
The Guarantor agrees to indemnify the Guarantee Trustee for, and to hold
it harmless against, any loss, liability or expense incurred without negligence
or willful misconduct on the part of the Guarantee Trustee, arising out of or
in connection with the acceptance or administration of this Guarantee
Agreement, 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. This Section 3.3 shall survive the resignation or
removal of the Guarantee Trustee and the termination of this Guarantee
Agreement.
ARTICLE IV. GUARANTEE TRUSTEE
Section 4.1. Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the Trust Indenture
Act to act as such and has a combined capital and surplus of at least
$50,000,000, and shall be a corporation meeting the requirements of
Section 310(a) of the Trust Indenture Act. If such corporation publishes
reports of condition at least annually, pursuant to law or to the
requirements of its supervising or examining authority, then, for the
purposes of this Section 4.1 and to the extent permitted by the Trust
Indenture Act, 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) 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 the Guarantee
Trustee.
<PAGE>
10
(a) 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 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. If an instrument of acceptance by a Successor Guarantee
Trustee shall not have been delivered to the Guarantee Trustee within 30 days
after such removal, the Guarantee Trustee being removed may petition any court
of competent jurisdiction for the appointment of a Successor Guarantee Trustee.
(c) The Guarantee Trustee appointed hereunder 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, at the expense of the Guarantor, 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 or on behalf of the Issuer), as and when due, regardless of any
defense, right of set-off or counterclaim which the Issuer 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 Issuer 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
Guarantee Trustee, the Issuer 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.
<PAGE>
11
The obligations, covenants, 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 Issuer of any express or implied agreement,
covenant, term or condition relating to the Securities to be performed or
observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions (other than an extension of time for payment of
Distributions that results from the extension of any interest payment period on
the Debentures as provided in the Indenture), Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Securities or the
extension of time for the performance of any other obligation under, arising
out of, or in connection with, the Securities;
(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 Securities, or any action
on the part of the Issuer 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 Issuer or any of the assets of the
Issuer;
(e) any invalidity of, or defect or deficiency in, the 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 (other than payment of
the underlying obligation), 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 the
consent of, the Guarantor with respect to the happening of any of the
foregoing.
Section 5.4. Rights of Holders.
The Guarantor expressly acknowledges that: (i) this Guarantee Agreement
will be deposited with the Guarantee Trustee to be held for the benefit of the
Holders; (ii) the Guarantee Trustee has the right to enforce this Guarantee
Agreement on behalf of the Holders; (iii) the Holders of a Majority in
aggregate Liquidation Amount of the Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee in respect of this Guarantee Agreement or exercising any
trust or power
<PAGE>
12
conferred upon the Guarantee Trustee under this Guarantee Agreement; and (iv)
any Holder may institute a legal proceeding directly against the Guarantor to
enforce its rights under this Guarantee Agreement without first instituting a
legal proceeding against the Guarantee Trustee, the Issuer or any other Person.
Section 5.5. Guarantee of Payment
This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment
of the Guarantee Payments in full (without duplication of amounts theretofore
paid by the Issuer) or upon the distribution of Debentures to Holders as
provided in the Trust Agreement.
Section 5.6. Subrogation.
The Guarantor shall be subrogated to all rights (if any) of the Holders
against the Issuer in respect of any amounts paid to the 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 rights which 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 acknowledges that its obligations hereunder are independent
of the obligations of the Issuer with respect to the 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 AND SUBORDINATION
Section 6.1. Subordination.
The obligations of the Guarantor under this Guarantee Agreement will
constitute unsecured obligations of the Guarantor and will rank subordinate and
junior in right of payment to all Senior Debt (as defined in the Indenture) of
the Guarantor.
Section 6.2. Pari Passu Guarantees.
The obligations of the Guarantor under this Guarantee Agreement shall
rank pari passu with the obligations of the Guarantor under any similar
guarantee agreements issued by the
<PAGE>
13
Guarantor on behalf of the holders of preferred securities issued by any Trust
(as defined in the Indenture).
ARTICLE VII. TERMINATION
Section 7.1. Termination.
This Guarantee Agreement shall terminate and be of no further force and
effect upon (i) full payment of the Redemption Price (as defined in the Trust
Agreement) of all Securities, (ii) the distribution of Debentures to the
Holders in exchange for all of the Securities or (iii) full payment of the
amounts payable in accordance with the Trust Agreement upon liquidation of the
Issuer. 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 is required to repay any sums paid with respect to Securities or this
Guarantee Agreement.
ARTICLE VIII. MISCELLANEOUS
Section 8.1. 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 Securities then
outstanding. Except in connection with a consolidation, merger or sale
involving the Guarantor or a conveyance, transfer or lease of the Guarantor's
properties that is permitted under Article VIII of the Indenture and pursuant
to which the successor or assignee agrees in writing to perform the Guarantor's
obligations hereunder, the Guarantor shall not assign its obligations hereunder
and any purported assignment other than in accordance with this provision shall
be void.
Section 8.2. Amendments.
Except with respect to any changes which do not adversely affect the
rights of the Holders or the Guarantee Trustee in any material respect (in
which case no consent of the Holders or the Guarantee Trustee, as the case may
be, will be required), this Guarantee Agreement may only be amended with the
prior approval of the Holders of not less than a Majority in aggregate
Liquidation Amount of the Securities. The provisions of Article VI of the Trust
Agreement concerning meetings of the Holders shall apply to the giving of such
approval.
Section 8.3. Notices.
Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied or mailed by first class mail as follows:
<PAGE>
14
(a) if given to the Guarantor, to the address set forth below or such
other address or facsimile number or to the attention of such other Person as
the Guarantor may give notice to the Holders:
Pennsylvania Power & Light Company
Two North Ninth Street
Allentown, Pennsylvania 18101
Facsimile No.: (610) 774-5106
Attention: Treasurer
(b) if given to the Issuer, in care of the Guarantee Trustee, at the
Issuer's (and the Guarantee Trustee's) address set forth below or such other
address as the Guarantee Trustee on behalf of the Issuer may give notice to the
Holders:
PP&L Capital Trust
c/o Pennsylvania Power & Light Company
Two North Ninth Street
Allentown, Pennsylvania 18101
Facsimile No.: (610) 774-5106
Attention: Treasurer
with a copy to:
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York 10001
Facsimile No.:
Attention: Global Trust Services
(c) if given to the Guarantee Trustee, at the address set forth below or
such other address or facsimile number or to the attention of such other Person
as the Guarantee Trustee may give notice to the Holders:
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York 10001
Facsimile No.:
Attention: Global Trust Services
(d) if given to any Holder, at the address set forth on the books and
records of the Issuer.
All notices hereunder 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; provided, however, that any
<PAGE>
15
notice mailed to the Guarantee Trustee shall be deemed received only upon
receipt by the Guarantee Trustee.
Section 8.4. Benefit.
This Guarantee Agreement is solely for the benefit of the Holders and is
not separately transferable from the Securities.
Section 8.5. Interpretation.
In this Guarantee Agreement, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not defined in
the preamble hereto have the respective meanings assigned to them in Section
1.1;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or amended
from time to time;
(d) all references in this Guarantee Agreement to Articles and Sections
are to Articles and Sections of this Guarantee Agreement unless otherwise
specified;
(e) 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;
(f) a reference to the singular includes the plural and vice versa; and
(g) the masculine, feminine or neuter genders used herein shall include
the masculine, feminine and neuter genders.
Section 8.6. Governing Law.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
<PAGE>
16
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.
THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
Pennsylvania Power & Light Company
By:
-------------------------------------
Name:
Title:
The Chase Manhattan Bank,
as Guarantee Trustee
By:
-------------------------------------
Name:
Title:
<PAGE>
Exhibit 5.1
[Letterhead of
Pennsylvania Power & Light Company]
March __, 1997
Pennsylvania Power & Light Company
Two North Ninth Street
Allentown, Pennsylvania 18101
Ladies and Gentlemen:
I am Senior Counsel of Pennsylvania Power & Light Company ("PP&L")
and, as such, am familiar with the affairs of PP&L and its subsidiaries.
With respect to the Registration Statement on Form S-3 (Registration
No. 333-20661), as amended (the "Registration Statement"), filed with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Act"), relating to (i) the issuance by PP&L Capital Trust, a statutory
business trust created under the Business Trust Act of the State of Delaware
(the "Trust"), of its Trust Originated Preferred Securities (the "Preferred
Securities"), (ii) in connection therewith, the deposit by PP&L with the Trust
as trust assets of its Junior Subordinated Deferrable Interest Debentures (the
"Junior Subordinated Debentures") and (iii) the guarantee (the "Guarantee") of
the Preferred Securities by PP&L to the extent described in the Prospectus
forming a part of the Registration Statement, I wish to advise you as follows:
I am of the opinion that PP&L is a corporation validly organized and
existing under the laws of the Commonwealth of Pennsylvania and is duly
qualified to carry on the business which it is now conducting in that
Commonwealth.
I am further of the opinion that the Preferred Securities, the Trust
Agreement (as defined in the Registration Statement), the Junior Subordinated
Debentures and the Guarantee have been duly authorized by PP&L.
I am a member of the Bar of the Commonwealth of Pennsylvania, and I
do not express any opinion herein concerning any law other than the law of the
Commonwealth of Pennsylvania. In so far as this opinion letter relates to any
matters
<PAGE>
2
governed by the laws of the State of Delaware, I have relied on the opinion of
Richards, Layton & Finger, to be filed as an exhibit to the Registration
Statement.
I hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the use of my name in the Registration Statement
and in the Prospectus constituting a part thereof under the captions "Validity
of Securities" and "Experts." I also hereby give my consent to both the use of
my name by and the reliance on this opinion by Simpson Thacher & Bartlett and
Richards, Layton & Finger in their opinions, filed as Exhibits 5.2 and 5.3,
respectively, to the Registration Statement.
Very truly yours,
/s/ Michael A. McGrail
Michael A. McGrail
<PAGE>
Exhibit 5.2
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, N.Y. 10017-3954
(212) 455-2000
Fax: (212) 455-2502
March __, 1997
Pennsylvania Power & Light Company
Two North Ninth Street
Allentown, Pennsylvania 18101
Ladies and Gentlemen:
We have acted as counsel for Pennsylvania Power & Light Company, a
Pennsylvania corporation (the "Company"), and PP&L Capital Trust, a statutory
business trust created under the Business Trust Act of the State of Delaware
(the "Trust"), in connection with the preparation and filing with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"), of a Registration Statement on Form S-3 (Registration No.
333-20661), as amended (the "Registration Statement"), relating to (i) the
issuance by the Trust of its Trust Originated Preferred Securities ("TOPrS")
(the "Preferred Securities") and (ii) in connection therewith, the deposit by
the Company with the Trust as trust assets of its Junior Subordinated Deferrable
Interest Debentures (the "Junior Subordinated Debentures"). Concurrently with
the delivery of Junior Subordinated Debentures to the Trust, the Company will
make a cash contribution to the Trust, the proceeds of which will be used by the
Trust to purchase as trust assets additional Junior Subordinated Debentures.
The Junior Subordinated Debentures are to be issued under an Indenture (the
"Indenture"), to be entered into by and between the Company and The Chase
Manhattan Bank, as trustee. The Preferred Securities will be guaranteed (the
"Guarantee") by the Company to the extent described in the Prospectus forming a
part of the Registration Statement.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such corporate records, certificates of public officials
and other instruments and have made such other and further investigations, as we
have deemed relevant or necessary as a basis for the opinions hereinafter set
forth.
Based on the foregoing, and subject to the qualifications and
limitations stated herein, we are of the opinion that:
<PAGE>
Pennsylvania Power & Light
Company -2- March __, 1997
1. Assuming that the Indenture and the Junior Subordinated Debentures
have been duly authorized, when (i) the Registration Statement has become
effective under the Act, (ii) the Indenture has been duly executed and
delivered and qualified under the Trust Indenture Act of 1939, as amended,
(iii) the terms of the Junior Subordinated Debentures have been duly
established in accordance with the Indenture and (iv) the Junior
Subordinated Debentures have been duly executed and authenticated in
accordance with the Indenture and duly issued and delivered to the Trust as
contemplated by the Registration Statement and upon payment therefor, the
Junior Subordinated Debentures will constitute valid and binding obligations
of the Company enforceable against the Company in accordance with their
terms.
2. Assuming that the Guarantee has been duly authorized, when (i) the
Registration Statement has become effective under the Act, (ii) the
Guarantee has been duly executed and delivered and (iii) the Preferred
Securities have been duly issued and delivered as contemplated by the
Registration Statement and upon payment therefor, the Guarantee will
constitute a valid and binding obligation of the Company enforceable against
the Company in accordance with its terms.
Our opinions set forth in paragraphs 1 and 2 above are subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
We are members of the Bar of the State of New York, and we do not
express any opinion herein concerning any law other than the law of the State of
New York and the federal law of the United States. Insofar as this opinion
letter relates to any matters governed by the laws of the Commonwealth of
Pennsylvania, we have relied on the opinion of Michael A. McGrail, Esq., to be
filed as an exhibit to the Registration Statement.
We hereby consent to the filing of this opinion letter as an exhibit to
the Registration Statement and to the use of our name under the heading
"Validity of Securities" in the Prospectus forming a part of the Registration
Statement.
Very truly yours,
/s/ Simpson Thacher & Bartlett
SIMPSON THACHER & BARTLETT
<PAGE>
Exhibit 8.1
March 24, 1997
Re: Issuance and Sale of Trust Originated
Preferred Securities by PP&L Capital Trust
------------------------------------------
Pennsylvania Power & Light Company
Two North Ninth Street
Allentown, Pennsylvania 18101
PP&L Capital Trust
c/o Pennsylvania Power & Light
Two North Ninth Street
Allentown, Pennsylvania 18101
Ladies and Gentlemen:
We have acted as special tax counsel ("Tax Counsel") to Pennsylvania
Power & Light Company, a Pennsylvania corporation (the "Company"), and PP&L
Capital Trust, a statutory business trust organized under the Business Trust Act
of the State of Delaware (the "Trust"), in connection with the preparation and
filing by the Company and the Trust with the Securities and Exchange Commission
of a Registration Statement on Form S-3 (Registration No. 333-20661) (as
amended, the "Registration Statement") under the Securities Act of 1933, as
amended, and with respect to: (i) the issuance and sale of the junior
subordinated deferrable interest debentures (the "Subordinated Debentures") by
the Company pursuant to the Junior Subordinated Indenture, dated as of April 1,
1997 (the "Indenture"), between the Company and The Chase Manhattan Bank, a New
York banking corporation, as trustee (the "Indenture Trustee") and (ii) the
issuance and sale of Trust Originated Preferred Securities (the "Preferred
Securities") and Trust Common
<PAGE>
-2-
March 24, 1997
Securities (collectively, the "Trust Securities") pursuant to the Amended and
Restated Trust Agreement, among the Company, as Depositor, The Chase Manhattan
Bank, as Property Trustee, Chase Manhattan Bank Delaware, as Delaware Trustee,
and the Administrative Trustees named therein (the "Trust Agreement"). The
Preferred Securities will be offered for sale to investors pursuant to the
Registration Statement.
The Trust Securities are guaranteed by the Company with respect to the
payment of distributions and payments upon liquidation, redemption and otherwise
pursuant to, and to the extent set forth in, the Guarantee Agreement (the
"Guarantee Agreement") between the Company and The Chase Manhattan Bank, as
trustee (in such capacity, the "Guarantee Trustee"), for the benefit of the
holders of the Trust Securities.
All capitalized terms used in this opinion letter and not otherwise
defined herein shall have the meaning ascribed to such terms in the Registration
Statement.
In delivering this opinion letter, we have reviewed and relied upon:
(i) the Registration Statement, (ii) a form of the Indenture; (iii) a form of
the Subordinated Debentures; (iv) a form of the Trust Agreement; (v) a form of
the Guarantee Agreement; and (vi) forms of the Trust Securities, in the case of
each "form", as such form was filed as an exhibit to the Registration Statement.
Further, we have relied upon certain other statements and representations
contained in the Company's letter of representation attached hereto as Exhibit
A. We also have examined and relied upon originals or copies, certified or
otherwise identified to our satisfaction, of such records of the Company and
the Trust and such other documents, certificates and records as we have deemed
necessary or appropriate as a basis for the opinions set forth herein.
<PAGE>
-3-
March 24, 1997
In our examination of such material, we have assumed the genuineness
of all signatures, the authenticity of all documents submitted to us as
originals and the conformity to original documents of all copies of documents
submitted to us. In addition, we also have assumed that the transactions related
to the issuance of the Subordinated Debentures and Trust Securities will be
consummated in accordance with the terms of the documents and forms of documents
described herein.
On the basis of the foregoing and assuming that the Trust was formed
and will be maintained in compliance with the terms of the Trust Agreement, we
hereby confirm (i) our opinions set forth in the Registration Statement under
the caption "Certain Federal Income Tax Consequences" and (ii) that, subject to
the qualifications set forth therein, the discussion set forth in the
Registration Statement under such caption is an accurate summary of the United
States federal income tax matters described therein.
We express no opinion with respect to the transactions referred to
herein or in the Registration Statement other than as expressly set forth
herein. Moreover, we note that there is no authority directly on point dealing
with securities such as the Preferred Securities or transactions of the type
described herein and that our opinion is not binding on the Internal Revenue
Service ("IRS") or the courts, either of which could take a contrary position.
Nevertheless, we believe that if challenged, the opinions we express herein
would be sustained by a court with jurisdiction in a properly presented case.
<PAGE>
-4-
March 24, 1997
Our opinion is based upon the Code, the Treasury regulations
promulgated thereunder and other relevant authorities and law, all as in effect
on the date hereof. Consequently, future changes in the law may cause the tax
treatment of the transactions referred to herein to be materially different from
that described above.
We are admitted to practice law only in the State of New York and the
opinions we express herein are limited solely to matters governed by the federal
law of the United States.
We hereby consent to the use of this opinion for filing as Exhibit 8.1
to the Registration Statement and the use of our name in the Registration
Statement under the captions "Certain Federal Income Tax Consequences" and
"Validity of Securities".
Very truly yours,
Simpson Thacher & Bartlett
<PAGE>
EXHIBIT 12.1
PENNSYLVANIA POWER & LIGHT COMPANY AND SUBSIDIARIES, CONSOLIDATED
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Millions of Dollars)
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Fixed charges, as defined:
Interest on long-term debt...................... $ 207 $ 213 $ 214 $ 226 $ 240
Interest on short-term debt
and other interest............................. 11 18 18 13 12
Amortization of debt discount, expense
and premium - net.............................. 2 2 2 2 1
Interest on capital lease
obligations
Charged to expense........................... 13 15 12 9 10
Capitalized.................................. 2 2 1 1 2
Estimated interest component of
operating rentals.............................. 8 8 6 5 5
Proportionate share of fixed charges
of 50-percent-or-less-owned
persons........................................ 1 1 1 1 2
----- ----- ----- ----- -----
Total fixed charges........................... $ 244 $ 259 $ 254 $ 257 $ 272
===== ===== ===== ===== =====
Earnings, as defined:
Net income...................................... $ 357 $ 352 $ 243 $ 348 $ 346
Less undistributed income of less
than 50-percent-owned persons.................. - - - - -
----- ----- ----- ----- -----
357 352 243 348 346
Add (Deduct):
Federal income taxes............................ 189 195 199 163 145
State income taxes.............................. 64 62 77 64 65
Deferred income taxes........................... 10 15 (45) 22 33
Investment tax credit - net..................... (10) (11) (12) (14) (14)
Income taxes on other income and
deductions - net............................... (2) 26 (38) (1) 0
Amortization of capitalized
interest on capital leases..................... 4 6 9 12 13
Total fixed charges as above
(excluding capitalized interest
on capital lease obligations).................. 243 257 253 256 271
----- ----- ----- ----- -----
Total earnings............................... $ 855 $ 902 $ 686 $ 850 $ 859
===== ===== ===== ===== =====
Ratio of earnings to fixed
charges......................................... 3.50 3.48 2.70 3.31 3.15
===== ===== ===== ===== =====
</TABLE>
<PAGE>
EXHIBIT 12.2
PENNSYLVANIA POWER & LIGHT COMPANY AND SUBSIDIARIES, CONSOLIDATED
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND DIVIDENDS ON PREFERRED AND PREFERENCE STOCK
(Millions of Dollars)
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Fixed charges, as defined:
Interest on long-term debt....................... $ 207 $ 213 $ 214 $ 226 $ 240
Interest on short-term debt
and other interest.............................. 11 18 18 13 12
Amortization of debt discount, expense
and premium - net............................... 2 2 2 2 1
Interest on capital lease obligations
Charged to expense.............................. 13 15 12 9 10
Capitalized..................................... 2 2 1 1 2
Estimated interest component of
operating rentals............................... 8 8 6 5 5
Proportionate share of fixed charges
of 50-percent-or-less-owned persons............. 1 1 1 1 2
----- ----- ----- ----- -----
Total fixed charges.......................... 244 259 254 257 272
Dividends on preferred and preference stock (a).. 47 50 49 55 66
----- ----- ----- ----- -----
Combined fixed charges and dividends on
preferred and preference stock................. $ 291 $ 309 $ 303 $ 312 $ 338
===== ===== ===== ===== =====
Earnings, as defined:
Net income....................................... $ 357 $ 352 $ 243 $ 348 $ 346
Less undistributed income of less
than 50-percent-owned persons.................. - - - - -
----- ----- ----- ----- -----
357 352 243 348 346
Add (Deduct):
Federal income taxes............................. 189 195 199 163 145
State income taxes............................... 64 62 77 64 65
Deferred income taxes............................ 10 15 (45) 22 33
Investment tax credit - net...................... (10) (11) (12) (14) (14)
Income taxes on other income and
deductions - net............................... (2) 26 (38) (1) 0
Amortization of capitalized
interest on capital leases..................... 4 6 9 12 13
Total fixed charges as above
(excluding capitalized interest
on capital lease obligations).................. 243 257 253 256 271
----- ----- ----- ----- -----
Total earnings................................ $ 855 $ 902 $ 686 $ 850 $ 859
===== ===== ===== ===== =====
Ratio of earnings to fixed
charges.......................................... 2.93 2.92 2.26 2.72 2.54
===== ===== ===== ===== =====
</TABLE>
(a) Represents the pre-tax earnings which would be required to cover preferred
and preference stock dividends.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report
dated February 3, 1997 appearing on page 41 of Pennsylvania Power & Light
Company's Annual Report on Form 10-K for the year ended December 31, 1996.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
Price Waterhouse LLP
Philadelphia, Pennsylvania
March 21, 1997
<PAGE>
Exhibit 23.2
[Deloitte & Touche LLP Letterhead]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Pennsylvania Power & Light Company and PP&L Capital Trust on Form S-3 of our
report dated February 3, 1995 on the consolidated statements of income,
shareowners' common equity, and cash flows of Pennsylvania Power & Light Company
and its subsidiaries for the year ended December 31, 1994, prior to restatement,
appearing in the Annual Report on Form 10-K of Pennsylvania Power & Light
Company for the year ended December 31, 1996 and to the reference to us under
the heading "Experts" in the Prospectus, which is part of this Registration
Statement.
March 26, 1997
<PAGE>
EXHIBIT 25.1
______________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
___________________________________________
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
________________________________________
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
_____________________________________________
PENNSYLVANIA POWER & LIGHT COMPANY
(Exact name of obligor as specified in its charter)
PENNSYLVANIA 23-0959590
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
TWO NORTH NINTH STREET
ALLENTOWN, PENNSYLVANIA 18101
(Address of principal executive offices) (Zip Code)
-------------------------
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES OF
PENNSYLVANIA POWER & LIGHT COMPANY
(Title of the indenture securities)
-------------------------
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street,
New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
-2-
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996,
in connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-
50010, which is incorporated by reference. On July 14, 1996, in connection with
the merger of Chemical Bank and The Chase Manhattan Bank (National Association),
Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 24TH day of FEBRUARY, 1997.
THE CHASE MANHATTAN BANK
By /s/Michael A. Smith
----------------------------------
Michael A. Smith
Vice President
-3-
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business December 31, 1996, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Millions
Cash and balances due from depository
institutions:
Noninterest-bearing balances and
currency and coin..................................... $ 11,509
Interest-bearing balances............................. 8,457
Securities:...................................................
Held to maturity securities................................... 3,128
Available for sale securities................................. 40,534
Federal Funds sold and securities purchased
under agreements to resell in domestic offices of the
bank and of its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds sold............................................ 9,222
Securities purchased under agreements to resell............... 422
Loans and lease financing receivables:
Loans and leases, net of unearned income $133,935
Less: Allowance for loan and lease losses 2,789
Less: Allocated transfer risk reserve .... 16
-------
Loans and leases, net of unearned income,
allowance, and reserve......................................... 131,130
Trading Assets.................................................. 49,876
Premises and fixed assets (including capitalized leases)........ 2,877
Other real estate owned......................................... 290
Investments in unconsolidated subsidiaries and associated
companies...................................................... 124
Customer's liability to this bank on acceptances outstanding.... 2,313
Intangible assets............................................... 1,316
Other assets.................................................... 11,231
------
TOTAL ASSETS.................................................... $272,429
========
- 4 -
<PAGE>
LIABILITIES
Deposits
In domestic offices.................................... $87,006
Noninterest-bearing.............................$35,783
Interest-bearing ............................... 51,223
------
In foreign offices, Edge and Agreement
subsidiaries, and IBF's................................. 73,206
Noninterest-bearing..............................$ 4,347
Interest-bearing..................................68,859
Federal funds purchased and securities sold
under agreements to repurchase in domestic offices of the
bank and of its Edge and Agreement subsidiaries, and in
IBF's
Federal funds purchased...................................... 14,980
Securities sold under agreements to repurchase............... 10,125
Demand notes issued to the U.S. Treasury ....................... 1,867
Trading liabilities............................................. 34,783
Other Borrowed money:
With a remaining maturity of one year or less........... 14,639
With a remaining maturity of more than one year......... 425
Mortgage indebtedness and obligations under
capitalized leases............................................. 40
Bank's liability on acceptances executed and outstanding........ 2,267
Subordinated notes and debentures............................... 5,471
Other liabilities............................................... 11,343
TOTAL LIABILITIES............................................... 256,152
-------
Limited-Life Preferred stock and related surplus 550
EQUITY CAPITAL
Common stock.................................................... 1,251
Surplus......................................................... 10,243
Undivided profits and capital reserves.......................... 4,526
Net unrealized holding gains (Losses)
on available-for-sale securities................................ (309)
Cumulative foreign currency translation adjustments ............ 16
TOTAL EQUITY CAPITAL............................................ 15,727
------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED
STOCK AND EQUITY CAPITAL................................ $272,429
========
I, Joseph L. Sclafani, S.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the in-structions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
EDWARD D. MILLER )DIRECTORS
THOMAS G. LABRECQUE )
- 5 -
<PAGE>
EXHIBIT 25.2
______________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
___________________________________________
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
________________________________________
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
_____________________________________________
PENNSYLVANIA POWER & LIGHT COMPANY
(Exact name of obligor as specified in its charter)
DELAWARE 23-7879922
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
C/O PENNSYLVANIA POWER & LIGHT COMPANY
TWO NORTH NINTH STREET
ALLENTOWN, PENNSYLVANIA 18101
(Address of principal executive offices) (Zip Code)
-------------------------
PENNSYLVANIA POWER & LIGHT COMPANY
CAPITAL TRUST
(Title of the indenture securities)
-------------------------
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street,
New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
-2-
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996,
in connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-
50010, which is incorporated by reference. On July 14, 1996, in connection with
the merger of Chemical Bank and The Chase Manhattan Bank (National Association),
Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 19TH day of MARCH, 1997.
THE CHASE MANHATTAN BANK
By /s/Michael A. Smith
___________________________
Michael A. Smith
Vice President
-3-
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business December 31, 1996, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Millions
Cash and balances due from depository
institutions:
Noninterest-bearing balances and
currency and coin..................................... $ 11,509
Interest-bearing balances............................. 8,457
Securities:...................................................
Held to maturity securities................................... 3,128
Available for sale securities................................. 40,534
Federal Funds sold and securities purchased
under agreements to resell in domestic offices of the
bank and of its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds sold............................................ 9,222
Securities purchased under agreements to resell............... 422
Loans and lease financing receivables:
Loans and leases, net of unearned income $133,935
Less: Allowance for loan and lease losses 2,789
Less: Allocated transfer risk reserve .... 16
-------
Loans and leases, net of unearned income,
allowance, and reserve......................................... 131,130
Trading Assets.................................................. 49,876
Premises and fixed assets (including capitalized leases)........ 2,877
Other real estate owned......................................... 290
Investments in unconsolidated subsidiaries and associated
companies...................................................... 124
Customer's liability to this bank on acceptances outstanding.... 2,313
Intangible assets............................................... 1,316
Other assets.................................................... 11,231
------
TOTAL ASSETS.................................................... $272,429
========
- 4 -
<PAGE>
LIABILITIES
Deposits
In domestic offices.................................... $87,006
Noninterest-bearing.............................$35,783
Interest-bearing ............................... 51,223
------
In foreign offices, Edge and Agreement
subsidiaries, and IBF's................................. 73,206
Noninterest-bearing..............................$ 4,347
Interest-bearing..................................68,859
Federal funds purchased and securities sold
under agreements to repurchase in domestic offices of the
bank and of its Edge and Agreement subsidiaries, and in
IBF's
Federal funds purchased...................................... 14,980
Securities sold under agreements to repurchase............... 10,125
Demand notes issued to the U.S. Treasury ....................... 1,867
Trading liabilities............................................. 34,783
Other Borrowed money:
With a remaining maturity of one year or less........... 14,639
With a remaining maturity of more than one year......... 425
Mortgage indebtedness and obligations under
capitalized leases............................................. 40
Bank's liability on acceptances executed and outstanding........ 2,267
Subordinated notes and debentures............................... 5,471
Other liabilities............................................... 11,343
TOTAL LIABILITIES............................................... 256,152
-------
Limited-Life Preferred stock and related surplus 550
EQUITY CAPITAL
Common stock.................................................... 1,251
Surplus......................................................... 10,243
Undivided profits and capital reserves.......................... 4,526
Net unrealized holding gains (Losses)
on available-for-sale securities................................ (309)
Cumulative foreign currency translation adjustments ............ 16
TOTAL EQUITY CAPITAL............................................ 15,727
------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED
STOCK AND EQUITY CAPITAL................................ $272,429
========
I, Joseph L. Sclafani, S.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
EDWARD D. MILLER )DIRECTORS
THOMAS G. LABRECQUE )
- 5 -
<PAGE>
EXHIBIT 25.3
______________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
___________________________________________
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
________________________________________
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
_____________________________________________
PENNSYLVANIA POWER & LIGHT COMPANY
(Exact name of obligor as specified in its charter)
DELAWARE 23-7879922
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
C/O PENNSYLVANIA POWER & LIGHT COMPANY
TWO NORTH NINTH STREET
ALLENTOWN, PENNSYLVANIA 18101
(Address of principal executive offices) (Zip Code)
-------------------------
PENNSYLVANIA POWER & LIGHT COMPANY
GUARANTEE WITH RESPECT TO PREFERRED SECURITIES
(Title of the indenture securities)
-------------------------
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street,
New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
-2-
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now
in effect, including the Organization Certificate and the Certificates
of Amendment dated February 17, 1969, August 31, 1977, December 31,
1980, September 9, 1982, February 28, 1985, December 2, 1991 and July
10, 1996 (see Exhibit 1 to Form T-1 filed in connection with
Registration Statement No. 333-06249, which is incorporated by
reference).
2. A copy of the Certificate of Authority of the Trustee to
Commence Business (see Exhibit 2 to Form T-1 filed in connection with
Registration Statement No. 33-50010, which is incorporated by
reference. On July 14, 1996, in connection with the merger of Chemical
Bank and The Chase Manhattan Bank (National Association), Chemical
Bank, the surviving corporation, was renamed The Chase Manhattan
Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4
to Form T-1 filed in connection with Registration Statement No. 333-
06249, which is incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the
Act (see Exhibit 6 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July
14, 1996, in connection with the merger of Chemical Bank and The Chase
Manhattan Bank (National Association), Chemical Bank, the surviving
corporation, was renamed The Chase Manhattan Bank).
7. A copy of the latest report of condition of the Trustee,
published pursuant to law or the requirements of its supervising or
examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 19TH day of MARCH, 1997.
THE CHASE MANHATTAN BANK
By /s/ Michael A. Smith
____________________________
Michael A. Smith
Vice President
-3-
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business December 31, 1996, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Millions
Cash and balances due from depository
institutions:
Noninterest-bearing balances and
currency and coin..................................... $ 11,509
Interest-bearing balances............................. 8,457
Securities:...................................................
Held to maturity securities................................... 3,128
Available for sale securities................................. 40,534
Federal Funds sold and securities purchased
under agreements to resell in domestic offices of the
bank and of its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds sold............................................ 9,222
Securities purchased under agreements to resell............... 422
Loans and lease financing receivables:
Loans and leases, net of unearned income $133,935
Less: Allowance for loan and lease losses 2,789
Less: Allocated transfer risk reserve .... 16
-------
Loans and leases, net of unearned income,
allowance, and reserve......................................... 131,130
Trading Assets.................................................. 49,876
Premises and fixed assets (including capitalized leases)........ 2,877
Other real estate owned......................................... 290
Investments in unconsolidated subsidiaries and associated
companies...................................................... 124
Customer's liability to this bank on acceptances outstanding.... 2,313
Intangible assets............................................... 1,316
Other assets.................................................... 11,231
------
TOTAL ASSETS.................................................... $272,429
========
- 4 -
<PAGE>
LIABILITIES
Deposits
In domestic offices.................................... $87,006
Noninterest-bearing.............................$35,783
Interest-bearing ............................... 51,223
------
In foreign offices, Edge and Agreement
subsidiaries, and IBF's................................. 73,206
Noninterest-bearing..............................$ 4,347
Interest-bearing..................................68,859
Federal funds purchased and securities sold
under agreements to repurchase in domestic offices of the
bank and of its Edge and Agreement subsidiaries, and in
IBF's
Federal funds purchased...................................... 14,980
Securities sold under agreements to repurchase............... 10,125
Demand notes issued to the U.S. Treasury ....................... 1,867
Trading liabilities............................................. 34,783
Other Borrowed money:
With a remaining maturity of one year or less........... 14,639
With a remaining maturity of more than one year......... 425
Mortgage indebtedness and obligations under
capitalized leases............................................. 40
Bank's liability on acceptances executed and outstanding........ 2,267
Subordinated notes and debentures............................... 5,471
Other liabilities............................................... 11,343
TOTAL LIABILITIES............................................... 256,152
-------
Limited-Life Preferred stock and related surplus 550
EQUITY CAPITAL
Common stock.................................................... 1,251
Surplus......................................................... 10,243
Undivided profits and capital reserves.......................... 4,526
Net unrealized holding gains (Losses)
on available-for-sale securities................................ (309)
Cumulative foreign currency translation adjustments ............ 16
TOTAL EQUITY CAPITAL............................................ 15,727
------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED
STOCK AND EQUITY CAPITAL................................ $272,429
========
I, Joseph L. Sclafani, S.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
EDWARD D. MILLER )DIRECTORS
THOMAS G. LABRECQUE )
- 5 -
