As filed with the Securities and Exchange Commission on July 17, 1996
Registration No. 333-_______
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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CalEnergy Company, Inc.
(Exact name of registrant as specified in its charter)
Delaware 94-2213782
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
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CalEnergy Capital Trust
(Exact name of registrant as specified in its charter)
Delaware 47-6208410
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
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302 South 36th Street, Suite 400
Omaha, NE 68131
(402) 341-4500
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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Steven A. McArthur, Esq.
Senior Vice President, General Counsel and Secretary
CalEnergy Company, Inc.
302 South 36th Street, Suite 400
Omaha, NE 68131
(402) 341-4500
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
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Copy to:
Peter J. Hanlon, Esq.
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022-4669
(212) 821-8000
Approximate date of commencement of proposed sale to the public: From
time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please 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. [X]
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. [ ]
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<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================
Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Securities Amount to be Offering Price Per Aggregate Offering Registration
to be Registered Registered(1) Unit(4) Price(4) Fee(1)
<S> <C> <C> <C> <C>
TIDES............................. 2,078,600 $52.5625 $109,256,412.5 (1)(2) $37,675
(1)(2)
Convertible Junior Subordinated
Debentures of CalEnergy Company,
Inc............................... (3) -- -- --
Common Stock of CalEnergy Company,
Inc.(5)........................... 3,477,083.(4) -- -- --
Preferred Securities Guarantee(6). -- -- -- --
Total.......................... 2,078,600 100% $109,256,412.5 $37,675
===================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee in
accordance with Rule 457(c) of the Securities Act.
(2) Exclusive of accrued interest and distributions, if any.
(3) $103,930,000 in aggregate principal amount of 6 1/4% Convertible Junior
Subordinated Debentures (the "Convertible Junior Subordinated
Debentures") of CalEnergy Company, Inc. (the "Company") were issued and
sold to CalEnergy Capital Trust (the "Trust") in connection with the
issuance by the Trust of 2,078,600 of its 6 1/4% Convertible Preferred
Securities Term Income Deferrable Equity Securities ("TIDES"). The
Convertible Junior Subordinated Debentures may be distributed, under
certain circumstances, to the holders of TIDES for no additional
consideration.
(4) Such number of shares of Common Stock ("Common Stock") of the Company are
issuable upon conversion of the TIDES or the Convertible Junior
Subordinated Debentures registered hereunder. This Registration Statement
also covers such shares as may be issuable pursuant to anti-dilution
adjustments.
(5) Includes Common Stock purchase rights. Prior to the occurrence of certain
events, the purchase rights will not be exercisable or evidenced
separately from the Common Stock. No separate consideration will be
received for the Common Stock purchase rights.
(6) Includes the rights of holders of the TIDES under the Preferred
Securities Guarantee. No separate consideration will be received for the
Preferred Securities Guarantee.
-------------------
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 Securities and Exchange
Commission, acting pursuant to said Section 8(a), may determine.
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<PAGE>
Subject to Completion, dated July 17, 1996
PROSPECTUS
2,078,600 TIDES[SM]
CalEnergy Capital Trust
6 1/4% Convertible Preferred Securities
Term Income Deferrable Equities Securities (TIDES)SM
(liquidation preference $50 per each of the TIDES)
guaranteed to the extent set forth herein by, and convertible into
Common Stock of,
CalEnergy Company, Inc.
Distributions payable March 15, June 15, September 15, and December 15.
------------------------
This Prospectus relates to the 6 1/4% Convertible Preferred
Securities Term Income Deferrable Equity Securities (TIDES)SM or TIDES[SM],
which represent undivided beneficial ownership interests in the assets of
CalEnergy Capital Trust, a statutory business trust formed under the laws of
the State of Delaware (the "Issuer" or the "Trust"), and the shares of the
common stock, par value $.0675 per share ("Common Stock") of CalEnergy
Company, Inc., a Delaware corporation ("CalEnergy" or the "Company"), issuable
upon conversion of the TIDES. The TIDES were issued and sold (the "Original
Offering") on April 10, 1996 (the "Original Offering Date") to the Initial
Purchasers (as defined herein) and were simultaneously sold by the Initial
Purchasers in transactions exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act"), in the United
States to persons reasonably believed by the Initial Purchasers to be
qualified institutional buyers in reliance on Rule 144A under the Securities
Act and to a limited number of institutional "accredited investors" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act). The
Company directly or indirectly owns all the common securities issued by the
Issuer (the "Common Securities" and together with the TIDES, the "Trust
Securities"). The Issuer exists for the sole purpose of issuing the Trust
Securities and using the proceeds thereof to purchase from the Company its 6
1/4% Convertible Junior Subordinated Debentures due 2016 (the "Convertible
Junior Subordinated Debentures") having the terms described herein. The
holders of TIDES will have a preference with respect to cash distributions and
amounts payable upon liquidation, redemption or otherwise over the holders of
the Common Securities of the Issuer.
The TIDES and the Common Stock issuable upon conversion of the TIDES
(the "Offered Securities") may be offered and sold from time to time by the
holders named herein or by their transferees, pledgees, donees or their
successors (collectively, the "Selling Holders") pursuant to this Prospectus.
The Offered Securities may be sold by the Selling Holders from time to time
directly to purchasers or, under certain circumstances, through agents,
underwriters or dealers. See "Plan of Distribution" and "Selling Holders." If
required, the names of any Selling Holders, agents or underwriters involved in
the sale of the Offered Securities and the applicable agent's commission,
dealer's purchase price or underwriter's discount, if any, will be set forth
in an accompanying supplement to this Prospectus (the "Prospectus
Supplement"). The Selling Holders will receive all of the net proceeds from
the sale of the Offered Securities and will pay all underwriting discounts and
selling commissions, if any, applicable to any such sale. The Company is
responsible for payment of all other expenses incident to the offer and sale
of the Offered Securities. The Selling Holders and any broker-dealers, agents
or underwriters which participate in the distribution of the Offered
Securities may be deemed to be "underwriters" within the meaning of the
Securities Act, and any commission received by them and any profit on the
resale of the Offered Securities purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
See "Plan of Distribution" for a description of indemnification arrangements.
Prospective investors should carefully consider matters discussed
under the caption "Risk Factors" commencing on page 7.
<PAGE>
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.
The date of this Prospectus is _______, 1996
<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 SUCH STATE.
3
<PAGE>
(continued from front cover)
Holders of the TIDES are entitled to receive cumulative cash
distributions at an annual rate of 6 1/4% of the liquidation preference of $50
per each of the TIDES, accruing from the date of original issuance and payable
quarterly in arrears on each March 15, June 15, September 15 and December 15,
commencing June 15, 1996. See "Description of the TIDES--Distributions." The
payment of distributions and payments on liquidation of the Issuer or the
redemption of TIDES, as described below (but only to the extent of funds of
the Issuer available therefor), are guaranteed by the Company to the extent
described herein (the "Guarantee"). The Company's obligations under the
Guarantee are subordinate and junior to all other liabilities of the Company,
except any liabilities that may be made pari passu expressly by their terms
and certain other guarantees, but are pari passu with the most senior
preferred stock issued, from time to time, if any, by the Company. See
"Description of the Guarantee." If the Company fails to make interest payments
on the Convertible Junior Subordinated Debentures, the Issuer will have
insufficient funds to pay distributions on the TIDES. The Guarantee does not
cover payment of distributions when the Issuer does not have sufficient funds
to pay such distributions. The Guarantee, when taken together with the
Company's obligations under the Convertible Junior Subordinated Debentures and
the Indenture (as defined herein) and its obligations under the Declaration
(as defined herein), including its liabilities to pay costs, expenses, debts
and obligations of the Issuer (other than with respect to the Trust
Securities), provide a full and unconditional guarantee of amounts due on the
TIDES. The obligations of the Company under the Convertible Junior
Subordinated Debentures are subordinate and junior in right of payment to
Senior Indebtedness (as defined herein) of the Company. At March 31, 1996,
Senior Indebtedness consisting of borrowed money of the Company aggregated
approximately $854.4 million. See "Capitalization."
The Company has the right under the Indenture for the Convertible
Junior Subordinated Debentures to defer the interest payments due from time to
time on the Convertible Junior Subordinated Debentures for successive periods
not exceeding 20 consecutive quarters for each such period, and, as a
consequence, quarterly distributions on the TIDES would be deferred by the
Issuer (but would continue to accumulate quarterly and accrue interest) until
the end of any such interest deferral period. See "Risk Factors--Option to
Extend Interest Payment Period; Tax Consequences," "Description of the
TIDES--Distributions" and "Description of the Convertible Junior Subordinated
Debentures--Option to Extend Interest Payment Period."
Each of the TIDES is convertible in the manner described herein at
the option of the holder into shares of Common Stock at the rate of 1.6728
shares of the Common Stock for each of the TIDES (equivalent to a conversion
price of $29.89 per share of Common Stock), subject to adjustment in certain
circumstances. See "Description of the TIDES--Conversion Rights." The last
reported sale price of the Common Stock (which is listed under the symbol "CE"
on the New York Stock Exchange) on July 16, 1996, was $24 7/8 per share.
The TIDES are effectively redeemable at the option of the Company, in
whole or in part, from time to time, after April 9, 1999, at the prices set
forth herein, plus accrued and unpaid distributions thereon to the date fixed
for redemption (the "Redemption Price"). See "Description of the
TIDES--Optional Redemption." Upon the repayment of the Convertible Junior
Subordinated Debentures at maturity or upon any acceleration, earlier
redemption, or otherwise, the proceeds from such repayment will be applied to
redeem the TIDES and the Common Securities on a pro rata basis. In addition,
upon the occurrence of certain events arising from a change in law or a change
in legal interpretation, the Company will liquidate the Issuer and cause to be
distributed to the holders of the TIDES, on a pro rata basis, Convertible
Junior Subordinated Debentures or, in certain limited circumstances, will
cause the redemption of the TIDES in whole at the liquidation preference of
$50 per each of the TIDES plus accrued and unpaid distributions. See
"Description of the TIDES--Tax Event or Investment Company Event Redemption or
Distribution" and "Description of the Convertible Junior Subordinated
Debentures."
In the event of the liquidation of the Issuer, the holders of the
TIDES will be entitled to receive for each of the TIDES a liquidation
preference of $50 plus accrued and unpaid distributions thereon to the date of
payment, unless, in connection with such liquidation, Convertible Junior
Subordinated Debentures are distributed to the holders of the TIDES. See
"Description of the TIDES--Liquidation Distribution Upon Dissolution."
4
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act"), and, in accordance
therewith, files reports, proxy and information statements and other
information with the Securities and Exchange Commission ("SEC"). Such reports,
proxy and information statements and other information filed by the Company
with the SEC can be inspected and copied at the Public Reference Section of
the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the regional offices of the SEC located at Seven World
Trade Center, 13th Floor, New York 10048 and 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such material can be obtained from
the Public Reference Section of the SEC at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such reports,
proxy and information statements and other information can also be inspected
at the offices of the New York Stock Exchange, 20 Broad Street, New York, New
York 10005.
The Company has filed with the SEC a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act with respect to the securities offered by
this Prospectus. This Prospectus does not contain all of the information set
forth or incorporated by reference in the Registration Statement and the
exhibits and schedules related thereto, certain portions of which have been
omitted as permitted by the rules and regulations of the SEC. For further
information with respect to the Company and the securities offered by this
Prospectus, reference is made to the Registration Statement and the exhibits
filed or incorporated as a part thereof. Statements contained in this
Prospectus as to the contents of any documents referred to are not necessarily
complete and, in each such instance, are qualified in all respects by
reference to the applicable documents filed with the SEC.
No separate financial statements of the Issuer have been included
herein. The Company does not consider that such financial statements would be
material to holders of the TIDES because (i) all of the voting securities of
the Issuer will be owned, directly or indirectly, by the Company, a reporting
company under the Exchange Act, (ii) the Issuer has no independent operations
but exists for the sole purpose of issuing securities representing undivided
beneficial interests in the assets of the Issuer and investing the proceeds
thereof in Convertible Junior Subordinated Debentures issued by the Company
and (iii) the obligations of the Issuer under the Trust Securities are fully
and unconditionally guaranteed by the Company to the extent that the Issuer
has funds available to meet such obligations. See "Description of the
Convertible Junior Subordinated Debentures" and "Description of the
Guarantee."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the SEC (file No. 1-9874) are
incorporated by reference into this Prospectus:
(i) The Company's description of the Common Stock contained in the
Company's Registration Statement on Form 8-A, dated July 28, 1993, pursuant to
Section 12 of the Exchange Act, including any amendment or report filed for
the purpose of updating such description;
(ii) The Company's Annual Report on Form 10-K for the year ended
December 31, 1995;
(iii) The Company's Form 10-Q for the quarterly period ending
March 31, 1996; and
(iv) The Company's Current Reports on Form 8-K dated March 26, 1996,
March 28, 1996, April 2, 1996, April 12, 1996, April 17, 1996, July 1, 1996
and July 8, 1996.
All documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the filing of a post-effective amendment which indicates the
termination of this offering shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the date of filing of such
documents.
5
<PAGE>
Any statement contained in a document, all or a portion of which is
incorporated by reference herein, or contained in this Prospectus, shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which is also incorporated herein by reference, modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed to constitute a part of this Prospectus except as so modified or
superseded.
The Company hereby undertakes to provide without charge to each
person to whom a copy of this Prospectus has been delivered, on the written or
oral request of any such person, a copy of any or all of the documents
referred to above which have been or may be incorporated into this Prospectus
by reference (other than certain exhibits to such documents). Requests for
such copies should be directed to Investor Relations, CalEnergy Company, Inc.,
302 South 36th Street, Suite 400, Omaha, Nebraska 68131, telephone number
(402) 341-4500.
6
<PAGE>
RISK FACTORS
Prospective purchasers should carefully consider the following risk
factors in addition to the other information appearing in or incorporated by
reference in this Prospectus. This Prospectus contains or incorporates by
reference forward-looking statements which involve risks and uncertainties.
The Company's actual results may differ significantly from the results
discussed in the forward-looking statements. Factors that might cause such
differences include, but are not limited to, the following risk factors.
Subordination of Guarantee and Convertible Junior Subordinated
Debentures. The Company's obligations under the Guarantee are subordinate and
junior in right of payment to all other liabilities of the Company, with
certain limited exceptions. The obligations of the Company under the
Convertible Junior Subordinated Debentures are subordinate and junior in right
of payment to Senior Indebtedness (as defined herein) of the Company. No
payment of principal (including redemption payments, if any), premium, if any,
or interest on the Convertible Junior Subordinated Debentures may be made if
(i) any Senior Indebtedness is not paid when due and any applicable grace
period with respect to such default has ended with such default not having
been cured or waived or ceasing to exist, or (ii) the maturity of any Senior
Indebtedness has been accelerated because of a default. As of March 31, 1996,
the Company had approximately $854.4 million principal amount of borrowed
money included in Senior Indebtedness. See "Capitalization." Neither the
TIDES, the Convertible Junior Subordinated Debentures nor the Guarantee limit
the Company's ability to incur additional indebtedness or liabilities,
including indebtedness or liabilities that would rank senior to the
Convertible Junior Subordinated Debentures and the Guarantee. See "Description
of the Guarantee--Status of the Guarantee; Subordination" and "Description of
the Convertible Junior Subordinated Debentures--Subordination." The
Convertible Junior Subordinated Debentures are also effectively subordinate to
all existing and future liabilities, including trade payables, of the
Company's subsidiaries, joint ventures and affiliates. See "Risk
Factors--Holding Company Structure."
Dependence on Convertible Junior Subordinated Debentures Payments;
Substantial Leverage. The ability of the Issuer to pay amounts due on the
TIDES is wholly dependent upon the Company making payments on the Convertible
Junior Subordinated Debentures. The Company is substantially leveraged. As of
March 31, 1996, the Company's total consolidated liabilities were $2,126.6
million (excluding deferred income), its total consolidated assets were
$2,721.4 million and its total stockholders' equity was $569.2 million. As of
such date, on a pro forma basis, after giving effect to the consummation of
the offering of the TIDES and the application of the net proceeds therefrom,
and the acquisition of the Mission interests together with the issuance of
$135 million of Salton Sea Funding Corporation notes and bonds and the
application of the net proceeds therefrom, the Company's total consolidated
liabilities would have been $2,218.6 million (excluding deferred income), its
obligations in respect of the TIDES would have been $103.9 million, its total
consolidated assets would have been $2,813.4 million and its stockholders'
equity would have been $569.2 million. The Company's substantial level of debt
presents the risk that the Company might not generate sufficient cash to
service the Company's indebtedness, including the Convertible Junior
Subordinated Debentures, or that its leveraged capital structure could limit
its ability to finance the acquisition and development of additional projects,
to compete effectively or to operate successfully under adverse economic
conditions. See "Selected Historical Financial and Operating Data" and
"Capitalization." If the Company is unable to make payments on the Convertible
Junior Subordinated Debentures or the Guarantee, the Issuer will be unable to
make payments on the TIDES as and when required. The Company is also a holding
company which derives substantially all of its operating income from its
subsidiaries and joint ventures. Distributions from such entities are
restricted under various covenants and conditions contained in financing
documents by which they are bound and the stock or assets of substantially all
of such entities is directly or indirectly pledged, to secure various of such
financings. See "Risk Factors--Holding Company Structure," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Notes to the Consolidated Financial Statements."
Holding Company Structure. As a holding company, the Company is
dependent on distributions from its subsidiaries' and joint ventures'
ownership interests in the projects owned and operated by such entities for
substantially all of its operating income. The Company expects that its future
development efforts will also be structured to involve operating subsidiaries,
joint ventures and partnerships. The Company must rely upon dividends and
other payments from its subsidiaries, partnerships and joint ventures to
generate the funds
7
<PAGE>
necessary to meet its obligations, including the payment of principal,
interest and premium, if any, on the Convertible Junior Subordinated
Debentures. The availability of distributions from the Company's subsidiaries
and projects is subject to the satisfaction of various covenants and
conditions contained in the applicable subsidiaries' and joint ventures'
financing documents and, until the pending acquisition of the remaining
partnership interests in the Partnership Projects (as defined herein) is
consummated, in the partnership agreements relating to the Partnership
Projects. Furthermore, the Company is structuring Philippine and Indonesian
project financing arrangements containing, and anticipates that future project
level financings will contain, certain conditions and similar restrictions on
the distribution of cash to the Company.
The Company's subsidiaries, partnerships and joint ventures are
separate and distinct legal entities and have no obligation, contingent or
otherwise, to pay any amounts due pursuant to the Convertible Junior
Subordinated Debentures or to make any funds available therefor, whether by
dividends, loans or other payments, and do not guarantee the payment of
interest on, premium (if any) or principal of the Convertible Junior
Subordinated Debentures. Any right of the Company to receive any assets of any
of its subsidiaries or other affiliates upon any liquidation or reorganization
of the Company (and the consequent right of the holders of the Convertible
Junior Subordinated Debentures to participate in the distribution of, or to
realize proceeds from, those assets) will be effectively subordinated to the
claims of any such subsidiary's or other affiliate's creditors (including
trade creditors and holders of debt issued by such subsidiary or other
affiliate). As of March 31, 1996, on a pro forma basis, after giving effect to
the consummation of the offering of the TIDES and the application of the net
proceeds therefrom, and the acquisition of the Mission interests together with
the issuance of $135 million of Salton Sea Funding Corporation notes and bonds
and the application of net proceeds therefrom, there would have been
approximately $1,880.0 million of total consolidated indebtedness, which
includes the Company's proportionate share of joint venture and subsidiary
debt, which would be effectively senior to the Convertible Junior Subordinated
Debentures, substantially all of which would have been secured by the assets
of such joint ventures and subsidiaries, and $103.9 million of TIDES. See
"Description of the Convertible Junior Subordinated Debentures--Subordination."
Rights Under the Guarantee. The Guarantee Trustee (as defined herein)
holds the Guarantee for the benefit of the holders of the TIDES. The Guarantee
guarantees to the holders of the TIDES the payment (but not the collection) of
(i) any accrued and unpaid distributions on the TIDES to the extent the Issuer
has funds available therefor, (ii) the amount payable upon redemption,
including all accrued and unpaid distributions, of the TIDES called for
redemption by the Issuer, to the extent the Issuer has funds available
therefor and (iii) upon a voluntary or involuntary dissolution, winding up or
termination of the Issuer (other than in connection with a redemption of all
of the TIDES), the lesser of (a) the aggregate of the liquidation amount and
all accrued and unpaid distributions on the TIDES to the date of payment to
the extent the Issuer has funds available therefor and (b) the amount of
assets of the Issuer remaining available for distribution to holders of the
TIDES upon the liquidation of the Issuer. The holders of a majority in
liquidation amount of the TIDES have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under the Guarantee. In the event of a payment default on
the TIDES, any holder of TIDES may institute a legal proceeding directly
against the Company to enforce such holder's rights in respect thereof under
the Guarantee without first instituting a legal proceeding against the Issuer,
the Guarantee Trustee, or any other person or entity. If the Company were to
default on its obligations under the Convertible Junior Subordinated
Debentures, the Issuer would lack available funds for the payment of
distributions or amounts payable on redemption of the TIDES or otherwise, and
in such event, the holders of the TIDES would not be able to rely upon the
Guarantee for payment of such amounts. Instead, holders of the TIDES would
rely on the enforcement (1) by the Trustee of its rights, as registered holder
of the Convertible Junior Subordinated Debentures, against the Company
pursuant to the terms of the Convertible Junior Subordinated Debentures or (2)
by such holder of its right of direct action against the Company to enforce
payments on the Convertible Junior Subordinated Debentures. See "Description
of the Guarantee--Status of the Guarantee; Subordination" and "Description of
the Convertible Junior Subordinated Debentures--Subordination" herein. The
Declaration provides that each holder of TIDES by acceptance thereof agrees to
the provisions of the Guarantee (including the subordination provisions
thereof) and the Indenture.
8
<PAGE>
Option to Extend Interest Payment Period; Tax Consequences. The
Company has the right under the Indenture to defer interest payments from time
to time on the Convertible Junior Subordinated Debentures for successive
periods not exceeding 20 consecutive quarters for each such period. Upon the
termination of any Deferral Period and the payment of all amounts then due,
the Company may select a new Deferral Period, subject to the requirements
described herein. As a consequence, during any such Deferral Period, quarterly
distributions on the TIDES would be deferred (but would continue to accrue
with interest thereon) by the Issuer. In the event that the Company exercises
this right, during such period the Company (i) shall not declare or pay
dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital
stock (other than stock dividends paid by the Company which consist of stock
of the same class as that on which the dividend is being paid), (ii) shall not
make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities issued by the Company after the date
of initial issuance of the Convertible Junior Subordinated Debentures that
rank pari passu with or junior to the Convertible Junior Subordinated
Debentures, and (iii) shall not make any guarantee payments with respect to
the foregoing (other than pursuant to the Guarantee). Prior to the termination
of any such Deferral Period, the Company may further extend the Deferral
Period; provided that such Deferral Period, together with all previous and
further extensions thereof, may not exceed 20 consecutive quarters and that
such Deferral Period may not extend beyond the maturity date of the
Convertible Junior Subordinated Debentures. The Company has no current
intention of exercising its right to defer payments of interest by extending
the interest payment period on the Convertible Junior Subordinated Debentures.
However, if the Company should determine to exercise its deferral right in the
future, the market price of the TIDES is likely to be adversely affected. See
"Description of the TIDES--Distributions" and "Description of the Convertible
Junior Subordinated Debentures--Option to Extend Interest Payment Period."
Should a Deferral Period occur, a holder of TIDES will continue to
accrue interest income for United States federal income tax purposes. As a
result, such a holder will be required to include such interest in gross
income for United States federal income tax purposes in advance of the receipt
of cash, and such holder will not receive the cash from the Issuer related to
such income if such holder disposes of or converts its TIDES prior to the
record date for payment of distributions. See "United States
Taxation--Potential Extension of Interest Payment Period and Original Issue
Discount."
Tax Event or Investment Company Event Redemption or Distribution.
Upon the occurrence of a Tax Event or Investment Company Event, the Company
will, except in certain limited circumstances, cause the Trustees to liquidate
the Issuer and cause Convertible Junior Subordinated Debentures to be
distributed pro rata to the holders of TIDES. In certain circumstances, the
Company will have the right to redeem the Convertible Junior Subordinated
Debentures, in whole (but not in part), at 100% of principal amount plus
accrued and unpaid interest, in lieu of a distribution of the Convertible
Junior Subordinated Debentures, in which event the TIDES will be redeemed in
whole at the liquidation preference of $50 per each of the TIDES plus accrued
and unpaid distributions. In the case of a Tax Event, the Company may also
elect to cause the TIDES to remain outstanding and pay Additional Interest (as
defined herein) on the Convertible Junior Subordinated Debentures. See
"Description of the TIDES--Tax Event or Investment Company Event Redemption or
Distribution" and "Description of the Convertible Junior Subordinated
Debentures--General."
Under current United States federal income tax law, a distribution of
the Convertible Junior Subordinated Debentures would not be a taxable event to
holders of the TIDES. However, if the relevant Special Event (as defined
herein) is a Tax Event which results in the Issuer being treated as an
association taxable as a corporation, the distribution would likely constitute
a taxable event to holders of the TIDES. See "United States Taxation--Receipt
of Convertible Junior Subordinated Debentures or Cash Upon Liquidation of the
Issuer."
Limited Voting Rights. Except in the limited circumstances described
herein, holders of TIDES will have no voting rights. See "Description of the
TIDES--Voting Rights."
Development Uncertainty. The Company is actively seeking to develop,
construct, own and operate new power projects utilizing geothermal and other
technologies, both domestically and internationally, the completion of any of
which is subject to substantial risk. The Company has in development or under
9
<PAGE>
construction projects representing several times the generating capacity of
those currently in operation. Development can require the Company to expend
significant sums for preliminary engineering, permitting, legal and other
expenses in preparation for competitive bids which the Company may not win or
before it can be determined whether a project is feasible, economically
attractive or capable of being financed. Successful development and
construction is contingent upon, among other things, negotiation on terms
satisfactory to the Company of engineering, construction, fuel supply and
power sales contracts with other project participants, receipt of required
governmental permits and consents and timely implementation of construction.
Further, there can be no assurance that the Company, which is substantially
leveraged, will obtain access to the substantial debt and equity capital
required to continue to develop and construct electric power projects or to
refinance projects. The future growth of the Company is dependent, in large
part, upon the demand for significant amounts of additional electrical
generating capacity and its ability to obtain contracts to supply portions of
this capacity. There can be no assurance that development efforts on any
particular project, or the Company's efforts generally, will be successful.
Development Uncertainty Outside the United States. The Company has
five projects under construction outside the United States representing an
aggregate net capacity of 705 megawatts ("MW") of electric generating capacity
of which the Company's aggregate net ownership interest is 487 MW and a number
of projects under award outside the United States. The financing and
development of projects outside the United States entail significant political
and financial risks (including, without limitation, uncertainties associated
with first-time privatization efforts in the countries involved, currency
exchange rate fluctuations, currency repatriation restrictions, political
instability, civil unrest and expropriation) and other structuring issues that
have the potential to cause substantial delays in respect of or material
impairment of the value of the project being developed, which the Company may
not be capable of fully insuring against. The uncertainty of the legal
environment in certain foreign countries in which the Company is developing
and may develop or acquire projects could make it more difficult for the
Company to enforce its rights under agreements relating to such projects. In
addition, the laws and regulations of certain countries may limit the ability
of the Company to hold a majority interest in some of the projects that it may
develop or acquire. The Company's international projects may, in certain
cases, be terminated by the applicable foreign governments.
Exploration, Development and Operation Uncertainties of Geothermal
Energy Resources. Geothermal exploration, development and operations are
subject to uncertainties similar to those typically associated with oil and
gas exploration and development, including dry holes and uncontrolled
releases. Because of the geological complexities of geothermal reservoirs, the
geographic area and sustainable output of geothermal reservoirs can only be
estimated and cannot be definitively established. There is, accordingly, a
risk of an unexpected decline in the capacity of geothermal wells and a risk
of geothermal reservoirs not being sufficient for sustained generation of the
electrical power capacity desired. In addition, geothermal power production
poses unusual risks of seismic activity. Accordingly, there can be no
assurance that earthquake, property damage or business interruption insurance
will be adequate to cover all potential losses sustained in the event of
serious seismic disturbances or that such insurance will be available on
commercially reasonable terms.
The success of a geothermal project depends on the quality of the
geothermal resource and operational factors relating to the extraction of the
geothermal fluids involved in such project. The quality of a geothermal
resource is affected by a number of factors, including the size of the
reservoir, the temperature and pressure of the geothermal fluids in such
reservoir, the depth and capacity of the production and injection wells, the
amount of dissolved solids and noncondensible gases contained in such
geothermal fluids, and the permeability of the subsurface rock formations
containing such geothermal resource, including the presence, extent and
location of fractures in such rocks. The quality of a geothermal resource may
decline as a result of a number of factors, including the intrusion of
lower-temperature fluid into the producing zone. An incorrect estimate by the
Company of the quality of geothermal resource, or a decline in such quality,
could have a material adverse effect on the Company's results of operations.
In addition, both the cost of operations and the operating
performance of geothermal power plants may be adversely affected by a variety
of operating factors. Production and injection wells can require frequent
maintenance or replacement. Corrosion caused by high-temperature and
high-salinity geothermal fluids may compel the replacement or repair of
certain equipment, vessels or pipelines. New production and injection wells
10
APITAL PRINTING SYSTEMS]
<PAGE>
may be required for the maintenance of current operating levels, thereby
requiring substantial capital expenditures.
Competition. The international power production market is
characterized by numerous strong and capable competitors, many of which have
more extensive and more diversified developmental or operating experience
(including international experience) and greater financial resources than the
Company. Many of these competitors also compete in the domestic market.
Further, in recent years, the domestic power production industry has been
characterized by strong and increasing competition with respect to the
industry's efforts to obtain new power sales agreements, which has contributed
to a reduction in prices offered by utilities. In this regard, many utilities
often engage in "competitive bid" solicitations to satisfy new capacity
demands. In the domestic market, the Energy Policy Act of 1992 is expected to
increase competition.
Present Dependence on Large Customer. The Company currently relies on
long-term power purchase "Standard Offer No. 4" contracts (each, an "SO4
Agreement") with a single customer, Southern California Edison Company
("Edison"), to generate substantially all of its operating revenues. Any
material failure by Edison to fulfill its contractual obligations under any of
such contracts is likely to have a material adverse effect on the Company's
results of operations.
Contract Risks; Expected Negative Impact of Avoided Cost Pricing.
Each of the Company's S04 Agreements provides for both capacity payments and
energy payments for a term of between 20 and 30 years. During the first ten
years of the term of each S04 Agreement, energy payments are based on a
pre-set schedule. Thereafter, while the basis for the capacity payment remains
the same, the required energy payment is Edison's then-current published
avoided cost of energy ("Avoided Cost of Energy"), as determined by the
California Public Utility Commission ("CPUC"). The initial ten-year period
expires in August 1997, March 1999 and January 2000, respectively, for certain
of the Company's domestic projects at China Lake, California (150 miles
northeast of Los Angeles). Such ten-year period expired in 1996 with respect
to one of the Company's seven geothermal plants in the Imperial Valley in
California (the "Imperial Valley Projects"), and expires in 1999 for three of
its Imperial Valley Projects and in 2000 for the remaining two Imperial Valley
Projects that operate under S04 Agreements.
Estimates of Edison's future Avoided Cost of Energy vary
substantially in any given year. The Company cannot predict the likely level
of Avoided Cost of Energy prices under its SO4 Agreements with Edison at the
expiration of the scheduled payment periods. Edison's Avoided Cost of Energy
as determined by the CPUC is currently substantially below the current energy
prices under the Company's respective SO4 Agreements. For the year ended
December 31, 1995, the time period-weighted average of Edison's Avoided Cost
of Energy was 2.1 cents per kWh, compared to the time period-weighted average
for the year ended December 31, 1995 selling prices for energy of
approximately 11.4 cents per kWh for the Company. Thus, the revenues generated
by each of the Company's facilities operating under SO4 Agreements are likely
to decline significantly after the expiration of the fixed-price period.
Impact of Environmental and Other Regulations. The Company is subject
to a number of environmental and other laws and regulations affecting many
aspects of its present and future operations, including the disposal of
various forms of waste, the construction or permitting of new and existing
facilities and the drilling and operation of new and existing wells. Such laws
and regulations generally require the Company to obtain and comply with a wide
variety of licenses, permits and other approvals. The Company also remains
subject to a number of complex and stringent laws and regulations that both
public officials and private individuals may seek to enforce. There can be no
assurance that existing regulations will not be revised or that new
regulations will not be adopted or become applicable to the Company which
could have an adverse impact on its operations. The implementation of
regulatory changes imposing more comprehensive or stringent requirements on
the Company, which would result in increased compliance costs, could have a
material adverse effect on the Company's results of operations. In addition,
regulatory compliance for the construction of new facilities is a costly and
time-consuming process, and intricate and rapidly changing environmental
regulations may require major expenditures for permitting and create the risk
of expensive delays or material impairment of project value if projects cannot
function as planned due to changing regulatory requirements or local
opposition.
11
<PAGE>
Shares of Common Stock Eligible for Future Sale. Pursuant to the
Company's Amended and Restated 1996 Stock Option Plan (the "1996 Plan"), as of
March 31, 1996, the Company had outstanding various options to its officers,
directors and employees for the purchase of 3,226,519 shares of Common Stock,
of which all of the shares of Common Stock issuable upon exercise of said
options have been registered pursuant to registration statements on Form S-8,
and, as and when fully vested, are available for immediate resale. Also as of
March 31, 1996, there were additional options outstanding to purchase
4,489,163 shares of Common Stock, 4,289,163 of which were granted to Peter
Kiewit Sons' Inc. ("PKS"). As of March 31, 1996, PKS has demand and piggyback
registration rights with respect to approximately 12,322,312 shares of Common
Stock (and any shares of Common Stock subsequently held by PKS), all options
to purchase shares of Common Stock (and the shares issuable upon the exercise
of such options) and 3,529,252 shares of Common Stock issuable upon conversion
of the Company's 9.5% convertible subordinated debentures. In addition,
4,444,444 shares of Common Stock have been reserved for issuance pursuant to
the conversion of the Company's 5% convertible subordinated debentures. Sales
of substantial amounts of Common Stock or the availability of Common Stock for
sale, could have an adverse impact on the market price of the Common Stock and
on the Company's ability to raise additional capital through the sale of
Common Stock.
Trading Characteristics of the TIDES. The TIDES may trade at a price
that does not fully reflect the value of accrued but unpaid distributions. A
holder who disposes of its TIDES between record dates for payments of
distributions thereon will be required to include accrued but unpaid interest
on the Convertible Junior Subordinated Debentures through the date of
disposition in income as ordinary income (i.e., original issue discount), and
to add such amount to its adjusted tax basis in its pro rata share of the
underlying Convertible Junior Subordinated Debentures deemed disposed of. To
the extent the selling price is less than the holder's adjusted tax basis
(which will include, in the form of original issue discount, all accrued but
unpaid interest), a holder will recognize a capital loss. Subject to certain
limited exceptions, capital losses cannot be applied to offset ordinary income
for United States federal income tax purposes. See "United States Taxation."
Lack of Public Market for the TIDES. There is no existing trading
market for the TIDES, and there can be no assurance regarding the future
development of a market for the TIDES, or the ability of holders of the TIDES
to sell their TIDES or the price at which such holders may be able to sell
their TIDES. If such a market were to develop, the TIDES could trade at prices
that may be higher or lower than the initial offering price depending on many
factors, including prevailing interest rates, the price of the Common Stock,
the Company's operating results and the market for similar securities. The
Initial Purchasers currently make a market in the TIDES. The Initial
Purchasers are not obligated to do so, however, and any market making with
respect to the TIDES may be discontinued at any time without notice.
Therefore, there can be no assurance as to the liquidity of any trading market
for the TIDES or that an active public market for the TIDES will develop. The
Company does not intend to apply for listing or quotation of the TIDES on any
securities exchange or stock market; however, the TIDES are eligible for
trading in the Private Offerings, Resale and Trading through Automated
Linkages (PORTAL) Market of the National Association of Securities Dealers,
Inc.
12
<PAGE>
CALENERGY CAPITAL TRUST
CalEnergy Capital Trust (the "Issuer" or the "Trust") is a statutory
business trust formed under Delaware law pursuant to (i) a declaration of
trust (the "Declaration") executed by the Company, as sponsor of the Trust,
and the trustees of the Issuer (the "Issuer Trustees") and (ii) the filing of
a certificate of trust with the Secretary of State of the State of Delaware.
The Company owns, directly or indirectly, Common Securities in an aggregate
liquidation amount equal to 3% of the total capital of the Issuer. The Common
Securities rank pari passu, and payment will be made thereon pro rata, with
the TIDES, except that, upon the occurrence and during the continuance of an
event of default under the Declaration, the rights of the holders of the
Common Securities to payment in respect of distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of
the holders of the TIDES. The assets of the Trust will consist principally of
the Convertible Junior Subordinated Debentures. The Issuer exists for the
exclusive purpose of (i) issuing the Trust Securities representing undivided
beneficial interests in the assets of the Trust, (ii) investing the gross
proceeds of the Trust Securities in the Convertible Junior Subordinated
Debentures and (iii) engaging in only those other activities necessary or
incidental thereto.
Pursuant to the Declaration, there are initially five Issuer
Trustees. Three of the Issuer Trustees (the "Company Trustees") are
individuals who are employees or officers of or who are affiliated with the
Company.
The fourth trustee is a financial institution that is unaffiliated
with the Company (the "Trustee"). The fifth trustee is an entity which
maintains its principal place of business in the State of Delaware (the
"Delaware Trustee"). Initially, The Bank of New York, a New York banking
corporation, acts as Trustee and its affiliate, The Bank of New York
(Delaware), a Delaware banking corporation, acts as Delaware Trustee until, in
each case, removed or replaced by the holder of the Common Securities. The
Bank of New York also acts as indenture trustee under the Guarantee (the
"Guarantee Trustee") and under the Indenture (the "Indenture Trustee"). See
"Description of the Guarantee" and "Description of the TIDES."
The Trustee holds title to the Convertible Junior Subordinated
Debentures for the benefit of the holders of the Trust Securities and the
Trustee has the power to exercise all rights, powers and privileges under the
Indenture as the holder of the Convertible Junior Subordinated Debentures. In
addition, the Trustee maintains exclusive control of a segregated non-interest
bearing bank account (the "Property Account") to hold all payments made in
respect of the Convertible Junior Subordinated Debentures for the benefit of
the holders of the Trust Securities. The Company, as the direct or indirect
holder of all the Common Securities, has the right to appoint, remove or
replace any of the Issuer Trustees and to increase or decrease the number of
trustees, provided that the number of trustees shall be at least three, a
majority of which shall be Company Trustees. The Company will pay all fees and
expenses related to the Trust and the offering of the TIDES. See "Description
of the Convertible Junior Subordinated Debentures."
The rights of the holders of the TIDES, including economic rights,
rights to information and voting rights, if any, are as set forth in the
Declaration and the Delaware Business Trust Act, as amended (the "Trust Act").
See "Description of the TIDES." The Declaration, the Indenture and the
Guarantee also incorporate by reference the terms of the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"). The Declaration, the
Indenture and the Guarantee will be qualified under the Trust Indenture Act.
The place of business and the telephone number of the Trust are the principal
executive offices and telephone number of the Company. See "The Company."
13
<PAGE>
THE COMPANY
CalEnergy Company, Inc., formerly known as California Energy Company,
Inc. (the "Company"), was founded in 1971 and is primarily engaged in the
development and operation of environmentally responsible independent power
production facilities worldwide utilizing geothermal resources or other energy
sources, such as hydroelectric, natural gas, oil and coal. The Company is the
largest independent geothermal power producer in the world (on the basis of
the Company's estimate of the aggregate MW of electric generating capacity in
operation and under construction).
The Company has an aggregate net ownership interest of 432 MW of
electric generating capacity in power production facilities in the United
States having an aggregate net capacity of 575 MW. All of these facilities are
managed and operated by the Company and are principally located in Southern
California. In addition to the electricity sales revenue earned from its net
ownership position in such facilities, the Company receives significant fee
and royalty income from operating such plants and certain power plants which
are owned by unaffiliated third parties and from managing the production from
the geothermal resources for such facilities.
Additionally, the Company has an aggregate net ownership interest of
449 MW of electric generating capacity in four geothermal power projects in
the Philippines and the United States having an aggregate net capacity of 540
MW, and has a net ownership interest of 52 MW of electric generating capacity
in a hydroelectric power project in the Philippines having an aggregate net
capacity of 150 MW, which projects are financed and under construction. The
Company has commenced construction of a 55 net MW geothermal project in
Indonesia in which the Company has an aggregate net ownership interest of 26
MW of electric generating capacity.
The Company is also developing seven additional projects with
executed or awarded power sales contracts in the Philippines, Indonesia and
the United States. The Company is expected to have an approximate net
ownership interest of 760 MW in these development projects (which represent an
aggregate net capacity of 1,423 MW of additional potential electric generating
capacity). Additionally, the Company is developing the Salton Sea Minerals
Extraction Project, in which it plans to recover minerals (potentially
including zinc, manganese, lithium carbide, boric acid and hydrogen sulfide)
in commercial quantities from the geothermal fluids at the Company's Imperial
Valley Projects (as defined herein). Substantial contingencies exist with
respect to development projects, including, without limitation, the need to
obtain financing, permits and licenses and the satisfactory completion of
construction and implementation of commercial operation.
The Company's Common Stock is traded on the New York, Pacific and
London Stock Exchanges. As of July 16, 1996, PKS was an approximate 34%
stockholder of the Company (on a fully diluted basis). PKS is a large
employee-owned construction, mining and telecommunications company with
approximately $3 billion in revenues in 1995. PKS is one of the largest
construction companies in North America and has been in the construction
business since 1884.
Strategy
Domestically, the Company is focusing on market opportunities in
which it believes it has relative competitive advantages due to its
geotechnical, project management, and operating expertise. In addition, the
Company expects to continue diversification into other environmentally
responsible sources of energy primarily through selected acquisitions,
including acquisitions of partially developed or existing power generating
projects and contracts. The Company is also evaluating the potential impacts
and opportunities of direct access and retail wheeling.
The Company presently believes that the international independent
power market holds the majority of new opportunities for financially
attractive private power development in the next several years, in large part
because the demand for new generating capacity is growing more rapidly in
emerging nations than in the United States. In developing its international
strategy, the Company pursues development opportunities in countries which it
believes have an acceptable risk profile and where the Company's geothermal
resource development
14
<PAGE>
and operating experience, project development expertise or strategic
relationship with PKS or local partners are expected to provide it with a
competitive advantage. The Company has financed and has under construction
four projects representing an aggregate of 461 MW of net ownership of electric
generating capacity in the Philippines and has commenced construction of a 55
MW geothermal project in Indonesia in which the Company has a net ownership
interest of 26 MW of electric generating capacity. In addition, the Company is
currently pursuing a number of other electric power project opportunities in
the Philippines, Indonesia and other countries. The Company believes that
these countries are ideally suited for the Company to develop, finance and
operate power projects successfully because of their population demographics,
extensive geothermal resources and stated commitments to the development of
private power programs. The Company's development efforts include both
so-called "greenfield" development as well as the acquisition of or
participation in the joint venture development of projects which are under
development or already operating. In greenfield development, the Company
attempts to negotiate power sales contracts for new generation capacity or
engages in competitive bids in response to government agency or utility
requests for proposals for new capacity.
The principal executive offices of the Company are located at 302
South 36th Street, Suite 400, Omaha, Nebraska 68131 and its telephone number
is (402) 341-4500. The Company was incorporated in 1971 under the laws of the
State of Delaware.
RECENT DEVELOPMENTS
On July 8, 1996, the Company and Falcon Seaboard Resources, Inc.
("Falcon Seaboard") jointly announced that CE/FS Holding Company, Inc. ("CE
Holding Company"), a wholly owned subsidiary of the Company, had entered into
a definitive agreement (the "Falcon Agreement") with the stockholders of
Falcon Seaboard for the purchase by CE Holding Company of all of the issued
and outstanding shares of capital stock of Falcon Seaboard (less certain
assets to be distributed to the stockholders of Falcon Seaboard prior to
closing) for a cash purchase price of approximately $226,000,000. Falcon
Seaboard has a significant ownership interest in three operating gas-fired
cogeneration plants and related natural-gas pipelines. The plants are located
in Texas, Pennsylvania and New York and total 520 MWs in capacity. The
acquisition is expected to be consummated in early August 1996, subject to
customary closing conditions. The waiting period pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, has been
terminated by the Federal Trade Commission. Reference is made to the Company's
Current Report on Form 8-K dated July 8, 1996 which contains the terms and
conditions to the Falcon Agreement and which is incorporated herein by
reference.
RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
The following table sets forth the Company's ratio of earnings to
fixed charges on a historical basis for each of the five years in the period
ended December 31, 1995, and for the three-month periods ended March 31, 1995
and March 31, 1996.
<TABLE>
<CAPTION>
Three Months Ended
Year Ended December 31, March 31,
------------------------------------------------- -------------------
1991 1992 1993 1994 1995 1995 1996
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earning
Fixed Charges...................... 2.0 3.2 2.8 1.7 1.5 1.5 1.3
- -----------------------------------------
</TABLE>
For purposes of computing historical ratios of earnings to fixed
charges, earnings are divided by fixed charges. "Earnings" represent the
aggregate of (a) the pre-tax income of the Company, including its
proportionate share of the pre-tax income of the Coso Project (as defined
herein) and beginning for the year ended December 31, 1995, the Partnership
Projects (as defined herein) and excluding the equity in loss of a
non-consolidated subsidiary, and (b) fixed charges, less capitalized interest.
"Fixed charges" represent interest (whether expensed or capitalized),
amortization of deferred financing and bank fees, and the portion of rentals
considered to be representative of the interest factor (one-third of lease
payments).
15
<PAGE>
CAPITALIZATION
(In thousands)
The following table sets forth (i) the consolidated capitalization of
the Company at March 31, 1996, and (ii) the consolidated capitalization of the
Company as adjusted to reflect the sale of the TIDES and the issuance by
Salton Sea Funding Corporation of $135 million of notes and bonds. The table
should be read in conjunction with the Company's consolidated financial
statements and notes thereto and other financial data incorporated herein by
reference.
<TABLE>
<CAPTION>
At March 31, 1996
-----------------
Actual As Adjusted
------ -----------
<S> <C> <C>
Indebtedness:
Construction loans................................................................ $ 251,386 $ 251,386
Project finance loans............................................................. 235,464 187,182
Senior discount notes............................................................. 489,517 489,517
Salton Sea notes and bonds........................................................ 452,088 587,088
Limited recourse senior secured notes............................................. 200,000 200,000
5% Convertible debt............................................................... 100,000 100,000
Convertible debt.................................................................. 64,850 64,850
---------- ----------
Total consolidated indebtedness................................................. 1,793,305 1,880,023
Deferred income...................................................................... 25,584 25,584
Convertible preferred securities of subsidiary (1)................................... -- 103,930
Stockholders' equity:
Preferred stock, no par value, 2,000 shares authorized............................
Common stock, $.0675 par value, 80,000 shares authorized, 52,180 3,523 3,523
shares issued, 51,944 outstanding.................................................
Additional paid-in capital........................................................ 356,251 356,251
Retained earnings................................................................. 219,520 219,520
Treasury stock, 186 common shares at cost......................................... (3,416) (3,416)
Unearned compensation--restricted stock............................................ (6,650) (6,650)
---------- -----------
Total stockholders' equity........................................................ 569,228 569,228
---------- -----------
Total capitalization............................................................ $2,388,117 $2,578,765
========== ==========
</TABLE>
- --------------------
(1) As described herein, the sole asset of the Issuer will be the 6 1/4%
Convertible Junior Subordinated Debentures due 2016 of the Company with
an outstanding principal amount of approximately $107,023 and upon
redemption of such debt, such convertible preferred securities (TIDES)
will be mandatorily redeemable.
16
<PAGE>
ACCOUNTING TREATMENT
The financial statements of the Issuer will be included in the
Company's consolidated financial statements and the TIDES will be shown as
convertible preferred securities of a subsidiary.
USE OF PROCEEDS
The Selling Holders will receive all of the proceeds from the sale of
the Offered Securities. Neither the Company nor the Issuer will receive any
proceeds from the sale of the Offered Securities.
DESCRIPTION OF THE TIDES
The following summary of certain material terms and provisions of the
TIDES is subject to, and qualified in its entirety by reference to, the
Declaration. The TIDES were issued pursuant to the terms of the Declaration.
The Declaration incorporates by reference terms of the Trust Indenture Act.
The Declaration will be qualified under the Trust Indenture Act. The Bank of
New York, as Trustee, acts as indenture trustee for the Declaration for
purposes of compliance with the Trust Indenture Act. Capitalized terms not
otherwise defined herein have the meanings assigned to them in the
Declaration.
General
The TIDES were issued in fully registered form without interest
coupons. Bearer TIDES were not issued.
The TIDES represent undivided beneficial ownership interests in the
assets of the Issuer and entitle the holders thereof 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 Declaration.
All of the Common Securities are owned, directly or indirectly, by
the Company. The Common Securities rank pari passu, and payments will be made
thereon pro rata, with the TIDES except as described under "--Subordination of
Common Securities." The Convertible Junior Subordinated Debentures are owned
by the Trustee and held for the benefit of the holders of the Trust
Securities. The Declaration does not permit the issuance by the Issuer of any
securities other than the Trust Securities or the incurrence of any
indebtedness by the Issuer.
Distributions
The distributions payable on each of the TIDES are fixed at a rate
per annum of 6 1/4% of the stated liquidation preference of $50 per each of
the TIDES. Deferred distributions (and interest thereon) accrue interest
(compounded quarterly) at the same rate. The term "distributions" as used
herein includes any such distributions payable unless otherwise stated. The
amount of distributions payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months.
Distributions on the TIDES are cumulative, accrue from the date of
initial issuance and are payable quarterly in arrears on each March 15, June
15, September 15 and December 15, commencing June 15, 1996, when, as and if
available. The Company has the right under the Indenture to defer interest
payments from time to time on the Convertible Junior Subordinated Debentures
for successive periods not exceeding 20 consecutive quarters for each such
period, and, as a consequence, quarterly distributions on the TIDES would be
deferred by the Issuer (but would continue to accrue with interest) during any
such Deferral Period. In the event that the Company exercises this right,
during such period the Company (i) shall not declare or pay dividends on, make
distributions with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock (other than
stock dividends paid by the Company which consist of stock of the same class
as that on which the dividend is being paid), (ii) shall not make any payment
of interest, principal or premium, if any, on or repay, repurchase or redeem
any debt securities issued by the Company after the date of original issuance
of the Convertible Junior Subordinated Debentures that rank pari passu with or
junior to the
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Convertible Junior Subordinated Debentures, and (iii) shall not make any
guarantee payments with respect to the foregoing (other than pursuant to the
Guarantee). Prior to the termination of any Deferral Period, the Company may
further extend such Deferral Period; provided that such Deferral Period
together with all previous and further deferrals thereof may not exceed 20
consecutive quarters. Upon the termination of any Deferral Period, the Company
is required to pay all amounts then due and, upon such payment, the Company
may select a new Deferral Period, subject to the above requirements. In no
event shall any Deferral Period extend beyond the maturity of the Convertible
Junior Subordinated Debentures. See "Description of the Convertible Junior
Subordinated Debentures--Interest" and "--Option to Extend Interest Payment
Period."
Distributions on the TIDES must be paid quarterly on the dates
payable to the extent of funds of the Trust available for the payment of such
distributions. Amounts available to the Trust for distribution to the holders
of the TIDES are limited to payments under the Convertible Junior Subordinated
Debentures in which the Issuer will invest the proceeds from the issuance and
sale of the Trust Securities. See "Description of the Convertible Junior
Subordinated Debentures." The payment of distributions, to the extent of funds
of the Trust available therefor, is guaranteed by the Company, as set forth
under "Description of the Guarantee."
Distributions on the TIDES are payable to the holders thereof as they
appear on the books and records of the Issuer on the relevant record dates,
which will be fifteen days prior to the relevant payment dates. Subject to any
applicable laws and regulations and the provisions of the Declaration, each
such payment will be made as described under "--Book-Entry-Only Issuance--The
Depository Trust Company" below. In the event that any date on which
distributions are payable on the TIDES is not a Business Day, payment of the
distribution payable on such date will be made on the next succeeding day
which is a Business Day (without any distribution or other payment in respect
of any such delay) except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such
date. A "Business Day" shall mean any day other than a day on which banking
institutions in The City of New York are authorized or required by law to
close.
Conversion Rights
General. TIDES are convertible at any time prior to maturity (except
in the case of TIDES called for redemption which are convertible at any time
prior to the close of business on the Business Day prior to the redemption
date), at the option of the holder thereof and in the manner described below,
into shares of the Common Stock at an initial conversion rate of 1.6728 shares
of Common Stock for each of the TIDES (equivalent to a conversion price of
$29.89 per share of Common Stock), subject to adjustment as described under
"Conversion Price Adjustments" below. The Issuer has covenanted in the
Declaration not to convert Convertible Junior Subordinated Debentures held by
it except pursuant to a notice of conversion delivered by a holder of TIDES to
an office or agency designated by the Trust for such purpose (the "Conversion
Agent"). A holder of TIDES wishing to exercise its conversion right shall
deliver an irrevocable conversion notice, together, if such TIDES is a
Certificated Security (as defined herein), with such Certificated Security, to
the Conversion Agent which shall, on behalf of such holder, exchange such of
the TIDES for a portion of the Convertible Junior Subordinated Debentures and
immediately convert such Convertible Junior Subordinated Debentures into
Common Stock. Holders may obtain copies of the required form of the conversion
notice from the Conversion Agent.
Holders of TIDES at the close of business on a distribution record
date will be entitled to receive the distribution payable on such TIDES on the
corresponding distribution payment date notwithstanding the conversion of such
TIDES following such distribution record date but prior to such distribution
payment date. Except as provided in the immediately preceding sentence,
neither the Issuer nor the Company will make, or be required to make, any
payment, allowance or adjustment for accumulated and unpaid distributions,
whether or not in arrears, on converted TIDES. The Company will make no
payment or allowance for distributions on the shares of Common Stock issued
upon such conversion, except to the extent that such shares of Common Stock
are held of record on the record date for any such distributions, except in
certain limited circumstances. Each conversion will be deemed to have been
effected immediately prior to the close of business on the day on which the
related conversion notice was received by the Issuer.
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No fractional shares of the Common Stock will be issued as a result
of conversion, but in lieu thereof such fractional interest will be paid by
the Company in cash.
Conversion Price Adjustments--General. The conversion price will be
subject to adjustment in certain events including, without duplication: (a)
the issuance of shares of Common Stock as a dividend or a distribution with
respect to Common Stock, (b) subdivisions, combinations and reclassification
of Common Stock, (c) the issuance to all holders of Common Stock of rights or
warrants entitling them (for a period not exceeding 45 days) to subscribe for
shares of Common Stock at less than the current market price, and (d) the
distribution to holders of Common Stock of evidences of indebtedness of the
Company, securities or capital stock, cash or assets (including securities,
but excluding those rights, warrants, dividends and distributions referred to
above and dividends paid exclusively in cash).
The Company from time to time may reduce the conversion price of the
Convertible Junior Subordinated Debentures (and thus the conversion price of
the TIDES) by any amount selected by the Company for any period of at least 20
days, in which case the Company shall give at least 15 days' notice of such
reduction. The Company may, at its option, make such reductions in the
conversion price, in addition to those set forth above, as the Company's Board
of Directors deems advisable to avoid or diminish any income tax to holders of
Common Stock resulting from any dividend or distribution of stock (or rights
to acquire stock) or from any event treated as such for income tax purposes.
See "United States Taxation--Adjustment of Conversion Price."
No adjustment of the conversion price will be made upon the issuance
of any shares of Common Stock pursuant to any present or future plan providing
for the reinvestment of dividends or interest payable on securities of the
Company and the investment of additional optional amounts in shares of Common
Stock under any such plan. No adjustment in the conversion price will be
required unless such adjustment would require a change of at least one percent
(1%) in the price then in effect; provided, however, that any adjustment that
would not be required to be made shall be carried forward and taken into
account in any subsequent adjustment. If any action would require adjustment
of the conversion price pursuant to more than one of the provisions described
above, only one adjustment shall be made and such adjustment shall be the
amount of adjustment that has the highest absolute value to the holder of the
TIDES.
Conversion price adjustments or omissions in making such
adjustments may, under certain circumstances, be deemed to be distributions
that could be taxable as dividends to holders of the TIDES or to the holders
of Company Common Stock. See "United States Taxation."
Conversion Adjustments--Merger, Consolidation or Sale of Assets of
the Company. In the event that the Company shall be a party to any transaction
(including, without limitation, and with certain exceptions, (a)
recapitalization or reclassification of the Common Stock, (b) consolidation of
the Company with, or merger of the Company into, any other Person, or any
merger of another Person into the Company, (c) any sale, transfer or lease of
all or substantially all of the assets of the Company or (d) any compulsory
share exchange) pursuant to which the Common Stock is converted into the right
to receive other securities, cash or other property (each of the foregoing
being referred to as a "Transaction"), then the holders of the TIDES then
outstanding shall have the right to convert the TIDES into the kind and amount
of securities, cash or other property receivable upon the consummation of such
Transaction by a holder of the number of shares of Common Stock issuable upon
conversion of such TIDES immediately prior to such Transaction.
In the case of a Transaction, each of the TIDES would become
convertible into the securities, cash or property receivable by a holder of
the number of shares of the Common Stock into which such TIDES was convertible
immediately prior to such Transaction. This change could substantially lessen
or eliminate the value of the conversion privilege associated with the TIDES
in the future. For example, if the Company were acquired in a cash merger,
each of the TIDES would become convertible solely into cash and would no
longer be convertible into securities whose value would vary depending on the
future prospects of the Company and other factors.
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Payment of Excess Cash Dividends
If the Company shall declare and pay cash dividends on its Common
Stock in an annualized per share amount which exceeds the greater of (A) the
per share amount of the immediately preceding cash dividend on its Common
Stock (as adjusted to reflect any of the events described above under
"--Conversion Rights--Conversion Price Adjustments--General") and (B) 15% of
the current market price of the Common Stock as of the trading day immediately
preceding the date of declaration of such dividend (the per share amount of
any such excess, to the extent of such excess, being herein called an "Excess
Amount"), then in any such event the holders of the TIDES then outstanding
shall have the right to receive, and the Company will pay to each such holder,
at the time of the payment of such Common Stock dividend, an amount equal to
such Excess Amount (on the basis of the number of shares of Common Stock that
would have been issued to such holder upon conversion of the TIDES held by
such holder on the record date for the payment of such dividend).
Optional Redemption
The Company is permitted to redeem the Convertible Junior
Subordinated Debentures as described herein under "Description of the
Convertible Junior Subordinated Debentures--Optional Redemption," in whole or
in part, from time to time, after April 9, 1999, upon not less than 20 nor
more than 60 days' notice. See "Description of the Convertible Junior
Subordinated Debentures--Optional Redemption." Upon any redemption in whole or
in part of the Convertible Junior Subordinated Debentures at the option of the
Company, the Issuer will, to the extent of the proceeds of such redemption,
redeem TIDES and Common Securities at the Redemption Price. In the event that
fewer than all the outstanding TIDES are to be so redeemed, the TIDES to be
redeemed will be selected as described under "--Book-Entry-Only Issuance--The
Depository Trust Company" below.
In the event of any redemption in part, the Trust shall not be
required to (i) issue, register the transfer of or exchange any of the TIDES
during a period beginning at the opening of business 15 days before any
selection for redemption of TIDES and ending at the close of business on the
earliest date in which the relevant notice of redemption is deemed to have
been given to all holders of TIDES to be so redeemed and (ii) register the
transfer of or exchange any TIDES so selected for redemption, in whole or in
part, except for the unredeemed portion of any TIDES being redeemed in part.
Tax Event or Investment Company Event Redemption or Distribution
If a Tax Event (as defined herein) shall occur and be continuing, the
Company shall cause the Company Trustees to liquidate the Issuer and cause
Convertible Junior Subordinated Debentures to be distributed to the holders of
the TIDES in liquidation of the Issuer within 90 days following the occurrence
of such Tax Event; provided, however, that such liquidation and distribution
shall be conditioned on (i) the Company Trustees' receipt of an opinion of
nationally recognized independent tax counsel (reasonably acceptable to the
Company Trustees) experienced in such matters (a "No Recognition Opinion"),
which opinion may rely on published revenue rulings of the Internal Revenue
Service, to the effect that the holders of the TIDES will not recognize any
income, gain or loss for United States Federal income tax purposes as a result
of such liquidation and distribution of Convertible Junior Subordinated
Debentures, and (ii) the Company being unable to avoid such Tax Event within
such 90-day period by taking some ministerial action or pursuing some other
reasonable measure that, in the sole judgment of the Company, will have no
adverse effect on the Issuer, the Company or the holders of the TIDES and will
involve no material cost. Furthermore, if (i) the Company has received an
opinion (a "Redemption Tax Opinion") of nationally recognized independent tax
counsel (reasonably acceptable to the Company Trustees) experienced in such
matters that, as a result of a Tax Event, there is more than an insubstantial
risk that the Company would be precluded from deducting the interest on the
Convertible Junior Subordinated Debentures for United States Federal income
tax purposes, even after the Convertible Junior Subordinated Debentures were
distributed to the holders of the TIDES upon liquidation of the Issuer as
described above, or (ii) the Company Trustees shall have been informed by such
tax counsel that it cannot deliver a No Recognition Opinion, the Company shall
have the right, upon not less than 30 nor more than 60 days' notice and within
90 days following the occurrence of the Tax Event, to redeem the Convertible
Junior Subordinated Debentures, in whole (but not in part) for cash, at 100%
of principal amount thereof plus accrued
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and unpaid interest and, following such redemption, all the TIDES will be
redeemed by the Issuer at the liquidation preference of $50 per each of the
TIDES plus accrued and unpaid distributions; provided, however, that, if at
the time there is available to the Company or the Issuer the opportunity to
eliminate, within such 90-day period, the Tax Event by taking some ministerial
action or pursuing some other reasonable measure that, in the sole judgment of
the Company, will have no adverse effect on the Issuer, the Company or the
holders of the TIDES and will involve no material cost, the Issuer or the
Company will pursue such measure in lieu of redemption. See "--Mandatory
Redemption." In lieu of the foregoing options, the Company will also have the
option of causing the TIDES to remain outstanding and pay Additional Interest
(as defined herein) on the Convertible Junior Subordinated Debentures. See
"Description of the Convertible Junior Subordinated Debentures--Additional
Interest."
"Tax Event" means that the Company shall have obtained an opinion of
nationally recognized independent tax counsel (reasonably acceptable to the
Company Trustees) experienced in such matters to the effect that, as a result
of (a) any amendment to or change (including any announced prospective change)
in the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein or (b) any
amendment to or change in an interpretation or application of such laws or
regulations by any legislative body, court, governmental agency or regulatory
authority (including the enactment of any legislation and the publication of
any judicial decision or regulatory determination on or after the date of this
Offering Circular), which amendment or change is effective or which
interpretation or pronouncement is announced on or after the date of this
Offering Circular (collectively, a "Change In Tax Law"), there is more than an
insubstantial risk that (i) the Issuer is or will be subject to United States
Federal income tax with respect to interest received on the Convertible Junior
Subordinated Debentures, (ii) interest payable to the Issuer on the
Convertible Junior Subordinated Debentures is not or will not be deductible
for United States Federal income tax purposes or (iii) the Issuer is or will
be subject to more than a de minimis amount of other taxes, duties,
assessments or other governmental charges of whatever nature imposed by the
United States, or any other taxing authority. Notwithstanding anything in the
previous sentence to the contrary, a Tax Event shall not include any Change in
Tax Law that requires the Company for United States federal income tax
purposes to defer taking a deduction for any original issue discount ("OID")
that accrues with respect to the Convertible Junior Subordinated Debentures
until the interest payment related to such OID is paid by the Company in money
provided that such Change in Tax Law does not create more than an
insubstantial risk that the Company will be prevented from taking a deduction
for OID accruing with respect to the Convertible Junior Subordinated
Debentures at a date that is no later than the date the interest payment
related to such OID is actually paid by the Company in money.
If an Investment Company Event (as hereinafter defined) shall occur
and be continuing, the Company shall cause the Company Trustees to liquidate
the Issuer and cause the Convertible Junior Subordinated Debentures to be
distributed to the holders of the TIDES in liquidation of the Issuer within 90
days following the occurrence of such Investment Company Event.
The distribution by the Company of the Convertible Junior
Subordinated Debentures will effectively result in the cancellation of the
TIDES.
"Investment Company Event" means the occurrence of a change in law or
regulation or a written 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") to the effect that the Issuer is or
will be considered an "investment company" which is required to be registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), which
Change in 1940 Act Law becomes effective on or after the date of this Offering
Circular.
A "Special Event" means either an Investment Company Event or a Tax
Event.
After the date fixed for any distribution of Convertible Junior
Subordinated Debentures (i) the TIDES will no longer be deemed to be
outstanding, (ii) The Depository Trust Company (the "Depository" or "DTC") or
its nominee, as the record holder of the Global Certificates (as defined
herein), will receive a registered global certificate or certificates
representing the Convertible Junior Subordinated Debentures to be delivered
upon such
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distribution and (iii) any certificates representing TIDES not held by DTC or
its nominee will be deemed to represent Convertible Junior Subordinated
Debentures having a principal amount equal to the aggregate of the stated
liquidation preference of such TIDES, with accrued and unpaid interest equal
to the amount of accrued and unpaid distributions on such TIDES, until such
certificates are presented to the Company or its agent for transfer or
reissuance.
Mandatory Redemption
The Convertible Junior Subordinated Debentures will mature on March
10, 2016, and may be redeemed, in whole or in part, at any time after April 9,
1999 or at any time in certain circumstances upon the occurrence of a Tax
Event. Upon the repayment or payment of the Convertible Junior Subordinated
Debentures, whether at maturity or upon redemption or otherwise, the proceeds
from such repayment or redemption shall simultaneously be applied to redeem
Trust Securities having an aggregate liquidation amount equal to the
Convertible Junior Subordinated Debentures so repaid or redeemed at the
applicable redemption price together with accrued and unpaid distributions
through the date of redemptions provided that holders of the Trust Securities
shall be given not less than 30 nor more than 60 days' notice of such
redemption. See "--Tax Event or Investment Company Event Redemption or
Distribution" and "Description of the Convertible Junior Subordinated
Debentures--General" and "--Optional Redemption." Upon the repayment of the
Convertible Junior Subordinated Debentures at maturity or upon any
acceleration, earlier redemption or otherwise, the proceeds from such
repayment will be applied to redeem the TIDES and Common Securities, in whole,
upon not less than 30 nor more than 60 days' notice.
Redemption Procedures
The TIDES will not be redeemed unless all accrued and unpaid
distributions have been paid on all TIDES for all quarterly distribution
periods terminating on or prior to the date of redemption.
If the Issuer gives a notice of redemption in respect of TIDES (which
notice will be irrevocable), then, by 12:00 noon, New York time, on the
redemption date, the Issuer will irrevocably deposit with DTC funds sufficient
to pay the amount payable on redemption and will give DTC irrevocable
instructions and authority to pay such amount in respect of TIDES represented
by the Global Certificates and will irrevocably deposit with the paying agent
for the TIDES funds sufficient to pay such amount in respect of any securities
issued in fully registered, certificated form ("Certificated Securities") and
will give such paying agent irrevocable instructions and authority to pay such
amount to the holders of Certificated Securities upon surrender of their
certificates. Notwithstanding the foregoing, distributions payable on or prior
to the redemption date for any TIDES called for redemption shall be payable to
the holders of such TIDES on the relevant record dates for the related
distribution dates. If notice of redemption shall have been given and funds
are deposited as required, then upon the date of such deposit, all rights of
holders of such TIDES so called for redemption will cease, except the right of
the holders of such TIDES to receive the redemption price, but without
interest on such redemption price. In the event that any date fixed for
redemption of TIDES is not a Business Day, then payment of the amount payable
on such date will be made on the next succeeding day which is a Business Day
(without any interest or other payment in respect of any such delay), except
that, if such Business Day falls in the next calendar year, such payment will
be made on the immediately preceding Business Day. In the event that payment
of the redemption price in respect of TIDES is improperly withheld or refused,
and not paid either by the Issuer or by the Company pursuant to the Guarantee
described under "Description of the Guarantee," distributions on such TIDES
will continue to accrue at the then applicable rate, from the original
redemption date to the date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of calculating
the amount payable upon redemption (other than for purposes of calculating any
premium).
Subject to the foregoing and applicable law (including, without
limitation, United States Federal securities laws), the Company or its
subsidiaries may at any time and from time to time purchase outstanding TIDES
by tender, in the open market or by private agreement.
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Subordination of Common Securities
Payment of distributions on, and the amount payable upon redemption
of, the Trust Securities, as applicable, shall be made pro rata based on the
liquidation preference of the Trust Securities; provided, however, that, if on
any distribution date or redemption date a Declaration Event of Default (as
defined below under "--Declaration Events of Default") under the Declaration
shall have occurred and be continuing, no payment of any distribution on, or
amount payable upon redemption 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 accumulated and
unpaid distributions on all outstanding TIDES for all distribution periods
terminating on or prior thereto, or in the case of payment of the amount
payable upon redemption of the TIDES, the full amount of such amount in
respect of all outstanding TIDES, shall have been made or provided for, and
all funds available to the Trustee shall first be applied to the payment in
full in cash of all distributions on, or the amount payable upon redemption
of, TIDES then due and payable.
In the case of any Declaration Event of Default, the holder of Common
Securities will be deemed to have waived any such Declaration Event of Default
until all such Declaration Events of Default with respect to the TIDES have
been cured, waived or otherwise eliminated. Until any such Declaration Events
of Default with respect to the TIDES have been so cured, waived or otherwise
eliminated, the Trustee shall act solely on behalf of the holders of the TIDES
and not the holder of the Common Securities, and only the holders of the TIDES
will have the right to direct the Trustee to act on their behalf.
Liquidation Distribution Upon Dissolution
In the event of any voluntary or involuntary liquidation,
dissolution, winding up or termination of the Issuer, the holders of the TIDES
at the time will be entitled to receive out of the assets of the Issuer
available for distribution to holders of Trust Securities after satisfaction
of liabilities of creditors of the Trust, before any distribution of assets is
made to the holders of the Common Securities, an amount equal to the aggregate
of the stated liquidation preference of $50 per each of the TIDES and accrued
and unpaid distributions thereon to the date of payment (the "Liquidation
Distribution"), unless, in connection with such liquidation, dissolution,
winding up or termination, Convertible Junior Subordinated Debentures in an
aggregate principal amount equal to the Liquidation Distribution have been
distributed on a pro rata basis to the holders of the Trust Securities.
Pursuant to the Declaration, the Issuer shall be dissolved and its
affairs shall be wound up upon the earliest to occur of the following: (i)
April 2, 2021, the expiration of the term of the Issuer, (ii) the bankruptcy
of the Company, (iii) the filing of a certificate of dissolution or its
equivalent with respect to the Company or the filing of a certificate of
cancellation with respect to the Issuer, following the approval thereof by the
holders of at least a majority in liquidation amount of the outstanding TIDES
as described under "--Modification of the Declaration," or the revocation of
the Company's charter and the expiration of 90 days after the date of notice
to the Company of such revocation without a reinstatement of its charter, (iv)
the distribution of all the assets of the Issuer, (v) the entry of a decree of
a judicial dissolution of the Company or (vi) the redemption of all the Trust
Securities.
Merger, Consolidation or Amalgamation of the Issuer
The Issuer may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other entity or person,
except as described below. The Issuer may, without the consent of the holders
of the TIDES, consolidate, amalgamate, merge with or into, or be replaced by,
a trust organized as such under the laws of any state of the United States of
America; provided that (i) if the Issuer is not the survivor, such successor
entity either (x) expressly assumes all of the obligations of the Issuer under
the TIDES or (y) substitutes for the TIDES other securities having
substantially the same terms as the TIDES (the "Successor Securities") as long
as the Successor Securities rank the same as the TIDES with respect to
distributions and payments upon liquidation, redemption and otherwise, (ii)
the Company expressly acknowledges a trustee of the successor entity that
possesses the same powers and duties as the Trustee as the holder of the
Convertible Junior Subordinated Debentures, (iii) the TIDES or any Successor
Securities are listed, or any Successor Securities will be listed upon
notification of issuance, on any
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national securities exchange or other organization on which the TIDES are then
listed, (iv) such merger, consolidation, amalgamation or replacement does not
cause the TIDES (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation or replacement does not adversely affect the
rights, preferences and privileges of the holders of the TIDES (including any
Successor Securities) in any material respect, (vi) such successor entity has
a purpose substantially identical to that of the Issuer, (vii) the Company has
provided a guarantee to the holders of the Successor Securities with respect
to such Successor entity having substantially the same terms as the Guarantee,
and (viii) prior to such merger, consolidation, amalgamation or replacement,
the Company has received an opinion of nationally recognized independent
counsel (reasonably acceptable to the Trustee) to the Issuer experienced in
such matters to the effect that (x) such successor entity will be treated as a
grantor trust for United States Federal income tax purposes, (y) following
such merger, consolidation, amalgamation or replacement, neither the Company
nor such successor entity will be required to register as an investment
company under the 1940 Act and (z) such merger, consolidation, amalgamation or
replacement will not adversely affect the rights, preferences and privileges
of the holders of the TIDES in any material respect. Notwithstanding the
foregoing, the Issuer shall not, except with the consent of holders of 100% in
liquidation amount of the Common Securities, consolidate, amalgamate, merge
with or into, or be replaced by any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it, if such
consolidation, amalgamation, merger or replacement would cause the Issuer or
the Successor Entity to be classified as other than a grantor trust for United
States Federal income tax purposes.
Declaration Events of Default
An event of default under the Indenture (an "Event of Default") or a
default by the Company under the Guarantee constitutes an event of default
under the Declaration with respect to the Trust Securities (a "Declaration
Event of Default"); provided that, pursuant to the Declaration, the holder of
the Common Securities will be deemed to have waived any Declaration Event of
Default with respect to the Common Securities until all Declaration Events of
Default with respect to the TIDES have been cured, waived or otherwise
eliminated. Until such Declaration Events of Default with respect to the TIDES
have been so cured, waived or otherwise eliminated, the Trustee will be deemed
to be acting solely on behalf of the holders of the TIDES and only the holders
of the TIDES will have the right to direct the Trustee with respect to certain
matters under the Declaration and, therefore, the Indenture.
If a Declaration 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 Convertible Junior Subordinated Debentures on the date such
interest or principal is otherwise payable (or in the case of redemption, the
redemption date), then a holder of TIDES may directly institute a proceeding
(a "Direct Action") for enforcement of payment to such holder of the principal
of or interest on the Convertible Junior Subordinated Debentures having a
principal amount equal to the aggregate liquidation amount of the TIDES of
such holder on or after the respective due date specified in the Convertible
Junior Subordinated Debentures. In connection with such Direct Action, the
Company will be subrogated to the rights of such holder of TIDES under the
Declaration to the extent of any payment made by the Company to such holder of
Convertible Preferred Securities in such Direct Action. The holders of TIDES
will not be able to exercise directly any other remedy available to the
holders of the Convertible Junior Subordinated Debentures.
Upon the occurrence of a Declaration Event of Default, the Trustee as
the sole holder of the Convertible Junior Subordinated Debentures will have
the right under the Indenture to declare the principal of and interest on the
Convertible Junior Subordinated Debentures to be immediately due and payable.
The Company and the Trust are each required to file annually with the Property
Trustee an officer's certificate as to its compliance with all conditions and
covenants under the Declaration.
Voting Rights
Except as described herein, under the Trust Act, the Trust Indenture
Act and under "Description of the Guarantee Amendments and Assignments," and
as otherwise required by law and the Declaration, the holders of the TIDES
will have no voting rights.
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Subject to the requirement of the Trustee obtaining a tax opinion in
certain circumstances set forth in the last sentence of this paragraph, the
holders of a majority in aggregate liquidation amount of the TIDES have the
right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or direct the exercise of any trust or
power conferred upon the Trustee under the Declaration including the right to
direct the Trustee, as holder of the Convertible Junior Subordinated
Debentures, to (i) exercise the remedies available under the Indenture with
respect to the Convertible Junior Subordinated Debentures, (ii) waive any past
Event of Default that is waiveable under the Indenture, (iii) exercise any
right to rescind or annul a declaration that the principal of all the
Convertible Junior Subordinated Debentures shall be due and payable or (iv)
consent to any amendment, modification, or termination of the Indenture or the
Convertible Junior Subordinated Debentures where such consent shall be
required; provided, however, that, where a consent or action under the
Indenture would require the consent or act of the holders of more than a
majority of the aggregate principal amount of Convertible Junior Subordinated
Debentures affected thereby, only the holders of the percentage of the
aggregate stated liquidation preference of the TIDES which is at least equal
to the percentage required under the Indenture may direct the Trustee to give
such consent or take such action. If the Trustee fails to enforce its rights
under the Convertible Junior Subordinated Debentures to receive interest or
principal on the Convertible Junior Subordinated Debentures on the date such
interest or principal is otherwise payable (or in the case of redemption, the
redemption date), a holder of record of TIDES may institute a legal proceeding
directly against the Company to enforce the Trustee's rights under the
Convertible Junior Subordinated Debentures without first instituting any legal
proceeding against the Trustee or any other person or entity. The Trustee
shall notify all holders of the TIDES of any notice of default received from
the Indenture Trustee with respect to the Convertible Junior Subordinated
Debentures. Such notice shall state that such Event of Default also
constitutes a Declaration Event of Default. Except with respect to directing
the time, method and place of conducting a proceeding for a remedy, the
Trustee shall not take any of the actions described in clause (i), (ii) or
(iii) above unless the Trustee has obtained an opinion of tax counsel to the
effect that, as a result of such action, the Issuer will not fail to be
classified as a grantor trust for United States Federal income tax purposes.
In the event the consent of the Trustee, as the holder of the
Convertible Junior Subordinated Debentures, is required under the Indenture
with respect to any amendment, modification or termination of the Indenture,
the Trustee shall request the direction of the holders of the Trust Securities
with respect to such amendment, modification or termination and shall vote
with respect to such amendment, modification or termination as directed by a
majority in liquidation amount of the Trust Securities voting would require
the together as a single class; provided, however, that, where a consent under
the Indenture would require the consent of the holders of more than a majority
of the aggregate principal amount of the Convertible Junior Subordinated
Debentures, the Trustee may only give such consent at the direction of the
holders of at least the same proportion in aggregate stated liquidation
preference of the Trust Securities. The Trustee shall not take any such action
in accordance with the directions of the holders of the Trust Securities
unless the Trustee has obtained an opinion of tax counsel to the effect that
for the purposes of United States Federal income tax the Issuer will not be
classified as other than a grantor trust.
A waiver of an Event of Default under the Indenture will constitute a
waiver of the corresponding Declaration Event of Default.
Any required approval or direction of holders of TIDES may be given
at a separate meeting of holders of TIDES convened for such purpose, at a
meeting of all of the holders of Trust Securities or pursuant to written
consent. The Company Trustees will cause a notice of any meeting at which
holders of TIDES are entitled to vote, or of any matter upon which action by
written consent of such holders is to be taken, to be mailed to each holder of
record of TIDES. Each such notice will include a statement setting forth the
following information: (i) the date of such meeting or the date by which such
action is to be taken; (ii) a description of any resolution proposed for
adoption at such meeting on which such holders are entitled to vote or of such
matter upon which written consent is sought; and (iii) instructions for the
delivery of proxies or consents. No vote or consent of the holders of TIDES
will be required for the Issuer to redeem and cancel TIDES or distribute
Convertible Junior Subordinated Debentures in accordance with the Declaration.
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Notwithstanding that holders of TIDES are entitled to vote or consent
under any of the circumstances described above, any of the TIDES that are
owned at such time by the Company or any entity directly or indirectly
controlling or controlled by, or under direct or indirect common control with,
the Company, shall not be entitled to vote or consent and shall, for purposes
of such vote or consent, be treated as if such TIDES were not outstanding.
The procedures by which holders of TIDES may exercise their voting
rights are described below. See "--Book-Entry-Only Issuance--The Depository
Trust Company" below.
Holders of the TIDES will have no rights to appoint or remove the
Issuer Trustees, who may be appointed, removed or replaced solely by the
Company as the indirect or direct holder of all of the Common Securities.
Modification of the Declaration
The Declaration may be modified and amended if approved by the
Company Trustees (and in certain circumstances the Trustee and the Delaware
Trustee), provided, that if any proposed amendment provides for, or the
Company Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Trust
Securities, whether by way of amendment to the Declaration or otherwise or
(ii) the dissolution, winding-up or termination of the Trust other than
pursuant to the terms of the Declaration, then the holders of the Trust
Securities voting together as a single 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 at least a majority in liquidation amount of the
Trust Securities affected thereby; provided, that if any amendment or proposal
referred to in clause (i) above would adversely affect only the TIDES or the
Common Securities, then only the affected class will be entitled to vote on
such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of at least a majority in liquidation
amount of such class of Securities.
Notwithstanding the foregoing, no amendment or modification may be
made to the Declaration if such amendment or modification would (i) cause the
Trust to be classified for purposes of United States Federal income taxation
as other than a grantor trust, (ii) reduce or otherwise adversely affect the
powers of the Trustee or (iii) cause the Trust to be deemed an "investment
company" which is required to be registered under the 1940 Act.
Transfer Restrictions
The TIDES (and any Convertible Junior Subordinated Debentures
distributed to holders of TIDES) will be subject to restrictions on transfer
and will bear a legend substantially as described in "Transfer Restrictions."
Shares of Common Stock received upon conversion of TIDES or Convertible Junior
Subordinated Debentures subject to such restrictions will also be subject to
such restrictions and will bear a comparable legend.
Registration Rights
In connection with the Original Offering, the Company entered into a
registration rights agreement dated April 10, 1996 (the "Registration Rights
Agreement") with the Initial Purchasers, for the benefit of the holders of the
TIDES, pursuant to which the Company would, at its cost, (a) file a
Registration Statement on Form S-3 (a "Shelf Registration Statement") covering
resales of the TIDES (together with the Convertible Junior Subordinated
Debentures, the Guarantee and the related Common Stock) pursuant to Rule 415
under the Securities Act, (b) use its reasonable best efforts to cause the
Shelf Registration Statement to be declared effective under the Securities Act
and (c) use its reasonable best efforts to keep the Shelf Registration
Statement continuously effective for a period of three years from its
effective date; in each case, subject to the terms and conditions of the
Registration Rights Agreement. The Company would, in the event a Shelf
Registration Statement is filed, among other things, provide to each holder
for whom such Shelf Registration Statement was filed copies of the prospectus
which is a part of the Shelf Registration Statement, notify each such holder
when the Shelf Registration Statement has become effective and take certain
other actions as are required to permit
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unrestricted resales of such Securities. A holder selling such Securities
pursuant to the Shelf Registration Statement generally would be required to be
named as a selling security holder in the related prospectus and to deliver a
prospectus to purchasers, would be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the Registration Rights Agreement which are
applicable to such holder (including certain indemnification obligations).
If (i) by October 7, 1996, the Shelf Registration Statement had not
been declared effective by the Securities and Exchange Commission ("SEC"), or
(ii) after the Shelf Registration Statement has been declared effective, such
Registration Statement ceases to be effective or usable (subject to certain
exceptions) in connection with resales of TIDES in accordance with and during
the periods specified in the Registration Rights Agreement (each such event
referred to in clauses (i) through (ii) a "Registration Default"), the
Convertible Junior Subordinated Debentures would bear interest at the rate per
annum of 6 3/4% and, therefore, distributions would accrue on the TIDES at the
rate of 6 3/4% per annum, from and including the date on which any such
Registration Default shall occur to but excluding the date on which all
Registration Defaults have been cured. At all other times, interest will
accrue on the Convertible Junior Subordinated Debentures and distributions
will accrue on the TIDES at a rate of 6 1/4% per annum. This Prospectus is a
part of the Shelf Registration Statement filed in accordance with the
foregoing requirements.
The summary herein of certain provisions of the Registration Rights
Agreement is subject to, and is qualified in its entirety by reference to, all
the provisions of the Registration Rights Agreement, a copy of which is
available upon request to the Company or the Initial Purchasers.
Book-Entry-Only Issuance--The Depository Trust Company
The description of book-entry procedures in this Prospectus includes
summaries of certain rules and operating procedures of DTC that affect
transfers of interests in the global certificate or certificates issued in
connection with sales of TIDES to qualified institutional buyers pursuant to
Rule 144A under the Securities Act. Except for TIDES initially sold to certain
"accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act) and issued as Certificated Securities, the TIDES were
issued only as fully registered securities registered in the name of Cede &
Co. (as nominee for DTC). One or more fully registered global TIDES
certificates (the "Global Certificates") will be issued, representing, in the
aggregate, TIDES sold pursuant to this Prospectus 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.
Participants in DTC include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. DTC is owned
by a number of its 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 a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the SEC.
Purchases of TIDES within the DTC system must be made by or through
Participants, which will receive a credit for the TIDES on DTC's records. The
ownership interest of each actual purchaser of TIDES ("Beneficial Owner") is
in turn to be recorded on the Participants' 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 Participants or Indirect Participants
through which the Beneficial Owners purchased TIDES. Transfers of ownership
interests in the TIDES are to be accomplished by entries made on the books of
Participants and Indirect Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive
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certificates representing their ownership interests in TIDES, except in the
event that use of the book-entry system for the TIDES is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the TIDES;
DTC's records reflect only the identity of the Participants to whose accounts
such TIDES are credited, which may or may not be the Beneficial Owners. The
Participants and Indirect Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to
Participants, by Participants to Indirect Participants, and by Participants
and Indirect Participants to 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.
Redemption notices in respect of the TIDES held in book-entry form
shall be sent to Cede & Co. If less than all of the TIDES are being redeemed,
DTC will determine the amount of the interest of each Participant to be
redeemed in accordance with its procedures.
Although voting with respect to the TIDES is limited, in those cases
where a vote is required, neither DTC nor Cede & Co. will itself consent or
vote with respect to TIDES. Under its usual procedures, DTC would mail an
Omnibus Proxy to the Issuer as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those
Participants to whose accounts the TIDES are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Distributions on the TIDES held in book-entry form will be made to
DTC in immediately available funds. 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 and Indirect Participants to Beneficial Owners will be governed
by standing instructions and customary practices and will be the
responsibility of such Participants and Indirect Participants and not of DTC,
the Issuer 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 Issuer, disbursement of such payments to Participants is
the responsibility of DTC, and disbursement of such payments to the Beneficial
owners is the responsibility of Participants and Indirect Participants.
Except as provided herein, a Beneficial Owner of an interest in a
global TIDES will not be entitled to receive physical delivery of TIDES.
Accordingly, each Beneficial Owner must rely on the procedures of DTC to
exercise any rights under the TIDES.
DTC may discontinue providing its services as securities depository
with respect to the TIDES at any time by giving notice to the Issuer. Under
such circumstances, in the event that a successor securities depository is not
obtained, certificates for the TIDES are required to be printed and delivered.
Additionally, the Issuer (with the consent of the Company) may decide to
discontinue use of the system of book-entry transfers through DTC (or a
successor depository). In that event, certificates for the TIDES will be
printed and delivered. In each of the above circumstances, the Company will
appoint a paying agent with respect to the TIDES.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the Company and the Issuer believe
to be reliable, but neither the Company nor the Issuer takes responsibility
for the accuracy thereof.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the global TIDES as
represented by a Global Certificate.
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Payment and Paying Agency
Payments in respect of the TIDES shall be made to DTC, which shall
credit the relevant accounts at DTC on the applicable distribution dates or,
in the case of Certificated Securities, 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 shall initially be The Bank of New
York. The Paying Agent shall be permitted to resign as Paying Agent upon 30
days' written notice to the Issuer Trustees. In the event that The Bank of New
York shall no longer be the Paying Agent, the Trustee shall appoint a
successor to act as Paying Agent (which shall be a bank or trust company).
Registrar, Transfer Agent and Conversion Agent
The Bank of New York acts as registrar, transfer agent and Conversion
Agent for the TIDES. Registration of transfers of TIDES will be effected
without charge by or on behalf of the Issuer, but upon payment (with the
giving of such indemnity as the Issuer or the Company may require) in respect
of any tax or other government charges which may be imposed in relation to it.
The Issuer will not be required to register or cause to be registered the
transfer of TIDES after such TIDES have been called for redemption.
Information Concerning the Trustee
The Company and certain of its subsidiaries maintain deposit accounts
and conduct other banking transactions with the Trustee in the ordinary course
of their businesses.
Miscellaneous
The Issuer Trustees are authorized and directed to conduct the
affairs of and to operate the Issuer in such a way that the Issuer will not be
deemed to be an "investment company" required to be registered under the 1940
Act or characterized as other than a grantor trust for federal income tax
purposes and so that the Convertible Junior Subordinated Debentures will be
treated as indebtedness of the Company for United States federal income tax
purposes. In this connection, the Issuer Trustees are authorized to take any
action, not inconsistent with applicable law, the certificate of trust or the
Declaration that the Issuer Trustees determine in their discretion to be
necessary or desirable for such purposes as long as such action does not
adversely affect the interests of the holders of the TIDES.
Holders of the TIDES have no preemptive rights.
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DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the Guarantee
which was executed and delivered by the Company for the benefit of the holders
from time to time of TIDES. The summary is subject in all respects to the
provisions of, and is qualified in its entirety by reference to, the
Guarantee. The Guarantee incorporates by reference the terms of the Trust
Indenture Act. The Guarantee will be qualified under the Trust Indenture Act.
The Bank of New York acts as trustee under the Guarantee for purposes of the
Trust Indenture Act. The Bank of New York, as the Guarantee Trustee, holds the
Guarantee for the benefit of the holders of the TIDES.
General
Pursuant to the Guarantee, the Company irrevocably and
unconditionally agrees, to the extent set forth herein, to pay in full, to the
holders of the TIDES, the Guarantee Payments (as defined below), as and when
due, regardless of any defense, right of set off or counterclaim which the
Issuer may have or assert. The following payments with respect to the TIDES,
to the extent not paid by the Issuer (the "Guarantee Payments"), will be
subject to the Guarantee (without duplication): (i) any accrued and unpaid
distributions which are required to be paid on the TIDES to the extent of
funds of the Trust available therefor, (ii) the amount payable upon redemption
of the TIDES, payable out of funds of the Trust available therefor with
respect to any TIDES called for redemption by the Issuer and (iii) upon a
liquidation of the Issuer, the lesser of (a) the aggregate of the liquidation
preference and all accrued and unpaid dividends on the TIDES to the date of
payment and (b) the amount of assets of the Issuer remaining available for
distribution to holders of TIDES upon the liquidation of the Issuer. 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 TIDES or by
causing the Issuer to pay such amounts to such holders.
If the Company fails to make interest payments on the Convertible
Junior Subordinated Debentures or pay amounts payable upon the redemption,
acceleration or maturity of the Convertible Junior Subordinated Debentures,
the Issuer will have insufficient funds to pay distributions on or to pay
amounts payable upon the redemption or repayment of the TIDES. The Guarantee
does not cover payment of distributions or the amount payable upon redemption
or repayment in respect of the TIDES when the Issuer does not have sufficient
funds to pay such distributions or such amount.
In taking any action to enforce the Guarantee, holders of the TIDES
may proceed directly against the Company as guarantor, rather than having to
proceed against the Issuer before attempting to collect from the Company, and
the Company waives any right or remedy to require that any action be brought
against the Issuer or any other person or entity before proceeding against the
Company. Such obligations will not be discharged except by payment of the
Guarantee Payments in full.
The Guarantee, when taken together with the Company's obligations
under the Convertible Junior Subordinated Debentures, and the Indenture and
the Declaration, including its obligations to pay costs, expenses, debts and
liabilities of the Trust (other than with respect to the Trust Securities)
provides a full and unconditional guarantee on a subordinated basis by the
Company of payments due on the TIDES issued by the Trust.
The Company has also agreed separately to irrevocably and
unconditionally guarantee the obligations of the Trust with respect to the
Common Securities (the "Common Securities Guarantee") to the same extent as
the Guarantee, except that upon the occurrence and during the continuation of
a Declaration Event of Default, holders of TIDES shall have priority over
holders of Common Securities with respect to distributions and payments on
liquidation, redemption, or otherwise.
Certain Covenants of the Company
In the Guarantee, the Company has covenanted that, so long as any
TIDES remain outstanding, if at such time (i) the Company has exercised its
option to defer interest payments on the Convertible Junior
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Subordinated Debentures and such deferral is continuing, (ii) the Company
shall be in default with respect to its payment or other obligations under the
Guarantee or (iii) there shall have occurred any event that, with the giving
of notice or the lapse of time or both, would constitute an Event of Default
under the Indenture, then the Company (a) shall not declare or pay dividends
on, make distributions with respect to, or redeem, purchase or acquire, or
make a liquidation payment with respect to, any of its capital stock (other
than stock dividends paid by the Company which consist of the stock of the
same class as that on which the dividend is being paid), (b) shall not make
any payment of interest, principal or premium, of any, on or repay, repurchase
or redeem any debt securities issued by the Company after the date of original
issuance of the Convertible Junior Subordinated Debentures that rank pari
passu with or junior to the Convertible Junior Subordinated Debentures, and
(c) shall not make any guarantee payments with respect to the foregoing (other
than pursuant to the Guarantee).
As part of the Guarantee, the Company has agreed that it will honor
all obligations described therein relating to the conversion of the TIDES into
Common Stock as described in "Description of the TIDES--Conversion Rights."
Amendments and Assignment
Except with respect to any changes which do not materially adversely
affect the rights of holders of TIDES (in which case no vote will be
required), the Guarantee may be changed only with the prior approval of the
holders of not less than a majority in aggregate stated liquidation preference
of the outstanding TIDES. The manner of obtaining any such approval of holders
of the TIDES will be as set forth under "Description of the TIDES--Voting
Rights." 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 TIDES then
outstanding. Except in connection with any permitted merger or consolidation
of the Company with or into another entity or any permitted sale, transfer or
lease of the Company's assets to another entity as described below under
"Description of the Convertible Junior Subordinated Debentures--Restrictions,"
the Company may not assign its rights or delegate its obligations under the
Guarantee without the prior approval of the holders of at least a majority of
the aggregate stated liquidation preference of the TIDES then outstanding.
Termination of the Guarantee
The Guarantee will terminate as to each holder of TIDES and be of no
further force and effect upon (a) full payment of the applicable redemption
price of such holder's TIDES or (b) the distribution of Common Stock to such
holder in respect of the conversion of such holder's TIDES into Common Stock
and will terminate completely upon full payment of the amounts payable upon
liquidation of the Issuer. The Guarantee will continue to be effective or will
be reinstated, as the case may be, if at any time any holder of TIDES must
restore payment of any sums paid under such TIDES or the Guarantee.
Status of the Guarantee; Subordination
The Guarantee constitutes an unsecured obligation of the Company and
ranks (i) subordinate and junior in right of payment to all liabilities of the
Company, except any liabilities that may be made pari passu expressly by their
terms, (ii) pari passu with the most senior preferred or preference stock now
or hereafter issued by the Company and with any guarantee now or hereafter
entered into by the Company in respect of any preferred or preference stock or
preferred securities of any affiliate of the Company and (iii) senior to
Common Stock. The Declaration provides that each holder of TIDES by acceptance
thereof agrees to the subordination provisions and other terms of the
Guarantee. Upon the bankruptcy, liquidation or winding up of the Company, its
obligations under the Guarantee will rank junior to all its other liabilities
(except as aforesaid) and, therefore, funds may not be available for payment
under the Guarantee.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, prior to the occurrence of a default, has
undertaken to perform only such duties as are specifically set forth in the
Guarantee and, after default with respect to the Guarantee, shall exercise the
same degree of care as a prudent individual would exercise in the conduct of
his or her own affairs. Subject to
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such 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
TIDES unless it is offered reasonable indemnity against the costs, expenses
and liabilities that might be incurred thereby.
Governing Law
The Guarantee is governed by and construed in accordance with the
laws of the State of New York.
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DESCRIPTION OF THE CONVERTIBLE JUNIOR SUBORDINATED DEBENTURES
Set forth below is a description of the specific terms of the
Convertible Junior Subordinated Debentures in which the Issuer invested with
the proceeds of the issuance and sale of (i) the TIDES and (ii) the Common
Securities. The following description is qualified in its entirety by
reference to the Indenture dated as of April 1, 1996 (the "Indenture"),
between the Company and The Bank of New York, as trustee (the "Indenture
Trustee"), a copy of which has been filed as an exhibit to the Registration
Statement and is incorporated herein by reference. The Indenture will be
qualified under the Trust Indenture Act. Whenever particular provisions or
defined terms in the Indenture are referred to herein, such provisions or
defined terms are incorporated by reference herein.
Under certain circumstances involving the dissolution of the Issuer
following the occurrence of a Tax Event or Investment Company Event,
Convertible Junior Subordinated Debentures may be distributed to the holders
of the TIDES in liquidation of the Issuer. See "Description of the TIDES--Tax
Event or Investment Company Event Redemption or Distribution."
General
The Convertible Junior Subordinated Debentures were issued under the
Indenture. The Convertible Junior Subordinated Debentures were limited in
aggregate principal amount to $107,022,800, such amount being the sum of the
aggregate stated liquidation preference of the TIDES and the Common
Securities.
The entire principal amount of the Convertible Junior Subordinated
Debentures will become due and payable, together with any accrued and unpaid
interest thereon, including Additional Interest, if any, on March 10, 2016.
The Convertible Junior Subordinated Debentures, if distributed to
holders of TIDES in a dissolution of the Issuer, will initially be issued as a
global security to the extent of any Global Certificates at the time
representing any TIDES and otherwise in fully registered, certificated form.
In the event that Convertible Junior Subordinated Debentures are issued in
certificated form, such Convertible Junior Subordinated Debentures will be in
denominations of $50 and integral multiples thereof and may be transferred or
exchanged at the offices described below.
Payments on Convertible Junior Subordinated Debentures issued as a
global security will be made in immediately available funds to DTC, as the
depository for the Convertible Junior Subordinated Debentures. In the event
Convertible Junior Subordinated Debentures are issued in certificated form,
principal and interest will be payable, the transfer of the Convertible Junior
Subordinated Debentures will be registrable and Convertible Junior
Subordinated Debentures will be exchangeable for Convertible Junior
Subordinated Debentures of other denominations of a like aggregate principal
amount at the corporate trust office of the Indenture Trustee in The City of
New York; provided that, unless the Convertible Junior Subordinated Debentures
are held by the Issuer or any successor permissible under "Description of the
TIDES--Merger, Consolidation or Amalgamation of the Issuer," payment of
interest may be made at the option of the Company by check mailed to the
address of the persons entitled thereto.
The Indenture does not contain any provisions that afford holders of
Convertible Junior Subordinated Debentures protection in the event of a highly
leveraged transaction involving the Company. The Convertible Junior
Subordinated Debentures are not entitled to the benefit of any sinking fund.
Interest
Each Convertible Junior Subordinated Debenture bears interest at the
rate of 6 1/4% per annum from the original date of issuance, payable quarterly
in arrears on March 15, June 15, September 15, and December 15 (each, an
"Interest Payment Date"), commencing June 15, 1996, to the person in whose
name such Convertible Junior Subordinated Debenture is registered at the close
of business on the fifteenth day immediately preceding such Interest Payment
Date. Interest compounds quarterly and accrues at the annual rate of 6 1/4% on
any interest installment not paid when due.
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The amount of interest payable for any period 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 Convertible Junior Subordinated Debentures is
not a Business Day, then payment of the interest payable on such date will be
made on the next succeeding day which is a Business Day (without any interest
or other payment in respect of any such delay), except that, if such Business
Day is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on such date.
Option to Extend Interest Payment Period
The Company has the right at any time during the term of the
Convertible Junior Subordinated Debentures to defer interest payments from
time to time for successive periods not exceeding 20 consecutive quarters for
each such period. At the end of each Deferral Period (subject to extensions as
provided below), the Company shall pay all interest then accrued and unpaid
(together with interest thereon at the rate specified for the Convertible
Junior Subordinated Debentures to the extent permitted by applicable law). In
no event shall any Deferral Period extend beyond the maturity of the
Convertible Junior Subordinated Debentures. During any Deferral Period, the
Company (i) shall not declare or pay dividends on, make distributions with
respect to, or redeem, purchase or acquire, or make a liquidation payment with
respect to, any of its capital stock (other than stock dividends paid by the
Company which consist of stock of the same class as that on which the dividend
is being paid), (ii) shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities issued
by the Company that rank pari passu with or junior to the Convertible Junior
Subordinated Debentures, and (iii) shall not make any guarantee payments with
respect to the foregoing (other than pursuant to the Guarantee). Prior to the
expiration of any such Deferral Period, the Company may further extend such
Deferral Period; provided that such Deferral Period together with all previous
and further extensions thereof may not exceed 20 consecutive quarters. Upon
the expiration of any Deferral Period and the payment of all amounts then due,
the Company may select a new Deferral Period, subject to the above
requirements. No interest during a Deferral Period, except at the end thereof,
shall be due and payable. If the Issuer shall be the sole holder of the
Convertible Junior Subordinated Debentures, the Company shall give the Issuer
notice of its selection of such Deferral Period at least one Business Day
prior to the earlier of (i) the date the distributions on the TIDES are
payable or (ii) the date the Issuer is required to give notice to any
applicable self-regulatory organization or to holders of the TIDES of the
record date or the date such distribution is payable, but in any event not
less than ten Business Days prior to such record date. The Company shall cause
the Issuer to give notice of the Company's selection of such Deferral Period
to the holders of the TIDES. If the Issuer shall not be the sole holder of the
Convertible Junior Subordinated Debentures, the Company shall give the holders
of the Convertible Junior Subordinated Debentures notice of its selection of
such Deferral Period at least ten Business Days prior to the earlier of (i)
the Interest Payment Date or (ii) the date the Company is required to give
notice to any applicable self-regulatory organization or to holders of the
Convertible Junior Subordinated Debentures of the record or payment date of
such related interest payment, but in any event not less than two Business
Days prior to such record date.
Additional Interest
If the Issuer would be required to pay any taxes, duties, assessments
or governmental charges of whatever nature (other than withholding taxes)
imposed by the United States, or any other taxing authority, then, in any such
case, the Company will pay as additional interest ("Additional Interest") such
amounts as shall be required so that the net amounts received and retained by
the Issuer after paying any such taxes, duties, assessments or governmental
charges will be not less than the amounts the Issuer would have received had
no such taxes, duties, assessments or governmental charges been imposed.
Conversion of the Convertible Junior Subordinated Debentures
The Convertible Junior Subordinated Debentures are convertible into
Common Stock at the option of the holders of the Convertible Junior
Subordinated Debentures at any time prior to maturity (except in the case of
TIDES called for redemption which shall be convertible at any time prior to
the close of business on the Business Day prior to the redemption date) at the
initial conversion price set forth on the cover page of this
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Prospectus, subject to the conversion price adjustments described under
"Description of the TIDES--Conversion Rights." The Issuer has covenanted not
to convert Convertible Junior Subordinated Debentures held by it except
pursuant to a notice of conversion delivered to the Conversion Agent by a
holder of TIDES. Upon surrender of each $50 of liquidation preference of TIDES
to the Conversion Agent for conversion, the Issuer will distribute $50
principal amount of the Convertible Junior Subordinated Debentures to the
Conversion Agent on behalf of the holder of the TIDES so converted, whereupon
the Conversion Agent will convert such Convertible Junior Subordinated
Debentures to Common Stock on behalf of such holder. The Company's delivery to
the holders of the Convertible Junior Subordinated Debentures (through the
Conversion Agent) of the fixed number of shares of Common Stock into which the
Convertible Junior Subordinated Debentures are convertible (together with the
cash payment, if any, in lieu of fractional shares) will be deemed to satisfy
the Company's obligation to pay the principal amount of the Convertible Junior
Subordinated Debentures so converted, and the accrued and unpaid interest
thereon attributable to the period from the last date to which interest has
been paid or duly provided for; provided, however, that if any Convertible
Junior Subordinated Debenture is converted after a record date for payment of
interest, the interest payable on the related interest payment date with
respect to such Convertible Junior Subordinated Debenture shall be paid to the
Issuer (which will distribute such interest to the converting holder) or other
holder of Convertible Junior Subordinated Debentures, as the case may be,
despite such conversion.
Optional Redemption
The Company shall have the right to redeem the Convertible Junior
Subordinated Debentures, in whole or in part, at any time or from time to time
after April 9, 1999, upon not less than 20 nor more than 60 days' notice, at a
redemption price equal to $52.08 per $50 principal amount of the Convertible
Junior Subordinated Debentures to be redeemed plus any accrued and unpaid
interest, including Additional Interest, if any, to the redemption date, if
redeemed on or before April 9, 2000, and at the following redemption prices
per $50 principal amount of Convertible Junior Subordinated Debentures, if
redeemed during the 12-month period ending April 9:
Price per $50
principal
Year amount
- ---- ------
2001 .................................................... $51.74
2002 .................................................... 51.39
2003 .................................................... 51.39
2004 .................................................... 51.39
2005 .................................................... 51.39
and thereafter at $50 per $50 principal amount of Convertible Junior
Subordinated Debentures plus, in each case, accrued and unpaid interest,
including Additional Interest, if any, to the redemption date.
In the event of any redemption in part, the Company shall not be
required to (i) issue, register the transfer of or exchange any Convertible
Junior Subordinated Debenture during a period beginning at the opening of
business 15 days before any selection for redemption of Convertible Junior
Subordinated Debentures and ending at the close of business on the earliest
date on which the relevant notice of redemption is deemed to have been given
to all holders of Convertible Junior Subordinated Debentures to be so redeemed
and (ii) register the transfer of or exchange any Convertible Junior
Subordinated Debentures so selected for redemption, in whole or in part,
except the unredeemed portion of any Convertible Junior Subordinated Debenture
being redeemed in part.
Subordination
The Indenture provides that the Convertible Junior Subordinated
Debentures are subordinate and junior in right of payment to all Senior
Indebtedness of the Company as provided in the Indenture. No payment of
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principal of (including redemption payments), or interest on, the Convertible
Junior Subordinated Debentures may be made (i) if any Senior Indebtedness is
not paid when due, any applicable grace period with respect to such default
has ended and such default has not been cured or waived, or (ii) if the
maturity of any Senior Indebtedness has been accelerated because of a default.
Upon any distribution of assets of the Company to creditors upon any
dissolution, winding up, liquidation or reorganization, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings,
all principal of, and premium, if any, and interest due or to become due on,
all Senior Indebtedness must be paid in full before the holders of the
Convertible Junior Subordinated Debentures are entitled to receive or retain
any payment. In the event that, notwithstanding the foregoing, any payment or
distribution of cash, property or securities shall be received or collected by
a holder of the Convertible Junior Subordinated Debentures in contravention of
the foregoing provisions, such payment or distribution shall be held for the
benefit of and shall be paid over to the holders of Senior Indebtedness or
their representative or representatives or to the trustee or trustees under
any indenture under which any instrument evidencing Senior Indebtedness may
have been issued, as their respective interests may appear, to the extent
necessary to pay in full all Senior Indebtedness then due, after giving effect
to any concurrent payment to the holders of Senior Indebtedness. Subject to
the payment in full of all Senior Indebtedness, the rights of the holders of
the Convertible Junior Subordinated Debentures will be subrogated to the
rights of the holders of Senior Indebtedness to receive payments or
distributions applicable to Senior Indebtedness until all amounts owing on the
Convertible Junior Subordinated Debentures are paid in full.
The term "Senior Indebtedness" shall mean in respect of the Company
(i) the principal, premium, if any, and interest in respect of (A)
indebtedness of such obligor for money borrowed and (B) indebtedness evidenced
by securities, convertible preferred securities, bonds or other similar
instruments issued by such obligor, (ii) all capital lease obligations of such
obligor, (iii) all obligations of such obligor issued or assumed as the
deferred purchase price of property, all conditional sale obligations of such
obligor and all obligations of such obligor under any title retention
agreement (but excluding trade accounts payable arising in the ordinary course
of business), (iv) all obligations of such obligor for the reimbursement of
any letter of credit, banker's acceptance, security purchase facility or
similar credit transaction, (v) all obligations of the type referred to in
clauses (i) through (iv) above of other persons for the payment of which such
obligor is responsible or liable as obligor, guarantor or otherwise, and (vi)
all obligations of the type referred to in clauses (i) through (v) above of
other persons secured by any lien on any property or asset of such obligor
(whether or not such obligation is assumed by such obligor), except for (1)
any such indebtedness issued after the date of original issuance of the
Convertible Junior Subordinated Debentures that is by its terms subordinated
to or pari passu with the Convertible Junior Subordinated Debentures and (2)
any indebtedness (including all other debt securities and guarantees in
respect of those debt securities) initially issued to any other trust, or a
trustee of such trust, partnership or other entity affiliated with the Company
that is, directly or indirectly, a financing vehicle of the Company (a
"Financing Entity") in connection with the issuance by such Financing Entity
of preferred securities or other similar securities. Such Senior Indebtedness
shall continue to be Senior Indebtedness and entitled to the benefits of the
subordination provisions irrespective of any amendment, modification or waiver
of any term of such Senior Indebtedness.
The Indenture does not limit the aggregate amount of Senior
Indebtedness the Company may issue. At March 31, 1996, Senior Indebtedness
consisting of borrowed money of the Company aggregated approximately $854.4
million. See "Capitalization."
Certain Covenants
If (i) there shall have occurred any event that would constitute an
Event of Default, (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 defer payments of interest on the
Convertible Junior Subordinated Debentures by extending the interest payment
period as provided in the Indenture and such period, or any extension thereof,
shall be continuing, then the Company (a) shall not declare or pay dividends
on, make distributions with respect to, or redeem, purchase or acquire, or
make a liquidation payment with respect to, any of its capital stock (other
than stock dividends paid by the Company which consist of stock of the same
class as that on which the dividend is being paid), (b) shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities issued by the Company after the date of original
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issuance of the Convertible Junior Subordinated Debentures that rank pari
passu with or junior to the Convertible Junior Subordinated Debentures, and
(c) shall not make any guarantee payments with respect to the foregoing (other
than pursuant to the Guarantee).
The Company has covenanted (i) to directly or indirectly maintain
100% ownership of the Common Securities of the Trust; provided, however, that
any permitted successor of the Company under the Indenture may succeed to the
Company's ownership of such Common Securities and (ii) to use its reasonable
efforts to cause the Trust (x) to remain a statutory business trust, except in
connection with the distribution of Convertible Junior Subordinated Debentures
to the holders of Trust Securities in liquidation of the Trust, the redemption
of all of the Trust Securities of the Trust, or certain mergers,
consolidations or amalgamations, each as permitted by the Declaration, and (y)
to otherwise continue to be classified as a grantor trust for United States
Federal income tax purposes.
Restrictions
The Indenture provides that the Company shall not consolidate with or
merge with or into any other corporation, or, directly or indirectly, convey,
transfer or lease all or substantially all of the properties and assets of the
Company on a consolidated basis to any Person, unless either the Company is
the continuing corporation or such corporation or Person assumes by
supplemental indenture all the obligations of the Company under the Indenture
and the Convertible Junior Subordinated Debentures, no default or Event of
Default shall exist immediately after the transaction, and the surviving
corporation or such Person is a corporation, partnership or trust organized
and validly existing under the laws of the United States of America, any state
thereof or the District of Columbia.
Events of Default
The Indenture provides that any one or more of the following
described events, which has occurred and is continuing, constitutes an "Event
of Default" with respect to the Convertible Junior Subordinated Debentures:
(i) failure for 30 days to pay interest on the Convertible Junior Subordinated
Debentures, including any Additional Interest in respect thereof, when due; or
(ii) failure to pay principal of or premium, if any, on the Convertible Junior
Subordinated Debentures when due whether at maturity, upon redemption, by
declaration or otherwise; or (iii) failure by the Company to deliver shares of
Common Stock upon an election by a holder of TIDES to convert such TIDES; or
(iv) failure to observe or perform any other covenant contained in the
Indenture for 90 days after notice; or (v) the dissolution, winding up or
termination of the Issuer, except in connection with the distribution of
Convertible Junior Subordinated Debentures to the holders of TIDES in
liquidation of the Issuer and in connection with certain mergers,
consolidations or amalgamations permitted by the Declaration; or (vi) certain
events in bankruptcy, insolvency or reorganization of the Company.
The Indenture Trustee or the holders of not less than 25% in
aggregate outstanding principal amount of the Convertible Junior Subordinated
Debentures may declare the principal of and interest (including any Additional
Interest) on the Convertible Junior Subordinated Debentures due and payable
immediately on the occurrence of an Event of Default; provided, however, that,
after such acceleration, but before a judgment or decree based on
acceleration, the holders of a majority in aggregate principal amount of
outstanding Convertible Junior Subordinated Debentures may, under certain
circumstances, rescind and annul such acceleration if all Events of Default,
other than the nonpayment of accelerated principal, have been cured or waived
as provided in the Indenture. For information as to waiver of defaults, see
"--Modification of the Indenture."
Notwithstanding the foregoing, if an 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 Convertible Junior Subordinated Debentures
on the date such interest or principal is otherwise payable (or in the case of
any redemption, the redemption date), a holder of TIDES may institute a direct
action for payment on or after the respective due date (or redemption date)
specified in the Convertible Junior Subordinated Debentures. The Company may
not amend the Indenture to remove the foregoing right to bring a Direct Action
without the prior written consent of all the holders of TIDES. Notwithstanding
any payment made to such holder of TIDES by the Company in connection with a
Direct Action, the Company shall remain obligated to pay the principal of or
interest on the
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Convertible Junior Subordinated Debentures held by the Issuer or the Trustee
of the Issuer and the Company shall be subrogated to the rights of the holder
of such TIDES with respect to payments on the TIDES to the extent of any
payments made by the Company to such holder in any Direct Action. The holders
of TIDES will not be able to exercise directly any other remedy available to
the holders of the Convertible Junior Subordinated Debentures.
The Trustee is the initial holder of the Convertible Junior
Subordinated Debentures. However, while the TIDES are outstanding, the Trustee
has agreed not to waive an Event of Default with respect to the Convertible
Junior Subordinated Debentures without the consent of holders of a majority in
aggregate liquidation preference of the TIDES then outstanding.
A default under any other indebtedness of the Company or any of its
subsidiaries or joint ventures or the Issuer would not constitute an Event of
Default under the Convertible Junior Subordinated Debentures.
Subject to the provisions of the Indenture relating to the duties of
the Indenture Trustee in case an Event of Default shall occur and be
continuing, the Indenture Trustee will be under no obligation to exercise any
of its rights or powers under the Indenture at the request or direction of any
holders of Convertible Junior Subordinated Debentures, unless such holders
shall have offered to the Indenture Trustee reasonable indemnity. Subject to
such provisions for the indemnification of the Indenture Trustee, the holders
of a majority in aggregate principal amount of the Convertible Junior
Subordinated Debentures then outstanding will have the right to direct the
time, method and place of conducting any proceeding for any remedy available
to the Indenture Trustee, or exercising any trust or power conferred on the
Indenture Trustee.
No holder of any Convertible Junior Subordinated Debenture will have
any right to institute any proceeding with respect to the Indenture or for any
remedy thereunder, unless such holder shall have previously given to the
Indenture Trustee written notice of a continuing Event of Default and, if the
Issuer is not the sole holder of Convertible Junior Subordinated Debentures,
unless the holders of at least 25% in aggregate principal amount of the
Convertible Junior Subordinated Debentures then outstanding shall also have
made written request, and offered reasonable indemnity, to the Indenture
Trustee to institute such proceeding as Indenture Trustee, and the Indenture
Trustee shall not have received from the holders of a majority in aggregate
principal amount of the outstanding Convertible Junior Subordinated Debentures
a direction inconsistent with such request and shall have failed to institute
such proceeding within 60 days. However, such limitations do not apply to a
suit instituted by a holder of a Convertible Junior Subordinated Debenture for
enforcement of payment of the principal of or interest on such Convertible
Junior Subordinated Debenture on or after the respective due dates expressed
in such Convertible Junior Subordinated Debenture.
The holders of a majority in aggregate outstanding principal amount
of all series of the Convertible Junior Subordinated Debentures affected
thereby may, on behalf of the holders of all the Convertible Junior
Subordinated Debentures of such series, waive any past default, except a
default in the payment of principal, premium, if any, or interest. The Company
is required to file annually with the Indenture Trustee and the Trustee a
certificate as to whether or not the Company is in compliance with all the
conditions and covenants under the Indenture.
Modification of the Indenture
The Indenture contains provisions permitting the Company and the
Indenture Trustee, with the consent of the holders of not less than a majority
in principal amount of the Convertible Junior Subordinated Debentures, to
modify the Indenture or any supplemental indenture, provided that no such
modification may, without the consent of the holder of each outstanding
Convertible Junior Subordinated Debenture affected thereby, (i) extend the
fixed maturity of any Convertible Junior Subordinated Debentures of any
series, or reduce the principal amount thereof, or reduce the rate or extend
the time of payment of interest thereon, or reduce any premium payable upon
the redemption thereof, or adversely affect the right to convert Convertible
Junior Subordinated Debentures, without the consent of the holder of each
Convertible Junior Subordinated Debenture so affected, or (ii) reduce the
percentage of Convertible Junior Subordinated Debentures, the holders
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of which are required to consent to any such supplemental indenture, without
the consent of the holders of each Convertible Junior Subordinated Debenture
then outstanding and affected thereby.
In addition, the Company and the Indenture Trustee may execute,
without the consent of any holder of Convertible Junior Subordinated
Debentures, any supplemental indenture to cure any ambiguities, comply with
the Trust Indenture Act and for certain other customary purposes.
Setoff
Notwithstanding anything contained to the contrary in the Indenture,
the Company has the right to set off any payment with respect to the
Convertible Junior Subordinated Debentures 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.
Governing Law
The Indenture and the Convertible Junior Subordinated Debentures are
governed by, and construed in accordance with, the laws of the State of New
York.
Information Concerning the Indenture Trustee
The Indenture Trustee, prior to default, has undertaken to perform
only such duties as are specifically set forth in the Indenture and, after
default, shall exercise the same degree of care as a prudent individual would
exercise in the conduct of his or her own affairs. Subject to such provision,
the Indenture Trustee is under no obligation to exercise any of the powers
vested in it by the Indenture at the request of any holder of Convertible
Junior Subordinated Debentures, unless offered reasonable indemnity by such
holder against the costs, expenses and liabilities which might be incurred
thereby. The Indenture 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 Indenture Trustee reasonably believes that repayment or adequate
indemnity is not reasonably assured to it.
EFFECT OF OBLIGATIONS UNDER THE CONVERTIBLE
JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
As set forth in the Declaration, the sole purpose of the Issuer is to
issue the Trust Securities and use the proceeds thereof to purchase from the
Company the Convertible Junior Subordinated Debentures.
As long as payments of interest and other payments are made when due
on the Convertible Junior Subordinated Debentures, such payments will be
sufficient to cover distributions and payments due on the TIDES primarily
because (i) the aggregate principal amount of Convertible Junior Subordinated
Debentures will be equal to the sum of the aggregate stated liquidation
preference of the TIDES and the Common Securities; (ii) the interest rate and
interest and other payment dates on the Convertible Junior Subordinated
Debentures will match the distribution rate and distribution and other payment
dates for the TIDES; (iii) the Declaration provides that the Company, as
originator, shall pay for all, and the Issuer shall not be obligated to pay,
directly or indirectly, for any, costs and expenses of the Issuer; and (iv)
the Declaration further provides that the holders of Common Securities and the
Issuer Trustees shall not cause or permit the Issuer to, among other things,
engage in any activity that is not consistent with the purposes of the Issuer.
If an 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 Convertible Junior Subordinated Debentures on the date such interest or
principal is otherwise payable (or in the case of redemption, on the
redemption date), then a holder of TIDES may institute a direct action against
the Company for payment on or after the respective due date for payment (or
redemption date).
Payments of distributions and other payments due on the TIDES out of
moneys held by the Issuer are guaranteed by the Company to the extent set
forth under "Description of the Guarantee." If the Company fails to
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make payments under the Guarantee, a holder of any of the TIDES may institute
a direct action against the Company to enforce its rights under the Guarantee.
DESCRIPTION OF CALENERGY CAPITAL STOCK
The authorized capital stock of the Company consists of 80,000,000
shares of Common Stock, par value $0.0675 per share, and 2,000,000 shares of
Preferred Stock, no par value.
Common Stock
As of March 31, 1996, there were 51,994,438 shares of Common Stock
outstanding (not including 15,689,379 shares issuable pursuant to outstanding
stock options and upon conversion of all outstanding 5% convertible debentures
and 9.5% exchangeable subordinated debentures). The holders of Common Stock
are entitled to one vote for each share held of record on all matters
submitted to a vote of stockholders. Holders of the Common Stock vote together
as a single class on all matters. Subject to preferences that may be
applicable to any outstanding Preferred Stock, holders of Common Stock are
entitled to receive ratably such dividends as may be declared by the Board of
Directors out of funds legally available therefor. In the event of a
liquidation, dissolution or winding up of the Company, holders of Common Stock
are entitled to share ratably in all assets remaining after payment of
liabilities and the liquidation preference of any outstanding Preferred Stock.
Subject to certain exceptions, Kiewit Energy has the right to purchase its pro
rata share of any securities convertible to Common Stock or other equity
securities offered or sold by the Company at a price less than the greater of
the current market price of the Common Stock or the exercise price of certain
options granted to Kiewit Energy. No other holders of Common Stock have
preemptive rights and holders of Common Stock have no rights to convert their
Common Stock into any other securities. The outstanding shares of Common Stock
are, and the Common Stock to be issued upon conversion of the TIDES will be,
fully paid and nonassessable.
On December 1, 1988, the Company distributed a dividend of one
Preferred Share Purchase Right (a "Right") for each outstanding share of
Common Stock. The Rights are not exercisable until ten days after a person or
group acquires, or has the right to acquire, beneficial ownership of 20% or
more of the Company's Common Stock or announces a tender or exchange offer for
30% or more of the Company's Common Stock. Each Right entitles the holder to
purchase one one-hundredth of a share of Series A Junior Preferred Stock, no
par value (the "Series A Preferred Stock"), for $52. The Rights may be
redeemed by the Board of Directors up to ten days after an event triggering
the distribution of certificates for the Rights. The Rights Plan pursuant to
which such Rights were issued was amended in February 1991 so that Kiewit
Energy's purchase of Common Stock would not trigger the exercise of the
Rights. The Rights will expire, unless previously redeemed or exercised, on
November 30, 1998. The Rights are automatically attached to, and trade with,
each share of Common Stock.
Preferred Stock
The Board of Directors has the authority to issue 2,000,000 shares of
Preferred Stock in one or more series and to fix the rights, preferences,
privileges and restrictions thereof, including dividend rights, dividend
rates, conversion rights, voting rights, terms of redemption, redemption
prices, liquidation preferences and the number of shares constituting any
series or the designation of such series, without any further action by the
stockholders. The issuance of additional shares of Preferred Stock may have
the effect of delaying, deferring or preventing a change in control of the
Company without further action by the stockholders. The issuance of additional
shares of Preferred Stock with voting and conversion rights may adversely
affect the voting power of the holders of Common Stock, including the loss of
voting control to others. The Company has no present plans to issue any
additional shares of Preferred Stock. As of March 26, 1996, 678,215 shares of
Series A Preferred Stock were subject to issuance if the Rights were exercised
in full.
Stock Options
The Company has issued various stock options. As of March 31, 1996, a
total of 8,717,000 shares of Common Stock are reserved for stock options, of
which 7,716,000 have been granted and remain outstanding at
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exercise prices ranging from $3.00 to $19.00 per share. The Company has stock
option plans under which shares were reserved for grant as incentive or
non-qualified stock options, as determined by the Board of Directors. The
plans allow options to be granted at 85% of their fair market value at the
date of grant. Generally, options are issued at 100% of fair market value at
the date of grant. Options granted under the 1996 Plan generally become
exercisable over a period of three to five years and expire if not exercised
within ten years from the date of grant, or in some instances, a lesser term.
Transfer Agent and Registrar
The Chemical Trust Company of California of San Francisco,
California, has been appointed as the transfer agent and registrar for the
Company's Common Stock and registration of transfer and exchange of shares of
Common Stock may be made at the office maintained for that purpose in San
Francisco, California.
Kiewit Registration Rights Agreements
Under the terms of the Registration Rights Agreement, dated as of
February 18, 1991, between the Company and Kiewit Energy, and the Registration
Rights Agreement, dated as of June 19, 1991, between the Company and Kiewit
Energy, each as amended (collectively, the "Kiewit Registration Rights
Agreements"), subject to certain conditions, Kiewit Energy or its affiliates
may request that the Company register under the Securities Act all or any
portion of certain securities of the Company owned by Kiewit Energy, including
(i) 12,322,312 shares of Common Stock held by Kiewit Energy and any shares of
Common Stock subsequently held by Kiewit Energy (the "Kiewit Shares"), (ii)
options held by Kiewit Energy to purchase 4,289,163 shares of Common Stock
(the "Kiewit Options"), (iii) 4,289,163 shares of Common Stock issuable upon
exercise of the Kiewit Options, and (iv) 3,529,252 shares of Common Stock
issuable upon conversion of the 9.5% Exchangeable Subordinated Debentures
(which were issued upon the exchange of the Series C Preferred Stock) (such
shares are referred to as the "Kiewit Conversion Shares"), in each case,
subject to adjustment as provided in the Kiewit Registration Rights
Agreements. (The Kiewit Shares, the Kiewit Options, the Kiewit Option Shares
and the Kiewit Conversion Shares are collectively referred to as the "Kiewit
Securities"). Subject to certain conditions, the Company is required to use
its diligent efforts to effect such registration. The Company is required to
effect no more than three such registrations (unless Kiewit Energy agrees to
pay all expenses in connection therewith) with respect to the Kiewit Shares,
4,500,000 Kiewit Option Shares and the related Kiewit Options, and two such
registrations (unless Kiewit Energy agrees to pay all expenses in connection
therewith) with respect to the Kiewit Conversion Shares, 1,000,000 Kiewit
Option Shares and the related Kiewit Options. If the Company proposes to
register any of its securities under the Securities Act, either for its own
account or for the account of other stockholders, the Company is required
under the Kiewit Registration Rights Agreements, subject to certain conditions
and at Kiewit Energy's (or its affiliate's) option, to include the Kiewit
Securities specified by Kiewit Energy or its affiliates in the registration
statement. If the underwriters selected for underwriting determine that
marketing factors require a limitation on the number of shares to be
underwritten, the underwriters may (subject to the allocation priority set
forth in the Kiewit Registration Rights Agreements) limit the number of Kiewit
Securities included in the registration statement and underwriting. Generally,
the Company is required to bear the expenses of all such registrations.
UNITED STATES TAXATION
General
The following is a summary of certain of the material United States
federal income tax consequences of the purchase, ownership, disposition and
conversion of TIDES. Unless otherwise stated, this summary deals only with
TIDES held as capital assets by holders and does not deal with special classes
of holders such as banks, thrifts, real estate investment trusts, regulated
investment companies, insurance companies, dealers in securities or
currencies, tax-exempt investors, or persons that will hold the TIDES as other
than a capital asset. This summary also does not address the tax consequences
to persons that have a functional currency other than the U.S. Dollar or the
tax consequences to shareholders, partners or beneficiaries of a holder of
TIDES. Further, it does not include any description of any alternative minimum
tax consequences or the tax laws of any state or local government or of any
foreign government that may be applicable to the TIDES. This summary is
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based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
regulations thereunder and administrative and judicial interpretations
thereof, as of the date hereof, all of which are subject to change, possibly
on a retroactive basis.
Treatment by the Company
The Company intends to treat the Convertible Junior Subordinated
Debentures as debt for United States federal income tax purposes and each
holder of TIDES as the owner of an undivided interest in the Convertible
Junior Subordinated Debentures. The Company and the Trust will therefore
report any payments on the Convertible Junior Subordinated Debentures to the
Internal Revenue Service in a manner consistent with such characterization.
Classification of the Trust
In connection with the issuance of the TIDES, Willkie Farr &
Gallagher, special counsel to the Company and the Trust, rendered its opinion
generally to the effect that, under then current law and assuming full
compliance with the terms of the Declaration and the Convertible Junior
Subordinated Debenture Indenture (and certain other documents), and based on
certain facts and assumptions contained in such opinion, the Trust will be
classified for United States federal income tax purposes as a grantor trust
and not as an association taxable as a corporation. Accordingly, for United
States federal income tax purposes, each holder of TIDES generally will be
considered the owner of an undivided interest in the Convertible Junior
Subordinated Debentures, and each holder will be required to include in its
gross income any OID accrued with respect to its allocable share of those
Convertible Junior Subordinated Debentures.
Potential Extension of Interest Payment Period and Original Issue Discount
Because the Company has the option, under the terms of the
Convertible Junior Subordinated Debentures, to defer payments of interest by
extending interest payment periods for up to 20 quarters, all of the stated
interest payments on the Convertible Junior Subordinated Debentures will be
treated as "original issue discount." Holders of debt instruments issued with
OID must include that discount in income on an economic accrual basis before
the receipt of cash attributable to the interest, regardless of their method
of tax accounting. Generally, all of a holder's taxable interest income with
respect to the Convertible Junior Subordinated Debentures will be accounted
for as OID. Actual payments and distributions of stated interest will not,
however, be separately reported as taxable income. The amount of OID that
accrues in any quarter will approximately equal the amount of the interest
that accrues on the Convertible Junior Subordinated Debentures in that quarter
at the stated interest rate. In the event that the interest payment period is
extended, holders will continue to accrue OID approximately equal to the
amount of the interest payment due at the end of the extended interest payment
period on an economic accrual basis over the length of the extended interest
payment period.
Holders purchasing TIDES at an "acquisition premium" for United
States federal income tax purposes (i.e., for an amount greater than its
adjusted issue price as of the purchase date but less than or equal to the sum
of all amounts payable on the TIDES) will be required to include a reduced
amount of OID in income. The reduction in includable OID is determined by
multiplying the amount of OID otherwise includable by a fraction, the
numerator of which is the excess, if any, of the price paid by the holder over
the adjusted issue price of the TIDES and the denominator of which is the
excess of the sum of all amounts payable on the TIDES after the purchase date
over the adjusted issue price of the TIDES. For this purpose, the adjusted
issue price of TIDES generally is equal to its issue price, increased by the
amount of OID that has accrued on the TIDES. In lieu of applying this
acquisition premium fraction, a holder may elect to include OID in income on a
constant yield method, determined as if the holder had purchased the TIDES at
original issuance.
Because income on the TIDES will constitute OID, corporate holders of
TIDES will not be entitled to a dividends-received deduction with respect to
any income recognized with respect to the TIDES.
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Market Discount
Generally, market discount will exist to the extent the purchase
price paid by a holder for TIDES is less than the revised issue price of the
TIDES at the time of purchase, subject to a statutory de minimis exception.
The revised issue price of TIDES generally equals its issue price, increased
by the amount of OID that has accrued for periods prior to a holder's
acquisition.
A holder of TIDES who acquires the TIDES with market discount will be
required to treat any payment on, or any gain realized on the sale, exchange,
retirement or other disposition of, the TIDES as ordinary income to the extent
of the market discount that accrued (but was not previously included in
income) during the period such holder held the TIDES. Market discount will be
considered to accrue ratably during the period from the date of acquisition to
the maturity date of the TIDES, unless the holder elects to accrue market
discount on the basis of semiannual compounding.
Alternatively, a holder may elect to include market discount in
income currently as it accrues (either on a ratable or semiannual compounding
basis), in which case the rules described above regarding the treatment as
ordinary income of gain upon disposition of the TIDES would not apply.
Generally, such currently included market discount is treated as ordinary
interest for United States federal income tax purposes. Such an election will
apply to all debt instruments acquired by a holder on or after the first day
of the taxable year to which such election applies and may be revoked only
with the consent of the IRS.
A holder may be required to defer the deduction of all or a portion
of the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry TIDES with market discount until the maturity of the TIDES
or certain earlier dispositions.
Receipt of Convertible Junior Subordinated Debentures or Cash Upon
Liquidation of the Issuer
Under certain circumstances, as described under the caption
"Description of the TIDES--Tax Event or Investment Company Event Redemption or
Distribution," Convertible Junior Subordinated Debentures may be distributed
to holders in exchange for the TIDES and in liquidation of the Trust. Under
current law, such a distribution to holders, for United States federal income
tax purposes, would be treated as a nontaxable event to each holder, and each
holder would receive an aggregate tax basis in the Convertible Junior
Subordinated Debentures equal to such holder's aggregate tax basis in its
TIDES. A holder's holding period in the Convertible Junior Subordinated
Debentures so received in liquidation of the Trust would include the period
during which the TIDES were held by such holder. If, however, the related
Special Event is a Tax Event which results in the Trust being treated as an
association taxable as a corporation, the distribution would likely constitute
a taxable event to holders of the TIDES.
Under certain circumstances described herein (see "Description of the
TIDES"), the Convertible Junior Subordinated Debentures may be redeemed for
cash and the proceeds of such redemption distributed to holders in redemption
of their TIDES. Under current law, such a redemption would, for United States
federal income tax purposes, constitute a taxable disposition of the redeemed
TIDES, and a holder would recognize gain or loss as if it sold such redeemed
TIDES for cash. See "--Disposition of TIDES."
Disposition of TIDES
A holder that sells TIDES will recognize gain or loss equal to the
difference between the amount realized on the sale of the TIDES and the
holder's adjusted tax basis in such TIDES. A holder's adjusted tax basis in
the TIDES generally will be its initial purchase price increased by OID
previously includible in such holder's gross income to the date of disposition
and decreased by payments received on the TIDES to the date of disposition.
Such gain or loss will be a capital gain or loss and will be a long-term
capital gain or loss if the TIDES have been held for more than one year at the
time of sale.
The TIDES may trade at a price that does not accurately reflect the
value of accrued but unpaid interest with respect to the underlying
Convertible Junior Subordinated Debentures. A holder who disposes of or
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converts his TIDES between record dates for payments of distributions thereon
will be required to include accrued but unpaid interest on the Convertible
Junior Subordinated Debentures through the date of disposition in income as
ordinary income, and to add such amount to his adjusted tax basis in his pro
rata share of the underlying Convertible Junior Subordinated Debentures deemed
disposed of. To the extent the selling price is less than the holder's
adjusted tax basis (which basis will include, in the form of OID, all accrued
but unpaid interest), a holder will recognize a capital loss. Subject to
certain limited exceptions, capital losses cannot be applied to offset
ordinary income for United States Federal income tax purposes.
Conversion of TIDES into Common Stock
A holder of TIDES will not recognize gain or loss upon the exchange,
through the Conversion Agent, of TIDES for a proportionate share of the
Convertible Junior Subordinated Debentures held by the Issuer.
A holder of TIDES will not recognize income, gain or loss upon the
conversion, through the Conversion Agent, of Convertible Junior Subordinated
Debentures into the Common Stock. A holder of TIDES will, however, recognize
gain upon the receipt of cash in lieu of a fractional share of the Common
Stock equal to the amount of cash received less such holder's tax basis in
such fractional share. A holder of TIDES' tax basis in the Common Stock
received upon exchange and conversion should generally be equal to such
holder's tax basis in the TIDES delivered to the Conversion Agent for exchange
less the basis allocated to any fractional share for which cash is received
and a holder of TIDES' holding period in the Common Stock received upon
exchange and conversion should generally begin on the date such holder
acquired the TIDES delivered to the Conversion Agent for exchange.
Adjustment of Conversion Price
Treasury Regulations promulgated under Section 305 of the Code would
treat holders of TIDES as having received a constructive distribution from the
Company in the event the conversion ratio of the Convertible Junior
Subordinated Debentures were adjusted if (i) as a result of such adjustment,
the proportionate interest (measured by the quantum of Common Stock into or
for which the Convertible Junior Subordinated Debentures are convertible or
exchangeable) of the holders of the TIDES in the assets or earnings and
profits of the Company were increased, and (ii) the adjustment was not made
pursuant to a bona fide, reasonable antidilution formula. An adjustment in the
conversion ratio would not be considered made pursuant to such a formula if
the adjustment was made to compensate for certain taxable distributions with
respect to the Common Stock. Thus, under certain circumstances, a reduction in
the conversion price for the holders may result in a deemed distribution. The
fair market value of such distribution will be taxable as dividend income to
holders to the extent of the current or accumulated earnings and profits of
the Company. Holders of the TIDES would be required to include their allocable
share of such deemed dividend income in gross income but will not receive any
cash related thereto.
Proposed Tax Legislation
On March 19, 1996, as part of President Clinton's Fiscal 1997 Budget
Proposal, the Treasury Department proposed legislation (the "Proposed
Legislation") which, among other things, would treat as equity for United
States federal income tax purposes instruments with a maximum term of more
than 20 years that are not shown as indebtedness on the consolidated balance
sheet of the issuer. On March 29, 1996, Senate Finance Committee Chairman
William V. Roth, Jr. and House Ways and Means Committee Chairman Bill Archer
issued a joint statement (the "Joint Statement") indicating their intent that
certain legislative proposals initiated by the Clinton administration,
including the Proposed Legislation, that may be adopted by either of the
tax-writing committees of Congress, would have an effective date that is no
earlier than the date of "appropriate Congressional action." Based on the
Joint Statement, it is expected that if the Proposed Legislation were enacted,
such legislation would not apply to the Convertible Junior Subordinated
Debentures. Furthermore, even if the Proposed Legislation were enacted in its
current form with effective date provisions making it applicable to the
Convertible Junior Subordinated Debentures, it would not cause the TIDES to be
treated as equity for United States federal income tax purposes since the
maximum term of the TIDES will not exceed 20 years. There can be no
assurances, however, that the effective date guidance contained in the Joint
Statement
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will be incorporated into any enacted legislation or that other legislation
enacted after the date hereof will not otherwise adversely affect the tax
treatment of the TIDES. If legislation is enacted that adversely affects the
tax treatment of the TIDES, such legislation could result in the distribution
of the TIDES to holders of the TIDES or, in certain limited circumstances, the
redemption of such securities by the Company and the distribution of the
resulting cash in redemption of the TIDES. See "Description of the TIDES--Tax
Event or Investment Company Event Redemption or Distribution."
United States Alien Holders
For purposes of this discussion, a "United States Alien Holder" is
any corporation, individual, partnership, estate or trust that is, as to the
United States, a foreign corporation, a non-resident alien individual, a
foreign partnership, or a nonresident fiduciary of a foreign estate or trust.
Under present United States federal income tax law, (i) payments by
the Trust or any of its paying agents to any holder of TIDES who or which is a
United States Alien Holder will not be subject to withholding of United States
Federal income tax; provided that, (a) the beneficial owner of the TIDES does
not actually or constructively (including by virtue of its interest in the
underlying Convertible Junior Subordinated Debentures) own 10% or more of the
total combined voting power of all classes of stock of the Company entitled to
vote, (b) the beneficial owner of the TIDES is not a controlled foreign
corporation that is related to the Company through stock ownership, and (c)
either (A) the beneficial owner of the TIDES certifies to the Trust or its
agent, under penalties of perjury, that it is not a United States holder and
provides its name and address or (B) a securities clearing organization, bank
or other financial institution that holds customers' securities in the
ordinary course of its trade or business (a "Financial Institution"), and
holds the TIDES in such capacity, that certifies to the Trust or its agent,
under penalties of perjury, that such statement has been received from the
beneficial owner by it or by a Financial Institution between it and the
beneficial owner and furnishes the Trust or its agent with a copy thereof; and
(ii) a United States Alien Holder of TIDES will not be subject to withholding
of United States Federal income tax on any gain realized upon the sale or
other disposition of the TIDES.
If a United States Alien Holder is treated as receiving a deemed
dividend as a result of an adjustment of the conversion price of the TIDES, as
described above under "Adjustment of Conversion Price," such deemed dividend
will be subject to United States federal withholding tax at a 30% (or lower
treaty) rate.
Information Reporting and Backup Withholding
Subject to the qualifications discussed below, income on the TIDES
will be reported to holders on Forms 1099, which forms should be mailed to
holders of TIDES by January 31 following each calendar year.
The Trust will be obligated to report annually to Cede & Co., as
holder of record of the TIDES, the OID related to the TIDES that accrued
during the year. The Trust currently intends to report such information on
Form 1099 prior to January 31 following each calendar year even though the
Trust is not legally required to report to record holders until April 15
following each calendar year. The Placing Agents have indicated to the Trust
that, to the extent that they hold TIDES as nominees for beneficial holders,
they currently expect to report to such beneficial holders on Forms 1099 by
January 31 following each calendar year. Under current law, holders of TIDES
who hold as nominees for beneficial holders will not have any obligation to
report information regarding the beneficial holders to the Trust. The Trust,
moreover, will not have any obligation to report to beneficial holders who are
not also record holders. Thus, beneficial holders of TIDES who hold their
TIDES through the Initial Purchasers will receive Forms 1099 reflecting the
income on their TIDES from such nominee holders rather than the Trust.
Payments made on, and proceeds from the sale of, the TIDES may be
subject to a "backup" withholding tax of 31% unless the holder complies with
certain identification requirements. Any withheld amounts will be allowed as a
credit against the holder's United States federal income tax, provided the
required information is provided to the Internal Revenue Service.
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THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS
INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON
A HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS
WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF THE TIDES, 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.
ERISA CONSIDERATIONS
Generally, employee benefit plans that are subject to the Employee
Retirement Income Security Act of 1974 ("ERISA"), or Section 4975 of the Code
("Plans"), may purchase TIDES, subject to the investing fiduciary's
determination that the investment in TIDES satisfies ERISA's fiduciary
standards and other requirements applicable to investments by the Plan.
In any case, the Company and/or any of its affiliates may be
considered a "party in interest" (within the meaning of ERISA) or a
"disqualified person" (within the meaning of Section 4975 of the Code) with
respect to certain Plans (generally, Plans maintained or sponsored by, or
contributed to by, any such persons). The acquisition and ownership of TIDES
by a Plan (or by an individual retirement arrangement or other plans described
in Section 4975(e)(i) of the Code) with respect to which the Company or any of
its affiliates is considered a party in interest or a disqualified person, may
constitute or result in a prohibited transaction under ERISA or Section 4975
of the Code, unless such TIDES are acquired pursuant to and in accordance with
an applicable exemption.
As a result, Plans with respect to which the Company or any of its
affiliates is a party in interest or a disqualified person should not acquire
TIDES. Any other Plans or other entities whose assets include Plan assets
subject to ERISA proposing to acquire TIDES should consult with their own
ERISA counsel.
SELLING HOLDERS
The TIDES were originally issued by the Trust and sold by CS First
Boston Corporation and Merrill Lynch, Pierce, Fenner & Smith Incorporated (the
"Initial Purchasers"), in a transaction exempt from the registration
requirements of the Securities Act, to persons reasonably believed by such
Initial Purchasers to be "qualified institutional buyers" (as defined in Rule
144A under the Securities Act), and to a limited number of institutional
"accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act). The Selling Holders may from time to time offer and sell
pursuant to this Prospectus any or all of the TIDES, any Convertible Junior
Subordinated Debentures and Common Stock issued upon conversion of the TIDES.
The term Selling Holders includes the holder listed below and the beneficial
owners of the TIDES and their transferees, pledgees, donees or other
successors.
The following table sets forth information with respect to the record
holder of the TIDES as of July 15, 1996.
Number of
Selling Holder TIDES
- ---------------------------------------------------------- -------------
Cede & Co. 2,078,600
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None of the Selling Holders has, or within the past three years
has had, any position, office or other material relationship with the Trust or
the Company or any of their predecessors or affiliates, except as noted above.
Because the Selling Holders may, pursuant to this Prospectus, offer all or
some portion of the TIDES, the Convertible Junior Subordinated Debentures or
the Common Stock issuable upon conversion of the TIDES, no estimate can be
given as to the amount of the TIDES, the Convertible Junior Subordinated
Debentures or the Common Stock issuable upon conversion of the TIDES that will
be held by the Selling Holders upon termination of any such sales. In
addition, the Selling Holders identified above may have sold, transferred or
otherwise disposed of all or a portion of their TIDES since the date on which
they provided the information regarding their TIDES pursuant to transactions
exempt from the registration requirements of the Securities Act.
PLAN OF DISTRIBUTION
The Offered Securities may be sold from time to time to purchasers
directly by the Selling Holders. Alternatively, the Selling Holders may from
time to time offer the Offered Securities to or through underwriters,
broker/dealers or agents, who may receive compensation in the form of
underwriting discounts, concessions or commissions from the Selling Holders or
the purchasers of such securities for whom they may act as agents. The Selling
Holders and any underwriters, broker/dealers or agents that participate in the
distribution of Offered Securities may be deemed to be "underwriters" within
the meaning of the Securities Act and any profit on the sale of such
securities and any discounts, commissions, concessions or other compensation
received by any such underwriter, broker/dealer or agent may be deemed to be
underwriting discounts and commissions under the Securities Act.
The Offered Securities may be sold from time to time in one or more
transactions at fixed prices, at prevailing market prices at the time of sale,
at varying prices determined at the time of sale or at negotiated prices. The
sale of the Offered Securities may be effected in transactions (which may
involve crosses or block transactions) (i) on any national securities exchange
or quotation service on which the Offered Securities may be listed or quoted
at the time of sale, (ii) in the over-the-counter market, (iii) in
transactions otherwise than on such exchanges or in the over-the-counter
market or (iv) through the writing of options. At the time a particular
offering of the Offered Securities is made, a Prospectus Supplement, if
required, will be distributed which will set forth the aggregate amount and
type of Offered Securities being offered and the terms of the offering,
including the name or names of any underwriters, broker/dealers or agents, any
discounts, commissions and other terms constituting compensation from the
Selling Holders and any discounts, commissions or concessions allowed or
reallowed or paid to broker/dealers.
Pursuant to the Registration Rights Agreement, the Company is
required to use its reasonable best efforts to keep the Registration Statement
continuously effective for a period of three years from its effective date or
such shorter period that will terminate upon the earlier of the date on which
the Offered Securities shall have been sold pursuant to the Registration
Statement or the date on which the Offered Securities are permitted to be
freely sold or distributed to the public pursuant to any exemption from the
registration requirements of the Securities Act (excluding in reliance on Rule
144A under the Securities Act). Notwithstanding the foregoing obligations, the
Company may, under certain circumstances, postpone or suspend the filing or
the effectiveness of the Registration Statement (or any amendments or
supplements thereto) or the sale of Offered Securities thereto.
To comply with the securities laws of certain jurisdictions, if
applicable, the Offered Securities will be offered or sold in such
jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain jurisdictions the Offered Securities may not be offered
or sold unless they have been registered or qualified for sale in such
jurisdictions or any exemption from registration or qualification is available
and is complied with.
The Selling Holders will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of any of the Offered Securities by
the Selling Holders. The foregoing may affect the marketability of such
securities.
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Pursuant to the Registration Rights Agreement, all expenses of the
registration of the Offered Securities will be paid by the Company, including,
without limitation, SEC filing fees and expenses of compliance with state
securities or "blue sky" laws; provided, however, that the Selling Holders
will pay all underwriting discounts and selling commissions, if any. The
Selling Holders will be indemnified by the Company and the Trust, jointly and
severally against certain civil liabilities, including certain liabilities
under the Securities Act, or will be entitled to contribution in connection
therewith. The Company and the Trust will be indemnified by the Selling
Holders severally against certain civil liabilities, including certain
liabilities under the Securities Act, or will be entitled to contribution in
connection therewith.
LEGAL MATTERS
The validity of the TIDES, the Convertible Junior Subordinated
Debentures, the Guarantee and any Common Stock issuable upon conversion of
such Convertible Junior Subordinated Debentures will be passed upon for the
Company and the Issuer by Steven A. McArthur, Senior Vice President and
General Counsel of the Company, and by Willkie Farr & Gallagher, and certain
matters will be passed upon on behalf of the Initial Purchasers by Skadden,
Arps, Slate, Meagher & Flom. As of March 31, 1996, Mr. McArthur beneficially
owned 155,498 shares of Common Stock.
EXPERTS
The financial statements and the related financial statement schedules
of the Company and its subsidiaries incorporated in this Registration
Statement by reference to the Company's 1995 Form 10-K have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports (which
reports express an unqualified opinion and include an explanatory paragraph
referring to the Company's adoption effective January 1, 1993, of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes") which
are incorporated herein by reference, and have been so incorporated in
reliance upon the reports of such firm given upon their authority as experts
in accounting and auditing.
With respect to the Company's unaudited interim financial information
for the three month periods ended March 31, 1996 and 1995, incorporated herein
by reference, Deloitte & Touche LLP have applied limited procedures in
accordance with professional standards for a review of such information.
However, as stated in their report included in the Company's report on Form
10-Q for the quarter ended March 31, 1996 and incorporated by reference
herein, they did not audit and they do not express an opinion on that interim
financial information. Accordingly, the degree of reliance on their report on
such information should be restricted in light of the limited nature of the
review procedures applied. Deloitte & Touche LLP are not subject to the
liability provisions of Section 11 of the Securities Act for their report on
the unaudited interim financial information because the report is not a
"report" or a "part" of a registration statement prepared or certified by an
accountant within the meaning of Sections 7 and 11 of the Securities Act.
The balance sheets of BN Geothermal Inc., Conejo Energy Company, San
Felipe Energy Company and Niguel Energy Company as of December 31, 1995 and
December 31, 1994 and the related statements of operations, shareholder's
equity and cash flows for each of the three years in the period ended December
31, 1995, incorporated by reference into this Registration Statement on Form
S-3, have been audited by Arthur Andersen LLP, independent public accountants,
as stated in their reports, and have been referred to herein in reliance upon
the authority of said firm as experts in giving said reports.
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- -----------------------------------------------------------------------------
No dealer, salesperson or other person has been authorized to give any
information or to make any representations not contained in this Prospectus
and, if given or made, such information or representation must not be relied
upon as having been authorized by the Company or the Issuer or any of their
agents. This Prospectus does not constitute an offer to sell or a solicitation
of an offer to buy any of the securities offered hereby in any jurisdiction to
any person to whom it is unlawful to make such offer or solicitation in such
jurisdiction. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that the
information contained herein is correct as of any time subsequent to the date
hereof or that there has been no change in the affairs of the Company or the
Issuer since such date.
---------------------------
TABLE OF CONTENTS
Page
----
Available Information........................................5
Incorporation Of Certain Documents By Reference..............5
Risk Factors.................................................7
CalEnergy Capital Trust.....................................13
The Company.................................................14
Recent Developments.........................................15
Ratio Of Earnings To Fixed Charges..........................15
Capitalization..............................................16
Accounting Treatment........................................17
Use Of Proceeds.............................................17
Description Of The Tides....................................17
Description Of The Guarantee................................30
Description Of The Convertible Junior Subordinated
Debentures..............................................33
Effect Of Obligations Under The Convertible Junior
Subordinated Debentures And The Guarantee...............39
Effect Of Obligations Under The Convertible Junior
Subordinated Debentures And The Guarantee...............39
Description Of CalEnergy Capital Stock......................40
United States Taxation......................................41
ERISA Considerations........................................46
Selling Holders.............................................46
Plan Of Distribution........................................47
Legal Matters...............................................48
Experts.....................................................48
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
CalEnergy
Capital Trust
(Graphic)
2,078,600 TIDESSM
guaranteed to the extent
set forth herein by,
and convertible into
Common Stock of,
CalEnergy Company, Inc.
----------------
PROSPECTUS
----------------
- -----------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following are the estimated expenses in connection with the
distribution of the securities being registered hereunder, other than
underwriting discounts and commissions.
Amount
SEC registration fee............................................. $37,675
Printing, shipping and engraving expenses........................ 130,000
Legal fees and expenses.......................................... 200,000
Accounting fees and expenses..................................... 100,000
Transfer Agent, Registrar and trustee fees and expenses.......... 15,000
Miscellaneous expenses........................................... 17,325
Total....................................................... $500,000
Item 15. Indemnification of Officers and Directors.
The Company
Section 145 of the General Corporation Law of the State of Delaware
(the "DGCL") grants each corporation organized thereunder, such as the
Company, the power to indemnify its directors and officers against liabilities
for certain of their acts. Article EIGHTH of the Company's Restated
Certificate of Incorporation and Article V of the Company's By-Laws provides
for indemnification of directors and officers of the Company to the extent
permitted by the DGCL. Article V of the Company's By-Laws further provides
that the Registrant may enter into contracts providing indemnification to the
full extent authorized or permitted by the DGCL and that the Company may
create a trust fund, grant a security interest and/or use other means to
ensure the payment of such amounts as may become necessary to effect
indemnification pursuant to such contracts or otherwise.
Section 102(b)(7) of the DGCL permits a provision in the certificate
of incorporation of each corporation organized thereunder, such as the
Company, eliminating or limiting, with certain exceptions, the personal
liability of a director to the corporation or its stockholders for monetary
damages for certain breaches of fiduciary duty as a director. Article EIGHTH
of the Company's Restated Certificate of Incorporation eliminates the personal
liability of directors to the full extent permitted by the DGCL.
The foregoing statements are subject to the detailed provisions of
Sections 145 and 102(b)(7) of the DGCL, Article EIGHTH of the Company's
Restated Certificate of Incorporation and Article V of the Company's By-Laws.
Section 145 of the DGCL empowers a Delaware corporation to indemnify
any persons who are, or are threatened to be made, parties to any threatened,
pending or completed legal action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of such corporation), by reason of the fact that such person is or was
an officer or director of such corporation, or is or was serving at the
request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. The indemnity may include expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such
action, suit or proceeding, provided that such officer or director acted in
good faith and in a manner reasonably believed to be in or not opposed to the
corporation's best interests, and, for criminal proceedings, had no reasonable
cause to believe his conduct was illegal. A Delaware corporation may indemnify
officers and directors in an action by or in the right of the corporation
under the same conditions, except that no indemnification is permitted without
judicial
II-1
<PAGE>
approval if the officer or director is adjudged to be liable to the
corporation in the performance of his duty. Where an officer or director is
successful on the merits or otherwise in the defense of any action referred to
above, the corporation must indemnify him against the expenses which such
officer or director actually and reasonably incurred.
The Trust
The Declaration of Trust (the "Declaration") provides that no Trustee,
affiliate of any Regular Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives or agent of the Trust, or any
employee or agent of the trust or its affiliates (each an "Indemnified
Person") shall be liable, responsible or accountable in damages or otherwise
to the Trust or any employee or agent of the trust or its affiliates for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by the such Indemnified Person in good faith on behalf of the Trust
and in a manner such Indemnified Person reasonably believed to be within the
scope of the authority conferred on such Indemnified Person by the Declaration
or by law, except that an Indemnified Person shall be liable for any such
loss, damage or claim incurred by reason of such Indemnified Person's gross
negligence (or, in the case of the Trustee, negligence) or willful misconduct
with respect to such act or omissions. The Declaration also provides that to
the fullest extent permitted by applicable law, the Company shall indemnify
and hold harmless each Indemnified Person from and against any loss, damage or
claim incurred by such Indemnified Person by reason of any act or omission
performed or omitted by such Indemnified Person in good faith on behalf of the
Trust and in a manner such Indemnified Person reasonably believed to be within
the scope of authority conferred on such Indemnified Person by the
Declaration, except that no Indemnified Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such
Indemnified Person by reason of gross negligence (or, in the case of the
Trustee, negligence) or willful misconduct with respect to such acts or
omissions. The Declaration further provides that, to the fullest extent
permitted by applicable law, expenses (including legal fees) incurred by an
Indemnified Person in defending any claim, demand, action, suit or proceeding
shall, from time to time, be advanced by the Company prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by
or an undertaking by or on behalf of the Indemnified Person to repay such
amount if it shall be determined that the Indemnified Person is not entitled
to be indemnified for the underlying cause of action as authorized by the
Declaration. The directors and officers of the Company and the Regular
Trustees are covered by insurance policies indemnifying them against certain
liabilities, including certain liabilities arising under the Securities Act of
1933, as amended (the "Securities Act"), which might be incurred by them in
such capacities and against which they cannot be indemnified by the Company or
the Trust. The Selling Holders will be indemnified by the Company and the
Trust, jointly and severally, against certain civil liabilities, including
certain liabilities under the Securities Act, or will be entitled to
contribution in connection therewith. The Company and the Trust will be
indemnified by the Selling Holders severally against certain civil
liabilities, including certain liabilities under the Securities Act, or will
be entitled to contribution in connection therewith.
Item 16. Exhibits and Financial Statement Schedules.
A. Exhibits
The following exhibits are filed as part of this Registration
Statement:
Exhibit No. Description
- ------------------- ------------------------------------------------------
4.1 Certificate of Trust of CalEnergy Capital Trust
4.2 Amended and Restated Declaration of Trust of CalEnergy
Capital Trust, dated as of April 4, 1996, among
CalEnergy Company, Inc., as Sponsor, The Bank of New
York, as Property Trustee, The Bank of New York
(Delaware), as Delaware Trustee and Steven A.
McArthur, John G. Sylvia and Gregory Abel, as
Trustees
4.3 Indenture for the 6 1/4% Convertible Junior
Subordinated Debentures, dated as of April 1, 1996,
among CalEnergy Company, Inc., as Issuer, and The
Bank of New York, as Trustee
II-2
<PAGE>
4.4 Form of 6 1/4% Convertible Preferred Securities Term
Income Deferrable Equity Securities (TIDES)SM
(included in Exhibit 4.2 above)
4.5 Form of 6 1/4% Convertible Junior Subordinated
Debentures (included in Exhibit 4.3 above)*
4.6 CalEnergy Company, Inc. Preferred Securities Guarantee,
dated as of April 10, 1996, between CalEnergy
Company, Inc., as Guarantor, and The Bank of New
York, as Preferred Guarantee Trustee
4.7 CalEnergy Company, Inc. Common Securities Guarantee,
dated as of April 10, 1996, by CalEnergy Company,
Inc., as Guarantor
5.1* Opinion of Willkie Farr & Gallagher as to the
legality of the TIDES, Convertible Junior
Subordinated Debentures and Preferred Securities
Guarantee being registered hereby
5.2* Opinion of Steven A. McArthur, General Counsel of
CalEnergy Company, Inc., as to the legality of the
Common Stock of CalEnergy Company, Inc., being
registered hereby
8.1* Opinion of Willkie Farr & Gallagher as to certain tax
matters
10.1 Registration Rights Agreement, dated April 10, 1996,
by and among CalEnergy Capital Trust, CalEnergy
Company, Inc., CS First Boston Corporation and
Merrill Lynch, Pierce, Fenner & Smith Incorporated
12.1 Statement on Ratio of Earnings to Fixed Charges of
CalEnergy Company, Inc.
15.1 Awareness letter of Deloitte & Touch LLP
23.1 Consent of Deloitte & Touche LLP, independent public
accountants
23.2 Consent of Arthur Andersen LLP, independent public
accountants
23.3* Consent of Willkie Farr & Gallagher is contained in
the opinions of counsel filed as Exhibits 5.1 and 8.1
23.4* Consent of Steven A. McArthur, General Counsel of
CalEnergy Company, Inc., is contained in the opinion
filed as Exhibit 5.2
24.1 Power of Attorney
25.1 Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939, as amended, of The Bank of New
York, as Trustee under the 6 1/4Convertible Junior
Subordinated Debentures Indenture
25.2 Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939, as amended, of The Bank of New
York, as Property Trustee under the Amended and
Restated Declaration of Trust
25.3 Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939, as amended, of The Bank of New
York, as Preferred Guarantee Trustee under the
Preferred Securities Guarantee
- ------------------------------
* To be filed by amendment
B. Financial Statements and Schedules
All schedules for which provision is made in Regulation S-X of the
Securities and Exchange Commission either are not required under the related
instructions or the information required to be included therein has been
included in the financial statements and schedule of CalEnergy Company, Inc.
included in its Form 10-K.
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3)
of the Securities Act of 1933, as amended (the "Securities Act").
II-3
<PAGE>
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Securities and Exchange
Commission ("SEC") by such registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 (the "Exchange
Act") that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment 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.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) 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 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.
(c) 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 or
otherwise, the Registrant has been advised that in the opinion of the SEC,
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 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 Act
and will be governed by the final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes to file an
application for the purpose of determining the eligibility of the trustee to
act under subsection (a) of Section 310 of the Trust Indenture Act in
accordance with the rules and regulations prescribed by the SEC under Section
305(b)(2) of the Trust Indenture Act.
(e) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of Prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in a
form of Prospectus filed by the Registrants 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; and
(2) For purposes of determining any liability under the Securities
Act of 1933, 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.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, CalEnergy
Company, Inc. 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
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Omaha, State of Nebraska, on July
17, 1996.
CALENERGY COMPANY, INC.
By: /s/ David L. Sokol
---------------------------
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- -----------------------------------------------------------------------------
/s/ David L. Sokol Chairman of the Board, July 17, 1996
- ------------------- Chief Executive Officer, and
David L. Sokol Director
/s/ John G. Sylvia Senior Vice President, July 17, 1996
- ------------------- Chief Financial Officer and
John G. Sylvia Treasurer
/s/ Gregory E. Abel Senior Vice President, Controller July 17, 1996
- ------------------- and Chief Accounting Officer
Gregory E. Abel
* Director July 17, 1996
- -------------------
Edgar D. Aronson
* Director July 17, 1996
- -------------------
Judith E. Ayres
* Director July 17, 1996
- -------------------
James Q. Crowe
* Director July 17, 1996
- -------------------
Richard K. Davidson
* By /s/ Steven A. McArthur
-------------------------
Attorney-In-Fact
II-5
<PAGE>
* Director July 17, 1996
- -----------------------------
Richard R. Jaros
* Director July 17, 1996
- -----------------------------
Ben Holt
* Director July 17, 1996
- -----------------------------
John R. Shiner
* Director July 17, 1996
- -----------------------------
Bernard W. Reznicek
* Director July 17, 1996
- -----------------------------
Walter Scott, Jr.
* Director July 17, 1996
- -----------------------------
David E. Wit
* By /s/ Steven A. McArthur
-----------------------
Attorney-In-Fact
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, CalEnergy
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
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Omaha, State of Nebraska, on July
17, 1996.
CALENERGY CAPITAL TRUST
By: /s/ Steven A. McArthur
---------------------------
Trustee
By: /s/ John G. Sylvia
---------------------------
Trustee
By: /s/ Gregory E. Abel
---------------------------
Trustee
II-7
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit Description Page
------- ------------------- ----
4.1 Certificate of Trust of CalEnergy Capital Trust
4.2 Amended and Restated Declaration of Trust of
CalEnergy Capital Trust, dated as of April 4, 1996,
among CalEnergy Company, Inc., as Sponsor, The Bank
of New York, as Property Trustee, The Bank of New
York (Delaware), as Delaware Trustee and Steven A.
McArthur, John G. Sylvia and Gregory Abel, as
Trustees
4.3 Indenture for the 6 1/4% Convertible Junior
Subordinated Debentures, dated as of April 1, 1996,
among CalEnergy Company, Inc., as Issuer, and The
Bank of New York, as Trustee
4.4 Form of 6 1/4% Convertible Preferred Securities
Term Income Deferrable Equity Securities (TIDES) SM
(included in Exhibit 4.2 above)
4.5 Form of 6 1/4% Convertible Junior Subordinated
Debentures (included in Exhibit 4.3 above)
4.6 CalEnergy Company, Inc. Preferred Securities
Guarantee, dated as of April 10, 1996, between
CalEnergy Company, Inc., as Guarantor, and The Bank
of New York, as Preferred Guarantee Trustee
4.7 CalEnergy Company, Inc. Common Securities
Guarantee, dated as of April 10, 1996, by CalEnergy
Company, Inc., as Guarantor
5.2* Opinion of Steven A. McArthur, General Counsel of
CalEnergy Company, Inc., as to the legality of the
Common Stock of CalEnergy Company, Inc., being
registered hereby
8.1* Opinion of Willkie Farr & Gallagher as to certain
tax matters
10.1 Registration Rights Agreement, dated April 10, 1996,
by and among CalEnergy Capital Trust, CalEnergy
Company, Inc., CS First Boston Corporation and
Merrill Lynch, Pierce, Fenner & Smith Incorporated,
as the Initial Purchasers
12.1 Statement on Ratio of Earnings to Fixed Charges of
CalEnergy Company, Inc.
15.1 Awareness letter of Deloitte & Touche LLP
23.1 Consent of Deloitte & Touche LLP, independent
public accountants
23.2 Consent of Arthur Andersen LLP, independent
public accountants
23.3* Consent of Willkie Farr & Gallagher is contained in
the opinions of counsel filed as Exhibits 5.1 and
8.1
23.4* Consent of Steven A. McArthur, General Counsel of
CalEnergy Company, Inc., is contained in the opinion
filed as Exhibit 5.2
24.1 Power of Attorney
25.1 Form T-1 Statement of Eligibility under the Trus
Indenture Act of 1939, as amended, of The Bank of
New York, as Trustee under the 6 1/4% Convertible
Junior Subordinated Debentures Indenture
25.2 Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939, as amended, of The Bank of
New York, as Trustee under the Amended and Restated
Declaration of Trust
25.3 Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939, as amended, of The Bank of
New York, as Preferred Guarantee Trustee under the
Preferred Securities Guarantee
- ------------------
* To be filed by amendment
II-8
CERTIFICATE OF TRUST
The undersigned, the trustees of CalEnergy Capital Trust, desiring to
form a business trust pursuant to Delaware Business Trust Act, 12 Del. C.
Section 3810, hereby certify as follows:
The name of the business trust being formed hereby (the "Trust") is
"CalEnergy Capital Trust".
The name and business address of the trustee of the Trust which has its
principal place of business in the State of Delaware is as follows:
The Bank of New York, Delaware
23 White Clay Center
Route 273
Newark, Delaware 19711
This Certificaate of Trust shall be effective as of the date of filing.
Dated: April 3, 1996
/s/ Steven A. McArthur
- -------------------------------
Name: Steven A. McArthur
Title: Regular Trustee
/s/ John G. Sylvia
- -------------------------------
Name: John G. Sylvia
Title: Regular Trustee
/s/ Gregory Abel
- -------------------------------
Name: Gregory Abel
Title: Regular Trustee
THE BANK OF NEW YORK, DELAWARE, as
Delaware Trustee
By: /s/ Donald J. Wrobel
- -------------------------------
Name: Donald J. Wrobel
Title: Executive Vice President
AMENDED AND RESTATED DECLARATION
OF TRUST
CALENERGY CAPITAL TRUST
Dated as of April 4, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
INTERPRETATION AND DEFINITIONS
<S> <C>
SECTION 1.1 Definitions...................................................................... 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application................................................. 10
SECTION 2.2 Lists of Holders of Securities................................................... 10
SECTION 2.3 Reports by the Property Trustee.................................................. 11
SECTION 2.4 Periodic Reports to Property Trustee............................................. 11
SECTION 2.5 Evidence of Compliance with Conditions Precedent................................. 11
SECTION 2.6 Events of Default; Waiver........................................................ 11
SECTION 2.7 Event of Default; Notice......................................................... 14
ARTICLE III
ORGANIZATION
SECTION 3.1 Name............................................................................. 15
SECTION 3.2 Office........................................................................... 15
SECTION 3.3 Purpose.......................................................................... 15
SECTION 3.4 Authority........................................................................ 15
SECTION 3.5 Title to Property of the Trust................................................... 16
SECTION 3.6 Powers and Duties of the Regular Trustees........................................ 16
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees............................. 20
SECTION 3.8 Powers and Duties of the Property Trustee........................................ 21
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee...................... 24
SECTION 3.10 Certain Rights of Property Trustee............................................... 26
SECTION 3.11 Delaware Trustee................................................................. 29
SECTION 3.12 Not Responsible for Recitals or Issuance of Securities........................... 29
SECTION 3.13 Duration of Trust................................................................ 30
SECTION 3.14 Mergers.......................................................................... 30
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.......................................... 32
SECTION 4.2 Responsibilities of the Sponsor.................................................. 32
i
<PAGE>
Page
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees............................................................... 33
SECTION 5.2 Delaware Trustee................................................................. 34
SECTION 5.3 Property Trustee; Eligibility.................................................... 34
SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee Generally................ 35
SECTION 5.5 Initial Trustees................................................................. 36
SECTION 5.6 Appointment, Removal and Resignation of Trustees................................. 36
SECTION 5.7 Vacancies among Trustees......................................................... 38
SECTION 5.8 Effect of Vacancies.............................................................. 38
SECTION 5.9 Meetings......................................................................... 39
SECTION 5.10 Delegation of Power.............................................................. 39
SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business...................... 40
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.................................................................... 40
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.......................................... 41
SECTION 7.2 Execution and Authentication..................................................... 41
SECTION 7.3 Form and Dating.................................................................. 42
SECTION 7.4 Registrar, Paying Agent and Conversion Agent..................................... 45
Section 7.5 Paying Agent to Hold Money in Trust.............................................. 46
SECTION 7.6 Replacement Securities........................................................... 46
SECTION 7.7 Outstanding Preferred Securities................................................. 46
SECTION 7.8 Preferred Securities............................................................. 47
SECTION 7.9 Temporary Securities............................................................. 47
SECTION 7.10 Cancellation..................................................................... 48
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust............................................................. 49
ARTICLE IX
TRANSFER
SECTION 9.1 General.......................................................................... 50
ii
<PAGE>
Page
SECTION 9.2 Transfer Procedures and Restrictions............................................. 51
SECTION 9.3 Deemed Security Holders.......................................................... 61
SECTION 9.4 Book Entry Interests............................................................. 61
SECTION 9.5 Notices to Clearing Agency....................................................... 62
SECTION 9.6 Appointment of Successor Clearing Agency......................................... 62
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability....................................................................... 63
SECTION 10.2 Exculpation..................................................................... 63
SECTION 10.3 Fiduciary Duty.................................................................. 64
SECTION 10.4 Indemnification................................................................. 65
SECTION 10.5 Outside Businesses.............................................................. 69
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year..................................................................... 69
SECTION 11.2 Certain Accounting Matters...................................................... 69
SECTION 11.3 Banking......................................................................... 70
SECTION 11.4 Withholding..................................................................... 71
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments...................................................................... 71
SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent................ 73
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee.............................. 76
ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 Registration Rights............................................................. 78
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices......................................................................... 80
SECTION 15.2 Governing Law................................................................... 81
iii
<PAGE>
Page
SECTION 15.3 Intention of the Parties........................................................ 82
SECTION 15.4 Headings........................................................................ 82
SECTION 15.5 Successors and Assigns.......................................................... 82
SECTION 15.6 Partial Enforceability.......................................................... 82
SECTION 15.7 Counterparts.................................................................... 83
</TABLE>
iv
<PAGE>
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act
Section of
of 1939, as amended
Declaration
310(a)........................................................ 5.3(a)
310(c)........................................................ Inapplicable
311(c)........................................................ Inapplicable
312(a)........................................................ 2.2(a)
312(b)........................................................ 2.2(b)
313........................................................... 2.3
314(a)........................................................ 2.4
314(b)........................................................ Inapplicable
314(c)........................................................ 2.5
314(d)........................................................ Inapplicable
314(f)........................................................ Inapplicable
315(a)........................................................ 3.9(b)
315(c)........................................................ 3.9(a)
315(d)........................................................ 3.9(a)
316(a)........................................................ Annex I
316(c)........................................................ 3.6(e)
- ---------------
* This Cross-Reference Table does not constitute part of the
Declaration and shall not affect the interpretation of any of its
terms or provisions.
v
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
CALENERGY CAPITAL TRUST
April 4, 1996
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration")
dated and effective as of April 4, 1996, by the undersigned trustees (together
with all other Persons from time to time duly appointed and serving as
trustees in accordance with the provisions of this Declaration, the
"Trustees"), CalEnergy Company, Inc., a Delaware corporation, as trust sponsor
(the "Sponsor"), and by the holders, from time to time, of undivided
beneficial interests in the Trust issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor established CalEnergy
Capital Trust (the "Trust"), a trust under the Business Trust Act (as defined
herein) pursuant to a Declaration of Trust dated as of April 3, 1996, (the
"Original Declaration") and a Certificate of Trust filed with the Secretary of
State of the State of Delaware on April 3, 1996, for the sole purpose of
issuing and selling certain securities representing undivided beneficial
interests in the assets of the Trust and investing the proceeds thereof in
certain Debentures (as defined herein) of the Debenture Issuer (as defined
herein);
WHEREAS, as of the date hereof, no interests in
the Trust have been issued;
WHEREAS, all of the Trustees and the Sponsor, by this
Declaration, amend and restate each and every term and provision of the
Original Declaration; and
NOW, THEREFORE, it being the intention of the parties hereto
to continue the Trust as a business trust under the Business Trust Act and
that this Declaration constitute the governing instrument of such business
trust, the Trustees declare that all assets contributed to the Trust will be
held in trust for the benefit of the holders, from time to time, of the
securities representing undivided beneficial interests in the assets of the
Trust issued hereunder, subject to the provisions of this Declaration.
<PAGE>
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration
but not defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Declaration
has the same meaning throughout;
(c) all references to "the Declaration" or "this
Declaration" are to this Declaration as modified, supple-
mented or amended from time to time;
(d) all references in this Declaration to
Articles and Sections and Annexes and Exhibits are to
Articles and Sections and Annexes and Exhibits to this
Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Declaration unless otherwise defined in this
Declaration or unless the context otherwise requires; and
(f) a reference to the singular includes the
plural and vice versa.
"Additional Interest" means if the Trust is required to pay
any taxes, duties, assessments or governmental charges of whatever nature
(other than withholding taxes) imposed by the United States or any other
taxing authority, such amounts as shall be required so that the net amounts
received and retained by the Trust after paying such taxes, duties,
assessments and governmental charges will not be less than the amounts the
Trust would have received had no such taxes, duties, assessments or
governmental charges been imposed.
"Affiliate" has the same meaning as given to that term in
Rule 405 of the Securities Act or any successor rule thereunder.
2
<PAGE>
"Agent" means any Registrar, Paying Agent,
Conversion Agent or co-registrar.
"Authorized Officer" of a Person means any Person that is
authorized to bind such Person provided, however that the Authorized Officer
signing an Officer's Certificate given pursuant to section 314(a)(4) of the
Trust Indenture Act shall be the principal executive, financial or accounting
officer of such Person.
"Book Entry Interest" means a beneficial interest in a
Global Certificate, ownership and transfers of which shall be maintained and
made through book entries by a Depositary as described in Section 9.4.
"Business Day" means any day other than a day on which
banking institutions in the City of New York or in Wilmington, Delaware are
authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code ss.3801 et seq., as it may be amended from time to
time, or any successor legislation.
"Certificate" means a certificate in global or definitive
form representing a Common Security or a Preferred Security.
"Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act.
"Closing Date" means April 10, 1996.
"Code" means the Internal Revenue Code of 1986 as amended
from time to time, or any successor legislation.
"Commission" means the Securities and Exchange
Commission.
"Common Securities" has the meaning specified in
Section 7.1(a).
"Common Securities Guarantee" means the guarantee agreement
dated as of April 10, 1996, of the Sponsor in respect of the Common
Securities.
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"Company Indemnified Person" means (a) any Regular Trustee;
(b) any Affiliate of any Regular Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Regular Trustee; or (d) any officer, employee or agent of the Trust or its
Affiliates.
"Covered Person" means: (a) any officer, director,
shareholder, partner, member, representative, employee or
agent of (i) the Trust or (ii) the Trust's Affiliates; and
(b) any Holder of Securities.
"Debenture Issuer" means the Sponsor in its
capacity as issuer of the Debentures.
"Debenture Trustee" means The Bank of New York, a New York
banking corporation, as trustee under the Indenture until a successor is
appointed thereunder, and thereafter means such successor trustee.
"Debentures" means the series of Debentures to be issued by
the Debenture Issuer under the Indenture to be held by the Property Trustee, a
specimen certificate for such series of Debentures being Exhibit B.
"Delaware Trustee" has the meaning set forth in
Section 5.2.
"Definitive Preferred Securities" means the Restricted
Definitive Preferred Security and any other Preferred Securities in definitive
form issued by the Trust.
"Distribution" means a distribution payable to Holders of
Securities in accordance with Section 6.1.
"Depositary" means The Depository Trust Company,
the initial Clearing Agency.
"Event of Default" in respect of the Securities means an
Event of Default (as defined in the Indenture) has occurred and is continuing
in respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
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"Exchanged Preferred Securities" means any Preferred
Security issued in connection with a sale pursuant to an effective Shelf
Registration Statement and not bearing any Restricted Securities Legend.
"Fiduciary Indemnified Person" has the meaning set
forth in Section 10.4(b).
"Holder" means a Person in whose name a Certificate
representing a Security is registered, such Person being a beneficial owner
within the meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified
Person or a Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of April 1, 1996,
between the Debenture Issuer and the Debenture Trustee, and any indenture
supplemental thereto pursuant to which the Debentures are to be issued.
"Initial Purchasers" has the meaning set forth in
the Purchase Agreement.
"Investment Company" means an investment company
as defined in the Investment Company Act.
"Investment Company Act" means the Investment Company Act of
1940, as amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in the
terms of the Securities as set forth in Annex I hereto.
"Legal Action" has the meaning set forth in
Section 3.6(g).
"Majority in liquidation amount of the Securities" means,
except as provided in the terms of the Preferred Securities or by the Trust
Indenture Act, Holder(s) of outstanding Securities voting together as a single
class or, as the context may require, Holders of outstanding Preferred
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of
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more than 50% of the aggregate liquidation amount (including the stated
amount that would be paid on redemption, liquidation or otherwise, plus accrued
and unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
"Ministerial Action" has the meaning set forth in the terms
of the Securities as set forth in Annex I hereto.
"Offering Circular" means the confidential offering
circular, dated as of April 4, 1996, relating to the issuance by the Trust of
Preferred Securities.
"Officer's Certificate" means, with respect to any Person, a
certificate signed by an Authorized Officer of such Person. Any Officer's
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(a) a statement that the officer signing the Certificate 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 upon which the
statements or opinions contained in such Certificate are
based;
(c) a statement that, in such officer's opinion, such officer
has made or caused to be made such examination or
investigation as 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.
"Participants" has the meaning set forth in
Section 7.3(b).
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"Paying Agent" has the meaning specified in
Section 7.4.
"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.
"Preferred Securities" has the meaning specified
in Section 7.1(a).
"Preferred Securities Guarantee" means the guarantee
agreement dated as of April 10, 1996, of the Sponsor in respect of the
Preferred Securities.
"Preferred Security Beneficial Owner" means, with respect to
a Book Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Depositary, or on the books of a
Person maintaining an account with such Depositary (directly as a Participant
or as an indirect participant, in each case in accordance with the rules of
such Depositary).
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.3.
"Property Trustee Account" has the meaning set
forth in Section 3.8(c).
"Purchase Agreement" shall have the meaning set
forth in Section 7.3(a).
"Quorum" means a majority of the Regular Trustees or, if
there are only two Regular Trustees, both of them.
"Registrar" has the meaning specified in Section 7.4.
"Registration Rights Agreement" means the Registration
Rights Agreement, dated April 10, 1996, among the Sponsor, the Trust, and the
Initial Purchasers named in
the Purchase Agreement.
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"Regular Trustee" means any Trustee other than the Property
Trustee and the Delaware Trustee.
"Related Party" means, with respect to the
Sponsor, any direct or indirect wholly owned subsidiary of
the Sponsor or any other Person that owns, directly or indirectly, 100% of the
outstanding voting securities of the Sponsor.
"Responsible Officer" means, with respect to the Property
Trustee, any vice-president, any assistant vice-president, the treasurer, any
assistant treasurer, any trust officer or assistant trust officer or any other
officer in the Corporate Trust Department of the Property Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Restricted Definitive Preferred Security" has the
meaning set forth in Section 7.3(c).
"Restricted Period" means the one-year period following the
last issue date for the Preferred Securities (including Preferred Securities
issued to cover overallotments and Common Securities issued in connection with
related capital contributions). The Sponsor shall inform the Trustee as to the
termination of the restricted period and the Trustee may rely conclusively
thereon.
"Restricted Preferred Securities" shall include
the Restricted Definitive Preferred Securities and the Rule
144A Global Preferred Securities (as defined in Article IX
herein).
"Rule 3a-5" means Rule 3a-5 under the Investment
Company Act.
"Securities" means the Common Securities and the
Preferred Securities.
"Securities Act" means the Securities Act of 1933, as
amended from time to time or any successor legislation.
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"Securities Custodian" means the custodian with respect to
the Rule 144A Global Preferred Security and any other Preferred Security in
global form.
"Shelf Registration Statement" has the meaning
specified in Section 14.1.
"Special Event" has the meaning set forth in
Annex I hereto.
"Sponsor" means CalEnergy Company, Inc., a Delaware
corporation, or any successor entity in a merger, consolidation or
amalgamation, in its capacity as sponsor of the Trust.
"Super Majority" has the meaning set forth in
Section 2.6(a)(ii).
"Tax Event" has the meaning set forth in Annex I
hereto.
"10% in liquidation amount of the Securities" means, except
as provided in the terms of the Preferred Securities or by the Trust Indenture
Act, Holders of outstanding Securities voting together as a single class or,
as the context may require, Holders of outstanding Preferred Securities or
Holders of outstanding Common Securities, voting separately as a class, who
are the record owners of 10% or more of the aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all outstanding Securities of the
relevant class.
"Treasury Regulations" means the income tax regulations,
including temporary and proposed regulations, promulgated under the Code by
the United States Treasury, as such regulations may be amended from time to
time (including corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed
this Declaration as a trustee, so long as such Person shall continue in office
in accordance with the terms hereof, and all other Persons who may from time
to time be duly appointed, qualified and serving as Trustees in
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accordance with the provisions hereof, and references herein to a Trustee or
the Trustees shall refer to such Person or Persons solely in their capacity as
trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended from time to time, or any successor legislation.
"Unrestricted Definitive Preferred Security" has
the meaning set forth in Section 9.2(c).
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the
Trust Indenture Act that are required to be part of this Declaration, which
are incorporated by reference in and made part of this Declaration and shall,
to the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is
a Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this
Declaration limits, qualifies or conflicts with the duties imposed by ss.ss.
310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
(d) The application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf
of the Trust shall provide the Property Trustee (i) within 14 days after each
record date for payment of Distributions, a list, in such form as the Property
Trustee may reasonably require, of the names and addresses of the Holders of
the Securities ("List of Holders") as of such record date, provided that
neither the Sponsor nor the
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Regular Trustees on behalf of the Trust shall be obligated to provide such
List of Holders at any time the List of Holders does not differ from the most
recent List of Holders given to the Property Trustee by the Sponsor and the
Regular Trustees on behalf of the Trust, and (ii) at any other time, within 30
days of receipt by the Trust of a written request from the Property Trustee
for a List of Holders as of a date no more than 14 days before such List of
Holders is given to the Property Trustee. The Property Trustee shall preserve,
in as current a form as is reasonably practicable, all information contained
in Lists of Holders given to it or which it receives in the capacity as Paying
Agent (if acting in such capacity) provided that the Property Trustee may
destroy any List of Holders previously given to it on receipt of a new List of
Holders.
(b) The Property Trustee shall comply with its obligations
under ss.ss. 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Property Trustee.
Within 60 days after May 15 of each year, the Property
Trustee shall provide to the Holders of the Preferred Securities such reports
as are required by ss. 313 of the Trust Indenture Act, if any, in the form and
in the manner provided by ss. 313 of the Trust Indenture Act. The Property
Trustee shall also comply with the requirements of ss. 313(d) of the Trust
Indenture Act.
SECTION 2.4 Periodic Reports to Property Trustee.
Each of the Sponsor and the Regular Trustees on behalf of
the Trust shall provide to the Property Trustee such documents, reports and
information as required by ss. 314 of the Trust Indenture Act (if any) and the
compliance certificate required by ss. 314 of the Trust Indenture Act in the
form, in the manner and at the times required by ss. 314 of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions
Precedent.
Each of the Sponsor and the Regular Trustees on behalf of
the Trust shall provide to the Property Trustee such evidence of compliance
with any conditions precedent,
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if any, provided for in this Declaration that relate to any of the matters set
forth in ss. 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to ss. 314(c)(1) may be given in
the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver.
(a) The Holders of a Majority in liquidation
amount of Preferred Securities may, by vote, on behalf of
the Holders of all of the Preferred Securities, waive any past Event of
Default in respect of the Preferred Securities and its consequences, provided
that, if the underlying Event of Default under the Indenture:
(i) is not waivable under the Indenture, the
Event of Default under the Declaration shall also not
be waivable; or
(ii) requires the consent or vote of greater than a
majority in principal amount of the holders of the Debentures (a
"Super Majority") to be waived under the Indenture, the Event of
Default under the Declaration may only be waived by the vote of the
Holders of at least the proportion in liquidation amount of the
Preferred Securities that the relevant Super Majority represents of
the aggregate principal amount of the Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in
lieu of ss. 316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B)
of the Trust Indenture Act is hereby expressly excluded from this Declaration
and the Securities, as permitted by the Trust Indenture Act. Upon such waiver,
any such default shall cease to exist, and any Event of Default with respect
to the Preferred Securities arising therefrom shall be deemed to have been
cured, for every purpose of this Declaration, but no such waiver shall extend
to any subsequent or other default or an Event of Default with respect to the
Preferred Securities or impair any right consequent thereon. Any waiver by the
Holders of the Preferred Securities of an Event of Default with respect to the
Preferred Securities shall also be deemed to constitute a waiver by the
Holders of the Common Securities of any such Event of Default with respect to
the Common Securities for all purposes of this Declaration without any
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further act, vote, or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the
Common Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except
where the Holders of the Common Securities are deemed to have waived
such Event of Default under the Declaration as provided below in this
Section 2.6(b), the Event of Default under the Declaration shall also
not be waivable; or
(ii) requires the consent or vote of a Super
Majority to be waived, except where the Holders of the Common
Securities are deemed to have waived such Event of Default under the
Declaration as provided below in this Section 2.6(b), the Event of
Default under the Declaration may only be waived by the vote of the
Holders of at least the proportion in liquidation amount of the
Common Securities that the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding;
provided further, that each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Securities and its consequences until all Events of Default with
respect to the Preferred Securities have been cured, waived or otherwise
eliminated, and until such Events of Default have been so cured, waived or
otherwise eliminated, the Property Trustee will be deemed to be acting solely
on behalf of the Holders of the Preferred Securities and only the Holders of
the Preferred Securities will have the right to direct the Property Trustee in
accordance with the terms of the Securities. The foregoing provisions of this
Section 2.6(b) shall be in lieu of ss.ss. 316(a)(1)(A) and 316(a)(1)(B) of the
Trust Indenture Act and such ss.ss. 316(a)(1)(A) and 316(a)(1)(B) of the Trust
Indenture Act are hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Subject to the foregoing
provisions of this Section 2.6(b), upon such waiver, any such default
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shall cease to exist and any Event of Default with respect to the Common
Securities arising therefrom shall be deemed to have been cured for every
purpose of this Declaration, but no such waiver shall extend to any subsequent
or other default or Event of Default with respect to the Common Securities or
impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the Property
Trustee at the direction of the Holders of the Preferred Securities,
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu
of ss. 316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of
the Trust Indenture Act is hereby expressly excluded from this Declaration and
the Securities, as permitted by the Trust Indenture Act.
SECTION 2.7 Event of Default; Notice.
(a) The Property Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Securities, notices of all defaults with
respect to the Securities actually known to a Responsible Officer of the
Property Trustee, unless such defaults have been cured before the giving of
such notice (the term "defaults" for the purposes of this Section 2.7(a) being
hereby defined to be an Event of Default as defined in the Indenture, not
including any periods of grace provided for therein and irrespective of the
giving of any notice provided therein); provided that, except for a default in
the payment of principal of (or premium, if any) or interest on any of the
Debentures or in the payment of any sinking fund installment established for
the Debentures, the Property Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee, or a
trust committee of directors and/or Responsible Officers of the Property
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders of the Securities.
(b) The Property Trustee shall not be deemed to
have knowledge of any default except:
(i) a default under Sections 501(1) and
501(2) of the Indenture; or
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(ii) any default as to which the Property Trustee
shall have received written notice or of which a Responsible Officer
of the Property Trustee charged with the administration of the
Declaration shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "CalEnergy Capital Trust," as such name
may be modified from time to time by the Regular Trustees following written
notice to the Holders of Securities. The Trust's activities may be conducted
under the name of the Trust or any other name deemed advisable by the Regular
Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o
CalEnergy Company, Inc., 302 South 36th Street, Suite 400, Omaha, Nebraska
68131, Attention: Chief Financial Officer, with a copy to: General Counsel. On
10 Business Days written notice to the Holders of Securities, the Regular
Trustees may designate another principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only
those other activities necessary or incidental thereto. The Trust shall not
borrow money, issue debt or reinvest proceeds derived from investments, pledge
any of its assets, or otherwise undertake (or permit to be undertaken) any
activity that would cause the Trust not to be classified for United States
federal income tax purposes as a grantor trust.
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SECTION 3.4 Authority.
(a) Subject to the limitations provided in this Declaration
and to the specific duties of the Property Trustee, the Regular Trustees shall
have exclusive and complete authority to carry out the purposes of the Trust.
An action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Property Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the
Trustees acting on behalf of the Trust, no person shall be required to inquire
into the authority of the Trustees to bind the Trust. Persons dealing with the
Trust are entitled to rely conclusively on the power and authority of the
Trustees as set forth in this Declaration.
(b) Except as expressly set forth in this Declaration and
except if a meeting of the Regular Trustees is called with respect to any
matter over which the Regular Trustees have power to act, any power of the
Regular Trustees may be exercised by, or with the consent of, any one such
Regular Trustee.
(c) Unless otherwise determined by the Regular Trustees, and
except as otherwise required by the Business Trust Act or applicable law, any
Regular Trustee is authorized to execute on behalf of the Trust any documents
which the Regular Trustees have the power and authority to cause the Trust to
execute pursuant to Section 3.6, provided, that the registration statement
referred to in Section 3.6, including any amendments thereto, shall be signed
by a majority of the Regular Trustees; and
(d) a Regular Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21
his or her power for the purposes of signing any documents which the Regular
Trustees have power and authority to cause the Trust to execute pursuant to
Section 3.6.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the
Debentures and the Property Trustee Account or as
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otherwise provided in this Declaration, legal title to all assets of the Trust
shall be vested in the Trust. The Holders shall not have legal title to any
part of the assets of the Trust, but shall have an undivided beneficial
interest in the assets of the Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty
and authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities
and the Common Securities in accordance with this Declaration; provided,
however, that the Trust may issue no
more than one series of Preferred Securities and no more than one series of
Common Securities, and, provided further, that there shall be no interests in
the Trust other than the Securities, and the issuance of Securities shall be
limited to simultaneous issuance of both Preferred Securities and Common
Securities on the Closing Date and any other date Preferred Securities are
sold pursuant to the over-allotment option granted in the Purchase Agreement;
(b) in connection with the issue and sale of the
Preferred Securities, at the direction of the Sponsor, to:
(i) prepare and execute, if necessary, an offering
circular (the "Offering Circular") in preliminary and final form
prepared by the Sponsor, in relation to the offering and sale of
Preferred Securities to qualified institutional buyers in reliance on
Rule 144A under the Securities Act and to a limited number of
institutional "accredited investors" (as defined in Rule
501(a)(1),(2),(3) or (7) under the Securities Act) and to execute and
file with the Commission, at such time as determined by the Sponsor,
a registration statement filed on Form S-3 prepared by the Sponsor,
including any amendments thereto in relation to the Preferred
Securities;
(ii) execute and file any documents prepared by the
Sponsor, or take any acts as deter-
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mined by the Sponsor to be necessary in order to qualify or register
all or part of the Preferred Securities in any State or foreign
jurisdiction in which the Sponsor has determined to qualify or
register such Preferred Securities for sale;
(iii) execute and file an application, prepared by
the Sponsor, to the Private Offerings, Resale and Trading through
Automated Linkages ("PORTAL") Market and, at such time as determined
by the Sponsor, to the New York Stock Exchange or any other national
stock exchange or the Nasdaq Stock Market's National Market for
listing or quotation of the Preferred Securities;
(iv) to execute and deliver letters,
documents, or instruments with the Depositary relating
to the Preferred Securities;
(v) execute and file with the Commission, at such
time as determined by the Sponsor, a registration statement on Form
8-A, including any amendments thereto, prepared by the Sponsor
relating to the registration of the Preferred Securities under
Section 12(b) of the Exchange Act; and
(vi) execute and enter into the Purchase Agreement,
Registration Rights Agreement and other related agreements providing
for the sale of the Preferred Securities;
(c) to acquire the Debentures with the proceeds of the sale
of the Preferred Securities and the Common Securities; provided, however, that
the Regular Trustees shall cause legal title to the Debentures to be held of
record in the name of the Property Trustee for the benefit of the Holders of
the Preferred Securities and the Holders of Common Securities;
(d) to give the Sponsor and the Property Trustee prompt
written notice of the occurrence of a Special Event; provided that the Regular
Trustees shall consult with the Sponsor and the Property Trustee before taking
or refraining from taking any Ministerial Action in relation to a Special
Event;
(e) to establish a record date with respect to all actions
to be taken hereunder that require a record date be established, including and
with respect to, for the
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purposes of ss.316(c) of the Trust Indenture Act, Distributions, voting
rights, redemptions and exchanges, and to issue relevant notices to the
Holders of Preferred Securities and Holders of Common Securities as to such
actions and applicable record dates;
(f) to take all actions and perform such duties
as may be required of the Regular Trustees pursuant to the
terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate,
resort to legal action, or otherwise adjust claims or demands of or against
the Trust ("Legal Action"), unless pursuant to Section 3.8(e), the Property
Trustee has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who
may be designated as officers with titles) and managers, contractors,
advisors, and consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's
obligations under the Trust Indenture Act;
(j) to give the certificate required by
ss. 314(a)(4) of the Trust Indenture Act to the Property
Trustee, which certificate may be executed by any Regular
Trustee;
(k) to incur expenses that are necessary or
incidental to carry out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act
as, registrar and transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the
Securities of any notice received from the Debenture Issuer of its election to
defer payments of interest on the Debentures by extending the interest payment
period under the Indenture;
(n) to execute all documents or instruments,
perform all duties and powers, and do all things for and on
behalf of the Trust in all matters necessary or incidental
to the foregoing;
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(o) to take all action that may be necessary or appropriate
for the preservation and the continuation of the Trust's valid existence,
rights, franchises and privileges as a statutory business trust under the laws
of the State of Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the Holders of the
Preferred Securities or to enable the Trust to effect the purposes for which
the Trust was created;
(p) to take any action, not inconsistent with this
Declaration or with applicable law, that the Regular Trustees determine in
their discretion to be necessary or desirable in carrying out the activities
of the Trust as set out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be
an Investment Company required to be registered under
the Investment Company Act;
(ii) causing the Trust to be classified for
United States federal income tax purposes as a grantor
trust; and
(iii) cooperating with the Debenture Issuer to
ensure that the Debentures will be treated as indebtedness of the
Debenture Issuer for United States federal income tax purposes;
provided that such action does not materially adversely
affect the interests of Holders; and
(q) to take all action necessary to cause all applicable tax
returns and tax information reports that are required to be filed with respect
to the Trust to be duly prepared and filed by the Regular Trustees, on behalf
of the Trust.
The Regular Trustees must exercise the powers set forth in
this Section 3.6 in a manner that is consistent with the purposes and
functions of the Trust set out in Section 3.3, and the Regular Trustees shall
not take any action that is inconsistent with the purposes and functions of
the Trust set forth in Section 3.3.
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Subject to this Section 3.6, the Regular Trustees shall have
none of the powers or the authority of the Property Trustee set forth in
Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to
this Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the
Trustees.
(a) The Trust shall not, and the Trustees (including the
Property Trustee) shall not, engage in any activity other than as required or
authorized by this Declaration. In particular, the Trust shall not and the
Trustees (including the Property Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from
holding the Debentures, but shall distribute all such proceeds to
Holders of Securities pursuant to the terms of this Declaration and
of the Securities;
(ii) acquire any assets other than as
expressly provided herein;
(iii) possess Trust property for other than a
Trust purpose;
(iv) make any loans or incur any indebtedness
other than loans represented by the Debentures;
(v) possess any power or otherwise act in
such a way as to vary the Trust assets or the terms of
the Securities in any way whatsoever;
(vi) issue any securities or other evidences
of beneficial ownership of, or beneficial interest in,
the Trust other than the Securities; or
(vii) other than as provided in this Declaration or
Annex I hereto, (A) direct the time, method and place of exercising
any trust or power conferred upon the Debenture Trustee with respect
to the Debentures, (B) waive any past default that is waivable under
the Indenture, (C) exercise any right to
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rescind or annul any declaration that the principal of all the
Debentures shall be due and payable, or (D) consent to any
amendment, modification or termination of the Indenture or the
Debentures where such consent shall be required unless the Trust
shall have received an opinion of counsel to the effect that such
modification will not cause more than an insubstantial risk that for
United States federal income tax purposes the Trust will not be
classified as a grantor trust.
SECTION 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Debentures shall be owned by and
held of record in the name of the Property Trustee in trust for the benefit of
the Holders of the Securities. The right, title and interest of the Property
Trustee to the Debentures shall vest automatically in each Person who may
hereafter be appointed as Property Trustee in accordance with Section 5.6.
Such vesting and cessation of title shall be effective whether or not
conveyancing documents with regard to the Debentures have been executed and
delivered.
(b) The Property Trustee shall not transfer its right, title
and interest in the Debentures to the Regular Trustees or to the Delaware
Trustee (if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated
non-interest bearing trust account (the "Property Trustee Account")
in the name of and under the exclusive control of the Property
Trustee on behalf of the Holders of the Securities and, upon the
receipt of payments of funds made in respect of the Debentures held
by the Property Trustee, deposit such funds into the Property Trustee
Account and make payments to the Holders of the Preferred Securities
and Holders of the Common Securities from the Property Trustee
Account in accordance with Section 6.1. Funds in the Property Trustee
Account shall be held uninvested until disbursed in accordance with
this Declaration. The Property Trustee Account shall be an account
that is maintained with a banking institution the rating on whose
long-term unsecured indebtedness is at least
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equal to the rating assigned to the Preferred Securities by a
"nationally recognized statistical rating organization", as that
term is defined for purposes of Rule 436(g)(2) under the Securities
Act.
(ii) engage in such ministerial activities as so
directed and as shall be necessary or appropriate to effect the
redemption of the Preferred Securities and the Common Securities to
the extent the Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by
the Regular Trustees in accordance with the terms of the Securities,
engage in such ministerial activities as so directed as shall be
necessary or appropriate to effect the distribution of the Debentures
to Holders of Securities upon the occurrence of certain special
events (as may be defined in the terms of the Securities) arising
from a change in law or a change in legal interpretation or other
specified circumstances pursuant to the terms of the Securities.
(d) The Property Trustee shall take all actions and perform
such duties as may be specifically required of the Property Trustee pursuant
to the terms of the Securities.
(e) The Property Trustee shall take any Legal Action which
arises out of or in connection with an Event of Default of which a Responsible
Officer of the Property Trustee has actual knowledge or the Property Trustee's
duties and obligations under this Declaration or the Trust Indenture Act.
(f) The Property Trustee shall not resign as a
Trustee unless either:
(i) the Trust has been completely liquidated
and the proceeds of the liquidation distributed to the
Holders of Securities pursuant to the terms of the
Securities; or
(ii) a Successor Property Trustee has been
appointed and has accepted that appointment in
accordance with Section 5.6.
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(g) The Property Trustee shall have the legal power to
exercise all of the rights, powers and privileges of a holder of Debentures
under the Indenture and, if an Event of Default actually known to a
Responsible Officer of the Property Trustee occurs and is continuing, the
Property Trustee shall, for the benefit of Holders of the Securities, enforce
its rights as holder of the Debentures subject to the rights of the Holders
pursuant to the terms of such Securities.
(h) The Property Trustee will act as Paying Agent and
Registrar in New York to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all securities and any such
Paying Agent shall comply with ss. 317(b) of the Trust Indenture Act. Any
Paying Agent may be removed by the Property Trustee at any time and a
successor Paying Agent or additional Paying Agents may be appointed at any
time by the Property Trustee.
(i) Subject to this Section 3.8, the Property Trustee shall
have none of the duties, liabilities, powers or the authority of the Regular
Trustees set forth in Section 3.6.
The Property Trustee must exercise the powers set forth in
this Section 3.8 in a manner that is consistent with the purposes and
functions of the Trust set out in Section 3.3, and the Property Trustee shall
not take any action that is inconsistent with the purposes and functions of
the Trust set out in Section 3.3.
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SECTION 3.9 Certain Duties and Responsibilities of the
Property Trustee.
(a) The Property 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 Declaration and no implied covenants shall be read into this
Declaration against the Property Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6) of which
a Responsible Officer of the Property Trustee has actual knowledge, the
Property Trustee shall exercise such of the rights and powers vested in it by
this Declaration, and use the same degree of care and skill in their exercise,
as a prudent individual would exercise or use under the circumstances in the
conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to
relieve the Property Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of
Default and after the curing or waiving of all such
Events of Default that may have occurred:
(A) the duties and obligations of the
Property Trustee shall be determined solely by the
express provisions of this Declaration and the
Property Trustee shall not be liable except for the
performance of such duties and obligations as are
specifically set forth in this Declaration, and no
implied covenants orobligations shall be read into
this Declaration against the Property Trustee; and
(B) in the absence of bad faith on the
part of the Property Trustee, the Property Trustee
may conclusively rely, as to the truth of the
statements and the correctness of the opinions
expressed therein, upon any certificates or
opinions furnished to the Property Trustee and
conforming to the requirements of this Declaration;
but in the
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case of any such certificates or
opinions that by any provision hereof are
specifically required to be furnished to the
Property Trustee, the Property Trustee shall be
under a duty to examine the same to determine
whether or not they conform to the requirements of
this Declaration;
(ii) the Property Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer of
the Property Trustee, unless it shall be proved that the Property
Trustee was negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good
faith in accordance with the direction of the Holders of not less
than a Majority in liquidation amount of the Securities relating to
the time, method and place of conducting any proceeding for any
remedy available to the Property Trustee, or exercising any trust or
power conferred upon the Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require
the Property Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if it shall
have reasonable grounds for believing that the repayment of such
funds or liability is not reasonably assured to it under the terms of
this Declaration or indemnity reasonably satisfactory to the Property
Trustee against such risk or liability is not reasonably assured to
it;
(v) the Property Trustee's sole duty with respect
to the custody, safe keeping and physical preservation of the
Debentures and the Property Trustee Account shall be to deal with
such property in a similar manner as the Property Trustee deals with
similar property for its own account, subject to the protections and
limitations on liability afforded to the Property Trustee under this
Declaration and the Trust Indenture Act;
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(vi) the Property Trustee shall have no duty or
liability for or with respect to the value, genuineness, existence or
sufficiency of the Debentures or the payment of any taxes or
assessments levied thereon or in connection therewith;
(vii) the Property Trustee shall not be liable for
any interest on any money received by it except as it may otherwise
agree in writing with the Sponsor. Money held by the Property Trustee
need not be segregated from other funds held by it except in relation
to the Property Trustee Account maintained by the Property Trustee
pursuant to Section 3.8(c)(i) and except to the extent otherwise
required by law; and
(viii) the Property Trustee shall not be
responsible for monitoring the compliance by the Regular Trustees or
the Sponsor with their respective duties under this Declaration, nor
shall the Property Trustee be liable for any default or misconduct of
the Regular Trustees or the Sponsor.
SECTION 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may rely and shall be
fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties;
(ii) any direction or act of the Sponsor or
the Regular Trustees contemplated by this Declaration
shall be sufficiently evidenced by an Officers'
Certificate;
(iii) whenever in the administration of this
Declaration, the Property Trustee shall deem it desirable that a
matter be proved or established before taking, suffering or omitting
any action hereunder, the Property Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad
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faith on its part, request and rely upon an Officers' Certificate
which, upon receipt of such request, shall be promptly delivered by
the Sponsor or the Regular Trustees;
(iv) the Property Trustee shall have no duty to see
to any recording, filing or registration of any instrument (including
any financing or continuation statement or any filing under tax or
securities laws) or any rerecording, refiling or registration
thereof;
(v) the Property Trustee may consult with counsel
of its choice or other experts and the advice or opinion of such
counsel and experts with respect to legal matters or advice within
the scope of such experts' area of expertise shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance
with such advice or opinion, such counsel may be counsel to the
Sponsor or any of its Affiliates, and may include any of its
employees. The Property Trustee shall have the right at any time to
seek instructions concerning the administration of this Declaration
from any court of competent jurisdiction;
(vi) the Property Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by
this Declaration at the request or direction of any Holder, unless
such Holder shall have provided to the Property Trustee adequate
security and indemnity, reasonably satisfactory to the Property
Trustee, against the costs, expenses (including attorneys' fees and
expenses and the expenses of the Property Trustee's agents, nominees
or custodians) and liabilities that might be incurred by it in
complying with such request or direction, including such reasonable
advances as may be requested by the Property Trustee provided, that,
nothing contained in this Section 3.10(a)(vi) shall be taken to
relieve the Property Trustee, upon the occurrence of an Event of
Default, of its obligation to exercise the rights and
powers vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to
make any investigation into the facts or matters
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stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order,
security, bond, debenture, note, other evidence of indebtedness or
other paper or document, but the Property Trustee, in its
discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit;
(viii) the Property Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys and the Property
Trustee shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed with due care by it
hereunder;
(ix) any action taken by the Property Trustee or
its agents hereunder shall bind the Trust and the Holders of the
Securities, and the signature of the Property Trustee or its agents
alone shall be sufficient and effective to perform any such action
and no third party shall be required to inquire as to the authority
of the Property Trustee to so act or as to its compliance with any of
the terms and provisions of this Declaration, both of which shall be
conclusively evidenced by the Property Trustee's or its agent's
taking such action;
(x) whenever in the administration of this
Declaration the Property Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking
any other action hereunder the Property Trustee (i) may request
instructions from the Holders of the Securities which instructions
may only be given by the Holders of the same proportion in
liquidation amount of the Securities as would be entitled to direct
the Property Trustee under the terms of the Securities in respect of
such remedy, right or action, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be protected in acting in
accordance with such instructions;
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be
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under any obligation to take any action that is discretionary under
the provisions of this Declaration; and
(xii) the Property 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 Declaration.
(b) No provision of this Declaration shall be deemed to
impose any duty or obligation on the Property Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on
it, in any jurisdiction in which it shall be illegal, or in which the Property
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration
other than Section 5.2, the Delaware Trustee shall not be entitled to exercise
any powers, nor shall the Delaware Trustee have any of the duties and
responsibilities of the Regular Trustees or the Property Trustee described in
this Declaration. Except as set forth in Section 5.2, the Delaware Trustee
shall be a Trustee for the sole and limited purpose of fulfilling the
requirements of ss. 3807 of the Business Trust Act.
SECTION 3.12 Not Responsible for Recitals or Issuance of
Securities.
The recitals contained in this Declaration and the
Securities shall be taken as the statements of the Sponsor, and the Trustees
do not assume any responsibility for their correctness. The Trustees make no
representations as to the value or condition of the property of the Trust or
any part thereof. The Trustees make no representations as to the
validity or sufficiency of this Declaration or the
Securities.
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SECTION 3.13 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of
Article VIII hereof, shall exist until April 2, 2021.
SECTION 3.14 Mergers.
(a) The Trust may not consolidate, amalgamate, merge with or
into, or be replaced by, or convey, transfer or lease its properties and
assets substantially as an entirety to any corporation or other entity or
body, except as described in Section 3.14(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees
or, if there are more than two, a majority of the Regular Trustees and without
the consent of the Holders of the Securities, the Delaware Trustee or the
Property Trustee, consolidate, amalgamate, merge with or into, or be replaced
by a trust organized as such under the laws of any State of the United States;
provided, that:
(i) if the Trust is not the survivor, such
successor entity (the "Successor Entity") either:
(A) expressly assumes all of the
obligations of the Trust under the
Securities; or
(B) substitutes for the 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 with respect to Distributions and
payments upon liquidation, redemption and
otherwise;
(ii) the Debenture Issuer expressly acknowledges a
trustee of the Successor Entity that possesses the same powers and
duties as the Property Trustee as the Holder of the Debentures;
(iii) the Preferred Securities or any Successor
Securities are listed, or any Successor Securities
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will be listed upon notification of issuance, on any national
securities exchange or with any other organization on which the
Preferred Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation or
replacement 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 or
replacement 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) the Sponsor guarantees the obligations of
such Successor Entity under the Successor Securities at least to the
extent provided by the Preferred Securities Guarantee; and
(viii) prior to such merger, consolidation,
amalgamation or replacement, the Sponsor has received an opinion of a
nationally recognized independent counsel to the Trust reasonably
acceptable to the Property Trustee experienced in such matters to the
effect that:
(A) such merger, consolidation,
amalgamation or replacement will not adversely affect the
rights, preferences and privileges of the Holders of the
Securities (including any Successor Securities) in any
material respect (other than with respect to any dilution of
the Holders' interest in the new entity);
(B) following such merger, consolidation,
amalgamation or replacement, neither the Trust nor the
Successor Entity will be required to register as an
Investment Company; and
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(C) following such merger, consolidation,
amalgamation or replacement, the Trust (or the Successor
Entity) will be treated as a grantor trust for United States
federal income tax purposes.
(c) Notwithstanding Section 3.14(b), the Trust shall not,
except with the consent of Holders of 100% in liquidation amount of the Common
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or Successor Entity to be classified as
other than a grantor trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
On the Closing Date and on any other date Preferred
Securities are sold pursuant to the over-allotment option granted in the
Purchase Agreement, the Sponsor will purchase all of the Common Securities
issued by the Trust, in an amount at least equal to 3% of the capital of the
Trust, at the same time as the Preferred Securities are sold.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities, as applicable:
(a) to prepare the Offering Circular and to
prepare for filing by the Trust with the Commission the
Shelf Registration Statement, including any amendments
thereto;
(b) to determine the States and foreign jurisdictions in
which to take appropriate action to qualify or register for sale all or part
of the Preferred Securities
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and to do any and all such acts, other than actions that must be taken by the
Trust, and advise the Trust of actions it must take, and prepare for execution
and filing any documents to be executed and filed by the Trust, as the Sponsor
deems necessary or advisable in order to comply with the applicable laws of
any such States and foreign jurisdictions;
(c) to prepare for filing by the Trust an application to
PORTAL and to the New York Stock Exchange or any other national stock exchange
or the Nasdaq National Market for listing or quotation of the Preferred
Securities;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration of the
Preferred Securities under Section 12(b) of the Exchange Act, including any
amendments thereto; and
(e) to negotiate the terms of the Purchase Agreement,
Registration Rights Agreement and other related agreements providing for the
sale of the Preferred Securities.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.
The number of Trustees shall be five (5), and:
(a) at any time before the issuance of any Se-
curities, the Sponsor may, by written instrument, increase
or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of
Trustees may be increased or decreased by vote of the Holders of a Majority in
liquidation amount of the Common Securities voting as a class at a meeting of
the Holders of the Common Securities;
provided, however, that the number of Trustees shall in no event be less than
two (2); provided further that (1) one Trustee, the Delaware Trustee, in the
case of a natural person, shall be a person who is a resident of the State of
Delaware or that, if not a natural person, is an entity
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which has its principal place of business in the State of Delaware; (2) there
shall be at least one Regular Trustee who is an employee or officer of, or is
affiliated with the Sponsor; and (3) one Trustee shall be the Property Trustee
for so long as this Declaration is required to qualify as an indenture under
the Trust Indenture Act, and such Trustee may also serve as Delaware Trustee
if it meets the applicable requirements.
SECTION 5.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be:
(a) a natural person who is resident of the State
of Delaware; or
(b) if not a natural person, an entity which has
its principal place of business in the State of Delaware,
and otherwise meets the requirements of applicable law,
provided that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application.
SECTION 5.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee which
shall act as Property Trustee which shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation organized and doing business
under the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a corporation or
Person permitted by the Commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at
least 50 million U.S. dollars ($50,000,000), and subject to
supervision or examination by Federal, State, Territorial or District
of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law
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or to the requirements of the supervising or examining authority
referred to above, then for the purposes of this Section 5.3(a)(ii),
the combined capital and surplus of such corporation shall be deemed
to be its combined capital and surplus as set forth in its most
recent report of condition so published; and
(iii) if the Trust is excluded from the definition
of an Investment Company solely by means of Rule 3a-5 and to the
extent Rule 3a-5 requires a trustee having certain qualifications to
hold title to the "eligible assets" of the trust, the Property
Trustee shall possess those qualifications.
(b) If at any time the Property Trustee shall cease to be
eligible to so act under Section 5.3(a), the Property Trustee shall
immediately resign in the manner and with the effect set forth in Section
5.6(c).
(c) If the Property Trustee has or shall acquire any
"conflicting interest" within the meaning of ss. 310(b) of the Trust Indenture
Act, the Property Trustee and the Holder of the Common Securities (as if it
were the obligor referred to in ss. 310(b) of the Trust Indenture Act) shall
in all respects comply with the provisions of ss. 310(b) of the Trust
Indenture Act.
(d) The Preferred Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first provision contained in Section 310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be set
forth in Section 5.5 hereof.
SECTION 5.4 Qualifications of Regular Trustees and Dela-
ware Trustee Generally.
Each Regular Trustee and the Delaware Trustee (unless the
Property Trustee also acts as Delaware Trustee) shall be either a natural
person who is at least 21 years of age or a legal entity that shall act
through one or more Authorized Officers.
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SECTION 5.5 Initial Trustees.
The initial Regular Trustees shall be:
Steven A. McArthur
c/o CalEnergy Company, Inc.
302 South 36th Street, Suite 400
Omaha, Nebraska 68131
John G. Sylvia
c/o CalEnergy Company, Inc.
302 South 36th Street, Suite 400
Omaha, Nebraska 68131
Gregory Abel
c/o CalEnergy Company, Inc.
302 South 36th Street, Suite 400
Omaha, Nebraska 68131
The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
23 White Clay Center
Route 273
Newark, Delaware 19711
The initial Property Trustee shall be:
The Bank of New York
101 Barclay Street
Corporate Trust Trustee Administration
Floor 21 West
New York, New York 10286
SECTION 5.6 Appointment, Removal and Resignation of
---------------------------------------
Trustees.
(a) Subject to Section 5.6(b), Trustees may be
appointed or removed without cause at any time:
(i) until the issuance of any Securities, by
written instrument executed by the Sponsor; and
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(ii) after the issuance of any Securities, by
vote of the Holders of a Majority in liquidation amount
of the Common Securities voting as a class at a meeting
of the Holders of the Common Securities.
(b) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.6(a) until a Successor Property Trustee
has been appointed and has accepted such appointment by written instrument
executed by such Successor Property Trustee and delivered to the Regular
Trustees and the Sponsor; and
(c) The Trustee that acts as Delaware Trustee shall not be
removed in accordance with Section 5.6(a) until a successor Trustee possessing
the qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware Trustee
and delivered to the Regular Trustees and the Sponsor.
(d) A Trustee appointed to office shall hold office until
his successor shall have been appointed or until his death, removal or
resignation. Any Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing signed by the Trustee and
delivered to the Sponsor and the Trust, which resignation shall take effect
upon such delivery or upon such later date as is specified therein; provided,
however, that:
(i) No such resignation of the Trustee that
acts as the Property Trustee shall be effective:
(A) until a Successor Property Trustee has
been appointed and has accepted such appointment by
instrument executed by such Successor Property
Trustee and delivered to the Trust, the Sponsor and
the resigning Property Trustee; or
(B) until the assets of the Trust have
been completely liquidated and the proceeds
thereof distributed to the holders of the
Securities; and
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(ii) no such resignation of the Trustee that
acts as the Delaware Trustee shall be effective until a
Successor Delaware Trustee has been appointed and has
accepted such appointment by instrument executed by such Successor
Delaware Trustee and delivered to the Trust, the Sponsor and the
resigning Delaware Trustee.
(e) The Holders of the Common Securities shall use their
best efforts to promptly appoint a Successor Property Trustee or Successor
Delaware Trustee, as the case may be, if the Property Trustee or the Delaware
Trustee delivers an instrument of resignation in accordance with this Section
5.6.
(f) If no Successor Property Trustee or Successor Delaware
Trustee shall have been appointed and accepted appointment as provided in this
Section 5.6 within 60 days after delivery to the Sponsor and the Trust of an
instrument of resignation or removal, the Property Trustee or Delaware Trustee
resigning or being removed, as applicable, may petition any court of competent
jurisdiction for appointment of a Successor Property Trustee or Successor
Delaware Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper and prescribe, appoint a Successor Property Trustee
or Successor Delaware Trustee, as the case may be.
(g) No Property Trustee or Delaware Trustee shall be liable
for the acts or omissions to act of any Successor Property Trustee or
Successor Delaware Trustee, as the case may be.
SECTION 5.7 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the
number of Trustees is not reduced pursuant to Section 5.1, or if the number of
Trustees is increased pursuant to Section 5.1, a vacancy shall occur. A
resolution certifying the existence of such vacancy by the Regular Trustees
or, if there are more than two, a majority of the Regular Trustees shall be
conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with a Trustee appointed in accordance with Section 5.6.
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SECTION 5.8 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of
a Trustee shall not operate to annul the Trust. Whenever a vacancy in the
number of Regular Trustees shall occur, until such vacancy is filled by the
appointment of a Regular Trustee in accordance with Section 5.6, the Regular
Trustees in office, regardless of their number, shall have all the powers
granted to the Regular Trustees and shall discharge all the duties imposed
upon the Regular Trustees by this Declaration.
SECTION 5.9 Meetings.
If there is more than one Regular Trustee, meetings of the
Regular Trustees shall be held from time to time upon the call of any Regular
Trustee. Regular meetings of the Regular Trustees may be held at a time and
place fixed by resolution of the Regular Trustees. Notice of any meetings of
the Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile or overnight courier) not less than 24 hours before
such meeting. Notices shall contain a brief statement of the time, place and
anticipated purposes of the meeting. The presence (whether in person or by
telephone) of a Regular Trustee at a meeting shall constitute a waiver of
notice of such meeting except where a Regular Trustee attends a meeting for
the express purpose of objecting to the transaction of any activity on the
ground that the meeting has not been lawfully called or convened. Unless
provided otherwise in this Declaration, any action of the Regular Trustees may
be taken at a meeting by vote of a majority of the Regular Trustees present
(whether in person or by telephone) and eligible to vote with respect to such
matter, provided that a Quorum is present, or without a meeting by the
unanimous written consent of the Regular Trustees. In the event there is only
one Regular Trustee, any and all action of such Regular Trustee shall be
evidenced by a written consent of such Regular Trustee.
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SECTION 5.10 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21
his or her power for the purpose of executing any documents contemplated in
Section 3.6, including any registration statement or amendment thereto filed
with the Commission, or making any other governmental filing; and
(b) the Regular Trustees shall have power to
delegate from time to time to such of their number or to
officers of the Trust the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Regular
Trustees or otherwise as the Regular Trustees may deem expedient, to the
extent such delegation is not prohibited by applicable law or contrary to the
provisions of the Trust, as set forth herein.
SECTION 5.11 Merger, Conversion, Consolidation or
Succession to Business.
Any corporation into which the Property Trustee or the
Delaware Trustee, as the case may be, may be merged or converted or with which
either may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Property Trustee or the Delaware
Trustee, as the case may be, shall be a party, or any corporation succeeding
to all or substantially all the corporate trust business of the Property
Trustee or the Delaware Trustee, as the case may be, shall be the successor of
the Property Trustee or the Delaware Trustee, as the case may be, 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.
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ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions (as defined herein) in
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Preferred Securities and the Common
Securities in accordance with the preferences set forth in their respective
terms. If and to the extent that the Debenture Issuer makes a payment of
interest (including Compounded Interest (as defined in the Indenture) and
Additional Interest (as defined in the Indenture)), premium and/or principal
on the Debentures held by the Property Trustee (the amount of any such payment
being a "Payment Amount"), the Property Trustee shall and is directed, to the
extent funds are available for that purpose, to make a distribution (a
"Distribution") of the Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Regular Trustees shall on behalf of the Trust issue
one class of convertible preferred securities, representing undivided
beneficial interests in the assets of the Trust (the "Preferred Securities"),
having such terms (the "Terms") as are set forth in Annex I and one class of
convertible common securities, representing undivided beneficial interests in
the assets of the Trust (the "Common Securities"), having such terms as are
set forth in Annex I. The Trust shall issue no securities or other interests
in the assets of the Trust other than the Preferred Securities and the Common
Securities. The Trust shall issue no Securities in bearer form.
(b) The consideration received by the Trust for the issuance
of the Securities shall constitute a contribution to the capital of the Trust
and shall not constitute a loan to the Trust.
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(c) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and nonassessable.
(d) Every Person, by virtue of having become a Holder or a
Preferred Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the
terms of, and shall be bound by, this Declaration.
SECTION 7.2 Execution and Authentication.
(a) The Securities shall be signed on behalf of the Trust by
a Regular Trustee. In case any Regular Trustee of the Trust who shall have
signed any of the Securities shall cease to be such Regular Trustee before the
Securities so signed shall be delivered by the Trust, such Securities
nevertheless may be delivered as though the person who signed such Securities
had not ceased to be such Regular Trustee; and any Securities may be signed on
behalf of the Trust by such persons who, at the actual date of execution of
such Security, shall be the Regular Trustees of the Trust, although at the
date of the execution and delivery of
the Declaration any such person was not such a Regular
Trustee.
(b) One Regular Trustee shall sign the Preferred Securities
for the Trust by manual or facsimile signature. Unless otherwise determined by
the Trust, such signature shall, in the case of Common Securities, be a manual
signature.
A Preferred Security shall not be valid until authenticated
by the manual signature of an authorized signatory of the Property Trustee.
The signature shall be conclusive evidence that the Preferred Security has
been authenticated under this Declaration.
Upon a written order of the Trust signed by one Regular
Trustee, the Property Trustee shall authenticate the Preferred Securities for
original issue in paragraph 5 of the Securities. The aggregate number of
Preferred Securities outstanding at any time shall not exceed the number set
forth in the Terms in Annex I hereto except as provided in Section 7.6.
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The Property Trustee may appoint an authenticating agent
acceptable to the Trust to authenticate Preferred Securities. An
authenticating agent may authenticate Preferred Securities whenever the
Property Trustee may do so. Each reference in this Declaration to
authentication by the Property Trustee includes authentication by such agent.
An authenticating agent has the same rights as the Property Trustee to deal
with the Company or an Affiliate.
SECTION 7.3 Form and Dating.
The Preferred Securities and the Property Trustee's
certificate of authentication shall be substantially in the form of Exhibit
A-1 and the Common Securities shall be substantially in the form of Exhibit A-
2, each of which is hereby incorporated in and expressly made a part of this
Declaration. Certificates may be printed, lithographed or engraved or may be
produced in any other manner as is reasonably acceptable to the Regular
Trustees, as evidenced by their execution thereof. The Securities may have
letters, numbers, notations or other marks of identification or designation
and such legends or endorsements required by law, stock exchange rule,
agreements to which the Trust is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form
acceptable to the Trust). The Trust at the direction of the Sponsor shall
furnish any such legend not contained in Exhibit A-1 to the Property Trustee
in writing. Each Preferred Security shall be dated the date of its
authentication. The terms and provisions of the Securities set forth in Annex
I and the forms of Securities set forth in Exhibits A-1 and A-2 are part of
the terms of this Declaration and to the extent applicable, the Property
Trustee and the Sponsor, by their execution and delivery of this Declaration,
expressly agree to such terms and provisions and to be bound thereby.
(a) Global Securities. The Preferred Securities are being
offered and sold by the Trust pursuant to a Purchase Agreement relating to the
Preferred Securities, dated April 4, 1996, among the Trust, the Sponsor and
the Initial Purchasers named therein (the "Purchase Agreement").
Securities offered and sold to Qualified Institutional
Buyers ("QIBs") in reliance on Rule 144A under the Securities Act ("Rule
144A") as provided in the Purchase
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Agreement, shall be issued in the form of one or more, permanent global
Securities in definitive, fully registered form without distribution coupons
with the appropriate global legends and Restricted Securities Legend set forth
in Exhibit A-1 hereto (each, a "Rule 144A Global Preferred Security"), which
shall be deposited on behalf of the purchasers of the Preferred Securities
represented thereby with the Property Trustee, at its New York office, as
custodian for the Depositary, and registered in the name of the Depositary or
a nominee of the Depositary, duly executed by the Trust and authenticated by
the Property Trustee as hereinafter provided. The number of Preferred
Securities represented by the Rule 144A Global Preferred Security may from
time to time be increased or decreased by adjustments made on the records of
the Property Trustee and the Deposi- tary or its nominee as hereinafter
provided.
(b) Book-Entry Provisions. This Section 7.3(b) shall apply
only to the Rule 144A Global Preferred Securities and such other Preferred
Securities in global form as may be authorized by the Trust to be deposited
with or on behalf of the Depositary.
The Trust shall execute and the Property Trustee shall, in accordance
with this Section 7.3, authenticate and make available for delivery initially
one or more Rule 144A Global Preferred Securities that (a) shall be registered
in the name of Cede & Co. or other nominee of such Depositary and (b) shall be
delivered by the Trustee to such Depositary or pursuant to such Depositary's
written instructions or held by the Trustee as custodian for the Depositary.
Members of, or participants in, the Depositary
("Participants") shall have no rights under this Declaration with respect to
any Rule 144A Global Preferred Security held on their behalf by the Depositary
or by the Property Trustee as the custodian of the Depositary or under such
Rule 144A Global Preferred Security, and the Depositary may be treated by the
Trust, the Property Trustee and any agent of the Trust or the Property Trustee
as the absolute owner of such Rule 144A Global Preferred Security for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Trust, the Property Trustee or any agent of the Trust or the
Property Trustee from giving effect to any written certification, proxy or
other authorization furnished by the Depositary or impair, as between the
Depos-
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itary and its Participants, the operation of customary practices of such
Depositary governing the exercise of the rights of a holder of a beneficial
interest in any Rule 144A Global Preferred Security.
(c) Certificated Securities. Except as provided in Section
7.9, owners of beneficial interests in the Rule 144A Global Preferred Security
will not be entitled to receive physical delivery of certificated Preferred
Securities. Purchasers of Securities who are institutional "accredited
investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act) will receive Preferred Securities in the form of individual certificates
in definitive, fully registered form without distribution coupons and with the
Restricted Securities Legend set forth in Exhibit A-1 hereto ("Restricted
Definitive Preferred Securities"); provided, however, that upon transfer of
such Restricted Definitive Preferred Securities to a QIB, such Restricted
Definitive Preferred Securities will, unless the Rule 144A Global Preferred
Security has previously been exchanged, be exchanged for an interest in a Rule
144A Global Security pursuant to the provisions at Section 9.2. Restricted
Definitive Preferred Securities will bear the Restricted Securities Legend set
forth on Exhibit A-1 unless removed in accordance with this Section 7.3 or
Section 9.2.
SECTION 7.4 Registrar, Paying Agent and Conversion Agent.
The Trust shall maintain in the Borough of Manhattan, City
of New York, State of New York, (i) an office or agency where Preferred
Securities may be presented for registration of transfer or from exchange
("Registrar"), (ii) an office or agency where Preferred Securities may be
presented for payment ("Paying Agent") and an office or agency where
Securities may be presented for conversion ("Conversion Agent"). The Registrar
shall keep a register of the Preferred Securities and of their transfer and
exchange. The Trust may appoint the Registrar, the Paying Agent and the
Conversion Agent and may appoint one or more co-registrars, one or more
additional paying agents and one or more additional conversion agents in such
other locations as it shall determine. The term "Paying Agent" includes any
additional paying agent and the term "Conversion Agent" includes any
additional conversion agent. The Trust may change any Paying Agent, Registrar,
co-registrar or Conversion Agent without prior notice to any Holder. The
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Paying Agent shall be permitted to resign as Paying Agent upon 30 days'
written notice to the Regular Trustees. The Trust shall notify the Property
Trustee of the name and address of any Agent not a party to this Declaration.
If the Trust fails to appoint or maintain another entity as Registrar, Paying
Agent or Conversion Agent, the Property Trustee shall act as such. The Trust
or any of its Affiliates may act as Paying Agent, Registrar, or Conversion
Agent. The Trust shall act as Paying Agent, Registrar, co-registrar, and
Conversion Agent for the Common Securities.
The Trust initially appoints the Property Trustee
as Registrar, Paying Agent, and Conversion Agent for the
Preferred Securities.
SECTION 7.5 Paying Agent to Hold Money in Trust.
The Trust shall require each Paying Agent other than the
Property Trustee to agree in writing that the Paying Agent will hold in trust
for the benefit of Holders or the Property Trustee all money held by the
Paying Agent for the payment of principal or distribution on the Securities,
and will notify the Property Trustee if there are insufficient funds. While
any such insufficiency continues, the Property Trustee may require a Paying
Agent to pay all money held by it to the Property Trustee. The Trust at any
time may require a Paying Agent to pay all money held by it to the Property
Trustee and to account for any money disbursed by it. Upon payment over to the
Property Trustee, the Paying Agent (if other than the Trust or an Affiliate of
the Trust) shall have no further liability for the money. If the Trust or the
Sponsor or an Affiliate of the Trust or the Sponsor acts as Paying Agent, it
shall segregate and hold in a separate trust fund for the benefit of the
Holders all money held by it as Paying Agent.
SECTION 7.6 Replacement Securities.
If the holder of a Security claims that the Security has
been lost, destroyed or wrongfully taken or if such Security is mutilated and
is surrendered to the Trust or in the case of the Preferred Securities to the
Property Trustee, the Trust shall issue and the Property Trustee shall
authenticate a replacement Security if the Property Trustee's and the Trust's
requirements, as the case may be, are met. If required by the Property Trustee
or the Trust,
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an indemnity bond must be sufficient in the judgment of both to
protect the Trustees, the Property Trustee, the Sponsor or any authenticating
agent from any loss which any of them may suffer if a Security is replaced.
The Company may charge for its expenses in replacing a Security.
In case any such mutilated, destroyed, lost or stolen
Security has become or is about to become due and payable, or is about to be
purchased by the Sponsor pursuant to Article III hereof, the Sponsor in its
discretion may, instead of issuing a new Security, pay or purchase such
Security, as the case may be.
Every replacement Security is an additional obligation of
the Trust.
SECTION 7.7 Outstanding Preferred Securities.
The Preferred Securities outstanding at any time are all the
Preferred Securities authenticated by the Property Trustee except for those
cancelled by it, those delivered to it for cancellation, and those described
in this Section as not outstanding.
If a Preferred Security is replaced, paid or purchased
pursuant to Section 7.6 hereof, it ceases to be outstanding unless the
Property Trustee receives proof satisfactory to it that the replaced, paid or
purchased Preferred Security is held by a bona fide purchaser.
If Preferred Securities are considered paid in accordance
with the terms of this Declaration, they cease to be outstanding and interest
on them ceases to accrue.
A Preferred Security does not cease to be outstanding
because one of the Trust, the Sponsor or an Affiliate of the Sponsor holds the
Security.
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SECTION 7.8 Preferred Securities in Treasury.
In determining whether the Holders of the required amount of
Securities have concurred in any direction, waiver or consent, Preferred
Securities owned by the Trust, the Sponsor or an Affiliate of the Sponsor, as
the case may be, shall be disregarded and deemed not to be outstanding, except
that for the purposes of determining whether the Property Trustee shall be
fully protected in relying on any such direction, waiver or consent, only
Securities which the Property Trustee knows are so owned shall be so
disregarded.
SECTION 7.9 Temporary Securities.
(a) Until definitive Securities are ready for delivery, the
Trust may prepare and, in the case of the Preferred Securities, the Property
Trustee shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations
that the Trust considers appropriate for temporary Securities. Without
unreasonable delay, the Trust shall prepare and, in the case of the Preferred
Securities, the Property Trustee shall authenticate definitive Securities in
exchange for temporary Securities.
(b) A Global Preferred Security deposited with the
Depositary or with the Property Trustee as custodian for the Depositary
pursuant to Section 7.3 shall be transferred to the beneficial owners thereof
in the form of certificated Preferred Securities only if such transfer
complies with Section 9.2 and (i) the Depositary notifies the Company that it
is unwilling or unable to continue as Depositary for such Global Preferred
Security or if at any time such Depositary ceases to be a "clearing agency"
registered under the Exchange Act and a successor depositary is not appointed
by the Sponsor within 90 days of such notice, or (ii) an Event of Default has
occurred and is continuing.
(c) Any Global Preferred Security that is transferable to
the beneficial owners thereof in the form of certificated Preferred Securities
pursuant to this Section 7.9 shall be surrendered by the Depositary to the
Property Trustee located in the Borough of Manhattan, The City of New York, to
be so transferred, in whole or from time to time in part, without charge, and
the Property Trustee shall
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authenticate and make available for delivery, upon such transfer of each
portion of such Global Preferred Security, an equal aggregate liquidation
amount of Securities of authorized denominations in the form of certificated
Securities. Any portion of a Global Preferred Security transferred pursuant to
this Section shall be registered in such names as the Depositary shall direct.
Any Preferred Security in the form of certificated Preferred Securities
delivered in exchange for an interest in the Restricted Global Preferred
Security shall, except as otherwise provided by Sections 7.3 and 9.1, bear the
Restricted Securities Legend set forth in Exhibit A-1 hereto.
(d) Subject to the provisions of Section 7.9(c), the
registered holder of a Global Preferred Security may grant proxies and
otherwise authorize any person, including Participants and persons that may
hold interests through Participants, to take any action which a holder is
entitled to take under this Declaration or the Securities.
(e) In the event of the occurrence of either of the events
specified in Section 7.9(b), the Trust will promptly make available to the
Property Trustee a reasonable supply of certificated Securities in definite,
fully registered form without interest coupons.
SECTION 7.10 Cancellation.
The Trust at any time may deliver Preferred Securities to
the Property Trustee for cancellation. The Registrar, Paying Agent and
Conversion Agent shall forward to the Property Trustee any Preferred
Securities surrendered to them for registration of transfer, redemption,
conversion, exchange or payment. The Property Trustee shall promptly cancel
all Preferred Securities, surrendered for registration of transfer,
redemption, conversion, exchange, payment, replacement or cancellation and
shall dispose of cancelled Preferred Securities as the Trust directs. The Trust
may not issue new Preferred Securities to replace Preferred Securities that it
has paid or that have been delivered to the Property Trustee for cancellation
or that any holder has converted.
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ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall terminate:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of
dissolution or its equivalent with respect to the Sponsor, the filing
of a certificate of cancellation with respect to the Trust after
having obtained the consent of at least a Majority in liquidation
amount of the Securities, voting together as a single class, to file
such certificate of cancellation, or the revocation of the charter of
the Sponsor and the expiration of 90 days after the date of
revocation without a reinstatement thereof, except, in each case, to
the extent permitted by Article Eight of the Indenture;
(iii) upon the entry of a decree of judicial
dissolution of the Sponsor or the Trust;
(iv) when all of the Securities shall have been
called for redemption and the amounts necessary for redemption
thereof shall have been paid to the Holders in accordance with the
terms of the Securities;
(v) upon the occurrence and continuation of a Tax
Event pursuant to which the Trust shall have been dissolved in
accordance with the terms of the Securities and all of the Debentures
endorsed thereon shall have been distributed to the Holders of
Securities in exchange for all of the Securities;
(vi) the expiration of the term of the Trust
on April 2, 2021; or
(vii) before the issuance of any Securities,
with the consent of all the Regular Trustees and the
Sponsor.
(b) As soon as is practicable after the occurrence of an
event referred to in Section 8.1(a), the
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Trustees shall file a certificate of cancellation with the Secretary of State
of the State of Delaware.
(c) The provisions of Section 3.9 and Article X
shall survive the termination of the Trust.
ARTICLE IX
TRANSFER AND EXCHANGE
SECTION 9.1 General.
(a) Where Preferred Securities are presented to the
Registrar or a co-registrar with a request to register a transfer or to
exchange them for an equal number of Preferred Securities represented by
different certificates, the Registrar shall register the transfer or make the
exchange if its requirements for such transactions are met. To permit
registrations of transfers and exchanges, the Trust shall issue and the
Property Trustee shall authenticate Preferred Securities at the Registrar's
request.
(b) Securities may only be transferred, in whole or in part,
in accordance with the terms and conditions set forth in this Declaration and
in the terms of the Securities. Any transfer or purported transfer of any
Security not made in accordance with this Declaration shall be null and void.
Subject to this Article IX, the Sponsor and any Related
Party may only transfer Common Securities to the Sponsor or a Related Party of
the Sponsor; provided that, any such transfer is subject to the condition
precedent that the transferor obtain the written opinion of nationally
recognized independent counsel experienced in such matters that such transfer
would not cause more than an insubstantial risk that:
(i) the Trust would not be classified for
United States federal income tax purposes as a grantor
trust; and
(ii) the Trust would be an Investment Company
or the transferee would become an Investment Company.
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(c) The Regular Trustees shall provide for the registration
of Securities and of transfers of Securities, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other governmental charges that may be
imposed in relation to it. Upon surrender for registration of transfer of any
Securities, the Regular Trustees shall cause one or more new Securities to be
issued in the name of the designated transferee or transferees. Every Security
surrendered for registration of transfer shall be accompanied by a written
instrument of transfer in form satisfactory to the Regular Trustees duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Each Security surrendered for registration of transfer shall be canceled by
the Regular Trustees. A transferee of a Security shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt
by such transferee of a Security. By acceptance of a Security, each transferee
shall be deemed to have agreed to be bound by this Declaration.
(d) The Trust shall not be required (i) to issue, register
the transfer of, or exchange, Preferred Securities during a period beginning
at the opening of business 15 days before the day of any selection of
Preferred Securities for redemption set forth in the terms of the Securities
as set forth in Annex I hereto and ending at the close of business on the day
of selection, or (ii) to register the transfer or exchange of any Preferred
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Preferred Security being redeemed in part.
SECTION 9.2 Transfer Procedures and Restrictions.
(a) General. Except in connection with a Shelf Registration
Statement contemplated by and in accordance with the terms of the Registration
Rights Agreement, if Preferred Securities are issued upon the transfer,
exchange or replacement of Preferred Securities bearing the Restricted
Securities Legend set forth in Exhibit A-1 hereto, or if a request is made
to remove such Restricted Securities Legend on Preferred Securities, the
Preferred Securities so issued shall bear the Restricted Securities Legend,
or the Restricted Securities Legend shall not be removed, as the case may be,
unless there is delivered to the Trust and the
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Property Trustee such satisfactory evidence, which may include an opinion of
counsel licensed to practice law in the State of New York, as may be
reasonably required by the Company, that neither the legend nor the
restrictions on transfer set forth therein are required to ensure that
transfers thereof comply with the provisions of Rule 144A, Rule 144 or
Regulation S under the Securities Act or, with respect to Restricted
Securities, that such Securities are not "restricted" within the meaning of
Rule 144 under the Securities Act. Upon provision of such satisfactory
evidence, the Property Trustee, at the written direction of the Trust, shall
authenticate and deliver Preferred Securities that do not bear the legend.
(b) Transfers After Effectiveness of Shelf Registration
Statement. After the effectiveness of a Shelf Registration Statement for any
Preferred Securities, all requirements pertaining to legends on such Preferred
Security will cease to apply, and beneficial interests in a Preferred Security
in global form without legends will be available to transferees of such
Preferred Securities, upon exchange of the transferring holder's Restricted
Definitive Preferred Security or directions to transfer such Holder's
beneficial interest in the Rule 144A Global Preferred Security, as the case
may be. No such transfer or exchange of a Restricted Definitive Preferred
Security or of an interest in the Rule 144A Global Preferred Security shall be
effective unless the transferor delivers to the Trust a certificate in the
form of Exhibit D hereto as to compliance by such person with the provisions
of the Registration Rights Agreement applicable thereto. After the
effectiveness of the Shelf Registration Statement, the Trust shall issue and
the Property Trustee upon the receipt of a Company Order shall authenticate a
Preferred Security in global form without the Restricted Securities Legend
(the "Exchanged Global Preferred Security") to deposit with the Depositary to
evidence transfers of (i) beneficial interests from the Rule 144A Global
Preferred Security and (ii) Restricted Definitive Preferred Securities.
(c) Transfer and Exchange of Definitive Preferred
Securities. When Definitive Preferred Securities are
presented to the Registrar or co-Registrar
(x) to register the transfer of such Definitive
Preferred Securities; or
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(y) to exchange such Definitive Preferred
Securities for an equal number of Definitive Preferred
Securities of another number,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Preferred Securities surrendered for
transfer or exchange:
(i) shall be duly endorsed or accompanied by a
written instrument of transfer in form reasonably satisfactory to the
Trust and the Registrar or co-registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing; and
(ii) in the case of Definitive Preferred Securities
that are Restricted Definitive Preferred Securities, are being
transferred or exchanged pursuant to an effective registration
statement under the Securities Act or, prior to the effectiveness of
the Shelf Registration Statement, pursuant to clause (A) or (B)
below, and are accompanied by the following additional information
and documents, as applicable:
(A) if such Restricted Preferred Securities are being
delivered to the Registrar by a Holder for registration in
the name of such Holder, without transfer, a certification
from such Holder to that effect (in the form set forth on
the reverse of the Preferred Security); or
(B) if such Restricted Preferred Securities are being
transferred pursuant to an exemption from registration in
accordance with Rule 144 or Regulation S under the
Securities Act: (i) a certification to that effect (in the
form set forth on the reverse of the Preferred Security)
and (ii) if the Trust or Registrar so requests, evidence
reasonably satisfactory to them as to the compliance with
the restrictions set forth in the Restricted Securities
Legend.
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Definitive Preferred Securities that are transferred to QIBs
in accordance with Rule 144A under the Securities Act must take delivery of
their interests as the Preferred Securities in the form of a beneficial
interest in the Rule 144A Global Preferred Security in accordance with Section
9.2(d).
(d) Restrictions on Transfer of a Definitive Preferred
Security for a Beneficial Interest in a Global Preferred Security. A
Definitive Preferred Security may not be exchanged for a beneficial interest
in a Global Preferred Security except upon satisfaction of the requirements
set forth below. Upon receipt by the Property Trustee of a Definitive
Preferred Security, duly endorsed or accompanied by appropriate instruments of
transfer, in form satisfactory to the Property Trustee, together with:
(i) if such Definitive Preferred Security is a
Restricted Preferred Security, certification, in the form set forth
on the reverse of the Preferred Security, that such Definitive
Preferred Security is being transferred to a QIB in accordance with
Rule 144A under the Securities Act; and
(ii) whether or not such Definitive Preferred
Security is a Restricted Preferred Security, written instructions
directing the Property Trustee to make, or to direct the Depositary
to make, an adjustment on its books and records with respect to such
Global Preferred Security to reflect an increase in the number of the
Preferred Securities represented by the Global Preferred Security,
then the Property Trustee shall cancel such Definitive Preferred Security and
cause, or direct the Depositary to cause, the aggregate number of Preferred
Securities represented by the Global Preferred Security to be increased
accordingly. If no Global Preferred Securities are then outstanding, the Trust
shall issue and the Property Trustee shall authenticate, upon written order of
any Regular Trustee, an appropriate number of Preferred Securities in global
form.
(e) Transfer and Exchange of Global Preferred Securities.
The transfer and exchange of Global Preferred Securities or beneficial
interests therein shall be effected
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through the Depositary, in accordance with this Declaration (including
applicable restrictions on transfer set forth herein, if any) and the
procedures of the Depositary therefor.
(f) Transfer of a Beneficial Interest in a Global
Preferred Security for a Definitive Preferred Security.
(i) Any person having a beneficial interest in a
Global Preferred Security that is being transferred or exchanged
pursuant to clause (A) or (B) below and not pursuant to an effective
Shelf Registration Statement may upon request, and if accompanied by
the information specified below, exchange such beneficial interest
for a Definitive Preferred Security representing the same number of
Preferred Securities. Upon receipt by the Property Trustee from the
Depositary or its nominee on behalf of any Person having a beneficial
interest in a Global Preferred Security of written instructions or
such other form of instructions as is customary for the Depositary or
the person designated by the Depositary as having such a beneficial
interest in a Restricted Preferred Security and the following
additional information and documents (all of which may submitted by
facsimile):
(A) if such beneficial interest is being
transferred to the person designated by the
Depositary as being the owner of a beneficial
interest in a Global Preferred Security, a
certification from such Person to that effect (in
the form set forth on the reverse of the Preferred
Security); or
(B) if such beneficial interest is being
transferred pursuant to an exemption from
registration in accordance with Rule 144 or
Regulation S under the Securities Act: (i) a
certification to that effect from the transferee or
transferor (in the form set forth on the reverse of
the Preferred Security) and (ii) if the Property
Trustee or Registrar so requests, evidence
reasonably satisfactory to them as to the compliance
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with the restrictions set forth in the legend
set forth in Section 9.2(i),
then the Property Trustee or the Securities Custodian, at the
direction of the Property Trustee, will cause, in accordance with the
standing instructions and procedures existing between the Depositary
and the Securities Custodian, the aggregate principal amount of the
Global Preferred Security to be reduced on its books and records and,
following such reduction, the Trust will execute and the Property
Trustee will authenticate and deliver to the transferee a Definitive
Preferred Security.
(ii) Definitive Preferred Securities issued in
exchange for a beneficial interest in a Global Preferred Security
pursuant to this Section 9.2(f) shall be registered in such names and
in such authorized denominations as the Depositary, pursuant to
instructions from its Participants or indirect participants or
otherwise, shall instruct the Property Trustee. The Property Trustee
shall deliver such Preferred Securities to the persons in whose names
such Preferred Securities are so registered in accordance with the
instructions of the Depositary.
Beneficial interests in the Rule 144A Global
Security may not be exchanged for a Definitive Preferred Security
except as provided in Section 9.2(h).
(g) Restrictions on Transfer and Exchange of Global
Preferred Securities. Notwithstanding any other provisions of this Declaration
(other than the provisions set forth in subsection (i) of this Section 9.2), a
Global Preferred Security may not be transferred as a whole except by the
Depositary to a nominee of the Depositary or another nominee of the Depositary
or by the Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary.
Definitive Preferred Securities that are transferred to QIBs
in accordance with Rule 144A under the Securities Act prior to the
effectiveness of the Shelf Registration Statement must take delivery of their
interests as the Preferred Securities in the form of a beneficial
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interest in the Rule 144A Global Preferred Security in accordance with Section
9.2(d).
(h) Authentication of Definitive Preferred
Securities. If at any time:
(i) the Depositary notifies the Trust that the
Depositary is unwilling or unable to continue as Depositary for the
Global Preferred Securities and a successor Depositary for the Global
Preferred Securities is not appointed by the Trust at the direction
of the Sponsor within 90 days after delivery of such notice; or
(ii) the Trust, in its sole discretion, notifies
the Property Trustee in writing that it elects to cause the issuance
of Definitive Preferred Securities under this Declaration,
then the Trust will execute, and the Property Trustee, upon receipt of a
written order of the Trust signed by one Regular Trustee requesting the
authentication and delivery of Definitive Preferred Securities to the Persons
designated by the Trust, will authenticate and deliver Definitive Preferred
Securities, in an aggregate principal amount equal to the principal amount of
Global Preferred Securities, in exchange for such Global Preferred Securities.
(i) Legend.
(i) Except as permitted by the following paragraph
(ii), each Preferred Security certificate evidencing the Global
Preferred Securities and the Definitive Preferred Securities (and all
Preferred Securities issued in exchange therefor or substitution
thereof) shall bear a legend (the "Restricted Securities Legend") in
substantially the following form:
THIS SECURITY, ANY CONVERTIBLE JUNIOR
SUBORDINATED DEBENTURE ISSUED IN EXCHANGE FOR THIS SECURITY
AND ANY COMMON STOCK (AND RELATED RIGHTS) ISSUED ON
CONVERSION THEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE OFFERED,
SOLD,
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PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) TO THE
COMPANY, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES
ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS
THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S
AND THE TRANSFER AGENT'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER (i) PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN
EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE
OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS
COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRANSFER
AGENT.
(ii) Upon any sale or transfer of a Restricted
Preferred Security (including any Restricted Preferred Security
represented by a Global Preferred Security) pursuant to an effective
registration statement under the Securities Act or pursuant to Rule
144 under the Securities Act after the Shelf Registration Statement
ceases to be effective:
(A) in the case of any Restricted
Preferred Security that is a Definitive Preferred Security,
the Registrar shall permit the Holder thereof to exchange
such Restricted Preferred Security for a Definitive
Preferred Security that does not bear the Restricted
Securities Legend and rescind any restriction on the
transfer of such Restricted Preferred Security; and
(B) in the case of any Restricted
Preferred Security that is represented by a Global Preferred
Security, the Registrar shall permit the
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Holder thereof to exchange such Restricted Preferred Security
(in connection with the sale of a Preferred Security pursuant
to the Registration Rights Agreement) for another Global
Preferred Security that does not bear the Restricted Securities
Legend.
(j) Cancellation or Adjustment of Global Preferred Security.
At such time as all beneficial interests in a Global Preferred Security have
either been exchanged for Definitive Preferred Securities to the extent
permitted by the Declaration or redeemed, repurchased or canceled in
accordance with the terms of this Declaration, such Global Preferred Security
shall be returned to the Depositary for cancellation or retained and canceled
by the Property Trustee. At any time prior to such cancellation, if any
beneficial interest in a Global Preferred Security is exchanged for Definitive
Preferred Securities, Preferred Securities represented by such Global
Preferred Security shall be reduced and an adjustment shall be made on the
books and records of the Property Trustee (if it is then the Securities
Custodian for such Global Preferred Security) with respect to such Global
Preferred Security, by the Property Trustee or the Securities Custodian, to
reflect such reduction.
(k) Obligations with Respect to Transfers and
Exchanges of Preferred Securities.
(i) To permit registrations of transfers and
exchanges, the Trust shall execute and the Property Trustee shall
authenticate Definitive Preferred Securities and Global Preferred
Securities at the
Registrar's or co-Registrar's request.
(ii) Registrations of transfers or exchanges will
be effected without charge, but only upon payment (with such
indemnity as the Trust or the Sponsor may require) in respect of any
tax or other governmental charge that may be imposed in relation to
it.
(iii) The Registrar or co-registrar shall not be
required to register the transfer of or exchange of (a) any
Definitive Preferred Security selected for redemption in whole or in
part pursuant to Article III, except the unredeemed portion of any
Definitive
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Preferred Security being redeemed in part, or (b) any Preferred
Security for a period beginning 15 Business Days before the mailing
of a notice of an offer to repurchase or redeem Preferred Securities
or 15 Business Days before a quarterly distribution date.
(iv) Prior to the due presentation for
registrations of transfer of any Preferred Security, the Trust, the
Property Trustee, the Paying Agent, the Registrar or any co-registrar
may deem and treat the person in whose name a Preferred Security is
registered as the absolute owner of such Preferred Security for the
purpose of receiving Distributions on such Preferred Security and for
all other purposes whatsoever, and none of the Trust, the Property
Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
(v) All Preferred Securities issued upon any
transfer or exchange pursuant to the terms of this Declaration shall
evidence the same security and shall be entitled to the same benefits
under this Declaration as the Preferred Securities surrendered upon
such transfer or exchange.
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(l) No Obligation of the Property Trustee.
(i) The Property Trustee shall have no
responsibility or obligation to any beneficial owner of a Global
Preferred Security, a Participant in the Depositary or other Person
with respect to the accuracy of the records of the Depositary or its
nominee or of any Participant thereof, with respect to any ownership
interest in the Preferred Securities or with respect to the delivery
to any Participant, beneficial owner or other Person (other than the
Depositary) of any notice (including any notice of redemption) or the
payment of any amount, under or with respect to such Preferred
Securities. All notices and communications to be given to the Holders
and all payments to be made to Holders under the Preferred Securities
shall be given or made only to or upon the order of the registered
Holders (which shall be the Depositary or its nominee in the case of
a Global Preferred Security). The rights of beneficial owners in any
Global Preferred Security shall be exercised only through the
Depositary subject to the applicable rules and procedures of the
Depositary. The Property Trustee may conclusively rely and shall be
fully protected in relying upon information furnished by the
Depositary or any agent thereof with respect to its Participants and
any beneficial owners.
(ii) The Property Trustee and Registrar shall have
no obligation or duty to monitor, determine or inquire as to
compliance with any restrictions on transfer imposed under this
Declaration or under applicable law with respect to any transfer of
any interest in any Preferred Security (including any transfers
between or among Depositary Participants or beneficial owners in any
Global Preferred Security) other than to require delivery of such
certificates and other documentation or evidence as are expressly
required by, and to do so if and when expressly required by, the
terms of this Declaration, and to examine the same to determine
substantial compliance as to form with the express requirements
hereof.
SECTION 9.3 Deemed Security Holders.
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The Trustees may treat the Person in whose name any
Certificate shall be registered on the books and records of the Trust as the
sole holder of such Certificate and of the Securities represented by such
Certificate for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Certificate or in the Securities
represented by such Certificate on the part of any Person, whether or not the
Trust shall have actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
Global Preferred Securities shall initially be registered on
the books and records of the Trust in the name of Cede & Co., the nominee of
the Depositary, and no Preferred Security Beneficial Owner will receive a
definitive Preferred Security Certificate representing such Preferred Security
Beneficial Owner's interests in such Global Preferred Securities, except as
provided in Section 9.2. Unless and until definitive, fully registered
Preferred Securities Certificates have been issued to the Preferred Security
Beneficial Owners pursuant to Section 9.2:
(a) the provisions of this Section 9.4 shall be
in full force and effect;
(b) the Trust and the Trustees shall be entitled to deal
with the Depositary for all purposes of this Declaration (including the
payment of Distributions on the relevant Global Preferred Securities and
receiving approvals, votes or consents hereunder) as the Holder of the
Preferred Securities and the sole holder of the Global Preferred Securities
and shall have no obligation to the Preferred Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4
conflict with any other provisions of this Declaration, the provisions of this
Section 9.4 shall control; and
(d) the rights of the Preferred Security Beneficial Owners
shall be exercised only through the Depositary and shall be limited to those
established by law and agreements between such Preferred Security Beneficial
Owners and
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the Depositary and/or the Participants and receive and transmit
payments of Distributions on the Global Certificates to such Participants. The
Depositary will make book entry transfers among the Participants.
SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Preferred
Security Holders is required under this Declaration, the Regular Trustees
shall, in the case of any Global Preferred Security, give all such notices and
communications specified herein to be given to the Preferred Security Holders
to the Depositary, and shall have no notice obligations to the Preferred
Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If the Depository elects to discontinue its services as
securities depositary with respect to the Preferred Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency
with respect to such Preferred Securities.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Decla-
ration, the Securities Guarantees and the terms of the
Securities the Sponsor shall not be:
(i) personally liable for the return of any portion
of the capital contributions (or any return thereon) of the Holders
of the Securities which shall be made solely from assets of the
Trust; and
(ii) be required to pay to the Trust or to
any Holder of Securities any deficit upon dissolution
of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable as
principal obligor, jointly and severally with the
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Trust, for all of the debts and obligations of the Trust (other than with
respect to the Securities).
(c) Pursuant to ss. 3803(a) of the Business Trust Act, the
Holders of the Preferred Securities shall be entitled to the same limitation
of personal liability extended to stockholders of private corporations for
profit organized under the General Corporation Law of the State of Delaware.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in
a manner such Indemnified Person reasonably believed to be within the scope of
the authority conferred on such Indemnified Person by this Declaration or by
law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's gross
negligence (or, in the case of the Property Trustee, negligence) or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the Trust by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Trust, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount of
assets from which Distributions to Holders of Securities might properly be
paid.
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SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified
Person has duties (including fiduciary duties) and liabilities relating
thereto to the Trust or to any other Covered Person, an Indemnified Person
acting under this Declaration shall not be liable to the Trust or to any other
Covered Person for its good faith reliance on the provisions of this
Declaration. The provisions of this Declaration, to the extent that they
restrict the duties and liabilities of an Indemnified Person otherwise
existing at law or in equity (other than the duties imposed on the Property
Trustee under the Trust Indenture Act), are agreed by the parties hereto to
replace such other duties and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists
or arises between an Indemnified Person and any Covered
Person; or
(ii) whenever this Declaration or any other
agreement contemplated herein or therein provides that an Indemnified
Person shall act in a manner that is, or provides terms that are,
fair and reasonable to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative interest
of each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made, taken
or provided by the Indemnified Person shall not constitute a breach of this
Declaration or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified
Person is permitted or required to make a decision:
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(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to consider such
interests and factors as it desires, including its own interests, and
shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express
standard and shall not be subject to any other or different standard
imposed by this Declaration or by applicable law.
SECTION 10.4 Indemnification.
(a) (i) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was or is
a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that
he is or was a Company Indemnified Person against expenses (including
attorneys' fees and expenses), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with
such action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the Company Indemnified Person did not act in good
faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that
his conduct was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was or is
a party or is threatened to be made a party to any threatened,
pending or completed
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action or suit by or in the right of the Trust to procure a judgment
in its favor by reason of the fact that he is or was a Company
Indemnified Person against expenses (including attorneys' fees and
expenses) actually and reasonably incurred by him in connection with
the defense or settlement of such action or suit if he acted in good
faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the Trust and except that no such
indemnification shall be made in respect of any claim, issue or
matter as to which such Company Indemnified Person shall have been
adjudged to be liable to the Trust unless and only to the extent
that the Court of Chancery of Delaware or the court in which such
action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such Court of Chancery
or such other court shall deem proper.
(iii) Any indemnification under paragraphs (i) and (ii) of
this Section 10.4(a) (unless ordered by a court) shall be made by the
Debenture Issuer only as authorized in the specific case upon a
determination that indemnification of the Company Indemnified Person
is proper in the circumstances because he has met the applicable
standard of conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Regular Trustees by a majority
vote of a quorum consisting of such Regular Trustees who were not
parties to such action, suit or proceeding, (2) if such a quorum is
not obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a
written opinion, or (3) by the Common Security Holder of the Trust.
(iv) Expenses (including attorneys' fees and expenses)
incurred by a Company Indemnified Person in defending a civil,
criminal, administrative or investigative action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 10.4(a) shall
be paid by the Debenture Issuer in advance of the final disposition
of such action, suit or proceeding. Notwithstanding the foregoing, no
advance shall be made by the Debenture Issuer if a determination is
reasonably
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and promptly made (i) by the Regular Trustees by a majority vote of
a quorum of disinterested Regular Trustees, (ii) if such a quorum is
not obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a
written opinion or (iii) the Common Security Holder of the Trust,
that, based upon the facts known to the Regular Trustees, counsel or
the Common Security Holder at the time such determination is made,
such Company Indemnified Person acted in bad faith or in a manner
that such person did not believe to be in or not opposed to the best
interests of the Trust, or, with respect to any criminal proceeding,
that such Company Indemnified Person believed or had reasonable
cause to believe his conduct was unlawful.
(v) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other paragraphs of this Section
10.4(a) shall not be deemed exclusive of any other rights to which
those seeking indemnification and advancement of expenses may be
entitled under any agreement, vote of stockholders or disinterested
directors of the Debenture Issuer or Preferred Security Holders of
the Trust or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office. All
rights to indemnification under this Section 10.4(a) shall be deemed
to be provided by a contract between the Debenture Issuer and each
Company Indemnified Person who serves in such capacity at any time
while this Section 10.4(a) is in effect. Any repeal or modification
of this Section 10.4(a) shall require the consent of the Regular
Trustees and not affect any rights or obligations then existing.
(vi) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any person who is or was a Company
Indemnified Person against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status
as such, whether or not the Debenture Issuer would have the power to
indemnify him against such liability under the provisions of this
Section 10.4(a).
(vii) For purposes of this Section 10.4(a), references to
"the Trust" shall include, in addition to the
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resulting or surviving entity, any constituent entity (including any
constituent of a constituent) absorbed in a consolidation or merger,
so that any person who is or was a director, trustee, officer or
employee of such constituent entity, or is or was serving at the
request of such constituent entity as a director, trustee, officer,
employee or agent of another entity, shall stand in the same
position under the provisions of this Section 10.4(a) with respect
to the resulting or surviving entity as he would have with respect
to such constituent entity if its separate existence had continued.
(viii) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 10.4(a) shall,
unless otherwise provided when authorized or ratified, continue as to
a person who has ceased to be a Company Indemnified Person and shall
inure to the benefit of the heirs, executors and administrators of
such a person.
(b) The Debenture Issuer agrees to indemnify the (i) Property Trustee,
(ii) the Delaware Trustee, (iii) any Affiliate of the Property Trustee and the
Delaware Trustee, and (iv) any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or agents of the
Property Trustee and the Delaware Trustee (each of the Persons in (i) through
(iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold
each Fiduciary Indemnified Person harmless against, any and all loss,
liability or expense including taxes (other than taxes based on the income of
such Fiduciary Indemnified Person) incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or
administration or the trust or trusts hereunder, including the costs and
expenses (including reasonable legal fees and expenses) of defending itself
against or investigating any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The
obligation to indemnify as set forth in this Section 10.4(b) shall survive the
satisfaction and discharge of this Declaration.
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SECTION 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and
the Property Trustee may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar
or dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the
pursuit of any such venture, even if competitive with the business of the
Trust, shall not be deemed wrongful or improper. No Covered Person, the
Sponsor, the Delaware Trustee, or the Property Trustee shall be obligated to
present any particular investment or other opportunity to the Trust even if
such opportunity is of a character that, if presented to the Trust, could be
taken by the Trust, and any Covered Person, the Sponsor, the Delaware Trustee
and the Property Trustee shall have the right to take for its own account
(individually or as a partner or fiduciary) or to recommend to others any such
particular investment or other opportunity. Any Covered Person, the Delaware
Trustee and the Property Trustee may engage or be interested in any financial
or other transaction with the Sponsor or any Affiliate of the Sponsor, or may
act as depositary for, trustee or agent for, or act on any committee or body
of holders of, securities or other obligations of the Sponsor or its
Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the
calendar year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the
Regular Trustees shall keep, or cause to be kept, books of account, records
and supporting documents, which shall reflect in reasonable detail, each
material transaction of the Trust. The books of account shall be
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maintained in accordance with generally accepted accounting principles
consistently applied.
(b) The Regular Trustees shall cause to be prepared and
delivered to each of the Holders of Securities, within 90 days after the end
of each Fiscal Year of the Trust, annual financial statements of the Trust,
including a balance sheet of the Trust as of the end of such Fiscal Year, and
the related statements of income or loss, which shall be examined by and
reported upon as of the end of each Fiscal Year by a firm of independent
certified public accountants selected by the Regular Trustees.
(c) The Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Securities, any annual United States
federal income tax information statement, required by the Code, containing
such information with regard to the Securities held by each Holder as is
required by the Code and the Treasury Regulations. Notwithstanding any right
under the Code to deliver any such statement at a later date, the Regular
Trustees shall endeavor to deliver all such statements within 30 days after
the end of each Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly prepared and
filed with the appropriate taxing authority, an annual United States federal
income tax return, on a Form 1041 or such other form required by United States
federal income tax law, and any other annual income tax returns required to be
filed by the Regular Trustees on behalf of the Trust with any state or local
taxing authority.
SECTION 11.3 Banking.
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The Trust shall maintain one or more bank accounts in the
name and for the sole benefit of the Trust; provided, however, that all
payments of funds in respect of the Debentures held by the Property Trustee
shall be made directly to the Property Trustee Account and no other funds of
the Trust shall be deposited in the Property Trustee Account. The sole
signatories for such accounts shall be designated by the Regular Trustees;
provided, however, that the Property Trustee shall designate the signatories
for the Property Trustee Account.
SECTION 11.4 Withholding.
The Trust and the Regular Trustees shall comply with all
withholding requirements under United States federal, state and local law. The
Trust shall request, and the Holders shall provide to the Trust, such forms or
certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably
be requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations. The Regular Trustee shall file
required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Trust is required to withhold and pay over any amounts to any authority with
respect to distributions or allocations to any Holder, the amount withheld
shall be deemed to be a distribution in the amount of the withholding to the
Holder. In the event of any claimed overwithholding, Holders shall be limited
to an action against the applicable jurisdiction. If the amount required to be
withheld was not withheld from actual Distributions made, the Trust may reduce
subsequent Distributions by the amount of such withholding.
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ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration or by
any applicable terms of the Securities, this Declaration may only be amended
by a written instrument approved and executed by:
(i) the Regular Trustees (or, if there are
more than two Regular Trustees a majority of the Regul-
ar Trustees);
(ii) if the amendment affects the rights,
powers, duties, obligations or immunities of the
Property Trustee, the Property Trustee; and
(iii) if the amendment affects the rights,
powers, duties, obligations or immunities of the
Delaware Trustee, the Delaware Trustee;
(b) no amendment shall be made, and any such pur-
ported amendment shall be void and ineffective:
(i) unless, in the case of any proposed amendment,
the Property Trustee shall have first received an Officers'
Certificate from each of the Trust and the Sponsor that such
amendment is permitted by, and conforms to, the terms of this
Declaration (including the terms of the Securities);
(ii) unless, in the case of any proposed amendment
which affects the rights, powers, duties, obligations or immunities
of the Property Trustee, the Property Trustee shall have first
received:
(A) an Officers' Certificate from each of
the Trust and the Sponsor that such amendment is permitted
by, and conforms to, the terms of this Declaration
(including the terms of the Securities); and
(B) an opinion of counsel (who may be
counsel to the Sponsor or the Trust) that such
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amendment is permitted by, and conforms to, the terms of this
Declaration (including the terms of the Securities); and
(iii) to the extent the result of such
amendment would be to:
(A) cause the Trust to fail to continue
to be classified for purposes of United States
federal income taxation as a grantor trust;
(B) reduce or otherwise adversely
affect the powers of the Property Trustee in
contravention of the Trust Indenture Act; or
(C) cause the Trust to be deemed to be
an Investment Company which is required to be
registered under the Investment Company Act;
(c) at such time after the Trust has issued any Securities
that remain outstanding, any amendment that would adversely affect the rights,
privileges or preferences of any Holder of Securities may be effected only
with such additional requirements as may be set forth in the terms of such
Securities;
(d) Section 9.1(c) and this Section 12.1 shall
not be amended without the consent of all of the Holders of
the Securities;
(e) Article IV shall not be amended without the
consent of the Holders of a majority in liquidation amount
of the Common Securities and;
(f) the rights of the holders of the Common Securities under
Article V to increase or decrease the number of, and appoint and remove
Trustees shall not be amended without the consent of the Holders of a Majority
in liquidation amount of the Common Securities; and
(g) notwithstanding Section 12.1(c), this
Declaration may be amended without the consent of the
Holders of the Securities to:
(i) cure any ambiguity;
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(ii) correct or supplement any provision in
this Declaration that may be defective or inconsistent
with any other provision of this Declaration;
(iii) add to the covenants, restrictions or
obligations of the Sponsor; and
(iv) conform to any change in Rule 3a-5 or written
change in interpretation or application of Rule 3a-5 by any
legislative body, court, government agency or regulatory authority
which amendment does not have a material adverse effect on the
rights, preferences or privileges of the Holders.
SECTION 12.2 Meetings of the Holders of Securities; Action
by Written Consent.
(a) Meetings of the Holders of any class of
Securities may be called at any time by the Regular Trustees
(or as provided in the terms of the Securities) to consider
and act on any matter on which Holders of such class of Securities are
entitled to act under the terms of this Declaration, the terms of the
Securities or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading. The Regular Trustees shall call
a meeting of the Holders of such class if directed to do so by the Holders of
at least a Majority in liquidation amount of such class of Securities. Such
direction shall be given by delivering to the Regular Trustees one or more
calls in a writing stating that the signing Holders of Securities wish to call
a meeting and indicating the general or specific purpose for which the meeting
is to be called. Any Holders of Securities calling a meeting shall specify in
writing the Certificates held by the Holders of Securities exercising the
right to call a meeting and only those Securities represented by the
Certificates so specified shall be counted for purposes of determining whether
the required percentage set forth in the second sentence of this paragraph has
been met.
(b) Except to the extent otherwise provided in
the terms of the Securities, the following provisions shall
apply to meetings of Holders of Securities:
(i) notice of any such meeting shall be given to
all the Holders of Securities having a right
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to vote thereat at least 7 days and not more than 60 days before the
date of such meeting. Whenever a vote, consent or approval of the
Holders of Securities is permitted or required under this
Declaration or the rules of any stock exchange on which the
Preferred Securities are listed or admitted for trading, such vote,
consent or approval may be given at a meeting of the Holders of
Securities. Any action that may be taken at a meeting of the Holders
of Securities may be taken without a meeting if a consent in writing
setting forth the action so taken is signed by the Holders of
Securities owning not less than the minimum amount of Securities in
liquidation amount that would be necessary to authorize or take such
action at a meeting at which all Holders of Securities having a
right to vote thereon were present and voting, but in no event less
than a Majority in liquidation amount of the outstanding Securities.
Prompt notice of the taking of action without a meeting shall be
given to the Holders of Securities entitled to vote who have not
consented in writing. The Regular Trustees may specify that any
written ballot submitted to the Security Holders for the purpose of
taking any action without a meeting shall be returned to the Trust
within the time specified by the Regular Trustees;
(ii) each Holder of a Security may authorize
any Person to act for it by proxy on all matters in
which a Holder of Securities is entitled to participate, including
waiving notice of any meeting, or voting or participating at a
meeting. No proxy shall be valid after the expiration of 11 months
from the date thereof unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the Holder of Securities
executing it. Except as otherwise provided herein, all matters
relating to the giving, voting or validity of proxies shall be
governed by the General Corporation Law of the State of Delaware
relating to proxies, and judicial interpretations thereunder, as if
the Trust were a Delaware corporation and the Holders of the
Securities were stockholders of a Delaware corporation;
(iii) each meeting of the Holders of the Securities
shall be conducted by the Regular Trustees or
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by such other Person that the Regular Trustees may designate; and
(iv) unless the Business Trust Act, this
Declaration, the terms of the Securities, the Trust Indenture Act or
the listing rules of any stock exchange on which the Preferred
Securities are then listed or trading provide otherwise, the Regular
Trustees, in their sole discretion, shall establish all other
provisions relating to meetings of Holders of Securities, including
notice of the time, place or purpose of any meeting at which any
matter is to be voted on by any Holders of Securities, waiver of any
such notice, action by consent without a meeting, the establishment
of a record date, quorum requirements, voting in person or by proxy
or any other matter with respect to the exercise of any such right to
vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee.
The Trustee that acts as initial Property Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Property Trustee represents and warrants to the Trust and
the Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) the Property Trustee is a banking corporation with trust
powers, duly organized, validly existing and in good standing under the laws
of the State of New York, with trust power and authority to execute and
deliver, and to carry out and perform its obligations under the terms of, this
Declaration.
(b) The execution, delivery and performance by the Property
Trustee of the Declaration has been duly authorized by all necessary corporate
action on the part of the Property Trustee. The Declaration has been duly
executed and delivered by the Property Trustee, and 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, insol-
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vency, and other similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in
equity or at law).
(c) The execution, delivery and performance of the
Declaration by the Property Trustee does not conflict with or constitute a
breach of the certificate of incorporation or by-laws of the Property Trustee.
(d) No consent, approval or authorization of, or
registration with or notice to, any New York State or Federal banking
authority is required for the execution, delivery or performance by the
Property Trustee, of the Declaration.
SECTION 13.2 Representations and Warranties of Delaware
Trustee.
The Trustee that acts as initial Delaware Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration
and at the time of Closing, and each Successor Delaware Trustee represents and
warrants to the Trust and the Sponsor at the time of the Successor Delaware
Trustee's acceptance of its appointment as Delaware Trustee that:
(a) The Delaware Trustee is duly organized, validly existing
and in good standing under the laws of the State of Delaware, with trust power
and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, this Declaration.
(b) The execution, delivery and performance by the Delaware
Trustee of the Declaration has been duly authorized by all necessary corporate
action on the part of the Delaware Trustee. The Declaration has been duly
executed and delivered by the Delaware Trustee, and constitutes a legal, valid
and binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law).
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(c) The execution, delivery and performance of the
Declaration by the Delaware Trustee does not conflict with or constitute a
breach of the certificate of incorporation or By-laws of the Delaware Trustee.
(d) No consent, approval or authorization of, or
registration with or notice to, any Federal banking authority is required for
the execution, delivery or performance by the Delaware Trustee, of this
Declaration.
(e) The Delaware Trustee is an entity which has
its principal place of business in the State of Delaware.
(f) The Delaware Trustee has been authorized to
perform its obligations under the Certificate of Trust and
the Declaration.
ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 Registration Rights.
The Holders of the Preferred Securities, the Debentures and
the Preferred Securities Guarantee are entitled to the benefits of a
Registration Rights Agreement. Pursuant to the Registration Rights Agreement
the Sponsor has agreed for the benefit of the Holders of the Preferred
Securities, the Debentures and the Preferred Securities Guarantee that,
subject to the terms of the Registration Rights Agreement (including, without
limitation, those provisions permitting a Suspension (as defined therein)) (i)
it will, at its cost, as promptly as reasonably practicable, prepare and file
a Shelf Registration Statement (as defined in the Registration Rights
Agreement) with the Commission with respect to resales of the Preferred
Securities, together with the Securities, the Guarantee and the related Common
Stock issuable upon conversion thereof, (ii) it will use its reasonable best
efforts to cause such Shelf Registration Statement to be declared effective by
the Commission on or prior to October 7, 1996 and (iii) it will use its
reasonable best efforts to keep such Shelf Registration Statement continuously
effective under the Securities Act of 1933, as amended, until the third
anniversary of the date of the effectiveness of the Shelf Registration
Statement or such earlier date as is provided in the Registration Rights
Agreement. The Company and the Trust agree that from and
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after the date on which any Registration Default (as defined below) occurs,
the per annum interest rate on the Securities will increase by 50 basis points
(.50%). Such increase will remain in effect from and including the date on
which any such Registration Default shall occur (or be deemed to occur as
described below) to but excluding the date on which all Registration Defaults
have been cured (or have been deemed to be cured as described below), on which
date the interest rate on the Securities will revert to the interest rate
originally borne by the Securities.
"Registration Default" shall mean any of the
following events:
(i) on or prior to October 7, 1996, the Regis- trable
Securities (as defined in the Registration Rights Agreement) are not
the subject of a Shelf Registration Statement which has become
effective;
(ii) the Registrable Securities are the subject of a Shelf
Registration Statement which was effective but which has ceased to be
effective for any reason prior to the end of the Shelf Registration
Period (as defined in the Registration Rights Agreement);
(iii) the occurrence of a Suspension (as defined
in the Registration Rights Agreement); or
(iv) the occurrence of an event contemplated by
paragraph 3(c)(2)(iii) of the Registration Rights
Agreement (an "Amendment Event");
provided, however, that if the Registration Default consists of the occurrence
of any event contemplated by clause (iii) or (iv) above, then such
Registration Default shall not be deemed to have occurred until the expiration
of 30 Business Days after the date of the occurrence of such Suspension or
Amendment Event, provided that (a) the Trust and the Company thereafter
reasonably promptly comply with the requirements of paragraph 3(i) of the
Registration Rights Agreement, if applicable, and (b) in the case of such
Amendment Event resulting from an action taken by the Company or the Trust,
such action was taken in good faith; and provided, further, that a
Registration Default shall not constitute a default or Event of Default
hereunder.
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A Registration Default shall be deemed to have been cured
and cease to exist on the date subsequent to the occurrence of such
Registration Default on which:
(x) in the case of a Registration Default described in
clause (i) or (ii) above, the Shelf Registration Statement covering
such Registrable Securities shall become effective; or
(y) in the case of a Registration Default described in
clause (iii) or (iv) above, upon the Company and the Trust taking
action to notify the Holders (for purposes of this clause (y), as
that term is defined in the Registration Rights Agreement) of the
Registrable Securities that such Suspension or Amendment Event has
ended. For purposes of this clause (y), taking action to notify
Holders shall be deemed sufficient when notice is first deposited in
first class mail or delivered to a courier service or filed with the
SEC or publicly disseminated by press release or other release
to a news reporting service.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices.
All notices provided for in this Declaration shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees
at the Trust's mailing address set forth below (or such other address as the
Trust may give notice of to the Holders of the Securities):
c/o CalEnergy Company, Inc.
302 South 36th Street, Suite 400
Omaha, Nebraska 68131
Attention: General Counsel
(b) if given to the Property Trustee, at the mailing address
set forth below (or such other address as the Property Trustee may give notice
of to the Holders of the Securities):
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The Bank of New York
Corporate Trust Trustee Administration
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Department
(c) if given to the Delaware Trustee, at the mailing address
set forth below (or such other address as the Delaware Trustee may give notice
of to the Holders of the Securities):
The Bank of New York (Delaware)
23 White Clay Center
Route 273
Newark, Delaware 19711
Attention: Corporate Trust Department
(d) if given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice to the Trust):
CalEnergy Company, Inc.
302 South 36th Street, Suite 400
Omaha, Nebraska 68131
Attention: General Counsel
(e) if given to any other Holder, at the address
set forth on the books and records of the Trust or the
Registrar, as applicable.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first
class mail, postage prepaid except that if a notice or other document is
refused delivery or cannot be delivered because of a changed address of which
no notice was given, such notice or other document shall be deemed to have
been delivered on the date of such refusal or inability to deliver.
SECTION 15.2 Governing Law.
This Declaration and the rights of the parties hereunder
shall be governed by and interpreted in accordance
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with the laws of the State of Delaware and all rights and remedies shall be
governed by such laws without regard to the principles of conflict of laws of
the State of Delaware or any other jurisdiction that would call for the
application of the law of any jurisdiction other than the State of Delaware;
provided, however, that there shall not be applicable to the Trust, the
Trustees or this Declaration any provision of the laws (statutory or common)
of the State of Delaware pertaining to trusts that relate to or regulate, in a
manner inconsistent with the terms hereof (i) the filing with any court or
governmental body or agency of trustee accounts or schedules of trustee fees
and charges, (ii) affirmative requirements to post bonds for trustees,
officers, agents or employees of a trust, (iii) the necessity for obtaining
court or other governmental approval concerning the acquisition, holding or
disposition of real or personal property, (iv) fees or other sums payable to
trustees, officers, agents or employees of a trust, (v) the allocation of
receipts and expenditures to income or principal, (vi) restrictions or
limitations on the permissible nature, amount or concentration of trust
investments or requirements relating to the titling, storage or other manner
of holding or investing trust assets, or (vii) the establishment of fiduciary
or other standards of responsibility or limitations on the acts or powers of
trustees that are inconsistent with the limitations or liabilities or
authorities and powers of the Trustees as set forth or referenced in this
Declaration. Section 3540 of Title 12 of the Delaware Code shall not apply to
the Trust.
SECTION 15.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust.
The provisions of this Declaration shall be interpreted to further this
intention of the parties.
SECTION 15.4 Headings.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
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SECTION 15.5 Successors and Assigns
Whenever in this Declaration any of the parties hereto is
named or referred to, the successors and assigns of such party shall be deemed
to be included, and all covenants and agreements in this Declaration by the
Sponsor and the Trustees shall bind and inure to the benefit of their
respective successors and assigns, whether so expressed.
SECTION 15.6 Partial Enforceability.
If any provision of this Declaration, or the application of
such provision to any Person or circumstance, shall be held invalid, the
remainder of this Declaration, or the application of such provision to persons
or circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 15.7 Counterparts.
This Declaration may contain more than one counterpart of
the signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
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IN WITNESS WHEREOF, the undersigned has caused these
presents to be executed as of the day and year first above written.
Steven A. McArthur
as Trustee
/s/ Steven A. McArthur
-----------------------------------
John G. Sylvia
as Trustee
/s/ John G. Sylvia
-----------------------------------
Gregory Abel
as Trustee
/s/ Gregory Abel
-----------------------------------
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: /s/ Donald J. Wrobel
--------------------------------
Name: Donald J. Wrobel
Title: Excutive Vice President
THE BANK OF NEW YORK,
as Property Trustee
By: /s/ Byron Merino
-------------------------------
Name: Byron Merino
Title: Assistant Treasurer
CALENERGY COMPANY, INC.
as Sponsor
By: /s/ Steven A. McArthur
-------------------------------
Name: Steven A. McArthur
Title: Senior Vice President
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ANNEX I
TERMS OF
6 1/4% CONVERTIBLE PREFERRED SECURITIES
6 1/4% CONVERTIBLE COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated
Declaration of Trust, dated as of April 4, 1996 (as amended from time to time,
the "Declaration"), the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities and the
Common Securities are set out below (each capitalized term used but not
defined herein has the meaning set forth in the Declaration or, if not defined
in such Declaration, as defined in the Offering Circular referred to below):
1. Designation and Number.
(a) "Preferred Securities." 2,000,000 Preferred Securities
of the Trust with an aggregate liquidation preference
with respect to the assets of the Trust of One Hundred
Million Dollars ($100,000,000), plus up to an addition-
al 240,000 Preferred Securities of the Trust with an
aggregate liquidation preference with respect to the
assets of the Trust of Twelve Million Dollars
($12,000,000) solely to cover over-allotments, as pro-
vided for in the Purchase Agreement (the "Additional
Preferred Securities"), and a liquidation preference
with respect to the assets of the Trust of $50 per pre-
ferred security, are hereby designated for the purposes
of identification only as "6 1/4% Convertible Preferred
Securities (liquidation preference $50 per Convertible
Preferred Security)" (the "Preferred Securities"). The
Preferred Security Certificates evidencing the Pre-
ferred Securities shall be substantially in the form of
Exhibit A-1 to the Declaration, with such changes and
additions thereto or deletions therefrom as may be re-
quired by ordinary usage, custom or practice or to
conform to the rules of any stock exchange or other
organization on which the Preferred Securities are
listed.
(b) "Common Securities." 61,856 Common Securities of the Trust
with an aggregate liquidation amount with respect to the
assets of the Trust of Three Million Ninety-Two Thousand
Eight Hundred Dollars ($3,092,800) plus up to an additional
7,423 Common Securities of the
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Trust with an aggregate liquidation amount with respect to
the assets of the Trust of Three Hundred Seventy-One
Thousand One Hundred Fifty Dollars ($371,150) to meet the
capital requirements of the Trust in the event of an
issuance of Additional Preferred Securities, and a
liquidation amount with respect to the assets of the Trust
of $50 per Common Security, are hereby designated for the
purposes of identification only as "6 1/4% Convertible
Common Securities (liquidation amount $50 per Convertible
Common Security)" (the "Common Securities"). The Common
Security Certificates evidencing the Common Securities
shall be substantially in the form of Exhibit A-2 to the
Declaration, with such changes and additions thereto or
deletions therefrom as may be required by ordinary usage,
custom or practice.
2. Distributions.
(a) Distributions payable on each Security will be fixed at
a rate per annum of 6 1/4% (the "Coupon Rate") of the
stated liquidation amount of $50 per Security, such
rate being the rate of interest payable on the Debentu-
res to be held by the Property Trustee. Distributions
in arrears for more than one quarter will bear interest
thereon compounded quarterly at the Coupon Rate (to the
extent permitted by applicable law). The term "Distri-
butions" as used herein includes any such interest
including any Additional Payments payable unless other-
wise stated. A Distribution is payable only to the
extent that payments are made in respect of the Deben-
tures held by the Property Trustee and to the extent
the Property Trustee has funds available therefor. The
amount of Distributions payable for any period will be
computed for any full quarterly Distribution period on
the basis of a 360-day year of twelve 30-day months,
and for any period shorter than a full quarterly Dis-
tribution period for which Distributions are computed,
Distributions will be computed on the basis of the
actual number of days elapsed.
(b) Distributions on the Securities will be cumulative,
will accrue from the date of initial issuance and will
be payable quarterly in arrears, on the following
dates, which dates correspond to the interest payment
dates on the Debentures: March 15, June 15, Septem-
ber 15, and December 15 of each year, commencing on
June 15, 1996, when, as and if available for payment by
the Property Trustee, except as otherwise described
below. The Debenture Issuer has the right under the
Indenture to defer payments of interest on the Deben-
tures by extending the interest payment period from
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time to time on the Debentures for successive periods
not exceeding 20 consecutive quarters (each an "Extension
Period"), during which Extension Period no interest shall be
due and payable on the Debentures; provided, that no
Extension Period shall last beyond the date of maturity of
the Debentures. As a consequence of such extension,
Distributions will also be deferred. Despite such deferral,
quarterly Distributions will continue to accrue with
interest thereon (to the extent permitted by applicable law)
at the Coupon Rate compounded quarterly during the Extension
Period. Prior to the expiration of any Extension Period, the
Debenture Issuer may elect to continue to defer payments of
interest for another Extension Period, provided, that such
Extension Period, together with all previous and further
consecutive Extension Periods, may not exceed 20 consecutive
quarters and provided further that such Extension Period may
not extend beyond the maturity of the Debentures. Payments
of accrued Distributions will be payable to Holders as they
appear on the books and records of the Trust on the first
record date after the end of the Extension Period. Upon the
expiration of any Extension Period and the payment of all
amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
(c) Distributions on the Securities will be payable to the
Holders thereof as they appear on the books and records
of the Trust on the relevant record dates. The rele-
vant record dates shall be 15 days prior to the rele-
vant payment dates, except as otherwise described in
this Annex I to the Declaration. Subject to any appli-
cable laws and regulations and the provisions of the
Declaration, each such payment in respect of the Pre-
ferred Securities being held in book-entry form through
The Depository Trust Company (the "Depositary") will be
made as described under the heading "Description of the
TIDES -- Book-Entry Only Issuance -- The Depository
Trust Company" in the Offering Circular. The relevant
record dates for the Common Securities shall be the
same record dates as for the Preferred Securities.
Distributions payable on any Securities that are not
punctually paid on any Distribution payment date, as a
result of the Debenture Issuer having failed to make a
payment under the Debentures, will cease to be payable
to the Person in whose name such Securities are regis-
tered on the relevant record date, and such defaulted
Distribution will instead be payable to the Person in
whose name such Securities are registered on the spe-
cial record date or other specified date determined in
accordance with the Indenture. If
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any date on which Distributions are payable on the
Securities is not a Business Day, then payment of the
Distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any
distribution or other payment in respect of any such
delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on
the immediately preceding Business Day, in each case with
the same force and effect as if made on such date.
(d) In the event of an election by the Holder to convert
its Securities through the Conversion Agent into Common
Stock of the Debenture Issuer pursuant to the terms of
the Securities as forth in this Annex I to the Declara-
tion, no payment, allowance or adjustment shall be made
with respect to accumulated and unpaid Distributions on
such Securities, or be required to be made; provided
that Holders of Securities at the close of business on
any record date for the payment of Distributions will
be entitled to receive the Distributions payable on
such Securities on the corresponding payment date
notwithstanding the conversion of such Securities into
Common Stock of the Debenture Issuer following such
record date.
(e) In the event that there is any money (including money
received pursuant to Section 1309(b) of the Indenture) or
other property held by or for the Trust that is not
accounted for hereunder, such property shall be distributed
Pro Rata (as defined herein) among the Holders of the
Securities.
3. Liquidation Distribution Upon Dissolution.
In the event of any voluntary or involuntary dissolution,
winding-up or termination of the Trust (each a "Liquidation") the then Holders
of the Securities on the date of the Liquidation, as the case may be, will be
entitled to receive out of the assets of the Trust available for distribution
to Holders of Securities after satisfaction of liabilities of creditors,
distributions in an amount equal to the aggregate of the stated liquidation
amount of $50 per Security plus accrued and unpaid Distributions thereon to
the date of payment (such amount being the "Liquidation Distribution"),
unless, in connection with such Liquidation, Debentures in an aggregate
principal amount equal to the aggregate stated liquidation amount of such
Securities, with an interest rate equal to the Coupon Rate of, and bearing
accrued and unpaid interest in an amount equal to the accrued and unpaid
Distributions on, such Securities, shall be distributed on a Pro Rata basis to
the Holders of the Securities.
I-4
<PAGE>
If, upon any such Liquidation, the Liquidation Distribution
can be paid only in part because the Trust has insufficient assets available
to pay in full the aggregate Liquidation Distribution, then the amounts
payable directly by the Trust on the Securities shall be paid on a Pro Rata
basis in accordance with paragraph 9 below.
4. Redemption and Distribution.
(a) Upon the repayment of the Debentures in whole or in
part, whether at maturity or upon redemption (either at
the option of the Debenture Issuer or pursuant to a
Special Event), the proceeds from such repayment or
payment shall be simultaneously applied to redeem Secu-
rities having an aggregate liquidation amount equal to
the aggregate principal amount of the Debentures so
repaid or redeemed at a redemption price per Security
equal to the redemption price of the Debentures, to-
gether with accrued and unpaid Distributions thereon
through the date of the redemption, payable in cash
(the "Redemption Price"). Holders will be given not
less than 30 (or in the case of a redemption at the
option of the Debenture Issuer, not less 20) nor more
than 60 days' notice of such redemption.
(b) If fewer than all the outstanding Securities are to be so
redeemed, the Common Securities and the Preferred Securities
will be redeemed Pro Rata and the Preferred Securities to be
redeemed will be as described in paragraph 4(f)(ii) below.
(c) If, at any time, a Tax Event shall occur and be con-
tinuing the Sponsor shall cause the Regular Trustees to
liquidate the Trust and, after satisfaction of credi-
tors of the Trust, cause Debentures to be distributed
to the Holders of the Securities in liquidation of the
Trust within 90 days following the occurrence of such
Tax Event (the "90 Day Period"); provided, however,
that such liquidation and distribution shall be condi-
tioned on (i) the Regular Trustees' receipt of an opin-
ion of a nationally recognized independent tax counsel
experienced in such matters (a "No Recognition Opin-
ion"), which opinion may rely on published revenue rul-
ings of the Internal Revenue Service, to the effect
that the Holders of the Securities will not recognize
any income, gain or loss for United States federal
income tax purposes as a result of such liquidation and
distribution of Debentures, and (ii) the Sponsor being
unable to avoid such Tax Event within such 90-day
period by taking some ministerial action or pursuing
I-5
<PAGE>
some other reasonable measure that, in the sole judg-
ment of the Sponsor, will have no adverse effect on the
Trust, the Sponsor or the Holders of the Securities and
will involve no material cost ("Ministerial Action").
If (i) the Debenture Issuer has received
an opinion (a "Redemption Tax Opinion") of a nationally
recognized independent tax counsel (reasonably acceptable to
the Regular Trustees) experienced in such matters that, as a
result of a Tax Event, there is more than an insubstantial
risk that the Debenture Issuer would be precluded from
deducting the interest on the Debentures for United States
federal income tax purposes, even after the Debentures were
distributed to the Holders of Securities upon liquidation of
the Trust as described in this paragraph 4(c), or (ii) the
Regular Trustees shall have been informed by such tax
counsel that it cannot deliver a No Recognition Opinion, the
Debenture Issuer shall have the right, upon not less than 30
nor more than 60 days' notice, and within 90 days following
the occurrence of such Tax Event, to redeem the Debentures
in whole (but not in part) for cash, at par plus accrued and
unpaid interest and, following such redemption, all the
Securities will be redeemed by the Trust at the liquidation
preference of $50 per Security plus accrued and unpaid
distributions; provided, however, that, if at the time there
is available to the Debenture Issuer or the Trust the
opportunity to eliminate, within such 90 day period, the Tax
Event by taking some Ministerial Action, the Trust or the
Debenture Issuer will pursue such Ministerial Action in lieu
of redemption.
"Tax Event" means that the Sponsor shall
have received an opinion of a nationally recognized
independent tax counsel (reasonably acceptable to the
Regular Trustees) experienced in such matters (a
"Dissolution Tax Opinion") to the effect that as a result of
(a) any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations
thereunder) of the United States or any political
subdivision or taxing authority therefor or therein, or (b)
any amendment to, or change in, an interpretation or
application of any such laws or regulations by any
legislative body, court, governmental agency or regulatory
authority (including the enactment of any legislation and
the publication of any judicial decision or regulatory
determination on or after the date of the Offering
Circular), which amendment or change is effective or which
interpretation or pronouncement is announced on or after the
date of the Offering Circu-
I-6
<PAGE>
lar, there is more than an insubstantial risk that (i) the
Trust is or will be subject to United States federal
income tax with respect to interest received on the
Debentures, (ii) the Trust is, or will be within 90 days
of the date thereof, subject to more than a de minimis
amount of taxes, duties, assessments or other
governmental charges of whatever nature imposed by the
United States, or any other taxing authority, or (iii)
interest payable by the Debenture Issuer to the Trust on the
Debentures is not or will not be deductible by the Debenture
Issuer for United States federal income tax purposes.
Notwithstanding anything in the previous sentence to the
contrary, a Tax Event shall not include any Change in Tax
Law that requires the Debenture Issuer for United States
federal income tax purposes to defer taking a deduction for
any original issue discount ("OID") that accrues with
respect to the Debentures until the interest payment related
to such OID is paid by the Debenture Issuer in money;
provided, that such Change in Tax Law does not create more
than an insubstantial risk that the Debenture Issuer will be
prevented from taking a deduction for OID accruing with
respect to the Debentures at a date that is no later than
the date the interest payment related to such OID is
actually paid by the Debenture Issuer in money.
If an Investment Company Event (as
hereinafter defined) shall occur and be continuing, the
Sponsor shall cause the Regular Trustees to liquidate the
Trust and cause the Debentures to be distributed to the
Holders of the Securities in liquidation of the Trust within
90 days following the occurrence of such Investment Company
Event.
"Investment Company Event" means the
occurrence of a change in law or regulation or a written
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"), to the
effect that the Trust is or will be considered an Investment
Company which is required to be registered under the
Investment Company Act, which Change in 1940 Act Law becomes
effective on or after the date of the Offering Circular.
After the date fixed for any distribution
of Debentures: (i) the Securities will no longer be deemed
to be outstanding, (ii) the Depositary or its nominee (or
any successor Clearing Agency or its nominee), as record
Holder of Preferred Securities repre-
I-7
<PAGE>
sented by global certificates, will receive a registered
global certificate or certificates representing the
Debentures to be delivered upon such distribution and
(iii) any certificates representing Securities, except for
certificates representing Preferred Securities held by the
Depositary or its nominee (or any successor Clearing
Agency or its nominee), will be deemed to represent
Debentures having an aggregate principal amount equal to
the aggregate stated liquidation amount of such
Securities, with accrued and unpaid interest equal to
accrued and unpaid Distributions on such Securities until
such certificates are presented to the Debenture Issuer or
its agent for transfer or reissuance.
(d) The Trust may not redeem fewer than all the outstanding
Securities unless all accrued and unpaid Distributions have
been paid on all Securities for all quarterly Distribution
periods terminating on or before the date of redemption.
(e) If the Debentures are distributed to the Holders of the
Securities, pursuant to the terms of the Indenture, the
Debenture Issuer will use its best efforts to have the
Debentures listed on any exchange on which the Preferred
Securities were listed immediately prior to the distribution
of the Debentures.
(f) "Redemption or Distribution Procedures."
(i) Notice of any redemption of, or notice of dis-
tribution of Debentures in exchange for the
Securities (a "Redemption/Distribution Notice")
will be given by the Trust by mail to each Hold-
er of Securities to be redeemed or exchanged not
less than 30 (or in the case of a redemption at
the option of the Debenture Issuer, not less 20)
nor more than 60 days before the date fixed for
redemption or exchange thereof which, in the
case of a redemption, will be the date fixed for
redemption of the Debentures. For purposes of
the calculation of the date of redemption or ex-
change and the dates on which notices are given
pursuant to this paragraph 4(f)(i), a Redemp-
tion/Distribution Notice shall be deemed to be
given on the day such notice is first mailed by
first-class mail, postage prepaid, to Holders of
Securities. Each Redemption/Distribution Notice
shall be addressed to the Holders of Securities
at the address of each such Holder appearing in
I-8
<PAGE>
the books and records of the Trust. No defect
in the Redemption/Distribution Notice or in the
mailing of either thereof with respect to any
Holder shall affect the validity of the redemp-
tion or exchange proceedings with respect to any
other Holder.
(ii) In the event that fewer than all the outstanding
Securities are to be redeemed, the Securities to
be redeemed shall be redeemed Pro Rata from each
Holder of Preferred Securities, it being under-
stood that, in respect of Preferred Securities
registered in the name of and held of record by
the Depositary or its nominee (or any successor
Clearing Agency or its nominee), the distribu-
tion of the proceeds of such redemption will be
made to each Clearing Agency Participant (or
Person on whose behalf such nominee holds such
securities) in accordance with the procedures
applied by such agency or nominee.
(iii) If Securities are to be redeemed and the Trust
gives a Redemption/Distribution Notice, which
notice may only be issued if the Debentures are
redeemed as set out in this paragraph 4 (which
notice will be irrevocable), then (A) with re-
spect to Preferred Securities held in book-entry
form, by 12:00 noon, New York City time, on the
redemption date, provided that the Debenture
Issuer has paid the Property Trustee a suffi-
cient amount of cash in connection with the
related redemption or maturity of the Deben-
tures, the Trust will deposit irrevocably with
the Depositary or its nominee (or successor
Clearing Agency or its nominee) funds sufficient
to pay the applicable Redemption Price with
respect to such Preferred Securities and will
give the Depositary irrevocable instructions and
authority to pay the applicable Redemption Price
to the Holders of such Preferred Securities
represented by the Global Certificates, and (B)
with respect to Preferred Securities issued in
certificated form and Common Securities, provid-
ed that the Debenture Issuer has paid the Prop-
erty Trustee a sufficient amount of cash in
connection with the related redemption or matu-
rity of the Debentures, the Trust will irrevoca-
bly deposit with the Paying Agent funds suffi-
cient to pay the amount payable on redemption to
the Holders of such Securities upon surrender of
I-9
<PAGE>
their certificates. If a Redemption/Distribution Notice
shall have been given and funds deposited as
required, then on the date of such deposit, all
rights of Holders of such Securi- ties so called for
redemption will cease, except the right of the
Holders of such Securities to receive the redemption
price, but without inter- est on such redemption
price. Neither the Regu- lar Trustees nor the Trust
shall be required to register or cause to be
registered the transfer of any Securities that have
been so called for redemption. If any date fixed for
redemption of Securities is not a Business Day, then
payment of the amount payable on such date will be
made on the next succeeding day that is a Business
Day (without any interest or other payment in respect
of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be
made on the immediately preceding Business Day, in
each case with the same force and effect as if made
on such date fixed for redemption. If payment of the
redemp- tion price in respect of any Securities is
im- properly withheld or refused and not paid either
by the Trust or by the Sponsor as guarantor pursuant
to the relevant Securities Guarantee, Distributions
on such Securities will continue to accrue at the
then applicable rate, from the original redemption
date to the date of payment, in which case the actual
payment date will be considered the date fixed for
redemption for purposes of calculating the amount
payable upon redemption (other than for purposes of
calculating any premium).
(iv) In the event of any redemption in part, the
Trust shall not be required to (i) issue, regis-
ter the transfer of or exchange of any Preferred
Security during a period beginning at the open-
ing of business 15 days before any selection for
redemption of Preferred Securities and ending at
the close of business on the earliest date in
which the relevant notice of redemption is
deemed to have been given to all holders of Pre-
ferred Securities to be so redeemed and (ii)
register the transfer of or exchange of any Pre-
ferred Securities so selected for redemption, in
whole or in part, except for the unredeemed
portion of any Preferred Securities being re-
deemed in part.
I-10
<PAGE>
(v) Redemption/Distribution Notices shall be sent by
the Regular Trustees on behalf of the Trust to
(A) in the case of Preferred Securities held in
book-entry form, the Depositary and, in the case
of Securities held in certificated form, the
Holders of such certificates and (B) in respect
of the Common Securities, the Holder thereof.
(vi) Subject to the foregoing and applicable law
(including, without limitation, United States
federal securities laws), the Sponsor or any of
its subsidiaries may at any time and from time to
time purchase outstanding Preferred Securities
by tender, in the open market or by private
agreement.
5. Conversion Rights.
The Holders of Securities shall have the right at any time, at their
option, to cause the Conversion Agent to convert Securities, on
behalf of the converting Holders, into shares of Common Stock of the
Debenture Issuer in the manner described herein on and subject to the
following terms and conditions:
(a) The Securities will be convertible at the office of the
Conversion Agent into fully paid and nonassessable
shares of Common Stock of the Debenture Issuer pursuant
to the Holder's direction to the Conversion Agent to
exchange such Securities for a portion of the Deben-
tures theretofore held by the Trust on the basis of one
Security per $50 principal amount of Debentures, and
immediately convert such amount of Debentures into
fully paid and nonassessable shares of Common Stock of
the Debenture Issuer at an initial conversion rate of
1.6728 shares of Common Stock of the Debenture Issuer
per $50 principal amount of Debentures (which is equiv-
alent to a conversion price of $29.89 per share of
Common Stock of the Debenture Issuer, subject to cer-
tain adjustments set forth in the terms of the Deben-
tures (as so adjusted, "Conversion Price")).
(b) In order to convert Securities into Common Stock of the
Debenture Issuer the Holder shall submit to the Conver-
sion Agent at the office referred to above an irrevo-
cable request to convert Securities on behalf of such
Holder (the "Conversion Request"), together, if the
Securities are in certificated form, with such certifi-
cates. The Conversion Request shall (i) set forth the
number of Securities to be converted and the
I-11
<PAGE>
name or names, if other than the Holder, in which the
shares of Common Stock of the Debenture Issuer should be
issued and (ii) direct the Conversion Agent (a) to
exchange such Securities for a portion of the Debentures
held by the Trust (at the rate of exchange specified in
the preceding paragraph) and (b) to immediately convert
such Debentures on behalf of such Holder, into Common -
Stock of the Debenture Issuer (at the conversion rate
specified in the preceding paragraph). The Conversion
Agent shall notify the Trust of the Holder's election to
exchange Securities for a portion of the Debentures held
by the Trust and the Trust shall, upon receipt of such
notice, deliver to the Conversion Agent the appro- priate
principal amount of Debentures for exchange in accordance
with this Section. The Conversion Agent shall thereupon
notify the Debenture Issuer of the Holder's election to
convert such Debentures into shares of Common Stock of the
Debenture Issuer. Holders of Securities at the close of
business on a Distribution record date will be entitled to
receive the Distribution payable on such securities on the
corresponding Distribution payment date notwithstanding
the conversion of such Securities following such record
date but prior to such distribution payment date. Except
as provided above, neither the Trust nor the Sponsor will
make, or be required to make, any payment, allowance or
adjustment upon any conversion on account of any
accumulated and unpaid Distributions accrued on the
Securities (including any Additional Payments accrued
thereon) surrendered for conversion, or on account of any
accumulated and unpaid dividends on the shares of Common
Stock of the Debenture Issuer issued upon such conversion.
The Debenture Issuer shall make no payment or allowance
for distributions on the shares of Common Stock of the
Debenture Issuer issued upon such conversion, except to
the extent that such shares of Common Stock of the
Debenture Issuer are held of record on the record date for
any such distributions and except as provided in Section
1309 of the Indenture. Securities shall be deemed to have
been converted immediately prior to the close of business
on the day on which a Notice of Conversion relating to
such Securities is received the Trust in accordance with
the foregoing provision (the "Conversion Date"). The
Person or Persons entitled to receive the Common Stock of
the Debenture Issuer issuable upon conversion of the
Debentures shall be treated for all purposes as the record
holder or holders of such Common Stock of the Debenture
Issuer at such time. As promptly as practicable on or
after the Conversion Date, the Debenture Issuer shall
issue and deliver at the office of
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<PAGE>
the Conversion Agent a certificate or certificates for the
number of full shares of Common Stock of the Debenture
Issuer issuable upon such conversion, together with the
cash payment, if any, in lieu of any fraction of any share
to the Person or Persons entitled to receive the same,
unless otherwise directed by the Holder in the notice of
conversion and the Conversion Agent shall distribute such
certificate or certificates to such Person or Persons.
(c) Each Holder of a Security by his acceptance thereof appoints
The Bank of New York "Conversion Agent" for the purpose of
effecting the conversion of Securities in accordance with
this Section. In effecting the conversion and transactions
described in this Section, the Conversion Agent shall be
acting as agent of the Holders of Securities directing it to
effect such conversion transactions. The Conversion Agent is
hereby authorized (i) to exchange Securities from time to
time for Debentures held by the Trust in connection with the
conversion of such Securities in accordance with this Section
and (ii) to convert all or a portion of the Debentures into
Common Stock of the Debenture Issuer and thereupon to deliver
such shares of Common Stock of the Debenture Issuer in
accordance with the provisions of this Section and to deliver
to the Trust a new Debenture or Debentures for any resulting
unconverted principal amount.
(d) No fractional shares of Common Stock of the Debenture
Issuer will be issued as a result of conversion, but in
lieu thereof, such fractional interest will be in cash
(based on the last reported sale price of the Common
Stock of the Debenture Issuer on the date such Securi-
ties are surrendered for conversion) by the Debenture
Issuer to the Trust, which in turn will make such
payment to the Holder or Holders of Securities so
converted.
(e) The Debenture Issuer shall at all times reserve and
keep available out of its authorized and unissued
Common Stock of the Debenture Issuer, solely for issu-
ance upon the conversion of the Debentures, free from
any preemptive or other similar rights, such number of
shares of Common Stock of the Debenture Issuer as shall
from time to time be issuable upon the conversion of
all the Debentures then outstanding. Notwithstanding
the foregoing, the Debenture Issuer shall be entitled
to deliver upon conversion of Debentures, shares of
Common Stock of the Debenture Issuer reacquired and
held in the treasury of the Debenture Issuer (in lieu
I-13
<PAGE>
of the issuance of authorized and unissued shares of
Common Stock of the Debenture Issuer), so long as any
such treasury shares are free and clear of all liens,
charges, security interests or encumbrances. Any
shares of Common Stock of the Debenture Issuer issued
upon conversion of the Debentures shall be duly autho-
rized, validly issued and fully paid and nonassessable.
The Trust shall deliver the shares of Common Stock of
the Debenture Issuer received upon conversion of the
Debentures to the converting Holder free and clear of
all liens, charges, security interests and encumbranc-
es, except for transfer, stamp or withholding taxes.
Each of the Debenture Issuer and the Trust shall pre-
pare and shall use its best efforts to obtain and keep
in force such governmental or regulatory permits or
other authorizations as may be required by law, and
shall comply with all applicable requirements as to
registration or qualification of the Common Stock of the
Debenture Issuer (and all requirements to list the Common
Stock of the Debenture Issuer issuable upon conversion of
Debentures that are at the time applicable), in order to
enable the Debenture Issuer to lawfully issue Common Stock
of the Debenture Issuer to the Trust upon conversion of the
Debentures and the Trust to lawfully deliver the Common
Stock of the Debenture Issuer to each Holder upon conversion
of the Securities.
(f) The Debenture Issuer will pay any and all taxes that
may be payable in respect of the issue or delivery of
shares of Common Stock of the Debenture Issuer on
conversion of Debentures and the delivery of the shares
of Common Stock of the Debenture Issuer by the Trust
upon conversion of the Securities. The Debenture
Issuer shall not, however, be required to pay any tax
which may be payable in respect of any transfer in-
volved in the issue and delivery of shares of Common
Stock of the Debenture Issuer in a name other than that
in which the Securities so converted were registered,
and no such issue or delivery shall be made unless and
until the person requesting such issue has paid to the
Trust or Debenture Issuer, as the case may be, the
amount of any such tax, or has established to the
satisfaction of the Trust or Debenture Issuer, as the
case may be, that such tax has been paid.
(g) Nothing in the preceding Paragraph (f) shall limit the
requirement of the Trust or Debenture Issuer, as the case
may be, to withhold taxes pursuant to the terms of the
Securities or set forth in this Annex I to the Declaration
or to the Declaration itself or other-
I-14
<PAGE>
wise require the Property Trustee or the Trust to pay any
amounts on account of such withholdings.
6. Voting Rights - Preferred Securities.
(a) Except as provided under paragraphs 6(b) and 7, in the
Business Trust Act and as otherwise required by law and the
Declaration, the Holders of the Preferred Securities will
have no voting rights.
Subject to the requirements set forth in this paragraph,
following an Event of Default, the Holders of a majority
in liquidation amount of the Preferred Securities, voting
separately as a class may direct the time, method, and
place of conducting any proceeding for any remedy
available to the Property Trustee, or direct the exercise
of any trust or power conferred upon the Property Trustee
under the Declaration, including the right to direct the
Property Trustee, as holder of the Debentures, to (i)
exercise the remedies available under the Indenture with
respect to the Debentures, (ii) waive any past default and
its consequences that is waivable under the Indenture, or
(iii) exercise any right to 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; provided, however, that
where a consent under the Indenture would require the
consent or act of the Holders of greater than a majority
of the Holders in principal amount of Debentures affected
thereby (a "Super Majority"), the Property Trustee may
only give such consent or take such action at the written
direction of the Holders of at least the proportion in
liquidation amount of the Preferred Securities which the
relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding. The
Property Trustee shall be under no obligation to revoke
any action previously authorized or approved by a vote of
the Holders of the Preferred Securities. Other than with
respect to directing the time, method and place of
conducting any remedy available to the Property Trustee or
the Debenture Trustee as set forth above, the Property
Trustee shall be under no obligation to take any action in
accordance with the directions of the Holders of the
Preferred Securities under this paragraph unless the
Property Trustee has obtained an opinion of independent
tax counsel to the effect that for the purposes of United
States federal income tax the Trust will not be classified
as other than a grantor trust on account of such action
and each
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<PAGE>
Holder will be treated as owning an undivided beneficial
interest in the Debentures. If the Property Trustee fails
to enforce its rights under the Debentures after the
Holders of the requisite percentage in liquidation amount
of Preferred Securities has made a written request, a
Holder of Preferred Securities may institute a legal
proceeding directly against the Debenture Issuer or any
other Person to enforce the Property Trustee's rights
under the Debentures without first instituting any legal
proceeding against the Property Trustee or any other
Person. Notwithstanding the foregoing, if a Declaration
Event of Default has occurred and is continuing and such
event is attributable to the failure of the Debenture
Issuer to pay interest or principal on the Debentures on
the date such interest or principal is otherwise payable
(other than pursuant to a valid extension of the interest
payment period by the Debenture Issuer pursuant to Section
312 of the Indenture) (or in the case of redemption on the
redemption date), then a holder of Preferred Securities
may directly institute a proceeding for enforcement of
payment to such holder (a "Direct Action") of the
principal of or interest on the Debentures having a
principal amount equal to the aggregate liquidation amount
of the Preferred Securities of such holder on or after the
respective due date specified in the Debentures. Except as
provided in the preceding sentence, the holders of
Preferred Securities will not be able to exercise directly
any other remedy available to the holders of the
Debentures. In connection with such Direct Action, the
Debenture Issuer will be subro- gated to the rights of
such holder of Preferred Securities under the Declaration
to the extent of any payment made by the Debenture Issuer
to such holder of Preferred Securities in such Direct
Action.
Any required approval or direction of Holders of Preferred
Securities may be given at a separate meeting of Holders
of Preferred Securities convened for such purpose, at a
meeting of all of the Holders of Securities in the Trust
or pursuant to written consent. The Regular Trustees will
cause a notice of any meeting at which Holders of
Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such
Holders is to be taken, to be mailed to each Holder of
record of Preferred Securities. Each such notice will
include a statement setting forth the following
information (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of
any resolution proposed for adoption at such meeting on
which such Holders are entitled to vote
I-16
<PAGE>
or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or
consents.
No vote or consent of the Holders of the Preferred
Securities will be required for the Trust to redeem and
cancel Preferred Securities or to distribute the Debentures
in accordance with the Declaration and the terms of the
Securities.
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 Sponsor or any Affiliate of the Sponsor shall
not be entitled to vote or consent and shall, for purposes
of such vote or consent, be treated as if such Preferred
Securities were not outstanding.
7. Voting Rights - Common Securities.
(a) Except as provided under paragraphs 7(b), (c) and 8, in the
Business Trust Act and as otherwise required by law and the
Declaration, the Holders of the Common Securities will have
no voting rights.
(b) The Holders of the Common Securities are entitled, in
accordance with Article V of the Declaration, to vote to
appoint, remove or replace any Trustee or to increase or
decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only
after the Event of Default with respect to the Pre-
ferred Securities has been cured, waived, or otherwise
eliminated and subject to the requirements of the
second to last sentence of this paragraph, the Holders
of a Majority in liquidation amount of the Common
Securities, voting separately as a class, may direct
the time, method, and place of conducting any proceed-
ing for any remedy available to the Property Trustee,
or exercising any trust or power conferred upon the
Property Trustee under the Declaration, including (i)
directing the time, method, place of conducting any
proceeding for any remedy available to the Debenture
Trustee, or exercising any trust or power conferred on
the Debenture Trustee with respect to the Debentures,
(ii) waive any past default and its consequences that
is waivable under Section 606 of the Indenture, (iii)
exercise any right to rescind or annul a declaration
that the principal of all the Debentures shall be due
and payable, or (iv) consent to any amend-
I-17
<PAGE>
ment, modification, or termination of the Indenture or the
Deben- tures where such consent shall be required;
provided that, where a consent or action under the
Indenture would require the consent or act of the Holders
of greater than a majority in principal amount of Deben-
tures affected thereby (a "Super Majority"), the Prop-
erty Trustee may only give such consent or take such
action at the written direction of the Holders of at least
the proportion in liquidation amount of the Common
Securities which the relevant Super Majority represents of
the aggregate principal amount of the Debentures
outstanding. Pursuant to this paragraph 7(c), the Property
Trustee shall not revoke any action previously authorized
or approved by a vote of the Holders of the Preferred
Securities. Other than with respect to directing the time,
method and place of con- ducting any remedy available to
the Property Trustee or the Debenture Trustee as set forth
above, the Property Trustee shall be under no obligation
to take any action in accordance with the directions of
the Holders of the Common Securities under this paragraph
unless the Property Trustee has obtained an opinion of
independent tax counsel to the effect that for the
purposes of United States federal income tax the Trust
will not be classified as other than a grantor trust on
account of such action and each Holder will be treated as
owning an undivided beneficial interest in the Debentures.
If the Property Trustee fails to enforce its rights under
the Debentures after a Holder of Common Securities has
made a written request, such Holder of Common Securities
may institute a legal proceeding directly against the
Debenture Issuer or any other Person to enforce the
Property Trustee's rights under the Debentures, without
first instituting any legal proceeding against the
Property Trustee or any other Person.
Any approval or direction of Holders of Common Securities
may be given at a separate meeting of Holders of Common
Securities convened for such purpose, at a meeting of all
of the Holders of Securities in the Trust or pursuant to
written consent. The Regular Trustees will cause a notice
of any meeting at which Holders of Common Securities are
entitled to vote, or of any matter upon which action by
written consent of such Holders is to be taken, to be
mailed to each Holder of record of Common Securities. Each
such notice will include a statement setting forth (i) the
date of such meeting or the date by which such action is
to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon
I-18
<PAGE>
which written consent is sought and (iii) instructions for
the delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities
will be required for the Trust to redeem and cancel Common
Securities or to distribute the Debentures in accordance
with the Declaration and the terms of the Securities.
8. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 12.1 of the
Declaration, if any proposed amendment to the Declaration
provides for, or the Regular Trustees otherwise propose to
effect, (i) any action that would adversely affect the
powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or
otherwise, or (ii) the dissolu- tion, winding-up or
termination of the Trust, other than as described in
Section 8.1 of the Declaration, then the Holders of
Securities as a class, will be entitled to vote on such
amendment or proposal (but not on any other amendment or
proposal) and such amendment or proposal shall not be
effective except with the approval of the Holders of at
least a Majority in liquidation amount of the Securities
affected thereby, voting together as a single class;
provided, however, if any amendment or proposal referred
to in clause (i) above would adversely affect only the
Preferred Securities or only the Common Securities, then
only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall
not be effective except with the approval of a Majority in
liquidation amount of such class of Securities.
(b) In the event the consent of the Property Trustee as the
holder of the Debentures is required under the Inden- ture
with respect to any amendment, modification or termination
on the Indenture or the Debentures, the Property Trustee
shall request the written direction of the Holders of the
Securities with respect to such amendment, modification or
termination and shall vote with respect to such amendment,
modification or termi- nation as directed by a Majority in
liquidation amount of the Securities voting together as a
single class; provided, however, that where a consent
under the Indenture would require the consent of the
holders of greater than a majority in aggregate principal
amount of the Debentures (a "Super Majority"), the
Property Trustee may only give such consent at the written
direction of the Holders of at least the same propor-
I-19
<PAGE>
tion in aggregate stated liquidation preference of the
Securities; provided, further, that the Property Trust- ee
shall not take any action in accordance with the
directions of the Holders of the Securities under this
paragraph 8(b) unless the Property Trustee has obtained an
opinion of tax counsel to the effect that for the purposes
of United States federal income tax the Trust will not be
classified as other than a grantor trust on account of
such action.
9. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each
Holder of Securities according to the aggregate liquidation amount of the
Securities held by the relevant Holder in relation to the aggregate
liquidation amount of all Securities outstanding unless, in relation to a
payment, an Event of Default under the Declaration has occurred and is
continuing, in which case any funds available to make such payment shall be
paid first to each Holder of the Preferred Securities pro rata according to
the aggregate liquidation amount of Preferred Securities held by
the relevant Holder relative to the aggregate liquidation amount of all
Preferred Securities outstanding, and only after satisfaction of all amounts
owed to the Holders of the Preferred Securities, to each Holder of Common
Securities pro rata according to the aggregate liquidation amount of Common
Securities held by the relevant Holder relative to the aggregate liquidation
amount of all Common Securities outstanding.
10. Ranking.
The Preferred Securities rank pari passu and payment thereon
shall be made Pro Rata with the Common Securities except that, where an Event
of Default occurs and is continuing under the Indenture in respect of the
Debentures held by the Property Trustee, the rights of Holders of the Common
Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to
payment of the Holders of the Preferred Securities.
11. Acceptance of Securities Guarantee and Indenture.
Each Holder of Preferred Securities and Common Securities,
by the acceptance thereof, agrees to the provisions of the Preferred
Securities Guarantee and the Common Securities Guarantee, respectively,
including the subordination provisions therein and to the provisions of the
Indenture.
12. No Preemptive Rights.
I-20
<PAGE>
The Holders of the Securities shall have no preemptive
rights to subscribe for any additional securities.
13. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the
Preferred Securities Guarantee or the Common Securities Guarantee (as may be
appropriate), and the Indenture to a Holder without charge on written request
to the Sponsor at its principal place of business.
I-21
<PAGE>
EXHIBIT A-1
FORM OF PREFERRED SECURITY
[FORM OF FACE OF SECURITY]
THIS SECURITY, ANY CONVERTIBLE JUNIOR SUBORDINATED DEBENTURE
ISSUED IN EXCHANGE FOR THIS SECURITY AND ANY COMMON STOCK (AND RELATED RIGHTS)
ISSUED ON CONVERSION THEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED
IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO
NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO
THE COMPANY'S AND THE TRANSFER AGENT'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER (i) PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM, AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED
AND DELIVERED BY THE TRANSFEROR TO THE TRANSFER AGENT.
[Include if Preferred Security is in global form and the
Depository Trust Company is the U. S. Depositary -- UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A
NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC)
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.]
[Include if Preferred Security is in global form --
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
DECLARATION REFERRED TO BELOW.]
A-1
<PAGE>
Certificate Number Number of Preferred Securities
[CUSIP NO. [ ]]
Preferred Securities
of
CalEnergy Capital Trust
6 1/4% Convertible Preferred Securities
(liquidation preference $50 per Convertible Preferred Security)
CalEnergy Capital Trust, a statutory business trust formed
under the laws of the State of Delaware (the "Trust"), hereby certifies that
___________________________________________ (the "Holder") is the registered
owner of preferred securities of the Trust representing undivided beneficial
interests in the assets of the Trust designated the 6 1/4% Convertible
Preferred Securities (liquidation preference $50 per Convertible Preferred
Security) (the "Preferred Securities"). The Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities
represented hereby are issued and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of the Trust dated
as of April 4, 1996, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Preferred
Securities as set forth in Annex I to the Declaration. Capitalized terms used
herein but not defined shall have the meaning given them in the Declaration.
The Holder is entitled to the benefits of the Preferred Securities Guarantee
to the extent provided therein. The Sponsor will provide a copy of the
Declaration, the Preferred Securities Guarantee and the Indenture to a Holder
without charge upon written request to the Trust at its principal place of
business.
Reference is hereby made to select provisions of the
Preferred Securities set forth on the reverse hereof, which select provisions
shall for all purposes have the same effect as if set forth at this place.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
A-2
<PAGE>
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebted-
ness and the Preferred Securities as evidence of indirect benefi-
cial ownership in the Debentures.
Unless the Property Trustee's Certificate of Authentication
hereon has been properly executed, these Preferred Securities shall not be
entitled to any benefit under the Declaration or be valid or obligatory for
any purpose.
A-3
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate
this day of____________________ , 199__.
CALENERGY CAPITAL TRUST
By: ____________________
Name:
Title:
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Preferred Securities referred to in the
within-mentioned Declaration.
Dated:__________________ ,____
THE BANK OF NEW YORK,
as Property Trustee
By: _______________________
Authorized Signatory
A-4
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Preferred Security will be
fixed at a rate per annum of 6 1/4% (the "Coupon Rate") of the stated
liquidation preference of $50 per Preferred Security, such rate being the rate
of interest payable on the Debentures to be held by the Property Trustee.
Distributions in arrears for more than one quarter will bear interest thereon
compounded quarterly at the Coupon Rate (to the extent permitted by applicable
law). The term "Distributions" as used herein includes such cash distributions
and any such interest payable unless otherwise stated. A Distribution is
payable only to the extent that payments are made in respect of the Debentures
held by the Property Trustee and to the extent the Property Trustee has funds
available therefor. The amount of Distributions payable for any period will be
computed for any full quarterly Distribution period on the basis of a 360-day
year of twelve 30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed, Distributions will
be computed on the basis of the actual number of days elapsed per 30-day
month.
Except as otherwise described below, distributions on the
Preferred Securities will be cumulative, will accrue from the date of original
issuance or from the most recent distribution date to which interest has been
paid or duly provided for and will be payable quarterly in arrears, on March
15, June 15, Sep- tember 15 and December 15 of each year, commencing on June
15, 1996, to Holders of record fifteen (15) days prior to such payment dates,
which payment dates shall correspond to the interest payment dates on the
Debentures. The Debenture Issuer has the right under the Indenture to defer
payments of interest on the Debentures by extending the interest payment
period from time to time on the Debentures for successive periods not
exceeding 20 consecutive quarters (each an "Extension Period") during which
Extension Periods no interest shall be due and payable on the Debentures;
provided, that no Extension Period shall extend beyond the date of maturity of
the Debentures. As a consequence of such extension, Distributions will also be
deferred. Despite such extension, quarterly Distributions will continue to
accrue with interest thereon (to the extent permitted by applicable law) at
the Coupon Rate compounded quarterly during the Extension Periods. Prior to
the termination of any Extension Period, the Debenture Issuer may elect to
continue to defer payments of interest for another consecutive Extension
Period; provided, that any such continued Extension Period, together with all
such previous and consecutive Extension Periods, may not exceed 20 consecutive
quarters. Payments of accrued Distributions will be payable to Holders as they
appear on the books and records of the Trust on the first record date after
the end of the Extension Period. Upon the termination of any Extension Period
and the
A-5
<PAGE>
payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
The Preferred Securities shall be redeemable as provided in
the Declaration.
The Preferred Securities shall be convertible into shares of
Common Stock of CalEnergy Company, Inc., through (i) the exchange of Preferred
Securities for a portion of the Debentures and (ii) the immediate conversion
of such Debentures into Common Stock of CalEnergy Company, Inc., in the manner
and according to the terms set forth in the Declaration.
A-6
<PAGE>
CONVERSION REQUEST
To: THE BANK OF NEW YORK,
as Property Trustee of
CalEnergy Capital Trust
The undersigned owner of these Preferred Securities hereby
irrevocably exercises the option to convert these Preferred Securities, or the
portion below designated, into Common Stock of CALENERGY COMPANY, INC. (the
"CalEnergy Common Stock") in accordance with the terms of the Amended and
Restated Declaration of Trust (the "Declaration"), dated as of April 4, 1996,
by Steven A. McArthur, John G. Sylvia and Gregory Abel as Regular Trustees,
The Bank of New York (Delaware), as Delaware Trustee, The Bank of New York, as
Property Trustee, CalEnergy Company, Inc., as Sponsor, and by the Holders,
from time to time, of individual beneficial interests in the Trust to be
issued pursuant to the Declaration. Pursuant to the aforementioned exercise of
the option to convert these Preferred Securities, the undersigned hereby
directs the Conversion Agent (as that term is defined in the Declaration) to
(i) exchange such Preferred Securities for a portion of the Debentures (as
that term is defined in the Declaration) held by the Trust (at the rate of
exchange specified in the terms of the Preferred Securities set forth as Annex
I to the Declaration) and (ii) immediately convert such Debentures on behalf
of the undersigned, into CalEnergy Common Stock (at the conversion rate
specified in the terms of the Preferred Securities set forth as Annex I to the
Declaration).
The undersigned does also hereby direct the Conversion Agent
that the shares issuable and deliverable upon conversion, together with any
check in payment for fractional shares, be issued in the name of and delivered
to the undersigned, unless a different name has been indicated in the
assignment below. If shares are to be issued in the name of a person other
than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto.
A-7
<PAGE>
Any holder, upon the exercise of its conversion rights in
accordance with the terms of the Declaration and the Preferred Securities,
agrees to be bound by the terms of the Registration Rights Agreement relating
to the CalEnergy Common Stock issuable upon conversion of the Preferred
Securities.
Date: ____________, ____
in whole __ in part __
Number of Preferred Securities to
be converted: ___________________
If a name or names other
than the undersigned,
please indicate in the
spaces below the name or
names in which the shares
of CalEnergy Common Stock
are to be issued, along
with the address or
addresses of such person
or persons
---------------------------------
---------------------------------
---------------------------------
---------------------------------
---------------------------------
---------------------------------
---------------------------------
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other Identify-
ing Number
---------------------------------
---------------------------------
---------------------------------
- ---------------
* (Signature must be guaranteed by an "eligible guarantor institution"
that is, a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Registrar, which requirements
include membership or participation in the Securities Transfer Agents
A-8
<PAGE>
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
agent to transfer this Preferred Security Certificate on the
books of the Trust. The agent may substitute another to act for
him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Preferred
Security Certificate)
Signature Guarantee:** ------------------------------------------------------
---------------------
(..continued)
Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934,
as amended.)
** (Signature must be guaranteed by an "eligible guarantor institution"
that is, a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Registrar, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934,
as amended.)
A-9
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
RESTRICTED PREFERRED SECURITIES
This certificate relates to _____________ Preferred Securities held in (check
applicable space) ____ book-entry or ____ definitive form by the undersigned.
(A) The undersigned (check one box below):
|_| has requested the Property Trustee by written order to deliver in
exchange for its beneficial interest in the Rule 144A Global
Preferred Security held by the Depositary a Preferred Security or
Preferred Securities in definitive, registered form in such number
equal to its beneficial interest in such Rule 144A Global Preferred
Security (or the number thereof indicated above); or
|_| has requested the Property Trustee by written order to exchange its
Preferred Security in definitive registered form for an interest in
the Rule 144A Global Preferred Security held by the Depositary in
such number equal to number of Preferred Securities in definitive
registered form so held; or
|_| has requested the Property Trustee by written order to exchange or
register the transfer of a Preferred Security or Preferred
Securities.
(B) The undersigned confirms that such Securities are being (check one
box below):
(1) |_| acquired for the undersigned's own account, with-
out transfer (in satisfaction of Section
9.2(d)(ii)(A)); or
(2) |_| transferred pursuant to and in compliance with
Rule 144A under the Securities Act of 1933; or
(3) |_| transferred pursuant to and in compliance with
Regulation S under the Securities Act of 1933; or
(4) |_| transferred pursuant to another available exemp-
tion from the registration requirements of the
Securities Act of 1933; or
A-10
<PAGE>
(5) |_| transferred pursuant to an effective Shelf Regis-
tration Statement (as defined in Section 14.1 of
the Declaration).
Unless one of the boxes in (B) above is checked, the Property Trustee will
refuse to register any of the Preferred Securities evidenced by this
certificate in the name of any person other than the registered Holder
thereof; provided, however, that if box (3) or (4) is checked, the Property
Trustee may require, prior to registering any such transfer of the Preferred
Securities such legal opinions, certifications and other information as the
Trust has reasonably requested to confirm that such transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933, such as the exemption
provided by Rule 144 under such Act; provided, further, that after the date
that a Shelf Registration Statement becomes effective and so long as such
Shelf Registration Statement continues to be effective, the Property Trustee
may only permit transfers for which box (5) has been checked.
---------------
Signature
- ------------------------
Signature Guarantee:***
- -------------------------- ---------------
Signature must be guaranteed Signature
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is
purchasing these Preferred Securities for its own account or an account with
respect to which it exercises sole investment discretion and that it and any
such account is a "qualified institutional buyer" within the meaning of Rule
144A under the
- --------
*** (Signature must be guaranteed by an "eligible guarantor institution"
that is, a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Registrar, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934,
as amended.)
A-11
<PAGE>
Securities Act of 1933, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such information
regarding the Trust as the undersigned has requested pursuant to Rule 144A or
has determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in
order to claim the exemption from registration provided by Rule 144A.
Dated: -------------------- ----------------------------------
NOTICE: To be executed by
an executive officer
A-12
<PAGE>
EXHIBIT A-2
FORM OF COMMON SECURITY
[FORM OF FACE OF SECURITY]
[THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION OR AN EFFECTIVE
REGISTRATION STATEMENT.]
[OTHER THAN AS PROVIDED IN THE DECLARATION (AS DEFINED HEREIN), THIS
SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT TO
A RELATED PARTY (AS DEFINED IN THE DECLARATION) OF CALENERGY COMPANY, INC.]
Certificate Number Number of Common Securities
Common Securities
of
CalEnergy Capital Trust
6 1/4% Convertible Common Securities
(liquidation amount $50 per Convertible Common Security)
CalEnergy Capital Trust, a statutory business trust formed
under the laws of the State of Delaware (the "Trust"), hereby certifies that
- -------------------------------------------------------------------------------
(the "Holder") is the registered owner of common securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated the 6 1/4% Convertible Common Securities (liquidation amount $50
per Convertible Common Security) (the "Common Securities"). The Common
Securities are transferable on the books and records of the Trust, in person
or by a duly authorized attorney, upon surrender of this certificate duly
endorsed and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities represented hereby are issued
A2-1
<PAGE>
and shall in all respects be subject to the provisions of the
Amended and Restated Declaration of Trust of the Trust dated as of April 4,
1996, as the same may be amended from time to time (the "Declaration"),
including the designation of the terms of the Common Securities as set forth
in Annex I to the Declaration. Capitalized terms used herein but not defined
shall have the meaning given them in the Declaration. The Holder is entitled
to the benefits of the Common Securities Guarantee to the extent provided
therein. The Sponsor will provide a copy of the Declaration, the Common
Securities Guarantee and the Indenture to a Holder without charge upon written
request to the Sponsor at its principal place of business.
Reference is hereby made to select provisions of the Common
Securities set forth on the reverse hereof, which select provisions shall for
all purposes have the same effect as if set forth at this place.
Upon receipt of this certificate, the Sponsor is bound by
the Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat for United States
federal income tax purposes the Debentures as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Debentures.
A2-2
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate
this day of , 199 .
CalEnergy Capital Trust
By:
-------------------------
Name:
Title:
A2-3
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed
at a rate per annum of 6 1/4% (the "Coupon Rate") of the stated liquidation
amount of $50 per Common Security, such rate being the rate of interest
payable on the Debentures to be held by the Property Trustee. Distributions in
arrears for more than one quarter will bear interest thereon compounded
quarterly at the Coupon Rate (to the extent permitted by applicable law). The
term "Distributions" as used herein includes such cash distributions and any
such interest payable unless otherwise stated. A Distribution is payable only
to the extent that payments are made in respect of the Debentures held by the
Property Trustee and to the extent the Property Trustee has funds available
therefor. The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed, Distributions will
be computed on the basis of the actual number of days elapsed per 30-day
month.
Except as otherwise described below, distributions on the
Common Securities will be cumulative, will accrue from the date of original
issuance or from the most recent distribution date to which interest has been
paid or duly provided for and will be payable quarterly in arrears, on March
15, June 15, Sep- tember 15 and December 15 of each year, commencing on June
15, 1996, to Holders of record fifteen (15) days prior to such payment dates,
which payment dates shall correspond to the interest payment dates on the
Debentures. The Debenture Issuer has the right under the Indenture to defer
payments of interest on the Debentures by extending the interest payment
period from time to time on the Debentures for successive periods not
exceeding 20 consecutive quarters (each an "Extension Period") during which
Extension Periods no interest shall be due and payable on the Debentures;
provided, that no Extension Period shall last beyond the date of maturity of
the Debentures. As a consequence of such extension, Distributions will also be
deferred. Despite such extension, quarterly Distributions will continue to
accrue with interest thereon (to the extent permitted by applicable law) at
the Coupon Rate compounded quarterly during the Extension Periods. Prior to
the termination of any Extension Period, the Debenture Issuer may elect to
continue to defer payments of interest for another consecutive Extension
Period; provided, that any such continued Extension Period, together with all
such previous and consecutive Extension Periods, may not exceed 20 consecutive
quarters. Payments of accrued Distributions will be payable to Holders as they
appear on the books and records of the Trust on
A2-4
<PAGE>
the first record date after the end of the Extension Period.
Upon the termination of any Extension Period and the payment of all amounts
then due, the Debenture Issuer may commence a new Extension Period, subject to
the above requirements.
The Common Securities shall be redeemable as provided in the
Declaration.
The Common Securities shall be convertible into shares of
Common Stock of CalEnergy Company, Inc., through (i) the exchange of Common
Securities for a portion of the Debentures and (ii) the immediate conversion
of such Debentures into Common Stock of CalEnergy Company, Inc., in the manner
and according to the terms set forth in the Declaration.
A2-5
<PAGE>
CONVERSION REQUEST
To: THE BANK OF NEW YORK
as Property Trustee of
CalEnergy Capital Trust
The undersigned owner of these Common Securities hereby
irrevocably exercises the option to convert these Common Securities, or the
portion below designated, into Common Stock of CALENERGY COMPANY, INC. (the
"CalEnergy Common Stock") in accordance with the terms of the Amended and
Restated Declaration of Trust (the "Declaration"), dated as of April 4, 1996,
by Steven A. McArthur, John G. Sylvia and Gregory Abel, as Regular Trustees,
The Bank of New York (Delaware), as Delaware Trustee, The Bank of New York, as
Property Trustee, CalEnergy Company, Inc., as Sponsor, and by the Holders,
from time to time, of individual beneficial interests in the Trust to be
issued pursuant to the Declaration. Pursuant to the aforementioned exercise of
the option to convert these Common Securities, the undersigned hereby directs
the Conversion Agent (as that term is defined in the Declaration) to (i)
exchange such Common Securities for a portion of the Debentures (as that term
is defined in the Declaration) held by the Trust (at the rate of exchange
specified in the terms of the Common Securities set forth as Annex I to the
Declaration) and (ii) immediately convert such Debentures on behalf of the
undersigned, into CalEnergy Common Stock (at the conversion rate specified in
the terms of the Common Securities set forth as Annex I to the Declaration).
The undersigned does also hereby direct the Conversion Agent
that the shares issuable and deliverable upon conversion, together with any
check in payment for fractional shares, be issued in the name of and delivered
to the undersigned, unless a different name has been indicated in the
assignment below. If shares are to be issued in the name of a person other
than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto.
A2-6
<PAGE>
Any holder, upon the exercise of its conversion rights in
accordance with the terms of the Declaration and the Common Securities, agrees
to be bound by the terms of the Registration Rights Agreement relating to the
CalEnergy Common Stock issuable upon conversion of the Common Securities.
Date: ____________, ____
in whole __ in part __
Number of Common Securities to be
converted: _____________________
If a name or names other
than the undersigned,
please indicate in the
spaces below the name or
names in which the shares
of CalEnergy Common Stock
are to be issued, along
with the address or
addresses of such person
or persons
--------------------------------
--------------------------------
--------------------------------
--------------------------------
--------------------------------
--------------------------------
--------------------------------
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other Identify-
ing Number
--------------------------------
--------------------------------
--------------------------------
Signature Guarantee:*
- --------
* (Signature must be guaranteed by an "eligible guarantor institution"
that is, a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Registrar, which requirements
include membership or participation in the Securities Transfer Agents
A2-7
<PAGE>
Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.)
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
- -----------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- -----------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints ________________________________________
- -----------------------------------------------------------------
______________________________________________ agent to transfer this Common
Security Certificate on the books of the Trust. The agent may substitute
another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
Signature Guarantee**:
- --------
** (Signature must be guaranteed by an "eligible guarantor institution"
that is, a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Registrar, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange
Act of 1934, as amended.)
A2-8
<PAGE>
EXHIBIT B
SPECIMEN OF DEBENTURE
(Omitted)
B-1
<PAGE>
EXHIBIT C
PURCHASE AGREEMENT
(Omitted)
C-1
<PAGE>
EXHIBIT D
FORM OF TRANSFEROR CERTIFICATE FOR TRANSFER DURING THE
EFFECTIVENESS OF A SHELF REGISTRATION STATEMENT
The Bank of New York
101 Barclay Street
Corporate Trust Trustee Administration
21 West
New York, New York 10286
Re: CalEnergy Capital Trust
6 1/4% Convertible Preferred Securities
Reference is hereby made to the Amended and Restated
Declaration of Trust (the "Declaration"), dated as of April 4, 1996, by Steven
A. McArthur, John G. Sylvia and Gregory Abel, as Regular Trustees, The Bank of
New York (Delaware), as Delaware Trustee, The Bank of New York, as Property
Trustee, CalEnergy Company, Inc., as Sponsor, and by the Holders, from time to
time, of individual beneficial interests in the Trust to be issued pursuant to
the Declaration. Capitalized terms used but not defined herein shall have the
meanings given them in the Declaration.
This letter relates to Preferred Securities which are held
in the form of [the Rule 144A Global Preferred Security with the Depositary
(CUSIP No. )][a Restricted Definitive Preferred Security (CUSIP No. )] in the
name of [name of transferor] (the "Transferor") to effect the transfer of the
Preferred Securities in exchange for an equivalent beneficial interest in the
Exchanged Global Preferred Security.
In connection with such request, and in respect of such
Preferred Securities, the Transferor does hereby certify that (i) such
Preferred Securities are being transferred in accordance with and pursuant to
an effective registration statement under the Securities Act of 1933, as
amended (the "Act"), and in accordance with any applicable securities laws of
any state of the United States and (ii) the Transferor has complied with its
obligations to provide information to the Issuer, as required by the
Registration Rights Agreement, and with its obligations, if any, under the Act
with regard to the delivery of a prospectus.
[Name of Transferor]
By:
--------------------------
Name:
Title:
Dated:
----------------------
cc: CalEnergy Capital Trust
D-1
CALENERGY COMPANY, INC.,
As Issuer
TO
THE BANK OF NEW YORK,
As Trustee
----------------
Indenture
Dated as of April 1, 1996
----------------
$103,092,800
(subject to increase to up to $115,463,950 in
the event an over-allotment option is exercised)
6 1/4% Convertible Junior Subordinated
Deferrable Interest Debentures Due 2016
<PAGE>
CalEnergy Company, Inc.
Certain Sections of this Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
<S> <C>
ss.310(a)(1) .................................................... 609
(a)(2) .................................................... 609
(a)(3) .................................................... Not Applicable
(a)(4) .................................................... Not Applicable
(b) .................................................... 608, 610
ss. 311(a) .................................................... 613
(b) .................................................... 613
ss. 312(a) .................................................... 701
.................................................... 702(a)
(b) .................................................... 702(b)
(c) .................................................... 702(c)
ss. 313(a) .................................................... 703(a)
(a)(4) .................................................... 101, 1004
(b) .................................................... 703(a)
(c) .................................................... 703(a)
(d) .................................................... 703(b)
ss. 314(a) .................................................... 704
(b) .................................................... Not Applicable
(c)(1) .................................................... 102
(c)(2) .................................................... 102
(c)(3) .................................................... Not Applicable
(d) .................................................... Not Applicable
(e) .................................................... 102
ss. 315(a) .................................................... 601
(b) .................................................... 602
(c) .................................................... 601
(d) .................................................... 601
(e) .................................................... 514
ss. 316(a) .................................................... 101
(a)(1)(A) .................................................... 502
.................................................... 512
(a)(1)(B) .................................................... 513
(a)(2) .................................................... Not Applicable
(b) .................................................... 508
(c) .................................................... 104(c)
ss. 317(a)(1) .................................................... 503
(a)(2) .................................................... 504
(b) .................................................... 1003
ss. 318(a) .................................................... 107
</TABLE>
- --------------
Note: This reconciliation and tie shall not, for any purpose, be deemed
to be a part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Page
Parties................................................................................................ 1
Recitals of the Company................................................................................ 1
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101. Definitions................................................................. 2
Act ........................................................................ 3
Additional Interest......................................................... 3
Additional Payments......................................................... 3
Affiliate................................................................... 3
Agent ................................................................... 3
Board of Directors.......................................................... 3
Board Resolution............................................................ 3
Business Day................................................................ 3
Closing Price............................................................... 4
Commission.................................................................. 4
Common Securities........................................................... 4
Common Stock................................................................ 4
Company ................................................................... 4
Company Request............................................................. 4
Compounded Interest......................................................... 5
Conversion Agent............................................................ 5
Conversion Date............................................................. 5
Corporate Trust Office...................................................... 5
Declaration................................................................. 5
Defaulted Interest.......................................................... 5
Delaware Trustee............................................................ 5
Dissolution Tax Opinion..................................................... 5
Event of Default............................................................ 5
Extended Interest Payment Period............................................ 5
Guarantee................................................................... 6
Holder ................................................................... 6
Indenture................................................................... 6
Initial Purchasers.......................................................... 6
Interest Payment Date....................................................... 6
Investment Company Event.................................................... 6
Maturity ................................................................... 6
Ministerial Action.......................................................... 6
90 Day Period............................................................... 6
No Recognition Opinion...................................................... 6
Notice of Conversion........................................................ 6
Officer's Certificate....................................................... 7
Opinion of Counsel.......................................................... 7
Outstanding................................................................. 7
Paying Agent................................................................ 8
Person ................................................................... 8
Predecessor Security........................................................ 8
Preferred Securities........................................................ 8
iii
<PAGE>
Property Trustee............................................................ 8
Purchase Agreement.......................................................... 8
Redemption Date............................................................. 8
Redemption Price............................................................ 8
Redemption Tax Opinion...................................................... 8
Reference Date.............................................................. 8
Registration Default........................................................ 8
Registration Rights Agreement............................................... 8
Regular Record Date......................................................... 8
Responsible Officer......................................................... 8
Restricted Securities Legend................................................ 9
Securities.................................................................. 9
Security Register........................................................... 9
Senior Indebtedness......................................................... 9
Shelf Registration Statement................................................ 10
Special Event............................................................... 10
Special Record Date......................................................... 10
Stated Maturity............................................................. 10
Subsidiary.................................................................. 10
Tax Event................................................................... 10
Trading Day................................................................. 10
Trust ................................................................... 10
Trustee ................................................................... 10
Trust Indenture Act......................................................... 10
Trust Securities............................................................ 11
Vice President.............................................................. 11
Voting Stock................................................................ 11
SECTION 102. Compliance Certificates and Opinions........................................ 11
SECTION 103. Form of Documents Delivered to Trustee...................................... 12
SECTION 104. Acts of Holders; Record Dates............................................... 12
SECTION 105. Notices, Etc., to Trustee and the Company................................... 14
SECTION 106. Notice to Holders; Waiver................................................... 15
SECTION 107. Conflict with Trust Indenture Act........................................... 15
SECTION 108. Effect of Headings and Table of Contents.................................... 16
SECTION 109. Successors and Assigns...................................................... 16
SECTION 110. Separability Clause......................................................... 16
SECTION 111. Benefits of Indenture....................................................... 16
SECTION 112. Governing Law............................................................... 16
SECTION 113. Legal Holidays.............................................................. 16
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally............................................................. 17
SECTION 202. Initial Issuance to Property Trustee........................................ 17
ARTICLE THREE
The Securities
SECTION 301. Title and Terms............................................................. 18
SECTION 302. Denominations............................................................... 20
SECTION 303. Execution, Authentication, Delivery and Dating.............................. 20
SECTION 304. Temporary Securities........................................................ 21
iv
<PAGE>
SECTION 305. Registration, Registration of Transfer and
Exchange.................................................................... 21
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities............................ 23
SECTION 307. Payment of Interest; Interest Rights Preserved.............................. 24
SECTION 308. Persons Deemed Owners....................................................... 26
SECTION 309. Cancellation................................................................ 26
SECTION 310. Right of Set Off............................................................ 26
SECTION 311. CUSIP Numbers............................................................... 26
SECTION 312. Extension of Interest Payment Period; Notice of
Extension................................................................... 27
SECTION 313. Paying Agent, Security Registrar and Conversion Agent....................... 28
SECTION 314. Global Security............................................................. 28
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture..................................... 30
SECTION 402. Application of Trust Money.................................................. 31
ARTICLE FIVE
Remedies
SECTION 501. Events of Default........................................................... 32
SECTION 502. Acceleration of Maturity; Rescission and
Annulment................................................................... 34
SECTION 503. Collection of Indebtedness and Suits for
Enforcement by Trustee...................................................... 35
SECTION 504. Trustee May File Proofs of Claim............................................ 35
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities.................................................................. 36
SECTION 506. Application of Money Collected.............................................. 36
SECTION 507. Limitation on Suits......................................................... 37
SECTION 508. Unconditional Right of Holders to Receive
Principal and Interest and Convert.......................................... 38
SECTION 509. Restoration of Rights and Remedies.......................................... 38
SECTION 510. Rights and Remedies Cumulative.............................................. 38
SECTION 511. Delay or Omission Not Waiver................................................ 38
SECTION 512. Control by Holders.......................................................... 39
SECTION 513. Waiver of Past Defaults..................................................... 39
SECTION 514. Undertaking for Costs....................................................... 40
SECTION 515. Waiver of Stay or Extension Laws............................................ 40
SECTION 516. Enforcement by Holders of Preferred Securities.............................. 40
ARTICLE SIX
The Trustee
SECTION 601 Certain Duties and Responsibilities......................................... 41
SECTION 602. Notice of Defaults.......................................................... 41
SECTION 603. Certain Rights of Trustee................................................... 41
SECTION 604. Not Responsible for Recitals or Issuance of
Securities.................................................................. 43
SECTION 605. May Hold Securities......................................................... 43
SECTION 606. Money Held in Trust......................................................... 43
v
<PAGE>
SECTION 607. Compensation and Reimbursement.............................................. 43
SECTION 608. Disqualification; Conflicting Interests..................................... 44
SECTION 609. Corporate Trustee Required; Eligibility..................................... 44
SECTION 610. Resignation and Removal; Appointment of Successor........................... 45
SECTION 611. Acceptance of Appointment by Successor...................................... 46
SECTION 612. Merger, Conversion, Consolidation or Succession
to Business................................................................. 47
SECTION 613. Preferential Collection of Claims Against
Company..................................................................... 47
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders................... 47
SECTION 702. Preservation of Information; Communications to Holders...................... 48
SECTION 703. Reports by Trustee.......................................................... 48
SECTION 704. Reports by Company.......................................................... 49
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease........................ 49
SECTION 801. Company May Consolidate, Etc., Only on Certain
Terms....................................................................... 49
SECTION 802. Successor Substituted....................................................... 50
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of Holders.......................... 51
SECTION 902. Supplemental Indentures with Consent of Holders............................. 52
SECTION 903. Execution of Supplemental Indentures........................................ 53
SECTION 904. Effect of Supplemental Indentures........................................... 53
SECTION 905. Conformity with Trust Indenture Act......................................... 54
SECTION 906. Reference in Securities to Supplemental Indentures......................... 54
ARTICLE TEN
Covenants; Representations and Warranties
SECTION 1001. Payment of Principal and Interest........................................... 54
SECTION 1002. Maintenance of Office or Agency............................................. 54
SECTION 1003. Money for Security Payments to Be Held in Trust............................. 55
SECTION 1004. Statement by Officers as to Default......................................... 56
SECTION 1005. Limitation on Dividends; Covenants as to the Trust.......................... 56
SECTION 1006. Payment of Expenses of the Trust............................................ 57
SECTION 1007. Registration Rights......................................................... 58
ARTICLE ELEVEN
Redemption of Securities
vi
<PAGE>
SECTION 1101. Right of Redemption......................................................... 60
SECTION 1102. Applicability of Article.................................................... 60
SECTION 1103. Election to Redeem; Notice to Trustee....................................... 60
SECTION 1104. Selection by Trustee of Securities to Be
Redeemed.................................................................... 61
SECTION 1105. Notice of Redemption........................................................ 61
SECTION 1106. Deposit of Redemption Price................................................. 62
SECTION 1107. Securities Payable on Redemption Date....................................... 62
SECTION 1108. Securities Redeemed in Part................................................. 63
SECTION 1109. Optional Redemption......................................................... 63
SECTION 1110. Tax Event Redemption........................................................ 64
ARTICLE TWELVE
Subordination of Securities
SECTION 1201. Agreement to Subordinate.................................................... 65
SECTION 1202. Default on Senior Indebtedness.............................................. 65
SECTION 1203. Liquidation; Dissolution; Bankruptcy........................................ 66
SECTION 1204. Subrogation................................................................. 67
SECTION 1205. Trustee to Effectuate Subordination......................................... 69
SECTION 1206. Notice by the Company....................................................... 69
SECTION 1207. Rights of the Trustee; Holders of Senior Indebt
edness...................................................................... 70
SECTION 1208. Subordination May Not Be Impaired........................................... 71
ARTICLE THIRTEEN
Conversion of Securities
SECTION 1301. Conversion Rights........................................................... 71
SECTION 1302. Conversion Procedures....................................................... 72
SECTION 1303. Conversion Price Adjustments................................................ 74
SECTION 1304. Reclassification, Consolidation, Merger or Sale
of Assets................................................................... 78
SECTION 1305. Notice of Adjustments of Conversion Price................................... 78
SECTION 1306. Prior Notice of Certain Events.............................................. 79
SECTION 1307. Certain Defined Terms....................................................... 80
SECTION 1308. Dividend or Interest Reinvestment Plans..................................... 81
SECTION 1309. Certain Additional Rights................................................... 81
SECTION 1310. Restrictions on Common Stock Issuable Upon Con
version..................................................................... 82
SECTION 1311. Trustee Not Responsible for Determining Conver
sion Price or Adjustments................................................... 83
ARTICLE FOURTEEN
Immunity of Incorporators, Stockholders,
Officers and Directors
SECTION 1401. No Recourse............................................................................ 83
EXHIBIT A Form of the Security
</TABLE>
<PAGE>
Page
ANNEX I Form of Amended and Restated Declaration of Trust among the
Company, as Sponsor, The Bank of New York, The Bank Of New York
(Delaware), and Steven A. McArthur, John G. Sylvia and Gregory Abel,
as trust ees, dated as of April 4, 1996.
- --------------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
viii
<PAGE>
INDENTURE, dated as of April 1, 1996, between CalEnergy
Company, Inc., a corporation duly organized and existing under the laws of the
State of Delaware (herein called the "Company"), having its principal office
at 302 South 36th Street, Suite 400, Omaha, Nebraska 68131, and The Bank of
New York, a New York banking corporation, as
Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
WHEREAS, CalEnergy Capital Trust, a Delaware business trust
(the "Trust"), formed under the Amended and Restated Declaration of Trust
among the Company, as Sponsor, The Bank of New York, as property trustee (the
"Property Trustee") and The Bank of New York (Delaware) (the "Delaware
Trustee") and Steven A. McArthur, John G. Sylvia and Gregory Abel, as
trustees, dated as of April 4, 1996 (the "Declara tion"), pursuant to the
Purchase Agreement (the "Purchase Agreement") dated April 4, 1996, among the
Company, the Trust and the Initial Pur chasers named therein, will issue and
sell up to 2,000,000 (or 2,240,000 if the over-allotment option is exercised)
aggregate liquidation prefer ence of its 6 1/4% Convertible Preferred
Securities (the "Preferred Securi ties") with a liquidation preference of $50
per Preferred Security, having an aggregate liquidation amount with respect to
the assets of the Trust of $100,000,000.00 (or $112,000,000.00 if the
over-allotment option is exercised);
WHEREAS, the trustees of the Trust, on behalf of the Trust,
will execute and deliver to the Company Common Securities evidencing an
ownership interest in the Trust, registered in the name of the Company, in an
aggregate amount equal to three percent of the capitalization of the Trust,
equivalent to 61,856 Common Securities (or 69,279 Common Securities if the
over-allotment option is exercised), with a liquida tion preference of $50 per
Common Security, having an aggregate liquida tion amount with respect to the
assets of the Trust of $3,092,800.00 (or $3,463,950.00 if the over-allotment
option is exercised) (the "Common Securities");
WHEREAS, the Trust will use the proceeds from the sale of
the Preferred Securities and the Common Securities to purchase from the
Company Securities (as defined below) in an aggregate principal amount of
$103,092,800.00 (or $115,463,950.00 if the over-allotment option is
exercised);
WHEREAS, the Company is guaranteeing the payment of
distributions on the Preferred Securities, and payment of the Redemption Price
and payments on liquidation with respect to the Preferred Securities, to the
extent provided in the Preferred Securities Guarantee Agreement (the
"Guarantee") between the Company and The Bank of New York, as guarantee
trustee, for the benefit of the holders of the Pre ferred Securities from time
to time;
WHEREAS, the Company has duly authorized the creation of an
issue of its 6 1/4% Convertible Junior Subordinated Deferrable Interest
Debentures Due 2016 (the "Securities"), of substantially the tenor and amount
hereinafter set forth and to provide therefor the Company has duly authorized
the execution and delivery of this Indenture; and
<PAGE>
WHEREAS, so long as the Trust is a Holder of Securities, and
any Preferred Securities are outstanding, the Declaration provides that
the holders of Preferred Securities may cause the Conversion Agent to (a)
exchange such Preferred Securities for Securities held by the Trust and (b)
immediately convert such Securities into Common Stock;
WHEREAS, 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 agreed, for the equal
and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
Section 101 Definitions.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as
the singular;
(2) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein, have
the meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally accepted
accounting principles; and
(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 104.
"Additional Interest" has the meaning specified in Section
301.
"Additional Payments" means Compounded Interest and
Additional Interest, if any.
2
<PAGE>
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agent" means any Registrar, Paying Agent, Conversion Agent
or co-registrar.
"Board of Directors" means either the board of directors of
the Company or any duly authorized committee of that board.
"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 a Saturday or a
Sunday or a day on which banking institutions in The City of New York are
authorized or required by any applicable law or executive order to remain
closed.
"Closing Price" has the meaning specified in Section 1307.
"Commission" means the Securities and Exchange Commission,
as from time to time constituted, created under the Securities Exchange Act of
1934, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties at such time.
"Common Securities" has the meaning specified in the
recitals to this Instrument.
"Common Securities Guarantee" means any guarantee that the
Company may enter into for the benefit of holders of Common Securities of the
Trust.
"Common Stock" includes any stock of any class of the
Company which has no preference in respect of dividends or of amounts payable
in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company and which is not subject to redemption by the
Company. However, subject to the provisions of Article Thirteen, shares
issuable on conversion of Securities shall include only shares of the class
designated as Common Stock of the Company at the date of this instrument or
shares of any class or classes resulting from any reclassification or
reclassifications thereof and which have no preference in respect of dividends
or of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company and which are not
subject to redemption by the Company; provided, that if at any time there
shall be more than one such resulting class, the shares of each such class
then so issuable on conversion shall be substantially in the proportion which
the total
3
<PAGE>
number of shares of such class resulting from all such reclassifications bears
to the total number of shares of all such classes resulting from all such
reclassifications.
"Company" means the Person named as the "Company" in the
first paragraph of this instrument 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" or "Company Order" means a written request
or order signed in the name of the Company by its Chairman of the Board, its
Vice Chairman of the Board, its President, a Vice President, its Treasurer or
its Secretary, and delivered to the Trustee.
"Compounded Interest" has the meaning specified in Section
312.
"Conversion Agent" means the Person appointed to act on
behalf of the holders of Preferred Securities in effecting the conversion of
Preferred Securities as and in the manner set forth in the Declaration and
Section 1302 hereof.
"Conversion Date" has the meaning specified in Section 1302.
"Corporate Trust Office" means the principal office of the
Trustee in New York, New York, at which at any particular time its corporate
trust business shall be administered and which at the date of this Indenture
is 101 Barclay Street, Floor 21 West, New York, New York
10286.
"Declaration" has the meaning specified in the Recitals of
this instrument.
"Defaulted Interest" has the meaning specified in Section
307.
"Delaware Trustee" has the meaning given it in the Recitals
of this instrument.
"Depositary" means, with respect to any Securities issued in
the form of one or more Global Security, a clearing agency registered under
the Exchange Act that is dedicated to act as Depositary for the Securities.
"Dissolution Event" means that, as a result of the
occurrence and continuation of a Special Event, the Trust is to be dissolved
in accordance with the Declaration and the Debentures held by the Property
Trustee are to be distributed to the holders of Trust Securities issued by The
Trust pro rata in accordance with the Declaration.
"Dissolution Tax Opinion" has the meaning specified in the
Declaration.
"Event of Default" has the meaning specified in Section 501.
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"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
"Extended Interest Payment Period" has the meaning specified
in Section 312.
"Global Security" has the meaning specified in Section 314.
"Guarantee" has the meaning specified in the Recitals to
this instrument.
"Holder" means a Person in whose name a Security is
registered in the Security Register.
"Indenture" means this instrument as originally executed or
as it may from time to time be supplemented or amended by one or more
indentures supplemental hereto entered into pursuant to the applicable
provisions hereof, including, for all purposes of this instrument and any such
supplemental indenture, the provisions of the Trust Indenture Act that are
deemed to be a part of and govern this instrument and any such supplemental
indenture, respectively.
"Initial Purchasers," with respect to the Preferred
Securities, means CS First Boston Corporation and Merrill Lynch, Pierce,
Fenner & Smith Incorporated.
"Interest Payment Date" has the meaning specified in Section
301.
"Investment Company Event" has the meaning specified in the
Declaration.
"Maturity", when used with respect to any Security, means
the date on which the principal of such Security becomes due and payable as
therein or herein provided, whether at the Stated Maturity or by declaration
of acceleration, call for redemption or otherwise.
"Ministerial Action" has the meaning specified in Section
1110.
"90 Day Period" has the meaning specified in Section 1110.
"No Recognition Opinion" has the meaning specified in the
Declaration.
"non Book-Entry Preferred Securities" has the meaning
specified in Section 314.
"Notice of Conversion" means the notice to be given by a
holder of Preferred Securities to the Conversion Agent directing the
Conversion Agent to exchange such Preferred Securities for Securities and to
convert such Securities into Common Stock on behalf of such holder.
"Officer's Certificate" means a certificate signed by the
Chairman of the Board, the Vice Chairman of the Board, the President, a
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Vice President, the Treasurer or the Secretary of the Company and delivered to
the Trustee. The officer signing an Officer's Certificate given pursuant to
Section 1004 shall be the principal executive, financial or accounting officer
of the Company.
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for the Company, and who shall be acceptable to the Trustee.
"Outstanding", when used with respect to Securities, means,
as of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except: (i) Securities theretofore cancelled
by the Trustee or delivered to the Trustee for cancellation; (ii) Securities
for whose payment or redemption money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent (other than the
Company) in trust or set aside and segregated in trust by the Company (if the
Company shall act as its own Paying Agent) for the Holders of such Securities;
provided, that if such Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made; and (iii) Securities which
have been paid pursuant to Section 306, converted into Common Stock pursuant
to Section 1301, or in exchange for or in lieu of which other Securities have
been authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Securities are held by a bona fide
purchaser in whose hands such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities
owned by the Company or any other obligor upon the Securities or any Affiliate
of the Company or of such other obligor shall be disregarded and deemed not to
be Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Securities which the Trustee knows to be so
owned shall be so disregarded. Securities so owned which have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company or any other obligor upon
the Securities or any Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to
pay the principal of or interest on any Securities on behalf of the Company.
"Person" means any individual, corporation, company,
partnership, joint venture, trust, unincorporated organization or government
or any agency or political subdivision thereof.
"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
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Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or
stolen Security shall be deemed to evidence the same debt as the mutilated,
destroyed, lost or stolen Security.
"Preferred Securities" has the meaning specified in the
Recitals to this instrument.
"Property Trustee" has the meaning specified in the Recitals
of this instrument.
"Purchase Agreement" has the meaning specified in the
Recitals to this instrument.
"Redemption Date", when used with respect to any Security to
be redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security
to be redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Redemption Tax Opinion" has the meaning set forth in the
Declaration.
"Reference Date" has the meaning specified in Section
1303(c).
"Registration Default" has the meaning specified in Section
1007.
"Registration Rights Agreement" has the meaning specified in
Section 1007.
"Regular Record Date" has the meaning specified in Section
301.
"Responsible Officer", when used with respect to the
Trustee, means the chairman or any vice-chairman of the board of directors,
the chairman or any vice-chairman of the executive committee of the board of
directors, the chairman of the trust committee, the president, any vice
president, any assistant vice president, the treasurer, any assistant
treasurer, any trust officer or assistant trust officer, the controller or any
assistant controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Securities Legend" has the meaning specified in
Section 202.
"Securities" has the meaning specified in the Recitals to
this instrument.
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"Security Register" and "Security Registrar" have the
respective meanings specified in Section 305.
"Senior Indebtedness" means in respect of the Company (i)
the principal, premium, if any, and interest in respect of (A) indebtedness of
such obligor for money borrowed and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by such obligor, (ii)
all capital lease obligations of such obligor, (iii) all obligations of such
obligor issued or assumed as the deferred purchase price of property, all
conditional sale obligations of such obligor and all obligations of such
obligor under any title reten tion agreement (but excluding trade accounts
payable arising in the ordinary course of business), (iv) all obligations of
such obligor for the reimbursement of any letter of credit, banker's
acceptance, security purchase facility or similar credit transaction, (v) all
obligations of the type referred to in clauses (i) through (iv) above of other
Persons for the payment of which such obligor is responsible or liable as
obligor, guarantor or otherwise, and (vi) all obligations of the type referred
to in clauses (i) through (v) above of other persons secured by any lien on
any property or asset of such obligor (whether or not such obligation is
assumed by such obligor), except for (1) any such indebtedness issued after
the date of original issuance of the Securities that is by its terms
subordinated to or pari passu with the Securities and (2) any indebtedness
(including all other debt securities and guarantees in respect of those debt
securities) initially issued to any other trust, or a trustee of such trust,
partnership, or other entity affiliated with the Company that is, directly or
indirectly, a financing vehicle of the Company (a "Financing Entity") in
connection with the issuance by such Financing Entity of preferred securities
or other securities which by their terms rank pari passu with, or junior to,
the Preferred Securities.
"Shelf Registration Statement" has the meaning specified in
Section 1007.
"Special Event" has the meaning specified in the
Declaration.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or
any installment of interest thereon, means the date specified in such Security
as the fixed date on which the principal, together with any accrued and unpaid
interest (including Compounded Interest), of such Security or such installment
of interest is due and payable.
"Subsidiary" of any Person means (i) a corporation more than
50% of the outstanding Voting Stock of which is owned, directly or indirectly,
by such Person or by one or more other Subsidiaries of such Person or by such
Person and one or more Subsidiaries thereof or (ii) any other Person (other
than a corporation) in which such Person, or one or more other Subsidiaries of
such Person or such Person and one or more other Subsidiaries thereof,
directly or indirectly, has at least a majority ownership and power to direct
the policies, management and affairs thereof.
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"Tax Event" has the meaning specified in the Declaration.
"Trading Day" has the meaning specified in Section 1307.
"Trust" has the meaning specified in the Recitals to this
instrument.
"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 such successor Trustee.
"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 Securities" means Common Securities and Preferred
Securities.
"Vice President," when used with respect to the Company or
the Trustee, means any vice president, whether or not designated by a number
or a word or words added before or after the title "vice president".
"Voting Stock" of any Person means capital stock of such
Person which ordinarily has voting power for the election of directors
(or Persons performing similar functions) of such Person, whether at all times
or only so long as no senior class of securities has such voting power by
reason of any contingency.
Section 102 Compliance Certificates and Opinions.
Upon any application or request by the Company to the
Trustee to take any action under any provision of this Indenture, the Company
shall furnish to the Trustee such certificates and opinions as may be required
under the Trust Indenture Act or reasonably requested by the Trustee in
connection with such application or request. Each such certificate or opinion
shall be given in the form of an Officers' Certificate, if to be given by an
officer of the Company, or an Opinion of Counsel, if to be given by counsel,
and shall comply with the applicable requirements of the Trust Indenture Act
and any other applicable requirement set forth in this Indenture.
Every certificate or opinion with respect to compliance with
a condition or covenant provided for in this Indenture shall include
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
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(2) a brief statement as to the nature and
scope of the examination or investigation upon which the
statements or opinions contained in such certificate or
opinion are based;
(3) a statement that, in the opinion of
each such individual, he has made or caused to be made such
examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether, in the
opinion of each such individual, such condition or covenant
has been complied with.
Section 103 Form of Documents Delivered to Trustee.
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by the opinion of,
only one such Person, or that they be so certified or covered by only one
document, but one such Person may certify or give an opinion with respect to
some matters and one or more other such Persons as to other matters, and any
such Person may certify or give an opinion as to such matters in one or
several documents.
Any certificate or opinion of an officer of the Company may
be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion
or representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company
stating that the information with respect to such factual matters is in the
possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.
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Section 104 Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or
taken by Holders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Holders in person or by an agent
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for
any purpose of this Indenture and (subject to Section 601) conclusive in favor
of the Trustee and the Company, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him the execution thereof.
Where such execution is by a signer acting in a capacity other than his
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the execution of any
such instrument or writing, or the authority of the Person executing the same,
may also be proved in any other manner which the Trustee or the Company, as
the case may be, deems sufficient.
(c) The Company may, in the circumstances permitted by the
Trust Indenture Act, fix any day as the record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or
take any request, demand, authorization, direction, notice, consent, waiver or
other action, or to vote on any action, authorized or per mitted to be given
or taken by Holders. If not set by the Company prior to the first solicitation
of a Holder made by any Person in respect of any such action, or, in the case
of any such vote, prior to such vote, the record date for any such action or
vote shall be the 30th day (or, if later, the date of the most recent list of
Holders required to be provided pursuant to Section 701) prior to such first
solicitation or vote, as the case may be. With regard to any record date, only
the Holders on such date (or their duly designated proxies) shall be entitled
to give or take, or vote on, the relevant action.
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 502, (iii) any request to institute
proceedings referred to in Section 507(2) or (iv) any direc tion referred to
in Section 512. If any record date is set pursuant to this paragraph, the
Holders of 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
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Holders after such record date; Nothing in this paragraph shall be con strued
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 Outstanding Securities of the date such action is taken.
(d) The ownership of Securities shall be proved by the
Security Register.
(e) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued
upon the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by the
Trustee or the Company in reliance thereon, whether or not notation of such
action is made upon such Security.
(f) Without limiting the foregoing, a Holder entitled
hereunder to give or take any such action 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 different part of such
principal amount, in each case, by specifying the same in a written notice to
the Company.
Section 105 Notices, Etc., to Trustee and the Company.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company
shall be sufficient for every purpose hereunder if made,
given, furnished or filed in writing to or with the Trustee
at its Corporate Trust Office, Attention: Corporate Trust
Trustee Administration, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to it at the address of its
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.
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Section 106 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 such Holder's address as it appears in
the Security Register, not later than the latest date (if any), and not
earlier than the earliest date (if any), prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Any notice when mailed to a Holder in the aforesaid manner
shall be conclusively deemed to have been received by such Holder whether or
not actually received by such Holder. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall
be the equivalent of such notice. Waivers of notice by Holders shall be filed
with the Trustee, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service
or by reason of any other cause it shall be impracticable to give such notice
by mail, then such notification as shall be made with the approval of the
Trustee shall constitute a sufficient notification for every purpose
hereunder.
Section 107 Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with
a provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall
be deemed to apply to this Indenture as so modified or to be excluded, as the
case may be.
Section 108 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 109 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 110 Separability Clause.
In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
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enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
Section 111 Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, the holders of Senior Indebtedness, the holders of
Preferred Securities (to the extent provided herein) and the Holders of
Securities, any benefit or any legal or equitable right, remedy or claim under
this Indenture.
Section 112 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 PRINCIPLES OF CONFLICTS OF LAWS.
Section 113 Legal Holidays.
In any case where any Interest Payment Date, Redemption Date
or Stated Maturity of any Security or the last date on which a Holder has the
right to convert his Securities shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of interest or principal or conversion of the Securities need not be
made on such date, but may be made on the next succeeding Business Day (except
that, if such Business Day is in the next succeeding calendar year, such
Interest Payment Date, Redemption Date or Stated Maturity, as the case may be,
shall be the immediately preceding Business Day) with the same force and
effect as if made on the Interest Payment Date or Redemption Date, or at the
Stated Maturity or on such last day for conversion, provided, that no interest
shall accrue for the period from and after such Interest Payment Date,
Redemption Date or Stated Maturity, as the case may be.
ARTICLE TWO
Security Forms
Section 201 Forms Generally.
The Securities and the Trustee's certificates of
authentication shall be substantially in the form of Exhibit A which is hereby
incorporated in and expressly made a part of this Indenture. The Securities
may have notations, legends or endorsements required by law, stock exchange
rule, agreements to which the Company is subject, if any, or usage (provided
that any such notation, legend or endorsement is in a form acceptable to the
Company). The Company shall furnish any such legend not contained in Exhibit A
to the Trustee in writing. Each Security shall be dated the date of its
authentication. The terms and provisions of the Securities set forth in
Exhibit A are part of the terms of this Indenture and to the extent
applicable, the Company and the Trustee, by their execution and delivery of
this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
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The definitive Securities shall be typewritten or printed,
lithographed or engraved or produced by any combination of these methods on
steel engraved borders or may be produced in any other manner permitted by the
rules of any securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as evidenced by their
execution of such Securities.
Section 202 Initial Issuance to Property Trustee.
The Securities initially issued to the Property Trustee of
the Trust shall be in the form of one or more individual certificates in
definitive, fully registered form without distribution coupons and shall bear
the following legend (the "Restricted Securities Legend") unless the Company
determines otherwise in accordance with applicable law:
THIS SECURITY HAS AND ANY COMMON STOCK (AND RELATED RIGHTS)
ISSUED ON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAW AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED
IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO
NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO
THE COMPANY'S AND THE TRANSFER AGENT'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER (i) PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM, AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED
AND DELIVERED BY THE TRANSFEROR TO THE TRANSFER AGENT.
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ARTICLE THREE
The Securities
Section 301 Title and Terms.
The aggregate principal amount of Securities that may be
authenticated and delivered under this Indenture is limited to the sum of (a)
$103,092,800.00 and (b) such aggregate principal amount (which may not exceed
$12,371,150.00 aggregate principal amount) of Securities, if any, as shall be
purchased by the Trust pursuant to an over-allotment option in accordance with
the terms and provisions of the Purchase Agreement dated April 4, 1996, among
the Company, the Trust and the Initial Purchasers named therein, except for
Securities authenticated and delivered upon registration of, transfer of, or
in exchange for, or in lieu of, other Securities pursuant to Section 304, 305,
306, 906, 1108 or 1301.
The Securities shall be known and designated as the "6 1/4%
Convertible Junior Subordinated Deferrable Interest Debentures Due 2016" of
the Company. Their Stated Maturity shall be March 10, 2016, and they shall
bear interest at the rate of 6 1/4% per annum, from April 10, 1996 or from the
most recent Interest Payment Date (as defined below) to which interest has
been paid or duly provided for, as the case may be, payable quarterly (subject
to deferral as set forth herein), in arrears, on March 15, June 15, September
15 and December 15 (each an "Interest Payment Date") of each year, commencing
June 15, 1996 until the prin cipal thereof is paid or made available for
payment, and they shall be paid to the Person in whose name the Security is
registered at the close of business on the regular record date for such
interest installment, which shall be the close of business on the date which
is 15 days prior to each Interest Payment Date (the "Regular Record Date").
Interest will compound quarterly and will accrue at the rate of 6 1/4% per
annum on any interest installment in arrears for more than one quarter or
during an extension of an interest payment period as set forth in Section 312
hereof.
The amount of interest payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months. Except as
provided in the following sentence, the amount of interest payable for any
period shorter than a full quarterly period for which interest in computed,
will be computed on the basis of the actual number of days elapsed in such a
30-day month. In the event that any date on which interest is payable on the
Securities is not a Business Day, then payment of 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 such date.
If at any time while the Property Trustee is the Holder of
any Securities, the Trust or the Property Trustee is required to pay any
taxes, duties assessments or governmental charges of whatever nature
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(other than withholding, transfer or stamp taxes) imposed by the United
States, or any other taxing authority, then, in any case, the Company will pay
as additional interest ("Additional Interest") on the Securi ties held by the
Property Trustee, such additional amounts as shall be required so that the net
amounts received and retained by the Trust and the Property Trustee after
paying such taxes, duties assessments or other governmental charges will be
equal to the amounts the Trust and the Property Trustee would have received
had no such taxes, duties, assessments or other government charges been
imposed.
The principal of and interest on the Securities shall be
payable at the office or agency of the Company in the United States maintained
for such purpose and at any other office or agency maintained by the Company
for such purpose 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; provided, however, that at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register.
The Securities shall be redeemable as provided in Article
Eleven hereof.
The Securities shall be subordinated in right of payment to
Senior Indebtedness as provided in Article Twelve hereof.
The Securities shall be convertible as provided in Article
Thirteen hereof.
Section 302 Denominations.
The Securities shall be issuable only in registered form
without coupons and only in denominations of $50 and integral multiples
thereof.
Section 303 Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by
its Chairman of the Board, its Vice Chairman of the Board, its President or
one of its Vice Presidents, under its corporate seal reproduced thereon
attested by its Secretary or one of its Assistant Secretaries. The signature
of any of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities executed by the
Company to the Trustee for authentication, together with a Company Order for
the authentication and delivery of such Securities; and the Trustee in
accordance with such Company Order shall authenticate
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and make available for delivery such Securities as in this Indenture
provided and not otherwise.
No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on
such Security a certificate of authentication substantially in the form
provided for herein executed by the Trustee by manual signature, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.
Section 304 Temporary Securities.
Pending the preparation of definitive Securities, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the offi cers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be 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 any office or agency of the Company designated pursuant to
Section 1002, 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 a like
principal amount of definitive Securities of authorized denominations. Until
so exchanged the temporary Securities shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities.
Section 305 Registration, Registration of Transfer and
Exchange.
(a) General.
The Company shall cause to be kept at the Corporate Trust
Office of the Trustee a register (the register maintained in such office and
in any other office or agency designated pursuant to
Section 1002 being herein sometimes collectively referred to as the "Security
Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Securities and of
transfers of Securities. The Trustee is hereby appointed "Security Registrar"
for the purpose of registering Securities and transfers of Securities as
herein provided.
Upon surrender for registration of transfer of any Security
at an office or agency of the Company designated pursuant to Section 1002 for
such purpose, the Company shall execute, and the Trustee shall authenticate
and deliver, in the name of the designated
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transferee or transferees, one or more new Securities of any authorized
denominations and of a like aggregate principal amount.
At the option of the Holder, Securities may be exchanged for
other Securities of any authorized denominations and of a like 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 for exchange shall (if so required by the Company or the Trustee)
be duly endorsed, or be accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security Registrar duly executed, by
the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of
transfer or exchange of Securities, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 304, 906, 1108 or 1301
not involving any transfer.
The Company shall not be required (i) in the case of a
partial redemption of the Securities, to issue, register the transfer of or
exchange any Security during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption of Securities
selected for redemption under Section 1104 and ending at the close of business
on the day of such mailing, or (ii) to register the transfer of or exchange
any Security so selected for redemption in whole or in part, except the
unredeemed portion of any Security being redeemed in part.
(b) Transfer Procedures and Restrictions.
The Securities may not be transferred except in compliance
with the Restricted Securities Legend unless otherwise determined by the
Company in accordance with applicable law. Upon any distribution of the
Securities to the holders of the Preferred Securities in accordance with the
Declaration, the Company and the Trustee shall enter into a supplemental
indenture pursuant to Section 901(6) to provide for transfer procedures and
restrictions with respect to the Securities substantially similar to those
contained in the Declaration to the extent applicable in the circumstances
existing at the time of such distribution.
Section 306 Mutilated, Destroyed, Lost and Stolen Securities.
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If any mutilated Security is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a new Security of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee
(i) evidence to their satisfaction of the destruction, loss or theft of any
Security and (ii) such security or indemnity as may be required by them to
save each of them and any agent of either 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 the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of like tenor and principal amount and bearing a
number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen
Security has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section,
the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee) connected
therewith.
Every new Security 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 duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 307 Payment of Interest; Interest Rights Preserved.
Interest on any Security 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.
Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the 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:
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(1) The Company may elect to make payment
of any Defaulted Interest to the Persons in whose names the
Securi ties (or their respective Predecessor Securities) are
regis tered 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 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 De
faulted 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 at his address
as it appears in the Security Register, not less than 10
days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special
Record Date therefor having been so mailed, such Defaulted
Interest shall be paid to the Persons in whose names the
Securities (or their respective Predecessor Securities) are
registered at the close of business on such Special Record
Date and shall no longer be payable pursuant to the follow
ing 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 on which the Securities may be listed, and, if so
listed, upon such notice as may be required by such
exchange, if, after notice given by the Company to the
Trustee of the proposed payment pursuant to this Clause,
such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue (including in each such case
Compounded Interest), which were carried by such other Securi ty.
In the case of any Security which is converted after any
Regular Record Date and on or prior to the next succeeding Interest Payment
Date (other than any Security whose Maturity is prior to such Interest Payment
Date), interest whose Stated Maturity is on such
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Interest Payment Date shall be payable on such Interest Payment Date
notwithstanding such conversion, and such interest (whether or not punctually
paid or duly provided for) shall be paid to the Person in whose name that
Security (or one or more Predecessor Securities) is registered at the close of
business on such Regular Record Date. Except as otherwise expressly provided
in the immediately preceding sentence, in the case of any Security that is
converted, interest whose Stated Maturity is after the date of conversion of
such Security shall not be payable, and the Company shall not make nor be
required to make any other payment, adjustment or allowance with respect to
accrued but unpaid interest (including Compounded Interest) on the Securities
being converted, which shall be deemed to be paid in full.
Section 308 Persons Deemed Owners.
Prior to due presentment of a Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Security is registered as the owner of
such Security for the purpose of receiving payment of principal of and
(subject to Section 307) interest (including Compounded 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 309 Cancellation.
All Securities surrendered for payment, redemption,
registration of transfer or exchange or conversion shall, if surrendered to
any Person other than the Trustee, be delivered to the Trustee and shall be
promptly cancelled 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 cancelled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
cancelled as provided in this Section, except as expressly permitted by this
Indenture. All cancelled Securities held by the Trustee shall be disposed of
as directed by a Company Order; provided, however, that the Trustee shall not
be required to destroy the certificates representing such cancelled
Securities.
Section 310 Right of Set Off.
Notwithstanding anything to the contrary in this Indenture,
the Company shall have the right to set off any payment it is otherwise
required to make hereunder to the extent the Company has theretofore made, or
is concurrently on the date of such payment making, a payment under the
Guarantee.
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Section 311 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 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 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 Securities, and any such redemption
shall not be affected by any defect in or omission of such numbers.
Section 312 Extension of Interest Payment Period; Notice of
Extension.
(a) The Company shall have the right, at any time during the
term of this Security, from time to time to defer payments of inter est by
extending the interest payment period of such Security for up to 20
consecutive quarters (an "Extended Interest Payment Period") during which
Extended Interest Payment Period no interest shall be due and payable;
provided, that no Extended Interest Payment Period may extend beyond the
Maturity Date. To the extent permitted by applicable law, interest, the
payment of which has been deferred because of the exten sion of the interest
payment period, will bear interest thereon at 6 1/4% compounded quarterly for
each quarter of the Extended Interest Payment Period ("Compounded Interest").
At the end of the Extended Interest Payment Period, the Company shall pay all
interest then accrued and unpaid on the Securities, including any Additional
Payments that shall be payable to the Holders of the Securities in whose names
the Securi ties are registered in the Security Registrar on the first Regular
Record Date after the end of the Extended Interest Payment Period. Before the
expiration of any Extended Interest Payment Period, the Company may elect to
continue to defer payments of interest for another consecutive Extended
Interest Payment Period; provided, that any such Extended Interest Payment
Period, together with all such previous and consecutive Extended Interest
Payment Periods, shall not exceed 20 consecutive quarters and shall not extend
beyond the Maturity Date. Upon the expiration of any Extended Interest Payment
Period and upon the payment of all Compounded Interest and Additional
Interest, if any, then due, the Company may commence a new Extended Interest
Payment Period, subject to the foregoing requirements. No interest shall be
due and payable during an Extended Interest Payment Period except at the end
thereof.
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(b) If the Property Trustee is the sole Holder of the
Securities at the time the Company selects an Extended Interest Payment
Period, the Company shall give written notice to the Regular Trustees, the
Property Trustee and the Trustee of its selection of such Extended Interest
Payment Period at least one Business Day prior to the earlier of (i) the next
succeeding Interest Payment Date or (ii) if the Pre ferred Securities are
listed on the New York Stock Exchange or other stock exchange or quotation
system, the date the Trust is required to give notice to the New York Stock
Exchange or other applicable self-regulatory organization or to holders of the
Preferred Securities of the record date or the date such distributions are
payable, but in any event not less than ten Business Days prior to such record
date.
(c) If the Property Trustee is not the sole holder of the
Securities at the time the Company selects an Extended Interest Payment
Period, the Company shall give the Holders of the Securities and the Trustee
written notice of its selection of an Extended Interest Payment Period at
least ten Business Days prior to the earlier of (i) the next succeeding
Interest Payment Date or (ii) if the Preferred Securities are listed on the
New York Stock Exchange or other stock exchange or quotation system, the date
the Company is required to give notice to the New York Stock Exchange or other
applicable self-regulatory organization or to holders of the Securities of the
record date or the date such dis tributions are payable, but in any event not
less than two Business Days prior to such record date.
(d) The quarter in respect of which any notice is given
pursuant to paragraphs (b) and (c) hereof shall be counted as one of the 20
quarters permitted in the maximum Extended Interest Payment Period permitted
under paragraph (a) hereof.
Section 313 Paying Agent, Security Registrar and Conversion
Agent.
The Trustee will initially act as Paying Agent, Security
Registrar and Conversion Agent. The Company may change any Paying Agent,
Security Registrar, co-registrar or Conversion Agent without prior notice. The
Company or any of its Affiliates may act in any such capacity.
Section 314 Global Security.
(a) In connection with a Dissolution Event,
(i) the Securities in certificated form may be
presented to the Trustee by the Property Trustee in exchange for a global
Security in an aggregate principal amount equal to the aggregate principal
amount of all outstanding Securities (a "Global Security"), to be registered
in the name of the Depositary, or its nominee, and delivered by the Trustee to
the Depositary for crediting to the accounts of its participants pursuant to
the instructions of the Regular Trustees. The Company upon any such
presentation shall execute a Global Security in such aggregate principal
amount and deliver the same to the Trustee for authentication and delivery in
accordance with this Inden-
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ture. Payments on the Securities issued as a Global Security will be
made to the Depositary; and
(ii) if any Preferred Securities are held in
non book-entry certificated form, the Securities in certificated form may be
presented to the Trustee by the Property Trustee and any Preferred Secu rity
Certificate which represents Preferred Securities, other than Pre ferred
Securities held by the Depositary or its nominee, ("Non Book- Entry Preferred
Securities") will be deemed to represent beneficial interests in Securities
presented to the Trustee by the Property Trustee having an aggregate principal
amount equal to the aggregate liquidation amount of the Non Book-Entry
Preferred Securities until such Preferred Security Certificates are presented
to the Security Registrar for transfer or reissuance at which time such
Preferred Security Certifi cates will be cancelled and a Security, registered
in the name of the holder of the Preferred Security Certificate or the
transferee of the holder of such Preferred Security Certificate, as the case
may be, with an aggregate principal amount equal to the aggregate liquidation
amount of the Preferred Security Certificate cancelled, will be executed by
the Company and delivered to the Trustee for authentication and delivery in
accordance with this Indenture. On issue of such Securities, Securities with
an equivalent aggregate principal amount that were presented by the Property
Trustee to the Trustee will be deemed to have been cancelled.
(b) A Global Security may be transferred, in whole but not in
part, only to another nominee of the Depositary, or to a nominee of such
successor Depositary.
(c) If at any time the Depositary notifies the Company that it
is unwilling or unable to continue as Depositary or if at any time the
Depositary shall no longer be registered or in good standing under the
Exchange Act or other applicable statute or regulation, and a successor
Depositary for such series is not appointed by the Company within 90 days
after the Company receives such notice or becomes aware of such condition, as
the case may be, the Company will execute, and, subject to Article Three of
this Indenture, the Trustee, upon written notice from the Company and receipt
of a Company Order, will authenticate and deliver the Securities in definitive
registered form without coupons, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the Global
Security in exchange for such Global Security. In addition, upon an Event of
Default or if the Company may at any time determine that the Securities shall
no longer be represented by a Global Security. In such event the Company will
execute, and subject to Section 305 of this Indenture, the Trustee, upon
receipt of an Officers' Certificate evidencing such determination by the
Company, will authenticate and make available for delivery the Securities in
definitive registered form without coupons, in authorized denominations, and
in an aggregate principal amount equal to the principal amount of the Global
Security in exchange for such Global Security. Upon the exchange of the Global
Security for such Securities in definitive registered form without coupons, in
authorized denominations, the Global Security shall be cancelled by the
Trustee. Such Securities in definitive registered form issued in exchange for
the Global Security shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the
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Trustee. The Trustee shall deliver such Securities to the Depositary
for delivery to the Persons in whose names such Securities are so regis
tered.
ARTICLE FOUR
Satisfaction and Discharge
Section 401 Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except
as to any surviving rights of conversion, registration of transfer or exchange
of Securities herein expressly provided for), 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 306 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 1003) have been delivered to
the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to
the Trustee for cancellation have become due and payable and
the Company has deposited or caused to be deposited with the
Trustee as trust funds in trust for the purpose an amount
sufficient to pay and discharge the entire indebtedness on
such Securities not theretofore delivered to the Trustee for
cancellation, for principal and interest (including
Additional Payments) to the date of such deposit (in the
case of Securities which have become due and payable) or to
the Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all
other sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
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Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607 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 402 and the
last paragraph of Section 1003 shall survive.
Section 402 Application of Trust Money.
Subject to the provisions of the last paragraph of Section
1003, all money deposited with the Trustee pursuant to Section 401 shall be
held in trust and applied by it, in accordance with the provisions of the
Securities and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal and
interest for whose payment such money has been deposited with the Trustee. All
moneys deposited with the Trustee pursuant to Section 401 (and held by it or
any Paying Agent) for the payment of Securities subsequently converted shall
be returned to the Company upon Company Request.
ARTICLE FIVE
Remedies
Section 501 Events of Default.
"Event of Default," wherever used herein, means any one of
the following events that has occurred and is continuing (whatever the reason
for such Event of Default and whether it shall be occasioned by the provisions
of Article Twelve or be voluntary or involuntary or be effected by operation
of law or pursuant to any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body):
(1) default in the payment of the
principal of (or premium, if any, on) any Security when due
whether at Matu rity, upon redemption, by declaration or
otherwise; or
(2) default in the payment of any interest
upon any Security, including any Additional Payments in
respect thereof, when it becomes due and payable, and
continuance of such default for a period of 30 days;
provided, that a valid extension of the interest payment
period by the Company pursuant to this Indenture shall not
constitute a default in the payment of interest (including
any Additional Payments) for this purpose; or
(3) failure by the Company to issue and
deliver Common Stock upon an election to convert the
Securities into Common Stock in accordance with Article
Thirteen hereof; or
(4) default in the performance, or breach,
of any covenant or warranty of the Company in this Indenture
(other than a default in whose performance or whose breach
is
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elsewhere in this Section specifically dealt with), and con tinuance
of such default or breach for a period of 90 days after there has
been given, by registered or certified mail, to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least
25% in principal amount of the Outstanding Securities a written
notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default"
hereunder; or
(5) entry by a court having jurisdiction in the pre mises of
(A) a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorga nization or other similar law or (B) a
decree or order adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization, ar
rangement, adjustment or composition of or in respect of the Company
under any applicable Federal or State law, or ap pointing a
custodian, receiver, liquidator, assignee, trust ee, sequestrator or
other similar official of the Company or of substantially all of the
property of the Company, or or dering the winding up or liquidation
of its affairs, and the continuance of any such decree or order for
relief or any such other decree or order unstayed and in effect for a
period of 60 consecutive days; or
(6) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by the Company or to the entry of a decree or order for
relief in respect of itself in an involuntary case or proceeding
under any appli cable Federal or State bankruptcy, insolvency,
reorganiza tion or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against the Company, or
the filing by the Company of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or State law,
or the consent by the Company to the filing of such petition or to
the appointment of or taking possession by a custodian, receiver,
liqui dator, assignee, trustee, sequestrator or other similar
official of the Company or of substantially all of the property of
the Company, or the making by the Company of an assignment for the
benefit of creditors, or the admission by the Company in writing of
its inability to pay its debts generally as they become due, or the
taking of corporate action by the Company in furtherance of any such
action; or
(7) the voluntary or involuntary dissolution, winding up or
termination of the Trust, except in connection with (i) the
distribution of Securities to holders of Preferred Securities in
liquidation or redemption of their interests in the Trust, (ii) the
redemption of all of the outstanding Preferred Securities of the
Trust or
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(iii) certain mergers, consolidations or amalgamations, each
as permitted by the Declaration.
Section 502 Acceleration of Maturity; Rescission and Annulment.
If an Event of Default occurs and is continuing, then and in
every such case the Trustee or the Holders of not less than 25% in principal
amount of the Outstanding Securities may declare the principal of all the
Securities and any other amounts payable hereunder to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if
given by Holders), and upon any such declaration such principal and all
accrued interest shall become immediately due and pay able.
At any time after such a declaration of acceleration has
been made and before a judgment or decree for payment of the money due has
been obtained by the Trustee as provided in this Article hereinafter, the
Holders of a majority in aggregate principal amount of the Outstanding
Securities, by written notice to the Company and the Trustee, may rescind and
annul such declaration and its consequences if:
(1) the Company has paid or deposited with the
Trustee a sum sufficient to pay
(A) all overdue interest (including any
Additional Payments) on all Securities,
(B) the principal of any Securities
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
(2) all Events of Default, other than the non-payment of the
principal of Securities which have become due solely by such
declaration of acceleration, have been cured or waived as provided in
Section 513.
No such rescission shall affect any subsequent default or
impair any right consequent thereon.
Section 503 Collection of Indebtedness and Suits for Enforcement
by Trustee.
The Company covenants that if:
(1) default is made in the payment of any interest (including
any Additional Payments) on any Security when such interest becomes
due and payable and such default continues for a period of 30 days,
or
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(2) default is made in the payment of the principal
of any Security at the Maturity thereof,
the Company will, upon written demand of the Trustee, pay to it, for the
benefit of the Holders of such Securities, the whole amount then due and
payable on such Securities for principal and interest, as applicable,
(including any Additional Payments) and, to the extent that payment thereof
shall be legally enforceable, interest on any overdue principal and on any
overdue interest (including any Additional Interest), at the rate borne by the
Securities, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disburse ments and advances of the Trustee,
its agents and counsel.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders 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 504 Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company
(or any other obligor upon the Securities), its property or its creditors, the
Trustee shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture
Act in order to have claims of the Holders and the Trustee allowed in any such
proceeding. 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; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 607.
No provision of this Indenture shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof or to authorize
the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
Section 505 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
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Trustee shall be brought in its own name as trustee of an express trust, and
any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, be for the ratable benefit of the Holders of the
Securities in respect of which such judgment has been recovered.
Section 506 Application of Money Collected.
Subject to Article Twelve, any money collected by the
Trustee pursuant to this Article shall be applied in the following order, at
the date or dates fixed by the Trustee and, in case of the distribution of
such money on account of principal or interest (including any Additional
Payments), upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due
the Trustee under Section 607; and
SECOND: To the payment of the amounts then due and
unpaid for principal of and interest (including any Additional
Payments) on the Securities in respect of which or for the benefit of
which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on
such Securities for principal and interest (including any Compounded
Interest), respectively.
Section 507 Limitation on Suits.
No Holder of any Security shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless
(1) such Holder has previously given written notice
to the Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in aggregate principal
amount of the Outstanding Securities shall have made written request
to the Trustee to institute proceedings in respect of such Event of
Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to
be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to
institute any such proceeding; and
(5) no direction inconsistent with such written
request has been given to the Trustee during such 60-day
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period by the Holders of a majority in principal amount of
the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other
Holders, or to obtain or to seek to obtain priority or preference over any
other Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all the
Holders.
Section 508 Unconditional Right of Holders to Receive Principal
and Interest and Convert.
Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of and (subject to Sections
307 and 312) interest (including any Additional Payments) on such Security on
the respective Stated Maturities expressed in such Security (or, in the case
of redemption, on the Redemption Date) and to convert such Security in
accordance with Article Thirteen and to insti tute suit for the enforcement of
any such payment and right to convert, and such rights shall not be impaired
without the consent of such Holder.
Section 509 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding
to enforce any right or remedy under this Indenture and such proceeding has
been discontinued or abandoned for any reason, or has been determined
adversely to the Trustee or to such Holder, then and in every such case,
subject to any determination in such proceeding, the Company, the Trustee and
the Holders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and
the Holders shall continue as though no such proceeding had been instituted.
Section 510 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 306, no right or remedy herein conferred upon or reserved
to the Trustee or to the Holders is intended to be exclusive of any other
right or remedy, and every right and remedy shall, to the extent permitted by
law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
Section 511 Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Security to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and
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remedy given by this Article or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
Section 512 Control by Holders.
The Holders of a majority in principal amount of the
Outstanding Securities shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee; provided, that
(1) such direction shall not be in conflict with any
rule of law or with this Indenture; and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
Section 513 Waiver of Past Defaults.
Subject to Section 902 hereof, the Holders of not less than
a majority in principal amount of the Outstanding Securities may on behalf of
the Holders of all the Securities waive any past default hereunder and its
consequences, except a default
(1) in the payment of the principal of, premium, if any, or
interest (including any Additional Payments) on any Security (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 depos ited with the Trustee); or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security affected; provided, however, that
if the Securities are held by the Trust or a trustee of the Trust,
such waiver shall not be effective until the holders of a majority in
liquidation preference of Trust Securities of the Trust shall have
consented to such waiver; provided, further, that if the consent of
the Holder of each outstanding Security is required, such waiver
shall not be effective until each holder of the Securities of the
Trust shall have consented to such waiver.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
Section 514 Undertaking for Costs.
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In any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, a court may require any party litigant
in such suit to file an undertaking to pay the costs of such suit, and may
assess costs against any such party litigant, in the manner and to the extent
provided in the Trust Indenture Act; provided, that neither this Section nor
the Trust Indenture Act shall be deemed to authorize any court to require such
an undertaking or to make such an assessment in any suit instituted by the
Company or the Trustee or in any suit for the enforcement of the right to
receive the principal of and interest (including any Additional Payments) on
any Security or to convert any Security in accordance with Article Thirteen.
Section 515 Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension
law wherever enacted, now or at any time hereafter in force, which may affect
the covenants or the performance of this Indenture; and the Company (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it will not hinder, delay or
impede the execution pursuant to this Indenture of any lawful 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.
Section 516 Enforcement by Holders of Preferred Securities.
Notwithstanding anything to the contrary contained herein,
if a Event of Default has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest (subject to Section
312) or principal on the Securities on the date such interest or principal is
otherwise payable, the Company acknowledges that, in such event, a holder of
Preferred Securities may directly institute a proceeding for enforcement of
payment to such holder of the principal of or interest on the Securities
having a principal amount equal to the aggregate liquidation amount of the
Preferred Securities of such holder on or after the respective due date
specified in the Securities.
ARTICLE SIX
The Trustee
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Section 601 Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as
provided by the Trust Indenture Act. Notwithstanding the foregoing, no
provision of this Indenture shall require the Trustee to expend or risk its
own funds or otherwise incur any financial liability in the performance of any
of its duties hereunder, or in the exercise of any of its rights or powers, if
it shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it. Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
Section 602 Notice of Defaults.
The Trustee shall give the Holders notice of any default
hereunder as and to the extent provided by the Trust Indenture Act; provided,
however, that in the case of any default of the character specified in Section
501(4), no such notice to Holders shall be given until at least 30 days after
the occurrence thereof. For the purpose of this Section, the term "default"
means any event which is, or after notice or lapse of time or both would
become, an Event of Default.
Section 603 Certain Rights of Trustee.
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors may 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 choice 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;
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(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, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to reasonable
examination of 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; and
(h) the Trustee shall not be liable for any action taken,
suffered, or omitted to be taken by it in good faith, without
negligence or willful misconduct, and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred
upon it by this Indenture.
Section 604 Not Responsible for Recitals or Issuance of
Securities.
The recitals contained herein and in the Securities, except
the Trustee's certificates of authentication, shall be taken as the statements
of the Company, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities. The Trustee shall not be
accountable for the use or application by the Company of the Securities or the
proceeds thereof.
Section 605 May Hold Securities.
The Trustee, any Paying Agent, any Security Registrar or any
other agent of the Company, in its individual or any other capacity, may
become the owner or pledgee of Securities and, subject to Sections 608 and
613, may otherwise deal with the Company with the same rights it would have if
it were not Trustee, Paying Agent, Security Registrar, or such other agent.
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Section 606 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed with the Company.
Section 607 Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time such reasonable
compensation as the Company and the Trustee shall from time to time
agree in writing for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
fees, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the ex penses 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 the Trustee and any predecessor Trustee for,
and to hold it harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of
or in connection with the acceptance or administration of this trust,
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.
The Trustee shall have a lien prior to the Securities as to
all property and funds held by it hereunder for any amount owing it pursuant
to this Section 607, except with respect to funds held in trust for the
benefit of the Holders of the Securities.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 501(6) or Section
501(7), 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 shall survive the termination
of this Indenture.
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Section 608 Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided
by, and subject to the provisions of, the Trust Indenture Act and this
Indenture.
Section 609 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which 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 and has
its Corporate Trust Office in New York, New York. If such Person 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 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 Trustee shall cease to be eligible
in accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect hereinafter specified in this Article.
Section 610 Resignation and Removal; Appointment of Successor.
(a) 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 611.
(b) The Trustee may resign at any time 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.
(c) The Trustee may be removed at any time by Act of the
Holders of a majority in principal amount of the Outstanding Securities,
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 the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(d) If at any time:
(1) the Trustee shall fail to comply with Section
608 after written request therefor by the Company or by any Holder
who has been a bona fide Holder of a Security for at least six
months, or
(2) the Trustee shall cease to be eligible under
Section 609 and shall fail to resign after written request therefor
by the Company or by any such Holder, or
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(3) the Trustee shall become incapable of
acting or shall be adjudged a bankrupt or insolvent or a
receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by Company Order may remove the
Trustee, or (ii) subject to Section 514, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
1 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, the Company, by a Board Resolution, shall
promptly appoint a successor Trustee. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee shall be appointed by Act of the Holders of a major ity in
principal amount of the Outstanding Securities delivered to the Company and
the retiring Trustee, the successor Trustee so appointed shall, forthwith upon
its acceptance of such appointment, become the successor Trustee and supersede
the successor Trustee appointed by the Company. If no successor Trustee 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, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
1 The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 106. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
Section 611 Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder 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; provided,
that on 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. Upon request of any such successor Trustee, the Company shall
execute any and all instruments required to more fully and certainly vest in
and confirm to such successor Trustee all such rights, powers and trusts.
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No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
Section 612 Merger, Conversion, Consolidation or Succession to
Business.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all the corporate
trust business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation shall be otherwise qualified and eligible
under this Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case any Securities
shall have been authenticated, but not delivered, by the Trustee then in
office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the
Securities so authenticated with the same effect as if such successor Trustee
had itself authenticated such Securities.
Section 613 Preferential Collection of Claims Against Company.
If 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).
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
Section 701 Company to Furnish Trustee Names and Addresses of
Holders.
The Company will furnish or cause to be furnished to the
Trustee
(a) semiannually, not later than February 15 and August 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 a date not
more than 15 days prior to the delivery thereof, 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;
excluding from any such list names and addresses received by the Trustee in
its capacity as Security Registrar.
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Section 702 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 701 and the
names and addresses of Holders received by the Trustee in its capacity as
Security Registrar. The Trustee may destroy any list furnished to it as
provided in Section 701 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders
with respect to their rights under this Indenture or under the Securities, and
the corresponding rights and duties of the Trustee, shall be as provided by
the Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason of
any disclosure of information as to names and addresses of Holders made
pursuant to the Trust Indenture Act.
Section 703 Reports by Trustee.
(a) Within 60 days after May 15 of each year, commencing May
15, 1996, the Trustee shall transmit by mail to Holders such reports
concerning the Trustee and its actions under this Indenture as may be required
pursuant to the Trust Indenture Act in the manner provided pursuant thereto.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Securities are listed, with the Commission and with the Company. The
Company will notify the Trustee when the Securities are listed on any stock
exchange.
Section 704 Reports by Company.
The Company shall file with the Trustee and the Commission,
and transmit to Holders, such information, documents and other reports, and
such summaries thereof, as may be required pursuant to the Trust Indenture Act
at the times and in the manner provided pursuant to such Act; provided, that
any such information, documents or reports required to be filed with the
Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 shall be filed with the Trustee within 15 business days after the same is
so required to be filed with the Commission.
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
or determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
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ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
Section 801 Company May Consolidate, Etc., Only on Certain
Terms.
The Company shall not consolidate with or merge with or into
any other Person or, directly or indirectly, convey, transfer or lease all or
substantially all of its properties and assets on a consolidated basis to any
Person, unless:
(1) the Person formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance,
transfer or lease, all or substantially all of the properties and
assets of the Company on a consolidated basis shall be a corporation,
partnership or trust, shall be organized and validly existing under
the laws of the United States of America, any State thereof or the
District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
reasonably satisfactory to the Trustee, the due and punctual payment
of the principal of (and premium, if any) and interest on all the
Securities and the performance or observance of every covenant of
this Indenture on the part of the Company to be performed or observed
and shall have provided for conversion rights in accordance with
Article Thirteen;
(2) immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of the Company
or a Subsidiary as a result of such transaction as having been
incurred by the Company or such Subsidiary at the time of such
transaction, no Event of Default, and no event which, after notice or
lapse of time or both, would become an Event of Default, shall have
happened and be continuing; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is re quired in connection with such
transaction, such supplemen tal indenture, comply with this Article
and that all condi tions precedent herein provided for relating to
such transaction have been complied with.
This Section shall only apply to a merger or consolidation
in which the Company is not the surviving corporation and to conveyances,
leases and transfers by the Company as transferor or lessor.
Section 802 Successor Substituted.
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Upon any consolidation of the Company with, or merger of the
Company into, any other Person or any conveyance, transfer or lease of all or
substantially all the properties and assets of the Company on a consolidated
basis in accordance with Section 801, the successor Person formed by such
consolidation or into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein,
and thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Indenture and the
Securities.
ARTICLE NINE
Supplemental Indentures
Section 901 Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when
authorized by a Company Order, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to
the Company and the assumption by any such successor of the
covenants of the Company herein and in the Securities; or
(2) to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power
herein conferred upon the Company; or
(3) to make provision with respect to the conversion
rights of Holders pursuant to the requirements of Article
Thirteen; or
(4) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be
inconsistent with the provisions of this Indenture; provided, that
such action pursuant to this clause (4) shall not materially
adversely affect the interests of the Holders of the Securities or,
so long as any of the Preferred Securities shall remain outstanding,
the holders of the Preferred Securities;
(5) to comply with the requirements of the
Commission in order to effect or maintain the qualification
of this Indenture under the Trust Indenture Act; or
(6) to make provision for transfer procedures,
certification, book-entry provisions, the form of restricted secu
rities legends, if any, to be placed on Securities, and all other
matters required pursuant to Section 305(b) or otherwise necessary,
desirable or appropriate in connection with the issu-
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ance of Securities to holders of Preferred Securities in the event of
a distribution of Securities by the Trust if a Special Event occurs
and is continuing.
Section 902 Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority
in principal amount of the Outstanding Securities, 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 under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby,
(1) extend the Stated Maturity of the principal of, or
(subject to Section 312) any installment of interest (in cluding any
Additional Payments) on, any Security, or reduce the principal amount
thereof, or reduce the rate or (subject to Section 312) extend the
time for payment of interest thereon, or reduce any premium payable
upon the redemption thereof, 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 en forcement
of any such payment on or after the Stated Maturity thereof (or, in
the case of redemption, on or after the Redemption Date), or
materially adversely affect the right to convert any Security as
provided in Article Thir teen (except as permitted by Section
901(3)), or modify the provisions of this Indenture with respect to
the subor dination of the Securities in a manner adverse to the
Holders,
(2) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of
this Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture, or
(3) modify any of the provisions of this Section or Section
513, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding Security
affected thereby;
provided that if the Securities are held by the Trust or a trustee of the
Trust, such supplemental indenture shall not be effective until the holders of
a majority in liquidation preference of Trust Securities shall have consented
to such supplemental indenture; provided, further, that if the consent of the
Holder of each Outstanding Security is re quired, such supplemental indenture
shall not be effective until each
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holder of the Trust Securities of the Trust shall have consented to such
supplemental indenture.
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.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Persons entitled to consent to any
indenture supplemental hereto. If a record date is fixed, the Holders on such
record date, or their duly designated proxies, and only such Persons, shall be
entitled to consent to such supplemental indenture, whether or not such
Holders remain Holders after such record date; provided, that unless such
consent shall have become effective by virtue of the requisite percentage
having been obtained prior to the date which is 90 days after such record
date, any such consent previously given shall automatically and without
further action by any Holder be cancelled and of no further effect.
Section 903 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 601) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
Section 904 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. No such supplemental indenture
shall directly or indirectly modify the provisions of Article Twelve in any
manner which might terminate or impair the rights of the Senior Indebtedness
pursuant to such subordination provisions.
Section 905 Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the Trust Indenture Act.
Section 906 Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution
of any supplemental indenture pursuant to this Article may, and shall if
required by the Trustee, bear a notation in form approved by the Trustee as to
any matter provided for in such supplemental indenture. If the Company shall
so determine, new Securities so modified as to conform, in
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the opinion of the Trustee and the Company, to any such supplemental indenture
may be prepared and executed by the Company and authenticated and delivered by
the Trustee in exchange for Outstanding Securities.
ARTICLE TEN
Covenants; Representations and Warranties
Section 1001 Payment of Principal and Interest.
The Company will duly and punctually pay the principal of
and interest on the Securities in accordance with the terms of the Securities
and this Indenture.
Section 1002 Maintenance of Office or Agency.
The Company will maintain in the United States an office or
agency where Securities may be presented or surrendered for payment, where
Securities may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Company in respect of the Securities
and this Indenture may be served. The Company will give prompt written notice
to the Trustee of the location, and any change in the location, of such office
or agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.
The Company may also from time to time designate one or more
other offices or agencies (in the United States) where the Securities may be
presented or surrendered for any or all such purposes and may from time to
time rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in the United States for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
Section 1003 Money for Security Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying
Agent, it will, on or before each due date of the principal of or interest on
any of the Securities, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal or interest so
becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents,
it will, prior to each due date of the principal of or interest on any
Securities, deposit with a Paying Agent a sum sufficient to pay such amount,
such sum to be held as provided by the Trust Indenture Act, and
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(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act.
The Company will cause each Paying Agent 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 (i) comply with the provisions of the
Trust Indenture Act applicable to it as a Paying Agent and (ii) during the
continuance of any default by the Company (or any other obligor upon the
Securities) in the making of any payment in respect of the Securities, upon
the written request of the Trustee, forthwith pay to the Trustee all sums held
in trust by such Paying Agent as such.
The Company may at any time, for the purpose of obtaining
the satisfaction and discharge of this Indenture or for any other purpose,
pay, or by Company Order direct any Paying Agent to pay, to the Trustee all
sums held in trust by the Company or such Paying Agent, such sums to be held
by the Trustee upon the same trusts as those upon which such sums were held by
the Company or such Paying Agent; and, upon such payment by any Paying Agent
to the Trustee, such Paying Agent shall be released from all further liability
with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of or
interest on any Security and remaining unclaimed for two years after such
principal or interest has become due and payable shall be paid to the Company
on Company Request, or (if then held by the Company) shall be discharged from
such trust; and the Holder of any 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.
Section 1004 Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days
after the end of each fiscal year of the Company ending after the date hereof,
an Officers' Certificate, stating whether or not to the best knowledge of the
signers thereof the Company is in default in the performance and observance of
any of the material terms, provisions and conditions of this Indenture
(without regard to any period of grace or requirement of notice provided
hereunder) and, if the Company shall be in default, specifying all such
defaults and the nature and status thereof of which they may have knowledge.
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Section 1005 Limitation on Dividends; Covenants as to the Trust.
(a) The Company covenants that the Company (i) shall not
declare or pay dividends on, make distributions with respect to, or redeem,
purchase or acquire, or make a liquidation payment with respect to, any of its
capital stock, except for dividends or distributions in shares of its capital
stock of the same class on which such dividend or distribution is being paid
and conversions or exchanges of common stock of one class into common stock of
another class, (ii) shall not make any payment of interest, principal or
premium, if any, on or repay, repur chase or redeem any debt securities issued
by the Company after the date of original issuance of the Securities that rank
pari passu with or junior to the Securities (except by conversion into or
exchange for shares of its capital stock and except for a redemption, purchase
or other acquisition of shares of its capital stock made for the purposes of
an employee incentive plan or benefit plan of the Company or any of its
Subsidiaries), and (iii) shall not make any guarantee payments with respect to
the foregoing (other than pursuant to the Guarantee and the Common Securities
Guarantee); in each case of clauses (i), (ii) and (iii) above if at such time
(A) there shall have occurred and be continuing any event that with the giving
of notice or the lapse of time or both, would constitute an Event of Default
hereunder, (B) the Company shall be in default with respect to its payment of
any obligations under the Guarantee or (C) the Company shall have given notice
of its selection of an Extended Interest Payment Period as provided herein and
such period, or any extension thereof, shall be continuing.
(b) The Company also covenants and agrees (i) that it shall
directly or indirectly maintain 100% ownership of the Common Securities of the
Trust; provided, however, that any successor of the
Company as provided in Article Eight hereunder may succeed to the Company's
ownership of such Common Securities and (ii) that it shall use its reasonable
efforts, consistent with the terms and provisions of the Declaration, to cause
the Trust (x) to remain a statutory business trust, except in connection with
the distribution of the Securities to the holders of Trust Securities in
liquidation of the Trust, the redemption of all of the Trust Securities of the
Trust, or certain merg ers, consolidations or amalgamations of the Trust, each
as permitted by the Declaration, and (y) to otherwise continue to be
classified as a grantor trust for United States Federal income tax purposes.
Section 1006 Payment of Expenses of the Trust.
In connection with the offering, sale and issuance of the
Securities to the Property Trustee in connection with the sale of the Trust
Securities by the Trust, the Company shall:
(a) pay for all costs, fees and expenses relating to the
offering, sale and issuance of the Securities, including commissions to the
Initial Purchasers payable pursuant to the Purchase Agreement and compensation
of the Trustee under the Indenture in accordance with the provisions of
Section 607 of the Indenture;
(b) be responsible for and pay for all debts and
obligations (other than with respect to the Trust Securities) of the
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Trust, pay for all costs and expenses of the Trust (including, but not limited
to, costs and expenses relating to the organization of the Trust, the
offering, sale and issuance of the Trust Securities (including commissions to
the underwriters in connection therewith), the fees and expenses of the
Property Trustee and the Delaware Trustee, the costs and expenses relating to
the operation of the Trust, including without limitation, costs and expenses
of accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, paying agent(s),
registrar(s), transfer agent(s), duplicating, travel and telephone and other
tele communications expenses and costs and expenses incurred in connection
with the acquisition, financing, and disposition of Trust assets); and
(c) pay any and all taxes (other than United States
withholding taxes attributable to the Trust or its assets) and all
liabilities, costs and expenses with respect to such taxes of the Trust.
Section 1007 Registration Rights.
The holders of the Preferred Securities, the Securities and
the Guarantee are entitled to the benefits of a Registration Rights Agreement,
dated as of April 10, 1996, among the Company and the Initial Purchasers (the
"Registration Rights Agreement"). Pursuant to the Registration Rights
Agreement, the Company has agreed for the benefit of the holders of the
Preferred Securities, the Securities and the Guaran tee that, subject to the
terms of the Registration Rights Agreement (including, without limitation,
those provisions permitting a Suspension (as defined therein)) (i) it will, at
its cost, as promptly as reasonably practicable, prepare and file a Shelf
Registration Statement (as defined in the Registration Rights Agreement) with
the Commission with respect to resales of the Preferred Securities, together
with the Securities, the Guarantee and the related Common Stock issuable upon
conversion thereof, (ii) it will use its reasonable best efforts to cause such
Shelf Registration Statement to be declared effective by the Commission on or
prior to October 7, 1996 and (iii) it will use its rea sonable best efforts to
keep such Shelf Registration Statement continu ously effective under the
Securities Act of 1933, as amended, until the third anniversary of the date of
the effectiveness of the Shelf Regis tration Statement or such earlier date as
is provided in the Registra tion Rights Agreement. The Company and the Trust
agree that from and after the date on which any Registration Default (as
defined below) occurs, the per annum interest rate on the Securities will
increase by 50 basis points (.50%). Such increase will remain in effect from
and including the date on which any such Registration Default shall occur (or
be deemed to occur as described below) to but excluding the date on which all
Registration Defaults have been cured (or have been deemed to be cured as
described below), on which date the interest rate on the Securities will
revert to the interest rate originally borne by the Securities.
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"Registration Default" shall mean any of the following
events:
(i) on or prior to October 7, 1996, the Registrable
Securities (as defined in the Registration Rights Agreement) are not
the subject of a Shelf Registration Statement which has become
effective;
(ii) the Registrable Securities are the subject of
a Shelf Registration Statement which was effective but which has
ceased to be effective for any reason prior to the end of the Shelf
Registration Period (as defined in the Registration Rights
Agreement);
(iii) the occurrence of a Suspension (as defined in
the Registration Rights Agreement); or
(iv) the occurrence of an event contemplated by
paragraph 3(c)(2)(iii) of the Registration Rights Agreement (an
"Amendment Event");
provided, however, that if the Registration Default consists of the occurrence
of any event contemplated by clause (iii) or (iv) above, then such
Registration Default shall not be deemed to have occurred until the expiration
of 30 Business Days after the date of the occurrence of such Suspension or
Amendment Event, provided that (a) the Trust and the Company thereafter
reasonably promptly comply with the requirements of paragraph 3(i) of the
Registration Rights Agreement, if applicable, and (b) in the case of such
Amendment Event resulting from an action taken by the Company or the Trust,
such action was taken in good faith; and provided, further, that a
Registration Default shall not constitute a default or Event of Default
hereunder.
A Registration Default shall be deemed to have been cured
and cease to exist on the date subsequent to the occurrence of such
Registration Default on which:
(x) in the case of a Registration Default described
in clause (i) or (ii) above, the Shelf Registration Statement
covering such Registrable Securities shall become effective; or
(y) in the case of a Registration Default described
in clause (iii) or (iv) above, upon the Company and the Trust taking
action to notify the Holders (for purposes of this clause (y), as
that term is defined in the Registration Rights Agreement) of the
Registrable Securities that such Suspension or Amendment Event has
ended. For purposes of this clause (y), taking action to notify
Holders shall be deemed sufficient when notice is first deposited in
first class mail or delivered to a courier service or filed with the
SEC or publicly disseminated by press release or other release to a
news reporting service.
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ARTICLE ELEVEN
Redemption of Securities
Section 1101 Right of Redemption.
(a) The Securities may be redeemed at the election of the
Company, as a whole or in part, at any time or from time to time after April
9, 1999, at the Redemption Prices set forth in Section 1109 below.
(b) The Securities may be redeemed as a whole but not in part
at the election of the Company at any time within 90 days following the
occurrence of a Tax Event; provided, however, that if, at the time there is
available to the Company or the Trust the opportunity to eliminate, within
such 90-day period, the Tax Event by taking some ministerial action, including
but not limited to filing a form or making an election, or pursuing some other
similar reasonable measure, which, in the sole judgment of the Company, has or
will cause no adverse effect on the Trust or the Company or involves or will
involve no material cost, then the Company or the Trust shall pursue such
measure in lieu of redemption.
Section 1102 Applicability of Article.
Redemption of Securities at the election of the Company, as
permitted by Section 1101, shall be made in accordance with such provision and
this Article.
Section 1103 Election to Redeem; Notice to Trustee.
The election of the Company to redeem Securities pursuant to
Section 1101 shall be evidenced by a Company Order. In case of any redemption
at the election of the Company, the Company shall, at least 60 days and no
more than 90 days prior to the Redemption Date fixed by the Company, notify
the Trustee in writing of such Redemption Date and of the principal amount of
Securities to be redeemed and provide a copy of the notice of redemption given
to Holders of Securities to be redeemed pursuant to Section 1104.
Section 1104 Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed (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 not previously called for
redemption, by such method as the Trustee shall deem fair and appropriate and
which may provide for the selection for redemption of portions (equal to $50
or any integral multiple thereof) of the principal amount of the Securities.
The Trustee shall promptly notify the Company in writing of
the Securities selected for redemption as aforesaid and, in case of any
Securities selected for partial redemption as aforesaid, the principal amount
thereof to be redeemed.
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The provisions of the two preceding paragraphs shall not
apply with respect to any redemption affecting only a single Security, whether
such Security is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal amount of the
Security shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
shall relate, in the case of any Securities redeemed or to be redeemed only in
part, to the portion of the principal amount of such Securities which has been
or is to be redeemed.
Section 1105 Notice of Redemption.
Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 30 (or in the case of a redemption at
the election of the Company, not less than 20) nor more than 60 days prior to
the Redemption Date, to each Holder of Securities to be re deemed, at such
Holder's address appearing in the Security Register.
All notices of redemption shall identify the Securities to
be redeemed (including, if relevant, CUSIP or ISIN number) and shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security to be redeemed and
that interest thereon will cease to accrue on and after said date,
and
(4) the place or places where such Securities are to be
surrendered for payment of the Redemption Price.
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 expense of the Company.
Section 1106 Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with
the Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 1003) an
amount of money sufficient to pay the Redemption Price of, and (except if the
Redemption Date shall be an Interest Payment Date) accrued interest on, all
the Securities which are to be redeemed on that date.
If any Security called for redemption is converted, any
money deposited with the Trustee or with any Paying Agent or so
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segregated and held in trust for the redemption of such Security shall
(subject to any right of the Holder of such Security to receive interest as
provided in the last paragraph of Section 307) be paid to the Company upon
Company Request or, if then held by the Company, shall be dis charged from
such trust.
Section 1107 Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such
date (unless the Company shall default in the payment of the Redemption Price
and accrued interest) such Securities shall cease to bear interest. Upon
surrender of any such Security for redemption in accordance with said notice,
such Security shall be paid by the Company at the Redemption Price, together
with accrued interest (including Additional Payments, if any) to the
Redemption Date; provided, however, that installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such
at the close of business on the relevant Record Dates according to the terms
and the provisions of Section 307.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal shall, until paid, bear
interest from the Redemption Date at the rate borne by the Security.
Section 1108 Securities Redeemed in Part.
In the event of any redemption in part, the Company shall
not be required to (i) issue, register the transfer of or exchange any
Security during a period beginning at the opening of business 15 days before
any selection for redemption of Securities and ending at the close of business
on the earliest date in which the relevant notice of redemption is deemed to
have been given to all holders of Securities to be so redeemed and (ii)
register the transfer of or exchange any Securi ties so selected for
redemption, in whole or in part, except for the unredeemed portion of any
Securities being redeemed in part.
Any Security which is to be redeemed only in part shall be
surrendered at a place of payment therefor (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or his attorney duly authorized in writing), and the Company
shall execute, and the Trustee shall authenticate and make available for
delivery to the Holder of such Secu rity without service charge, a new
Security or Securities, of any authorized denomination as requested by such
Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.
Section 1109 Optional Redemption.
(a) The Company shall have the right to redeem the
Securities, in whole or in part, at any time or from time to time on or
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after April 9, 1999, upon not less than 20 nor more than 60 days' notice, at a
Redemption Price equal to $52.08 per $50 principal amount of the Securities to
be redeemed plus any accrued and unpaid interest, including Additional
Payments, if any, to the Redemption Date, if re deemed on or before April 9,
2000, and at the following percentages of the principal amount of Securities,
if redeemed during the 12-month period ending April 9:
Price per $50
Principal
Year Amount
2001........................................ $51.74
2002........................................ 51.39
2003........................................ 51.04
2004........................................ 50.69
2005........................................ 50.35
and thereafter at $50 per $50 principal amount of the Securities plus, in each
case, accrued and unpaid interest, including Additional Payments, if any, to
the Redemption Date. Any redemption pursuant to this Section 1109 shall be
made pursuant to the provisions of Sections 1101 through 1108 hereof.
(b) If a partial redemption of the Securities would result in
the delisting of the Preferred Securities issued by the Trust from any
national securities exchange or other organization on which the Preferred
Securities are listed, the Company shall not be permitted to effect such
partial redemption and may only redeem the Securities in whole.
Section 1110 Tax Event Redemption.
If a Tax Event has occurred and is continuing and:
(a) the Company has received a Redemption Tax Opinion; or
(b) the Trustee shall have been informed by tax counsel that a
No Recognition Opinion cannot be delivered to the Trust, then, notwithstanding
Section 1109(a) but subject to Section 1109(b), the Company shall have the
right upon not less than 30 days nor more than 60 days notice to the Holders
of the Securities to redeem the Securities in whole or in part for cash at $50
per $50 principal amount of the Securities plus accrued and unpaid interest,
including Additional Payments, if any, within 90 days following the occurrence
of such Tax Event (the "90 Day Period"); provided, however, that if, at the
time there is available to the Company or the Trust the opportunity to elimi
nate within the 90 Day Period, the Tax Event by taking some ministerial
action, including, but not limited to, filing a form or making an elec tion,
or pursuing some other similar reasonable measure which, in the sole judgment
of the Company, will have no adverse effect on the Compa ny, the Trust or the
Holders of the Trust Securities issued by the Trust and will involve no
material cost, then the Company or the Trust shall pursue such ministerial
action or other measure in lieu of redemption, and provided, further, that the
Company shall have no right to redeem the Securities while the Trust is
pursuing any ministerial action or
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other similar measure pursuant to its obligations under the Declaration.
The redemption payment of $50 per $50 principal amount of the
Securities plus accrued and unpaid interest, including Additional Payments, if
any, shall be made prior to 12:00 noon, New York time, on the date of such
redemption or such earlier time as the Company deter mines provided that the
Company shall deposit with the Trustee an amount sufficient to make such
redemption payment by 10:00 a.m. on the date such redemption payment is to be
made.
ARTICLE TWELVE
Subordination of Securities
Section 1201 Agreement to Subordinate.
The Company covenants and agrees, and each Holder of
Securities by such Holder's acceptance thereof likewise covenants and agrees,
that all Securities shall be issued subject to the provisions of this Article
Twelve; and each Holder of a Security, whether upon original issue or upon
transfer or assignment thereof, accepts and agrees to be bound by such
provisions. The payment by the Company of the principal of, premium, if any,
and interest (including Additional Payments) on all Securities issued
hereunder shall, to the extent and in the manner hereinafter set forth, be
subordinated and junior in right of payment to the prior payment in full of
all Senior Indebtedness, whether outstanding at the date of this Indenture or
thereafter incurred; provided however, that no provision of this Article
Twelve shall prevent the occurrence of any default or Event of Default
hereunder.
Section 1202 Default on Senior Indebtedness.
In the event and during the continuation of any default by
the Company in the payment of principal, premium, interest or any other
payment due on any Senior Indebtedness continuing beyond the period of grace,
if any, specified in the instrument evidencing such Senior Indebtedness,
unless and until such default shall have been cured or waived or shall have
ceased to exist, or in the event that the maturity of any Senior Indebtedness
has been accelerated because of a default, then no payment shall be made by
the Company with respect to the principal of (including redemption payments),
premium, if any, or inter est on the Securities.
In the event that, notwithstanding the foregoing, any
payment shall be received by the Trustee when such payment is prohibited by
the preceding paragraph of this Section 1202, such payment shall be held in
trust for the benefit of, and shall be paid over or delivered to, the holders
of Senior Indebtedness or their respective represen tatives, or to the trustee
or trustees under any indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests may appear,
but only to the extent that the holders of the Senior Indebtedness (or their
representative or representatives or a trustee) notify the Trustee in writing
within 90 days of such pay ment of the amounts then due and owing on the
Senior Indebtedness and only the amounts specified in such notice to the
Trustee shall be paid to the holders of Senior Indebtedness.
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Section 1203 Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Company or distribution of assets of
the Company of any kind or character, whether in cash, property or securities,
to creditors upon any dissolution or winding up or liquidation or
reorganization of the Company, whether voluntary or involuntary, or in
bankruptcy, insolvency, receivership or other proceedings, all amounts
(including principal, premium, if any, and interest) due or to become due upon
all Senior Indebtedness shall first be paid in full, or payment thereof
provided for in money in accordance with its terms, before any payment is made
on account of the principal (and premium, if any) or interest on the
Securities; and upon any such dissolution or winding up or liquidation or
reorganization, any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
which the Holders of the Securities or the Trustee would be entitled, except
for the provisions of this Article Twelve, shall be paid by the Company or by
any receiver, trustee in bankruptcy, liquidating trustee, agent or other
Person making such payment or distribution, or by the Holders of the
Securities or by the Trustee under this Indenture if received by them or it,
directly to the holders of Senior Indebtedness (pro rata to such holders on
the basis of the respective amounts of Senior Indebtedness held by such
holders, as calculated by the Company) or their representa tive or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing such Senior Indebtedness may have been
issued, as their respective interests may appear, to the extent necessary to
pay such Senior Indebtedness in full, in money or money's worth, after giving
effect to any concurrent payment or distribution to or for the holders of such
Senior Indebtedness, before any payment or distribution is made to the Holders
of Securities or to the Trustee.
In the event that, notwithstanding the foregoing, any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, prohibited by the foregoing, shall be
received by the Trustee or the Holders of the Securities before all Senior
Indebtedness is paid in full, or provision is made for such payment in money
in accordance with its terms, such payment or distribution shall be held in
trust for the benefit of and shall be paid over or delivered to the holders of
Senior Indebtedness or their representative or representatives, or to the
trustee or trustees under any indenture pursuant to which any instruments
evidencing such Senior Indebtedness may have been issued, and their respective
interests may appear, as calculated by the Company, for application to the
payment of all Senior Indebtedness remaining unpaid to the extent necessary to
pay such Senior Indebtedness in full in money in accordance with its terms,
after giving effect to any concurrent payment or distribution to or for the
holders of such Senior Indebtedness.
For purposes of this Article Twelve, the words, "cash,
property or securities" shall not be deemed to include shares of stock of the
Company as reorganized or readjusted, or securities of the Company or any
other corporation provided for by a plan of reorganization or readjustment,
the payment of which is subordinated at least to the extent provided in this
Article Twelve with respect to the Securities to the payment of all Senior
Indebtedness which may at the
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time be outstanding; provided, that (i) such Senior Indebtedness is assumed by
the new corporation, if any, resulting from any such reorganization or
readjustment, and (ii) the rights of the holders of such Senior Indebtedness
are not, without the consent of such holders, altered by such reorganization
or readjustment. The consolidation of the Company with, or the merger of the
Company with or into, another Person or the liquidation or dissolution of the
Company following the conveyance, transfer or lease of all or substantially
all its properties and assets on a consolidated basis to another Person upon
the terms and conditions provided for in Article Eight hereof shall not be
deemed a dissolution, winding up, liquidation or reorganization for the
purposes of this Section 1203 if such other Person shall, as a part of such
consolidation, merger, conveyance, transfer or lease, comply with the
conditions stated in Article Eight hereof. Nothing in Section 1202 or in this
Section 1203 shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 607 hereof.
Section 1204 Subrogation.
Subject to the payment in full of all Senior Indebtedness,
the rights of the Holders of the Securities shall be subrogated to the rights
of the holders of such Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company, as the case may
be, applicable to such Senior Indebtedness until the principal of (and
premium, if any,) and interest on the Securities shall be paid in full; and,
for the purposes of such subrogation, no payments or distributions to the
holders of such Senior Indebtedness 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 Twelve, and no payment over pursuant to the
provisions of this Article Twelve, to or for the benefit of the holders of
such Senior Indebtedness by Holders of the Securities or the Trustee, shall,
as between the Company, its creditors other than holders of Senior
Indebtedness, and the Holders of the Securities, be deemed to be a payment by
the Company to or on account of such Senior Indebtedness. It is understood
that the provisions of this Article Twelve are and are intended solely for the
purposes of defining the relative rights of the Holders of the Securities, on
the one hand, and the holders of such Senior Indebtedness on the other hand.
Nothing contained in this Article Twelve or elsewhere in
this Indenture or in the Securities is intended to or shall impair, as between
the Company, its creditors other than the holders of Senior Indebtedness, and
the Holders of the Securities, the obligation of the Company, which is
absolute and unconditional, to pay to the Holders of the Securities the
principal of (and premium, if any) and interest on the Securities as and when
the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Holders of the
Securities and creditors of the Company, as the case may be, other than the
holders of Senior Indebtedness, nor shall anything herein or therein prevent
the Trustee or the Holder of any Security from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture,
subject to the rights, if any, under this Article Twelve of the holders of
such Senior Indebtedness in respect of cash, property or securities of the
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Company, as the case may be, received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company
referred to in this Article Twelve, the Trustee, subject to the provisions of
Section 603, and the Holders of the Securities, shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction in which such
dissolution, winding up, liquidation or reorganization proceedings are
pending, or a certificate of the receiver, trustee in bankruptcy, liquidation
trustee, agent or other Person making such payment or distribution, delivered
to the Trustee or to the Holders of the Securities, for the purposes of
ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Indebtedness and other indebtedness of the Company, as
the case may be, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this
Article Twelve.
Section 1205 Trustee to Effectuate Subordination.
Each Holder of Securities by such Holder's acceptance
thereof authorizes and directs the Trustee on such Holder's behalf to take
such action as may be necessary or appropriate to effectuate the subordination
provided in this Article Twelve and appoints the Trustee as such Holder's
attorney-in-fact for any and all such purposes.
Section 1206 Notice by the Company.
The Company shall give prompt written notice to a
Responsible Officer of the Trustee of any fact known to the Company which
would prohibit the making of any payment of monies to or by the Trustee in
respect of the Securities pursuant to the provisions of this Article Twelve.
Notwithstanding the provisions of this Article Twelve 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 of
monies to or by the Trustee in respect of the Securities pursuant to the
provision of this Article Twelve, unless and until a Responsible Officer of
the Trustee shall have received written notice thereof at the Corporate Trust
Office of the Trustee from the Company or a holder or holders of Senior
Indebtedness or from any trustee therefor; and before the receipt of any such
written notice, the Trustee, subject to the provisions of Section 603 hereof,
shall be entitled in all respects to assume that no such facts exist;
provided, however, that if the Trustee shall not have received the notice
provided for in this Section 1206 at least two Business Days prior to the date
upon which by the terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of (and premium,
if any) or interest on any Security), then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to
receive such money and to apply the same to the purposes 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.
The Trustee, subject to the provisions of Section 603, shall
be entitled to rely on the delivery to it of a written notice by a
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Person representing himself to be a holder of Senior Indebtedness (or a
trustee on behalf of such holder) to establish that such notice has been given
by a holder of such Senior Indebtedness or a trustee on behalf of any such
holder or holders. In the event that the Trustee determines in good faith that
further evidence is required with respect to the right of any Person as a
holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article Twelve, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any
other facts pertinent to the right of such Person under this Article Twelve,
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 1207 Rights of the Trustee; Holders of Senior Indebtedness.
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article Twelve in respect of any Senior
Indebtedness at any time held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee
of any of its rights as such holder.
With respect to the holders of Senior Indebtedness of the
Company, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are set forth in this Article Twelve, and no
implied covenants or obligations with respect to the holders of such Senior
Indebtedness shall be read into this Indenture against the Trustee. The
Trustee shall not be deemed to owe any fiduciary duty to the holders of such
Senior Indebtedness and, subject to the provisions of Section 603, the Trustee
shall not be liable to any holder of such Senior Indebtedness if it shall pay
over or deliver to Holders of Securities, the Company or any other Person
money or assets to which any holder of such Senior Indebtedness shall be
entitled by virtue of this Article Twelve or otherwise. With respect to the
holders of Senior Indebtedness, the Trustee undertakes to perform or to
observe only such of its covenants or obligations as are specifically set
forth in this Article Twelve and no implied covenants or obligations with
respect to holders of Senior Indebtedness shall be read into this Indenture
against the Trustee.
Section 1208 Subordination May Not Be Impaired.
No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such
holder, or by any noncompliance by the Company with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof which any
such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from
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time 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 Twelve or the obligations hereunder of the Holders of the
Securities to the holders of Senior Indebtedness, do any one or more of the
following: (i) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, such Senior Indebtedness, or otherwise amend
or supplement in any manner such Senior Indebtedness or any instrument
evidencing the same or any agreement under which such Senior Indebtedness is
outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing such Senior Indebtedness; (iii)
release any Person liable in any manner for the collection of such Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Company and any other Person.
ARTICLE THIRTEEN
Conversion of Securities
Section 1301 Conversion Rights.
Subject to and upon compliance with the provisions of this
Article, the Securities are convertible, at the option of the Holder, at any
time on or before redemption as provided below or the close of business at
their Stated Maturity, into fully paid and nonassessable shares of Common
Stock of the Company at an initial conversion rate of 1.6728 shares of Common
Stock for each $50 in aggregate principal amount of Securities (equal to a
conversion price of $29.89 per share of Common Stock), subject to adjustment
as described in this Article Thirteen. A Holder of Securities may convert any
portion of the principal amount of the Securities into that number of fully
paid and nonassessable shares of Common Stock (calculated as to each
conversion to the nearest 1/100th of a share) obtained by dividing the
principal amount of the Securities to be converted by such conversion price.
In case a Security or portion thereof is called for redemption, such
conversion right in respect of the Security or portion so called shall expire
at the close of business on the corresponding Redemption Date, unless the
Company defaults in making the payment due upon redemption.
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Section 1302 Conversion Procedures.
(a) In order to convert all or a portion of the Securities,
the Holder thereof shall deliver to the Conversion Agent an irrevocable Notice
of Conversion setting forth the principal amount of Securities to be
converted, together with the name or names, if other than the Holder, in which
the shares of Common Stock should be issued upon conversion and, if such
Securities are definitive Securities, surrender to the Conversion Agent the
Securities to be converted, duly endorsed or assigned to the Company or in
blank. In addition, a holder of Preferred Securities may exercise its right
under the Declaration to convert such Preferred Securities into Common Stock
by delivering to the Conversion Agent an irrevocable Notice of Conversion
setting forth the information called for by the preceding sentence and
directing the Conversion Agent (i) to exchange such Preferred Security for a
portion of the Securities held by the Trust (at an exchange rate of $50
principal amount of Securities for each Preferred Security) and (ii) to
immediately convert such Securities, on behalf of such holder, into Common
Stock of the Company pursuant to this Article Thirteen and, if such Preferred
Securities are in definitive form, surrendering such Preferred Securities,
duly endorsed or assigned to the Company or in blank. So long as any Preferred
Securities are outstanding, the Trust shall not convert any Securities except
pursuant to a Notice of Conversion duly executed and delivered to the
Conversion Agent by a holder of Preferred Securities.
If a Notice of Conversion is delivered on or after the
Regular Record Date and prior to the subsequent Interest Payment Date, the
Holder will be entitled to receive the interest payable on the subsequent
Interest Payment Date on the portion of Securities to be converted
notwithstanding the conversion thereof prior to such Interest Payment Date.
Except as otherwise provided in the immediately preceding sentence, in the
case of any Security which is converted, interest whose Stated Maturity is
after the date of conversion of such Security shall not be payable, and the
Company shall not make nor be required to make any other payment, adjustment
or allowance with respect to accrued but unpaid interest on the Securities
being converted, which shall be deemed to be paid in full. Each conversion
shall be deemed to have been effected immediately prior to the close of
business on the day on which the Notice of Conversion was received (the
"Conversion Date") by the Conversion Agent from the Holder or from a holder of
the Preferred Securities effecting a conversion thereof pursuant to its
conversion rights under the Declaration, as the case may be. The Person or
Persons entitled to receive the Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such
Common Stock as of the Conversion Date. As promptly as practicable on or after
the Conversion Date, the Company shall issue and deliver at the office of the
Conversion Agent, unless otherwise directed by the Holder in the Notice of
Conversion, a certificate or certificates for the number of full shares of
Common Stock issuable upon such conversion, together with the cash payment, if
any, in lieu of any fraction of any share to the Person or Persons entitled to
receive the same. The Conversion Agent shall deliver such certificate or
certificates to such Person or Persons.
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(b) The Company's delivery upon conversion of the fixed
number of shares of Common Stock into which the Securities are convertible
(together with the cash payment, if any, in lieu of fractional shares) shall
be deemed to satisfy the Company's obligation to pay the principal amount at
Maturity of the portion of Securities so converted and any unpaid interest
(including Additional Payments) accrued on such Securities at the time of such
conversion.
(c) No fractional shares of Common Stock will be issued as a
result of conversion, but in lieu thereof, the Company shall pay to the
Conversion Agent a cash adjustment in an amount equal to the same fraction of
the current market price of such fractional interest on the date on which the
Securities or Preferred Securities, as the case may be, were duly surrendered
to the Conversion Agent for conversion, or, if such day is not a Trading Day,
on the next Trading Day, and the Conversion Agent in turn will make such
payment, if any, to the Holder of the Securities or the holder of the
Preferred Securities so converted.
(d) In the event of the conversion of any Security in part
only, a new Security or Securities for the unconverted portion thereof will be
issued in the name of the Holder thereof upon the cancellation thereof in
accordance with Section 305.
(e) In effecting the conversion transactions described in
this Section, the Conversion Agent is acting as agent of the holders of
Preferred Securities (in the exchange of Preferred Securities for Securities)
and as agent of the Holders of Securities (in the conversion of Securities
into Common Stock), as the case may be, directing it to effect such conversion
transactions. The Conversion Agent is hereby authorized (i) to exchange
Securities held by the Trust from time to time for Preferred Securities in
connection with the conversion of such Preferred Securities in accordance with
this Article Thirteen and (ii) to convert all or a portion of the Securities
into Common Stock and thereupon to deliver such shares of Common Stock in
accordance with the provisions of this Article Thirteen and to deliver to the
Trust a new Security or Securities for any resulting unconverted principal
amount.
(f) All shares of Common Stock delivered upon any conversion
of Restricted Securities shall bear a restrictive legend substantially in the
form of the legend required to be set forth on such Securities and shall be
subject to the restrictions on transfer provided in such legend and in Section
305(b) hereof. Neither the Trustee nor the Conversion Agent shall have any
responsibility for the inclusion or content of any such restrictive legend on
such Common Stock; provided, however, that the Trustee or the Conversion Agent
shall have provided to the Company or to the Company's transfer agent for such
Common Stock, prior to or concurrently with a request to the Company to
deliver to such Conversion Agent certificates for such Common Stock, written
notice that the Securities delivered for conversion are Restricted Securities.
Section 1303 Conversion Price Adjustments.
The conversion price shall be subject to adjustment (without
duplication) from time to time as follows:
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(a) In case the Company shall, while any of the Securities
are outstanding, (i) pay a dividend or make a distribution with respect to its
Common Stock in shares of Common Stock, (ii) subdivide its out standing shares
of Common Stock, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares or (iv) issue by reclassification of its shares of
Common Stock any shares of capital stock of the Company, the conversion
privilege and the conversion price in effect immediately prior to such action
shall be adjusted so that the Holder of any Securities thereafter surrendered
for conversion shall be entitled to receive the number of shares of capital
stock of the Company which he would have owned immediately following such
action had such Securities been converted immediately prior thereto. An
adjustment made pursuant to this subsection (a) shall become effective
immediately after the record date in the case of a dividend or other
distribution and shall become effective immediately after the effective date
in case of a subdivision, combination or reclassification (or immediately
after the record date if a record date shall have been established for such
event). If, as a result of an adjustment made pursuant to this subsection (a),
the Holder of any Security thereafter surrendered for conversion shall become
entitled to receive shares of two or more classes or series of capital stock
of the Company, the Board of Direc tors (whose determination shall be
conclusive and shall be described in a Board Resolution filed with the
Trustee) shall determine the allocation of the adjusted conversion price
between or among shares of such classes or series of capital stock.
(b) In case the Company shall, while any of the Securities
are outstanding, issue rights or warrants to all holders of its Common Stock
entitling them (for a period expiring within 45 days after the record date
mentioned below) to subscribe for or purchase shares of Common Stock at a
price per share less than the current market price per share of Common Stock
(as determined pursuant to subsection (d) below) on the record date mentioned
below, the conversion price for the Securities shall be adjusted so that the
same shall equal the price determined by multiplying the conversion price in
effect immediately prior to the date of issuance of such rights or warrants by
a fraction of which the numerator shall be the number of shares of Common
Stock outstanding on the date of issuance of such rights or warrants plus the
number of shares which the aggregate offering price of the total number of
shares so offered for subscription or purchase would purchase at such current
market price, and of which the denominator shall be the number of shares of
Common Stock outstanding on the date of issuance of such rights or warrants
plus the number of additional shares of Common Stock offered for subscription
or purchase. Such adjustment shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
rights or warrants. For the purposes of this subsection, the number of shares
of Common Stock at any time outstanding shall not include shares held in the
treasury of the Company. The Company shall not issue any rights or warrants in
respect of shares of Common Stock held in the treasury of the Company. In case
any rights or warrants referred to in this subsection in respect of which an
adjustment shall have been made shall expire unexercised within 45 days after
the same shall have been distributed or issued by the Company, the conversion
price shall be readjusted at the time of such expiration to the conversion
price that would have been in effect if no
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adjustment had been made on account of the distribution or issuance of such
expired rights or warrants.
(c) Subject to the last sentence of this subparagraph, in case
the Company shall, by dividend or otherwise, distribute to all holders of its
Common Stock evidences of its indebtedness, shares of any class or series of
capital stock, cash or assets (including securities, but excluding any rights
or warrants referred to in subparagraph (b), any dividend or distribution paid
exclusively in cash and any dividend or distribution referred to in
subparagraph (a) of this Section 1303), the conversion price shall be reduced
so that the same shall equal the price determined by multiplying the
conversion price in effect immedi ately prior to the effectiveness of the
conversion price reduction contemplated by this subparagraph (c) by a fraction
of which the numerator shall be the current market price per share (determined
as provided in subparagraph (d)) of the Common Stock on the date fixed for the
payment of such distribution (the "Reference Date") less the fair market value
(as determined in good faith by the Board of Directors, whose determination
shall be conclusive and described in a resolution of the Board of Directors),
on the Reference Date, of the portion of the evidences of indebtedness, shares
of capital stock, cash and assets so distributed applicable to one share of
Common Stock and the denominator shall be such current market price per share
of the Common Stock, such reduction to become effective immediately prior to
the opening of business on the day following the Reference Date. In the event
that such dividend or distribution is not so paid or made, the conversion
price shall again be adjusted to be the conversion price which would then be
in effect if such dividend or distribution had not occurred. If the Board of
Directors determines the fair market value of any distribu tion for purposes
of this subparagraph (c) by reference to the actual or when issued trading
market for any securities comprising such distribution, it must in doing so
consider the prices in such market over the same period used in computing the
current market price per share of Common Stock (determined as provided in
subparagraph (d)). For purposes of this subparagraph (c), any dividend or
distribution that includes shares of Common Stock or rights or warrants to
subscribe for or purchase shares of Common Stock shall be deemed instead to be
(1) a dividend or distribution of the evidences of indebtedness, shares of
capital stock, cash or assets other than such shares of Common Stock or such
rights or warrants (making any conversion price reduction required by this
subparagraph (c)) immediately followed by (2) a dividend or distribution of
such shares of Common Stock or such rights or warrants (making any further
conversion price reduction required by subparagraph (a) or (b)), except (A)
the Reference Date of such dividend or distribu tion as defined in this
subparagraph shall be substituted as (a) "the record date in the case of a
dividend or other distribution," and (b) "the record date for the
determination of stockholders entitled to receive such rights or warrants" and
(c) "the date fixed for such deter mination" within the meaning of
subparagraphs (a) and (b) and (B) any shares of Common Stock included in such
dividend or distribution shall not be deemed outstanding for purposes of
computing any adjustment of the conversion price in subparagraph (a).
(d) For the purpose of any computation under subparagraphs (b)
or (c), the current market price per share of Common Stock on any date in
question shall be deemed to be the average of the daily Closing
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Prices for the five consecutive Trading Days selected by the Company
commencing not more than 20 Trading Days before, and ending not later than,
the earlier of the day in question and, if applicable, the day before the "ex"
date with respect to the issuance or distribution requiring such computation;
provided, however, that if another event occurs that would require an
adjustment pursuant to subparagraph (a) through (c), inclusive, the Board of
Directors may make such adjustments to the Closing Prices during such five
Trading Day period as it deems appropriate to effectuate the intent of the
adjustments in this Sec tion 1303, in which case any such determination by the
Board of Directors shall be set forth in a Board Resolution and shall be
conclusive. For purposes of this paragraph, the term "ex" date means the first
date on which the Common Stock trades regular way on the New York Stock
Exchange or on such successor securities exchange as the Common Stock may be
listed or in the relevant market from which the Closing Prices were obtained
without the right to receive such issuance or distribution.
(e) The Company may make such reductions in the conversion
price, in addition to those required by subparagraphs (a) through (c), as it
considers to be advisable to avoid or diminish any income tax to holders of
Common Stock or rights to purchase Common Stock resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any event treated
as such for income tax purposes. The Company from time to time may reduce the
conversion price by any amount for any period of time if the period is at
least twenty (20) days, the reduction is irrevocable during the period, and
the Board of Directors of the Company shall have made a determination that
such reduction would be in the best interest of the Company, which
determination shall be conclusive. Whenever the conversion price is reduced
pursuant to the preceding sentence, the Company shall mail to holders of
record of the Securities a notice of the reduction at least fifteen (15) days
prior to the date the reduced conversion price takes effect, and such notice
shall state the reduced conversion price and the period it will be in effect.
(f) No adjustment in the conversion price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the conversion price; provided, however, that any adjustments which by reason
of this subparagraph are not required to be made shall be carried forward and
taken into account in determining whether any subsequent adjustment shall be
required.
(g) If any action would require adjustment of the conver sion
price pursuant to more than one of the provisions described above, only one
adjustment shall be made and such adjustment shall be the amount of adjustment
that has the highest absolute value to the Holder of the Securities.
Section 1304 Reclassification, Consolidation, Merger or Sale of
Assets.
In the event that the Company shall be a party to any
transaction (including without limitation (a) any recapitalization or
reclassification of the Common Stock (other than a change in par value, or
from par value to no par value, or from no par value to par value, or
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as a result of a subdivision or combination of the Common Stock), (b) any
consolidation of the Company with, or merger of the Company into, any other
Person, any merger of another Person into the Company (other than a merger or
consolidation which does not result in a reclassification, conversion,
exchange or cancellation of the outstanding shares of Common Stock of the
Company), (c) any sale or transfer of all or substantially all of the assets
of the Company or (d) any compulsory share exchange pursuant to which the
Common Stock is converted into the right to receive other securities, cash or
other property, then lawful provision shall be made as part of the terms of
such transaction (i) whereby the Holder of each Security then outstanding
shall have the right thereafter to convert such Security only into the kind
and amount of securities, cash and other property receivable upon consummation
of such transaction by a holder of the number of shares of Common Stock of the
Company into which such Security could have been converted immediately prior
to such transaction and (ii) to provide for adjustments which, for events
subsequent to the effective date of such provision, shall be as nearly
equivalent as may be prac ticable to the adjustments provided for in this
Article Thirteen. The above provisions shall similarly apply to successive
transactions of the foregoing type.
Section 1305 Notice of Adjustments of Conversion Price.
Whenever the conversion price is adjusted as herein
provided:
(a) the Company shall compute the adjusted conversion price
and shall prepare a certificate signed by the Chief Financial Officer or the
Treasurer of the Company setting forth the adjusted conversion price and
showing in reasonable detail the facts upon which such adjustment is based,
and such certificate shall forthwith be filed with the Trustee, the Conversion
Agent and the transfer agent for the Preferred Securities and the Securities;
and
(b) a notice stating the conversion price has been adjusted
and setting forth the adjusted conversion price shall as soon as practicable
be mailed by the Company to all record holders of Preferred Securities and the
Securities at their last addresses as they appear upon the stock transfer
books of the Company and the Trust.
Section 1306 Prior Notice of Certain Events.
In case:
(i) the Company shall declare any dividend (or any
other distribution) on its Common Stock, other than (A) a dividend
payable in shares of Common Stock or (B) a dividend payable in cash
that would not require an adjustment pursuant to Section 1303(c);
(ii) the Company shall authorize the granting to all
holders of Common Stock of rights or warrants to subscribe for or
purchase any shares of stock of any class or series or of any other
rights or warrants;
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<PAGE>
(iii) of any reclassification of Common
Stock (other than a subdivision or combination of the
outstanding Common Stock, or a change in par value, or from
par value to no par value, or from no par value to par
value), or of any consolidation or merger to which the
Company is a party and for which approval of any
stockholders of the Company shall be required, or of the
sale or transfer of all or substantially all of the assets
of the Company or of any compulsory share exchange whereby
the Common Stock is converted into other securities, cash or
other property; or
(iv) of the voluntary or involuntary
dissolution, liquidation or winding up of the Company;
then the Company shall (a) if any Preferred Securities are outstanding, cause
to be filed with the transfer agent for the Preferred Securities, and shall
cause to be mailed to the holders of record of the Preferred Securities, at
their last addresses as they shall appear upon the stock transfer books the
Trust or (b) shall cause to be mailed to all Holders at their last addresses
as they shall appear in the Security Register, at least fifteen days prior to
the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record (if any) is to be taken for the purpose
of such dividend, distribution, rights or warrants or, if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, share exchange, dissolution, liquidation or winding up
is expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares
of Common Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up (but no failure to mail such notice or
any defect therein or in the mailing thereof shall affect the validity of the
corporate action required to be specified in such notice).
Section 1307 Certain Defined Terms.
The following definitions shall apply to terms used in this
Article Thirteen:
(1) "Closing Price" of any common stock on any day
shall mean the last reported sale price regular way on such day or,
in case no such sale takes place on such day, the average of the
reported closing bid and asked prices regular way of such common
stock, in each case on the NYSE Composite Tape or, if the common
stock is not listed or admitted to trading on such exchange, on the
principal national securities exchange on which such common stock is
listed or admitted to trading, or, if not listed or admitted to
trading on any national securities exchange, the average of the
closing bid and asked prices as furnished by any New York Stock
Exchange member firm selected from time to time by the Board of
Directors of the Company for that purpose or, if not so available in
such manner, as otherwise determined in good faith by the Board of
Directors.
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<PAGE>
(2) "Trading Day" shall mean a day on
which any securities are traded on the national securities
exchange or quotation system used to determine the Closing
Price.
Section 1308 Dividend or Interest Reinvestment Plans.
Notwithstanding the foregoing provisions, the issuance of
any shares of Common Stock pursuant to any plan providing for the reinvestment
of dividends or interest payable on securities of the Company and the
investment of additional optional amounts in shares of Common Stock under any
such plan, and the issuance of any shares of Common Stock or options or rights
to purchase such shares pursuant to any employee benefit plan or program of
the Company (including without limitation, the Company's Employee Stock Option
Plan, Employee Stock Purchase Plan and 401(k) Plan) or pursuant to any option,
warrant, right or exercisable, exchangeable or convertible security
outstanding as of the date the Securities were first issued (whether or not
subsequently amended), shall not be deemed to constitute an issuance of Common
Stock or exercisable, exchangeable or convertible securities by the Company to
which any of the adjustment provisions described above applies. There shall
also be no adjustment of the conversion price in case of the issuance of any
stock (or securities convertible into or exchangeable for stock) of the
Company except as specifically described in this Article Thirteen.
68
<PAGE>
Section 1309 Certain Additional Rights.
(a) In case the Company shall, by dividend or otherwise,
declare or make a distribution on its Common Stock referred to in Section
1303(c) (including, without limitation, dividends or
distributions referred to in the last sentence of Section 1303(c)), the Holder
of the Securities, upon the conversion thereof subsequent to the close of
business on the date fixed for the determination of stock holders entitled to
receive such distribution and prior to the effectiveness of the conversion
price adjustment in respect of such distribution, shall also be entitled to
receive for each share of Common Stock into which the Securities are
converted, the portion of the shares of Common Stock, rights, warrants,
evidences of indebtedness, shares of capital stock, cash and assets so
distributed applicable to one share of Common Stock; provided, however, that,
at the election of the Company (whose election shall be evidenced by a
resolution of the Board of Directors) with respect to all Holders so
converting, the Company may, in lieu of distributing to such Holder any
portion of such distribution not consisting of cash or securities of the
Company, pay such Holder an amount in cash equal to the fair market value
thereof (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board
of Directors). If any conversion of Securities described in the immediately
preceding sentence occurs prior to the payment date for a distribution to
holders of Common Stock which the Holder of Securities so converted is
entitled to receive in accordance with the immediately preceding sentence, the
Company may elect (such election to be evidenced by a resolution of the Board
of Directors) to distribute to such Holder a due bill for the shares of Common
Stock, rights, warrants, evidences of indebtedness, shares of capital stock,
cash or assets to which such Holder is so entitled, provided, that such due
bill (i) meets any applicable requirements of the principal national
securities exchange or other market on which the Common Stock is then traded
and (ii) requires payment or delivery of such shares of Common Stock, rights,
warrants, evidences of indebtedness, shares of capital stock, cash or assets
no later than the date of payment or delivery thereof to holders of shares of
Common Stock receiving such distribution.
(b) If the Company shall declare and pay cash dividends on its
Common Stock in an annualized per share amount which exceeds the greater of
(A) the per share amount of the immediately preceding cash dividend on its
Common Stock (as adjusted to reflect any of the events listed in Sections 1303
or 1304) and (B) 15% of the current market price of the Common Stock as of the
Trading Day immediately preceding the date of declaration of such dividend
(the per share amount of any such excess, to the extent of such per share
excess, being herein called an "Excess Amount"), then in any such event the
Holders shall have the right to receive, and the Company will pay to such
Holders, at the time of the payment of such Common Stock dividend, an amount
equal to such Excess Amount (calculated on the basis of the number of shares
of Common Stock that would have been issued to a Holder upon conversion of the
Securities held by such Holder on the record date for payment of such
dividend) unless the Holder converts the Securities and receives such dividend
as a holder of Common Stock.
69
<PAGE>
Section 1310. Restrictions on Common Stock Issuable Upon Conversion.
(a) Shares of Common Stock to be issued upon conversion of a
Security in respect of Restricted Preferred Securities (as defined in the
Declaration) shall bear such restrictive legends as the Company may provide in
accordance with applicable law.
(b) If shares of Common Stock to be issued upon conversion
of a Security in respect of Restricted Preferred Securities are to be
registered in a name other than that of the Holder of such Preferred Security,
then the Person in whose name such shares of Common Stock are to be registered
must deliver to the Conversion Agent a certificate satisfactory to the Company
and signed by such Person, as to compliance with the restrictions on transfer
applicable to such Preferred Security.
Neither the Trustee nor any Conversion Agent or Registrar shall be re quired
to register in a name other than that of the Holder shares of Common Stock or
such Preferred Securities issued upon conversion of any such Security in
respect of such Preferred Securities not so accompanied by a properly
completed certificate.
Section 1311. Trustee Not Responsible for Determining Conversion Price
or Adjustments.
Neither the Trustee nor any Conversion Agent shall at any
time be under any duty or responsibility to any Holder of any Security to
determine whether any facts exist which may require any adjustment of the
conversion price, or with respect to the nature or extent of any such
adjustment when made, or with respect to the method employed, or herein or in
any supplemental indenture provided to be employed, in making the same.
Neither the Trustee nor any Conversion Agent shall be accountable with respect
to the validity or value (or the kind of account) of any shares of Common
Stock or of any securities or property, which may at any time be issued or
delivered upon the conversion of any Security; and neither the Trustee nor any
Conversion Agent makes any representation with respect thereto. Neither the
Trustee nor any Conversion Agent shall be responsible for any failure of the
Company to make any cash payment or to issue, transfer or deliver any shares
of Common Stock or stock certificates or other securities or property upon the
surrender of any Security for the purpose of conversion, or, except as
expressly herein provided, to comply with any of the covenants of the Company
contained in Article Ten or this Article Thirteen.
ARTICLE FOURTEEN
Immunity of Incorporators, Stockholders,
Officers and Directors
Section 1401 No Recourse.
No recourse under or upon any obligation, covenant or agree
ment of this Indenture, or of any Security, or for any claim based thereon or
otherwise in respect thereof, shall be had against any
70
<PAGE>
incorporator, stockholder, officer or director, past, present or future as
such, of the Company or of any predecessor or successor corporation, either
directly or through the Company or any such predecessor or successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that this Indenture and the obligations issued hereunder
are solely corporate obligations, and that no such personal liability whatever
shall attach to, or is or shall be incurred by, the incorporators,
stockholders, officers or directors as such, of the Company or of any
predecessor or successor corporation, or any of them, because of the creation
of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or in any of
the Securities or implied therefrom; and that any and all such personal
liability of every name and nature, either at common law or in equity or by
constitution or statute, of, and any and all such rights and claims against,
every such incorporator, stockholder, officer or director as such, because of
the creation of the indebtedness hereby authorized, or under or by reason of
the obligations, covenants or agreements contained in this Indenture or in any
of the Securities or implied therefrom, are hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this
Indenture and the issuance of such Securities.
71
<PAGE>
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, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
CALENERGY COMPANY, INC.
By: /s/ Steven A McArthur
----------------------------
Name: Steven A. McArthur
Title: Senior Vice President
Attest:
/s/ Steven A. McArthur
- ----------------------
Secretary
THE BANK OF NEW YORK,
as Trustee
By: /s/ Bryon Merino
----------------------------
Name: Bryon Merino
Title: Assistant Treasurer
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 10th day of April, 1996 before me personally came
Steven A. McArthur, to me known, who, being by me duly sworn, did depose and
say that he/she is the General Counsel/Senior Vice President of CalEnergy
Company, Inc., one of the corporations described in and which executed the
foregoing instrument; and that he/she signed his/her name thereto by authority
of the Board of Directors of such corporation.
/s/ Jennifer Avitabile
Notary Public State of New York
No. 01AV5017281
Qualified in New York County
Certificate Filed in New York
County
Commission Expires
Aug. 30, 1997
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 7th day of April, 1996 before me personally came
Byron Merino, to me known, who, being by me duly sworn, did depose and say
that he/she is a Assistant Treasurer of The Bank of New York, a corporation
described in and which executed the foregoing instrument; and that he/she signed
his/her name thereto by authority of the Board of Directors of such corporation.
/s/ William J. Cassels
Notary Public State of New York
No. 01CA5027729
Qualified in Bronx County
Certificate Filed in New York
County
Commission Expires
May 16, 1996
<PAGE>
EXHIBIT A
FORM OF SECURITY
[FORM OF FACE OF SECURITY]
[Include Restricted Securities Legend: THIS SECURITY HAS AND ANY COMMON STOCK
(AND RELATED RIGHTS) ISSUED ON CONVERSION HEREOF HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (A) TO THE COMPA NY, (B) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D)
PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, OR (E)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRANSFER AGENT'S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSES (D) OR (E)
TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN EACH OF THE FOREGOING
CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS
SECURITY IS COM PLETED AND DELIVERED BY THE TRANSFEROR TO THE TRANSFER AGENT.
]
CALENERGY COMPANY, INC.
6 1/4% Convertible Junior Subordinated
Deferrable Interest Security Due 2016
No._________ $___________
[CUSIP No. _________]
CALENERGY COMPANY, INC., a corporation duly organized and
existing under the laws of the State of Delaware (herein called "the Company",
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to
____________________, or registered assigns, the principal sum [indicated on
Schedule A hereof]* [of ______ Dollars]** ($ )
on March 10, 2016.
Interest Payment Dates: March 15, June 15, September 15 and
December 15, commencing June 15, 1996
- --------
* Applicable to Global Securities only.
** Applicable to certificated Securities only.
<PAGE>
Regular Record Dates: the close of business on the 15th day
immediately preceding each Interest Payment Date, commencing
May 31, 1996
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.
IN WITNESS WHEREOF, the Company has caused this instrument
to be signed manually or by facsimile by its duly authorized officers and a
facsimile of its corporate seal to be affixed hereto or imprinted hereon.
Dated: _________, ____
CALENERGY COMPANY, INC.
By:________________________
Name:
Title:
[Seal]
Attest:
- ---------------
A-2
<PAGE>
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Securities referred to in the
within-mentioned Indenture.
Dated: , THE BANK OF NEW YORK,
as Trustee
By: _______________________
Authorized Signatory
A-3
<PAGE>
[FORM OF REVERSE OF SECURITY]
CALENERGY COMPANY, INC.
6 1/4% Convertible Junior Subordinated
Deferrable Interest Debenture Due 2016*
(1) Interest. CalEnergy Company, Inc., a Delaware corpora tion
(the "Company"), is the issuer of this 6 1/4% Convertible Junior Subordinated
Deferrable Interest Debenture Due 2016 (the "Security") limited in aggregate
principal amount to $103,092,800.00 (or $115,463,950.00 if the over-allotment
option is exercised), issued under the Indenture hereinafter referred to. The
Company promises to pay interest on the Securities in cash from April 10, 1996
or from the most recent interest payment date to which interest has been paid
or duly provided for, quarterly (subject to deferral for up to 20 consecutive
quarters as described in Section 3 hereof) in arrears on March 15, June 15,
September 15 and December 15 of each year (each such date, an "Interest
Payment Date"), commencing June 15, 1996, at the rate of 6 1/4% per annum
(subject to increase as provided in Section 13 hereto) plus Additional
Interest, if any, until the principal hereof shall have become due and
payable.
The amount of interest payable for any period will be
computed on the basis of twelve 30-day months and a 360-day year. To the
extent lawful, the Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments
of interest (without regard to any applicable grace period) at the rate borne
by the Securities, compounded quarterly. Any interest paid on this Security
shall be increased to the extent necessary to pay Additional Interest as set
forth in this Security.
(2) Additional Interest. The Company shall pay to CalEnergy
Capital Trust (and its permitted successors or assigns under the Declaration)
(the "Trust") such additional amounts as may be necessary in order that the
amount of dividends or other distributions then due and payable by the Trust
on the Preferred Securities that at any time remain outstanding in accordance
with the terms thereof shall not be reduced as a result of any additional
taxes, duties and other governmental charges of whatever nature (other than
withholding stamp or transfer taxes) imposed by the United States or any other
taxing authority.
- --------
* All terms used in this Security which are defined in the Indenture or in
the Declaration attached as Annex A thereto shall have the meanings as signed
to them in the Indenture or the Declaration, as the case may be.
A-4
<PAGE>
(3) Extension of Interest Payment Period. The Company shall
have the right, at any time during the term of this Security, from time to
time to defer payments of interest by extending the interest payment period of
such Security for up to 20 consecutive quarters (an "Extended Interest Payment
Period") during which Extended Interest Payment Period no interest shall be
due and payable; provided, that no Extended Interest Payment Period may extend
beyond the Maturity Date. To the extent permitted by applicable law, interest,
the payment of which has been deferred because of the extension of the
interest payment period, will bear interest thereon at 6 1/4% compounded
quarterly for each quarter of the Extended Interest Payment Period
("Compounded Interest"). At the end of the Extended Interest Payment Period,
the Company shall pay all interest then accrued and unpaid on the Securities,
including any Additional Payments that shall be payable to the Holders of the
Securities in whose names the Securities are registered in the Security
Registrar on the first Regular Record Date after the end of the Extended
Interest Payment Period. Before the expiration of any Extended Interest
Payment Period, the Company may elect to continue to defer payments of
interest for another consecutive Extended Interest Payment Period; provided,
that any such Extended Interest Payment Period, together with all such
previous and consecutive Extended Interest Payment Periods, shall not exceed
20 consecutive quarters and shall not extend beyond the Maturity Date. Upon
the expiration of any Extended Interest Payment Period and upon the payment of
all Compounded Interest and Additional Interest, if any, then due, the Company
may commence a new Extended Interest Payment Period, subject to the foregoing
requirements. No interest shall be due and payable during an Extended Interest
Payment Period except at the end thereof.
If the Property Trustee is the sole holder of the Securities
at the time the Company selects an Extended Interest Payment Period, the
Company shall give notice to the Regular Trustees, the Property Trustee and
the Trustee of its selection of such Extended Interest Payment Period at least
one Business Day prior to the earlier of (i) the next succeeding Interest
Payment Date or (ii) if the Preferred Securities are listed on the New York
Stock Exchange or other stock exchange or quota tion system, the date the
Trust is required to give notice to the New York Stock Exchange or other
applicable self-regulatory organization or to holders of the Preferred
Securities on the record date or the date such distributions are payable, but
in any event not less than ten Busi ness Days prior to such record date.
If the Property Trustee is not the sole holder of the
Securities at the time the Company selects an Extended Interest Payment
Period, the Company shall give the Holders of these Securities and the Trustee
notice of its selection of an Extended Interest Payment Period at least ten
Business Days prior to the earlier of (i) the next succeeding Interest Payment
Date or (ii) if the Preferred Securities are listed on the New York Stock
Exchange or other stock exchange or quotation system, the date the Company is
required to give notice to the New York Stock Exchange or other applicable
self-regulatory organization or to holders of the Securities on the record
date or the date such dis tributions are payable, but in any event not less
than two Business Days prior to such record date.
A-5
<PAGE>
The quarter in respect of which any notice is given pursuant
to the second and third paragraphs of this Section 3 shall be counted as one
of the 20 quarters permitted in the maximum Extended Interest Payment Period
permitted under the first paragraph of this Section 3.
(4) Method of Payment. The interest 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 install ment, which shall be the close
of business on the 15th day immediately preceding each Interest Payment Date
(the "Regular Record Date"), commencing May 31, 1996. Any such interest 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 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 on which the Securities may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture.
Payment of the principal of and interest on this Security
will be made at the office or agency of the Company maintained for that
purpose in New York, New York, 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; provided, however, that, at the option of the Company, payment
of interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register.
(5) Paying Agent and Security Registrar. The Trustee will
act as Paying Agent, Security Registrar and Conversion Agent. The
Company may change any Paying Agent, Security Registrar, co-registrar or
Conversion Agent without prior notice. The Company or any of its
Affiliates may act in any such capacity.
(6) Indenture. The Company issued the Securities under an
indenture, dated as of April 1, 1996 (the "Indenture"), between the Company
and The Bank of New York, 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, limi tations 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. The terms of the Securities include those stated in the Indenture
and those made part of the Indenture by the Trust Indenture Act of 1939 (15
U.S. Code ss.ss. 77aaa-77bbbb) ("TIA") as in effect on the date of the
Indenture. The Securities are subject to, and qualified by, all such terms,
certain of which are summarized hereon, and holders are referred to the
Indenture and the TIA for a statement of such terms. The Securities are
unsecured general obligations of the Company limited to $103,092,800.00
A-6
<PAGE>
in aggregate principal amount (or up to $115,463,950.00 if the over-allotment
option is exercised) and subordinated in right of payment to all existing and
future Senior Indebtedness of the Company. 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 interest on this Security at the times, place and
rate, and in the coin or currency, herein prescribed or to convert this
Security as provided in the Indenture.
1 Optional Redemption. The Securities are redeemable at the
Company's option at any time and from time to time after April 9, 1999, upon
not less than 20 or more than 60 days' notice, at a Redemption Price equal to
$52.08 per $50 principal amount of the Securi ties plus any accrued and unpaid
interest, including Additional Payments, if any, to the Redemption Date, if
redeemed on or before April 9, 2000, and at the following redemption prices
per $50 principal amount of the Securities, if redeemed during the 12-month
period ending April 9:
Price per $50
Principal
Year Amount
---- -----------
2001.................................... $51.74
2002.................................... 51.39
2003.................................... 51.04
2004.................................... 50.69
2005.................................... 50.35
and thereafter at $50 per $50 principal amount of the Securities plus, in each
case, accrued and unpaid interest, including Additional Payments, if any, to
the Redemption Date (subject to the right of holders of record on the relevant
record date to receive interest due on the Interest Payment Date). On or after
the Redemption Date, interest will cease to accrue on the Securities, or
portion thereof, called for redemption.
(8) Optional Redemption Upon Tax Event. The Securities are subject to
redemption in whole, but not in part, at any time within 90 days, if a Tax
Event (as defined in the Declaration) shall occur and be continuing, at a
redemption price equal to $50 per $50 principal amount thereof plus accrued
but unpaid interest, including Additional Payments, if any, to the Redemption
Date; provided, however, that if, at the time there is available to the
Company or the Trust the opportunity to eliminate, within such 90-day period,
the Tax Event by taking some ministerial action, including but not limited to
filing a form or making an election, or pursuing some other similar reasonable
measure, which, in the sole judgment of the Company, has or will cause no
adverse effect on the Trust or the Company or involves or will involve no
material cost, then the Company or the Trust shall pursue such measure in lieu
of redemption. Any redemption pursuant to this Section 8 will be made upon not
less than 30 nor more than 60 days' notice.
(9) Notice of Redemption. Notice of redemption will be mailed
at least 30 (or in the case of a redemption at the election of the
Company, at least 20) but not more than 60 days before the Redemption
A-7
<PAGE>
Date to each Holder of the Securities to be redeemed at his address of record.
The Securities in denominations larger than $50 may be redeemed in part but
only in integral multiples of $50. In the event of a re demption of less than
all of the Securities, the Securities will be chosen for redemption by the
Trustee in accordance with the Indenture. On and after the Redemption Date,
interest ceases to accrue on the Securities or portions of them called for
redemption.
If this Security is redeemed subsequent to a Regular Record
Date with respect to any Interest Payment Date specified above and on or prior
to such Interest Payment Date, then any accrued interest will be paid to the
person in whose name this Security is registered at the close of business on
such record date.
(10) Mandatory Redemption. The Securities will mature on March
10, 2016, and may be redeemed, in whole or in part, at any time after April 9,
1999 or at any time in certain circumstances upon the occurrence of a Tax
Event. Upon the repayment of the Securities, wheth er at maturity or upon
redemption, the proceeds from such repayment or payment shall simultaneously
be applied to redeem Trust Securities having an aggregate liquidation amount
of the Securities so repaid or redeemed at the applicable redemption price
together with accrued and unpaid distributions through the date of redemption;
provided, that holders of the Trust Securities shall be given not less than 30
nor more than 60 days notice of such redemption. Upon the repayment of the
Securities at maturity or upon any acceleration, earlier redemption or
otherwise, the proceeds from such repayment will be applied to redeem the
Preferred Securities, in whole, upon not less than 30 nor more than 60 days'
notice. There are no sinking fund payments with respect to the Securities.
(11) Subordination. The payment of the principal of, interest
on or any other amounts due on the Securities is subordinated in right of
payment to all existing and future Senior Indebtedness (as defined below) of
the Company, as described in the Indenture. Each holder, by accepting a
Security, agrees to such subordination and autho rizes and directs the Trustee
on its behalf to take such action as may be necessary or appropriate to
effectuate the subordination so provided and appoints the Trustee as its
attorney-in-fact for such purpose.
Senior Indebtedness shall mean in respect of the Company (i)
the principal, premium, if any, and interest in respect of (A) indebtedness of
such obligor for money borrowed and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by such obligor, (ii)
all capital lease obligations of such obligor, (iii) all obligations of such
obligor issued or assumed as the deferred purchase price of property, all
conditional sale obligations of such obligor and all obligations of such
obligor under any title reten tion agreement (but excluding trade accounts
payable arising in the ordinary course of business), (iv) all obligations of
such obligor for the reimbursement of any letter of credit, banker's
acceptance, security purchase facility or similar credit transaction, (v) all
obligations of the type referred to in clauses (i) through (iv) above of other
Persons for the payment of which such obligor is responsible or liable as
obligor, guarantor or otherwise, and (vi) all obligations of the type referred
to in clauses (i) through (v) above of other persons secured by
A-8
<PAGE>
any lien on any property or asset of such obligor (whether or not such
obligation is assumed by such obligor), except for (1) any such indebtedness
issued after the date of original issuance of the Securities that is by its
terms subordinated to or pari passu with the Securities and (2) any
indebtedness (including all other debt securities and guarantees in respect of
those debt securities) initially issued to any other trust, or a trustee of
such trust, partnership, or other entity affiliated with the Company that is,
directly or indirectly, a financing vehicle of the Company (a "Financing
Entity") in connection with the issuance by such Financing Entity of preferred
securities or other securities which by their terms rank pari passu with, or
junior to, the Preferred Securities.
(12) Conversion. The Holder of any Security has the right,
exercisable at any time prior to the close of business (New York time) on the
date of the Security's maturity, to convert the principal amount thereof (or
any portion thereof that is an integral multiple of $50) into shares of Common
Stock at an initial conversion rate of 1.6728 shares of Common Stock for each
Security (equivalent to a conversion price of $29.89 per share of Common Stock
of the Company), subject to adjustment under certain circumstances, except
that if a Security is called for redemption, the conversion right will
terminate at the close of business on the Redemption Date.
To convert a Security, a Holder must (1) complete and sign a
conversion notice substantially in the form attached hereto, (2) surrender the
Security to a Conversion Agent, (3) furnish appropriate endorsements or
transfer documents if required by the Security Registrar or Conversion Agent
and (4) pay any transfer or similar tax, if re quired. Upon conversion, no
adjustment or payment will be made for interest or dividends, but if any
Holder surrenders a Security for conversion after the close of business on the
Regular Record Date for the payment of an installment of interest and prior to
the opening of business on the next Interest Payment Date, then,
notwithstanding such conversion, the interest payable on such Interest Payment
Date will be paid to the registered Holder of such Security on such Regular
Record Date. In such event, such Security, when surrendered for conversion,
need not be accompanied by payment of an amount equal to the interest payable
on such Interest Payment Date on the portion so converted. The number of
shares issuable upon conversion of a Security is determined by dividing the
principal amount of the Security converted by the conver sion price in effect
on the Conversion Date. No fractional shares will be issued upon conversion
but a cash adjustment will be made for any fractional interest. The
outstanding principal amount of any Security shall be reduced by the portion
of the principal amount thereof converted into shares of Common Stock.
(13) Registration Rights. The holders of the Preferred
Securities, the Securities and the Guarantee are entitled to the bene fits of
a Registration Rights Agreement, dated as of April 10, 1996, among the Company
and the Initial Purchasers (the "Registration Rights Agreement"). Pursuant to
the Registration Rights Agreement, the Company has agreed for the benefit of
the holders of the Preferred Securities, the Securities and the Guarantee
that, subject to the terms of the Registration Rights Agreement (including,
without limitation, those
A-9
<PAGE>
provisions permitting a Suspension (as defined therein)) (i) it will, at its
cost, as promptly as reasonably practicable, prepare and file a Shelf
Registration Statement (as defined in the Registration Rights Agreement) with
the Commission with respect to resales of the Preferred Securities, together
with the Securities, the Guarantee and the related Common Stock issuable upon
conversion thereof, (ii) it will use its reasonable best efforts to cause such
Shelf Registration Statement to be declared effective by the Commission on or
prior to October 7, 1996 and (iii) it will use its reasonable best efforts to
keep such Shelf Regis tration Statement continuously effective under the
Securities Act of 1933, as amended, until the third anniversary of the date of
the effec tiveness of the Shelf Registration Statement or such earlier date as
is provided in the Registration Rights Agreement. The Company and the Trust
agree that from and after the date on which any Registration Default (as
defined below) occurs, the per annum interest rate on the Securities will
increase by 50 basis points (.50%). Such increase will remain in effect from
and including the date on which any such Registra tion Default shall occur (or
be deemed to occur as described below) to but excluding the date on which all
Registration Defaults have been cured (or have been deemed to be cured as
described below), on which date the interest rate on the Securities will
revert to the interest rate originally borne by the Securities.
"Registration Default" shall mean any of the following
events:
(i) on or prior to October 7, 1996, the Registrable
Securities (as defined in the Registration Rights Agreement) are not
the subject of a Shelf Registration Statement which has become
effective;
(ii) the Registrable Securities are the subject of
a Shelf Registration Statement which was effective but which has
ceased to be effective for any reason prior to the end of the Shelf
Registration Period (as defined in the Registration Rights
Agreement);
(iii) the occurrence of a Suspension (as defined in
the Registration Rights Agreement); or
(iv) the occurrence of an event contemplated by
paragraph 3(c)(2)(iii) of the Registration Rights Agreement (an
"Amendment Event");
provided, however, that if the Registration Default consists of the occurrence
of any event contemplated by clause (iii) or (iv) above, then such
Registration Default shall not be deemed to have occurred until the expiration
of 30 Business Days after the date of the occurrence of such Suspension or
Amendment Event, provided that (a) the Trust and the Company thereafter
reasonably promptly comply with the requirements of paragraph 3(i) of the
Registration Rights Agreement, if applicable, and (b) in the case of such
Amendment Event resulting from an action taken by the Company or the Trust,
such action was taken in good faith; and provided, further, that a
Registration Default shall not constitute a default or Event of Default
hereunder.
A-10
<PAGE>
A Registration Default shall be deemed to have been cured
and cease to exist on the date subsequent to the occurrence of such
Registration Default on which:
(x) in the case of a Registration Default described
in clause (i) or (ii) above, the Shelf Registration Statement
covering such Registrable Securities shall become effective; or
(y) in the case of a Registration Default described
in clause (iii) or (iv) above, upon the Company and the Trust taking
action to notify the Holders (for purposes of this clause (y), as
that term is defined in the Registration Rights Agreement) of the
Registrable Securities that such Suspension or Amendment Event has
ended. For purposes of this clause (y), taking action to notify
Holders shall be deemed sufficient when notice is first deposited in
first class mail or delivered to a courier service or filed with the
SEC or publicly disseminated by press release or other release to a
news reporting service.
(14) Registration, Transfer, Exchange and Denominations. As
provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in New York, New York, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to the Company and
the Security Registrar duly executed by, the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Securities, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Securities are issuable only in registered form without
coupons in denominations of $50 and integral multiples thereof. 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 there with. 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. In the event of
redemption or conversion of this Security in part only, a new Security or
Securities for the unredeemed or unconverted portion hereof will be issued in
the name of the Holder hereof upon the cancellation hereof.
(15) Persons Deemed Owners. Except as provided in Section
4 hereof, the registered Holder of a Security may be treated as its
owner for all purposes.
(16) Unclaimed Money. If money for the payment of
principal or interest remains unclaimed for two years, the Trustee and
the Paying Agent shall pay the money back to the Company at its written
request. After that, holders of Securities entitled to the money must
look to the Company for payment unless an abandoned property law
A-11
<PAGE>
designates another Person and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
(17) Defaults and Remedies. The Securities shall have the
Events of Default as set forth in Section 501 of the Indenture. Subject to
certain limitations in the Indenture, if an Event of Default occurs and is
continuing, the Trustee by notice to the Company or the holders of at least
25% in aggregate principal amount of the then outstanding Securities by notice
to the Company and the Trustee may declare all the Securities to be due and
payable immediately, except that in the case of an Event of Default arising
from certain events of bankruptcy or insolvency, all unpaid principal and
interest accrued on the Securities shall become due and payable immediately
without further action or notice.
The holders of a majority in principal amount of the
Securities then outstanding by written notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with
any judgment or decree and if all existing Events of Default have been cured
or waived except nonpayment of principal or interest that has become due
solely because of the acceleration. Holders may not enforce the Indenture or
the Securities except as provided in the Indenture. Subject to certain
limitations, holders of a majority in principal amount of the then outstanding
Securities issued under the Indenture may direct the Trustee in its exercise
of any trust or power. The Company must furnish annually compliance
certificates to the Trustee. The above description of Events of Default and
remedies is qualified by reference to, and subject in its entirety by, the
more complete description thereof contained in the Indenture.
(18) Amendments, Supplements and Waivers. The Indenture
permits, with certain exceptions as therein provided, the amendment thereof
and the modification of the rights and obligations of the Company and the
rights of the Holders of the Securities under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of a majority in
aggregate principal amount of the Securi ties at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all the Securities, 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 herefor or in
lieu hereof, whether or not notation of such consent or waiver is made upon
this Security.
(19) Trustee Dealings with the Company. The Trustee, in its
individual or any other capacity may become the owner or pledgee of the
Securities and may otherwise deal with the Company or an Affiliate with the
same rights it would have, as if it were not Trustee, subject to certain
limitations provided for in the Indenture and in the TIA.
Any Agent may do the same with like rights.
A-12
<PAGE>
(20) No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or the Indenture or
for any claim based on, in respect of or by reason of such obligations or
their creation. Each Holder of the Securities by accepting a Security waives
and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
(21) Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW
YORK SHALL GOVERN THE INDENTURE AND THE SECURITIES WITHOUT REGARD TO CONFLICT
OF LAW PROVISIONS THEREOF.
(22) Authentication. The Securities shall not be valid until
authenticated by the manual signature of an authorized officer of the Trustee
or an authenticating agent.
(23) Abbreviations. Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Cus todian), and U/G/M/A
(= Uniform Gifts to Minors Act).
The Company will furnish to any Holder of the Securities
upon written request and without charge a copy of the Indenture.
Request may be made to:
CalEnergy Company, Inc.
302 South 36th Street, Suite 400
Omaha, Nebraska 68131
Attention of: General Counsel
A-13
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
(I) or (we) assign and transfer this Security to
- ------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. no.)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ----------------------------------------------
agent to transfer this Security on the books of the Company. The agent
may substitute another to act for him.
Your Signature: ---------------------------------------------
(Sign exactly as your name appears
on the other side of this Security)
Date: ---------------------------
Signature Guarantee:* ------------------
[Include the following if the Security bears a Restricted Securities
Legend --
In connection with any transfer of any of the Securities evidenced by this
certificate, the undersigned confirms that such Securities are being:
CHECK ONE BOX BELOW
(1) |_| exchanged for the undersigned's own
account without transfer; or
(2) |_| transferred pursuant to and in
compliance with Rule 144A under the Securities Act of
1933; or
(3) |_| transferred pursuant to and in
compliance with Regulation S under the Securities Act
of 1933; or
- --------
* Signature must be guaranteed by a commercial bank, trust company or
member firm of the New York Stock Exchange.
A-14
<PAGE>
(4) |_| transferred pursuant to another
available exemption from the registration requirements
of the Securities Act of 1933; or
(5) |_| transferred pursuant to an effective
Shelf Registration Statement (as defined in Section
1007 of the Indenture).
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered Holder thereof; provided, however, that if box (3) or (4)
is checked, the Trustee may require, prior to registering any such transfer of
the Securities such legal opinions, certifications and other information as
the Company has reasonably requested to confirm that such transfer is being
made pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933, such as the exemption
provided by Rule 144 under such Act; provided, further, that after the date
that a Shelf Registration Statement becomes effective and so long as such
Shelf Registration Statement continues to be effective, the Trustee may only
permit transfers for which box (5) has been checked.
----------------------------
Signature
Signature Guarantee:*
- -------------------------------- ---------------------------
]
Signature must be guaranteed Signature
- ------------------------------------------------------------------------------
[TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is
purchasing this Security for its own account or an account with respect to
which it exercises sole investment discretion and that it and any such account
is a "qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such information
regarding the Company as the undersigned has requested pursuant to Rule 144A
or has determined not to request such information and that it is aware that
the transferor is relying upon the undersigned's foregoing representations in
order to claim the exemption from registration provided by Rule 144A.
Dated:------------------------- -----------------------------------------
NOTICE: To be executed by an executive officer]
- --------
* Signature must be guaranteed by a commercial bank, trust company or
member firm of the New York Stock Exchange.
A-15
<PAGE>
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE A
The initial principal amount of this Global Security shall
be $__________. The following increases or decreases in the principal amount
of this Global Security have been made:
<TABLE>
<CAPTION>
========================================================================================================================
Date Made Amount of increase
in Principal Amount Principal Amount of
of this Global Secu Amount of decrease this Global Security Signature of
rity including upon in Principal Amount following such authorized officer
exercise of over- of this Global Secu decrease or increase of Trustee or
allotment option rity Securities Custodian
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
========================================================================================================================
</TABLE>
A-16
<PAGE>
ELECTION TO CONVERT
To: CalEnergy Company, Inc.
The undersigned owner of this Security hereby irrevocably
exercises the option to convert this Security, or the portion below
designated, into Common Stock of CALENERGY COMPANY, INC. in accordance with
the terms of the Indenture referred to in this Security, and directs that the
shares issuable and deliverable upon conversion, together with any check in
payment for fractional shares, be issued in the name of and delivered to the
undersigned, unless a different name has been indicated in the assignment
below. If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto.
Any holder, upon the exercise of its conversion rights in
accordance with the terms of the Indenture and the Security, agrees to be
bound by the terms of the Registration Agreement relating to the Common Stock
issuable upon conversion of the Securities.
Date: ____________, ____
in whole __
Portions of Security to be converted ($50 or integral multiples
thereof): $_________________
--------------------------------------------
Signature
(for conversion only)
Please Print or Typewrite Name and Address, Including Zip Code, and Social
Security or Other Identifying Number
--------------------------------------------
--------------------------------------------
--------------------------------------------
Signature Guarantee:*
- --------
* Signature must be guaranteed by a commercial bank, trust company or
member firm of the New York Stock Exchange.
A-17
<PAGE>
ANNEX I
AMENDED AND RESTATED DECLARATION OF TRUST
(See Exhibit 4.2)
PREFERRED SECURITIES GUARANTEE AGREEMENT
CALENERGY COMPANY, INC.
Dated as of April 10, 1996
<PAGE>
PREFERRED SECURITIES GUARANTEE AGREEMENT
This PREFERRED SECURITIES GUARANTEE AGREEMENT (the "Preferred
Securities Guarantee"), dated as of April 10, 1996, is executed and delivered
by CalEnergy Company, Inc., a Delaware corporation (the "Guarantor"), and The
Bank of New York, a New York banking corporation, as trustee (the "Preferred
Guarantee Trustee"), for the benefit of the Holders (as defined herein) from
time to time of the Preferred Securities (as defined herein) of CalEnergy
Capital Trust, a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of April 4, 1996, among the trustees of the
Issuer named therein, the Guarantor, as sponsor, and the holders from time to
time of undivided beneficial interests in the assets of the Issuer, the Issuer
is issuing on the date hereof 2,000,000 Preferred Securities, having an
aggregate stated liquidation preference of $100,000,000, designated the 6 1/4%
Convertible Preferred Securities (plus up to an additional 240,000 Preferred
Securities, having an aggregate liquidation preference of $12,000,000, to
cover over-allotments) (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Preferred Securities Guarantee, to pay to the
Holders of the Preferred Securities the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set forth
herein; and
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Common Securities Guarantee") in substantially identical terms
to this Preferred Securities Guarantee for the benefit of the holders of the
Common Securities (as defined herein) except that if an Event of Default (as
defined in the Indenture (as defined herein)), has occurred and is continuing,
the rights of holders of the Common Securities to receive Guarantee Payments
under the Common Securities Guarantee are subordinated to the rights of
<PAGE>
Holders of Preferred Securities to receive Guarantee Payments under this
Preferred Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Preferred Securities Guarantee, unless the context
otherwise requires:
(a) Capitalized terms used in this Preferred Securities Guarantee
but not defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Preferred
Securities Guarantee has the same meaning
throughout;
(c) all references to "the Preferred Securities Guarantee" or
"this Guarantee" are to this Preferred Securities Guarantee as
modified, supplemented or amended from time to time;
(d) all references in this Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of this
Preferred Securities Guarantee unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Preferred Securities Guarantee unless
otherwise defined in this Preferred Securities Guarantee or
unless the context otherwise requires; and
2
<PAGE>
(f) a reference to the singular includes the
plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act of 1933, as amended, or any successor rule thereunder.
"Authorized Person" of a Person means any Person that is authorized
to bind such Person provided, however that the Authorized Officer signing an
Officer's Certificate given pursuant to Section 314(a)(4) of the Trust
Indenture Act shall be the principal executive, financial or accounting
officer of such Person.
"Common Securities" means the convertible common securities
representing common undivided beneficial interests in the assets of the
Issuer.
"Covered Person" means any Holder or beneficial
owner of Preferred Securities.
"Debentures" means the series of convertible junior subordinated
debt securities of the Guarantor designated the 6 1/4% Convertible Junior
Subordinated Deferrable Interest Debentures Due 2016 held by the Property
Trustee of the Issuer.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Preferred Securities Guarantee.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent
not paid or made by the Issuer: (i) any accrued and unpaid Distributions (as
defined in the Declaration) that are required to be paid on such Preferred
Securities to the extent the Issuer shall have funds available therefore, (ii)
the amount payable upon redemption to the extent the Issuer has funds
available therefor, with respect to any Preferred Securities called for
redemption by the Issuer, and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Issuer (other than in connection
with the distribution of Debentures to the Holders in exchange for Preferred
Securities as provided
3
<PAGE>
in the Declaration), the lesser of (a) the aggregate of the liquidation
preference and all accrued and unpaid Distributions on the Preferred
Securities to the date of payment, to the extent the Issuer shall have funds
available therefor, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders upon liquidation of the Issuer (in
either case, the "Liquidation Distribution"). If an event of default under the
Indenture has occurred and is continuing, the rights of holders of the Common
Securities to receive payments under the Common Securities Guarantee are
subordinated to the rights of Holders of Preferred Securities to receive
Guarantee Payments.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Preferred Guarantee Trustee, any
Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives or agents of the
Preferred Guarantee Trustee.
"Indenture" means the Indenture dated as of April 1, 1996, among
the Guarantor (the "Debenture Issuer") and The Bank of New York, as trustee,
and any indenture supplemental thereto pursuant to which the Debentures are to
be issued to the Property Trustee of the Issuer.
"Majority in liquidation preference of the Securities" means,
except as provided by the Trust Indenture Act, Holder(s) of Preferred
Securities, voting separately as a class, representing more than 50% of the
stated liquidation preference (including the stated amount that would be paid
on redemption, liquidation or otherwise, plus accrued and unpaid Distributions
to the date upon which the voting percentages are determined) of all Preferred
Securities.
4
<PAGE>
"Officer's Certificate" means, with respect to any Person, a
certificate signed by an Authorized Officer of such Person. Any Officer's
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Preferred Securities Guarantee shall include:
(a) a statement that the officer signing the
Certificate has read the covenant or condition and the
definition relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken upon which the statements or opinions contained in
such Certificate are based;
(c) a statement that, in such officer's opinion, such officer has
made or caused to be made such examination or investigation as 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.
"Preferred Guarantee Trustee" means The Bank of New York until a
Successor Preferred Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Preferred Securities Guarantee and
thereafter means each such Successor Preferred
Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred
Guarantee Trustee, the chairman of the board of directors, the president, any
vice president, any assistant vice president, the secretary, any assistant
secretary, the treasurer, any assistant
5
<PAGE>
treasurer, any trust officer or assistant trust officer or any other officer
of the Preferred Guarantee Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.
"Successor Preferred Guarantee Trustee" means a
successor Preferred Guarantee Trustee possessing the qualifications to act as
Preferred Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture
Act of 1939, as amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Preferred Securities Guarantee, which are incorporated by reference hereto,
and shall, to the extent applicable, be governed by such provisions; and
(b) if and to the extent that any provision of this Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed
duties shall control;
SECTION 2.2 Lists of Holders of Securities.
(a) The Guarantor shall provide the Preferred Guarantee Trustee (i)
within 14 days after January 1 and June 30 of each year, a list, in such form
as the Preferred Guarantee Trustee may reasonably require, of the names and
addresses of the Holders of the Preferred Securities ("List of Holders") as of
such date, and (ii) at any other time, within 30 days of receipt by the
Guarantor of a written request for a List of Holders as
6
<PAGE>
of a date no more than 14 days before such List of Holders is given to the
Preferred Guarantee Trustee, provided that the Guarantor shall not be
obligated to provide such List of Holders at any time the List of Holders does
not differ from the most recent List of Holders given to the Preferred
Guarantee Trustee by the Guarantor or the Preferred Securities are represented
by one or more Global Securities (as defined in the Indenture). The Preferred
Guarantee Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and 312(b) of the Trust Indenture
Act.
SECTION 2.3 Reports by the Preferred
Guarantee Trustee.
Within 60 days after May 15 of each year, the Preferred Guarantee
Trustee shall provide to the Holders of the Preferred Securities such reports
as are required by Section 313 of the Trust Indenture Act, if any, in the form
and in the manner provided by Section 313 of the Trust Indenture Act. The
Preferred Guarantee Trustee shall also comply with the requirements of Section
313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Preferred
Guarantee Trustee.
The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by Section 314 (if any) and the
compliance certificate required by Section 314 of the Trust Indenture Act in
the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
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SECTION 2.5 Evidence of Compliance with
Conditions Precedent.
The Guarantor shall provide to the Preferred Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Preferred Securities Guarantee which relate to any of the matters set
forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given
in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver.
The Holders of a Majority in liquidation preference of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every
purpose of this Preferred Securities Guarantee, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.
SECTION 2.7 Event of Default; Notice.
(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Preferred Securities, notices of all Events of
Default known to the Preferred Guarantee Trustee, unless such defaults have
been cured before the giving of such notice, provided, that, the Preferred
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 Preferred Guarantee Trustee in
good faith determines that the withholding of such notice is in the interests
of the Holders of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default except any Event of Default as to which the
Preferred
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Guarantee Trustee shall have received written notice or a Responsible Officer
charged with the administration of the Declaration shall have obtained actual
knowledge.
SECTION 2.8 Conflicting Interests.
The Declaration shall be deemed to be specifically described in
this Preferred Securities Guarantee 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
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee.
(a) This Preferred Securities Guarantee shall be held by the
Preferred Guarantee Trustee for the benefit of the Holders of the Preferred
Securities, and the Preferred Guarantee Trustee shall not transfer this
Guarantee Agreement to any Person except a Holder of Preferred Securities
exercising his or her rights pursuant to Section 5.4(b) or to a Successor
Preferred Guarantee Trustee on acceptance by such Successor Preferred
Guarantee Trustee of its appointment to act as Successor Preferred Guarantee
Trustee. The right, title and interest of the Preferred Guarantee Trustee
shall automatically vest in any Successor Preferred Guarantee Trustee, and
such vesting and cessation of title shall be effective whether or not
conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Preferred Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the
Preferred Guarantee Trustee shall enforce this Preferred Securities Guarantee
for the benefit of the Holders of the Preferred Securities.
(c) The Preferred 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
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specifically set forth in this Preferred Securities Guarantee, and no implied
covenants shall be read into this Preferred Securities Guarantee against the
Preferred Guarantee Trustee. In case an Event of Default has occurred (that
has not been cured or waived pursuant to Section 2.6), the Preferred Guarantee
Trustee shall exercise such of the rights and powers vested in it by this
Preferred Securities Guarantee, 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 Preferred Securities Guarantee shall be
construed to relieve the Preferred 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 Preferred Guarantee
Trustee shall be determined solely by the express provisions of this
Preferred Securities Guarantee, and the Preferred Guarantee Trustee
shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Preferred Securities
Guarantee, and no implied covenants or obligations shall be read into
this Preferred Securities Guarantee against the Preferred Guarantee
Trustee; and
(B) in the absence of bad faith on the part of the
Preferred Guarantee Trustee, the Preferred Guarantee Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon any certificates or opinions
furnished to the Preferred Guarantee Trustee and conforming to the
requirements of this Preferred Securities Guarantee; but in the case of
any such certificates or opinions that by any provision hereof are
specifically
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required to be furnished to the Preferred Guarantee Trustee, the
Preferred Guarantee Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this Preferred
Securities Guarantee;
(ii) the Preferred Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer of the
Preferred Guarantee Trustee, unless it shall be proved that the
Preferred Guarantee
Trustee was negligent in ascertaining the per-
tinent facts upon which such judgment was made;
(iii) the Preferred 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 liquidation preference of the Preferred Securities at the
time outstanding, relating to the time, method and place of conducting
any proceeding for any remedy available to the Preferred Guarantee
Trustee, or exercising any trust or power conferred upon the Preferred
Guarantee Trustee under this Preferred Securities Guarantee; and
(iv) no provision of this Preferred Securities Guarantee shall
require the Preferred 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 Preferred 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 Preferred Securities
Guarantee or adequate indemnity against such risk or liability is not
reasonably assured to it.
SECTION 3.2 Certain Rights of Preferred
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Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may rely and shall be
fully protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Preferred Securities
Guarantor contemplated by this Preferred Securities Guarantee shall be
sufficiently evidenced by an Officers' Certificate;
(iii) whenever, in the administration of this Preferred
Securities Guarantee, the Preferred Guarantee Trustee shall deem it
desirable that a matter be proved or established before taking,
suffering or omitting any action hereunder, the Preferred Guarantee
Trustee (unless other evidence is herein specifically prescribed) may,
in the absence of bad faith on its part, request and rely upon an
Officers' Certificate which, upon receipt of such request, shall be
promptly delivered by the Guarantor;
(iv) the Preferred Guarantee Trustee shall have no duty to see
to any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof);
(v) the Preferred Guarantee Trustee may consult with counsel
of its selection, and the advice or opinion of such counsel with respect
to legal matters shall be full and complete authorization and protection
in respect of any action taken, suffered or
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omitted by it hereunder in good faith and in accordance with such advice
or opinion. Such counsel may be counsel to the Guarantor or any of its
Affiliates and may include any of the Guarantor's employees. The
Preferred Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this Guarantee Agreement
from any court of competent jurisdiction.
(vi) the Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Preferred Securities Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Preferred
Guarantee Trustee such adequate security and indemnity reasonably
satisfactory to the Preferred 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 Preferred
Guarantee Trustee; provided that nothing contained in this Section
3.2(a)(vi) shall be taken to relieve the Preferred Guarantee Trustee,
upon the occurrence of an Event of Default, of its obligation to exercise
the rights and powers vested in it by this Preferred Securities Guarantee;
(vii) the Preferred 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 Preferred
Guarantee Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit;
(viii) the Preferred Guarantee Trustee may execute any of the
trusts or powers
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hereunder or perform any duties hereunder either
directly or by or through agents or attorneys, and the Preferred
Guarantee Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care
by it hereunder;
(ix) any action taken by the Preferred Guarantee Trustee or its
agents hereunder shall bind the Holders of the Preferred Securities, and
the signature of the Preferred Guarantee Trustee or its agents alone
shall be sufficient and effective to perform any such action. No third
party shall be required to inquire as to the authority of the Preferred
Guarantee Trustee to so act or as to its compliance with any of the terms
and provisions of this Preferred Securities Guarantee, both of which
shall be conclusively evidenced by the Preferred Guarantee Trustee's
or its agent's taking such action; and
(x) whenever in the administration of this Preferred
Securities Guarantee the Preferred Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy
or right or taking any other action hereunder, the Preferred Guarantee
Trustee (i) may request instructions from the Holders of the Preferred
Securities or the Guarantor, (ii) may refrain from enforcing such remedy
or right or taking such other action until such instructions are
received, and (iii) shall be protected in acting in accordance with such
instructions.
(b) No provision of this Preferred Securities Guarantee shall be
deemed to impose any duty or obligation on the Preferred 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 Preferred 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
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authority available to the Preferred Guarantee Trustee shall be construed
to be a duty.
SECTION 3.3. Not Responsible for Recitals
or Issuance of Guarantee.
The recitals contained in this Preferred Securities Guarantee shall
be taken as the statements of the Guarantor, and the Preferred Guarantee
Trustee does not assume any responsibility for their correctness. The
Preferred Guarantee Trustee makes no representations as to the validity or
sufficiency of this Preferred Securities Guarantee.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility.
(a) There shall at all times be a Preferred
Guarantee Trustee which shall:
(i) not be an Affiliate of the Guar-
antor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or Person permitted by
the Securities and Exchange Commission to act as an institutional
trustee under the Trust Indenture Act, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus
of at least 50 million U.S. dollars ($50,000,000), and subject to
supervision or examination by Federal, State, Territorial or District of
Columbia authority. If such corporation publishes reports of condition
at least annually, pursuant to law or to the requirements of the
supervising or examining authority referred to above, then, for the
purposes of this Section 4.1(a)(ii), the combined capital and surplus of
such corporation shall be deemed to be its combined
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capital and surplus as set forth in its most recent report of condition
so published.
(b) If at any time the Preferred Guarantee Trustee shall cease to
be eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee
shall immediately resign in the manner and with the effect set out in Section
4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred 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 Preferred Guarantee Trustee.
(a) Subject to ss. 4.2(b), the Preferred Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in
accordance with ss. 4.2(a) until a Successor Preferred Guarantee Trustee has
been appointed and has accepted such appointment by written instrument
executed by such Successor Preferred Guarantee Trustee and delivered to the
Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been appointed
or until its removal or resignation. The Preferred Guarantee Trustee may
resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Preferred Guarantee Trustee and
delivered to the Guarantor, which resignation shall not take effect until a
Successor Preferred Guarantee Trustee has been appointed and has accepted such
appointment by instrument in writing executed by such Successor Preferred
Guarantee Trustee and delivered to the Guarantor and the resigning Preferred
Guarantee Trustee.
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(d) If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery of an instrument of removal or resignation, the Preferred
Guarantee Trustee resigning or being removed may petition any court of
competent jurisdiction for appointment of a Successor Preferred Guarantee
Trustee. Such court may thereupon, after prescribing such notice, if any, as
it may deem proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities Guarantee or
removal or resignation of the Preferred Guarantee Trustee pursuant to this
Section 4.2, the Guarantor shall pay to the Preferred Guarantee Trustee
all amounts accrued and payable to the Preferred Guarantee Trustee to the date
of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that 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 Subordination
If an Event of Default (as defined in the Indenture), has occurred
and is continuing, the rights of Holders of the Common Securities to receive
Guarantee Payments under the Common Securities Guarantee are subordinated to
the rights of Holders of Preferred
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Securities to receive Guarantee Payments under this Preferred Securities
Guarantee.
SECTION 5.3 Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this Preferred
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first
against 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 5.4 Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor
under this Preferred Securities Guarantee 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 Preferred 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, the amount payable upon redemption,
Liquidation Distribution or any other sums payable under the terms of the
Preferred Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Preferred
Securities (other than an extension of time for payment of Distributions, the
amount payable upon redemption, Liquidation Distribution or other sum payable
that results from the extension of any interest payment period on the
Debentures or any extension of the maturity date of the Debentures permitted
by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part
of the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the
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Preferred 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 Preferred Securities;
(f) the settlement or compromise of any obli-
gation guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.4 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 or any other Person to
give notice to, or obtain consent of, the Guarantor with respect to the
happening of any of the foregoing.
SECTION 5.5 Rights of Holders.
(a) The Holders of a Majority in liquidation preference of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Preferred Guarantee
Trustee in respect of this Preferred Securities Guarantee or exercising any
trust or power conferred upon the Preferred Guarantee Trustee under this
Preferred Securities Guarantee.
(b) Any Holder of Preferred Securities may directly institute a
legal proceeding against the Guarantor to enforce the payment obligations of
the Guarantor under this Preferred Securities Guarantee without first
instituting a legal proceeding against the Trust, the Preferred Guarantee
Trustee or any other Person.
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(c) If an Event of Default with respect to the Debentures (an
"Indenture Event of Default"), constituting the failure to pay interest or
principal on the Debentures on the date such interest or principal is
otherwise payable (or in the case of any redemption, the redemption date) has
occurred and is continuing, then a Holder of Preferred Securities may
directly, at any time, institute a proceeding for enforcement of payment to
such Holder of the principal of or interest on the Debentures having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such Holder on or after the respective due date (or redemption
date) specified in the Debentures.
SECTION 5.6 Guarantee of Payment.
This Preferred Securities Guarantee creates a guarantee of payment
and not of collection.
SECTION 5.7 Subrogation.
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Preferred Securities against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Preferred Securities
Guarantee; provided, however, that the Guarantor shall not (except to the
extent required by mandatory provisions of law) be entitled to enforce or
exercise any right that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under
this Preferred Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Preferred Securities Guarantee. 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 5.8 Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the
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terms of this Preferred Securities Guarantee notwithstanding the occurrence of
any event referred to in subsections (a) through (g), inclusive, of Section
5.4 hereof.
SECTION 5.9 Conversion
The Guarantor acknowledges its obligation to issue and deliver
common stock upon the conversion of the Preferred Securities.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions.
So long as any Preferred Securities remain outstanding, if at such
time (i) the Guarantor has exercised its option to defer interest payments on
the Debentures and such deferral is continuing, (ii) the Guarantor
shall be in default with respect to its payment or other obligations under
this Preferred Securities Guarantee or (iii) there shall have occurred and be
continuing any event that, with the giving of notice or the lapse of time or
both, would constitute an Event of Default under the Indenture, then the
Guarantor (a) shall not declare or pay any dividend on, or make any
distribution with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock (other than
stock dividends paid by the Guarantor which consist of the stock of the same
class as that on which the dividend is being paid), (b) shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities issued by the Guarantor after the date hereof that
ranks pari passu with or junior to the Debentures and (c) shall not make any
guarantee payments with respect to the foregoing (other than pursuant to this
Preferred Securities Guarantee).
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SECTION 6.2 Ranking.
This Preferred Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right
of payment to all other liabilities of the Guarantor, except any liabilities
that may be made pari passu expressly by their terms, (ii) pari passu with the
most senior preferred or preference stock issued by the Guarantor after the
date hereof and with any guarantee now or hereafter entered into by the
Guarantor in respect of any preferred or preference stock or Preferred
Security of any Affiliate of the Guarantor, and (iii) senior to the
Guarantor's common stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.
This Preferred Securities Guarantee shall terminate upon (i) full
payment of the amount payable upon redemption of all Preferred Securities,
(ii) the distribution of the Guarantor's common stock to the Holders in
respect of the conversion of the Preferred Securities into the Guarantor's
common stock or the dis-
tribution of the Debentures to the Holders of all of the Preferred Securities
or (iii) full payment of the amounts payable in accordance with the
Declaration upon liquidation of the Issuer. Notwithstanding the foregoing,
this Preferred Securities Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of Preferred
Securities must restore payment of any sums paid under the Preferred
Securities or under this Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation.
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(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed
or omitted by such Indemnified Person in good faith in accordance with this
Preferred Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Preferred Securities Guarantee or by law, except
that an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence
and amount of assets from which Distributions to Holders of Preferred
Securities might properly be paid.
SECTION 8.2 Indemnification.
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(a) The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified Person harmless against, any and all loss,
liability or expense including taxes (other than taxes based on the income of
such Indemnified Person) incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration or the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or
investigating any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 8.2 shall survive the termination of
this Preferred Securities Guarantee.
(b) To the fullest extent permitted by applicable law, expenses
(including legal fees and expenses) incurred by an Indemnified Person in
defending any claim, demand, action, suit or proceeding shall, from time to
time, be advanced by the Guarantor prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the Guarantor of an
undertaking by or on behalf of the Indemnified Person to repay such amount if
it shall be determined that the Indemnified Person is not entitled to be
indemnified as authorized in Section 8.2(a).
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns.
All guarantees and agreements contained in this Preferred
Securities Guarantee shall bind the successors, assigns, receivers, trustees
and representatives of the Guarantor and shall inure to the benefit of the
Holders of the Preferred Securities then outstanding. Except in connection
with any merger or consolidation of the Guarantor with or into another entity
or any sale, transfer or lease of all or substantially all of the Guarantor's
assets to another entity as permitted under Article Eight of the Indenture,
the Guarantor may not assign its rights or delegate its obligations under the
Preferred Securities Guarantee without the prior approval
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of the Holders of a Majority in liquidation preference of the Preferred
Securities then outstanding.
SECTION 9.2 Amendments.
Except with respect to any changes that do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Preferred Securities Guarantee may only be amended with the prior approval of
the Holders of at least a Majority in liquidation preference (including the
stated amount that would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions to the date upon which the voting percentages
are determined) of all the outstanding Preferred Securities. The provisions of
Section 12.2 of the Declaration with respect to meetings of Holders of the
Securities apply to the giving of such approval.
SECTION 9.3 Notices.
All notices provided for in this Preferred Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, as follows:
(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address as
the Preferred Guarantee Trustee may give notice of to the Holders of the
Preferred Securities):
The Bank of New York
101 Barclay Street
21 West
Attention: Corporate Trust
Trustee Administration
New York, New York 10286
(b) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders of the Preferred Securities):
CalEnergy Company, Inc.
302 South 36th Street, Suite 400
25
<PAGE>
Omaha, Nebraska 68131
Attention: Chief Financial Officer
with a copy to: General Counsel
(c) If given to any Holder of Preferred Securities, at the address
set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 9.4 Benefit.
This Preferred Securities Guarantee is solely for the benefit of
the Holders of the Preferred Securities and, subject to Section 3.1(a), is not
separately transferable from the Preferred Securities.
SECTION 9.5 Governing Law.
THIS PREFERRED SECURITIES GUARANTEE SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.
26
<PAGE>
THIS PREFERRED SECURITIES GUARANTEE is executed as of the day and
year first above written.
CALENERGY COMPANY, INC.,
as Guarantor
By: /s/ Steven A. McArthur
---------------------------
Name: Steven A. McArthur
Title: Senior Vice
President and
General Counsel
THE BANK OF NEW YORK, as
Preferred Guarantee Trustee
By: /s/ Byron Merino
---------------------------
Name: Byron Merino
Title: Assistant Treasurer
<PAGE>
COMMON SECURITIES GUARANTEE AGREEMENT
CALENERGY COMPANY, INC.
Dated as of April 10, 1996
<PAGE>
COMMON SECURITIES GUARANTEE AGREEMENT
This COMMON SECURITIES GUARANTEE AGREEMENT (the "Common
Securities Guarantee"), dated as of April 10, 1996, is executed and delivered
by CalEnergy Company, Inc., a Delaware corporation (the "Guarantor"), for the
benefit of the Holders (as defined herein) from time to time of the Common
Securities (as defined in the Declaration) of CalEnergy Capital Trust, a
Delaware business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of April 4, 1996, among the Trustees of
the Issuer named therein, the Guarantor, as sponsor, and the holders from time
to time of undivided beneficial interests in the assets of the Issuer, the
Issuer is issuing on the date hereof 61,856 Common Securities, having an
aggregate stated liquidation amount of $3,092,800 (plus up to an additional
7,423 Common Securities, having an aggregate liquidation amount of $371,150,
to meet the capital requirements of the Trust in the event of an issuance of
Additional Preferred Securities (as such term is defined in the Declaration)),
designated the 6 1/4% Convertible Common Securities;
WHEREAS, as incentive for the Holders to purchase the Common
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Common Securities Guarantee, to pay to the
Holders of the Common Securities the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set forth
herein; and
WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement in substantially identical terms to this Common Securities
Guarantee for the benefit of the holders of the Preferred Securities (the
"Preferred Securities Guarantee") except that if an Event of Default (as
defined in the Indenture), has occurred and is continuing, the rights of
holders of the Common Securities to receive Guarantee Payments under this
Common Securities Guarantee are subordinated to the rights of Holders of
Preferred Securities to receive Guarantee Payments under the Preferred
Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by each
Holder of Common Securities, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Common
Securities Guarantee for the benefit of the Holders.
<PAGE>
In this Common Securities Guarantee, unless the context
otherwise requires, the terms set forth below shall have the following
meanings.
Capitalized terms used in this Common Securities Guarantee but not defined
in the preamble above have the respective meanings assigned to them in this
Section 1.1;
Terms defined in the Declaration as at the date of execution of this Common
Securities Guarantee have the same meaning when used in this Common Securities
Guarantee unless otherwise defined in this Common Securities Guarantee.
A term defined anywhere in this Common Securities Guarantee has
the same meaning throughout;
All references to "the Common Securities Guarantee" or "this Common
Securities Guarantee" are to this Common Securities Guarantee as modified,
supplemented or amended from time to time;
All references in this Common Securities Guarantee to Articles and Sections
are to Articles and Sections of this Common Securities Guarantee unless
otherwise specified; and
A reference to the singular includes the plural and vice versa.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Common Securities, to
the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions which are required to be paid on such Common Securities to the
extent the Issuer shall have funds available therefore, (ii) the amount
payable upon redemption to the extent the Issuer has funds available therefor,
with respect to any Common Securities called for redemption by the Issuer, and
(iii) upon a voluntary or involuntary dissolution, winding-up or termination
of the Issuer (other than in connection with the distribution of Debentures to
the Holders in exchange for Common Securities as provided in the Declaration),
the lesser of (a) the aggregate of the liquidation amount and all accrued and
unpaid Distributions on the Common Securities to the date of payment, to the
extent the Issuer has funds available therefor, and (b) the amount of assets
of the Issuer remaining available for distribution to Holders in liquidation
of the Issuer (in either case, the "Liquidation Distribution").
"Holder" shall mean any holder, as registered on the books
and records of the Issuer, of any Common Securities.
<PAGE>
The Guarantor irrevocably and unconditionally agrees to pay
in full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by 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.
If an Event of Default (as defined in the Indenture), has
occurred and is continuing, the rights of Holders of the Common Securities to
receive Guarantee Payments under this Common Securities Guarantee are
subordinated to the rights of Holders of Preferred Securities to receive
Guarantee Payments under the Preferred Securities Guarantee.
The Guarantor hereby waives notice of acceptance of this
Common Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding
first against 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.
The obligations, covenants, agreements and duties of the
Guarantor under this Common Securities Guarantee shall in no way be affected
or impaired by reason of the happening from time to time of any of the
following:
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 Common Securities to be performed or
observed by the Issuer;
the extension of time for the payment by the Issuer of all or any portion of
the Distributions, amount payable upon redemption, Liquidation Distribution or
any other sums payable under the terms of the Common Securities or the
extension of time for the performance of any other obligation under, arising
out of, or in connection with, the Common Securities (other than an extension
of time for payment of Distributions, amount payable upon redemption,
Liquidation Distribution or other sum payable that results from the extension
of any interest payment period on the Debentures or any extension of the
maturity date of the Debentures permitted by the Indenture);
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 Common Securities, or
any action on the part of the Issuer granting indulgence or extension of any
kind;
<PAGE>
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;
any invalidity of, or defect or deficiency in the Common
Securities;
the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 2.3 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 or any other Persons to give
notice to, or obtain consent of, the Guarantor with respect to the happening
of any of the foregoing.
The Guarantor expressly acknowledges that any
Holder of Common Securities may institute a legal proceeding directly against
the Guarantor to enforce its rights under this Common Securities Guarantee,
without first instituting a legal proceeding against the Issuer or any other
Person.
This Common Securities Guarantee creates a
guarantee of payment and not of collection.
The Guarantor shall be subrogated to all (if any)
rights of the Holders of Common Securities against the Issuer in respect of
any amounts paid to such Holders by the Guarantor under this Common Securities
Guarantee; 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 Common Securities Guarantee, if, at the time of any such
payment, any amounts are due and unpaid under this Common Securities
Guarantee. 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.
The Guarantor acknowledges that its obligations
hereunder are independent of the obligations of the Issuer with respect to the
Common Securities and that the Guarantor shall be liable as principal and as
debtor hereunder to make Guarantee Payments pursuant to the terms of this
Common Securities Guarantee notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 2.4 hereof.
<PAGE>
SECTION 2.9. The Guarantor acknowledges its obligation to
issue and deliver common stock upon the conversion of the Common Securities.
So long as any Common Securities remain
outstanding, if (i) the Guarantor shall be in default with respect to its
Guarantee Payments or other obligations hereunder, (ii) there shall have
occurred and be continuing any event that, with the giving of notice or the
lapse of time or both, would constitute an Event of Default under the
Indenture or (iii) the Guarantor shall have given notice of its selection of
an Extended Interest Payment Period as provided in the Indenture and such
period, or any extension thereof, shall be continuing, then (a) the Guarantor
shall not declare or pay any dividend on, or make any distributions with
respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock (other than stock dividends paid by the
Guarantor which consist of the stock of the same class as that on which the
dividend is being paid), (b) the Guarantor shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by the Guarantor after the date hereof which rank pari
passu with or junior to the Debentures and (c) shall not make any guarantee
payments with respect to the foregoing (other than pursuant to the Preferred
Securities Guarantee).
This Common Securities Guarantee will constitute
an unsecured obligation of the Guarantor and will rank (i) subordinate and
junior in right of payment to all other liabilities of the Guarantor, except
any liabilities that may be made pari passu expressly by their terms, (ii)
pari passu with the most senior preferred or preference stock now or hereafter
issued by the Guarantor and with any guarantee now or hereafter entered into
by the Guarantor in respect of any preferred or preference stock or Preferred
Security of any Affiliate of the Guarantor, and (iii) senior to the
Guarantor's common stock.
This Common Securities Guarantee shall terminate
upon (i) full payment of the amount payable upon redemption of the Common
Securities, (ii) the distribution of the Guarantor's common stock to the
Holders in respect of the conversion of the Preferred Securities into the
Guarantor's common stock or the distribution of the Debentures to the Holders
of all of the Common Securities or (iii) full payment of the amounts payable
in accordance with the Declaration upon liquidation of the Issuer.
Notwithstanding the foregoing, this Common Securities Guarantee will continue
to be effective or will be reinstated, as the case
<PAGE>
may be, if at any time any Holder of Common Securities must restore payment of
any sums paid under the Common Securities or under this Common Securities
Guarantee.
All guarantees and agreements contained in this
Common Securities Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Guarantor and shall inure to the benefit
of the Holders of the Common Securities then outstanding. Except in connection
with any merger or consolidation of the Guarantor with or into another entity
or any sale, transfer or lease of all or substantially all of the Guarantor's
assets to another entity as permitted under Article Eight of the Indenture,
the Guarantor may not assign its rights or delegate its obligations under the
Common Securities Guarantee without the prior approval of the Holders of at
least a Majority of the aggregate stated liquidation amount of the Common
Securities then outstanding.
Except with respect to any changes which do not
adversely affect the rights of Holders (in which case no consent of Holders
will be required), this Common Securities Guarantee may only be amended with
the prior approval of the Holders of at least a Majority in liquidation amount
of all the outstanding Common Securities. The provisions of Section 12.2 of
the Declaration with respect to meetings of Holders of the Securities apply to
the giving of such approval.
All notices provided for in this Common Securities
Guarantee shall be in writing, duly signed by the party giving such notice,
and shall be delivered, telecopied or mailed by registered or certified mail,
as follows:
if given to the Issuer, in care of the Regular Trustees at the
Issuer's mailing address set forth below (or such other address as the Issuer
may give notice of to the Holders of the Common Securities):
Steven A. McArthur
John G. Sylvia
Gregory Abel
CalEnergy Capital Trust
c/o CalEnergy Company, Inc.
302 South 36th Street, Suite 400
Omaha, Nebraska 68131
if given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to the
Holders of the Common Securities):
CalEnergy Company, Inc.
<PAGE>
302 South 36th Street, Suite 400
Omaha, Nebraska 68131
Attention: Chief Financial Officer
with a copy to: General Counsel
if given to any Holder of Common Securities, at the address
set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first
class mail, postage prepaid except that if a notice or other document is
refused delivery or cannot be delivered because of a changed address of which
no notice was given, such notice or other document shall be deemed to have
been delivered on the date of such refusal or inability to deliver.
This Common Securities Guarantee is solely for the
benefit of the Holders and is not separately transferable from
the Common Securities.
THIS COMMON SECURITIES GUARANTEE SHALL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
<PAGE>
THIS COMMON SECURITIES GUARANTEE is executed as of the day
and year first above written.
CALENERGY COMPANY, INC., as Guarantor
By: /s/ Steven A. McArthur
-------------------------
Name: Steven A. McArthur
Title: Senior Vice President
CALENERGY CAPITAL TRUST
6 1/4% CONVERTIBLE PREFERRED SECURITIES
TERM INCOME DEFERRABLE EQUITY SECURITIES (TIDES)SM
(LIQUIDATION PREFERENCE $50 PER EACH OF THE TIDES)
GUARANTEED TO A LIMITED EXTENT BY, AND
CONVERTIBLE INTO COMMON STOCK OF,
CALENERGY COMPANY, INC.
REGISTRATION RIGHTS AGREEMENT
April 10, 1996
CS FIRST BOSTON CORPORATION
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
c/o CS First Boston Corporation,
Park Avenue Plaza,
New York, N.Y. 10055
Dear Sirs:
<PAGE>
CalEnergy Capital Trust, a statutory business trust formed under the
laws of the State of Delaware (the "Trust") by CalEnergy Company, Inc., a
Delaware corporation (the "Guarantor"), proposes to issue and sell to CS First
Boston Corporation and Merrill Lynch, Pierce, Fenner & Smith Incorporated (the
"Purchasers"), upon the terms set forth in a purchase agreement dated April 3,
1996 (the "Purchase Agreement"), among the Purchasers, the Guarantor and the
Trust 6 1/4% Convertible Preferred Securities Term Income Deferrable Equity
Securities (TIDES)SM or TIDESSM (liquidation preference $50 per each of the
TIDES) (the "TIDES") (the "Initial Placement"). As an inducement to you to
enter into the Purchase Agreement and in satisfaction of a condition to your
obligations thereunder, the Trust and the Guarantor agree with you, (i) for
the benefit of the Purchasers and (ii) for the benefit of the holders from
time to time of the TIDES, the 6 1/4% Convertible Junior Subordinated
Debentures Due 2016 (the "Debentures") and the Common Stock, par value $0.0675
per share (the "Common Stock"), of the Guarantor (together with the related
Rights) issuable upon conversion of the TIDES or the Debentures (collectively,
together with the Guarantee of the Guarantor of the TIDES, the
"Securities"), including the Purchasers (each of the foregoing a "Holder" and
together the "Holders"), as follows:
1. Definitions. Capitalized terms used herein without definition shall
have their respective meanings set forth in or pursuant to the Purchase
Agreement or the Confidential Offering Circular dated April 4, 1996, in
respect of the TIDES. As used in this Agreement, the following capitalized
defined terms shall have the following meanings:
"Act" or "Securities Act" means the Securities Act of 1933, as amended.
"Affiliate" of any specified person means any other person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such specified person. For purposes of this definition, control
of a person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such person whether by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities and Exchange Act of 1934, as amended.
"Managing Underwriters" means the investment banker or investment
bankers and manager or managers selected or approved by the Trust and the
Guarantor in accordance with the provisions set forth in Section 6 hereof,
that shall administer an underwritten offering, if any.
"Prospectus" means the prospectus included in any Shelf Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act), as amended
or supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Securities.
"Registrable Securities" means, with respect to any Holder, all
Securities held by such Holder; provided, however, that a Security ceases to
be a Registrable Security when (i) it has been effectively registered under
the Act and disposed of in accordance with the Shelf Registration Statement or
(ii) it is, in the written opinion of counsel to the Trust and the Guarantor,
permitted to be freely sold or
2
<PAGE>
distributed to the public pursuant to any exemption from the registration
requirements of the Securities Act, including subsection (k) of Rule 144, but
excluding Rule 144A; and provided that all references to Registrable Securities
herein shall mean, with respect to any Security or Securities, collectively the
associated TIDES, Debentures, shares of Common Stock, Rights and Guarantee of
such TIDES and shall not be deemed to apply separately in respect of such
associated Securities.
"Shelf Registration" means a registration effected pursuant to Section 2
hereof.
"Shelf Registration Period" has the meaning set forth in Section 2(b)
hereof.
"Shelf Registration Statement" means a "shelf" registration statement
covering resales of the Registrable Securities of the Trust and the Guarantor
pursuant to the provisions of Section 2 hereof filed with the Commission which
covers some or all of the Registrable Securities, as applicable, on an
appropriate form under Rule 415 under the Act, or any similar rule that may be
adopted by the Commission, amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"underwriter" means any underwriter of Registrable Securities in
connection with an offering thereof under a Shelf Registration Statement,
selected or approved by the Trust and the Guarantor in accordance with the
provisions set forth in Section 6 hereof.
2. Shelf Registration. (a) The Trust and the Guarantor shall as promptly
as reasonably practicable prepare and file with the Commission and thereafter
shall each use its reasonable best efforts to cause to be declared effective
under the Act as soon as reasonably practicable, but (subject to Section 2(d)
below) in no event later than October 7, 1996, a Shelf Registration Statement
relating to the offer and sale of the Registrable Securities by the Holders
from time to time in accordance with the methods of distribution set forth in
such Shelf Registration Statement, provided, however, that no Holder shall be
entitled to have the Registrable Securities held by it covered by such Shelf
Registration unless such Holder is in compliance with Section 3(m) hereof.
(a) The Trust and the Guarantor shall each use its reasonable best
efforts (i) to keep the Shelf Registration Statement continuously effective in
order to permit the Prospectus forming part thereof to be usable by Holders
for a period of three years from the date the Shelf Registration Statement is
declared effective or such shorter period that will terminate upon the earlier
of the following: (A) when all the TIDES covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration Statement, (B)
when all Debentures issued to Holders in respect of TIDES that had not been
sold pursuant to the Shelf Registration Statement have been sold pursuant to
the Shelf Registration Statement, (C) when all shares of Common Stock
(together with the related Rights) issued upon conversion of any such TIDES or
any such Debentures that had not been sold pursuant to the Shelf Registration
Statement have been sold pursuant to the Shelf Registration Statement and (D)
when, in the written opinion of counsel to the Trust and the Guarantor, all
outstanding Securities have ceased to be Registrable Securities (in any such
case, such period being called the "Shelf Registration Period") and (ii) after
the effectiveness of the Shelf Registration Statement, promptly upon the
request of any Holder to take any action reasonably necessary to register the
sale of any Registrable Securities of such Holder on such Shelf Registration
Statement and to identify such Holder as a selling securityholder.
3
<PAGE>
(b) In the event of a "Registration Default" (as defined in the
Indenture governing the Debentures (the "Indenture") and in the Amended and
Restated Declaration of Trust of the Trust, dated as of April 4, 1996 (the
"Declaration")), then the per annum interest rate on the Debentures and the
TIDES will increase by 50 basis points (.50%), from and including the date on
which any such Registration Default shall occur (or be deemed to occur as
described in the Indenture and the Declaration) to but excluding the date on
which all Registration Defaults have been cured or deemed cured as described
in the Indenture and the Declaration, all subject to the terms and conditions
of the Indenture and the Declaration.
(c) Notwithstanding any other provision hereof, the Trust and the
Guarantor or the Guarantor acting alone may postpone or suspend the filing or
the effectiveness of the Shelf Registration Statement (or any amendments or
supplements thereto), or the sale of Securities pursuant thereto, if (i) such
action is required by applicable law or regulation, or (ii) such action is
taken in good faith and for valid business reasons (not including avoidance of
the Trust's and Guarantor's obligations hereunder), including the acquisition
or divestiture of assets, other pending corporate developments, public filings
with the Commission or other similar events, so long as the Trust and the
Guarantor promptly thereafter comply with the requirements of Section 3(i)
hereof, if applicable. The Trust and the Guarantor shall be deemed not to have
used their reasonable best efforts to keep the Shelf Registration Statement
effective during the requisite period if either the Trust or the Guarantor
intentionally takes any action not referred to in clause (i) or (ii) of this
Section 2(d) that would result in Holders of Registrable Securities covered
thereby not being able to offer and sell any such Registrable Securities during
that period. Notwithstanding the occurrence of any event referred to in such
clauses (i) or (ii) (a "Suspension"), such event shall not, except as set forth
in the Indenture and the Declaration, suspend, postpone or in any other manner
affect the running of the time period by which the Shelf Registration Statement
must be declared effective, or during which it must remain effective, in order
to prevent the occurrence of a Registration Default pursuant to the Indenture or
the Declaration, and, if the filing or effectiveness of the Shelf Registration
Statement is postponed or suspended as a result of a Suspension, a Registration
Default shall nonetheless exist under the Indenture and the Declaration if all
other requirements set forth for the occurrence of a Registration Default shall
be satisfied, and the provisions of the Debentures and the TIDES requiring the
payment of additional interest during the period of such Registration Default,
as set forth in the Indenture and the Declaration, shall be applicable. The
Trust and the Guarantor agree to notify the Holders of the occurrence of a
Suspension as promptly as practicable after such occurrence and to mail notice
thereof to Holders reasonably promptly following the termination of any
suspension.
3. Registration Procedures. In connection with any Shelf Registration
Statement, the following provisions shall apply:
(a) The Trust and the Guarantor shall furnish to the Purchasers, prior
to the filing thereof with the Commission, a copy of any Shelf Registration
Statement, and each amendment thereof and each amendment or supplement, if
any, to the Prospectus included therein (provided that, for this purpose,
amendments or supplements shall not be deemed to include documents
incorporated by reference into such Shelf Registration Statement) and shall
each use its reasonable best efforts to reflect in each such document, when so
filed with the Commission, such comments as the Purchasers reasonably may
propose on a timely basis.
4
<PAGE>
(b) The Trust and the Guarantor shall take such action as may be
necessary so that (i) any Shelf Registration Statement and any amendment
thereto and any Prospectus forming part thereof and any amendment or
supplement thereto (and each report or other document incorporated therein by
reference in each case) complies in all material respects with the Securities
Act and the Exchange Act and the respective rules and regulations thereunder,
(ii) any Shelf Registration Statement and any amendment thereto does not, when
it becomes effective, 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 and (iii) any Prospectus forming part of
any Shelf Registration Statement, and any amendment or supplement to such
Prospectus, does not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements, in the light
of the circumstances under which they were made, not misleading (except, in
each case, for any untrue statements of a material fact or omissions of a
material fact made in reliance on and in conformity with information furnished
to the Guarantor or the Trust by or on behalf of Holders or underwriters).
(c) (1) The Trust and the Guarantor shall advise the Purchasers and, in
the case of clause (i), the Holders and, if requested by the Purchasers or any
such Holder, confirm such advice in writing:
(i) when a Shelf Registration Statement and any amendment
thereto has been filed with the Commission and when the Shelf
Registration Statement or any post-effective amendment thereto
(exclusive of documents incorporated by reference) has become
effective; and
(ii) of any request by the Commission for amendments or
supplements to the Shelf Registration Statement or the Prospectus
included therein or for additional information.
(2) The Trust and the Guarantor shall advise the Purchasers and the
Holders and, if requested by the Purchasers or any such Holder, confirm
such advice in writing:
(i) of the issuance by the Commission of any stop order
suspending the effectiveness of the Shelf Registration Statement or
the initiation of any proceedings for that purpose;
(ii) of the receipt by the Trust or the Guarantor of any
notification with respect to the suspension of the qualification of
the securities included therein for sale in any jurisdiction or the
initiation of any proceeding for such purpose;
(iii) of the happening of any event that requires the making of
any changes in the Shelf Registration Statement or the Prospectus
(exclusive of documents incorporated by reference) so that, as of
such date, the Shelf Registration Statement and the Prospectus do
not contain an untrue statement of a material fact and no not omit
to state a material fact required to be stated therein or necessary
to make the statements therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not
misleading (which advice may be accompanied by an instruction that
such notice constitutes material non-public information and to
suspend the use of the Prospectus until the requisite changes have
been made), and which instruction shall require that such Holders
shall not communicate such material non-public information to any
third
5
<PAGE>
party and shall not sell or purchase, or offer to sell or
purchase any securities of the Trust or the Guarantor after receipt
of such advice and prior to the effectiveness of any action
required to be taken by the Trust or the Guarantor pursuant to
Section 3(i) hereof; and
(iv) if the Guarantor determines that the filing of a
post-effective amendment to the Registration Statement would be
appropriate.
(d) The Trust and the Guarantor shall use their reasonable best efforts
to prevent the issuance, and if issued to obtain the withdrawal, of any order
suspending the effectiveness of any Shelf Registration Statement at the
earliest possible time.
(e) The Trust and the Guarantor shall furnish to each Holder of
Securities included within the coverage of any Shelf Registration Statement,
without charge, at least one copy of such Shelf Registration Statement and any
post-effective amendment thereto (including any reports or other documents
incorporated therein by reference), including financial statements and
schedules, and, if the Holder so requests in writing, all exhibits (including
those incorporated by reference).
(f) The Trust and the Guarantor shall, during the Shelf Registration
Period, deliver to each Holder of Securities included within the coverage of
any Shelf Registration Statement, without charge, as many copies of the
Prospectus (including each preliminary Prospectus) included in such Shelf
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request; and each of the Trust and the Guarantor consents to the
use of the Prospectus or any amendment or supplement thereto by each of the
selling Holders of Securities and the underwriters, if any, in connection with
the offering and sale of the Securities covered by the Prospectus or any
amendment or supplement thereto during the Shelf Registration Period, provided
that such use complies with this Agreement and with all applicable laws and
regulations.
(g) Prior to any offering of Securities pursuant to any Shelf
Registration Statement, the Trust and the Guarantor shall register or qualify
such Securities or cooperate with the Holders of Securities included therein
and their respective counsel in connection with the registration or
qualification of such Securities for offer and sale under the securities or
blue sky laws of such jurisdictions in the United States as any such Holders
reasonably request in writing and do any and all other acts or things
necessary or advisable to enable the offer and sale in such jurisdictions of
the Securities covered by such Shelf Registration Statement; provided,
however, that neither the Trust nor the Guarantor will be required to qualify
generally to do business in any jurisdiction where it is not then so qualified
or to take any action which would subject it to general service of process or
to taxation in any such jurisdiction where it is not then so subject.
(h) Unless any Securities shall be in book-entry only form, the Trust
and the Guarantor shall cooperate with the Holders of Securities to facilitate
the timely preparation and delivery of certificates representing Securities to
be sold pursuant to any Shelf Registration Statement free of any restrictive
legends and in such permitted denominations and registered in such names as
Holders may request in connection with the sale of Securities pursuant to such
Shelf Registration Statement.
(i) Upon the occurrence of any event contemplated by Section
3(c)(2)(iii), subject to Section 2(d), the Trust and the Guarantor shall
reasonably promptly prepare a post-effective amendment to any
6
<PAGE>
Shelf Registration Statement or an amendment or supplement to the related
Prospectus or file any other required document so that, as thereafter delivered
to purchasers of the Registrable Securities included therein, the Prospectus
will not 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 (except, in each
case, for an untrue statement of a material fact or omission of a material
fact made in reliance on and in conformity with written information furnished
to the Guarantor or the Trust by or on behalf of Holders or underwriters
specifically for use therein). The Trust and the Guarantor agree to notify the
Holders to suspend use of the Prospectus as promptly as practicable after the
occurrence of such an event, and the Holders shall suspend use of the
Prospectus, and not communicate such material non-public information to any
third party, and not sell or purchase, or offer to sell or purchase, any
securities of the Trust or the Guarantor, until the Trust or the Guarantor
have amended or supplemented the Prospectus so it does not contain any such
misstatement or omission. At such time as such public disclosure is otherwise
made or the Trust and the Guarantor determine in good faith that such
disclosure is not necessary, the Trust and the Guarantor agree promptly to
notify the Holders of such determination and to amend or supplement the
Prospectus if necessary, so it does not contain any such untrue statement or
omission therein and to furnish the Holders such numbers of copies of the
Prospectus as so amended or supplemented as the Holders may reasonably
request.
(j) Not later than the effective date of any Shelf Registration
Statement hereunder, the Trust and the Guarantor shall provide a CUSIP number
for the TIDES and the Debentures in the event of and at the time of any
distribution thereof to Holders, registered under such Shelf Registration
Statement, and provide the applicable trustee with certificates for such
Securities, in a form eligible for deposit with The Depository Trust Company.
(k) The Trust and the Guarantor shall use their best efforts to comply
with all applicable rules and regulations of the Commission and shall make
generally available to their security holders or otherwise provide in
accordance with Section 11(a) of the Securities Act as soon as practicable
after the effective date of the applicable Shelf Registration Statement an
earnings statement satisfying the provisions of Section 11(a) of the
Securities Act.
(l) The Trust and the Guarantor shall use their reasonable best efforts
to cause the Indenture, the Declaration and the Guarantee to be qualified
under the Trust Indenture Act in a timely manner.
(m) The Trust and the Guarantor may require each Holder of Securities to
be sold pursuant to any Shelf Registration Statement to furnish to the Trust
and the Guarantor such information regarding the Holder and the distribution
of such Securities as the Trust and the Guarantor may from time to time
reasonably require for inclusion in such Shelf Registration Statement and the
Guarantor and the Trust may exclude from such registration the Securities of
any Holder that fails to furnish such information within a reasonable time
after receiving such request.
(n) The Trust and the Guarantor shall, if requested, promptly
incorporate in a Prospectus supplement or post-effective amendment to a Shelf
Registration Statement, such information as the Managing Underwriters
reasonably agree should be included therein and to which the Trust and the
Guarantor do not reasonably object and shall make all required filings of such
Prospectus supplement or post-effective amendment as soon as practicable after
they are notified of the matters to be incorporated in such Prospectus
supplement or post-effective amendment.
7
<PAGE>
(o) Subject to Section 6 and Section 2(d), the Trust and the Guarantor
shall enter into such customary agreements (including underwriting agreements
in customary form) which are reasonably acceptable to the Trust and the
Guarantor and shall take all other reasonably requested actions in order to
expedite or facilitate the registration or the disposition of the Registrable
Securities, and in connection therewith, if an underwriting agreement is
entered into, cause the same to contain indemnification provisions and
procedures substantially identical to those set forth in Section 5 (or such
other provisions and procedures acceptable to the Managing Underwriters, if
any, and reasonably acceptable to the Guarantor and the Trust) with respect to
all parties to be indemnified pursuant to Section 5.
(p) Subject to Section 6 and Section 2(d), the Trust and the Guarantor
shall (i) make reasonably available for inspection by the Holders of
Securities to be registered thereunder, any underwriter participating in any
disposition pursuant to such Shelf Registration Statement, and any attorney,
accountant or other agent retained by such Holders or any such underwriter all
reasonably requested customary and relevant financial and other records,
pertinent corporate documents and properties of the Trust and the Guarantor
and its subsidiaries; (ii) cause the Guarantor's officers, directors and
employees and the Issuer Trustees to supply all such information reasonably
requested by such Holders or any such underwriter, attorney, accountant or
agent in connection with any such Shelf Registration Statement as is customary
for similar due diligence examinations, in each case pursuant to
confidentiality arrangements reasonably requested by the Guarantor and the
Trust; provided, however, that the foregoing inspection and information
gathering shall, to the greatest extent possible, be coordinated on behalf of
the Holders and the other parties entitled thereto by one counsel designated
by and on behalf of such Holders and reasonably acceptable to the Guarantor
and the Trust; (iii) make such representations and warranties to the Holders
of Securities registered thereunder and the underwriters, if any, in form,
substance and scope as are customarily made by the Guarantor to Holders or to
underwriters in underwritten offerings; (iv) obtain opinions of counsel to the
Trust and the Guarantor (who may be the General Counsel of the Guarantor) and
updates thereof addressed to each selling Holder and the underwriters, if any,
covering such matters as are customarily covered in opinions requested by
Holders or underwriters in underwritten offerings (it being agreed that the
matters to be covered by such opinion shall include, without limitation, as of
the date of the opinion and as of the effective date of the Shelf Registration
Statement or most recent post-effective amendment thereto, as the case may be,
the absence from such Shelf Registration Statement and the prospectus included
therein, as then amended or supplemented, including the documents incorporated
by reference therein, of an untrue statement of a material fact or the omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading; (v) obtain "cold comfort" letters
and updates thereof from the independent certified public accountants of the
Guarantor (and, if necessary, any other independent certified public
accountants of any subsidiary of the Guarantor or of any business acquired by
the Guarantor for which financial statements and financial data are, or are
required to be, included in the Shelf Registration Statement), addressed to
each such Holder of Securities registered thereunder and the underwriters, if
any, in customary form and covering matters of the type customarily covered in
"cold comfort" letters delivered to Holders or underwriters in connection with
underwritten offerings; and (vi) deliver such customary documents and
certificates as may be reasonably requested by any such Holders and the
Managing Underwriters, if any, including those to evidence compliance with
Section 3(i) and with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Trust and the Guarantor. The
foregoing actions set forth in clauses (iii), (iv), (v) and (vi) of this
8
<PAGE>
Section 3(p) shall be performed at each closing under any underwritten
offering to the extent required thereunder.
(q) The Trust and the Guarantor will use its reasonable best efforts to
cause the Common Stock relating to such Shelf Registration Statement to be
listed on each securities exchange, if any, on which any shares of Common
Stock are then listed.
(r) In the event that any broker-dealer registered under the Exchange
Act and selected or approved in accordance with the provisions set forth in
Section 6 hereof shall, underwrite any Securities or participate as a member
of an underwriting syndicate or selling group or "assist in the distribution"
(within the meaning of the Rules of Fair Practice and the By-Laws of the
National Association of Securities Dealers, Inc. ("NASD")) thereof, whether as
a Holder of such Securities or as an underwriter, a placement or sales agent
or a broker or dealer in respect thereof, or otherwise,the Guarantor and the
Trust shall take reasonable steps to (subject to Section 2(d) and 3(p)) assist
such broker-dealer in complying with the requirements of such Rules and
By-Laws, including, without limitation, by (A) if such Rules or By-Laws,
including Schedule E thereto, shall so require, engaging (at the expense of
the Holders) a "qualified independent underwriter" (as defined in such
Schedule) selected or approved by the Trust and the Guarantor to participate
in the preparation of the Shelf Registration Statement relating to such
Securities and to exercise usual standards of due diligence in respect
thereto, (B) indemnifying any such qualified independent underwriter to the
extent of the indemnification of underwriters provided in Section 5 hereof and
(C) providing such information to such broker-dealer as may be required in
order for such broker-dealer to comply with the requirements of the Rules of
Fair Practice of the NASD.
(s) The Trust and the Guarantor shall use their reasonable best efforts
to comply with all applicable rules and regulation of the Commission.
4. Registration Expenses. Except as otherwise provided in Section 6, the
Guarantor shall bear all fees and expenses incurred in connection with the
performance of its obligations under Sections 2 and 3 hereof and shall bear or
reimburse the Holders for the reasonable fees and disbursements of one firm of
counsel designated by the Guarantor and reasonably acceptable to the
Purchasers to act as counsel for the Holders in connection therewith; provided,
however that the Trust and the Guarantor shall not be responsible for any fees
and expenses of any underwriter (including any discounts, commissions or legal
fees and expenses) other than the reasonable fees and expenses of counsel in
connection with state blue sky qualifications of the Registrable Securities.
5. Indemnification and Contribution. (a) In connection with any Shelf
Registration Statement, the Trust and the Guarantor, jointly and severally,
agree to indemnify and hold harmless each Purchaser and each Holder of
Securities covered thereby (including the Purchasers), each director, officer,
employee and agent of the Purchasers and each person who controls any
Purchaser or any such Holder within the meaning of either the Securities Act
or the Exchange Act against any losses, claims, damages or liabilities, joint
or several, to which such Purchaser or Holder may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the Shelf Registration Statement as originally filed or in
any amendment thereof, or in any preliminary Prospectus or Prospectus or any
Exchange Act filing incorporated therein, or in any amendment thereof or
supplement thereto, or arise
9
<PAGE>
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading and agrees to reimburse each such indemnified party for any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that (i) the Guarantor
and the Trust will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in, or omission or alleged omission from,
any of such documents in reliance upon and in conformity with written
information furnished to the Guarantor by any Purchaser through CSFBC or any
such Holder specifically for use therein and (ii) the foregoing indemnity with
respect to any untrue statement or alleged untrue statement contained in, or
omission or alleged omission from, any preliminary prospectus relating to a
Shelf Registration Statement shall not inure to the benefit of any Holder (or
any person controlling such Holder) from whom the person asserting any such
loss, claim, damage or liability purchases any of the Securities that are the
subject thereof if such person did not receive a copy of the final prospectus
(or the final prospectus as supplemented) at or prior to the written
confirmation of the sale of such Securities to such person and the untrue
statement or alleged untrue statement or omission or alleged omission
contained in the preliminary prospectus was corrected in the final prospectus
(or the final prospectus as supplemented) and the corrected prospectus was
made available to such Holder prior to the time of such sale. This indemnity
agreement will be in addition to any liability which the Guarantor or the
Trust may otherwise have.
The Trust and the Guarantor, jointly and severally, also agree to
indemnify or contribute to Losses (as defined below) of, as provided in
Section 5(d), any underwriters of Securities registered under the Shelf
Registration Statement, their officers, directors, employees and agents and
each person who controls such underwriters on substantially the same basis as
that of the indemnification of the Purchasers and the selling Holders provided
in this Section 5(a) and shall, if requested by any Holder, enter into an
underwriting agreement reflecting such agreement, as provided in Section 3(o)
and Section 6 hereof.
(a) As a condition to the inclusion of a Holder's Registrable Securities
in a Shelf Registration Statement, such Holder shall agree to indemnify and
hold harmless (i) the Trust and the Guarantor, (ii) each of the directors of
the Guarantor, (iii) each of its officers who signs such Shelf Registration
Statement and (iv) each person who controls the Trust or the Guarantor within
the meaning of either the Securities Act or the Exchange Act to the same extent
as the foregoing indemnity from the Trust and the Guarantor, but only with
reference to written information relating to such Holder furnished to the
Guarantor by or on behalf of such Holder specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which any such Holder may otherwise have.
(b) Promptly after receipt by an indemnified party under Section 5(a) or
(b) of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under this Section 5, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability it may have to any indemnified party otherwise than
under Section 5(a) or (b), except to the extent that it has been materially
prejudiced by such failure; and provided that such omission will not relieve
it from any liabilities which it may otherwise have to an indemnified party.
In case any such action is brought against any indemnified party and it
notifies the indemnifying party of the
10
<PAGE>
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified party
under this Section 5 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that the indemnified party
shall have the right to appoint counsel to represent the indemnified party and
their respective controlling persons who may be subject to liability arising out
of any claim in respect of which indemnity may be sought by the indemnified
party against the indemnifying party under this Section 5 if the employment of
such counsel shall have been authorized in writing by the indemnifying party in
connection with the defense of such action, or if, in the written opinion of
counsel to either the indemnifying party or the indemnified party,
representation of both parties by the same counsel would be inappropriate due to
actual or likely conflicts of interest between them, and in that event the fees
and expenses of one firm of separate counsel (in addition to the fees and
expenses of local counsel) shall be paid by the indemnifying party. No
indemnifying party shall, without the prior written consent of the indemnified
party, which consent shall not be unreasonably withheld, effect any settlement
of any pending or threatened action in respect of which any indemnified party is
or could have been a party and indemnity could have been sought hereunder by
such indemnified party unless such settlement includes an unconditional release
of such indemnified party from all liability on any claims that are the subject
matter of such action. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, which
consent shall not be unreasonably withheld.
(c) In the event that the indemnity provided in Section 5(a) or (b) is
unavailable to or insufficient to hold harmless an indemnified party for any
reason, then each indemnifying party shall contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses reasonably
incurred in connection with investigating or defending same) (collectively
"Losses") to which such indemnified party may be subject in such proportion as
is appropriate to reflect the relative benefits received by such indemnifying
party, on the one hand, and such indemnified party, on the other hand, from
the Initial Placement and the Shelf Registration Statement which resulted in
such Losses; provided, however, that in no case shall the Purchasers or any
subsequent Holder of any Security be responsible, in the aggregate, for any
amount in excess of the amount by which the net proceeds received by such
Holders from the sale of the Securities pursuant to the Shelf Registration
Statement exceeds the amount of damages which such Holders have otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the indemnifying party and the
indemnified party shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of such
indemnifying party, on the one hand, and such indemnified party, on the other
hand, in connection with the statements or omissions which resulted in such
Losses as well as any other relevant equitable considerations. Relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the indemnifying
party, on the one hand, or by the indemnified party, on the other hand and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The parties agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of
the equitable considerations referred to above. Notwithstanding the provisions
of this Section 5(d), no
11
<PAGE>
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section 5, each person who controls a Holder within the meaning of either the
Securities Act or the Exchange Act shall have the same rights to contribution as
such Holder, and each person who controls the Guarantor or the Trust within the
meaning of either the Securities Act or the Exchange Act, each officer of the
Guarantor who shall have signed the Shelf Registration Statement and each
director of the Guarantor shall have the same rights to contribution as the
Guarantor, subject in each case to the applicable terms and conditions of this
Section 5(d).
(d) The provisions of this Section 5 will remain in full force and
effect, regardless of any investigation made by or on behalf of any Holder or
the Guarantor or the Trust or any of the officers, directors, employees,
agents or controlling persons referred to in Section 5 hereof, and will
survive the sale by a Holder of Securities covered by the Shelf Registration
Statement.
6. Underwritten Offering. The Holders of Registrable Securities covered
by the Shelf Registration Statement who desire to do so may sell such
Registrable Securities in an underwritten offering in accordance with the
conditions set forth below and subject to Section 2(d) and 3(p). In any such
underwritten offering, (a) the investment banker or bankers and manager or
managers that will administer the offering will be selected or approved by the
Guarantor and the Trust, and (b) the underwriting arrangements with respect
thereto will be approved by the Holders of a majority of the Registrable
Securities to be included in such offering; provided, however, that such
underwriting arrangements must be reasonably acceptable to the Guarantor and
the Trust. No Holder may participate in any underwritten offering contemplated
hereby unless (a) such Holder agrees to sell such Holder's Registrable
Securities in accordance with such approved underwriting arrangements, (b)
such Holder completes and executes all reasonable questionnaires, powers of
attorney, indemnities, underwriting agreements, lock-up letters and other
documents required under the terms of such approved underwriting arrangements
and (c) at least 25% of the outstanding Registrable Securities held by all
Holders are included in such underwritten offering. The Holders participating
in any underwritten offering shall be responsible for any expenses customarily
borne by selling securityholders, including underwriting discounts and
commissions and fees and expenses of counsel to the selling securityholders
and shall reimburse the Trust and the Guarantor for the fees and disbursements
of their counsel, their independent public accountants and any printing
expenses incurred in connection with such underwritten offering.
7. Miscellaneous.
(a) No Inconsistent Agreements. The Trust and the Guarantor have
not, as of the date hereof, entered into, and shall not, on or after the
date hereof, enter into, any agreement with respect to their securities or
otherwise that conflicts with the rights granted to the Holders herein or the
provisions hereof.
(b) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, qualified, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Trust and the Guarantor have obtained the written
consent of the Purchasers.
12
<PAGE>
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telex, telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by such
Holder to the Guarantor in accordance with the provisions of this
Section 7(c), which address initially is, with respect to each Holder,
the address of such Holder set forth in the books and records of the
Trust or the registrar and transfer agent for the Securities;
(2) if to the Purchasers, initially at the address set forth in the
Purchase Agreement; and
(3) if to the Trust or the Guarantor, initially at its address set
forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given when received.
The Purchaser or the Trust and the Guarantor by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
(d) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties and the
Holders, including, without the need for an express assignment or any consent
by the Trust or the Guarantor thereto, subsequent Holders of Securities. The
Trust and the Guarantor hereby agree to extend the benefits of this Agreement
to any Holder of Securities and any such Holder may specifically enforce the
provisions of this Agreement as if an original party hereto.
(e) Counterparts. This agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
(h) Severability. In the event that any one of more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and
of the remaining provisions hereof shall not be in any way impaired or
affected thereby, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by law.
13
<PAGE>
If the foregoing is in accordance with the Purchasers' understanding of
our agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement between the Trust and the
Guarantor and the several Purchasers in accordance with its terms.
Very truly yours,
CALENERGY CAPITAL TRUST
By Gregory Abel, solely in his capacity
as trustee and not in his individual
capacity,
/s/ Gregory Abel
---------------------------------------
Gregory Abel
By Steven A. McArthur, solely in his
capacity as trustee and not in his indi-
vidual capacity,
/s/ Steven A. McArthur
---------------------------------------
Steven A. McArthur
The foregoing Registration
Rights Agreement is hereby
confirmed and accepted as of CALENERGY COMPANY, INC.
the date first above written.
CS FIRST BOSTON CORPORATION By /s/ Steven A. McArthur
-----------------------------------
Name: Steven A. McArthur
Title: Senior Vice President
By /s/ Jonathon D. Brown
-----------------------------
Name: Jonathon D. Brown
Title: Director
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By /s/ Richard A. Vaccari
-----------------------------
Name: Richard A. Vaccari
Title: Managing Director
Exhibit 12.1
CALENERGY COMPANY, INC.
Ratio of Earnings to Fixed Charges
(Dollars in Thousands, Except Ratio)
<TABLE>
<CAPTION>
Three Months
ended March 31, Year ended December 31,
------------------ ---------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Pre-tax income from
continuing operations ................ $ 20,958 $ 18,158 $ 97,051 $ 55,836 $ 61,258 $ 50,732 $ 34,866
Loss on equity investment in
unconsolidated subsidiary ............ 962 -- 362 -- -- -- --
Capitalized interest, net
of amortization ...................... (11,550) (4,281) (31,160) (9,196) (6,174) (5,202) (4,979)
--------- --------- --------- --------- --------- --------- ---------
10,370 13,877 66,253 46,640 55,084 45,530 29,887
--------- --------- --------- --------- --------- --------- ---------
Fixed Charges:
Interest expense and
amortization of deferred
finance charges on all
indebtedness ....................... 34,779 29,562 134,637 62,837 30,205 20,459 29,814
Interest portion of lease
rentals ............................ 15 15 60 109 247 253 217
--------- --------- --------- --------- --------- --------- ---------
Total fixed charges ................ 34,794 29,577 134,697 62,946 30,452 20,712 30,031
--------- --------- --------- --------- --------- --------- ---------
Earnings before income taxes,
and fixed charges .................... $ 45,164 $ 43,454 $ 200,950 $ 109,586 $ 85,536 $ 66,242 $ 59,918
========= ========= ========= ========= ========= ========= =========
Ratio of earnings to fixed
charges .............................. 1.298 1.469 1.492 1.741 2.809 3.198 1.995
========= ========= ========= ========= ========= ========= =========
</TABLE>
EXHIBIT 15.1
CalEnergy Company, Inc.
Omaha, Nebraska
We have made a review, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited interim
financial information of CalEnergy Company, Inc. for the three months ended
March 31, 1996 and 1995 as indicated in our report dated April 18, 1996;
because we did not perform an audit, we expressed no opinion on that
information.
We are aware that our report referred to above is being incorporated by
reference in the Prospectus which is part of this Registration Statement on
Form S-3.
We also are aware that the aforementioned report, pursuant to Rule 436(c)
under the Securities Act, is not considered a part of a Registration Statement
prepared or certified by an accountant or a report prepared or certified by an
accountant within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
Omaha, Nebraska
July 12, 1996
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
CalEnergy Company, Inc. on Form S-3 of our reports dated January 26, 1996,
appearing in the Annual Report on Form 10-K of CalEnergy Company, Inc. for the
year ended December 31, 1995 and to the reference to us under the heading
"Experts" in the Prospectus, which is a part of this Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Omaha, Nebraska
July 12, 1996
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement of
CalEnergy Company, Inc. on Form S-3 of our reports dated June 7, 1996 on the
financial statements of BN Geothermal, Inc., Conejo Energy Company, San Felipe
Energy Company and Niguel Energy Company incorporated by reference in the
Registration Statement and to all references to our Firm included in this
Registration Statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Orange County, California
July 12, 1996
EXHIBIT 24.1
POWER OF ATTORNEY
FORM S-3
The undersigned, a member of the Board of Directors of
CalEnergy Company, Inc., a Delaware corporation (the "Company"), hereby
constitutes and appoints Steven A. McArthur, John G. Sylvia and Gregory E.
Abel and each of them, as his/her true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for and in his/her stead,
in any and all capacities, to sign on his/her behalf any and all Registration
Statements filed by the Company on Form S-3 relating to the offering of
2,000,000 6-1/4% Term Income Deferrable Equity Securities (TIDESSM) as they
may be amended from time to time and to execute any amendments thereto
(including post-effective amendments) or certificates that may be required in
connection with such Registration Statement, and to file the same, with all
exhibits thereto, and all other documents in connection with such Registration
Statement, and to file the same, with all exhibits thereto, and all other
documents in connection therewith, with the Securities and Exchange
Commission, with the full power and authority to do and perform each and every
act and thing necessary or advisable to all intents and purposes as he/she
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his/her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
<PAGE>
POWER OF ATTORNEY
FORM S-3
Date: July 12, 1996
----------------
/s/ DAVID L. SOKOL /s/ RICHARD R. JAROS
- ------------------------------ -------------------------------
DAVID L. SOKOL RICHARD R. JAROS
/s/ EDGAR D. ARONSON /s/ BERNARD W. REZNICEK
- ------------------------------ --------------------------------
EDGAR D. ARONSON BERNARD W. REZNICEK
/s/ JUDITH E. AYRES /s/ WALTER SCOTT, JR.
- ------------------------------ --------------------------------
JUDITH E. AYRES WALTER SCOTT, JR.
/s/ JAMES Q. CROWE /s/ JOHN R. SHINER
- ------------------------------ --------------------------------
JAMES Q. CROWE JOHN R. SHINER
/s/ RICHARD K. DAVIDSON /s/ DAVID E. WIT
- ------------------------------ --------------------------------
RICHARD K. DAVIDSON DAVID E. WIT
/s/ BEN HOLT
- ------------------------------
BEN HOLT
-2-
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED
PURSUANT TO RULE 901(d) OF REGULATION S-T
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
CalEnergy Company, Inc.
(Exact name of obligor as specified in its charter)
Delaware 94-2213782
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
302 South 36th Street, Suite 400
Omaha, NE 68131
(Address of principal executive offices) (Zip code)
----------------------
Convertible Junior Subordinated Debentures
(Title of the indenture securities)
================================================================================
<PAGE>
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.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None. (See Note on page 3.)
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the
Commission, are incorporated herein by reference as an exhibit
hereto, pursuant to Rule 7a-29 under the Trust Indenture Act of 1939
(the "Act") and Rule 24 of the Commission's Rules of Practice.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1
filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the
answer to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, 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 28th day of June, 1996.
THE BANK OF NEW YORK
By: /s/ LLOYD A.MCKENZIE
Name: LLOYD A.MCKENZIE
Title: ASSISTANT VICE PRESIDENT
-4-
<PAGE>
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1995, published 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 Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ...................................... $ 4,500,312
Interest-bearing balances .............................. 643,938
Securities:
Held-to-maturity securities ............................ 806,221
Available-for-sale securities .......................... 2,036,768
Federal funds sold and securities
purchased under agreements to resell
in domestic offices of the bank:
Federal funds sold ..................................... 4,166,720
Securities purchased under agreements
to resell .............................................. 50,413
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ............................................... 27,068,535
LESS: Allowance for loan and
lease losses ......................................... 520,024
LESS: Allocated transfer risk
reserve .............................................. 1,000
Loans and leases, net of unearned
income and allowance, and reserve .................... 26,547,511
Assets held in trading accounts .......................... 758,462
Premises and fixed assets (including
capitalized leases) .................................... 615,330
Other real estate owned .................................. 63,769
Investments in unconsolidated
subsidiaries and associated
companies .............................................. 223,174
Customers' liability to this bank on
acceptances outstanding ................................ 900,795
Intangible assets ........................................ 212,220
Other assets ............................................. 1,186,274
------------
Total assets ............................................. $ 42,711,907
============
LIABILITIES
Deposits:
In domestic offices .................................... $ 21,248,127
Noninterest-bearing .................................... 9,172,079
Interest-bearing ....................................... 12,076,048
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ....................... 9,535,088
Noninterest-bearing .................................... 64,417
Interest-bearing ....................................... 9,470,671
Federal funds purchased and secu-
rities sold under agreements to re-
purchase in domestic offices of
the bank and of its Edge and
Agreement subsidiaries, and in
IBFs:
Federal funds purchased ................................ 2,095,668
Securities sold under agreements
to repurchase ........................................ 69,212
Demand notes issued to the U.S. ..........................
Treasury ............................................... 107,340
Trading liabilities ...................................... 615,718
Other borrowed money:
With original maturity of one year
or less .............................................. 1,638,744
With original maturity of more than
one year ............................................. 120,863
Bank's liability on acceptances exe-
cuted and outstanding .................................. 909,527
Subordinated notes and debentures ........................ 1,047,860
Other liabilities ........................................ 1,836,573
------------
Total liabilities ........................................ 39,224,720
------------
EQUITY CAPITAL
Common stock ............................................. 942,284
Surplus .................................................. 525,666
Undivided profits and capital
reserves ............................................... 1,995,316
Net unrealized holding gains
(losses) on available-for-sale
securities ............................................. 29,668
Cumulative foreign currency transla-
tion adjustments ....................................... (5,747)
------------
Total equity capital ..................................... 3,487,187
------------
Total liabilities and equity
capital ................................................ $ 42,711,907
============
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
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 Board of Governors of the Federal Reserve System
and is true and correct.
-
J. Carter Bacot |
Thomas A. Renyi | Directors
Alan R. Griffith |
-
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED
PURSUANT TO RULE 901(d) OF REGULATION S-T
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
CalEnergy Capital Trust
(Exact name of obligor as specified in its charter)
Delaware Applied for
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
302 South 36th Street, Suite 400
Omaha, NE 68131
(Address of principal executive offices) (Zip code)
----------------------
TIDES
(Title of the indenture securities)
================================================================================
<PAGE>
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.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None. (See Note on page 3.)
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the
Commission, are incorporated herein by reference as an exhibit
hereto, pursuant to Rule 7a-29 under the Trust Indenture Act of 1939
(the "Act") and Rule 24 of the Commission's Rules of Practice.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1
filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the
answer to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, 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 28th day of June, 1996.
THE BANK OF NEW YORK
By: /s/ PAUL J. SCHMALZEL
Name: PAUL J. SCHMALZEL
Title: ASSISTANT TREASURER
-4-
<PAGE>
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1995, published 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 Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ...................................... $ 4,500,312
Interest-bearing balances .............................. 643,938
Securities:
Held-to-maturity securities ............................ 806,221
Available-for-sale securities .......................... 2,036,768
Federal funds sold and securities
purchased under agreements to resell
in domestic offices of the bank:
Federal funds sold ..................................... 4,166,720
Securities purchased under agreements
to resell .............................................. 50,413
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ............................................... 27,068,535
LESS: Allowance for loan and
lease losses ......................................... 520,024
LESS: Allocated transfer risk
reserve .............................................. 1,000
Loans and leases, net of unearned
income and allowance, and reserve .................... 26,547,511
Assets held in trading accounts .......................... 758,462
Premises and fixed assets (including
capitalized leases) .................................... 615,330
Other real estate owned .................................. 63,769
Investments in unconsolidated
subsidiaries and associated
companies .............................................. 223,174
Customers' liability to this bank on
acceptances outstanding ................................ 900,795
Intangible assets ........................................ 212,220
Other assets ............................................. 1,186,274
------------
Total assets ............................................. $ 42,711,907
============
LIABILITIES
Deposits:
In domestic offices .................................... $ 21,248,127
Noninterest-bearing .................................... 9,172,079
Interest-bearing ....................................... 12,076,048
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ....................... 9,535,088
Noninterest-bearing .................................... 64,417
Interest-bearing ....................................... 9,470,671
Federal funds purchased and secu-
rities sold under agreements to re-
purchase in domestic offices of
the bank and of its Edge and
Agreement subsidiaries, and in
IBFs:
Federal funds purchased ................................ 2,095,668
Securities sold under agreements
to repurchase ........................................ 69,212
Demand notes issued to the U.S. ..........................
Treasury ............................................... 107,340
Trading liabilities ...................................... 615,718
Other borrowed money:
With original maturity of one year
or less .............................................. 1,638,744
With original maturity of more than
one year ............................................. 120,863
Bank's liability on acceptances exe-
cuted and outstanding .................................. 909,527
Subordinated notes and debentures ........................ 1,047,860
Other liabilities ........................................ 1,836,573
------------
Total liabilities ........................................ 39,224,720
------------
EQUITY CAPITAL
Common stock ............................................. 942,284
Surplus .................................................. 525,666
Undivided profits and capital
reserves ............................................... 1,995,316
Net unrealized holding gains
(losses) on available-for-sale
securities ............................................. 29,668
Cumulative foreign currency transla-
tion adjustments ....................................... (5,747)
------------
Total equity capital ..................................... 3,487,187
------------
Total liabilities and equity
capital ................................................ $ 42,711,907
============
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
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 Board of Governors of the Federal Reserve System
and is true and correct.
-
J. Carter Bacot |
Thomas A. Renyi | Directors
Alan R. Griffith |
-
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED
PURSUANT TO RULE 901(d) OF REGULATION S-T
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
CalEnergy Capital Trust
(Exact name of obligor as specified in its charter)
Delaware Applied for
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
302 South 36th Street, Suite 400
Omaha, NE 68131
(Address of principal executive offices) (Zip code)
----------------------
Preferred Securities Guarantee
(Title of the indenture securities)
================================================================================
<PAGE>
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.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None. (See Note on page 3.)
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the
Commission, are incorporated herein by reference as an exhibit
hereto, pursuant to Rule 7a-29 under the Trust Indenture Act of 1939
(the "Act") and Rule 24 of the Commission's Rules of Practice.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1
filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the
answer to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, 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 28th day of June, 1996.
THE BANK OF NEW YORK
By: /s/ PAUL J. SCHMALZEL
Name: PAUL J. SCHMALZEL
Title: ASSISTANT TREASURER
-4-
<PAGE>
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1995, published 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 Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ...................................... $ 4,500,312
Interest-bearing balances .............................. 643,938
Securities:
Held-to-maturity securities ............................ 806,221
Available-for-sale securities .......................... 2,036,768
Federal funds sold and securities
purchased under agreements to resell
in domestic offices of the bank:
Federal funds sold ..................................... 4,166,720
Securities purchased under agreements
to resell .............................................. 50,413
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ............................................... 27,068,535
LESS: Allowance for loan and
lease losses ......................................... 520,024
LESS: Allocated transfer risk
reserve .............................................. 1,000
Loans and leases, net of unearned
income and allowance, and reserve .................... 26,547,511
Assets held in trading accounts .......................... 758,462
Premises and fixed assets (including
capitalized leases) .................................... 615,330
Other real estate owned .................................. 63,769
Investments in unconsolidated
subsidiaries and associated
companies .............................................. 223,174
Customers' liability to this bank on
acceptances outstanding ................................ 900,795
Intangible assets ........................................ 212,220
Other assets ............................................. 1,186,274
------------
Total assets ............................................. $ 42,711,907
============
LIABILITIES
Deposits:
In domestic offices .................................... $ 21,248,127
Noninterest-bearing .................................... 9,172,079
Interest-bearing ....................................... 12,076,048
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ....................... 9,535,088
Noninterest-bearing .................................... 64,417
Interest-bearing ....................................... 9,470,671
Federal funds purchased and secu-
rities sold under agreements to re-
purchase in domestic offices of
the bank and of its Edge and
Agreement subsidiaries, and in
IBFs:
Federal funds purchased ................................ 2,095,668
Securities sold under agreements
to repurchase ........................................ 69,212
Demand notes issued to the U.S. ..........................
Treasury ............................................... 107,340
Trading liabilities ...................................... 615,718
Other borrowed money:
With original maturity of one year
or less .............................................. 1,638,744
With original maturity of more than
one year ............................................. 120,863
Bank's liability on acceptances exe-
cuted and outstanding .................................. 909,527
Subordinated notes and debentures ........................ 1,047,860
Other liabilities ........................................ 1,836,573
------------
Total liabilities ........................................ 39,224,720
------------
EQUITY CAPITAL
Common stock ............................................. 942,284
Surplus .................................................. 525,666
Undivided profits and capital
reserves ............................................... 1,995,316
Net unrealized holding gains
(losses) on available-for-sale
securities ............................................. 29,668
Cumulative foreign currency transla-
tion adjustments ....................................... (5,747)
------------
Total equity capital ..................................... 3,487,187
------------
Total liabilities and equity
capital ................................................ $ 42,711,907
============
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
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 Board of Governors of the Federal Reserve System
and is true and correct.
-
J. Carter Bacot |
Thomas A. Renyi | Directors
Alan R. Griffith |
-
